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. . . s u s t a i n a b l e t r u s t Continental Reinsurance Plc RC.73956

Our Vision “To be the Premier Player in the African Reinsurance Market “

Our Mission “Providing credible reinsurance security and services to our Clients and sustainable value to our shareholders and other stakeholders”

Our Values Teamwork and Passion Ability and Dependability Sustainable Trust

Corporate Philosophy ... Sustainable Trust

...sustainable trust Contents Pages

Corporate Information 3 Financial Highlights 4 Notice of Annual General Meeting 5 Company profile 6 Board of Directors 9 Key Management Staff 10 Chairman’s Statement 11 Financial Year Review 15 Directors' Report 21 Corporate Governance Report 28 Audit Committee's Report 37 Report of the Independent Auditors 38 Statement of Significant Accounting Policies 40 Balance Sheet 47 Profit and Loss Account 48 Statement of Cash flows 49 Non-Life Revenue Account 50 Life Fund Account 51 Life Revenue Account 52 Notes to the Financial Statements 53 Statement of Value Added 67 Five Year Financial Summary 68 Share Capital History 69 Proxy Form 70 E-Dividend Mandate Form 72

2 Board of Directors and Corporate Information

Board of Directors

Engr. S. Akin Laguda - Chairman Mr. D. Chemillier-Gendreau (French) - Vice Chairman Dr. Olufemi Oyetunji - Managing Director/CEO ( Appointed w.e.f . 03/01/2011) Mr. Adeyemo Adejumo - Managing Director/CEO (Retired w.e.f. 14/12/2010) Mr. Rasak O. Falekulo - Executive Director (Life) Mr. Monin C. Adam (Ivorian) - Executive Director (Finance) Mr. Lawrence M. Nazare (Zimbabwean) - Executive Director (Non-Life ) (Appointed w.e.f. 01/05/2010) Mr. Vincent LeGuennou (French) Mr. Hurley Doddy (American) Mr. David S. Sobanjo Ms. Nana Appiah-Korang (Ghanaian)

Company Secretary Solicitors Mrs. Abimbola A. Falana Bayo Osipitan & Co. 2A, Ireti Street Registered Office Yaba, . St. Nicholas House (8th Floor) 6, Catholic Mission Street Registrars Lagos. Sterling Registrars Limited, 24, Campbell Street Regional Offices Lagos.

Cameroun Office Bankers Rue Ngosso Din Derriere Pharmacie Stanbic IBTC Bank Ltd De la Cote, Bali, Douala. Zenith Bank Plc Guaranty Trust Bank Plc Nairobi Office Ecobank, Douala Phase 2 Jumuia Place United Bank for Africa Plc, Douala Lenana Road Union Bank of Cameroun, Douala Nairobi, United Bank for Africa Plc, Abidjan NIC Bank, Nairobi HSBC, London Auditors Akintola Williams Deloitte 235, Ikorodu Road Ilupeju, Lagos.

3 Financial Highlights For the year ended 31st December, 2010

change N millions, unless otherwise stated 2009 2010 in %

Non-Life

Premium earned 5,676 8,565 50.9%

Net Combined ratio in % (Net of Retro) 86.6% 82.7% -4.5%

Life P rem ium earned 902 1,391 54.2%

I nvestment Investment in come (Net of Provisions) 681 1,128 65.6% Return on investment in % (Annualized) 5.8% 8.6% 48.3% Total P remium earned 6,578 9,956 51.4%

Net income 905 1,230 35.9%

Earnings per share in kobo 9 1 2 33.3% Shareholders’ equity 11,170 11,619 4.0% Return on equity1 in % (Annua lized) 8.1% 10.4% 28.4%

Number of employees2 5 0 5 3 6.0% 1Return on equity is calculated by dividin g annualized net income attributable to common shareholders by av erage common shareholder`s equity. 2Permanent staff

Financial strength ratings as at 31 December,2 010 A.M Be st

Ratings B

Outlook stable

Share Per formance Market C apitalization as at 31 December,2010 Share pric e in =N= 1.00 Number of shares (B illion) 10.37 Market capitalization in =N= Bn 10.37

1.6 1.4

1.2 1 0.8 Cre 0.6 NSE ASI (Rebased) 0.4 0.2 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 ------t t r r c c v y g g p n b b c c a p a e e o u u a e e e J O O A F F S D D A A N - M - - - M ------7 4 5 1 7 8 3 6 7 2 3 5 1 2 1 2 1 2 1 2 2 1 2

4 Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the Twenty fourth Annual General Meeting of members of CONTINENTAL REINSURANCE PLC will be held at Victoria Crown Plaza (VCP) Hotel, 292b, Ajose Adeogun Street, Victoria Island, Lagos on Wednesday, July 20, 2011 at 11.00 a.m. to transact the following businesses:

ORDINARY BUSINESS

1. To receive the Report of the Directors and the Audited Financial Statements for the year ended December 31, 2010 together with the reports of the Auditors and the Audit Committee thereon.

2. To declare a dividend.

3. (i) To elect/re-elect Directors. (ii) Pursuant to Section 256 of the Companies and Allied Matters Act, CAP C20 LFN 2004, Special Notice is hereby given that Engr. S. Akin Laguda, who is retiring by rotation and offering himself for re- election at this meeting is above 70 years old.

4. To appoint new Auditors and to authorize the Directors to fix their remuneration.

5. To elect members of the Audit Committee.

SPECIAL BUSINESS

6. To approve the remuneration of the Directors for the year ending December 31, 2011.

BY ORDER OF THE BOARD

Abimbola A. Falana (Mrs.) Company Secretary

Registered Office: 6, Catholic Mission Street, (8th Floor) Lagos.

Dated: March 01, 2011

Notes:

1. Proxy

A member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy to attend and vote instead of him/her. A proxy need not be a member of the Company. To be valid for the purpose of the meeting, the Proxy Form, which is enclosed in this Annual Report must be completed, duly stamped by the Commissioner for Stamp Duties and deposited at the registered office of the Registrars, Sterling Registrars Limited, 24, Campbell Street, Lagos not less than 48 hours before the time fixed for the meeting.

5 Notice of Annual General Meeting

2. Closure of Register

The register of members and transfer books will be closed from Monday, July 11, 2011 to Friday, July 15, 2011, both days inclusive, to enable the Registrar prepare for the payment of dividend.

3. Payment of Dividend

If the dividend recommended by the Directors is declared, dividend will be paid on Thursday, July 21, 2011 to shareholders whose names are registered in the Company's Register of Members at the close of business on Friday, July 8, 2011.

To facilitate the payment of dividend electronically, shareholders who have not completed the e-dividend Mandate Form are encouraged to do so. An e-dividend Mandate Form is in this Annual Report.

4. Unclaimed Dividend

A list of shareholders who are yet to claim their dividend(s) is being circulated with this Annual Report. Members who have not claimed their dividend(s) are advised to write to or call at the office of Registrars, Sterling Registrars Limited, 24, Campbell Street, Lagos.

5. Nominations for Audit Committee

The Audit Committee is comprised of three (3) Directors and three (3) Shareholders' representatives. In accordance with Section 359(5) of the Companies and Allied Matters Act, Cap C. 20, LFN 2004, any shareholder may nominate a shareholder for election to the Audit Committee by giving notice of such nomination, in writing, to the Company Secretary at least 21 days before the Annual General meeting.

6 Corporate Profile

he existence of Continental Reinsurance Plc, (“Continental Re” or “the Company”) dates back to 1985 when it was incorporated as a private reinsurance company in Nigeria. It commenced business as a general reinsurer in TJanuary 1987 and became a composite reinsurer in January 1990, providing Life and Non-Life reinsurance on both a treaty and facultative basis and has a well-diversified business mix and customer base.

In line with the business objectives of its founders, to be a leading reinsurance company in Africa, the Company was converted to a public limited liability Company in 2000, and recapitalized from NGN 2 billion to NGN 10 billion in 2007 with widespread ownership including international investors. The Company was listed on the Nigeria Stock Exchange on May 30, 2007. Continental Re has since become an international company managed by seasoned professionals and complying with international standards in its business dealings.

OFFICE LOCATION The corporate head office is in Lagos, Nigeria. The office also doubles as a regional office with other regional offices in Douala, Cameroon and Nairobi, Kenya. The Lagos regional office covers the Anglophone West African countries; the regional office in Douala, Cameroon covers all Francophone denominated businesses in the West and Central Africa regions while the regional office in Nairobi, Kenya covers Eastern and Southern Africa businesses. The Company is on the verge of obtaining a license for an office in Tunis that will cover businesses in North Africa and the Maghreb countries. In view of this strategic positioning across Africa, Continental Re has significant business activities in over 40 African countries.

CREDIT RATING Continental Re is rated by AM Best, London. The Company was rated “B” in 2009 and again in 2010 which reaffirmed its financial strength and has sustained BB+ rating for insurer credit since 2008. In order to write more qualitative businesses and for better assessment of risks, a Risk Management department was set up in 2009. In 2010 the Non-Life and Life businesses were separated and are headed by seasoned and experienced professionals in order to improve the quality of businesses and to ensure efficient management of various reinsurance portfolios.

PRODUCTS AND SERVICES The Company provides first class covers in all classes of reinsurance, traditionally non-life and life treaty and facultative reinsurance, supported by first class retrocessionaires in the London and African Reinsurance markets. Continental Re's products and services cut across Fire, Energy, Marine, Liability, Accident and Life, both individual and group life.

To improve its profitability, the Company has a solid Investment portfolio, managed by high level investment professionals with a diversified investment focus, in order to meet future claim obligations, limit the Company's exposure to investment risk, preserve shareholders' capital and thus maximize total return on investment.

The Company also provides top-class specialized training and development programmes to its esteemed clients in various classes of insurance and reinsurance portfolios including fire, energy, business interruption, international reinsurance, life and pension, motor and general accident insurance and engineering/bond insurance.

OUR PEOPLE Continental Re is managed by highly talented, motivated and seasoned professionals. The Company has a profile of stable management over the years and effective organizational renewal with employment of seasoned professionals who are supported with relevant training and development programmes.

7 Corporate Profile cont’d

NEW BRAND IDENTITY

The quest for transformation and business leadership in Africa has led to the very recent change in Continental Re's brand identity. The geometrical shapes form a basic CR shape which is an abbreviation of Continental Reinsurance. The choice of colours reflects the essence of the business: Blue symbolizes friendship, calmness and hope; Green represents growth, protection and prosperity while Gray stands for security, maturity and dependability. Continental Re's new philosophy is “Sustainable Trust''.

CORPORATE PERFORMANCE The Company's gross premium has grown at an average rate of over 45% over the last five years from NGN 2.6 billion in 2006 to NGN 11.6 billion in 2010. With the on-going strategic focus of the Company, the trend of exceptional growth is expected to continue in the coming years.

Following the same trend, Continental Re's assets grew from NGN 4.2 billion in 2006 to NGN 18.7 billion in 2010.

8 Board of Directors

Engr. S. Akin Laguda Mr. D. Chemillier-Gendreau Dr. Olufemi Oyetunji Chairman Vice Chairman Managing Director/CEO

Mr. Rasak O. Falekulo Mr. Monin C. Adam Mr. Lawrence M. Nazare Mr. Hurley Doddy Executive Director (Life) Executive Director (Finance) Executive Director (Non-Life ) Director

Ms. Nana Appiah-Korang Mr. Vincent LeGuennou Mr. David S. Sobanjo Director Director Director Key Management Staff

Dr. Olufemi Oyetunji Mr. Rasak O. Falekulo Mr. Monin C. Adam Mr. Lawrence M. Nazare Managing Director/CEO Executive Director (Life) Executive Director (Finance) Executive Director (Non-Life )

Mr. Alexandre Aquereburu Mr. George Nandy Mr. Daniel Mouyame Mr. Musa Kolo Chief Risk Officer Regional Director Nairobi Regional Director (Douala) DGM (Finance)

Mr. Kanma Okafor Mrs. Abimbola A. Falana Mr. Steve Odjugo Mr. Olusegun Ajibewa Mrs. Adebisi O. Fadairo DGM (ICT) Company Sec./Legal Adviser DGM (Oil & Gas) AGM (HR & Admin) AGM Technical Operations Chairman’s Statement

Engr. S. Akin Laguda C H A I R M A N Chairman’s Statement cont’d

ellow shareholders, distinguished ladies and gentlemen, on behalf of the Board of Directors of Continental Reinsurance Plc, I welcome you all to the 24th Annual General Meeting of our company. During the course of this Fmeeting, we will present to you the annual report and financial statements for the year ended December 31, 2010.

Business and Operating Environment

In 2010, the recovery of the global economy from the effects of the financial crisis continued. While in most developed economies, the recovery has been slower than expected, developing and emerging markets have shown strong growth and are in fact approaching pre-crisis growth rates. According to the World Economic Outlook report of the International Monetary Fund released in October 2010, the world economy expanded at an annual rate of about 5¼ percent during the first half of 2010. World industrial production reached growth rates of about 15 percent, and global trade recovered at rates over 40 percent during this period.

The global insurance industry has also shown signs of strong growth. The Global Insurance Review 2010 posited that most insurance companies had restored their capital to pre-crisis level by end-2009 and continued to build larger buffer in 2010.

Similarly, the global reinsurance industry experienced positive underwriting results, although at a declining rate. This is due to extraordinarily high losses in the first quarter of the year mainly due to catastrophe events which include the Chile earthquake, Australian flood, Europe windstorm Xynthia and US winter storms. There have been generally deteriorating premium rates too.

However, the recent world financial crisis and the experience of the banking sector have highlighted the need for a Risk Based Supervision (RBS) regime and also for a Risk Based Solvency Capital (RBC). Europe's Solvency II Directive to come into effect in January 2013 is known to be in the forefront in this respect. There are various forms of RBS, but it is known that the International Association of Insurance Supervisors is working on a common framework which will be applicable and acceptable to all regulators. In all cases, there will be changes in the manner insurers and re-insurers manage their businesses, thus leading to commercial best practice.

The African insurance and reinsurance markets have maintained a relatively stable growth during the year under review.

As a pan-African entity, Continental Re continues to deepen its presence into the continent. Though, a significant portion of our business still emanates from Nigeria, our deliberate effort at diversifying our business base is yielding positive result.

The Nigerian insurance industry continued to witness deliberate regulatory efforts directed at improving public patronage of insurance. Worthy of note is the intensification of the awareness campaign by the National Insurance Commission for the compulsory insurances and the release of the Guidelines for the Insurance of Oil and Gas Business in Nigeria in 2010. It is expected that the positive results of these efforts will soon become evident.

The domestic economy weathered the storm of the global economic recession. The year-on-year inflation declined during most of 2010 to 11.8 percent in December from 15.6 percent in February. The domestic capital market recovered significantly in the year after the decline occasioned by the crisis in 2008/2009. Also, the pressure on Nigeria's external sector subsided in the first half of the year following the rebound in crude oil prices at the international oil market and the relative calm in the Niger Delta region that bolstered oil production and export.

12 Chairman’s Statement cont’d

Financial Scorecard

I place before you the operating and financial results of our company for the year ended December 31, 2010.

The Company's profit before tax improved by 62% from NGN 979 million in 2009 to NGN 1.6 billion in the period under review. We recorded a Gross Premium Income of NGN 11.6 billion up from NGN 7.4 billion recorded in 2009. From this figure, our non-life business achieved NGN 10.3 billion while life business achieved NGN 902 million, an increase of 58% and 54% respectively. These increases are a result of our deliberate effort at deepening our presence in existing markets and making in-roads into new ones.

Investment income (net of provisions) in 2010 grew by 66% from NGN 681 million in 2009 to NGN 1.1 billion. This positive change was as a result of improvement in the Nigerian capital market and a change in our asset re-allocation.

Despite the significant increase we achieved in our top line, we recorded only a growth of 7% in our management expenses which rose from NGN 1.1 billion in 2009 to NGN 1.2 billion in 2010. Our balance sheet and shareholders' funds grew by 20% and 4% respectively from NGN 15.6 billion and NGN 11.2 billion in 2009 to NGN 18.8 billion and NGN 11.6 billion in 2010.

We will continue to improve on this performance in the coming years.

Dividends

Our dividend practice generally seeks to be consistent and progressive. With this in mind, your Directors are pleased to recommend a cash dividend of 7.5 kobo per share for the financial year ended December 31, 2010. This represents an increase of 36 percent over the dividend of 5.5 kobo paid in the 2009 financial year.

Board Changes

Mr. Adeyemo Adejumo, the former Managing Director/Chief Executive Officer retired from the Company with effect from December 14, 2010. He also resigned from the Board with effect from the same date. Mr. Adejumo served the Company for 25 years. On behalf of the Board and management, I wish to thank him for his years of meritorious service and wish him a happy life in retirement.

Following the retirement of Mr. Adejumo and the approval of the National Insurance Commission, Dr. Olufemi Oyetunji was appointed Managing Director/Chief Executive Officer of the Company. His appointment took effect from January 3, 2011.

Also, during the period under review, Mr. Lawrence Nazare joined the Board as Executive Director (Non Life). Lawrence is an astute reinsurance practitioner with many years of experience. I welcome him on the Board of the Company.

Staff

Your Company continues to pride itself in the quality and strength of its workforce. Our people are our greatest assets. Our staff consistently demonstrates commitment to the Company and we shall continue to place great premium on their development and motivation.

13 Chairman’s Statement cont’d

Future Outlook

In the coming years, we plan to consolidate our regional footprint through strengthening of structures in our regional branches, increase diversification of income by country and business lines and strengthen our internal technical capabilities.

Our Enterprise Risk Management (ERM) project is well on course and we are making significant progress. As a risk- taking organization, we would be at the forefront of risk management within our own Company to ensure long-term prosperity for our shareholders and long-term security for our policyholders. We shall aspire to continue to be transparent and use regulator-approved internal models in the determination and achievement of a Risk Based Solvency Capital at all times.

Also, we have put together a 5-year strategic growth plan (2011 - 2015) under which we seek to aggressively grow our top line and improve return on equity to shareholders.

Conclusion

Distinguished fellow shareholders, ladies and gentlemen, permit me to use this opportunity to congratulate the executive management team and all our employees for their hard work and continuing dedication to the Company.

I also thank my fellow Directors on the Board for their confidence in my leadership of the Company.

Also, to you, our shareholders, I say thank you for your continuing support and goodwill.

Finally, I give thanks to the Almighty God for giving us another successful year.

Thank you all.

Engr. Akin Laguda Chairman

14 2010 Financial Year Review

NON-LIFE BUSINESS

Premium Income Gross Written Premiums in 2010 accounts for pipeline premium income which represents written premiums not yet advised by ceding companies at the end of the reporting period.

In 2010 Gross Written Premiums was NGN 10.3 billion, inclusive of pipeline premiums and NGN 7.9 billion excluding pipeline premiums compared to NGN 6.5 billion in 2009. The pie chart below shows Continental Re's steady Non-Life business growth in the last five years with a 48% Company Average Growth Rate (CAGR).

Non-Life Gross Premium Income Growth (NGN Million)

The 58% increase in premium income over 2009 was due in part to a change in the revenue accounting policy to allow for pipeline premiums. This methodology is in line with international GAAP and has been approved by the Auditors. Without this change in methodology, the performance of the Non-Life business in 2010 can be said to be adequate with a 22% increase over 2009. This growth achieved across all regions and business classes confirms the Company's strategy of taking advantage of business opportunities both locally and outside Nigeria as they present themselves

Geographical Distribution Geographically, Continental Re has continued to foray by deepening and expanding its footprints on the African Continent with coverage in over forty countries overseen by the regional offices in Lagos, Nigeria, Douala, Cameroun and Nairobi, Kenya with the Tunis and Abidjan offices expected to come on stream in 2011 after regulatory approvals. The operations under the Lagos office improved by 60% year-on-year and constitute about 70% of the total Non-Life business which compares favourably with last year's performance of 44% and 69% respectively. On the other hand, Douala office operations improved by only 26% and constitute 20% of the business compared to last year performance of 65% and 24% respectively. The Nairobi office's 161% year-on-year improvement and 10% of total business attests to the success of the Company's strategy of business development through the establishment of regional offices. The chart below shows the regional mix of our business in 2010.

15 2010 Financial Year Review

Non-Life Gross Regional Gross Premium Distribution

Nigeria Cameroun Kenya

10%

20%

70%

Lines of Business There was improvement in all classes of the Non-Life business with the Liability class having the highest growth of 130% and the Energy class slowing down to a 23% year-on-year growth due to a slow down of investments by the international oil companies in 2010 while awaiting the passage of the much anticipated Petroleum Industry Bill (PIB) by the Nigerian legislature. The other classes of Marine grew by 65% while Fire and Accident both grew by 51%.

Despite the slowdown in the growth of the Energy business in 2010, this class could be poised for significant growth in the near term on the back of the various legislations by the Nigerian government meant to improve the investment climate in the sector and encourage local participation.

16 2010 Financial Year Review

2010 Gross Premium Incomeper 2010 Gross Premium Incomeper Business Class Business Class

ergy ergy En En 3% 13% 1 Lia Liab bility Fire ility 11% 16% Fire 42% 40% Marine Marine 14% 15% Accident Accident 20% 19%

Combined Ratio The combined ratio for Non-Life operations has further reduced from 87% in 2009 to 82% in 2010, a further confirmation of the management's cost control measures and quality of business being underwritten.

Claims The Non-Life Gross Claims paid in 2010 was NGN 2.5 billion, a 3% reduction from the NGN 2.6 billion recorded in 2009 reflecting the quality of businesses written in 2010. However, net of reserves for outstanding claims and retrocession recoveries, the Net Claims Incurred of NGN 3.7 billion in 2010 is 54% higher than NGN 2.4 billion recorded in 2009. This is as a result of a higher reserve figure for prudence and a much lower claims retrocession recovery amount because of the absence of large claims in 2010. Gross Claims ratio improved from 39% in 2009 to 24% in 2010 with Nigerian business constituting 80% of the total claims while Cameroun and Kenya were 15% and 5% respectively. Year-on-year, only the Nigerian business experienced a drop in the claims ratio from 51% in 2009 to 28% to 2010; Cameroun increased from 16% in 2009 to 18% in 2010 and Kenya from 2% in 2009 to 10% in 2010. All classes of business experienced lower claims ratios, except for Energy where the ratio rose from less than 1% in 2009 to 20% in 2010. Fire declined from 56% to 26%, Accident from 42% to 29%, Marine from 30% to 18% and Liability from 21% to 20%.

Commissions and Charges Commissions and charges came to a total of NGN 2.6 billion in 2010 compared NGN 1.8 billion in 2009 representing a 46% rise in nominal terms. Commissions and charges were also adjusted to include pipeline businesses. The 25% commission ratio achieved in 2010 compares favourably to the higher ratio of 27% recorded in 2009.

17 2010 Financial Year Review

LIFE BUSINESS

Premium Income The Life business performed very well in 2010 with top line growth of 54% compared to a drop of 24% between 2008 and 2009 largely due to a return to participating in underwriting group life schemes (which had been discontinued in 2009 due to poor underwriting performance) as well as new businesses. Of the total of NGN 1.4 billion gross premium generated in 2010, 93% came from Group Life which has been the trend over the years due to the impact of the Nigerian Pension Reform Act where the bulk of the premiums are generated.

Life Business Outgo At a claims ratio of 44%, the experience improved in 2010 compared to a 64% ratio in 2009. In absolute terms, gross claims increased marginally by 5% from NGN 581 million in 2009 to NGN 612 million in 2010.

Commission and Charges are NGN 368 million in 2010 compared to NGN 338 million in 2009, a 9% change y-o-y.

Surplus/Deficit The Life Fund had a surplus of NGN 298 million at year-end. The valuation performed by our external actuaries, HR Nigeria Limited enabled the transfer of NGN 124 million to the Profit and Loss account.

INVESTMENT INCOME

Money Market The money market firmed up in 4Q 2010 in contrast to the illiquidity that dominated the first half of the year. The benchmark monetary policy rate closed at 6.25% with an asymmetric corridor of +/- 200 basis points. The Central Bank of Nigeria (CBN) continued its banking reforms to foster stability in the economy. The interest on bank placements inched up by an average of 200bps from 3% in the first half of the year to 5% in the second half.

Fixed Income The Bond market was very active in 2010 as investors flew to safety and moved to government securities as a safe haven for their financial assets. The huge illiquidity in the financial market as a result of the unwillingness of banks to lend to the real sector of the economy and investors' desire to continue to trade returns for safety led to the increased subscription to the Federal Government of Nigeria and State Bonds during the last quarter of the year despite the lower rates compared to the corresponding period in 2009.

Capital Market The domestic capital market continued to show some signs of recovery. The All Share Index (ASI) increased from 20,827.81 at the end of December 2009 to 24,770.52 as of December 31, 2010. AMCON commenced operation in November 2010 and purchased NGN 1.04 trillion of non-performing loans of the banks which in total is valued at NGN 2.2 trillion. This led to a bullish trend in the Nigerian Stock market in the last quarter of 2010. The market ended the year with a return of 18.93% compared to -33.78% in 2009.

Real Estate The real estate market responded positively to the improved general economic condition by improved market demand. Even though property rental is still tepid at high ends of the market such as Ikoyi and Victorial Island, the middle end such as Lekki Phase One presented a better appeal and pricing during the year.

18 2010 Financial Year Review

The Table below shows an improvement in the portfolio annualized yield from 6% in 2009 to 9% in 2010. During the period in review, the investment portfolio also recorded an unrealized profit of NGN 116 million and a realized income of NGN 996 million.

Investment Income Summary

Average Annual Total Investment 2 Investments Investment Yield. YTD income 2010 income 2010 Dec 10 N’m N’m N’m

Cash & Cash Equiv. 406 6,993 6 Internal Managed Listed Equities 161 628 26 Externally Managed Listed Equities 22 176 13 Private Equities 44 650 7

Fixed-Income 261 2,320 11

Statutory Deposits 22 1,000 2 Other/Real Estate 196 1,192 16 TOTAL 1,112 12,959 9 1 Average of the beginning and ending carrying values of investments and cash 2 Annualized yield YTD includes unrealized capital gains or losses

The Table below shows the portfolio asset allocation between 2009 and 2010 Investment Portfolio Asset Allocation;

Portfolio Composition DEC 10 DEC 09 Dec. 2010 Asset Allocation Cash and Cash Equivalents 55.0% 58.4%

8 . 0 Cash and Cash Internally Managed Listed Equ ities 5.0% 6.0% % 8. Equivalents 0% Externally Managed Listed Equities 1.0% 2.0% Internally Managed Listed Equities Private Equities 5.0% 5.6% Fixed-Income 18.0% 12.0% 18% Externally Managed 55% Listed Equities Statutory Deposits with CBN 8.0% 8.6% Private Equities Other/Real Estate 8.0% 8.0% 5% Fixed Income % 5 Statutory Deposits 1% Other/Real Estate Total 100% 100%

The portfolio in 2010 was allocated as follows:

Cash and Cash Equivalents: The decrease in cash by 3% from 58% to 55% was due to reallocation of cash to fixed income in line with our adjusted investment strategy in 2010.

Listed Equities: The marginal positive change in the internally managed portfolio was due to an increase in market value as a result of capital market appreciation. The internally managed equity portfolio was re-structured during the year through selling off underperforming stocks while increasing exposure to stocks with good fundamentals. The same strategy applied to the externally managed portfolio which now constitutes 1% of the total portfolio of investable assets.

Fixed Income: The total investment portfolio witnessed more diversification into fixed income assets which translated to an increase of 6% compared to 2009.

Real Estate: The properties were value by Fola Oyekan & Associates with the current market value of the portfolio standing at NGN 1.5 billion. The revaluation is in accordance with the National Insurance Commission's regulatory provision to revalue company's property assets after a minimum period of three years.

19 Directors’ Report

The Directors present their annual report together with the Balance Sheet and the Profit and Loss Account for the year ended December 31, 2010.

1. Summary of Results 2010 2009

NGN’000 NGN’000 Profit before taxation 1,585,000 979,815 Taxation (354,766) ( 74,597) Profit after taxation 1,230,234 905,218

Appropria tions Contingency reserve 321,526 204,085 Proposed dividend 777,956 570,501 Retained profit for the year 195,998 65,247

2. Principal Activity

The Company reinsures all classes of insurance business, including Life, Fire, Engineering, Bond, General Accident, Marine, Aviation, Motor, Liability and Energy within and outside Nigeria. The Company has branch offices in Douala (Cameroon) and Nairobi (Kenya). The Company is in the process of winding up two subsidiaries - CReSTECH Limited and CRIMS Limited

3. Legal Form

The Company was incorporated as a private limited liability Company on July 24, 1985 and was converted to a public limited liability Company on March 27, 2000. The shares of the Company are currently listed on the Nigerian Stock Exchange.

4. Fixed Assets

Movements in fixed assets during the year are shown in Note 10 on page 57. In the opinion of the Directors, the market value of the Company's properties is not less than the value shown in the accounts.

5. Dividend

The Directors recommend the payment of a dividend, in respect of the year, of 7.5 kobo on each 50 kobo ordinary share amounting to NGN 777,956,000.00 subject to deduction of withholding tax at the appropriate rate.

6. Post Balance Sheet Event

There were no post Balance Sheet events which could have a material effect on the state of affairs of the Company as at December 31, 2010 or on the profit for the year ended on that date that have not been adequately provided for or disclosed.

20 Directors’ Report

7. Directors

The Directors of the Company during the year and at the date of this report are: Engr. S. Akin Laguda - Chairman Mr. D. Chemillier-Gendreau (French) - Vice Chairman Dr. Olufemi Oyetunji` - Managing Director/CEO )Appointed w.e.f 03/01/2011) Mr. Adeyemo Adejumo - Managing Director/CEO )Retired w.e.f 14/12/2010) Mr. Rasak O. Falekulo - Executive Director (Life) Mr. Monin C. Adam (Ivorian) - Executive Director (Finance) Mr. Lawrence M. Nazare (Zimbabwean) - Executive Director (Non-Life) (Appointed w.e.f 01/05/2010) Mr. Vincent Le Guennou (French) Mr. Hurley Doddy (American) Mr. David S. Sobanjo Ms. Nana Appiah-Korang (Ghanaian) Mr. Bakary H. Kamara (Mauritanian) - (Appointed on 30/03/2010 but election into office stepped down at AGM of 16/07/2010)

. Mr. Adeyemo Adejumo retired as Managing Director/CEO of the Company and also resigned from the Board with effect from December 14, 2010 after twenty five years of service. The Board wishes Mr. Adejumo happy retirement and the very best in his future endeavours. Dr. Olufemi Oyetunji who was appointed Managing Director/CEO with effect from January 3, 2011 in place of Mr. Adeyemo Adejumo presents himself for election.

. Mr. Lawrence M. Nazare who was appointed Executive Director (Non-Life) during the year also presents himself for election.

. Mr. Bakary H. Kamara, the Managing Director of African Reinsurance Corporation (Africa Re), who was presented for election at the last Annual General Meeting but whose election was stepped down at the meeting following objection raised by the National Insurance Commission (NAICOM) to his being on the Board of both Africa Re and Continental Re on the ground of conflict of interest is being re-presented for election. Mr. Kamara will be retiring from Africa Re with effect from June 30, 2011.

. Engr. S. Akin Laguda who is above 70 years old retires by rotation and has indicated his willingness to continue in office as a Director, Special Notice having been received in compliance with Section 256 of the Companies and Allied Matters Act Cap C 20, Laws of the Federation of Nigeria 2004.

8. Responsibilities of Directors

The Directors are responsible for the preparation of the financial statements which give a true and fair view of the state of affairs of the Company as at the end of the financial year and of its profit and cash flows for the year and comply with the provisions of the Companies and Allied Matters Act, Cap C20, LFN 2004. These responsibilities include ensuring that:

21 Directors’ Report

. adequate internal control procedures are instituted to safeguard assets, prevent and detect fraud and other irregularities; . proper accounting records are maintained; . applicable accounting standards are adhered to; . suitable accounting policies are used and consistently applied; and . the financial statements are prepared on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

9. Directors' Interests

The direct and indirect interests of Directors in the issued share capital of the Company as recorded in the register of Directors' Shareholdings and/or as notified by them for the purpose of Section 275 of the Companies and Allied Matters Act, CAP C20, LFN 2004 are as follows:

Number of 50 kobo Ordinary Shares held as at December 31

2 0 1 0 2 0 0 9

Direct Indirect Direct Indirect

Engr. S. Akin Laguda Nil 323,596,004 Nil 288,543,210

Mr. D. Chemillier-Gendreau Nil * Nil * Dr. Olufemi Oyetunji Ni l N il Nil Nil Mr. Rasak O. Falekulo 35,266,666 Nil 35,266,666 Nil Mr. Monin C. Adam 681,700 * 681,700 * Mr. Lawrence M. Nazare N i l N il Nil N il Mr. Vincent Le Guennou Ni l * Nil * Mr. Hurley Doddy Ni l * Nil * Mr. David S. Sobanjo 126,162,282 100,000 126,162,282 100,000 Ms. Nana Appiah-Korang Nil * Nil *

The indirect interest of Mr. D. Chemillier-Gendreau, Mr. Vincent Le Guennou, Mr. Hurley Doddy, Ms. N. Appiah-Korang and Mr. Monin C. Adam who represent C-Re Holding Ltd, the majority shareholder, is 5,251,071,322 shares.

Engr. S. Akin Laguda and Mr. David S. Sobanjo represent Salag Ltd and AIICO Insurance Plc respectively.

10. Directors' Interests in Contracts

None of the Directors has notified the Company, for the purpose of Section 277 of the Companies and Allied Matters Act, CAP C20, LFN 2004, of any declarable interest in contracts with which the Company was involved as at December 31, 2010.

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11. Substantial Shareholding

Shareholding of 5% and above of the issued share capital of the Company as at December 31, 2010: Ordinary Share of 50 kobo each 2010 200 9 Numb e r % N umber % C-Re Ho lding Ltd 5,251,041 ,322 50. 62 5,251,041,32 2 50.62 STANBIC Nominees Nig. Ltd 787,904,935 7.60 - - [Trading A/C]

12. Acquisition of Own Shares

The Company did not purchase any of its own shares during the year.

13. Ownership Structure

December 31, 2010 December 31, 2009 No. of No . of % N o . of No. of % Holders Shares Holders Shares

Foreign 23 5,447,085,821 52.51 30 6,087,695,166 58.69 Nigeria 6,343 4 ,925,658,491 47.49 6, 524 4,285 ,049,146 41.31

14. Retrocessionaires

· Lloyd’s Sydincation. · Odyssey Re · Transatlantic Re · Q-Re · Africa Re · China Re · Labuan Re · Trust Re · SCR Morocco · Ap Fajer Re · CCR · Kenya Re · Tunis Re · Re · PTA Re · CICA Re · Sen Re · Tan Re

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15. Principal Brokers

The following brokers transacted business with the Company during the year under review:

Local

Glanvill Enthoven Reinsurance Brokers Limited United African Insurance Brokers Limited Ark Reinsurance Brokers SCIB Insurance Brokers

Foreign

CK Re Limited, London JB Boda & Company Private Limited, Bombay Pierre Leblanc Atlas Reinsurance Consultants - Tunisia Fair Insurance & Reinsurance Brokers - Morocco AON - London & Morocco ARB - Morocco FSA Re K.E.K

16. Donations and Sponsorship

During the year, the Company made donations amounting to NGN 4,208,375.60. The recipients include the following:

NGN . Lionic Year Fund 100,000.00 . Professional Insurance Ladies 100,000.00 . West African Insurance Institute 1,845,000.00 . Christ Tower School 50,000.00 . Wesley Schools 703,750.00 . WAICA 539,625.60 . International Education 500,000.00 . Pacelli School for the Blind 100,000.00 . Onikan Health Centre 100,000.00 . Nurses Welfare Association 50,000.00 . Chartered Insurance Institute of Nigeria 20,000.00 . Kiddies Hunt 100,000.00

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17. Analysis of Shareholdings

The issued and fully paid up share capital of the Company as at December 31, 2010 was NGN 5,186,372,156.00 divided into 10,372,744,312 ordinary shares of 50 kobo each. The range of shareholding is as follows:

Range Number of of Holdings holders Units Units % 1 - 1,000 46 0 31 1,678 0.00 1,001 - 5,000 1,20 1 4, 010,143 0.04 5,001 - 10,000 1,00 7 8, 921,081 0.09 10,001 - 50,000 1,85 4 52 ,152,435 0.50 50,001 - 100,000 75 6 65 ,776,309 0.63 100,001 - 500,000 68 5 16 5, 511,098 1.60 500,001 - 1,000,000 15 9 12 1, 072,401 1.17 1,000,001 - 5,000,000 15 5 35 7,938,307 3.45 5,000,001 - 10,000,000 30 20 4, 345,602 1.97 10,000,001 - 50,000,000 38 1,062, 938,368 10.25 50,000,001 - 100,000,000 10 67 5, 505,111 6.51 100,000,001 and above 11 657,4, 261,779 73.79

Total 6,36 6 10,3 72,744,312 100%

18. Employment and Employees

18.1 Employment of Physically Challenged Persons

There is no physically challenged person in the employment of the Company. The Company continues to maintain its non-discriminatory policy in respect of employment of otherwise qualified but physically challenged persons. Should any employee become disabled during the course of his/her employment, in line with the Company's policy, such employee would be retained and retrained to enable him/her continue employment.

18.2 Employees' Involvement and Training

The Company is committed to employees' training and development. Staff training and development programmes are structured to meet the corporate objectives of the Company. These are pursued through enhanced job scope and responsibilities as well as through relevant local and overseas functional and management courses, conferences, seminars and workshops. Management and staff relations in the Company remain cordial. The Company encourages participation of employees in arriving at decisions on issues affecting their well being and maintains continuous communication with them through circulars and regular divisional and sectional meetings.

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18.3 Health, Safety at Work and Welfare of Employee

Health and safety regulations are in force within the Company's premises and adherence by employees to such regulations is ensured. The Company maintains retainers with clinics and hospitals where staff and a number of their immediate family members enjoy free but generously limited health care services. In addition, all members of staff are covered by the staff Personal Accident Insurance Scheme. All confirmed staff are also members of the Company's Retirement Benefit Scheme which is approved by the Joint Tax Board. .

In recognition of the need for a healthy and stress free workforce, all management staff undergo thorough medical examination every two years.

19. Auditors

The Auditors, Messrs Akintola Williams Deloitte, have served as Auditors of the Company for over 24 years. In compliance with clause 8.0 (iii) of the NAICOM Code of Corporate Governance which provides that the tenure of Auditors shall be for a maximum period of five (5) years they will not be seeking reappointment.

A resolution will be proposed at the Annual General Meeting to appoint new Auditors and to authorise the Directors to fix their remuneration.

20. Audit Committee

The members of the Audit Committee appointed at the last Annual General Meeting have met and will, in accordance with the provisions of the Companies and Allied Matters Act, CAP C20, LFN 2004 present their report to you at this Annual General Meeting.

BY ORDER OF THE BOARD

Abimbola A. Falana (Mrs.) Company Secretary 6, Catholic Mission Street (8th Floor) Lagos

26 Corporate Governance Report

1. Introduction

The Company remains committed to entrenching sound governance structures through which objectives are set and the means of attaining them and monitoring their performance are determined. The Board of Directors is at the core of the Company's corporate governance practices and has put in place a simple and transparent governance structure. The Board also seeks to achieve international best practices in the governance of the Company and to enhance shareholder value and respect minority rights in its business decisions.

2. Responsibilities of the Board

The Board continued to operate within the scope of its responsibilities as contained in the Company's Corporate Governance principles, the NAICOM and SEC Codes of Corporate Governance, the Company's Articles of Association and the Companies and Allied Matters Act. It sets the performance and strategic objectives of the Company and is dedicated to ensuring that the Company achieves those objectives. It provides effective leadership through Board Committees and delegated authority. It delegates some of its powers to the Board Committees and the executive management and ensures that appropriate structures are put in place for the authorities delegated. Its responsibilities include:

. Ensuring the integrity of the company's financial reporting system . Ensuring that ethical standards are maintained . Ensuring that the company complies with relevant laws and statutory regulatory requirements. . Formulating policies and strategies on marketing, investment and claims administration. . Monitoring corporate expenditures and acquisitions. . Monitoring and managing potential conflicts of interest of key executives, board members and shareholders including misuse of corporate assets. . Formulating risk policy, monitoring potential risks within the company including recognizing and encouraging honest whistle blowing.

The Board regularly monitors compliance with policies and achievement against objectives and during the year effectively monitored performance through quarterly performance reporting and budget reviews.

Matters exclusively reserved for Board's deliberation and decision include: . Approval of financial statements . Formulation of Dividend policy . Approval of Business strategy . Approval of Business Plan . Approval of annual operating budget and capital expenditure budget . Approval of material investments and disposals . Risk management strategy . Matters relating to share capital . Approval of major capital projects . Staff matters including remuneration, reward, recruitment and promotion of Senior Management.

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In performing these responsibilities, the Board is guided by the need for objective judgment of issues independent of executive management; compliance with laws and regulations relating to the Company's business activities e.g. Companies and Allied Matters Act, Investment and Securities' Act, Insurance Act; NAICOM Guidelines etc; transparency and avoidance of conflict of interest between Directors and the business of the Company; taking decisions on fully informed basis, in good faith, with due diligence and care in the best interest of the Company and of the shareholders.

In achieving the above, there is in place a well defined organizational structure that effectively meets the needs of the company with clear job descriptions, authority levels and working relationships for members of the management.

3. Board of Directors 3.1 The Directors of the Company are qualified individuals with diverse skills and expertise. The non-executive Directors bring to the Board, a wide range of business, financial and global experience. The profile of each Director can be found on the Company's website at www.continental-re.com.

On joining the Board, Directors receive an induction pack which include the Company's profile; ethics and philosophy; Organizational Structure; Departmental Structure; Corporate Governance Principles; Duties of Directors; Directors' Code of Conduct; Schedule of Meetings for the year; Anti-Money Laundering/ Anti Bribery & Corruption Policy; Strategic Plan and copies of minutes of most recent meetings. Executive Directors go through orientation in the various departments of the Company.

3.2 Term of Office of Directors There is no fixed term of office for non-executive Directors. In line with the Company's Articles of Association one-third of the Directors retire by rotation annually and are eligible for re-election. New Directors appointed by the Board during the year are subject to election at the Annual General Meeting immediately following their appointment. Also according to the Company's Articles of Association, an executive Director is not to be subject to retirement by rotation whilst holding that office.

3.3 Profiles of Directors Seeking Election/Re-Election

3.3.1 Engr. S. Akin Laguda, Chairman (Non-Executive) (73) Engr. Laguda holds a B. Sc. (Engineering) London from Nigerian College of Science and Technology (Now Ahmadu Bello University), Zaria (1963). He is a member of the Institute of Mechanical Engineers, UK and a Chartered Engineer. A well-seasoned engineer and administrator, Engr. Laguda served as a Commissioner in Lagos State from 1975 to 1979. He is a member, Chartered Institute of Transport and Logistics as well as a Fellow, Institute of Management Consultants of Nigeria. He was a former Chairman of Julius Berger Nigeria Plc. He is an active Patron of the Franco-Nigerian Chamber of Commerce and Industries and was a past Chairman of the Chamber. He is also a recipient of Officer de la legion d'Honneur, France and Officier de l'Ordre de Merit, France. Apart from being on some other Boards, Engr. Laguda has served conscientiously on the Board of Continental Re over the years.

3.3.2 Dr. Olufemi Oyetunji, Managing Director/CEO (56) Prior to his appointment, Dr. Olufemi Oyetunji was the founding Managing Director/CEO of Alexander Forbes Consulting Actuaries Nigeria Limited and was the Chief Actuary supervising many large insurance and pension schemes. Before establishing Alexander Forbes, he was Managing Director/CEO of Crusader Insurance (Nigeria) Plc from 1999-2005. Dr. Oyetunji holds a PhD in Statistics from the University of Manchester, Institute of Science & Technology, England (1980); a Master of Science (M.Sc) degree in Statistics from Imperial College, London (1977) and a Bachelor of Science (B.Sc) First Class Honours degree in Statistics and Operational Research from the University of Manchester, Institute of Science & Technology, England

28 Corporate Governance Report

(1976). He is a Fellow of the Institute of Actuaries, United Kingdom and he has attended several management development programmes locally and overseas.

3.3.3 Mr. Lawrence M. Nazare, Executive Director (Non-Life) (44) Mr. Nazare is the Executive Director Non-Life operations. Has vast experience in reinsurance spanning over 21 years. He was previously the Managing Director of ZB Reinsurance Ltd, formerly Inter-market Reinsurance Limited, Zimbabwe, a Hannover Re Joint Venture Company. He was Chairman of Credit Insurance Zimbabwe Limited; Vice President of the Insurance Institute of Zimbabwe; a member of the regulatory Non-Life advisory Committee and an Executive Committee member of the organization of Eastern and Southern Africa Insurers (OESAI). He served as Chairman of The Insurance Council of Zimbabwe for three consecutive terms, was co- Chairman of the Non-Life Advisory Committee and Chairman of the Zimbabwe Reinsurance Association. Mr. Nazare holds a Bachelor of Law (Hons) Degree, (1988) and a post-graduate Bachelor of Laws Degree (1989) from the University of Zimbabwe and is an admitted Legal Practitioner.

3.3.4 Mr. Bakary H. Kamara (Non-Executive) (62) Mr. Kamara is the Managing Director/CEO of African Reinsurance Corporation (Africa Re), a position he has held since July 1993. He holds a Diploma of the Insurance Institute of Tours (France), 1977, Diploma of High Studies in Insurance Law (D.E.S.S.) from François Rabelais University - Tours (France), 1977, a Bachelor's Degree (BA) in General Law (1974) and a Master's Degree (MA) in Civil Law (1976) from the University Cheikh Anta Diop, Dakar. He is a member of various Boards, Councils and professional bodies and a permanent member of the Executive Committee of the African Insurance Organization. He is also a member of the Ouagadougou Forum, a gathering of prominent African captains of industry, professionals and scholars and Member of the Association of African Insurance Lawyers. He brings to the Board of Continental Re his wealth of experience as a versatile reinsurer.

Mr. Kamara was appointed a Director on March 30, 2010 but his election into office was stepped down at the last Annual General Meeting of the Company held on July 16, 2010 following NAICOM's objection to his election on grounds of conflict of interest. He will be retiring from Africa Re at the end of June 2011.

4. Board Committees The three Board Committees functioned effectively and operated within the powers delegated to them by the Board. At the Board meeting held on March 30, 2010, the composition of each of the Committees was reviewed. The Committees and their terms of reference are set out below.

4.1 Corporate Governance, Compliance and Establishment Committee Members: Ms. Nana Appiah-Korang (Chairperson), Mr. David S. Sobanjo

Terms of Reference · Formulate Corporate Governance Policy for the Company. · Ensure effective implementation of the Policy · Ensure compliance with relevant laws and regulations in the course of business. · Formulate recruitment policy for the Company · Agree the conditions of service · Review remuneration from time to time · Recruitment of top Management staff · Review Organogram of the organization from time to time for effective performance.

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4.2 Underwriting Committee Members: Mr. D. Chemillier-Gendreau (Chairman), Mr. David S. Sobanjo and all Executive Directors

Terms of Reference · Review underwriting policy of the Company · Formulate geographical expansion programme for the Company · Review the retrocession cover of the Company · Product development · Consider adequacy of technical reserve · Formulate Risk Management Policy · Consider Actuarial Reports

4.3 Investment/Finance, General Purposes and Enterprise Risk Management Committee Members: Mr. Hurley Doddy (Chairman), Mr. Vincent Le Guennou, Mr. David S. Sobanjo and all Executive Directors

Terms of Reference · Approve and review Investment Policy of the Company. · Review and approve assets allocation and Managers. · Consider quarterly and Annual Accounts. · Approve Investment within limits stipulated by the Board. · Consider annual budgets. · Consider capital raising exercise and/or financial restructuring of the Company. · Consider internal audit report. · Consider investment quarterly reports.

5. Board Meetings and Meetings of Board Committees Board and Board Committees' meetings dates for each year are agreed upon before the commencement of the year. Agenda for each meeting is circulated well in advance of the meetings to members. Detailed reports on items to be deliberated upon at the meetings are prepared and also sent well in advance to enable the Board take appropriate decisions.

30 Corporate Governance Report

The Board met four (4) times during the year. Each of the Board Committees also met four (4) times during the year. The names of the Directors and their attendance at the meetings are as follows:

Corporate Investment/Finance, Governance, General Purposes Board Compliance & Underwriting & Enterprise Risk Establishment Committee Management Committee Committee Number Attended Number Attended Number At tended Number Attended Directors of of of of meetings meetings meetings meetings Engr. S Akin Laguda 4 4 4 1 4 1 4 1

Mr. D Ch.emillier - 4 3 4 n/a 4 3 4 n/a

Gendreau

Mr. Adeyemo 4 4 4 n/a 4 4 4 4 Adejumo Mr. Rasa k O. Falekulo 4 4 4 n/a 4 4 4 4

Mr. Monin C. Adam 4 3 4 n/a 4 3 4 3

Mr. Lawrence M. 4 3 4 n/a 4 2 4 2 Nazare Mr. Vin cent Le 4 2 4 n/a 4 n/a 4 2 Guennou Mr. Hurle y Doddy 4 2 4 n/a 4 n/a 4 2

Mr. David S. Sobanjo 4 3 4 3 4 3 4 3

Ms. Nana Appiah - 4 3 4 3 4 n/a 4 n/a Korang Mr. Bak ary H. Kamara 4 2 4 1 4 1 4 1

Directors who were unable to attend Board and Committee meetings sent apologies for absence prior to the meetings and also appointed alternates. They, however, reviewed all the Board papers sent to them and forwarded their comments to the Chairman of the Board or of the Committee, as appropriate. In addition to the formal meetings held as shown in the table above, decisions were also taken via circular resolutions signed by all the Directors.

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6. Audit Committee The Committee met twice after the last Annual General Meeting and was very effective in the discharge of its statutory duties and responsibilities. The terms of reference of the Committee, broadly are as follows: · Reviewing the scope and planning of audit requirements; · Reviewing the accurateness of data and information provided in audited financial Reports; · Reviewing the Management Letter on the Audit of the Financial Statements; · Keeping under review the effectiveness of the Company's system of accounting and internal control; · Reviewing the procedure put in place to encourage whistle blowing; · Considering and reviewing major changes in accounting policies; · Reviewing quarterly internal audit reports; · Making recommendations to the Board in regard to the appointment, removal and remuneration of the external auditors of the Company; · Ensuring that interim and audited financial statements are in line with regulatory requirements and are in accordance with acceptable accounting standards.

The Executive Directors, the Chief Risk Officer, the DGM (Finance) and the Internal Auditor were in attendance at meetings of the Committee.

The Company Secretary acts as Secretary to all the Board Committees and Audit Committee.

7. Directors' Right to Seek Independent Professional Advice The Directors are aware that they have a right to seek independent professional advice in furtherance of their duties. There is no indication that any of the Directors took advantage of this policy during the year.

8. Management Committees The Company has the following Management Committees:

8.1 Executive Management Committee Executive Management and Management meetings were held regularly to discuss matters relating to the day to day activities of the Company as well as implementation of Board decisions.

8.2 Risk Management Committee The Committee's main function is to identify, control and mitigate against general enterprise risks.

8.3 Credit Control Committee. The Committee's functions include enforcement of the Company's Credit Control Policy; Monthly review of debtors' Age Analysis report and review of collection report.

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8.4 Technical Committee The Committee was established during the year with the main function of advising the company's Executive Management Committee concerning the establishment and review of the Company's underwriting policies and guidelines. Its terms of reference include: . Formulating and recommending the Company's Underwriting Philosophy and ensuring adherence thereto by all underwriting units and staff; . Developing the Company's underwriting processes and procedures and appropriate manuals; . Enforcing and monitoring the Company's Underwriting standards and procedures. . Monitoring the Company's underwriting performance and recommending corrective action(s) needed where deficiencies are observed; . Monitoring and controlling the Company's underwriting risk exposure through review of the Company's risk profiles; . Formulating the Company's retrocession strategy and ensuring that the Company has, at all times, adequate retrocession capacity and protection; . Enforcing adherence to the terms and conditions prescribed in the Company's retrocession arrangements; . Recommending for approval the Company's policies with regard to maximum line size and spelling out for approval any exceptions thereto; and . Performing such other functions as the Executive Management Committee may from time to time delegate to the Committee.

8.5 Ad Hoc Committees are set up from time to time and as the need arises to address specific issues.

9. Remuneration Policy

9.1 Managing Director/CEO and Executive Directors The remuneration of the Managing Director/CEO and Executive Directors is paid by way of salary, benefits, allowances and annual performance bonus. The Board, on the recommendation of the Corporate Governance, Compliance and Establishment Committee, approves annual increments and benefits. The performance bonus is a percentage of the Company's profit and is subject to the approval of the Board at the end of the financial year. Distribution of the bonus is based on laid down criteria. The Managing Director/CEO and the Executive Directors do not receive sitting allowance and Directors' fees paid to non-Executive Directors.

9.2 Non-Executive Directors The remuneration of non-Executive Directors is paid by way of fees approved by the Company at the Annual General Meeting on recommendation of the Board. Non-Executive Directors are also paid sitting allowance to cover expenses incurred by them in attending and returning from meetings of the Company.

10. Human Resources Policy The Company's Human Resources Policy is contained in the staff Handbook and is in line with global Human Resources practices. The Company's staff strength increased from 47 in 2009 to 53 in 2010. Two of the newly recruited staff, who are management staff, were appointed by the Board on the recommendation of the Corporate Governance, Compliance and Establishment Committee. The Company recognizes that employees are its greatest assets particularly in view of the technical nature of its business, hence takes employees development seriously.

33 Corporate Governance Report

11. Sustainability Policies

11.1 Corruption It is the policy of the Company to: . prohibit and actively detect and prevent money laundering and any activity that facilitates money laundering or the funding of terrorist or criminal activities,

. prohibit and prevent the making or offering of payments to government officials or any other persons in order to obtain or keep business or to obtain some other benefit for the Company or an employee of the Company,

. prohibit other corrupt practices.

In pursuit of the above, the Board, during the year, approved an Anti-Money Laundering/Anti Bribery & Corruption Policy. The Policy makes anti-money laundering and anti-bribery & corruption the responsibility of every Employee of the Company and requires any Employee that detects suspicious activity to report immediately, that activity to the Anti-Money Laundering/Anti Bribery & Corruption Compliance Officer. A Whistle Blowing Policy is currently being developed.

11.2 Corporate Social Responsibility The Company sponsors a 15 minutes French language programme tagged “Ambiance Continental Re” on Ray Power 100.5 FM Radio which is aired every Thursday from 5.15 p.m. to 5.30 p.m. The programme enlightens, teaches and entertains and has a large listening audience. The programme has been consistently on air for three years.

11.3 HIV/AIDS

Although there are no cases of HIV/AIDS in the Company, the Company recognizes the global threat of the disease and educates staff to guard against contacting it. The Company is, however, prepared to provide support to individuals with HIV/AIDS and to organizations providing public enlightenment on the disease.

12. Code of Ethics The Company appreciates that honesty, integrity and accountability are crucial for the success of its business and therefore requires the highest standards of professional and ethical conduct from its Directors and all employees. The draft code of ethics and conduct is still being reviewed by the Board.

13. Risk Management The Company is making significant progress on developing and implementing a risk management framework, which will encompass all functions. This is to establish best practice and comply with both Nigerian and International Corporate Governance codes and also to protect both the Company's policyholders and its shareholders' interests.

Our intention is to conduct workshops to: . Define our risk appetite statement . Define key targets and objectives . Identify risks or opportunities that may affect achievement of our objectives . Agree actions and controls to mitigate risk where appropriate . Populate risk registers . Document our processes.

34 Corporate Governance Report

We are also concurrently developing an internal model to calibrate our exposure insurance risk, market risk and credit risk. Together with the Company's risk appetite statement and risk registers, they will form the core part of our ERM framework.

This process is evolutionary and we will keep monitoring and developing our ERM framework to place Continental Re at the forefront of risk management.

14. External Auditors The Board continued to maintain an objective and professional relationship with the external auditors. The external auditors had no business relationship with the Company during the year 2010.

15. Shareholders' Rights In line with the Company's code of best practices, all shareholders are treated equally. No shareholder is given preferential treatment or superior access to information or other matters. At least 21 days' notice of Annual General Meeting is given to all shareholders.

16. Compliance with Statutory Requirements The Company maintains its commitment to achieving 100% compliance with Statutory and other regulatory requirements. In monitoring compliance, the Board, through the Corporate Governance, Compliance & Establishment Committee, reviews compliance reports at each of its meetings. This and other measures put in place during the year, to monitor compliance assisted in ensuring timely compliance by the Company. The sum of NGN 114,286.00 was however, paid to the Nigerian Stock Exchange (NSE) as penalty for late submission of the Financial Statements for the year ended December 31, 2009 which was due to circumstances beyond the Company's control. The sum of NGN 5,000,000.00 was also paid as penalty to the Nigerian Accounting Standards Board (NASB) for the years 2008 and 2009.

17. Internal Audit The internal audit reports directly to the Audit Committee and to the Board through the Managing Director and ensures that all controls, including financial, operational, compliance and risk management are functioning effectively. The purpose, authority and responsibility of the internal Audit department are clearly defined in the Company's Internal Audit Charter and annual audit plan approved by the Board on the recommendation of the Audit Committee. During the year, the internal audit reviewed the effectiveness of the internal controls at the head office and regional offices in Cameroon and Kenya and submitted its quarterly findings to the audit Committee and the Board. There were no major breaches of internal controls and procedures.

35 Corporate Governance Report

18 Communication The Company is conscious of shareholders' rights and is committed to maintaining good communications and relations with them as well as with other stakeholders. Information is disseminated through the Annual Report and Newspaper publications and the Company's website at www.continental-re.com. The Company's annual and quarterly results are published in at least two National Newspapers and are also displayed on the Company's website. The Annual General Meeting is the main forum for communication between the shareholders and the Board and active participation of shareholders at the meeting is encouraged.

Engr. S. A. Laguda Dr. Femi Oyetunji Chairman Managing Director/CEO

36 Audit Committee’s Report

To the members of CONTINENTAL REINSURANCE PLC

In compliance with the provisions of Section 359(6) of the Companies and Allied Matters Act, CAP C20, LFN 2004 members of the Audit Committee of Continental Reinsurance Plc hereby report on the financial statements of the Company for the year ended December 31, 2010 as follows:

- The scope and plan of the audit for the year ended December 31, 2010 were adequate;

- We have reviewed the financial statements and are satisfied with the explanations obtained;

- We have reviewed the external Auditor's management letter for the period and are satisfied that management has taken appropriate steps to address the issues raised;

- The accounting and reporting policies of the Company are in accordance with legal requirements and ethical practices.

The external Auditors confirmed having received full co-operation from the Company's management and that the scope of their work was not restricted in any way.

Mr. T. Hassan-Odukale Chairman, Audit Committee

Members of the Audit Committee Mr. Tunde Hassan-Odukale - Shareholders' representative (Chairman) (Leadway Assurance Co. Ltd) Mr. Ajibade A. Peters - Shareholders' Representative Mr. Andre Bayala - Shareholders' Representative (SONAR - Burkina Faso) Ms. Nana Appiah-Korang - Director Mr. David S. Sobanjo - Director Mr. Bakary Kamara - (Election as Director stepped down at last AGM)

37

Report of the Independent Auditors To the members of Continental Reinsurance Plc

Report on the financial statements

e have audited the accompanying financial statements of Continental Reinsurance Plc, set out on pages 40 to 68, which comprise the balance sheet as at 31 December, 2010, the income statement, statement of Wcash flows for the year then ended, a summary of significant accounting policies, value added statement, financial summary and other explanatory information.

Directors' Responsibility for the Financial Statements The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with the Companies and Allied Matters Act, Cap C20, LFN 2004, the Insurance Act, CAP I17 LFN 2004 and the NAICOM Guidelines 2010, and for such internal control as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with international standards on Auditing. Those standards require that we comply with ethical requirements. And plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements present fairly, in all material respects , the financial position of Continental Reinsurance Plc as at 31 December, 2010, and of its financial performance and its cash flows for the year then ended; the company has kept proper books of account , which are in agreement with the balance sheet and income statement, in the manner required by the companies and Allied Matters Act C20, LFN 2004, and in accordance with the Statements of Accounting standards issued by the Nigerian Accounting Standards Board.

Chartered Accountants Lagos,Nigeria 1 march 2011

38

CONTINENTAL REINSURANCE PLC

Statement of Significant Accounting Policies for the year ended 31 December 2010

The following are the statement of significant accounting policies which have been adopted by the company.

1. Basis of accounting These financial statements are prepared in accordance with Nigeria Statements of Accounting Standards (SAS), the Companies and Allied Matters Act CAP C20 LFN 2004, the Insurance Act CAP I17 LFN 2004 and its interpretations issued by the National Insurance Commission in its Insurance Industry Policy Guidelines. The financial statements have been prepared under the historical cost convention as modified by carrying certain investments at their fair value. Life Insurance Business: The financial statements for life business have been prepared using the fund accounting basis. General Insurance Business: The financial statements for general insurance business have been prepared using the annual basis of accounting.

2. Reporting Currency The financial statements are presented in Nigerian currency (Naira), which is the Company's reporting currency.

3. Use of estimates in the preparation of financial statements The preparation of financial statements requires the use of certain critical accounting estimates and assumption. It also requires management to exercise judgment in the process of applying the Company's accounting policies. Although these estimates are based on the historical information, actuarial analyses and the directors' best knowledge of current events and actions, actual results ultimately may differ from those estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis to take account of new and available information. Revisions to accounting estimates are recognized in the year in which the estimate is revised.

4. Underwriting accounts and reinsurance funds

4.1 Gross Premium Income Recognition Premium is recognized as income when offers from ceding companies are confirmed via credit notes. This comprises premiums generated on contracts entered into during the year as well as premiums and adjustments on contracts entered into in earlier years but confirmed in the current accounting year. Also, premium for the year includes estimates for pipeline or premium not yet advised by the ceding companies for contracts in force at the end of the year. Pipeline premiums are estimated on the basis of latest available information and historic premium development patterns.

All written premiums are recorded on underwriting year basis and a provision is made for unearned income as Reserve for Unexpired Risk for the portion of the premium relating to the current underwriting year that have not expired by the end of the accounting year.

Earned Premium Income represents Gross Premium less change in reserve for Unexpired Premium during the year.

40 CONTINENTAL REINSURANCE PLC

Statement of Significant Accounting Policies for the year ended 31 December 2010

4.2 Retrocession Retrocession premium represents the cost of outward reinsurance for the year. The retrocession programme is on underwriting year basis with appropriate reserves calculated using the same basis as the reserve for unexpired risks.

Retrocession recoveries represents that portion of claims paid/payable on risks ceded out in respect of which recoveries are received/receivable from the retrocessionaire. Retrocession recoveries on claims are disclosed separately as an asset and charged against Gross Claims Incurred to arrive at the Net Claims Incurred.

4.3 Gross Claims Gross claims represent claims and claims handling expenses paid to the ceding companies during the accounting year.

Gross Claims incurred consist of gross claims net of changes in Reserve for Outstanding Claims (including IBNR) during the year.

4.4 Reserve for unexpired risks The portion of the Non-Life gross written premium which has not yet expired by the end of the accounting year on a class by class risk earning profile basis is accounted for as Reserve for Unexpired Risks.

This is calculated using current underwriting year premium net of commissions and charges for all classes of business assuming businesses are incepted evenly throughout the year.

4.5 Reserve for outstanding claims Reserve for Outstanding Claims represents provisions made to account for estimated cost of all claims and the related claims handling expenses incurred but not paid at the Balance Sheet date. This also includes the cost of claims incurred but not reported (IBNR) using best available information.

Based on best available information, this reserve is calculated using standard actuarial methods and historical claims experience.

5. Cash and cash equivalents Cash and cash equivalents comprise of cash on hand and deposits held with banks. Cash equivalents are short-term, highly liquid instruments which are: (a) Readily convertible into cash, whether in local or foreign currency; and (b) So near to their maturity dates as to present insignificant risk of changes in value as a result of changes in interest rates.

6. Actuarial valuation of Life Fund Actuarial valuation of the life fund is carried out annually for purpose of determining the surplus or deficit at the end of the year. All deficits arising there from are charged to the profit and loss account while a maximum of 40% of the surplus is appropriated to the shareholder credited to the profit and loss account.

41 CONTINENTAL REINSURANCE PLC

Statement of Significant Accounting Policies for the year ended 31 December 2010

7. Contingency Reserves Contingency reserves are done in accordance with the provisions of the Insurance Act, CAP I17 LFN 2004:

a. For general business the contingency reserve is credited with the higher of an amount not less than 3% of the total premium or 20% of the net profits until the reserve reaches the greater of minimum paid up capital or 50% of net premium. b. For life business the contingency reserve is credited with the higher of an amount equal to 1% of the gross premium or 10% of the profits.

8. Investments Investments are initially recognized at cost and classified into short and long term in accordance with the Statement of Accounting Standard (SAS 13) on accounting for investments depending on the purpose for which they are acquired. This classification is revaluated on every reporting date.

.a Short term investments Short term investments are held as placements and term deposits with banks and other financial institutions. They are stated at the lower of cost and market value. Interest receivable is accrued for and credited to the profit and loss account.

.b Long term investments (.I) Quoted investments

Investments in quoted securities are held as long term and stated at market value. Gain between the cost and the market value is transferred to investment revaluation reserve. Diminution in the value of investments is also transferred to investment revaluation reserve to the extent of the balance in the reserve. Subsequent amounts are thereafter charged to the profit and loss account.

(ii) Unquoted investments Unquoted investments are stated at cost. Provision is made when there is permanent diminution in value.

9. Investment properties Investment properties are investments in land and buildings that are not occupied substantially for use in the operations of the company. An occupation of more than 15% of the property is considered substantial.

Investment properties are carried in the balance sheet at their market value. Investment properties are revalued every three years by external professional valuers and are not subject to periodic charges for depreciation.

When there is a decline in value of an investment property, the carrying amount of the property is written down to recognize the loss. Such a reduction is charged to the profit and loss account. Reductions in carrying amount are reversed when there is an increase, following a revaluation in accordance with the company's policy, on investment property, or if the reasons for the reduction no longer exist.

An increase in carrying amount arising from the revaluation of investment property is credited to Asset Revaluation Reserve Account. To the extent that a decrease in carrying amount offsets a previous increase, for the same property that has been credited to revaluation surplus and not subsequently reversed or utilized, it is charged against that revaluation surplus rather than the profit and loss account.

42 CONTINENTAL REINSURANCE PLC

Statement of Significant Accounting Policies for the year ended 31 December 2010

An increase in revaluation which is directly related to a previous decrease in carrying amount for the same property that was charged to the profit and loss account is credited to profit and loss account to the extent that it offsets the previously recorded decrease.

Investment properties are classified separately from other properties and used for the purposes of the business.

10. Investment income Investment income comprises interest earned on short-term deposits, rental income, dividend and income earned on trading of securities. Investment income is accounted for on an accrual basis.

11. Fixed assets Fixed assets are stated at cost less accumulated depreciation.

12. Depreciation Depreciation is provided using the straight-line method at rates calculated to write off the cost of the fixed assets over their estimated useful lives .The principal annual rates used for the purpose are:

%

Motor vehicles 25 Furniture and equipment 20 1/ Computer e q u ipment 33 3 Partitioning 20

13. Debtors Debtors are stated after deducting provision made for specific debts considered doubtful of recovery. An allowance for specific debt is established when there is objective evidence that the Company will not be able to collect all the amounts due according to the original terms of the receivables.

Full provision is made for balances outstanding for over 1 year.

When a receivable in respect of which a provision has already been made is deemed uncollectible, it is written- off against the related provision and subsequent recoveries are credited to the profit and loss account.

15. Underwriting expenses Underwriting expenses are subdivided into acquisition and maintenance expenses. Acquisition expenses are those incurred in obtaining and renewing insurance contracts. They include commission paid, policy expenses and indirect expenses such as salaries of underwriting staff; and are deferred and amortized in proportion to the amount of premium determined separately for each class of business recognized in the reporting period in line with the matching concept. Maintenance expenses are those incurred in servicing existing policies/contract. Maintenance expenses are charged to the revenue account in the accounting period in which they are incurred.

In Life Business all incurred expenses both acquisition and maintenance expenses are charged to the fund during the accounting period in which they are incurred.

43 CONTINENTAL REINSURANCE PLC

Statement of Significant Accounting Policies for the year ended 31 December 2010

16. Management expenses Management expenses are expenses other than claims, investments and underwriting expenses. They include salaries and wages and other non-operating expenses. Management expenses are charged to the profit and loss accounts in the accounting period in which they are incurred.

Certain management expenses, which relate directly to underwriting businesses are charged thereto, and are apportioned to the various classes of business in the proportion of the premium income of the current underwriting year.

17. Foreign currency balances a. Underwriting businesses from outside Nigeria denominated in foreign currencies are translated to Naira using the rates of exchange ruling at the time of the transaction. Other transactions denominated in foreign currencies are translated to Naira at the rates of exchange ruling at the time of the transaction.

b. All assets and liabilities (except for underwriting businesses as stated in Note 11a above) existing in foreign currencies are converted to Naira at the rate of exchange ruling at the balance sheet date, and gains and losses are treated on the Foreign Exchange Reserve Account.

18. Retirement Benefit Scheme The company has a Gratuity Scheme for its employees managed by Trustees. The scheme is non-contributory and employees qualify for benefits after five years' service. Provision for gratuity is made when it is determined that there is a shortfall in the assets funding the liabilities.

The Company also has a contributory pension scheme in line with the Pension Reform Act, 2004. Contribution to the scheme is 7.5% of total emoluments (basic salary, housing and transport allowances) by both employer and employee. The company's contribution each year is charged against income and is included in staff cost. The contribution by both company and employee is a total of 15%.

19. Provisions Provision is recognized when the Company has a present obligation, whether legal or constructive, as a result of past event for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in accordance with the Statement of Accounting Standard (SAS) 23.

20. Other assets Receivables and other sundry debtors are classified as other assets and are stated at cost less allowances for doubtful amounts. Allowances and write offs are recognized when a receivable is deemed not collectable based on the original terms of the contract. Subsequent recoveries are credited to the profit and loss account.

Prepayments are stated at cost net of amortization.

44 CONTINENTAL REINSURANCE PLC

Statement of Significant Accounting Policies for the year ended 31 December 2010

21. Taxation

i. Income tax Income tax is provided at the company tax rate on the taxable income for the year. Income tax payable on profits, based on the applicable tax law, is recognized as an expense in the period in which the related profits arise.

ii. Deferred taxation Deferred tax provision is made by the liability method and calculated at the current rate of taxation on the difference between the net book value of qualifying fixed assets and their corresponding tax written down value.

22. Dividend Proposed dividend for the year is recognized as a liability only when declared and approved by shareholders at the Annual General Meeting. Dividends that are proposed but not yet declared are disclosed in the notes to the financial statements.

23. Segment reporting A segment is a distinguishable component of the Company that is engaged in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risk and rewards that are different from those of other segments.

Segment information is presented in respect of the company's businesses and geographical segments. The business segments are determined by management based on the Company's internal reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

24. Earnings per share Basic earnings per share are calculated based on its ordinary shares. Basic earnings per share are calculated by dividing the profit attributable to the ordinary shareholders of the company by the number of ordinary shares outstanding during the year.

45

CONTINENTAL REINSURANCE PLC

Balance Sheet as at 31 December 2010

Life fund Company 2010 2009 Note N'000 N'000 N'000 N'000 ASSETS Cash and bank balances 2 - 221,119 221,119 338,216 Short term investments 3 649,760 5,357,040 6,006,800 6,648,097 Treasury bills 4 - 725,308 725,308 - Reinsurance debtors 5 154,189 3,935,923 4,090,112 3,349,515 Prepayments and other debit balances 6 - 483,107 483,107 698,109 Long term investments 7 - 4,590,8 98 4,590,898 2,622,852 Investment properties 8 350,001 1,207,833 1,557,834 827,629 Statutory deposits 9 - 1,000,0 00 1,000,000 1,000,000 Fixed assets 10 - 115,926 115,926 160,391

Total assets 1,153,950 17,637,154 18,791,104 15,644,809

LIABILITIES Creditors and accruals 11 204,957 614,488 819,445 784,109 Insurance Funds 12 747,758 2,785,534 3,533,292 2,538,230 Outstanding Claims 13 - 2,223,4 53 2,223,453 884,096 Dividend payable 14 - 44,763 44,763 36,345 Taxation 15 - 336,074 336,074 213,266 Deferred taxation 16 - 13,386 13,386 19,146 Revaluation reserve 22 201,235 - 201,235 -

1,153,950 6,017,698 7,171,648 4,475,192

CAPITAL AND RESERVES Share capital 17 5,186,372 5,186,372 5,186,372 Share premium 18 3,915,451 3,915,451 3,915,451 Revenue reserve 19 973,954 973,954 635,747 Revaluation reserve 22 286,441 286,441 90,401 Contingency reserve 23 1,094,207 1,094,207 772,680 Exchange equalisation reserve 24 163,031 163,031 568,966

Shareholders' funds - 11,619 ,456 11,619,456 11,169,617

1,153,950 17,637,154 18,791,104 15,644,809

The financial statements on pages 40 to 68 were approved by the Board of Directors on 1 March, 2011 and signed on its behalf by:

} ENGR. S. A. LAGUDA (CHAIRMAN) } } Directors } RAZACK O. FALEKULO (E. D. - LIFE) }

The accounting policies on pages 40 to 45 and the notes on pages 53 to 66 form part of these financial statements.

47 CONTINENTAL REINSURANCE PLC

Profit And Loss Account for the year ended 31 December 2010

2010 2009 Note N'000 N'000

Gross premium income 25.1 10,253,976 6,502,301 Changes in unexpired/unearned premium (820,610) (590,831) Gross premium earned 9,433,366 5,911,470 Retrocession cost incurred 26 (867,955) (234,716)

Premium earned 8,565,411 5,676,754

Gross claims paid 2,451,205 2,525,992 Changes in outstanding claims 1,339,357 505,945

Gross claims incurred 3,790,562 3,031,937 Retrocession recoveries (86,345) (634,293)

Claims incurred 3,704,217 2,397,644

Acquisition expenses 2,385,116 1,610,107 Maintenance costs 995,930 905,576 Total expenses 7,085,263 4,913,327

Underwriting profit 1,480,148 763,427 Investment and other income 27 981,688 1,179,408 Transfer from life revenue account 123,951 103,646

2,585,787 2,046,481 Administrative expenses (240,164) (151,942) Provision for doubtful balances 28 (720,123) (914,725) Revaluation deficit 8 (40,500) -

Profit on ordinary activities before taxation 29 1,585,000 979,814 Taxation 15.1 (354,766) (74,597)

Profit on ordinary activities after taxation 1,230,234 905,217 Transfer to contingency reserve: - Non-life 23 (307,619) (195,069) - Life 23 (13,907) (9,016)

Profit for the year 19 908,707 701,132 Revenue reserve brought forward 635,747 522,216 Transfer from Life Contingency Reserve 23.2 - (6 8,964) Prior year dividend declared (570,500) (518,637)

Revenue reserve carried forward 973,954 635,747

Earnings per share - Basic (kobo) 34 12 9

48 CONTINENTAL REINSURANCE PLC

Statement Of Cash Flows for the year ended 31 December 2010

2010 2009 Note N'000 N'000 Cash flows from operating activities Premium received from policy holders 10,824,110 6,813,083 Retrocession receipts in respect of claims 86,345 634,293 Acquisition cost paid (2,720,284 ) (1,907,518 ) Retrocession premium paid (867,955 ) (234,716 ) Cash paid to and on behalf of employees (1,175,678) (1,167,944 Other operating income 820,755 1,145,777 Claims paid (4,402,170 ) (3,613,310 ) Value added tax (VAT) input - - Value added tax (VAT) output (15,737) (17,050) Income tax paid 15.2 (237,718 ) (96,453)

Net cash provided by operating activities 30 2,311,668 1,556,162

Cash flows from investing activities

Purchase of fixed assets 10 (48,898) (100,350) Purchase of investments (2,739,450 ) (1,300,518) Investment properties 8 (478,332 ) (250,285 ) Proceed on sale of investments 616,147 325,879 Dividend received 74,857 44,569 Proceed on sale of fixed assets 4,021 5,740

Net cash used in investing activities (2,571,655 ) (1,274,965 )

Cash flows from financing activities

Share issue expenses refund 18 - 18,892 Dividend paid 14 (562,082 ) (753,908)

Net cash used in financing activities (562,082 ) (735,016 )

Net decrease in cash and cash equivalents (822,069) (453,819) Cash and cash equivalents at the beginning of the year 7,867,791 8,321,610

Cash and cash equivalents at the end of the year 31 7,045,722 7,867,791

49 CONTINENTAL REINSURANCE PLC

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50 CONTINENTAL REINSURANCE PLC

Life Fund Account as at 31 December 2010

2010 2009 Note N'000 N'000 ASSETS Short term investments 3 6 49,760 3 5 7,84 7 Reinsurance debtors 5 1 54,189 2 2 9,18 1 Long term investments 7 - 5 7 ,00 6 Investment properties 8 3 50,001 1 4 8,76 6

Total assets 1 ,153,950 792,800

LIABILITIES Creditors and accruals 11 204,957 219,488 Insurance funds 12.2 747,758 573,312 Revaluation reserve 22 2 01,235 -

1,153,950 7 9 2,80 0

The financial statements were approved by the Board of Directors on 1 March, 2011 and signed on its behalf by:

} ENGR. S. A. LAGUDA (CHAIRMAN) } } Directors } RAZACK O. FALEKULO (E. D. - LIFE) }

The accounting policies on pages40 to 45 and the notes on pages 53 to 66 form part of these financial statements.

51 CONTINENTAL REINSURANCE PLC

Life Revenue Account for the year ended 31 December 2010

2010 2009 Notes Individual Group Total Total N'000 N'000 N'000 N'000 Income Premium Income 25.2 90,933 1,299,811 1,390,744 901,613 Retrocessions - - - -

Net premium 90,933 1,299,811 1,390,744 901,613 Investment Income 27 - 31,986 31,986 44,928

90,933 1,331,797 1,422,730 946,541

Expenses Commission 13,026 322,142 335,168 297,411 Claims 1,644 609,964 611,608 581,373 Other charges 438 32,242 32,680 40,681 Management expenses 12,065 172,454 184,519 189,299 Provision for premium debtors 28 - (39,642) (39,642) 77,555

27,173 1,097,160 1,124,333 1,186,319

Excess\(Deficit) of income over expenditure 63,760 234,637 298,397 (239,778) Transfer to profit and loss (8,104) (115,847) (123,951) (103,646)

Transfer to Insurance Fund 55,656 118,790 174,446 (343,424)

52 CONTINENTAL REINSURANCE PLC

Notes To The Financial Statements for the year ended 31 December 2010

1. The Company a. Legal form Continental Reinsurance Plc was incorporated in 1985 as a professional reinsurance limited liability company under the Companies Act 1968 and obtained licence to transact non-life Reinsurance business on 10 December, 1986. It commenced business operation in January, 1987. The Company subsequently obtained licence to transact life reinsurance business in September, 1989 and commenced life reinsurance business in January 1990. In 1999, the Company was converted to a public limited liability company and on 30 May, 2007, its shares were listed on the Nigerian Stock Exchange. In January, 2005, the Company opened a business office in Douala Cameroun while the Nairobi office, Kenya commenced operations in year 2007. b. Principal activities The Company was licensed to carry out both life and non-life reinsurance business. Life Non-Life 2010 2009 N'000 N'000 N'000 N'000 2. Cash and bank balances Cash - 2,008 2,008 705 Local bank balances - 55,960 55,960 13,062 Foreign bank balances - 163,151 163,151 324,449

- 221,119 221,119 338,216 3. Short term investment Placements with banks and other financial institutions (note 3.1) 649,760 4,711,728 5,361,488 5,996,146 Managed funds - 1,414,273 1,414,273 1,477,337

Other short term placements - 48,842 48,842 56,092

649,760 6,174,843 6,824,603 7,529,575 Provision for doubtful investments (note 3.2) - (817,803) (817,803) (881,478)

649,760 5,357,040 6,006,800 6,648,097

3.1 Placements with banks and other financial institutions

- Foreign: Ecobank Plc - Douala - 434,502 434,502 311,652 United Bank for Africa Plc - Douala - 400,330 400,330 247,118 United Bank for Africa Plc - - 300,771 300,771 173,140

Union Bank Plc - Douala 30,100 - 30,100 31,480 HSBC 31,259 - 31,259 - NIC - Kenya 89,962 290,677 380,639 - Senegal - Banque Reg. - - - 118 - Nigeria Guaranty Trust Bank Plc - 315,121 315,121 433,150 First City Monument Bank Plc - 150,194 150,194 154,445 First Bank Nigeria Plc - - - 732,399 FinaCorp Limited - 56,102 56,102 53,485 First Securities Discount House Limited 312,737 - 312,737 114,869

GT Homes Limited - 162,620 162,620 143,923 Ecobank Plc 139,645 499,394 639,039 693,648 Profund Finance and Investment Limited - 231,911 231,911 208,576 United Bank for Africa Plc - 631,720 631,720 767,324 First Marina Limited - 127,678 127,678 107,292 Intercontinental Capital Market Limited - - - 49,270 Sterling Bank Plc - 556,555 556,555 351,379 Stanbic IBTC Plc - - - 400,000 Zenith Bank Plc - 304,153 304,153 944,015 ARM Investments Limited - - - 36,043

Access Bank Plc - 250,000 250,000 -

Kakawa Discount House Limited 46,057 - 46,057 42,820

649,760 4,711,728 5,361,488 5,996,146

53 CONTINENTAL REINSURANCE PLC

Notes To The Financial Statements for the year ended 31 December 2010

Life Non-Life 2010 2009 N'000 N'000 N'000 N'000 3. Short term investment (Cont'd) 3.2 Provision for doubtful investments At 1 January - 881,478 881,478 721,910 Charge for the year (Note 28) - (63,675) (63,675) 159,568

At 31 December - 817,803 817,803 881,478

The provisions in this account balance were principally as a result

of the diminution in the value of quoted equities held and

managed by fund and stock managers on behalf of the company.

3.3 Allocation of short term investments The short term investments is allocated as follows:

Life business 649,760 357,847

Non-life business 2,855,657 3,316,683 Shareholders' fund 3,319,186 3,855,045 6,824,603 7,529,575

4. Treasury bills

The treasury bills are held with the following financial institutions:

Stanbic IBTC Plc 483,568 483,568 - Access Bank Plc 241,740 241,740 -

725,308 725,308 -

The treasury bills are wholly owned for the shareholders of the company. 5. Reinsurance debtors

Due from ceding companies (Local) 353,979 3,979,912 4,333,891 4,080,314 Due from ceding companies (Pipeline) - 1,808,915 1,808,915 - Due on retrocession - 101,470 101,470 652,002 Premium reserves retained by ceding companies - 34,266 34,266 10,625

353,979 5,924,563 6,278,542 4,742,941 Provision for bad and doubtful debts (Note 5.1) (199,790) (1,988,640) (2,188,430) (1,393,426)

154,189 3,935,923 4,090,112 3,349,515 5.1 Provision for bad and doubtful debts At 1 January 239,432 1,153,994 1,393,426 943,989

(Write-back)/Charge for the year (Note 28) (39,642) 834,646 795,004 449,437

At 31 December 199,790 1,988,640 2,188,430 1,393,426

5.2 Profile of reinsurance debtors (age analysis) 2010 2009 Gross Premium Provision N'000 N'000 N'000 Under 365 days 4,090,112 - 3,349,515 Above 365 days 2,188,430 2,188,430 1,393,426 6,278,542 2,188,430 4,742,941

54 CONTINENTAL REINSURANCE PLC

Notes To The Financial Statements for the year ended 31 December 2010

Life Non-Life 2010 2009 N'000 N'000 N'000 N'000 6. Prepayments and other debit balances

Prepayments - 29,133 29,133 74,740

Interest receivable - 147,324 147,324 168,759

Staff loans and advances - 144,706 144,706 143,993

Staff share ownership trustee - 135 135 1,533

Due from subsidiaries (note 7.5) - 10,413 10,413 10,401 Withholding tax recoverable - 6,945 6,945 4,430 Life business - 204,9 57 204,9 57 174,1 91 Deposit for shares (note 6.1) - 13,38 8 13,38 8 14,69 3 Retrocession unexpired risk (note 26) - - - 192,0 42 Loss reserves - 40,47 1 40,47 1 4,625 Others - 4,922 4,922 27,98 9

- 602,3 94 602,3 94 817,3 96 Provision for other debtors (note 6.2) - (119, 287) (119, 287) (119, 287)

- 483,107 483,107 698,109

6.1 Deposit for shares This represents money paid for various public offers of companies and financial institutions for which the shares had not been allotted as at year end. Out of this balance the sum of N11 million has been fully provisioned in these financial statements.

Life Non-Life 2010 2009 N'000 N'000 N'000 N'000 6.2 Provision for doubtful balances At 1 January - 119,287 119,287 119,287

Charge for the year (Note 28) - - - -

At 31 December - 119,287 119,287 119,287

7. Long term investments

.1 Quoted investments [at market value]: Quoted shares and debenture: Cost - 544,684 544,684 1,114,089 Appreciation/(diminution) in market value (note 28) - 51,284 51,28 4 (383,275)

Market value - 595,968 595,968 730,814

.2 Unquoted investments [at cost]: Investment in unquoted companies - 660,003 660,003 614,575 Foreign currencies commercial bonds (note 7.3) - 113,1 20 113,1 20 54,93 5

- 773,123 773,123 669,510 Provision for doubtful investments (Note 7.4) - (22,3 82) (22,3 82) (21,9 46)

- 750,741 750,741 647,564

Investment in subsidiary (note 7.5) - 1,998 1,998 1,998 Government and Corporate bonds (note 7.6) - 3,242 ,191 3,242 ,191 1,242 ,476 - 4,590 ,898 4,590 ,898 2,622 ,852

55 CONTINENTAL REINSURANCE PLC

Notes To The Financial Statements for the year ended 31 December 2010

7.3 Foreign currencies commercial bonds These represent long term investments in life bonds with HSBC International and foreign mutual funds with Scottish Widow and J. P. Morgan.

Life Non-Life 2010 2009 N'000 N'000 N'000 N'000

7.4 Provision for doubtful investments At 1 January - 21,946 21,946 21,946

Charge for the year (note 28) - 436 436 - At 31 December - 22,382 22,382 21,946

7.5 Due from subsidiaries The company has a subsidiary named CReStech Limited. The subsidiary is not consolidated in these financial statements as it had been dormant. This and other related balances have been fully provided for in these financial statements. Also, management is in the process of liquidating the company and all the assets and liabilities of the company will be taken up by the parent company.

Life Non-Life 2010 2009 N'000 N'000 N'000 N'000 7.6 Government and Corporate bonds (note 7.2)

United Bank of Africa Plc - Corporate Bond Series 1 - 300,000 300,000 -

Guaranty Trust Bank Plc - Eurobond - 206,092 206,092 204,609 Guaranty Trust Bank Plc - Corporate bond - Series 1 - 150,000 150,000 150,000 Flour Mills Plc - Corporate bond - 150,000 150,000 - Societe Financiere Internale bond - - - 50,633 Central Bank of Kenya - 35,686 35,686 34,994 Bayelsa State bond - Series 1 - 200,000 200,000 - Lagos State bond - Series 2 - 497,591 497,591 250,000 Republic of Cameroun bond - 138,713 138,713 - Federal Republic of Cote D'ivoire - 151,140 151,140 100,707

Federal Republic of Nigeria: 6th FGN Series 1 - 49,918 49,918 65,863 6th FGN Series 2 - 292,303 292,303 385,670 7th FGN Series 2 - 683,136 683,136 - 9.25 FGN 2014 - 387,612 387,612 - - 3,242,191 3,242,191 1,242,476

7.7 Allocation of long term investments

The long term investments is allocated as follows: Life business - 2,071 Non-life business 1,409,379 925,230 Shareholders' fund 3,203,901 1,717,497

4,613,280 2,644,798

8. Investment in properties

Valuation/cost 148,766 678,863 827,629 687,344

Disposal during the year: - Cost - (104,902) (104,902) (97,980) - Revaluation reserve (note 22) - (50,915) (50,915) (12,020) Revaluation during the year:

- Revaluation reserve (note 22) 201,235 246,955 448,190 - - Profit and loss account - (40,500) (40,500) -

Additions in the year - 478,332 478,332 250,285

350,001 1,207,833 1,557,834 827,629

56 CONTINENTAL REINSURANCE PLC

Notes To The Financial Statements for the year ended 31 December 2010

8. Investment in properties (cont'd)

Three of the Company's land and buildings were revalued by Fola Oyekan & Associates, a professional firm of Estate Surveyors and Valuers on the basis of Open Market Value on 16 November, 2006 and a revaluation surplus of N102.421 million was incorporated into the books of the Company. During the year, the following properties of the company were revalued by Fola Oyekan & Associates, a professional firm of Estate Surveyors and Valuers on the basis of Open Market Value on 7 October, 2010:

- Four (4) units of wing of duplex referenced as A7, A9, A10, and A18 located at the Living Gold Estate, Ikoyi Foreshore Layout, Ikoyi South East, Banana Island at N600million. The initial cost of these properties was N398,045,500. A revaluation surplus of N201,954,500 has been recognised in these financial statements.

- A wing of four (4) bedroom Terrace House at House 1 Plot 9, Block 8, Ikoyi Foreshore Layout, Ikoyi South East, Banana Island at N125 million. This property was purchased at a cost of N40,514,430 and was valued by Fola Oyekan & Asscoiates on 16 November, 2006 at N80million. An additional revaluation surplus of N45 million has been included in the revaluation reserve.

- Three (3) units of wings of 4 bedroom duplex in Royal Terraces located at Criclewood Estate, Banana Island at N525 million. Two (2) of these properties, Block A, House 1 & 2, belong to the Life Business at the cost of N148,765,476 and the remaining one (1), Block C, House 5, to the General Business at the cost of N200 million. A revaluation surplus of N201,234,524 has been recognised for the Life Business while the revaluation deficit of N25 million has been against the Profit and Loss account of the General Business.

Also, during the year one of the company's properties located at Block 3 Plot 47 Castle and Temple Drive Off Fatai Arobieke Street Lekki, Phase 1, Lagos was revalued by Fola Oyeakan & Associates, a professional firm of Estate Surveyors and Valuers on 8 June, 2010 on the basis of Open Market Value at the sum of N305 million . The initial cost of the property was N320.5 million. Therefore the revaluation deficit of N15.5 million has been charged against the Profit and Loss account of the General Business. 2010 2009 N'000 N'000 8.1 Allocation of investment in properties The investment in properties is allocated as follows: Life business 350,001 148,766 Shareholders' fund 1,207,83 3 678,863 1,557,83 4 827,629

9. Statutory deposit This represents statutory deposit with Central Bank of Nigeria as at 31 December, 2010 in accordance with the provisions of the Insurance Act.

10. Fixed Assets Furniture Freehold Motor and Office Computer land vehicles equipment partitioning equipment Total N'000 N'000 N'000 N'000 N'000 N'000 Cost At 1 January 2,524 117,871 64,049 45,264 53,293 283,001 Additions - 22,084 13,011 - 13,803 48,898 Disposal - (18,649) (3,462) - (1,099) (23,210) At 31 December 2,524 12 1,306 73 ,59 8 45 ,26 4 65,99 7 308,689 Depreciation At 1 January - 70 ,806 28 ,80 4 7,9 29 15,07 1 122,610 Charge for the year - 22,684 13,915 17,197 28,620 82,416 On disposal - (8,998) (2, 79 9) - (46 6) (12,263) At 31 December - 84,492 39,920 25,126 43,225 192,763

Net Book Value At 31 December, 2010 2,5 24 36 ,814 33 ,67 8 20 ,13 8 22,77 2 115,926

At 31 December, 2009 2,524 47,065 35,245 37,335 38,222 160,391

57

CONTINENTAL REINSURANCE PLC

Notes To The Financial Statements for the year ended 31 December 2010

Life Non-Life 2010 2009 N'000 N'000 N'000 N'000 11. Creditors: Amounts falling due within one year:

Due to retrocessionaires - 237,823 237,823 137,351 Due to ceding companies - 38,147 38,147 246,308 Sundry creditors - 131,251 131,251 113,324 Rent received in advance - 128,353 128,353 51,546 Accrued expenses - 39,291 39,291 12,363 Statutory deductions - 133 133 214 Non-life business 204,957 - 204,957 171,040 Staff gratuity scheme (note 32.iv) - 26,413 26,413 38,015 Due to susidiaries - 338 338 338 Information technology development levy (note 11.1) - 12,739 12,739 13,610

204,957 614,488 819,445 784,109

11.1 Information technology development levy

At 1 January - 13,610 13,610 9,407 Based on profit for the year - 12,739 12,739 9,777 Payments during the year - (13,610) (13,610) (5,574) At 31 December - 12,739 12,739 13,610

The Nigerian Information Technology Development Agency [NITDA] Act was signed into law on 24 April, Section2007. 12 [2a] of the Act stipulates that 'specified' companies contribute 1% of their profit before tax to the Nigerian Information Technology Development Agency. In line with the Act, the Company have provided for NITDA levy at the specified rate. 2010 2009 N'000 N'000 12. Insurance funds .1 Non-Life Reserve for unearned premium At 1 January 1,964,918 1,374,087 Arising during the year 820,616 590,831 At 31 December 2,785,534 1,964,918

.2 Life

At 1 January 573,312 224,591 Arising during the year 174,446 (343,424) Transfer from Life General Reserve (note 20) - 623,181 Transfer from Contingency reserve (note 23.2) - 68,964 At 31 December 747,758 573,312 3,533,292 2,538,230 The latest available valuation of the life business funds was as at 31 December 2010. The book value of the fund as at that date was put at N871.7 million compared to the advised liability of N488.5 million. Based on this and in line with the Insurance Act 2003, a distribution of N123.95 million representing 40% of the surplus of N309.88 million was advised by the actuaries. The valuation of the company's life business fund as at 31 December 2010 was carried out by H R Nigeria Limited (Consultants and Actuaries). 2010 2009 N'000 N'000 13. Reserve for outstanding claims At 1 January 884,096 378,151 Arising during the year 1,339,357 505,945

At 31 December 2,223,453 884,096

58 CONTINENTAL REINSURANCE PLC

Notes To The Financial Statements for the year ended 31 December 2010

2010 2009 N'000 N'000 14. Dividend payable

At 1 January 36,345 271,616 Prior year dividend (note 19) 570,500 518,637 Payments (562,082) (753,908) At 31 December 44,763 36,345

15. Taxation

15.1 Per profit and loss account:

Income tax based on profit for the year 336,505 198,652 Education tax 24,021 14,614 Over provision in prior years - (157,815)

360,526 55,451 Deferred tax (note 16) (5,760) 19,146 354,766 74,597

15.2 Per Balance Sheet:

At 1 January 213,266 265,779 Based on profit for the year 360,526 55,451 Withholding tax credits - (11,511) Payments during the year (237,718) (96,453) At 31 December 336,074 213,266

The charge for taxation has been computed in accordance with the provisions of the Companies Income Tax Act, CAP C21 LFN 2004 and the Education Tax Act, CAP E4 LFN 2004 as ammended.

2010 2009 N'000 N'000 16. Deferred taxation

At 1 January 19,146 - (Release)\arising during the year (note 15.1) (5,760) 19,146 At 31 December 13,386 19,146

17. Share capital

Authorised: 15,000,000,000 ordinary shares of 50k each 7,500,000 7,500,000 Issued and fully paid: At 31 December 5,186,372 5,186,372

18. Share premium

At 1 January 3,915,451 3,896,559 Share issue refund - 18,892 At 31 December 3,915,451 3,915,451

59 CONTINENTAL REINSURANCE PLC

Notes To The Financial Statements for the year ended 31 December 2010

2010 2009 N'000 N'000 19. Revenue reserve- Non-life At 1 January 635,747 522,216 Prior year dividend (note 14) (570,500) (518,637) Transfer from Life contigency reserve (a) - (note 23.2) - (68,964) Transfer from profit and loss account 908,707 701,132

973,954 635,747

a. The amount previously held in the Life Contingency Reserve was transferred to the Revenue reserve - Non- life as stated in the Insurance Act CAP 117 LFN 2004.

b. In respect of the current year, the Directors proposed that a dividend of 7.5kobo per ordinary share will be paid to shareholders. This dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The gross dividend payable is N777,955,823.40. 2010 2009 N'000 N'000

20. General Reserve Fund

At 1 January - 623,181 Transfer to life insurance fund (note 12.2) - (623,181) At 31 December - -

In line with the Insurance Act CAP I17 LFN 2004, the general reserve

fund has been merged with the Life Insurance fund.

21. Investment revaluation reserve

- Non-life At 1 January - 1,987 Arising during the year - (1,987)

- - - Life At 1 January - 1,411 Arising during the year - (1,795)

- (384) Charged to life revenue account - 384

- -

At 31 December - -

60 CONTINENTAL REINSURANCE PLC

Notes To The Financial Statements for the year ended 31 December 2010

2010 2009 N'000 N'000

22. Revaluation reserve

1. Non-Life At 1 January 90,401 102,421 Arising during the year: - On revaluation (note 8) 246,955 - - On disposal (note 8) (50,915) (12,020)

286,441 90,401

2. Life

Arising during the year (note 8) 201,235 -

487,676 90,401

23. Contingency reserve

The statutory contingency reserve has been computed in accordance with Section 21(1) of the Insurance Act, Cap I17 LFN 2004. The movements on the account are as follows: 2010 2009 N'000 N'000 1. Non-Life At 1 January 694,700 499,631 Transfer from Profit and Loss account 307,619 195,069 At 31 December 1,002,319 694,700 2. Life

At 1 January 77,980 68,964 Transfer from Profit and Loss account 13,907 9,016 Transfer from Non-life revenue reserve (note 19) - 68,964 Transfer to Life Insurance fund (note 12.2) - (68,964)

At 31 December 91,887 77,980

1,094,207 772,680

24. Exchange equalisation reserve

At 1 January 568,966 232,997 Movement during the year (405,935) 335,969

At 31 December 163,031 568,966

25. Premium income

25.1 Non-life Total Earned Pipeline 2010 2009 N'000 N'000 N'000 N'000

- Energy 927,917 82,051 1,009,968 823,738 - Fire 3,205,172 911,124 4,116,296 2,733,460 - General accidents 1,501,900 501,151 2,003,051 1,329,892 - Marine 1,153,641 345,981 1,499,622 908,950

- Liability 1,090,483 534,556 1,625,039 706,261

7,879,113 2,374,863 10,253,976 6,502,301

61 CONTINENTAL REINSURANCE PLC

Notes To The Financial Statements for the year ended 31 December 2010

2010 2009 N'000 N'000 25. Premium income (Cont'd)

25.2 Life - Individual 90,933 63,446 - Group 1,299,811 838,167 1,390,744 901,613

11,644,720 7,403,914 Pipeline’ premiums represent amounts due to the company but not yet notified, as well as adjustments made in the year to premiums written in prior accounting periods. Pipeline premium occurs as a result of insufficient information available at the end of a financial year to enable an insurer to accurately identify the business written close to that balance sheet date for which the inception date is prior to the balance sheet date. Consistent with the insurance business principle, pipeline premium is estimated and recognised to account for all risks assumed during the financial year. This is the first time Continental Reinsurance Plc is recognising pipeline premiums in these financial statements. The impact analysis is as shown below:

N'000 Gross premium 2,374,863 Reserve on unexpired risk (358 ,69 1)

Premium earned 2,016,172 Claims reserve (1,365,5 32 ) Acquisition costs (565 ,94 8) Underwriting profit and contribution 84 ,6 92 26. Retrocession cost 2010 2009 Reserve on Retrocession Retrocession Unexpired Paid in the Cost per Profit Cost per Profit B/fwd Year & Loss account & Loss account N'000 N'000 N'000 N'000 Fire 104,380 217,155 321,535 127,575 Energy 54,296 362,074 416,370 66,361 Accident 13,878 61,788 75,666 16,962 Marine 19 ,48 8 34 ,89 6 54,384 23,818 19 2, 04 2 675, 91 3 867,955 234,716 Life Non- Life 2010 2009 N' 00 0 N' 00 0 N'000 N'000 27. Investment and other income

Dividend - 74,857 74,857 44,569 Profit on disposal of investment - 110,261 110,261 33,990 Interest on deposits and bank instruments 20,472 329,960 350,432 821,773 Interest on statutory deposit - 21,407 21,407 30,919 Interest on government and corporate bonds - 250,420 250,420 100,930 Income on Investment property 11 ,51 4 184,5 83 196,097 190,073 (Loss)/Profit on disposal of fixed assets - (6 ,92 6) (6,926) 369 Exchange gain/loss - 14 ,72 7 14,727 - Other income - 2,3 99 2,399 1,713 31 ,9 86 981, 68 8 1,013,674 1,224,336 28. Provision for doubtful balances Short term investments (note 3.2) - (63,6 75 ) (63,675 ) 159,568 Reinsurance debtors (note 5.1) (3 9,6 42 ) 834,6 46 795,004 449,437 Quoted securities (note 7.1) - (51,2 84 ) (51,284 ) 383,275 Unquoted investments (note 7.4) - 436 436 -

(39,642) 720,123 680,481 992,280

62 CONTINENTAL REINSURANCE PLC

Notes To The Financial Statements for the year ended 31 December 2010

2010 2009 N'000 N'000 29. Profit on ordinary activities before taxation Profit on ordinary activities before taxation is arrived at after charging/(crediting): Directors' remuneration: - Fees 39,617 16,048

- Other emoluments 134,885 34,483 Auditors' remuneration 10,000 7,500 Loss/(Profit) on disposal of fixed assets 6,926 (580) Exchange gain (14,727) (590) Depreciation 82,416 54,285

30. Reconciliation of profit after tax to net cash provided by operating activities

Profit after tax 1,230,234 905,217 Excess\(Deficit) of income over expenditure - life 298,397 (239,778) Adjustment for non-cash items: Depreciation 82,416 54,285 Provision for bad and doubtful balances 680,481 992,280 Profit on disposal of investments (110,261) (33,990) Exchange gain (14,727) - Loss/(Profit) on disposal of fixed assets 6,926 (369) Dividend received (74,857) (44,569)

Increase/(decrease) in income tax payable 122,808 (52,513) Deferred taxation (5,760) 19,146 Changes in operating assets/liabilities: Reinsurance debtors (2,373,213) (1,303,761) Prepayments and other debit balances 215,002 79,187 Creditors and accruals 35,336 74,447 Dividend payable 8,418 (235,271) Actuarial surplus (123,951) (103,646)

Provision for unexpired risks 995,062 939,552

Provision for outstanding claims 1,339,357 505,945

Net cash provided by operating activities 2,311,668 1,556,162 31. Cash and cash equivalents Cash and bank balances 221,119 338,216 Short term investments 6,824,603 7,529,575 7,045,722 7,867,791 32. Information regarding directors and employees i) Directors Emoluments paid to Directors include : - Fees 39,617 16,048 - Other emoluments 134,885 34,483 174,502 50,531 Fees and other emoluments disclosed above (excluding pension contribution) include amount paid to:

Chairman 3,295 1,838 Highest paid director 18,664 14,877

The number of directors excluding the chairman whose emoluments were in the

following ranges were: N N Number Number 4,000,001 - 7,000,000 1 1 Above - 7,000,001 3 2 4 3

63 CONTINENTAL REINSURANCE PLC

Notes To The Financial Statements for the year ended 31 December 2010

2010 2009 Number Number 32. Information regarding directors and employees (Cont'd)

ii) Employees

Employees remunerated at higher rates. The number of employees in receipt of emoluments within the following ranges were:

N N 500,001 - 1,000,000 15 14 1,000,001 - 1,500,000 9 10 1,500,001 - 2,000,000 8 7 2,000,001 - 2,500,000 5 6 2,500,001 - 3,000,000 3 3 3,000,001 & Above 11 7 51 47

N'000 N'000 iii) Pension At 1 January - - Provision during the year 18 ,490 14,964 Release to PFAs (18,490) (14,964) At 31 December - -

iv) Gratuity At 1 January 38,015 38,015 Provision during the year 25,000 10,105 Release to Con Re Trustees/PFAs (36,602) (10,105)

At 31 December 26,413 38,105

v) Staff cost Salaries and Allowances 322,396 296,222 Staff pension 18,490 14,964 Staff gratuity 25,000 10,105 365,886 321,291

The average number of persons employed during the year was as follows: Number Number

Managerial and Senior Staff 49 45 Junior Staff 2 2 51 47

64 CONTINENTAL REINSURANCE PLC

Notes To The Financial Statements for the year ended 31 December 2010

33. SEGMENT INFORMATION BY GEOGRAPHICAL DISTRIBUTION

Below is the Non-Life revenue account by office segments. 2010 2009 Nigeria Cameroun Kenya Total Total N'000 N'000 N'000 N'000 N'000 Income Gross premium income 7,150,992 2,041,705 1,061,279 10,253,976 6,502,301 Reserve for unearned premium at the beginning of the year 1,299,790 531,015 134,113 1,964,918 1,374,087 Reserve for unearned premium at the end of the year (1,938,767) (500,051) (346,710) (2,785,528) (1,964,918)

Earned premium income 6,512,015 2,072,669 848,682 9,433,366 5,911,470 Retrocession costs (701,834) (98,618) (67,503) (867,955) (234,716) Net premium written 5,810,181 1,974,051 781,179 8,565,411 5,676,754

Expenses Gross claims paid 1,966,756 376,790 107,659 2,451,205 2,525,992 Reserve for outstanding claims

at the end of the year 2,053,895 131,877 37,681 2,223,453 884,096 Reserve for outstanding claims

at the beginning of the year (752,296) (118,206) (13,594) (884,096) (378,151)

Claims incurred 3,268,355 390,461 131,746 3,790,562 3,031,937 Retrocession recoveries (86,345) - - (86,345) (634,293)

Net claims incurred 3,182,010 390,461 131,746 3,704,217 2,397,644 Underwriting expenses: Acquisition and maintenance cost 1,767,693 562,628 230,375 2,560,696 1,757,154 Administrative expenses 556,901 176,125 87,324 820,350 758,529

5,506,604 1,129,214 449,445 7,085,263 4,913,327

Underwriting Profit 303,577 844,837 331,734 1,480,148 763,427

Total assets employed 18,791,104 - - 18,791,104 15,644,809 Depreciation 82,416 - - 82,416 54,285

Net premium margin (%) 81 97 74 84 87

34. Basic earnings per share

Net profit attributable to shareholders (N'000) 1,230,234 905,217

Number of ordinary shares in issue as at year end ('000) 10,372,744 10,372,744

Basic earnings per share (kobo) 11.86 8.73

Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the average number of or dinary shares in issue during the year.

65 CONTINENTAL REINSURANCE PLC

Notes To The Financial Statements for the year ended 31 December 2010

35. Related Party Transactions a) Amount due from Directors The following facilities were due from the Executive Director-Non Life and Executive Director-Life at the end of the year: ED NON ED LIFE Total Total LIFE 2010 2009 N'000 N'000 N'000 N'000 Mortgage loan - 3,411 3,411 3,073 Personal loan 5,074 4,441 9,515 12,959 Car loan - 2,958 2,958 8,125 Car refurbishment loan - - - 1,500

5,074 10,810 15,884 25,657

These loans were given in line with the conditions of service of the Directors. Under the terms of the mortgage loan, repayment is to be made over the mortgage period from 2004. For other loans, 100% repayment is through deductions from salaries plus cash payment of balance upon cessation of employment. All the facilities were performing at the balance sheet date.

Effective 14 December, 2010 the Managing Director, Mr. Adejumo Adeyemo retired from the services of the company, after serving the company for about 25 years, 15 years of which was in the capacity of the Managing Director of the company. Consequently, the board of directors of the company, on 17 January 2011, approved the appointment of Dr. Olufemi Oyetunji. He was before his appointment the pioneer Managing Director of Alexander Forbes Limited. His appointment will be ratified at the annual general meeting of the company. b) Due from subsidiary

The company has an outstanding sum of N10,413,435 (31 December 2009 - N10,413,435) with CReStech Limited, a wholly-owned subsidiary. The transaction was in the ordinary course of business and is to be repaid according to the agreed terms and conditions. This amount has however been fully provisioned in these financial statements. 36. Contingent Liabilities and Capital Commitment There were no contingent liabilities and capital commitment as at 31 December, 2010 (2009 - Nil). 37. Comparative figures Certain comparative figures have been reclassified to reflect a more meaningful comparison.

66 CONTINENTAL REINSURANCE PLC

Statements OF Value Added for the year ended 31 December 2010

2010 2009 N'000 % N'000 %

Net premium income: - Local 7,191,796 4,987,540 - Foreign 2,764,360 1,590,827 Other income 1,045,660 175,744

11,001,816 6,754,111 Claims, commission, charges and management expenses - local (7,964,541) (5,396,082) - imported (317,699) (65,547)

2,719,576 1 00 1,292,482 1 00

Applied as follows:

To pay employees: - Salaries, pension and other allowances 365,886 14 321,291 25

To pay Government: - Income tax 360,526 13 55,451 4 - Information technology levy 12,739 - 9,777 -

Retained for growth and payment of dividend to shareholders: - Depreciation 8 2,416 3 20,336 2 - Deferred taxation (5,760) - 19,146 1 - Insurance funds 995,062 37 165,349 13 - Profit for the year 908,707 33 701,132 55

2,719,576 100 1,292,482 100

Value added is the wealth created by the efforts of the company and its employees and its allocation between employees, shareholders, government and re-investment for the future creation of further wealth.

67 CONTINENTAL REINSURANCE PLC

Financial Summary Year ended 31 December 2010

2010 2009 2008 2007 2006 N'000 N'000 N'000 N'000 N'000 Assets Cash and bank balances 221,119 338,216 189,932 45,619 41,844 Short term investments 6,006,800 6,648,097 7,409,768 7,933,893 754,284 Treasury bills 725,308 - - - - Reinsurance debtors 4,090,112 3,349,515 2,495,191 1,719,212 1,382,333 Prepayments and other debit balances 483,107 698,109 772,671 942,961 545,591 Long term investments 4,590,898 2,622,852 1,678,985 1,873,055 1,059,879 Investment properties 1,557,834 827,629 687,344 597,344 372,933 Statutory deposits 1,000,000 1,000,000 1,000,000 1,000,000 35,000 Fixed assets 115,926 160,391 119,698 47,562 39,100 Total assets 18,791,104 15,644,809 14,353,589 14,159,646 4,230,964

Liabilities Bank overdrafts - - - - 77,955 Creditors and accruals 819,445 784,109 705,037 902,185 565,154 Insurance funds 3,533,292 2,538,230 1,598,678 926,924 744,961 Outstanding claims 2,223,453 884,096 378,151 205,324 433,070 Taxation 336,074 213,266 265,779 281,194 156,671 Deferred taxation 13,386 19,146 - 8,168 8,168 Dividend 44,763 36,345 271,616 20,581 20,581

6,970,413 4,475,192 3,219,261 2,344,376 2,006,560

Share capital 5,186,372 5,186,372 5,186,372 5,186,372 1,240,591

Share premium 3,915,451 3,915,451 3,896,559 3,870,959 76,956

Revenue reserve 973,954 635,747 522,216 688,583 123,881

Investments revaluation reserve - - 1,987 1,162,502 215,993

General reserve fund - - 623,181 373,929 178,448 Exchange equalisation reserve 163,031 568,966 232,997 15,377 (10,661) Contingency reserve 1,094,207 772,680 568,595 415,127 296,775 Revaluation reserve 487,676 90,401 102,421 102,421 102,421

Shareholders' funds 11,820,691 11,169,617 11,134,328 11,815,270 2,224,404 18,791,104 15,644,809 14,353,589 14,159,646 4,230,964

Gross premium 11,644,720 7,403,914 5,275,296 2,806,337 2,611,599 Non-life underwriting profit 1,480,148 763,427 351,784 519,097 95,899 Profit before taxation 1,585,000 979,814 557,486 806,443 214,782 Taxation (354,766) (74,597) (84,161) (129,757) (78,991) Profit after taxation 1,230,234 905,217 473,325 676,686 135,791 Contingency reserve (321,527) (204,085) (121,055) (111,984) (19,180)

Profit transferred to revenue reserve 908,707 701,132 352,270 564,702 116,611

Earnings per share (basic) (Kobo) 12 9 5 7 5 Dividend per share (Kobo) - 5 5 5 - Net asset per share (Kobo) 114 108 107 114 90

Note: Earnings and dividend per share were computed based on the profit for the year and on the number of issued and fully paid ordinary shares at the end of the year. Net assets per share were computed on the number of issued and fully paid ordinary shares at the end of the respective years.

68 69 Share Capital History

Date Authorised (N) Issued & Fully Paid up (N)

Increase Cumulative Increase Cumulative Consideration

1985 - 10,000,000 - - -

1986 - 10,000,000 - 5,070,000 Cash

1987 - 10,000,000 3,730,000 8,800,000 Cash

1988 5,000,000 15,000,000 1,200,000 10,000,000 Cash

1989 - 15,000,000 2,450,000 12,450,000 Cash

1990 - 15,000,000 1,490,000 13,940,000 Cash

1991 - 15,000,000 1,060,0 00 15,000,000 Cash 1992 85,000,000 100,000,000 4,918,000 19,918,000 Cash

1993 - 100,000,000 10,934,000 30,852,000 Cash and Bonus (1 for 15)

1994 - 100,000,000 24,148,000 55,000,000 Cash and Bonus (1 for 8) 1995 - 100,000,000 17,012,000 72,012,000 Cash and Bonus (1 for 15)

1996 - 100,000,000 6,197,237 78,209,237 Cash, Stock split (N1,000 to N1)

1997 100,000,000 200,000,000 36,317,763 114,527,000 Cash

1998 - 200,000,000 35,487,588 150,014,588 Cash and Bonus (1 for 10)

1999 300,000,000 500,000,000 29,985,414 180,000,002 Cash and Bonus (1 for 15)

2000 - 500,000,000 12,000,000 192,000,002 Cash

2001 - 500,000,0 00 63,598,223 255,598,225 Cash and Bonus (1 for 8)

2002 - 500,000,000 44,503,325 300,101,550 Cash and Bonus (1 for 6) 2003 500,000,000 1,000,000,000 103,565,104 403,666,654 Cash and Bonus (1 for 4)

2004 - 1,000,000,000 254,674,470 658,241,124 Cash and Bonus (1 for 9)

2005 1,000,000,000 2,000,000,000 198,566,308 856,907,432 Cash and Bonus (1 for 9) 2006 5,5000,000,000 7,500,000,000 383,683,372 1,240,590,804 Cash

2007 - 7,500,000,000 3,945,781,353 5,186,372,157 Cash, Stock split (N1 to N0.50)

2008 - 7,500,000,000 - 5,186,372,157 -

2009 - 7,500,000,000 - 5,186,372,157 -

2010 - 7,500,000,000 - 5,186,372,157 -

70 Notes

71 Proxy Form

CONTINENTAL REINSURANCE PLC RC: 73956

TWENTY FOURTH ANNUAL GENERAL MEETING TO BE HELD AT VICTORIA CROWN PLAZA (VCP) HOTEL, 292B, AJOSE ADEOGUN STREET, VICTORIA ISLAND, LAGOS ON WEDNESDAY, JULY 20, 2011 AT 11.00 A.M.

I/We*______

RESOLUTIONS FOR AGAINST being a member of CONTINENTAL REINSURANCE PLC, hereby appoint To receive the Audited Financial Statement and the Reports of the Directors, Auditors an d Audit Committee **______T o declare a dividend To elect Dr. Olufemi Oyetunji To elect Mr. Lawrence M. Nazare of To elect Mr. Bakary H. Kamara ______To re-elect Eng. S. Akin Laguda To appoint new Auditors and to authorize the Directors to fix their or failing him, the Chairman as my/our proxy to act and vote for remuneration me/us and on my/our behalf at the Annual General Meeting of To elect members of the Audit Committee. To approve the remuneration of the Directors. the Company to be held on July 20, 2011 and at any and every adjournment thereof. Please indicate with an “X” in the appropriate space how you Dated this…………day of…………….2011 wish your votes to be cast on the resolutions set out above. Unless otherwise indicated, the proxy will vote or abstain at his/her discretion Shareholder's Signature…………………...

Notes

1. A member (shareholder) who is unable to attend the Annual General Meeting is entitled to vote by proxy. This Proxy Form has been prepared to enable you exercise your right to vote in case you cannot personally attend the meeting.

2. Provision has been made on this form for the Chairman of the meeting to act as your proxy, but if you wish, you may insert, in the space marked **, the name of any person, whether a member of the Company or not, who will attend the meeting and vote on your behalf.

3. In the case of joint shareholders, the signature of any of them will suffice, but the names of all Joint Shareholders must be stated.

4. The executed form must be deposited at the registered office of the Company or the office of the Registrars, Sterling Registrars Limited, 24, Campbell Street, Lagos not later than 48 hours before the time for holding the meeting.

5. If this Proxy Form is executed by a corporate shareholder, it must be sealed under the common seal of the corporate shareholder or under the hand of an officer or attorney duly authorized in that behalf.

6. It is the requirement of the law under the Stamp Duties Act Cap. S8 LFN 2004, that any instrument of Proxy to be used for the purpose of voting by any persons entitled to vote at any meeting of shareholders, must bear the appropriate stamp duty, and not adhesive postage stamps. TO BE VALID THIS FORM MUST BE STAMPED ACCORDINGLY.

Before posting or depositing the above form, please tear off the admission card below and retain it for admission to the meeting.

ADMISSION CARD CONTINENTAL REINSURANCE PLC RC: 73956

NUMBER OF SHARES HELD

Please admit the shareholder named on this form or his duly appointed proxy to the 24th Annual General Meeting to be held at Victoria Crown Plaza (VCP) Hotel, 292b, Ajose Adeogun Street, Victoria Island, Lagos on Wednesday, July 20, 2011 at 11.00 a.m.

Name of shareholder ……………………………………………………………

Name of person attending ……………………………………………………… Signature of person attending ………………………………………………….

NOTE: You are requested to sign this form at the entrance in the presence of the Registrar on the day of the Annual General Meeting.

The Registrar, Sterling Registrars Limited, 8th Floor, Knight Frank Building, 24, Campbell Street, Lagos

73 Mandate Form for E-Dividend Payment

. . . s u s t a i n a b l e t r u s t To:

T he Registrar, Sterling Registrars Limited th 8 Floor, Knight Frank Building, 24, Campbell Street, Lagos. T el: 01-2806987, 7303445 Tel/Fax: 2806987

I/We hereby request that from now on, all dividends due or which may due to me/us from my/our h olding in Continental Reinsurance Plc, be paid directly to my/our Bank Account named below:

(Surname) (Middle Name) (First Name) Shareholder’s F ull Address: ______

Signature/Right T humbprint of Shareholder:______

Mobile No(s): ______

Name of Bank: ______

B ank Branch: ______

B ank Branch Address: ______

Bank Account Nu mber: ______

Joint Holders

Signatures (1) ______(2) ______

If Corporate Shareholder: Authorized Signature(s): (1) ______(2) ______Company Seal:

NB: Company Seal required for Corporate Shareholder

BA NK AUTHORISED SIGNATORIES AND BANK STAMP

74 The Registrar, Sterling Registrars Limited, 8th Floor, Knight Frank Building, 24, Campbell Street, Lagos

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