PRESTIGE ASSURANCE PLC LAGOS, NIGERIA REPORT OF THE DIRECTORS AND AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 PRESTIGE ASSURANCE PLC REPORT OF THE DIRECTORS AND AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 Contents Page Corporate Information 3 Results at a Glance 4 Corporate Governance Report 5 - 9 Certificate Pursuant to Section 60(2) of the Investment and Securities Act 10 Report of the Audit Committee 11 Sustainability and Corporate Responsibility Report 12 - 14 Management Discussion and Analysis 15 - 16 Report of the Directors 17 – 22 Statement of Directors’ Responsibilities in Relation to the Preparation of the Financial Statements 23 Independent Auditor’s Report 24 - 27 Summary of Significant Accounting Policies 28 – 56 Statement of Profit or Loss and Other Comprehensive Income 57 Statement of Financial Position 58 Statement of Changes in Equity 59 - 60 Statement of Cash Flows 61 Notes to the Financial Statements 62 - 117 Other National Disclosures: Revenue Accounts 118 Statement of Value Added 119 Five-Year Financial Summary 120 – 121 PRESTIGE ASSURANCE PLC CORPORATE INFORMATION FOR THE YEAR ENDED 31 DECEMBER 2020 Directors Dr. Adedoyin Salami - Chairman Mr. Sarbeswar Sahoo (Indian) - Managing Director/CEO Mr. Gopalan Srinivasan (Indian) - Non-Executive Director (Resigned on 31 July 2018) Mr. Atul Sahai* - Non-Executive Director Mr. Muftau Olakunle Oyegunle - Non-Executive Director Mr. Anjan Dey** - Non-Executive Director Mr. Gopalan Raghu (Indian) - Non-Executive Director Mr. Raja Vadlamudi*** - Non-Executive Director Mr. Sibharth Prandan (Indian) - Non-Executive Director (Resigned on 6 August 2018) Mrs. Funmi Oyetunji - Independent Non-Executive Director * Appointed by the board on 6 February 2019, and the appointment was approved by NAICOM on 10 February 2020. ** Appointed by the board on 19 October 2018, and the appointment was approved by NAICOM on 10 February 2020. ***Appointed by the board in 10 December 2019, and the appointment was approved by NAICOM on 8 February 2021. Registration Number 6753 NAICOM Reg. Number 033 Company Secretary Abayomi Odulana FRC/2013/ICSAN/000000003201 Registered Office Ligali Ayorinde Street, Victoria Island, Lagos P.O.Box 650 Marina, Lagos [email protected] www.prestigeassuranceplc.com Actuary Zamara Consulting Actuaries Nigeria Limited FRC/2017/NAS/000000016912 70 Adetokunbo Ademola Street Victoria Island Lagos Registrar First Registrars & Investors Services Limited Plot 2, Abebe Village Road Iganmu, Lagos FRC/2013/00000000001946 Auditor Ernst & Young 10th & 13th Floors UBA House, 57, Marina Lagos Bankers Access Bank Plc Keystone Bank Limited Bank of India Limited Polaris Bank Limited Fidelity Bank Plc Providus Bank Limited First Bank of Nigeria Limited Stanbic IBTC Bank Limited Guaranty Trust Bank Plc Sterling Bank Plc Heritage Bank Plc Union Bank Plc United Bank for Africa Plc Ecobank Nigeria Limited Re-insurers African Reinsurance Corporation Aveni Reinsurer Continental Reinsurance Zep Reinsurer NCA Reinsurer 3 PRESTIGE ASSURANCE PLC RESULTS AT A GLANCE FOR THE YEAR ENDED 31 DECEMBER 2020 2020 2019 ₦’000 ₦’000 Gross premium written 7,008,747 6,128,662 Net premium income 3,471,260 2,963,063 Underwriting expenses (3,478,062) (3,206,899) Interest Income 422,236 448,098 Other investment income 240,019 254,761 Other operating income 94,782 25,321 Result from operating activities 691,614 515,115 Profit for the year 678,305 431,828 Net assets 12,403,394 8,445,735 Total assets 18,504,924 13,179,445 Basic earnings per share (Kobo) 9.78 6.79 Diluted earnings per share (Kobo) 9.78 6.79 4 PRESTIGE ASSURANCE PLC CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED 31 DECEMBER 2020 Introduction Prestige Assurance Plc (“the Company”) has remained committed to the principles and practice that promote Good Corporate Governance. We recognize that sound corporate governance practices are necessary for effective management and control of the Company’s business with a view to maximizing the Shareholders value and meeting the expectations of other Stakeholders. In furtherance of the commitment to high ethical conduct, we regularly review our processes and practices to ensure compliance with the legislative and best practice changes in the global corporate governance environment. The Company continues to comply with its Internal Governance Policies and the Code of Corporate Governance for Public Companies in Nigeria. As an Insurance Company, Prestige also complies with the Code of Good Corporate Governance for the Insurance Industry in Nigeria, issued by the National Insurance Commission in March 2015. The NAICOM’s Code of Corporate Governance covers a wide range of issues including Board structure, quality of Board Members, duties of the Board, conduct of the Board of Directors, rights of Shareholders and Committees of the Board. Board of Directors The Board of Directors has the ultimate responsibility for the overall functioning of the Company. The responsibilities of the Board include setting the Company’s strategic objectives and policies, providing leadership to put them into effect, supervising the management of the business, ensuring implementation of decisions reached at the Annual General Meeting, ensuring value creation to shareholders and employees, determination of the terms of reference and procedures of all Board Committees, ensuring maintenance of ethical standard as well as compliance with the Laws of Nigeria. At the moment, the Board is composed of seven members including a Non-Executive Chairman, MD/CEO and five Non-Executive Directors and one Executive Director. The Directors are experienced stakeholders with diverse professional backgrounds in Insurance, Accounting, Commerce, Management, Information Technology, etc. The Directors are men of impeccable character and high integrity. The Company is indeed delighted to have a versatile Board with deep understanding of its responsibilities to Shareholders, Regulatory Authorities, Government and other Stakeholders. The Board always takes proactive steps to master and fully appreciate all cultural, legislative, ethical, institutional and all other factors, which impact our operations and operating environment. This has ensured that a culture of compliance with rules and regulation is entrenched at all levels of operations within the Company. The meetings of the Board are scheduled well in advance and highlights from the sub-committees of the Board are circulated to all the Directors. During the year under review, the Board met on 2 March, 28 May, 24 July, 30 October and 26 November. Details of attendance by the Directors at Board meetings are as follows: S/N Directors Category of Directorship Number of Number of Meetings Meetings Held Attended 1 Dr. Adedoyin Salami Chairman 5 5 2 Mr. Sarbeswar Sahoo Managing Director/CEO 5 5 3 Mr. Vadlamudi Raja Non-Executive Director 5 4 4 Mr. Muftau Olakunle Oyegunle Non-Executive Director 5 5 5 Mr. Gopalan Raghu Non-Executive Director 5 4 6 Mr. Anjan Dey Non-Executive Director 5 1 7 Mrs. Funmi Oyetunji Independent Non-Executive Director 5 5 5 PRESTIGE ASSURANCE PLC CORPORATE GOVERNANCE REPORT - CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 Board Committees The Board performed its functions through four Standing Committees during the period under review; i. Audit Committee; ii. Investment Committee; iii. Establishment Committee; iv. Risk Management Committee. The Committees have clearly defined responsibilities, scope of authority and procedures for reporting to the Board. Membership of the Committees is structured to take optimum advantage of the skills and experience of Non-Executive Directors. The following are the standing Committees of the Board during the year under review: Audit Committee The Company established an Audit Committee in compliance with the Companies and Allied Matters Act, 2020, which comprises of three representatives of Shareholders (elected annually at the AGM), and two Non-Executive Directors during the year under review. The Audit Committee met three times during the year under review - 27 May, 22 July, 22 October, and 23 November. Membership and attendance at the meetings are as follows: S/n Members Number of Meetings Held Number of Meetings Attended 1 Engr. Olayiwola Tubun (Chairman) 4 4 2 Mr. Muftau Olakunle Oyegunle 4 4 3 Mr. Gopalan Raghu 4 4 4 Mrs Anike Odusote – (Member) 4 4 5 Mr. Sekoni Nurudeen – (Member) 4 3 Investment Committee The Investment Committee comprises of the MD/CEO, 2 Non-executive Directors and one Executive Director. The Committee meets to review the investment guidelines of the Company, ensure that investments embarked upon by the Management are in line with Regulatory and Board Guidelines and also considers other miscellaneous issues. Mr. Gopalan Raghu Chaired the Committee during the year under review. The Committee met three times in the year under review as follows: 19 February, 22 May and 20 July 2020. S/n Members Numbers of Meetings Held Number of Meetings Attended 1 Mr. Gopala Raghu 3 2 3 Mr. Vadlamudi Raja 3 3 4 Mr. Sarbeswar Sahoo 3 3 5 Mrs. Funmi Oyetunji 3 3 6 PRESTIGE ASSURANCE PLC CORPORATE GOVERNANCE REPORT - CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2020 Establishment Committee The Establishment Committee comprises the MD/CEO, Executive Director and two Non-Executive Directors. Mr. Muftau Olakunle Oyegunle chaired the Committee which primarily considers general staff matters. The Committee met on 24 February, 15 May, 22 July and 22 October as reflected below: S/n Members Number Meetings Held Number of Meetings Attended 1 Mr. Muftau Olakunle Oyegunle 4 4 2 Mr. Vadlamudi Raja 4 4 3 Mr. Sarbeswar Sahoo 4 4 4 Mr. Gopalan Raghu 4 3 Risk Management Committee The Risk Management Committee comprises of MD/CEO, 2 Non-executive Directors and Executive Director, namely Mr. Muftau Olakunle Oyegunle, Mr. Goplan Raghu, Dr. Balla Swamy and Mr. Sarberswar Sahoo. The Committee’s term of reference is to fundamentally ensure that the Company’s operations comply with the Enterprise Risk Policy as approved by the Board in line with regulatory requirements. The Committee met on 19 February, 8 May and 20 July. S/n Members Number Meetings Held Number of Meetings Attended 1 Mrs.