GUINEA INSURANCE : QUARTER 3 - FINANCIAL STATEMENT FOR 2023

Guinea Insurance Plc

Management Accounts

For the year ended 30th September 2023

GUINEA INSURANCE PLC

FINANCIAL STATEMENTS, 30TH SEPTEMBER 2023

CERTIFICATION PURSUANT TO SECTION 60(2) OF INVESTMENT AND SECURITIES ACT NO. 29

OF 2007

We the undersigned hereby certify the following with regards to our Audited Financial Statements for the year ended 30th September 2023 that:

• We have reviewed the report;
• To the best of our knowledge, the report does not contain:
• • Any untrue statement of a material fact, or
  • Omit to state a material fact, which would make the statements, misleading in the light of circumstances under which such statements were made;
• To the best of our knowledge, the financial statements and other financial information included in the report fairly present in all material respects the financial condition and results of operations of the Company as of, and for the periods presented in the report.
• We:
• • Are responsible for establishing and maintaining internal controls.
  • Have designed such internal controls to ensure that material information relating to the Company is made known to such officers by others within the Company particularly during the period in which the periodic reports are being prepared;
  • Have evaluated the effectiveness of the Company's internal controls as of date within 90 days prior to the report;
  • Have presented in the report our conclusions about the effectiveness of our internal controls based on our evaluation as of that date;
• We have disclosed to the auditors of the Company and audit committee:
• • All significant deficiency in the design or operation of internal controls which would adversely affect the Company's ability to record, process, summarise and report financial data and have identified for the Company's auditors any material weakness in internal controls, and
  • Any fraud, whether or not material, that involved management or other employees who have significant role in the Company's internal controls;
• We have identified in the report whether or not there were significant changes in internal controls or other factors that could significantly affect internal controls subsequent to the date of our evaluation,including any corrective actions with regard to significant deficiencies and material weaknesses.

_____________________
Mr. Ademola Abidogun	Mr. Pius Edobor
Managing Director	Executive Director
FRC/2016/CIIN/00000014549	FRC/2013/ICAN/0000000046

Statement of Financial Position

As at 30th September, 2023
	Notes	30-Sep-23	30-Sep-22
Assets		N'000	N'000
Cash and cash equivalents	17	1,759,527	404,854
Financial assets:	18	933,498	1,970,228
Trade receivables	19	-	-
Reinsurance assets	20	342,211	443,233
Deferred acquisition cost		-	-
Other receivables and prepayments	21	49,363	45,517
Investment properties	22	113,000	106,300
Intangible Asset	23	39,927	3,864
Property and equipment	24	841,911	883,272
Statutory deposit	25	333,654	333,654
Total assets		4,413,090	4,190,921
Liabilities
Insurance contract liabilities	26	1,246,183	885,966
Trade payables	27	13,776	75,016
Other payables and accruals	28	101,143	213,224
Employee benefit obligations	29	2,318	14,885
Current tax payable	30	28,454	24,310
Deferred tax liabilities		110,011	110,011
Deposit for shares	31	-	901,400
Total liabilities		1,501,886	2,224,812
Equity
Issued share capital	32	3,971,400	3,070,000
Share premium	33	337,545	337,545
Contingency reserve	34	686,403	623,417
Accumulated losses	35	(2,366,893)	(2,268,279)
Available-for-sale reserve and others	36	217,061	137,738
Other reserves	38	65,688	65,688
Total equity		2,911,204	1,966,109
Total liabilities and equity		4,413,090	4,190,921

These financial statements were approved by the Board of Directors on 15th October 2023 and

signed on behalf of the Board of directors by:

Ademola Abidogun

Managing Director/Chief Executive Officer

FRC/2016/CIIN/00000014549

Pius Edobor

Executive Director, Finance

FRC/2013/ICAN/00000004638

	Statement of Comprehensive income
	As at 30th September, 2023
			Notes 30-Sep-23	30-Sep-22
				N'000	N'000
	Insurance Contract Revenue	2	1,450,109	1,037,747
	Insurance Service Expenses	3	(717,035)	(465,753)
	Net Expenses From Reinsurance Contracts Held	6	(258,093)	(154,605)
	Insurance Service Result			474,980	417,389
	Interest income calculated using the effective interest method	7	129,753	90,410
	Net Investment Income			129,753	90,410
	Finance expenses from insurance contracts issued	4	(3,798)	(2,274)
	Finance income from reinsurance contracts held	5	1,588	1,292
	Net Insurance and Investment Income			602,523	506,816
	Other Operating Expenses	10	(653,270)	(626,302)
	Other Income	9	102,997	30,782
	Profit Before Income Tax			52,250	(88,704)
	Income Tax Expense	12	(8,935)	(5,234)
	Profit For the Year			43,315	(93,938)
	Other Comprhensive Income
	Net fair value gains/(losses) on financial assets at FVTOCI	15	7,242	(288)
	Other Comprhensive Income for the Year			7,242	(288)
	Total Comprhensive Income
			50,556	(94,226)
	Earnings/(Loss) per share - Basic and Diluted (kobo)			0.01	(0.02)

Statement of Changes in Equity As at 30th September, 2023

As at 1st January 2022 Loss for the year

Fair Value Gain - FVTOCI Transfer to Contingency Adjustment to Retained Earnings As at 30th September 2022

Issued share	Retained	Share	Contingency	Reserve for	Asset
capital	earnings	premium	reserve	FVTOCI	revaluation	Total
3,070,000	(2,394,265)	337,545	592,015	138,026	65,688	1,809,009
-	(93,937)	-	-	-	-	(93,937)
-		-	-	(288)	-	(288)
-	(31,402)	-	31,402	-	-	-
-	251,325	-	-	-	-	251,325
3,070,000	(2,268,279)	337,545	623,417	137,738	65,688	1,966,109

As at 1st January 2023 Additional Shares Raised Profit for the Year

Fair Value Gain - FVTOCI Transfer to Contingency Adjustment to Retained Earnings As at 30th September 2023

Issued share	Retained	Share	Contingency	Reserve for	Asset
capital	earnings	premium	reserve	FVTOCI	revaluation	Total
3,070,000	(2,337,704)	337,545	632,792	209,820	65,688	1,978,141
901,400						901,400
-	43,315	-	-	-	-	43,315
-		-	-	7,242	-	7,242
-	(53,611)	-	53,611	-	-	-
-	(18,893)	-	-	-	-	(18,893)
3,971,400	(2,366,893)	337,545	686,403	217,061	65,688	2,911,204

STATEMENT OF CASH FLOWS

for the period ended 30th September, 2023

In thousands of Naira		JAN TO SEP 2023		JAN TO SEP 2022
Operating activities:	Note
Premium received	42.1	1,787,036	1,046,734
Commission received	42.2	94,711	79,122
Commission paid		(260,319)	(172,711)
Maintenance cost		(173,490)
Reinsurance premium paid	42.3	(544,319)	(288,673)
Gross claim paid	42.4	(159,368)	(139,010)
Reinsurance recoveries	42.50	70,214	52,489
Payments to employees	42.6	(296,751)	(299,860)
Other operating cash payments	42.7	(179,340)	(375,991)
Other income received	42.9	55,511	-
Tax paid	24.1	(7,473)		(1,291)
Net cash flow from operating activities		386,411	(99,190)
Investing activities:
Investment income received	45.7	129,753	90,410
Purchase of intangible assets		(36,063)	(14,183)
Purchase of property and equipment	26	(45,282)	3,800
Proceed from sale of property and equipment		-	(709,551)
Purchase/sales of financial assets		937,710	-
Proceed/(purchase) of investment properties		-		-
Net cash flows from investing activities		986,118	(629,523)
Financing activities:
Deposit for shares	33	(901,400)	750,000
Interest repayment on finance lease		-	-
principal repayment on finance lease		-	-
New alloted shaares		901,400
Net cash flows from financing activities		-	750,000
Net increase in cash and cash equivalents		1,372,529	21,287
Effect of exchange rate changes on cash and
cash equivalent		-
Cash and cash equivalents at 1 January		386,998	383,566
Cash inflow				-
Cash and cash equivalents at 30th Sep. 2023		1,759,527	404,854

Notes to the Financial Statement

As at 30th September, 2023

1 Significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below.

1.1 Accounting Policy for Insurance Contract

1.1.1 Definition and Classification

Insurance contracts are contracts under which the company accepts significant insurance risk from a policyholder by

As at agreeing to compensate the policyholder if a specified uncertain future event adversly affects the policyholder. In making this assessment, all substantive rights and obligations, including those arising from law or regulation, are considered on a contract-by-contract basis. The company uses judgement to assess whether a contract transfers insurance risk (i.e. if there is a scenario with commercial substance in the Group has the possibility of a loss on a present value basis) and whether the accepted insurance risk is significant.

Contracts that have a legal form of insurance but do not transfer significant insurance risk and expose the Group to financial risk are classified as investment contracts and follow financial instruments accounting under IFRS 9.

1.1.2 Level of Aggregation

1. IFRS 17 requires an entity to identify portfolios of insurance contracts and each portfolio should be classified based on similar risks and managed together. Contracts within a product line would be expected to have similar risks and hence would be expected to be in the same portfolio if they are managed together. Contracts in different product lines (for example single premium fixed annuities compared with regular term life assurance) would not be expected to have similar risks and hence would be expected to be in different portfolios.

   The company creates its portfolio based on product type, then further aggregate it according to the minimum level of aggregation required by IFRS 17, namely:

2. a group of contracts that are onerous at initial recognition, if any;
3. a group of contracts that at initial recognition have no significant possibility of becoming onerous subsequently, if any; and
4. a group of the remaining contracts in the portfolio, if any.

The company also only include contracts that are within one year of each other.

1.1.3 Recognition

The company recognises insurance contract it issues according to IFRS 17 which is at earliest of the following:

1. the beginning of the coverage period of the group of contracts;
2. the date when the first payment from a policyholder in the group becomes due; and
3. for a group of onerous contracts, when the group becomes onerous.

If there is no contractual due date, the first payment from the policyholder is deemed to be due when it is received.

1.1.4 Measurement

The company mainly uses two methods to measure its insurance contract, namely the general measurement model (Building block approach), and premium allocation approach.

a. General Measurement Model (Building Block Approach)

The general measurement model requires insurance liabilities to be determined using a current estimate (probability weighted mean) of future cash flows; adjusted to reflect the time value of money and other financial risk; and a contractual service margin (CSM) representing the unearned profit from the groups of contracts. This model is the default measurement of group of insurance contracts byIFRS 17. The company uses this method for group of insurance contracts that are more than one year primarily and also used for contract within one year where it is reasonably expected the premium allocation approach would produce a significantly different measurements.

• Estimate of future cash flows

These are all the cash inflows and outflows relating to the group of contracts during their lifespan. The company follows the laid down guidelines of estimating cashflows. The standard guideline explains that the estimated future cash flows:

1. incorporate, in an unbiased way, all reasonable and supportable information available without undue cost or effort about the amount, timing and uncertainty of those future cash flows

1. reflect the perspective of the entity, provided that the estimates of any relevant market variables are consistent with observable market prices for those variables.

1. be current-the estimates shall reflect conditions existing at the measurement date, including assumptions at that date about the future .
   IV. be explicit-the entity shall estimate the adjustment for non financial risk separately from the other estimates.
   V.be within the boundary of the insurance contracts.

The cashflow was estimated using the past insurance, reinsurance, claims and recovery data.

• Discount rates

IFRS requires an entity to adjust its estimated future cashflows for time value of money and the financial risk related to those cashflows, to the extent that the financial risks are not included in the estimates of cashflows. The company adopted the bottom-up approach in estimating its discounting rates as one of the two methods introduced by IFRS 17.

• Risk adjustment

IFRS 17 requires the company to adjust the estimated present value of the future cash flows to reflect the compensation that the entity requires for bearing the uncertainty about the amount and timing of the cash flows that arises from non-financial risk. The risk is remeasured every year to reflect the prevailing computation factors. The company adopted the cost of capital approach in estimating its risk adjustment as one of the three methods introduced by IFRS 17.

• Contractual service margin (CSM)

CSM represent the unearned profit for a group insurance contracts. CSM cannot be negative for insurance contract issued. As a result, any contracts that are expected at issuance to be unprofitable result in the reporting of a loss at initial recognition. CSM is adjusted for changes in future cash flows and the risk adjustment that relate to future services.

• Onerous contracts

An insurance contract is onerous at the date of initial recognition if the fulfilment cash flows allocated to the contract, any previously recognised acquisition cash flows and any cash flows arising from the contract at the date of initial recognition in total are a net outflow.

• Revenue Recognition

An entity shall present in profit or loss insurance revenue arising from the groups of insurance contracts issued. Insurance revenue shall depict the provision of coverage and other services arising from the group of insurance contracts at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those services.

IFRS 17 requires the amount of insurance revenue recognised in a period to depict the transfer of promised services at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those services. The total consideration for a group of contracts covers the following amounts:

a. amounts related to the provision of services, comprising:

1. insurance service expenses, excluding any amounts allocated to the loss component of the liability for remaining coverage;

1. the risk adjustment for non-financial risk, excluding any amounts allocated to the loss component of the liability for remaining coverage; and
2. the contractual service margin.

b. amounts related to insurance acquisition cash flows.

b. Premium allocation approach (PAA)

The PAA is an optional measurement model and a simplification of the general measurement model for the calculation of the liability for unexpected coverage, which represent the liability for unexpected coverage in an insurance contract. The Company uses this model for group of insurance contracts within one year. The Company also ensures that the two conditions prescribed by IFRS 17 are met before being applied.

The conditions states that the PPA method can only be applied when:

1. the entity reasonably expects that such simplification would produce a measurement of the liability for remaining coverage for the group that would not differ materially from the general measurement model;

1. the coverage period of each contract in the group (including coverage arising from all premiums within the contract boundary determined at that of recognition) is one year or less.

• Revenue Recognition

An entity shall determine insurance revenue related to insurance acquisition cash flows by allocating the portion of the premiums that relate to recovering those cash flows to each reporting period in a systematic way on the basis of the passage of time. An entity shall recognise the same amount as insurance service expenses.

When an entity applies the premium allocation approach in paragraphs 55-58 of the standard, insurance revenue for the period is the amount of expected premium receipts (excluding any investment component and adjusted to reflect the time value of money and the effect of financial risk, if applicable, applying paragraph 56) allocated to the period. The entity shall allocate the expected premium receipts to each period of coverage:

1. on the basis of the passage of time; but
2. if the expected pattern of release of risk during the coverage period differs significantly from the passage of time, then on the basis of the expected timing of incurred insurance service expenses.

• Insurance Acquisition Cost

The standard stated that in applying the premium allocation approach, an entity:

1. may choose to recognise any insurance acquisition cash flows as expenses when it incurs those costs, provided that the coverage period of each contract in the group at initial recognition is no more than one year.
2. effectively defer acquisition costs that are directly attributable to portfolios of contracts.

The company has adopted to defer acquisition costs that are directly attributable to portfolios of contracts.

1.1.5 Presentation

• Insurance Contract (Finance Income & Expense)

The standard allows an entity to choose an accounting policy choice between:

1. including insurance finance income or expenses for the period in profit or loss; or
2. disaggregating insurance finance income or expenses for the period to include in profit or loss an amount determined by a systematic allocation of the expected total insurance finance income or expenses over the duration of the group of contracts.

The company has therefore adopted an accounting policy choice to include insurance finance income or expenses for the period in profit or loss.

• Reinsurance Income or Expense

The standard stipulates that an entity may present the income or expenses from a group of reinsurance contracts held, other than insurance finance income or expenses, as a single amount; or the entity may present separately the amounts recovered from the reinsurer and an allocation of the premiums paid that together give a net amount equal to that single amount.

amount.

If an entity presents separately the amounts recovered from the reinsurer and an allocation of the premiums paid, it shall:

1. treat reinsurance cash flows that are contingent on claims on the underlying contracts as partof the claims that are expected to be reimbursed under the reinsurance contract held;
2. treat amounts from the reinsurer that it expects to receive that are not contingent on claims of the underlying contracts (for example, some types of ceding commissions) as a reduction in the premiums to be paid to the reinsurer.
3. treat amounts recognised relating to recovery of losses as amounts recovered from the reinsurer; and
4. not present the allocation of premiums paid as a reduction in revenue.

The entity has adopted to present the income or expense from a group of reinsurance contract held as a single amount.

• Transiti

The standard specifies 3 transition methods which are:

I. The retrospective approach.

II. The modified retrospective approach.

III. The fair value approach.

Unless the implementation of IFRS 17 is impracticable, the company shall apply IFRS 17 retrosectively.

The company has therefore adopted the retrospective approach in the implementation of IFRS 17 guidelines.

1.1.6 Insurance and Financial risks management

The Company issues contracts that transfer insurance risk or financial risk or both.

a. Insurance Risks management

The Company accepts insurance risk through its insurance contracts and certain investments contracts where it assumes the risk of loss from persons or organisations to the underlying loss. The Company is exposed to the uncertainty surrounding the timing.

The Company manages its risk via its underwriting and reinsurance strategy within an overall risk management framework. Pricing is based on assumptions which have regard to trends and past experience. Exposures are managed by having documented underwriting limits and criteria.Reinsurance is purchased to mitigate the effect of potential loss to the Company from individual large or catastrophic events and also to provide access to specialist risks and to assist in managing capital. Reinsurance policies are written with approved reinsurers on either a proportional or excess of loss treaty basis.

The Company writes general insurance businesses. The most siginificant risks arise from persistency, longevity, morbity, expense variations and investment returns. Concentration of risk may arise from geographic regions, epidemics, accumulation of risks and market risk.

b. Financial Risk Management

The company monitors and manages the financial risks relating to the operations of the company through internal risk reports magnitude of risks. These risks include:

• Market risk
• Credit risk
• Liquidity risk

I. Market Risk

Market risk is the risk of adverse financial impact as a consequence of market movements such as currency exchange rates,interest rates and other price changes.

Market risks arises due to flunctuations in both value of assets and liabilities. The company has established policies and procedures in order to manage market risks.