vision: to be the insurance provider of first...

Tausi Assurance Company Limited - A Symbol of Trust, Security & Progress A

TAUSI ASSURANCE COMPANY LIMITEDANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31ST DECEMBER 2012

A Symbol of Trust, Security & Progress

Vision: To be the insurance provider of first choice

Mission: To provide generalinsurance services in Kenya

Core Values:• Integrity• Innovation• Accountability• Professionalism• Customerfocus• Teamspirit• Fairness

B Annual Report & Financial Statement for the year ended 31St December 2012

TAUSI ASSURANCE COMPANY LIMITED

Head Office:Tausi Court, Tausi Road, Off Muthithi Road, WestlandsP. O. Box 28889 City Sq. Nairobi 00200, KenyaTelephone: 3746602/03/17 Cell: 0735 145020, 0729 145888, Telefax: 3746618Email:[email protected]:www.tausiassurance.com

Tausi Assurance Company Limited - A Symbol of Trust, Security & Progress 1

Table of Contents

Company information ................................................................. 2

Board of Directors ...................................................................... 3

Executive Management ............................................................... 4

Chairman’s Report ....................................................................... 5

Statement of Corporate Governance ...................................... 7

Report of the directors ............................................................... 9

Statement of directors’ responsibilities ................................... 10

Report of the independent auditor ........................................... 11

Financial statements:

Profit and loss account .......................................................... 12

Statement of comprehensive income ................................. 13

Balance sheet ........................................................................... 14

Statement of changes in equity ............................................ 15

Statement of cash flows ........................................................ 16

Notes ........................................................................................ 17-43

Supplementary Information:

Appendix i - General insurance business revenue account ........ 45

2 Annual Report & Financial Statement for the year ended 31St December 2012

Company Information

Board of directors Mr.RasikKantaria - Chairman Mr. Shantilal Shah Mr.AmarKantaria Mr. Dilesh Bid Mr.DiamondJamal Mr.DineshKapila(appointedon7thNovember2012)

Executive management Mrs. Rita Thatthi - Principal Officer / CEO Ms.EvaWambui - ClaimsManager Ms. Winfred Muoki - Legal Manager Mr.CrispusGisemba - UnderwritingManager Mrs. Preeti Shah - Risk Manager Mr.ThomasNjoroge - ICTManager Mr.LawiKariuki - ClaimsManager

Head office and registered office Plot L.R. No. 209/2259/1 Tausi Court, Tausi Road Off Muthithi Road, Westlands P.O. Box 28889, 00200 Nairobi, Kenya. Tel: 3746602/3/17 Mobile: 0729145888/0735145020 Fax: 3746618

Independent auditor RSM Ashvir Certified Public Accountants 1st Floor, Reliance Centre, Woodvale Grove, Westlands P.O. Box 349, 00606 Nairobi, Kenya.

Principal banker Prime Bank Ltd PrimeBankBuilding,RiversideDrive,Westlands P.O. Box 43825-00100 Nairobi, Kenya.


Board of Directors

MR RASIK KANTARIA –CHAIRMAN MrRasikKantariajoinedtheTausiBoardin1993andwaselectedChairmaninMarch2006.ABachelorofScience(Economics)graduate,MrKantaria isalso theChairmanofPrimeBankLimited,LeisureLodgeBeachandGolfResortandFirstMerchantBank,Malawi.Heisa Director of Deposit Protection Fund Board of Kenya

MR DILESH S. BIDMrDileshS.Bid joinedtheTausiBoard inSeptember2009.Hehas30years’experiencein the insurance industry and has served on the executive Board of the Association of Insurance Brokers of Kenya for over 10 years. Mr Bid was appointed in 2008 by the Insurance RegulatoryAuthority to serve as amember of the IndustryRiskEvaluationCommittee;which position he currently holds.

MR. SHANTILAL SHAHMrShantilalShahjoinedtheTausiBoardinMay2005andchairstheAuditBoardCommitteeoftheCompany.ABachelorofCommerce(Honours)graduate,MrShantilalShahisanFCA(CharteredAccountant,UK), an FCPA (CertifiedPublicAccountant,Kenya) and aCPS(CertifiedPublicSecretary,Kenya).HeisalsoaDirectorofPrimeBankLimited

MR. AMAR KANTARIAMrAmarKantariajoinedtheTausiBoardinJune2007andchairstheAsset/LiabilityBoardcommitteeoftheCompany.ABachelorofArts(Honours)graduate,MrAmarKantariaisalsoanMBAinInternationalManagement.CurrentlytheExecutiveDirectorofPrimeBankLimited,MrAmarKantariahas15yearsofbankingexperience.

MR. DIAMOND JAMAL MrDiamond Jamal joined theTausiboard in July2010.He is a fellowof theCharteredCertifiedAccountants,UK(FCCA)andanAssociateoftheAustralianSocietyofCertifiedPractisingAccountants(ASA,Australia).HeisamemberofCertifiedPublicAccountantsofKenya(CPA(K)andCertifiedPublicSecretariesofKenya(CPS(K).HehasworkedasaGroupAccountantforMillingIndustriesLimited,alargegroupofcompaniesintheanimalfeedsIndustryinAustraliaandisaformerExecutivePartnerofPKFKenyaapositionheheldfromAugust1988toDecember2009whenheretired.MrDiamondJamalalsositsontheBoardofGuardianBankLimited.

MR. DINESH KAPILAMrDineshKapilajoinedtheBoardinNovember2012,isaBarristeratLawfromLincoln’sInn, England, advocate of the High Court of Kenya, partner with D.V Kapila & Co., a legal practitionerincorporate,commercialandconveyancingmatters.HasservedonAG’sTaskForceoncompanies,beenamemberofcommitteesofNairobiSecuritiesExchange,advisedonprivatizationasamemberofParastatalReformProgramCommitteeofGOK,andisontheboardofKenyaAirwaysandnumerousothercompanies.


Executive Management

MRS. RITA THATTHICEO and Principal OfficerBachelorofCommerceHonours(AccountingOption)UniversityofNairobiAssociateoftheCharteredInsuranceInstitute(ACII)(U.K.)Started Insurance Career in 1983

MS. EVA WAMBUIClaims ManagerBachelorofArts-PunjabUniversity(India)CertificateofCharteredInsuranceInstitute(Cert.CII)(UK)HigherDiplomainHumanresourcesStarted Insurance Career in 1993

MR. LAWI KARIUKIClaims ManagerBachelorofCommerce(InsuranceOption)UniversityofNairobiAssociateoftheInsuranceInstituteofKenya(AIIK)Started Insurance Career in 1999

MR. THOMAS NJOROGEICT ManagerBachelorofInformationTechnology-KenyattaUniversityOracleCertifiedProfessional(OCP),MicrosoftCertifiedSystemsEngineer(MCSE)CiscoCertifiedNetworkAssociate(CCNA)

MRS. PREETI HIMANSHU SHAHRisk ManagerFellowoftheCharteredInsuranceInstitute(FCII)(UK)AssociateoftheCharteredInsuranceInstitute(ACII)(UK)Started Insurance career in 1984

MS. WINFRED MUOKILegal & Compliance ManagerBachelor of Law- India Advocate of the High Court of KenyaCertifiedPublicSecretary(Kenya)Started Insurance Career in 2004

MR. CRISPUS GISEMBAUnderwriting Manager BachelorofArts-AgraUniversity(India)MastersofArts-BundelkhandUniversity(India)LicentiateInsurance(AllIndiaInsuranceInstitute)Started Insurance Career in 1996


It is my pleasure, on behalf of the Board of Directors, topresenttheauditedAnnualReportandFinancialStatementsofTausiAssuranceCompanyLimitedfortheyearended31stDecember2012.

Theinsuranceindustryisintransitionfromcompliancebasedtoriskbasedsupervision.Riskbasedsupervisionlaysemphasison identifying, understanding and anticipating possible risks a company will face in the execution of its operations. Tothis end, the support structure required to implement riskbased supervision has been created and strengthened at Tausi wherever necessary. TheCompanyiswellonitswaytoachievingits5yearstrategicplan,whichrunsfrom2012to2016,andembracesmarketing,underwriting, product development, human resources, ICT.TheCompanycontinuestoserveitscustomerseffectivelyand

efficiently,maximizereturnstoitsshareholders,implementgoodgovernanceandadoptaprofessionalapproach to doing business.

The Company’s performance

ThegrosspremiumincomefortheCompanyintheyear2012stoodatKsh.727mcomparedtoKsh.614mrecorded in the year 2011. This represents a growth rate of 18%.

ThegrossprofitstoodatKsh.197mcomparedtoKsh.89min2011.ThisisthehighestprofitgeneratedinthehistoryoftheCompany.TheinvestmentincomestoodatKsh.151min2012againstKsh.92min2011.TheCompanymadeanunderwritingprofitinitscorebusinessofKsh.54mcomparedtoKsh.40min2011.Theclaimsratiostoodat55%in2012ascomparedto56%in2011.TheseimpressiveresultsareanindicatorofthequalityofthebusinessunderwrittenbytheCompanyandatteststothenicheclientportfolio it has developed.

The shareholders fund increased fromKsh.507m in 2011 to Ksh.609.6m in 2012; representing a 20%increase.ThepaidupcapitaloftheCompanywasincreasedfromKsh.330mtoKsh.396.5mthroughtheissueofbonussharesandaninterimdividendof11/-persharedeclaredontheincreasednumberofshares.

Goingforward,Iamconfidentthatwiththefoundationwehavelaidovertheyearsthroughinvestmentintechnology,infrastructure,people,capitalizationoftheCompanyandcontinuousriskmanagement,wearepoisedtotaketheCompanytogreaterheightsandinkeepingwithourgoalof“growth with profits“.

Corporate Social Responsibility

TheBoardisconsciousoftheCompany’ssocialresponsibilityandhasensuredthatthecommunityatlargeandtheenvironmenthasbenefitedfromfundsthathavebeenchanneledtovariousworthycauses.EmployeeshavealsoparticipatedinsomeoftheCSRactivities.ListedbelowarejustafewoftheprojectsthattheCompanyhassupported:

• Lionsgiftofsightfirstprojectbysponsoringcornealgraftsfortwoeyesofaneedyperson.

• Amara Charitable Trust donation towards the construction of five classrooms at Kwa KalusyaPrimarySchool–Lukenya.

Chairman’s Statement


• Contributing towards the medicalcostsofaneedypatientwithatumor.

• Food for life, Water for life Charity that has an ongoing program for feedingthe needy and is also providing water tocommunitiesbytherehabilitationofboreholesinsemiaridareas.

• Environmental Conservation bysponsoring and planting 2000 trees in RagiaForestnearSusumwadamwithmyMillenniumtreecampaign.

• TheJaipurFootTrustbythedonationof50Jaipurfeet.

• The Rhino Ark Charitable Trust.

• Assisting various needy students with their school fees.

During 2012, the board appointed Mr. Dinesh Kapila as a director and I wish to extend him a warm welcome. I am surethe Company will benefit from his vastexperience and knowledge. I take this opportunity to thank the board of directors for their support during the year.

Iextendmyappreciationtothemanagementteamfortheirhardworkandfortheenthusiasmtheyhavedisplayed in execution of duty.

TheCompanyhasenjoyedtremendoussupportfromitsclients,brokersandagentsandIwishtothankthemforchoosingtoinsurewithTausi.Noneofourachievementswouldhavebeenpossiblewithouttheir continued support.

Finally, I thank the Insurance Regulatory Authority and business associates for their co-operation throughout the year.

RASIK KANTARIA

Staff of Tausi Assurance Company Ltd at a tree planting exercise


Statement of Corporate Governance

TausiAssuranceCompanyLimitediscommittedtotheprinciplesofCorporateGovernance.ThecorevaluesofTausiare integrity,accountability,customer focus,professionalism, fairness, teamspiritandinnovation.

Althoughday todayoperationsof theCompany aredelegated to the chief executiveofficer and themanagementteambytheboard,theBoardofdirectorsisultimatelyaccountableandresponsiblefortheperformanceandconductoftheCompany.

BOARD OF DIRECTORSThe Board consists of 6 non executive directors; who are known for their experience, skills andcompetenciesinthefieldsofbanking,finance,accounting,business,insuranceandlaw.

BOARD MEETINGSTheBoardofDirectorsmeetsatleastquarterlyandthemeetingsarechairedbyanon-executivechairman.TheBoardfulfilsitsfiduciarydutytotheshareholdersbymaintainingcontrolsoverthestrategic,financial,operationalandcomplianceissuesofthecompany.

BOARD COMMITTEESTheBoardhasconstitutedvariousboardcommitteesaspertheboardcharter.ThesecommitteesassisttheBoardinthedischargeofitsresponsibilitiesincludingmonitoringthekeyactivitiesintheCompany.

BOARD ASSET LIABILITY COMMITTEE Theasset liabilitycommitteeconsistsof twonon-executivedirectors;Mr.AmarKantaria(Chairman)andMr.DiamondJamal.ItisresponsibleforinvestmentsofassetsaspertheinvestmentpolicyandaspertherequirementsoftheInsuranceAct.ThiscommitteeisalsoresponsibleforthemanagementofassetsandliabilitiestoachievetheCompany’sfinancialobjectivesandforformulatingtheframeworkthatensurestheCompanyadherestothesolvencyrequirements,meetsitscashflowneedsandcapitalrequirements.ItisresponsibleforsettingtheCompany’sriskorrewardobjectives.

BOARD HUMAN RESOURCE AND ETHICS COMMITTEEThiscommitteeconsistsof twonon-executivedirectors;Mr.DiamondJamal (Chairman),Mr.DileshBidandthechiefexecutiveofficer.Itisresponsiblefortherecruitmentofpersonsincontrolfunctionsandseniormanagementpositions. Its responsibilities include implementationof thehumanresourcepolicyandproceduremanual.Thiscommittee is also responsible foraddressing successionplanningandassessingyearly evaluation recommendations. It addressesmatters reportedonethical concerns,complianceconcernsorpotentialbreachesorviolationsofthesame.

BOARD NOMINATIONS, REMUNERATION AND CORPORATE GOVERNANCE COMMITTEEThis committee consists of three non-executive directors; Mr. Diamond Jamal (Chairman), Mr.Shantilal K. Shah, Mr. Dilesh Bid and the chief executive officer, Mrs. Rita Thatthi. It is responsible fordetermining,withagreedtermsofreference, theCompanypolicyonnominationproceduresandspecificremunerationpackagesandanycompensationfortheprincipalofficerandexecutivedirectors.Thiscommitteeisresponsibleforthescrutinyandevaluationofdeclarationsmadebydirectorsbeforetheirappointmentorreappointmentorelectionofdirectorsbyshareholders.Thiscommitteeensuressuccession planning and board continuity. It is also responsible for addressing corporate governance mattersintheCompany.

BOARD RISK MANAGEMENT COMMITTEEThiscommitteeconsistsoftwonon-executivedirectors;Mr.DileshBid(Chairman),Mr.AmarKantaria.Thecommitteeisresponsibleforensuringeffectiveoperationoftheriskmanagementsystemthrough


specialized analysis and quality reviews. It reports on details of risk exposures and actions being taken to managetheexposures.Itadvisesonriskmanagementdecisionsinrelationtostrategicandoperationalmatterslikecorporatestrategy.Theriskmanagerreportstothiscommittee.Thecommitteealsolooksintopolicyholderprotectionmattersincludingperiodicreviewofthestatusofpolicyholders’complaints.Thecompliancemanageralsoreportstothiscommitteeonkeycomplianceissues.

BOARD AUDIT COMMITTEEThis committee consists of two non-executive directors;Mr. Shantilal K. Shah (Chairman) andMr.DileshBid.Thecommitteeisresponsibleforoverseeingthefinancialstatements,financialreportinganddisclosureprocesses.ThecommitteesetsandmonitorstheinternalcontrolfunctionsoftheCompany.Itensurestheefficientfunctioningoftheinternalauditdepartmentandthereviewofitsreports.TheInternalAuditorreportstothiscommittee.Thecommitteemonitorstheprogressmadeinrectificationofirregularitiesandchangesinprocesseswheredeficienciesarereported.Thecommitteealsoensurestheindependence of the external auditors and review of their reports.

EXECUTIVE COMMITTEEThiscommitteeconsistsof thechief executiveofficerand the topmanagementof theCompany.ThecommitteeisresponsiblefortheexecutionofBoardpoliciesandimplementationofthestrategicplanand Board directions. It is responsible for ensuring implementation of internal control systems, theriskmanagementpolicyandaddressingmattersarising in thedailyoperationsof theCompany.Anycommunication from the Board and the Insurance Regulatory Authority is addressed through thiscommittee.

INTERNAL CONTROLSTheBoardhasthecollectiveresponsibilityoftheCompany’sinternalcontrolsandforreviewingtheireffectiveness.

.....Statement of Corporate Governance cont’d


Report of the Directors

Thedirectorssubmittheirreporttogetherwiththeauditedfinancialstatementsfortheyearended31stDecember2012,whichdisclosethestateofaffairsofthecompany.

Incorporation

The company is incorporated in Kenya under the Kenyan Companies Act as a private companylimitedbyshares,andisdomiciledinKenya.Theaddressoftheregisteredofficeissetoutonpage1.

Principal activities

ThecompanyislicencedunderSection31oftheInsuranceAct(Cap.487)totransactinallclassesofgeneral insurance business with the exception of aviation.

Results and dividends

ThenetprofitfortheyearofShs.149,797,932(2011:Shs.54,039,979)hasbeenaddedtoretainedearnings.Duringtheyear,aninterimdividendofShs.43,615,946wasapprovedbydirectors.

Directorate

The directors who held office during the year and to the date of this report are set out on page 1.

Auditor

Thecompany’sauditor,RSMAshvir,hasexpresseditswillingnesstocontinueinofficeinaccordancewithSection159(2)oftheKenyanCompaniesAct,subjecttotheapprovalbytheCommissionerofInsuranceinaccordancewithSection56(4)oftheInsuranceAct.

By order of the board

…………………………….

Director

Date: 23rd April, 2013


Statement of Directors’ responsibilities

TheKenyanCompaniesActrequiresthedirectorstopreparefinancialstatementsforeachfinancialyearthatgiveatrueandfairviewofthestateofaffairsofthecompanyasattheendofthefinancialyearandofitsprofitandlossforthatyear.Italsorequiresthedirectorstoensurethatthecompanymaintains proper accounting records which disclose, with reasonable accuracy, thefinancialpositionofthecompany.Thedirectorsarealsoresponsibleforsafeguardingtheassetsofthecompany.

The directors accept responsibility for the preparation and fair presentation of these financial statements,whicharefreefrommaterialmisstatementwhetherduetofraudorerror.Theyalsoacceptresponsibility for:

i)designing,implementingandmaintaininginternalcontrolrelevanttothepreparationandfairpresentationofthefinancialstatements;

ii) selectingandapplyingappropriateaccountingpolicies;and

iii)makingaccountingestimatesandjudgmentsthatarereasonableinthecircumstances.

Thedirectorsareoftheopinionthatthefinancialstatementsgiveatrueandfairviewofthestateofthefinancialaffairsofthecompanyasat31stDecember2012andofitsfinancialperformanceandcashflowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandardsandtherequirementsoftheKenyanCompaniesAct.

Nothinghascometotheattentionofthedirectorstoindicatethatthecompanywillnotremainagoingconcernforatleastthenexttwelvemonthsfromthedateofthisstatement.

Approved by the board of directors on 23rd April, 2013 and signed on its behalf by:

……………………………. ……………………………Director Director


Report of the independent Auditor to the Members of Tausi Assurance Company Limited

Report on the financial statements

WehaveauditedtheaccompanyingfinancialstatementsofTausiAssuranceCompanyLimited,setoutonpages5to37,whichcomprisethebalancesheetat31stDecember2012,andtheprofitandlossaccount,statementsofcomprehensiveincome,changesinequityandcashflowsfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation.

Directors’ responsibility for the financial statements

ThedirectorsareresponsibleforthepreparationoffinancialstatementsthatgiveatrueandfairviewinaccordancewithInternationalFinancialReportingStandardsandtherequirementsoftheKenyanCompaniesAct,andforsuchinternalcontrolasthedirectorsdetermineisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Auditor’s responsibility

Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithInternationalStandardsonAuditing.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudit toobtainreasonableassurancewhether thefinancialstatementsare free frommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgement,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolsrelevanttothecompany’spreparationandfairpresentationofthefinancialstatementsinordertodesignauditproceduresthatareappropriate inthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessofthecompany’s internalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebythedirectors,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

Inouropiniontheaccompanyingfinancialstatementsgiveatrueandfairviewofthestateoffinancialaffairsofthecompanyasat31stDecember2012andofitsfinancialperformanceandcashflowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandardsandtheKenyanCompaniesAct.

Report on other legal requirements

AsrequiredbytheKenyanCompaniesActwereporttoyou,basedonouraudit,that:

i. wehaveobtainedalltheinformationandexplanationswhichtothebestofourknowledgeandbeliefwerenecessaryforthepurposesofouraudit;

ii. inouropinionproperbooksofaccounthavebeenkeptbythecompany,sofarasappearsfromourexaminationofthosebooks;and

iii) thecompany’sbalancesheetandprofitandlossaccountareinagreementwiththebooksofaccount.

Certified Public AccountantsNairobi

………………………………………. 2013045/2013

23rd April


Financial Statement

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST DECEMBER 2012

2012 2011 Note Shs Shs

Grossearnedpremiums 4 698,740,872 594,216,180Insurancepremiumscededtoreinsurers 4 (257,262,111) (206,760,172)

Net insurance premium revenue 4 441,478,761 387,456,008

Investmentincome 5 151,367,346 91,865,369Otherincome 6 104,888 -Commissionsearned 84,618,294 79,801,356Changes in fair value of financial assets at fair value through profit or loss 7 5,980,184 (34,641,062)

Total income 683,549,473 524,481,671

Claimspayable 8 (374,556,065) (312,546,141)Insuranceclaimsrecoverablefromreinsurers 8 132,463,829 94,883,538

Net insurance claims 8 (242,092,236) (217,662,603)

Administrativeandotherexpenses (127,961,285) (114,151,066)Commissionspayable (116,476,965) (103,601,712)

Total expenses (244,438,250) (217,752,778)

Profit before tax 9 197,018,987 89,066,290

Tax(expense) 10 (47,221,055) (35,026,311)

Profitfortheyearattributabletotheownersofthecompany 149,797,932 54,039,979

Dividends:Interim 11 43,615,946 -Final - proposed 11 ___++++++- 36,346,618 ========== =========


STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31ST DECEMBER 2012

2012 2011 Note Shs Shs

Profit for the year 149,797,932 54,039,979

Other comprehensive income:

Surplusonrevaluationofproperty,plantandequipment 14 - 9,000,000Changesinfairvalueofavailableforsalefinancialassets 17 14,058,340 (9,087,021)Deferredincometaxrelatingtocomponentsofother 19 - 26,106comprehensiveincome ___________ ___________

Other comprehensive income for the year, net of tax 14,058,340 (60,915) ___________ ___________

Total comprehensive income for the year attributable to the owners of the company 163,856,272 53,979,064 ========== ==========

Financial Statement


BALANCE SHEET AT 31ST DECEMBER 2012 2012 2011EQUITY Note Shs Shs Share capital 12 396,508,600 330,423,800Revaluation surplus 13 43,437,665 44,403,665Fairvaluereserve 7,697,425 (6,360,915)Retained earnings 144,080,519 102,603,333Proposed dividends 43,615,946 36,346,618

Total equity 635,340,155 507,416,501

REPRESENTED BY: AssetsProperty,plantandequipment 14 138,845,191 137,874,414Intangible assets 15 9,772,914 11,557,402Held-to-maturityfinancialassets 16 541,905,468 423,143,360Available for sale financial assets 17 41,650,119 27,591,779Financial assets at fair value through profit or loss 18 80,171,734 61,463,425Loans receivable 20 125,256,402 63,151,294Current tax recoverable - 3,303,198Receivablesarisingoutofreinsurancearrangements 14,276,029 10,003,597Receivablesarisingoutofdirectinsurancearrangements 48,341,403 30,700,891Reinsurers’shareofinsuranceliabilities 21 370,714,015 316,501,489Other receivables 22 71,986,683 53,727,544Deposits with financial institutions 23 365,774,023 381,346,329Cash and bank balances 23 13,063,818 14,633,432

Total assets 1,821,757,799 1,534,998,154

LiabilitiesInsurance contract liabilities 24 721,106,541 672,686,695Unearnedpremium 26 320,159,927 257,698,628Payablesarisingfromreinsurancearrangements 83,358,833 27,178,354Payablesarisingoutofdirectinsurancearrangements - 11,463,926Other payables 27 35,610,386 40,437,163Current tax payable 14,080,846 - Deferredincometax 19 12,101,111 18,116,887

Total liabilities 1,186,417,644 1,027,581,653

635,340,155 507,416,501 =========== ===========

Thefinancialstatementsonpages5to37wereapprovedforissuebytheboardofdirectoron................................and were signed on its behalf by:

..........................Amar Kantaria ..............Diamond Jamal Director Director

.. ..................Rita Thatthi Principal Officer

Financial Statement

23rd April 2013


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____

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____

____

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Totalcom

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6,300,000

54,039,979

-53,979,064

___

____

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(33,042,380)

____

____

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____

____

___

____

____

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____

____

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____

____

___

____

____

___

--

-(36,346,618)

3,304,238

(33,042,380)

____

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50

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1

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330,423,800

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44,403,665

102,603,333

36,346,618

507,416,501

Profi

t for

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year

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- 14

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2 -

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Bonu

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12

66,084,800

--

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17

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1,380,000

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To

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-

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85,093,132

-163,856,272

____

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Deferredincometaxon

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-

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iden

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-Interim

for2

012

-

--

(43,615,946)

43,615,946

--P

aidin2012

-

--

-(36,346,618)

(36,346,618)

____

____

___

____

____

___

____

____

___

____

____

___

____

____

___

____

____

___

--

414,000

(43,615,946)

7,269,328

(35,932,618)

____

____

___

____

____

___

____

____

___

____

____

___

____

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At 3

1st D

ecem

ber 2

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39

6,50

8,60

0 7,

697,

425

43,4

37,6

65

144,

080,

519

43,6

15,9

46

635,

340,

155


Statement of cash flows for the year ended 31st December 2012

2012 2011 Note Shs Shs Cash flows from operating activitiesProfit before income tax 197,018,987 89,066,290Adjustments for:Depreciationonproperty,plantandequipment 14 6,779,146 3,240,612Amortisationofintangibleassets 15 4,409,788 3,915,182Fairvalue(gain)/lossonfinancialassetsatfairvalue 7 (5,980,184) 34,641,062through profit or lossInvestmentincome (142,196,700) (84,731,937)(Gain)onsaleofproperty,plantandequipment 6 (104,888) -Dividendincome 5 (2,540,655) (3,065,678) Operating profit before working capital changes 57,385,494 43,065,531 (Increase)ininsurancecontractandotherreceivables (94,384,609) (30,341,685) (Decrease)/increaseininsurancecontractandotherpayables 88,309,622 36,330,449 Increaseinprovisionforunearnedpremium 62,461,299 24,608,226

Cash generated from operations 113,771,806 73,662,521Incometaxpaid (35,438,786) (28,949,701)

Net cash generated from operating activities 78,333,020 44,712,820

Cash flows from investing activitiesPurchaseofproperty,plantandequipment 14 (7,825,036) (4,455,503)Purchaseofintangibleassets 15 (2,625,300) (281,100)Purchaseoffinancialassetsatfairvaluethroughprofitorloss 18 (12,728,125) (1,188,000)Proceedsfromdisposalofproperty,plantandequipment 180,000 -Loansissuednetofrepayments (62,105,108) (15,181,933)Depositswithfinancialinstitutions (196,427,694) 401,783,147Investmentinheld-to-maturityinvestments (143,762,108) (194,776,109)Investmentinavailableforsaleinvestments - (36,678,800)Investmentincome 142,196,700 84,731,937Dividends received 2,540,655 3,065,678

Net cash (used) / generated from investing activities (280,556,016) 237,019,317

Cash flows from financing activitiesPaymentofdividends (36,346,618) (33,042,380)

Net cash used in financing activities (36,346,618) (33,042,380)

Net (decrease) / increase in cash and cash equivalents (238,569,614) 248,689,757Cash and cash equivalents at 1st January 330,633,432 81,943,675

Cash and cash equivalents at 31st December 23 92,063,818 330,633,432


1. Summary of significant accounting policies

Thesignificantaccountingpoliciesadoptedinthepreparationofthesefinancialstatementsaresetoutbelow:

a) Basis of preparation

ThefinancialstatementsarepreparedonagoingconcernbasisincompliancewithInternationalFinancialReportingStandards (IFRS).Theyarepresented inKenyaShillings (Shs),which is also the functional currency (see (c)).Themeasurementbasisusedisthehistoricalcostbasisexceptwhereotherwisestatedintheaccountingpoliciesbelow.

Thefinancialstatementscompriseaprofitandlossaccount(incomestatement),statementofcomprehensiveincome,balancesheet(statementoffinancialposition),statementofchangesinequity,statementofcashflowsandnotes.Incomeandexpenses,excludingthecomponentsofothercomprehensiveincome,arerecognisedintheprofitandlossaccount.

Othercomprehensiveincomeisrecognisedinthestatementofcomprehensiveincomeandcomprisesitemsofincomeandexpense(includingreclassificationadjustments)thatarenotrecognisedintheprofitandlossaccountasrequiredorpermittedbyIFRS.Reclassificationadjustmentsareamountsreclassifiedtotheprofitandlossaccountinthecurrentperiodthatwererecognisedinothercomprehensiveincomeinthecurrentorpreviousperiods.Transactionswiththeownersofthecompanyintheircapacityasownersarerecognisedinthestatementofchangesinequity.

ThepreparationoffinancialstatementsinconformitywithInternationalFinancialReportingStandardsrequirestheuseofestimatesandassumptions. Italsorequiresmanagement toexercise its judgement in theprocessofapplyingtheaccountingpoliciesadoptedbythecompany.Althoughsuchestimatesandassumptionsarebasedonthedirectors’ bestknowledgeoftheinformationavailable, actualresultsmaydifferfromthoseestimates. Thejudgementsandestimatesarereviewedattheendofeachreportingperiod,andanyrevisionstosuchestimatesarerecognisedintheyearinwhichtherevisionismade.Theareasinvolvingthejudgementsofmostsignificancetothefinancialstatements,andthesourcesofestimationuncertaintythathaveasignificantriskofresulting inamaterialadjustmentwithinthenextfinancialyear,aredisclosedinNote2.

b) New and revised standards

i) Adoption of new and revised standards

Thefollowingnewandrevisedstandardhasbecomeeffectiveforthefirsttimeinthefinancialyearbeginning1stJanuary2012andhavebeenadoptedbythecompany.

- IFRS 7 (Amendment) -Disclosures - Transfers of financial assets:Theamendments improve thedisclosurerequirementsinrelationtotransferredfinancialassets.

Theadoptionoftheabovehashadnomaterialeffectonthecompany’saccountingpoliciesordisclosures.

ii) New and revised standards and interpretations which have been issued but are not effective

The following revised standards and interpretations have been published but are not yet effective for the year beginning1stJanuary2012.Thecompanyhasnotearlyadoptedanyoftheseamendmentsorinterpretations.

-IAS1(Amendment)-Presentation of financial statements :theamendmentwillrequireentitiestogroupitemsofothercomprehensiveincomeaccordingtowhetherornottheywillbesubsequentlyreclassifiedtoprofitorloss.Itiseffectiveforaccountingperiodsbeginningonorafter1stJuly2012.

-IAS 19 (Amendment) - Employee Benefits :The key amendments include elimination of the ‘corridor approach’,modificationofaccountingforterminationpayments,andchangestothedisclosurerequirementsfordefinedbenefitplans.Theamendmentsareeffectiveforaccountingperiodsbeginningonorafter1stJanuary2013.

Notes


Notes (Continued)

1. Summary of significant accounting policies (continued)

b) New and revised standards (continued)

ii) New and revised standards and interpretations which have been issued but are not effective (continued)

- IFRS 9 - Financial InstrumentswilleventuallyreplaceIAS39-FinancialInstruments,RecognitionandMeasurement.Thenewstandardwillbeeffectiveforannualperiodsbeginningonorafter1stJanuary2015.Thechapterspublishedtodatecoverrecognition,derecognition,classificationandmeasurementoffinancialassetsandfinancialliabilities.Mostgainsorlossesonfinancialassetsmeasuredatfairvaluewillthenberecognisedinprofitorloss,butthecompanywillbeabletomakeanirrevocableelectiontopresentchangesinfairvalueofinvestmentsinequityinstrumentsinothercomprehensiveincome.

- IFRS 13 - Fair Value Measurement :thenewstandarddefinesfairvalue,setsoutaframeworkformeasuringfair value, and requires disclosures about fair value measurements. IFRS 13 applies when otherstandardsrequireorpermitfairvaluemeasurements:itdoesnotintroduceanynewrequirementstomeasurean asset or a liability at fair value. The new standard is effective for accounting periods beginning on or after1stJanuary2013.

- IFRS7(Amendment)-Financial Instruments-Disclosures:thisamendstherequireddisclosurestoincludeinformationthatwillenableusersofanentity’sfinancialstatementstoevaluatetheeffectorpotentialeffectofnettingarrangements,includingrightsofset-offassociatedwiththeentity’srecognisedfinancialassetsandrecognisedfinancialliabilitiesontheentity’sfinancialposition.Theamendmentiseffectiveforaccountingperiodsbeginningonorafter1stJanuary2013.

- TheannualimprovementsprojectpublishedinMay2012.

TheDirectorshaveassessedthepotentialimpactoftheaboveandexpectthattheywillnothaveasignificantimpactonthecompany’sfinancialstatementsfor2013.

c) Translation of foreign currencies

On initial recognition,all transactionsare recorded in the functionalcurrency (thecurrencyof theprimaryeconomicenvironmentinwhichthecompanyoperates),whichisKenyaShillings.

Transactions in foreign currencies during the year are converted into the functional currency using the exchange rate prevailingatthetransactiondate.Monetaryassetsandliabilitiesatthebalancesheetdatedenominatedinforeigncurrencies are translated into the functional currency using the exchange rate prevailing as at that date. The resulting foreignexchangegainsandlossesfromthesettlementofsuchtransactionsandfromyear-endtranslationarerecognisedona net basis in the profit and loss account in the year in which they arise, except for differences arising on translation of non-monetaryavailable-for-salefinancialassets,whicharerecognisedinothercomprehensiveincome.

d) Insurance contracts

i) ClassificationThecompanyissuesinsurancecontractsthattransferinsuranceriskorfinancialriskorbothfromtheinsuredtotheinsurer.ThecompanycarriesongeneralinsurancebusinessanditsinsurancecontractsareclassifiedintocategoriesinaccordancewiththeprovisionsoftheInsuranceAct.Classesofgeneralinsuranceinclude:engineering,fire-domesticrisksandindustrialandcommercialrisks,liability,marine,motor-privateandcommercialvehicles,personalaccident,theft,workmen’scompensationandemployers’liability,andmiscellaneous(i.e.classofinsurancenotincludedunderthoselistedabove).

Motorinsurancebusinessmeansthebusinessofaffectingandcarryingoutcontractsofinsuranceagainstlossof,ordamageto,orarisingoutoforinconnectionwiththeuseofmotorvehicles,inclusiveofthirdpartyrisksbutexclusiveoftransitrisks.

Personalaccidentinsurancebusinessmeansthebusinessofaffectingandcarryingoutcontractsofinsuranceagainstrisksofthepersonsinsuredsustaininginjuryastheresultofanaccidentorofanaccidentofaspecifiedclassordyingastheresultofanaccidentorofanaccidentofaspecifiedclassorbecomingincapacitatedinconsequence of disease or of disease of a specified nature.



d) Insurance contracts (continued)

i) Classification (continued)

Fire insurancebusiness meansthe business of affectingandcarryingout contracts of insurance, other thanincidentaltosomeotherclassofinsurancebusinessagainstlossordamagetopropertyduetofire,explosion,stormandotheroccurrencescustomarilyincludedamongtherisksinsuredagainstinthefireinsurancebusiness.

ii) Recognition and measurement

a) Premium income

Premiumincomeis recognisedonassumptionof risk, and includes estimates of premiumsdue but not yetreceived,lessanallowanceforcancellationsandunearnedpremiums.Unearnedpremiumsrepresenttheproportionofpremiumswrittenuptotheaccountingdatethatrelatestotheunexpiredtermsofpoliciesinforceatthebalancesheetdate.Unearnedpremiumiscomputedusingthe1/24thmethod.

Commissionincomeinrespectofinsurancecededisrecognisedovertheperiodinwhichrelatedpremiumisearned.

b) Claims

Claimsincurredcompriseclaimspaidintheyearandchangesintheprovisionforoutstandingclaims.Claimspaidrepresentall paymentsmadeduring the year,whether arising from events during that year or earlier years.Outstanding claimsrepresenttheestimatedultimatecostofsettlingallclaimsarisingfromincidentsoccurringpriortothebalancesheetdate,butnotsettledatthatdate.Outstandingclaimsarecomputedonthebasisofthebestinformationavailableatthetimetherecordsfortheyearareclosed,andincludeprovisionsforclaimsIncurredButNotReported(‘IBNR’).IBNRprovisionsarebasedonmanagementexperienceandestimates,butaresubjecttoaminimumpercentagesetbytheCommissionerofInsurance.Outstandingclaimsarenotdiscounted.

Someinsurancecontractspermitthecompanytosell(usuallydamaged)propertyacquiredinsettlingaclaim(forexample,salvage).The companymay alsohave the right to pursue thirdparties for payment of someor all costs (for example,subrogation).

Estimatesofsalvagerecoveriesfromdisposalareincludedasanallowanceinthemeasurementoftheinsuranceliabilityforclaims,andsalvagepropertyisrecognisedinotherassetswhentheliabilityissettled.

Subrogationreimbursementsarealsoconsideredasanallowanceinthemeasurementoftheinsuranceliabilityforclaimsand are recognised in other assets when the liability is settled.

c) Commissions payable and commission receivable

Aproportionofcommissionspayableisdeferredandamortisedovertheperiodinwhichtherelatedpremiumisearned.Deferred acquisition costs represent a proportion of acquisition costs that relate to policies that are in force at the year end.

Aproportionofcommissionsreceivableisdeferredandamortisedovertheperiodinwhichtherelatedpremiumincomeis earned.

Notes (Continued)



d) Insurance contracts (continued)

ii) Recognition and measurement (continued)

d) Liability adequacy test

At each balance sheet date, the company performs liability adequacy tests to ensure the adequacy of contractliabilities.Inperformingthesetests,currentbestestimatesoffuturecontractualcashflowsandclaimshandlingandadministrationexpenses,aswellasinvestmentincomefromtheassetsbackingsuchliabilitiesareused.Anydeficiency is immediately charged to profit or loss by establishing a provision for losses arising from liabilityadequacytests(theunexpiredriskprovision).

e) Reinsurance contracts held

Contractsenteredintobythecompanywithreinsurersunderwhichthecompanyiscompensatedfor lossesoninsurancecontractsissuedbyitareclassifiedasreinsurancecontractsheld.Contractsissuedbythecompanythatdonotmeettheclassificationrequirementsofinsurancecontractsareclassifiedasfinancialassets.Insurancecontractsenteredintobythecompanyunderwhichthecontractholderisanotherinsurer(inwardsreinsurance)are included with insurance contracts.

Thebenefitstowhichthecompanyisentitledunderitsreinsurancecontractsheldarerecognisedasreinsuranceassets.Theseassetsconsistofshort-termbalancesduefromreinsurers,aswellaslongertermreceivablesthataredependentontheexpectedclaimsandbenefitsarisingundertherelatedreinsuredinsurancecontracts.Amountsrecoverablefromorduetoreinsurersaremeasuredconsistentlywiththeamountsassociatedwiththereinsuredinsurancecontractsandinaccordancewiththetermsofeachreinsurancecontract.Reinsuranceliabilitiesareprimarilypremiumspayableforreinsurancecontractsandarerecognisedasanexpensewhendue.

The company assesses its reinsurance assets for impairmenton a quarterly basis. If there is objective evidencethatthereinsuranceasset is impaired, thecompanyreducesthecarryingamountof thereinsuranceasset to itsrecoverableamountandrecognisesthatimpairmentlossintheprofitandlossaccount.Thecompanygatherstheobjectiveevidencethatareinsuranceassetisimpairedusingthesameprocessadoptedforfinancialassetsheldatamortisedcost.

e) Investment income

Rentalincomefromoperatingleasesisrecognisedonastraightlinebasisovertheperiodofthelease.Dividendincomeisrecognisedwhentherighttoreceivethepaymentisestablished.

Interestincomeisrecognisedonatimeproportionbasisusingtheeffectiveinterestmethod.

f) Property, plant and equipment

Allcategoriesofproperty,plantandequipmentareinitiallyrecognisedatcost.Costincludesexpendituredirectlyattributabletotheacquisitionoftheassets.Computersoftware,includingtheoperatingsystem,thatisanintegralpartoftherelatedhardwareiscapitalisedaspartofthecomputerequipment.Buildingsaresubsequentlycarriedatarevaluedamount,basedon bi-annual valuations by external independent valuers, less accumulated depreciation and accumulated impairmentlosses.Allotheritemsofproperty,plantandequipmentaresubsequentlycarriedatcostlessaccumulateddepreciationandaccumulatedimpairmentlosses.

Subsequentcostsareincludedintheasset’scarryingamountorrecognisedasaseparateasset,asappropriate,onlywhenitisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtothecompanyandthecostoftheitemcanbemeasuredreliably.Repairsandmaintenancearechargedtotheprofitandlossaccountintheyearinwhichtheyareincurred.

Notes (Continued)



f) Property, plant and equipment (continued)

Increasesinthecarryingamountarisingonrevaluationarerecognisedinothercomprehensiveincomeandaccumulated in equityunder the headingof revaluationsurplus. Decreases that offset previousincreasesofthesameassetarerecognisedinothercomprehensiveincome.Allotherdecreasesarechargedtothe profit and loss account.

Annually, the difference between depreciation charge based on the revalued carrying amount of the assetchargedtotheprofitandlossaccountanddepreciationbasedontheasset’soriginalcostistransferredfromthe revaluation surplus reserve to retained earnings.

Depreciationiscalculatedusingthestraightlineorreducingbalancemethodtowritedownthecostofeachassettoitsresidualvalueoveritsestimatedusefullifeusingthefollowingannualrates:

Rate - %

Leasehold land Over the life of the lease Buildings 2 Straight line Motor vehicles 25 Reducing balance Furniture & fittings 12.5 “ Computers,copiers&faxes 30 “

Asnopartsofitemsofproperty,plantandequipmenthaveacostthatissignificantinrelationtothetotalcostoftheitem,thesamerateofdepreciationisappliedtothewholeitem.

Theassets’residualvaluesandusefullivesarereviewed,andadjustedifappropriate,ateachbalancesheetdate.Gainsandlossesondisposalofproperty,plantandequipmentaredeterminedbyreferencetotheircarryingamountandaretakenintoaccountindeterminingoperatingprofit.Ondisposalofrevaluedassets,amountsintherevaluationsurplusreserverelatingtothatassetaretransferredtoretainedearnings.

g) Intangible assets

Softwarelicencecosts andcomputersoftwarethat is not anintegral part of therelatedhardwareare initiallyrecognised at cost, and subsequentlycarried at cost less accumulated amortisation andaccumulatedimpairmentlosses.Coststhataredirectlyattributabletotheproductionofidentifiablecomputersoftwareproductscontrolledbythecompanyarerecognisedasintangibleassets.Amortisationiscalculatedusingthestraightlinemethodtowritedownthecostofeachlicenceoritemofsoftwaretoitsresidualvalueoveritsestimatedusefullifeusinganannualrateof20%.

h) Impairment of non-financial assets

Non-financial assets that are carried at amortisedcost are reviewedat the endof eachreportingperiod for anyindicationthatan assetmaybeimpaired.If anysuch indicationexists,an impairmentlossisrecognisedfortheamountbywhichtheasset’scarryingamountexceedsitsrecoverableamount.Therecoverableamountisthehigherofanasset’sfairvaluelesscoststosellandvalueinuse.

i) Retirement benefit obligations

Defined contribution

Thecompanyoperatesadefinedcontributionretirementbenefitsplanforitsemployees,theassetsofwhichareheldinaseparatetrusteeadministeredguaranteedschememanagedbyaninsurancecompany.Adefinedcontributionplanisaplanunderwhichthecompanypaysfixedcontributionsintoaseparatefund,andhas no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employees thebenefits relating to employee service in thecurrentorpriorperiods.Thecompany’scontributionsarechargedtotheprofitandlossaccountintheyeartowhichtheyrelate.

Notes (Continued)


1. Summary of significant accounting policies (continued)i) Retirement benefit obligations (continued) Defined contribution (continued)

The company and the employees also contribute to the National Social Security Fund (NSSF), a nationaldefinedcontributionscheme.Contributionsaredeterminedbylocalstatuteandthecompany’scontributionsare charged to the profit and loss account in the year to which they relate.

j) Short term employee benefits

Theestimatedmonetaryliabilityforemployees’accruedannualleaveentitlementatthebalancesheetdateisrecognisedasanemploymentcostaccrual.

k) Leases

Operating leases

Leases of assets where a significant proportion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Paymentsmadeunder operating leases are charged to theprofit and lossaccount on a straight line basis over the lease period. Prepaid operating lease rentals are recognised as leaseholdlandunderproperty,plantandequipmentandaresubsequentlyamortisedovertheleaseperiod.

l) Income taxes

Incometaxexpenseistheaggregateamountcharged/(credited)inrespectofcurrenttaxanddeferredtaxindeterminingtheprofitorlossfortheyear.Incometaxexpenseisrecognisedintheprofitandlossaccountexceptwhenitrelatestoitemsrecognisedinothercomprehensiveincome,inwhichcaseitisalsorecognisedinothercomprehensiveincome,ortoitemsrecogniseddirectlyinequity,inwhichcaseitisalso recognised directly in equity.

Current tax

Currentincometaxistheamountofincometaxpayableonthetaxableprofitfortheyear,andanyadjustmenttotaxpayableinrespectofprioryears,determinedinaccordancewiththeKenyanIncomeTaxAct.

Deferredincometax

Deferredincometaxisprovidedinfullonalltemporarydifferencesexceptthosearisingontheinitialrecognitionofanassetorliability,otherthanabusinesscombination,thatatthetimeofthetransactionaffectsneithertheaccountingnortaxableprofitorloss.Deferredincometaxisdeterminedusingtheliabilitymethodonalltemporarydifferencesarisingbetweenthetaxbasesofassetsandliabilitiesandtheircarryingvaluesforfinancial reporting purposes, using tax rates and laws enacted or substantively enacted at the balance sheet date andexpectedtoapplywhentherelateddeferredincometaxliabilityissettled.

Deferredincometaxassetsarerecognisedonlytotheextentthatitisprobablethatfuturetaxableprofitswillbeavailableagainstwhichtemporarydifferencescanbeutilised.Recognisedandunrecogniseddeferredtaxassetsarereassessedattheendofeachreportingperiodand,ifappropriate,therecognisedamountisadjustedtoreflecttheextentthatithasbecomeprobablethatfuturetaxableprofitswillallowthedeferredtaxassettoberecovered.

Notes (Continued)



m) Financial instruments

Thecompanyclassifiesitsfinancialinstrumentsintothefollowingcategories:

i) Financial assets and financial liabilities at fair value through profit or loss, whichcomprisefinancialassets and financial liabilities acquired or incurred principally for the purpose of selling or repurchasing in theneartermortogenerateshort-termprofit-taking.

ii)Held-to-maturity investments which comprise non-derivative financial assets with fixed ordeterminablepaymentsandfixedmaturitythatthecompanyhasapositiveintentionandabilitytoholdtomaturity.

iii)Loans and receivableswhichcomprisenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket,andexcludesassetswhichtheentityintendstosellimmediatelyorintheneartermorthosewhichtheentityuponinitialrecognitiondesignatesatfairvaluethroughprofitorloss or as available- for-sale financial assets.

iv) Available-for-salefinancialassets,whichcomprisenon-derivativefinancialassetsthataredesignatedas available-for-sale financial assets, and not classified under any of the other categories of financial assets.

v) Financial liabilities,whichcompriseallfinancialliabilitiesexceptfinancialliabilitiesatfairvaluethroughprofit or loss.

Financial assets

Allfinancialassetsarerecognisedinitiallyusingthetradedateaccountingwhichisthedatethecompanycommitsitselftothe purchase or sale. Financial assets carried at fair value through profit or loss are initially recognised at fair value and the transaction costs are expensed in the profit and loss account. All other categories of financial assets are recorded at the fair value of the consideration given plus the transaction cost.

Subsequently,held-to-maturityinvestmentsandloansandreceivablesarecarriedatamortisedcostusingtheeffectiveinterestmethod,whileallotherfinancialassetsarecarriedattheirfairvalues,withoutdeductionfortransactioncoststhatmaybeincurredonsale.

Amortisedcostistheamountatwhichthefinancialassetorliabilityismeasuredoninitialrecognitionminusprincipalrepayments,plusorminusthecumulativeamortisationusingtheeffectiveinterestmethodofanydifferencebetweentheinitialamountandthematurityamount,andminusanyreductionforimpairmentoruncollectibility.Fairvalueistheamountforwhichanassetcanbeexchanged,oraliabilitysettled,betweenknowledgeablewillingpartiesinanarm’slengthtransaction.Thefairvalueforquotedsharesisdeterminedusingthequotedbidpriceatthebalancesheetdatewhilethatofnon-quotedsharesisdeterminedusingvaluationtechniques.

Thecompanyassessesateachbalancesheetwhetherthereisobjectiveevidencethatafinancialassetisimpaired.Ifanysuchevidenceexists,animpairmentlossisrecognised.Impairmentlossistheamountbywhichthecarryingamountofanassetexceedsitsrecoverableamount.Inthecaseofheld-to-maturityinvestmentsandloansandreceivables,therecoverableamountisthepresentvalueoftheexpectedfuturecashflows,discountedusingtheasset’seffectiveinterest rate.

Changes in fair value of financial assets at fair value through profit or loss are recognised in the profit and loss account.

Notes (Continued)



m) Financial instruments (continued)

Financialassets(continued)

Changesinthecarryingvaluesandimpairmentlossesofheld-to-maturityinvestmentsandloansandreceivablesarerecognised in the profit and loss account. Trade and other receivables not collectible are written off against therelatedprovision.Subsequentrecoveriesofamountspreviouslywrittenoffarecreditedtotheprofitandloss account in the year of recovery.

Financialassetsarederecognisedwhentherightstoreceivecashflowsfromtheinvestmentshaveexpiredorthecompanyhastransferredsubstantiallyallrisksandrewardsofownership.

Financial assets held during the year were classified as follows:

-Demandandtermdepositswithbankinginstitutionsandtradeandotherreceivableswereclassifiedas‘loansandreceivables’.

-Governmentsecuritieswereclassifiedas‘held-to-maturityinvestments’,exceptthosedesignatedas‘’Availableforsale’’oninceptionofcontract.

-Investmentsinquotedshareswereclassifiedasfinancialassetsatfairvaluethroughprofitorloss.

Financial liabilities

All financial liabilities are recognised initially at fair value of the consideration given plus the transaction cost with the exception of financial liabilities carried at fair value through profit or loss, which are initially recognised at fair value and the transaction costs are expensed in the profit and loss account.

Subsequently,allfinancialliabilitiesarecarriedatamortisedcostusingtheeffectiveinterestmethodexceptfor financial liabilities through profit or loss which are carried at fair value.

All financial liabilities are classified as non-current except financial liabilities at fair value through profit or loss, thoseexpectedtobesettledinthecompany’snormaloperatingcycle,thosepayableorexpectedtobepaidwithin12monthsofthebalancesheetdateandthosewhichthecompanydoesnothaveanunconditionalrighttodefersettlementforatleast12monthsafterthebalancesheetdate.

Financial liabilities are derecognised only when the obligation specified in the contract is discharged or cancelled or expires.

Tradeandotherliabilitiesareclassifiedasfinancialliabilitiesbythedirectorsandarecarriedatamortisedcost.

Offsetting

Financialassetsandliabilitiesareoffsetandthenetamountreportedinthebalancesheetonlywhenthereisalegallyenforceablerighttosetofftherecognisedamountsandthereisanintentiontosettleonanetbasis,orrealisetheassetandsettletheliabilitysimultaneously.

Notes (Continued)



n) Provision for liabilities and charges

Provisionsarerecognisedwhenthecompanyhasapresentlegalorconstructiveobligationasaresultofpasteventsanditisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligationandareliableestimateoftheamountoftheobligationcanbemade.

o) Cash and cash equivalents

Cashandcashequivalentsincludecashinhandanddemandandtermdeposits,withmaturitiesofthreemonthsorlessfromthedateofacquisition,thatarereadilyconvertibletoknownamountsofcashandwhicharesub-jecttoaninsignificantriskofchangesinvalue,netofbankoverdrafts.Inthebalancesheet,bankoverdraftsareincluded as borrowings under current liabilities.

p) Share capital

Ordinarysharesarerecognisedatparvalueandclassifiedas‘sharecapital’inequity.

q) Dividends

Dividends on ordinary shares are recognised as a liability in the year in which they are declared. Proposed divi-dendsareaccountedforasaseparatecomponentofequityuntiltheyhavebeendeclaredatanannualgeneralmeeting.

2. Critical accounting estimates and judgments in applying accounting policies

Intheprocessofapplyingtheaccountingpoliciesadoptedbythecompany,thedirectorsmakecertainestimatesand judgements thatmay affect the carrying values of assets and liabilities in thenext financial period. Suchestimatesandjudgementsarebasedonhistoricalexperienceandotherfactors,includingexpectationsoffutureeventsthatarebelievedtobereasonableunderthecurrentcircumstances.Thedirectorsevaluatesuchestimatesandjudgementsateachfinancialreportingdatetoensurethattheyarestillbelievedtobereasonableundertheprevailingcircumstancesbasedontheinformationavailable.

a) Key sources of estimation uncertainty

Keyassumptionsaboutthefuturemadebythedirectorsthathaveasignificantriskofcausingamaterialadjust-menttothecarryingamountofassetsandliabilitieswithinthenextfinancialyearinclude:

i) The ultimate liability arising from claims made under insurance contracts

Estimates made in the determination of outstanding claims under insurance contracts including anestimateofIBNR.Suchestimatesaremadeonthebasisofthebestinformationavailableatthetimetherecordsfortheyearareclosed.TheamountofclaimsoutstandingprovisionnetofamountsrecoverableunderreinsurancecontractsattheyearendamountedtoShs.468,024,339(2011:Shs.439,816,793).

ii) Impairment losses on receivables

Thecompanyregularlyreviewsitsreceivablestoassessimpairment.Indeterminingwhetheranimpairmentlossshouldberecordedintheprofitandlossaccount,managementmakesjudgmentsastowhetherthereisanyobservabledataindicatingthatthereisameasurabledecreaseintheestimatedfuturecashflowsofany receivables.

Notes (Continued)


2. Critical accounting estimates and judgments in applying accounting policies (continued)

b) Significant judgements made in applying the company’s accounting policiesThejudgementsmadebythedirectorsintheprocessofapplyingthecompany’saccountingpoliciesthathavethemostsignificanteffectontheamountsrecognisedinthefinancialstatementsinclude:

i)Whetherassetsareimpaired;and

ii) Whetherthecompanyhastheabilitytohold‘held-tomaturity’investmentsuntiltheymature.Ifthecompanyweretosellotherthananinsignificantamountofsuchinvestmentsbeforematurity,itwouldberequiredtoclassifytheentireclassas‘available-for-sale’andmeasurethematfairvalue.

3. Risk management objectives and policiesThecompany’sactivitiesexposeittoavarietyofriskswhichincludeinsuranceriskandfinancialrisk(credit,liquidityandmarketrisks).Thecompany’soverallriskmanagementpoliciesaresetoutbytheboardandimplementedbymanagement,andfocusontheunpredictabilityofchangesinthebusinessenvironmentandseektominimisethepotentialadverseeffectsofsuchrisksonthecompany’sperformancebysettingacceptablelevelsofrisk.Thecompanyhasdevelopedpoliciesonunderwriting,reinsurance,creditandhasdefinedcriteriafortheapprovalofintermediariesandreinsurers.Thecompanydoesnothedgeagainstanyrisks.

a) Insurance riskThe risk under any one insurance contract is the possibility of the occurrence of the insured event and the uncertaintyoftheresultingclaim.Theinherentnatureofaninsurancecontractmakesthisriskrandomandunpredictableasthenumberandamountofclaimsandbenefitsvaryfromyeartoyearfromlevelsestablishedbyusing statistical data.

For a portfolio of insurance contracts where the theory of probability is applied to pricing and provisioning, the principalriskthatthecompanyfacesisthattheactualclaimsandbenefitpaymentsmayexceedthecarryingamountoftheinsuranceliabilities.Thiscouldoccurbecausethefrequencyorseverityofclaimsandbenefitsaregreaterthanthatestimatedatthetimeoftheclaimintimationandsubsequentrevisionbasedonthebestinformationavailableatthetimeofestimation.

Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relativevariabilityabouttheexpectedoutcomewillbe.Inaddition,amorediversifiedportfolioislesslikelytobeaffectedbyachangeinanysubsetoftheportfolio.Thecompanyhasdevelopeditsinsuranceunderwritingstrategytodiversifythe type of insurance risks accepted and within each of these categories to achieve a sufficiently large population of riskstoreducethevariabilityoftheexpectedoutcome.Inaddition,thecompanyreviewstheriskofeachclientpriorto the renewal of insurance policies.

Factorsthataggravateinsuranceriskincludelackofriskdiversificationintermsoftypeandamountofrisk,geographical location and type of industry insured.

i) UnderwritingThecompanyensuresthattheunderwritingdepartmenttakesintoconsiderationtheclassofriskbeingunderwritten,theamountoftheriskandthespecificrisksattachedtotheindustryandtheclientbeforeunderwritingorrenewingpolicies.Managementhasputinplacecontrolsensurethathighriskpoliciesarerenewedthroughascrutinyoftheclaimspaidratiosandtheprofitabilityoneachclientportfolio.

Reinsuranceisusedtomanageinsurancerisk.Reinsurancearrangementsincludeexcessoflossandstop-losscoverage.Theeffectofsuchreinsurancesisthatthecompanyshouldnotsuffertotalnetinsurancelossesinanyone year.

Notes (Continued)


Not

es (

Cont

inue

d)

3.

Ris

k m

anag

emen

t obj

ectiv

es a

nd p

olic

ies (

cont

inue

d)

a) I

nsur

ance

risk

(con

tinue

d)

i) U

nder

wri

ting

(con

tinue

d)

Theconcentrationofin

suranceris

kbeforeand

afte

rreinsurancebyclasso

finsuranceissu

mmarise

dbelow:


3. Risk management objectives and policies (continued)

a) Insurance risk (continued)

ii) Claims

a) Claims management

Thefrequencyandseverityofclaimsisaffectedbyseveralfactorsincludingtheunderwritingstrategy,adequatereinsurancearrangementsandproactiveclaimshandling.

Thecompanyhasaspecialisedclaimsdepartmentdealingwithclaimsmanagement.Thedepartmentassessesallclaimsandalsocarriesoutinvestigationswheresuchclaimsdonotconformtoexpectednorms.Claimsarereviewedindividuallyatthetimeofintimationandsubsequentlyreviewedwhennewinformationregardingtheclaimisreceived,andatleastonceeveryquarter,andadjustedtoreflectthelastinformationbasedontheunderlyingfacts,contractualtermsandconditions,assessmentsprovidedbyindependentlossadjustorsandchangesinthecurrentlaws,amongstotherfactors.Thecompanyactivelymanagesandpursuesearlysettlementofclaimstoreduceitsexposuretounpredictabledevelopments.Outstandingclaimsarenotdiscounted.

b) Claims provisions

Claimsarepaidonaclaims-occurrencebasisandthecompanyisliableforallinsuredeventsthatoccurredduringthecontractterm,evenifthelossisnotifiedaftertheendofthecontractterm.As a result, liabilityclaimsaresettledovera longperiodof time.Inaddition,aprovisionismadebythemanagementforclaimsthatmayhaveoccurredbuthavenotbeenreportedtothecompanyatthedateofthefinancialstatements.SuchprovisionsaretermedasIncurredButNotReported(IBNR),andarebasedonthemanagements’experienceandestimates,butsubjecttotheminimumpercentagessetbytheCommissionerof Insurance.

Theestimatedcostofclaimsincludesdirectexpensestobeincurredinsettlingclaims,netofexpectedsubrogationvalueandotherrecoveries.Incalculatingtheclaimsoutstandingprovision,thecompanyusestheinformationavailableandadjuststhisforanestimatebasedontheclaimsexperience.Theclaimsexperienceisbasedonthelossratio,whichisdefinedastheratiobetweentheultimatecostoftheinsuranceclaimstotheinsurancepremiumearnedinaparticularfinancialyearinrelationtosuchclaims.Thecompanytakesallreasonablestepstoensurethatithasallappropriateinformationregardingitsclaimsexposures.However,duetotheinherentuncertaintyinestablishingclaimsprovisions,itislikelythatthefinancialsettlementmaybedifferent fromthe assessed liability. Moreover, the amount of casualtyclaims is particularlysensitivetothelevelofcourtawardsandtothedevelopmentoflegalprecedentsonmattersofcontractandtort.Casualtyclaimsarealsosubjecttotheemergenceofnewtypesoflatentclaims,butnoallowanceisincluded for this at the balance sheet date.

TheestimationofIBNRissubjecttogreaterdegreesofuncertaintythantheestimationofthecostofsettlingclaimsalreadynotifiedtothecompany.IBNRclaimsmaynotbeapparenttotheinsureduntilmanyyearsaftertheeventthatgaverisetotheclaim.Forcasualtycontracts,IBNRproportiontothetotalliabilityishighandwilltypicallydisplaygreatervariationsbetweeninitialestimatesandfinaloutcomesbecauseofthegreaterdegreeofdifficultyofestimatingtheseliabilities.

Inestimatingtheliabilityforthecostofreportedclaimsnotyetpaid,thecompanyconsidersanyinformationavailablefromlossadjustorsandinformationonthecostofsettlingclaimswithsimilarcharacteristicsin previous periods.

Notes (Continued)



b) Financial risk

i) Credit risk

Creditriskistheriskthatonepartytoafinancialinstrumentwillcauseafinanciallossfortheotherpartybyfailingtodischargeanobligation.Creditriskmainlyarisesfromfinancialassets,andismanagedonacompany-widebasis.Thecompanydoesnotgradethecreditqualityoffinancialassetsthatareneitherpastduenorimpaired.Keyareaswherethecompanyisexposedtocreditriskare:

• financialassetsatfairvaluethroughprofitandloss;

• depositswithfinancialinstitutions;

• loansreceivable;

• receivablesarisingoutofreinsurancearrangements;and

• receivablesarisingoutofdirectinsurancearrangements.

Exposuretocreditriskonloansreceivableismanagedthroughregularanalysisoftheabilityofborrowersandpotentialborrowerstomeetinterestandcapitalrepaymentobligationsandbychanginglendinglimitswhereappropriate.Exposuretocreditriskisalsomanagedinpartbyobtainingcollateralagainstloansintheformofmortgageinterestsoverproperty and other registered securities over assets.

Creditriskonfinancialassetswithbankinginstitutionsismanagedbydealingwithinstitutionswithgoodcreditratings.

Thecompanyhasreinsurancearrangementsinplacetominimiseitsexposuretoclaims.Thisdoesnot,however,dischargethecompany’sliabilityasprimaryinsurer.Ifareinsurerfailstopayaclaimforanyreason,thecompanyremainsliableforthepaymenttothepolicyholder.Creditriskonreceivablesarisingoutofreinsurancearrangementsismanagedbyassessing the creditworthiness of reinsurers on an annual basis by reviewing their financial strength prior to finalisation of any contract.

Credit risk on receivables arising out of direct insurance arrangements is managed by ensuring that creditisextendedtocustomerswithanestablishedcredithistory.Thecredithistoryisdeterminedbytakingintoaccountthefinancialposition,pastexperienceandotherrelevantfactors.Creditismanagedbysettingthecreditlimitandthecreditperiodforeachcustomer.Theutilisationofthecreditlimitsandthecreditperiodismonitoredbymanagementonamonthlybasis.

Duetothe inherentnatureofgovernmentsecurities, theseareconsideredtohaveminimalcreditrisk.Forotherassetswhicharenotmaterial,creditriskisnotmanaged.

Notes (Continued)



i) Credit risk (continued)

Themaximumexposureofthecompanytocreditriskasatthebalancesheetdateisasfollows:

Fully Past due but Past due and performing not impaired impaired Total Shs Shs Shs Shs

31st December 2012Financial assets at fair value through 80,171,734 - - 80,171,734profit or lossLoans receivable 125,256,402 - - 125,256,402Held-to-maturityinvestments 541,905,468 - - 541,905,468Available for sale financial assets 41,650,119 - - 41,650,119Deposits with financial institutions 330,774,023 35,000,000 - 365,774,023Receivables arising out of reinsurance arrangements 14,276,029 - - 14,276,029Receivables arising out of directinsurancearrangements 48,341,403 - - 48,341,403Reinsurers’shareofinsuranceliabilities 370,714,015 - - 370,714,015Other receivables 71,986,683 - - 71,986,683Cash and bank balances 13,063,818 - - 13,063,818 ___________ ___________ __________ ___________ 1,638,139,694 35,000,000 - 1,673,139,694 ========== ========== ========== ==========

Fully Past due but Past due and performing not impaired impaired Total Shs Shs Shs Shs31st December 2011Financial assets at fair value through profit or loss 61,463,425 - - 61,463,425Loans receivable 63,151,294 - - 63,151,294Held-to-maturityinvestments 423,143,360 - - 423,143,360Available for sale financial assets 27,591,779 - - 27,591,779Deposits with financial institutions 346,346,329 35,000,000 - 381,346,329Receivables arising out of reinsurance arrangements 3,638,226 6,365,371 - 10,003,597Receivables arising out of directinsurancearrangements 30,700,891 - - 30,700,891Reinsurers’shareofinsuranceliabilities 316,501,489 - - 316,501,489Current tax recoverable 3,303,198 - - 3,303,198Other receivables 48,443,683 5,283,861 - 53,727,544Cash and bank balances 14,633,432 - - 14,633,432 ___________ __________ __________ ___________ 1,338,917,106 46,649,232 - 1,385,566,338 ========== ========== ========== ==========

Thepastduereceivablesarenotimpairedandcontinuetobepaid.Thecarryingamountofnetreceivablesapproximatetheirfairvalue.Thecompanydoesnotholdanycollateralagainstthepastdueorimpairedreceivables.Themanagementcontinuestoactivelyfollowuppastdueandimpairedreceivables.

Notes (Continued)



b) Financial risk (continued)

ii) Liquidity risk

Liquidityriskistheriskthatthecompanywillencounterdifficultyinmeetingobligationsassociatedwithfinancialliabilities.Theboardhasdevelopedariskmanagementframeworkforthemanagementofthecompany’sshort,mediumandlong-termliquidityrequirementstherebyensuringthatallfinancialliabilitiesaresettledastheyfalldue.Thecompanymanagesliquidityriskbycontinuouslyreviewingforecastsandactualcashflows,andmaintainingbankingfacilitiestocoveranyshortfalls.

Thetablebelowanalysesliabilitiesintotherelevantmaturitygroupingsbasedontheremainingperiodatthebalancesheetdatetothecontractualmaturitydate.

At 31st December 2012 90 days 1 year 1 - 5 years Over 5 years Shs Shs Shs ShsLiabilities Insurance contract liabilities 72,110,654 144,221,308 504,774,579 -Payables arising out of reinsurancearrangements 83,358,833 - - -Unearnedpremium 19,783,075 300,376,852 - -Other payables 35,610,386 - - - ___________ ___________ ___________ ___________ 210,862,948 444,598,160 504,774,579 - ___________ ___________ ___________ ___________

90 days 1 year 1 - 5 years Over 5 yearsAt 31st December 2011 Shs Shs Shs Shs

LiabilitiesInsurance contract liabilities 67,268,670 134,537,339 470,880,687 - Payables arising out ofreinsurancearrangements 27,178,354 - - -Unearnedpremium 19,783,075 237,915,553 - -Other payables 10,321,447 30,040,715 25,000 50,000Payables arising out of directinsurancearrangements 11,463,926 - - - ___________ ___________ ___________ ___________

136,015,472 402,493,607 470,905,687 50,000 ___________ ___________ ___________ ___________iii) Market risk

Marketriskis theriskthatthefair valueorfuturecashflowsof financialinstrumentswillfluctuatebecauseofchangesinmarketpriceandcomprisesthreetypesofrisks:currencyrisk,interestrateriskandother price risk.

a) Interest rate risk

Thecompany isexposedtovariousrisksassociatedwith theeffectsoffluctuation in theprevailing levelsofmarketinterestratesonitsfinancialpositionandcashflows.Themanagementcloselymonitorstheinterestratetrendstominimisethepotentialadverseimpactofinterestratechanges.

Had the weighted average interest rates been 1% higher / lower, with all other variables held constant, post-taxprofitwouldhaveincreased/decreasedbyShs.7,230,511(2011:Shs.6,266,629).

Notes (Continued)



b) Financial risk (continued)

iii) Market risk (continued)

b) Currency risk Currencyriskarisesonfinancialinstrumentsthataredenominatedinforeigncurrency.Thecompany’s

underwriting,reinsuranceandclaimssettlementsaredoneintheprincipalcurrency,whichistheKenyaShilling.Thelimitedexposuretoforeigncurrencyriskrelatestotheamountsinvestedinforeigncurrencybank accounts.

c) Other price riskOtherpriceriskarisesonfinancialinstrumentsbecauseofchangesinthepriceofafinancialinstrument.Thecompanyisexposedtootherpriceriskonitsinvestmentinquotedshares.Ifthepriceoffinancialassetsthroughprofitorlossdecreased/increasedby5percentagepoints,withotherfactorsremainingconstant,posttaxprofitwoulddecrease/increasebyShs6,091,093(2011:Shs.2,151,220).

c) Capital management

Thecompany’sobjectiveswhenmanagingcapitalare:

- tocomplywiththeinsurancecapitalrequirementsrequiredbyInsuranceAct(Cap.487);- to safeguard the company’s ability to continueas a going concern so that it can continue toprovide returns for

shareholdersandbenefitsforotherstakeholders;- toprovideanadequatereturntoshareholdersbypricinginsuranceandinvestmentcontractscommensuratelywith

thelevelofrisk;and- tomaintainasstrongcapitalbasetosupportthedevelopmentofitsbusiness.

TheInsuranceAct (Cap.487)specifies theminimumamountandtypeofcapital thatmustbeheld.Theminimumrequiredcapital(presentedinthetablebelow)mustbemaintainedatalltimesthroughouttheyear.Thecompanyissubjecttoinsurancesolvencyregulations.Witheffectfrom14thJune2010,therequiredminimumcapitalhasbeenincreased to Shs. 300,000,0000.

Thetablebelowsummarisestheminimumrequiredcapitalandtheregulatorycapitalheld:

2012 2011 Shs Shs

Capital held 396,508,600 330,423,800 ========= ========= Requiredminimumcapital 300,000,000 300,000,000 ========= =========

4. Net insurance premium revenue

Thepremiumincomeofthecompany,analysedbetweentheprincipalclassesofbusinessisasfollows:

Gross Reinsurance NetYear ended 31st December 2012 Shs Shs Shs Fire 154,775,966 (118,764,216) 36,011,750Motor 165,694,395 (10,554,260) 155,140,135Workmen’scompensation 107,104,073 (2,894,551) 104,209,522Marine 108,870,670 (40,170,140) 68,700,530Theft 78,013,927 (34,449,692) 43,564,235Others 84,281,841 (50,429,252) 33,852,589 __________ __________ __________

698,740,872 (257,262,111) 441,478,761 ========= ========= =========

Notes (Continued)


4. Net insurance premium revenue (continued)

Gross Reinsurance Net Shs Shs Shs

Year ended 31st December 2011Fire 114,673,187 (89,112,699) 25,560,488Motor 142,307,267 (2,568,706) 139,738,561Workmen’scompensation 98,279,256 (2,356,097) 95,923,159Marine 101,209,561 (39,511,999) 61,697,562Theft 71,707,824 (36,098,172) 35,609,652Others 66,039,085 (37,112,499) 28,926,586 ____________ ____________ __________ 594,216,180 (206,760,172) 387,456,008 ========== ========== ==========

2012 20115. Investment income Shs Shs

Interestincome -Interestfromgovernmentsecurities 70,217,454 39,519,205 - Bank deposits and bank balances 51,338,682 39,022,457 - Loans and receivables 20,640,564 6,190,275Netrentalincome 6,277,831 3,947,531Dividendincome - Financial assets at fair value through profit or loss 2,540,655 3,065,678Miscellaneousincome 352,160 120,223 ___________ ___________ 151,367,346 91,865,369 ========== ==========6. Other income

Gainondisposalofproperty,plantandequipment 104,888 - ========= ========7. Changes in fair value

Financialassetsatfairvaluethroughprofitandloss 5,980,184 (34,641,062)Available for sale financial assets recognised in othercomprehensiveincome 14,058,340 (9,087,021) ___________ ___________

20,038,524 (43,728,083) ========== ==========8. Net insurance claims

Theclaimsofthecompany,analysedbetweentheprincipalclassesofbusinessisasfollows:

Gross Reinsurance Net Shs Shs Shs Year ended 31st December 2012Motor (106,690,249) 26,225,099 (80,465,150)Workmen’scompensation (47,525,039) (19,800) (47,544,839)Theft (88,269,885) 43,832,782 (44,437,103)Others (132,070,892) 62,425,748 (69,645,144) ___________ __________ ___________

(374,556,065) 132,463,829 (242,092,236) ========== ========= ==========

Notes (Continued)


8. Net insurance claims (continued)

Gross Reinsurance Net Shs Shs Shs

Year ended 31st December 2011 Motor (105,372,595) 12,051,778 (93,320,817)Workmen’scompensation (39,824,879) 1,732,869 (38,092,010)Theft (49,201,138) 10,371,561 (38,829,577)Others (118,147,529) 70,727,330 (47,420,199 ___________ ___________ ____________ (312,546,141) 94,883,538 (217,662,603) ========== ========== ==========9. Profit before tax expense 2012 2011 Shs Shs (a)Itemscharged

Thefollowingitemshavebeenchargedinarriving at profit before tax expense:

Employeebenefitsexpense(Note9(b)) 82,865,740 76,862,120Depreciationofproperty,plantandequipment(Note14) 6,779,146 3,240,612Amortisationofintangibleassets(Note15) 4,409,788 3,915,182Auditors’remuneration

Current year 1,400,000 1,510,149 ========== ==========

(b)Employeebenefitsexpense

Thefollowingitemsareincludedinemployeebenefitsexpense:

RetirementbenefitcostsDefinedcontributionscheme 2,138,749 3,896,538National Social Security Fund 163,000 161,800

========== ==========10. Tax expense

Currentincometax 52,822,831 35,219,986 Deferredincometaxcreditedtoprofitandlossaccount(Note19) (5,601,776) (193,675) ____________ ____________ Incometaxexpenseinprofitandlossaccount 47,221,055 35,026,311 Deferredincometaxcreditedtoequity(Note19) (414,000) - ____________ ____________ Incometaxexpense 46,807,055 35,026,311 ========== ==========

Thetaxonthecompany’sprofitbeforeincometaxdiffersfromthetheoreticalamountthatwouldariseusingthestatutoryincometaxrateasfollows:

2012 2011 Shs Shs

Profit before income tax 197,018,987 89,066,290 ___________ __________Tax calculated at the statutory tax rate of 30% 59,105,696 26,719,887Tax effect of: Expenses not deductible for tax purposes 1,917,120 12,174,322 Deferred tax on change in fair value of available for salefinancialassetsandrevaluationsurplus (5,842,595) - Incomenotsubjecttotax (8,373,166) (3,867,898) ___________ ___________Tax expense 46,807,055 35,026,311 ========== ==========

Notes (Continued)


11. Dividends per share

Duringtheyear,aninterimdividendofShs.11pershareamountingtoShs.43,615,946wasapprovedbydirectors.Whereapplicable,paymentofnon-qualifyingdividendissubjecttodeductionofwithholdingtaxatarateof5%forresidents and 10% for non-residents.

12. Share capital No. of ordinary Issue and paid shares up capital Shs At31stDecember2011 3,304,238 330,423,800 ======== ========= At1stJanuary2012 3,304,238 330,423,800 Bonus issue 660,848 66,084,800 __________ __________ At31stDecember2012 3,965,086 396,508,600 ======== =========

Thetotalnumberofauthorisedordinarysharesis4,000,000(2011:4,000,000)withaparvalueofShs.100each.

On7thNovember2012,theissuedandpaidupcapitalwasincreasedfromShs330,423,800toShs396,508,600byabonusissueof1ordinaryshareforevery5sharesheldbycapitalisingShs66,084,800fromretainedearnings.

13. Revaluation surplus

Therevaluationsurplusaroseontherevaluationofthebuildingandisstatednetofdeferredincometax.TheCommissionerofInsurancehasallowedcapitalisationofrevaluationreservesuptoamaximumof50%.Thereserveis not distributable.

Notes (Continued)


14.

Prop

erty

, pla

nt a

nd e

quip

men

t

Fu

rnitu

re,

Com

pute

rs,

Leas

ohol

d

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otor

fit

tings

and

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land

Build

ings

ve

hicl

es

equi

pmen

ts

faxe

s To

tal

Shs

Sh

s Sh

s Sh

s Sh

s Sh

s

At 1

st Ja

nuar

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11

Cos

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alua

tion

5,00

0,00

0

111,

950,

000

2,15

8,75

0 21

,522

,098

16

,824

,322

15

7,45

5,17

0

Accum

ulateddepreciation

(535,900)

(1,950,000)

(1,253,991)

(12,480,499)

(13,575,257)

(29,795,647)

____

____

___

___

____

____

__

____

____

_ __

____

____

_ __

____

____

_ __

____

____

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Net

car

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4,46

4,10

0

110,

000,

000

904,

759

9,04

1,59

9 3,

249,

065

127,

659,

523

____

____

___

___

____

____

__

____

____

_ __

____

____

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____

____

_ __

____

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_

Year

ende

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Ope

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110,

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valu

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9,

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000,

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A

dditi

ons

-

- -

2,76

0,38

6 1,

695,

117

4,45

5,50

3

Depreciationcharge

(55,920)

-

(226,189)

(1,475,248)

(1,483,255)

(3,240,612)

____

____

___

___

____

____

__

____

____

_ __

____

____

_ __

____

____

_ __

____

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Clo

sing

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val

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4,40

8,18

0

119,

000,

000

678,

570

10,3

26,7

37

3,46

0,92

7 13

7,87

4,41

4

__

____

____

_ _

____

____

__

____

____

___

____

____

___

____

____

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A

t 31s

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1

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11

9,00

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0 2,

158,

750

24,2

82,4

84

18,5

19,4

39

168,

960,

673

Accum

ulateddepreciation

(591,820)

-

(1,480,180)

(13,955,747)

(15,058,512)

(31,086,259)

____

____

___

___

____

____

__

____

____

_ __

____

____

_ __

____

____

_ __

____

____

_

N

et c

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valu

e 4,

408,

180

11

9,00

0,00

0 67

8,57

0 10

,326

,737

3,

460,

927

137,

874,

414

====

====

==

===

====

===

====

====

==

====

====

==

====

====

==

====

====

==

Ye

ar en

ded

31st

Dec

embe

r 201

2

Ope

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car

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g va

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4,40

8,18

0

119,

000,

000

678,

570

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37

3,46

0,92

7 13

7,87

4,41

4

Disp

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-

-(75,113)

--

(75,113)

A

dditi

ons

-

- 1,

250,

000

2,41

0,10

9 4,

164,

927

7,82

5,03

6

Depreciationcharge

(55,920)

(2,380,000)

(463,364)

(1,592,106)

(2,287,756)

(6,779,146)

____

____

___

___

____

____

__

____

____

_ __

____

____

_ __

____

____

_ __

____

____

_

C

losin

g ca

rryi

ng v

alue

4,

352,

260

11

6,62

0,00

0 1,

390,

093

11,1

44,7

40

5,33

8,09

8 13

8,84

5,19

1

__

____

____

_ _

____

____

__

____

____

___

____

____

___

____

____

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____

____

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A

t 31s

t Dec

embe

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2

C

ost o

r val

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n 5,

000,

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11

9,00

0,00

0 2,

658,

750

26,6

92,5

93

22,6

84,3

66

176,

035,

709

Accum

ulateddepreciation

(647,740)

(2,380,000)

(1,268,657)

(15,547,853)

(17,346,268)

(37,190,518)

____

____

___

___

____

____

__

____

____

_ __

____

____

_ __

____

____

_ __

____

____

_

Net

car

ryin

g va

lue

4,35

2,26

0

116,

620,

000

1,39

0,09

3 11

,144

,740

5,

338,

098

138,

845,

191

====

====

==

===

====

===

====

====

==

====

====

==

====

====

==

====

====

==

Build

ingswerev

aluedon

22n

dDecem

ber2

011byR.R.O

swald&Co.Ltd.,independ

entvaluers,ontheb

asisofopenmarketvalue.Th

ecarryingam

ountoftheassetwasrestatedto

therevalued

amou

ntoftheasset,andtheresultin

ggainar

isingonrevaluationnetofd

eferredincometaxwasrecognise

dinotherco

mprehensiv

eincom

eand

creditedtoth

erevaluatio

nsurplusinequity.

Not

es (

Cont

inue

d)


14. Property, plant and equipment (continued)

If the building was stated on the historical cost basis, the carrying values would be as follows: Building Shs 31st December 2012 Cost 50,000,000 Accumulateddepreciation (11,000,000) __________ 39,000,000 ========= 31st December 2011 Cost 50,000,000 Accumulateddepreciation (10,000,000) __________ 40,000,000 =========15. Intangible assets Work in Software progress Total Cost Shs Shs Shs

At1stJanuary2012 3,509,845 18,760,039 22,269,884 Additions 67,500 2,557,800 2,625,300 _________ _________ __________ At31stDecember2012 3,577,345 21,317,839 24,895,184 _________ _________ __________ Amortisation At1stJanuary2012 3,208,465 7,504,017 10,712,482 Charge for the year 146,220 4,263,568 4,409,788 _________ _________ __________ At31stDecember2012 3,354,685 11,767,585 15,122,270 _________ _________ __________

Net book value At31stDecember2012 222,660 9,550,254 9,772,914 ======== ======== =========

At31stDecember2011 301,380 11,256,022 11,557,402 ======== ======== =========

WorkinprogressrelatestoPremiainsurancesoftwareunderimplementation.

16. Held to maturity financial assets 2012 2011 Shs Shs Non current Treasury bills - 9,253,012 Treasury bonds 491,292,006 331,088,567 Listed bonds 50,613,462 57,801,781 __________ __________ 541,905,468 398,143,360 ========= ========= Current Treasury bills - 25,000,000 __________ __________ 541,905,468 423,143,360 ========= =========

TreasurybondsamountingtoShs.101,000,000(2011:Shs.96,000,000)areheldunderlienwiththeCentralBankofKenyainaccordancewithSection32(1)oftheInsuranceAct(Cap.487).Thesefundsarenotavailabletofinancethecompany’soperations.

ThefairvalueoftheTreasuryBondscarriedatamortisedcostatthebalancesheetdate,basedonpricespublishedbybrokers,wasShs.508million(2011:Shs.311million)

Notes (Continued)


17. Available for sale financial assets 2012 2011 Non current Shs Shs

At1stJanuary 27,591,779 - Purchases - 36,678,800 Fairvaluegain/(loss)recognisedinothercomprehensiveincome 14,058,340 (9,087,021) _________ __________ At end of year 41,650,119 27,591,779 ======== =========18. Financial assets at fair value through profit or loss

Current (quoted securities): Start of the year 61,463,425 94,916,487 Purchases 12,728,125 1,188,000 Totalfairvaluegain/(loss)recognisedinprofitorloss(Note7) 5,980,184 (34,641,062) _________ _________ At end of year 80,171,734 61,463,425 ======== ========19. Deferred income tax

Deferredincometaxiscalculatedusingthetaxrateof30%(2011: 30%).Themovementonthedeferredincometaxaccountisas

At1stJanuary 18,116,887 18,336,668 (Credit)/chargetoprofitandlossaccount(Note10) (5,601,776) (193,675) (Credit)toequity (414,000) - (Credit)toothercomprehensiveincome - (26,106) __________ __________ At31stDecember 12,101,111 18,116,887 ========= ========= Thecharge/(credit)toothercomprehensiveincomerelatesto:

Profitonchangesinfairvalueofavailableforsalefinancialassets 14,058,340 (9,087,021) Surplusonrevaluationofproperty,plantandequipment - 9,000,000 ========= ========= Deferredtaxassetsandliabilities,deferredtaxcharge/(credit)intheprofitandlossaccount,inequityandinthe

statementofcomprehensiveincomeareattributabletothefollowingitems:

Charged / (credited) to Charged / other At 1st January (credited) to (credited) to comprehensive At 31st December 2012 profit & loss equity income 2012 Shs Shs Shs Shs Shs

Excess depreciation over capitalallowances (18,187) 39,124 20,937Provision for liabilities and charges (738,820) (212,306) - - (951,126)Loss in value of available for salefinancialassets (2,726,106) 2,726,106 - - -

Revaluation surplus of property, plantandequipment 21,600,000 (8,154,700) (414,000) - 13,031,300 ________- _________ _________ __________ __________ Net deferred tax liability 18,116,887 (5,601,776) (414,000) - 12,101,111 ======== ========= ======== ========= =========

Notes (Continued)


19. Deferred income tax (continued)

Charged / (credited) to Charged / other At 1st January (credited) to (credited) to comprehensive At 31st December 2012 profit & loss equity income 2012 Shs Shs Shs Shs Shs

Excess depreciation overcapitalallowances (35,129) 16,942 - - (18,187)Provision for liabilities andcharges (528,203) (210,617) - - (738,820)Loss in value of availableforsalefinancialassets - - - (2,726,106) (2,726,106Revaluation surplus ofproperty, plant and 18,900,000 - - 2,700,000 21,600,000 __________ _________ __________ ___________ _________

Net deferred tax liability 18,336,668 (193,675) - (26,106) 18,116,887 ========= ========= ========= ========= =========

Inaddition,deferredtaxofShs.414,000(2011:Shs.nil)wastransferredfromtherevaluationsurplustoretainedearnings.Thisrelatestothedifferencebetweentheactualdepreciationoftherevaluedcarryingamountsofbuildingsandtheequivalentdepreciationbasedonthehistoricalcostofthoseassets(theexcessdepreciation).

20. Loans receivable 2012 2011 Shs Shs

Mortgage loans 123,121,143 60,558,686Other loans 2,135,259 2,592,608 ____________ ____________Total loans 125,256,402 63,151,294 =========== ===========

21. Reinsurers’ share of insurance liabilities Reinsurers’shareof:-Unearnedpremium(Note26) 117,631,813 83,631,587-Notifiedclaimsoutstanding(Note25) 245,718,662 226,622,113-Claimsincurredbutnotreported(Note25) 7,363,540 6,247,789 ___________ __________ 370,714,015 316,501,489 ========== =========

Amountsduefromreinsurersinrespectofclaimspaidbythecompanyoncontractsthatarereinsuredareincludedasreceivablesarisingoutofreinsurancearrangements.

22. Other receivables

2012 2011 Shs Shs

Depositsandprepayments 9,299,329 1,884,458Sundry debtors 1,835,817 2,168,343Deferredcommission 55,567,676 44,390,882Deposits with courts 5,283,861 5,283,861 __________ __________ 71,986,683 53,727,544 ======== =========

23. Cash and cash equivalents

Cash and bank balances 13,063,818 14,633,432 Deposits with financial institutions 365,774,023 381,346,329 ___________ ___________ 378,837,841 395,979,761 ========= ==========

Notes (Continued)


23. Cash and cash equivalents (continued)

FixeddepositsamountingtoShs.35million(2011:Shs.35million)areheldunderlienwithNICBankLtd.Thesefixeddepositsarenotavailableforliquidation.FixeddepositsamountingtoShs.64millionrelatestorecoveriesfromreinsurerinrespectoflitigatedclaim.Thesefundsarenotavailabletofinancethecompany’sdayto day operations.

Forthepurposeofthecashflowstatement,cashandcashequivalentscomprisethefollowing:

2012 2011 Shs Shs

Cash and bank balances 13,063,818 14,633,432Treasurybills(heldtomaturityinvestments) - 25,000,000Deposits with financial institutions 79,000,000 291,000,000 ___________ ____________ 92,063,818 330,633,432 ========== ==========

24. Insurance contract liabilities

Short-termnon-lifeinsurancecontracts:-Claimsreportedandclaimshandlingexpenses 687,327,214 643,327,984-Claimsincurredbutnotreported 33,779,327 29,358,711 ___________ ____________Totalgrossinsuranceliabilities(Note25) 721,106,541 672,686,695 ========== ==========

Grossclaimsreported,claimshandlingexpensesliabilitiesandtheliabilityforclaimsincurredbutnotreportedarenetofexpectedrecoveriesfromsalvageandsubrogation.Theexpectedrecoveriesattheendof2012arenotmaterial.

Notes (Continued)


25.

Mov

emen

t in

insu

ranc

e lia

bilit

ies a

nd re

insu

ranc

e as

sets

20

12

2011

G

ross

R

eins

uran

ce

Net

G

ross

R

eins

uran

ce

Net

Shs

Shs

Shs

Shs

Shs

Shs

Sh

ort-

term

insu

ranc

e bu

sine

ss

Notifiedclaims

643,327,984

226,622,113

416,705,871

591,616,676

209,651,497

381,965,179

In

curr

ed b

ut n

ot re

port

ed

29,3

58,7

11

6,24

7,78

9 23

,110

,922

26

,512

,953

6,

404,

972

20,1

07,9

81

__

____

____

__

____

____

____

__

____

____

__

____

____

____

__

____

____

__

____

____

____

At1stJanu

ary

672,686,695

232,869,902

439,816,793

618,129,629

216,056,469

402,073,160

Cashpaidfo

rclaim

ssettledinth

eyear

(346,348,519)

(132,463,829)

(213,884,690)

(274,802,507)

(94,883,538)

(179,918,969)

In

crea

se in

liab

ilitie

s

-aris

ingfrom

currentyearc

laim

s353,948,324

95,179,189

258,769,135

329,433,636

115,124,562

214,309,074

-a

risingfrom

prio

ryears’claim

s40,820,041

57,496,940

(16,676,899)

(74,063)

(3,427,591)

3,353,528

____

____

____

__

____

____

__

____

____

___

____

____

____

__

____

____

__

____

____

____

At31stD

ecem

ber

721,106,541

253,082,202

468,024,339

672,686,695

232,869,902

439,816,793

====

====

==

====

====

==

====

====

===

====

====

===

====

====

===

====

====

==

Notifiedclaims

687,327,214

245,718,662

441,608,552

643,327,984

226,622,113

416,705,871

In

curr

ed b

ut n

ot re

port

ed

33,7

79,3

27

7,36

3,54

0 26

,415

,787

29

,358

,711

6,

247,

789

23,1

10,9

22

__

____

____

__

____

____

____

__

____

____

__

____

____

____

__

____

____

__

____

____

____

At31stD

ecem

ber

721,106,541

253,082,202

468,024,339

672,686,695

232,869,902

439,816,793

====

====

===

====

====

===

====

====

===

====

====

===

====

====

====

==

====

====

26.

Prov

isio

n fo

r une

arne

d pr

emiu

m

20

12

2011

G

ross

R

eins

uran

ce

Net

G

ross

R

eins

uran

ce

Net

Shs

Shs

Shs

Shs

Shs

Shs

At1stJanu

ary

257,698,628

83,631,587

174,067,041

233,090,402

79,433,732

153,656,670

N

et in

crea

se in

the

year

62

,461

,299

34

,000

,226

28

,461

,073

24

,608

,226

4,

197,

855

20,4

10,3

71

__

____

____

__

____

____

____

__

____

____

__

____

____

____

__

____

____

__

____

____

____

At31stD

ecem

ber

320,159,927

117,631,813

202,528,114

257,698,628

83,631,587

174,067,041

====

====

===

====

====

===

====

====

===

====

====

===

====

====

====

==

====

====

Not

es (

Cont

inue

d)


2012 2011 Shs Shs27. Other payables

Accrued expenses 8,743,586 7,108,496 Withholdingtaxoncommission 295,488 221,929 Other liabilities 4,384,801 6,014,113 Deferredcommission 22,186,511 27,092,625 __________ ___________ 35,610,386 40,437,163 ========= ==========28. Contingent liabilities i) Incommonwiththeinsuranceindustryingeneral,thecompanyissubjecttolitigationarisinginthenormal

course of insurance business.

ii) Oneshareholderhasappliedtothecourtforaninjunctionrestrainingthecompanyfromofferingadditionalsharestotwooftheshareholders,andalsoagainstoneofthecurrentdirectorsfromofferinghimselfforre-election.

iii)SubsequenttotherightsissueapprovedattheAnnualGeneralMeetingofthecompanyheldon22ndJuly2009,two

shareholdershaveseparatelyfiledasuitagainstthecompanyandhaveappliedtothecourttodeterminetheallocationof shareswhichwereunsubscribedduring therights issue. At thehearingof1st July2010ofoneof thecases, theplaintiff ’sadvocateacknowledgedthattheinjunctionhadbeenovertakenbyevents.Thematterwasthereforestoodovergenerally.

Thedirectorsareoftheopinionthattheabovelitigationswillnothaveamaterialeffectonthecompanyoverandabovethe liabilityalreadyprovided in thefinancialstatementsoronanyactions takenbythedirectorssubject to thesuitduringhistenureatthecompany.

29. Related party transactions

Thecompanyisrelatedtoothercompanieswhicharerelatedthroughcommonshareholdingorcommon The following transactions were carried out with related parties.

2012 2011 i) Transactions with related parties Shs Shs Grosspremiumswritten 254,743,256 202,057,071 ========= ========== Netclaimsincurred 33,437,992 19,084,895 ========= ========== Commissionpaid 30,833,002 31,882,744 ========= ==========

ii) Outstanding balances with related parties

Outstandingpremium 19,423,076 11,813,890 ========= ========== Claimspayable 4,112,545 7,605,000 ========= ========== Deposits with financial institutions 70,000,000 99,000,000 ========= ========== Current account balances 20,101,634 14,625,709 ========= ==========

Notes (Continued)


29. Related party transactions (continued)

ii) Outstanding balances with related parties (continued) 2012 2011 Shs Shs Mortgage loans receivable: - Staff 7,200,000 - ======== ======== Other related parties 27,976,529 29,848,127 ======== ======== Other loans receivable: - Staff 2,134,807 277,877 ======== ========

Theloanstorelatedpartiesbearmarketratesofinterestandaresecuredbypledgeofsecuritydocuments.

All relatedparty transactionsareatarm’s lengthon termsandconditionsasoffered tootherclients.Therearenoimpairmentprovisionsheldagainstanyrelatedpartybalances.

iii) Directors’ remuneration 2012 2011 Shs Shs

Directors’remuneration

-Asnon-executives(includedinNote29(iv)) 1,650,000 1,500,000- Fees 3,120,000 2,850,000 ======== ======== 4,770,000 4,350,000

======== ========

iv) Key management compensation

Salariesandotheremploymentbenefits 37,395,165 34,060,452 ======== ======== v) Contingencies

Guarantees - 2,345,454 ======== ========

TheguaranteeshavebeenissuedtothirdpartiesbyPrimeBankLtd.onbehalfofthecompanyintheordinarycourseofbusiness.Basedontheestimateofthefinancialeffectofthecontingenciesandthecorrespondingobligationfromthethirdparties,nolossisanticipated.

30. Financial assets categorisation

The categorisation of assets carried at fair value by the levels defned below is as follows:

Level 1 2012 2011 Shs ShsAvailableforsalefinancialassets(treasurybonds) 41,650,119 27,591,779Financialassetsatfairvaluethroughprofitorloss(equityshares) 80,171,734 61,463,425 __________ ___________ 121,821,853 89,055,204 ========= ==========

31. Commitments

Capital commitments

Capitalexpenditurecontractedforatthebalancesheetdatebutnotrecognisedinthefinancialstatementsis as follows: 2012 2011 Shs Shs

Intangible assets - 2,590,077 ======== =========

Notes (Continued)


32.

Ins

uran

ce co

ntra

ct li

abili

ty (c

hain

ladd

er)

NOTES (CONTINUED)

20

08 cl

aim

s + p

rior

yea

rs

2009

20

10

2011

20

12

Tota

l

Estim

ate

ultim

ate

clai

ms c

ost a

t yea

r 79

8,41

5,70

4 25

0,23

4,68

9 29

6,53

0,90

5 33

0,82

6,74

7 34

9,52

7,91

7 2,

025,

535,

962

Afte

r 1 Y

ear

(24,348,547)

13,293,630

(3,416,618)

(20,207,962)

-(34,679,497)

Afte

r 2 Y

ears

4,766,459

3,568,341

(553,533)

-

7,781,267

Afte

r 3 Y

ears

466,593

(8,575,820)

(8,109,227)

Afte

r 4 Y

ears

70

,150

,696

70

,150

,696

Cur

rent

est

imat

e of

cum

ulat

ive

clai

ms

849,

450,

905

258,

520,

840

292,

560,

754

310,

618,

785

349,

527,

917

2,06

0,67

9,20

1

-Le

ss cu

mul

ativ

e pa

ymen

ts to

dat

e 53

0,22

2,53

1 20

0,09

9,24

0 24

4,41

7,55

4 23

5,13

6,53

2 16

3,47

6,13

0 1,

373,

351,

987

-

Liab

ility

in th

e ba

lanc

e sh

eet

319,

228,

374

58,4

21,6

00

48,1

43,2

00

75,4

82,2

53

186,

051,

787

687,

327,

214

Not

es (

Cont

inue

d)


GEN

ERA

L IN

SUR

AN

CE

BUSI

NES

S R

EVEN

UE

AC

CO

UN

TAp

pend

ix 1


Notes

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