Quarter 5 - financial statement for 2022

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

STANDARD ALLIANCE INSURANCE PLC

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

Content Page

Corporate Information 2

Results at a glance 3

Statement of Directors' Responsibilities 4

Report of the Directors 5 - 7

Certification pursuant to section 60(2) of Investment and Securities Act 8

Report of the Audit Committee 9

Corporate Governance Report 10 - 14

Independent Auditor's Report 15 - 18

Summary of Significant Accounting Policies 19 - 42

Statement of Financial Position 43

Statement of Profit or Loss and Other Comprehensive income 44

Statement of Changes in Equity 45

Statement of Cash Flows 46

Notes to the financial statements 47 - 85

Revenue Account 86

Other National Disclosures : 87

Statement of Value Added 88

Five year Financial Summary 89 - 90

Alh. Uwais Haruna Mohammed Independent Non-

Executive Director

Resigned 16 August 2024

Chief Uzoma Igbonwa Non-Executive Director Resigned 27 June 2024

Akin Iroko Chairman Appointed 23 September 2024 Nathaniel ibitowa Non-Executive Director Appointed 23 September 2024 Rohan Fernando Non-Executive Director Appointed 23 September 2024

Musa Lawan Non-Executive Director Appointed 23 September 2024 Paulinus Offorzor Managing Director/CEO Appointed 23 September 2024 Michael Owope Chief Financial Officer Appointed 23 September 2024

Olutayo Amore ED - Technical Appointed 30 October 2024

Company Secretary - Bar. Halima Jimada

Registered Office - Plot 1 Block 94, Providence Street

Lekki Scheme 1, Lekki Lagos.

Registrar - First Registrars and Investor Services Limited Plot 2, Abebe Village Road, Iganmu

Lagos.

Bankers - Access Bank Plc Ecobank Plc Fidelity Bank Plc

First City Monument Bank Limited First Bank of Nigeria Limited Guaranty Trust Bank Plc

Heritage Bank Limited Keystone Bank Limited Polaris Bank Limited Sterling Bank Plc Union Bank Plc

United Bank for Africa Plc Unity Bank Plc

Wema Bank Plc Zenith Bank Plc

Reinsurers - African Reinsurance Corporation Waica Reinsurance Corporation Plc Nigeria Reinsurance Corporation Zep Reinsurance Corporation

Nouvell Compagnie Africaine De Reassurance Aveni Reinsurance Company Ltd

Reinsurance Broker - Standard Insurance Brokers Limited

Auditor - Muhtari Dangana & Co (Chartered Accountants) Maanah Plaza

19, Araromi Street, Onikan - Lagos.

Actuary - Becoda Consulting Limited

No 7, Ibiyinka Olorunimbe Close Victoria Island

Lagos

STATEMENT OF DIRECTORS' RESPONSIBILITIES

In accordance with the provisions of the Companies and Allied Matters Act, 2020, the Insurance Act CAP I17, LFN, 2004 and National Insurance Commission's prudential guidelines 2015, the Directors are responsible for the preparation of financial statements which give a true and fair view of the state of affairs of the Company and the profit or loss and other comprehensive income for the financial year.

The Directors responsibilities include ensuring that the Company:

1. implement appropriate internal controls to secure the assets of the Company, prevent and detect fraud and other financial irregularities

2. keeps accounting records which disclose with reasonable accuracy the financial position of the Company and which ensure that the financial statements comply with the requirements of the Companies and Allied Matters Act 2020, Insurance Act CAP I17, LFN 2004, and NAICOM Prudential Guidelines and Circulars.

3. has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and estimates, and that all applicable accounting standards have been followed.

   The Directors accept responsibility for maintaining adequate accounting records as required by:

   1. International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB);

   2. Companies and Allied Matters Act, 2020;

   3. Insurance Act, CAP I17, LFN 2004;

   4. NAICOM Prudential Guidelines and circulars.

The Directors are of the opinion that the financial statements give a true and fair view of the state of affairs of the Company and of the profit or loss for the year. The Directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements, as well as adequate systems of internal control.

Nothing has come to the attention of the Directors to indicate that the Company will not remain a going concern for at least 12 (twelve) months from the date of approval of the financial statements.

REPORT OF THE DIRECTORS

The Directors have the pleasure of presenting their annual report and the audited financial statements of Standard Alliance Insurance Plc to the Shareholders along with the auditor's report for the year ended 31 December 2022. The Company's financial statements were prepared in compliance with the International Financial Reporting Standards (IFRS).

Principal activities and business review

The Company's principal activity is the provision of non-life and life underwriting and special risk underwriting. Such services include provision of general insurance and life assurance services to both individual and corporate customers.

The below is the summary of the Company's operating results:

2022 2021

N'000 N'000

Gross premium income 105,279 453,038

Claims expenses (578,558) (881,065)

Underwriting expenses (9,151) (40,853)

Underwriting results (494,549) (492,834)

Directors

The Directors of the Company are as follows:

Mr. Johnson Chukwu - Chairman Resigned 16 August 2024

Mr. Tayo Awodiya - Chief Executive Officer Resigned 16 August 2024

Mr. Oduniyi Odusi - Executive Director Resigned 28 June 2024 Alh. Uwais Haruna Mohammed - Independent Non-Executive Director Resigned 16 August 2024 Chief Uzoma Igbonwa Non-Executive Director Resigned 27 June 2024

Akin Iroko - Chairman Appointed 23 September 2024 Nathaniel ibitowa - Non-Executive Director (Nigerian) Appointed 23 September 2024 Rohan Fernando - Non-Executive Director (Sri Lankan) Appointed 23 September 2024 Musa Lawan - Non-Executive Director (Nigerian) Appointed 23 September 2024 Paulinus Offorzor - Managing Director/CEO (Nigerian) Appointed 23 September 2024 Michael Owope - Chief Financial Officer (Nigerian) Appointed 23 September 2024 Olutayo Amore - Executive Director-Technical (Nigerian) Appointed 30 October 2024

Directors' interests

The Directors' direct interests in the issued share capital of the Company as recorded in the Register of members as at 31 December 2022 are as follows:

Mr. Johnson Chukwu & Mr. Austin Enajemo-Isire:

In accordance with Section 277 of the Companies and Allied Matters Act 2020, none of the Directors notified the Company of any declarable interest in contracts involving the Company during the year under review.

Property, plant and equipment

Information relating to changes in tangible assets is given in Note 14 to the financial statements. The Directors are of the opinion that the market value of the Company's assets is not lower than the values shown in the financial statements.

Share capital information

1. Share range analysis

   Number of % Share %

   Range of shares Shareholders Total Units Total

   1	-	1,000	15,126	21.49	14,492,143	0.11
   1,001	-	5,000	27,647	39.27	86,388,122	0.67
   5,001	-	10,000	11,711	16.63	103,565,160	0.80
   10,001	-	50,000	11,831	16.81	282,768,978	2.19
   50,001	-	100,000	2,029	2.88	165,648,519	1.28
   100,001	-	500,000	1,534	2.18	340,954,565	2.64
   500,001	-	1,000,000	240	0.34	198,713,693	1.54
   1,000,001	-	5,000,000	165	0.23	363,668,833	2.82
   5,000,001	-	10,000,000	45	0.06	335,668,609	2.60
   10,000,001	-	50,000,000	40	0.06	853,979,957	6.61
   50,000,001	and above		33 0.05		10,165,182,007 78.73
   Total			70,401 100		12,911,030,586 100

2. Substantial interests in shares

Apart from Gemrock Management Company Limited, Standard Alliance Investments Limited and FCMB Plc which hold 2,594,060,738 units (20.09%), 2,557,636,144 units (19.81%) and 700,000,000 units (5.42%) respectively, no other shareholder held more than 5% of the issued share capital of the Company as at 31 December 2022.

Corporate Social Responsibilies

The Company makes donations to charitable and non-profit organisations in appreciation of the society's contributions toward's the Company's progress.

During the year, no donation was made (December 2021: Nil) was given out as donations and charitable contributions. Details of the donations and charitable gifts are as stated below:

2022 2021

N'000 N'000

1. Fair Life African Foundation - -

2. Ansar-ud-deen Society of Nigeria - -

   - -

   Human resources

   1. Employment of disabled persons

      The Company operates a non-discriminatory policy in the consideration of applications for employment, including those received from disabled persons. The Company's policy is that the most qualified and experienced persons are recruited for appropriate job levels irrespective of applicants state of origin, enthnicity, religion or physical condition. In the event that any employee becomes disabled in the course of employment, the Company is in a position to arrange appropriate training to ensure continuous employment of such person without being subjected to any disadvantage in his/her career development.

   2. Health, safety and welfare of Employees

      The Company's business premises are designed with a view to guaranteeing the safety and healthy living conditions of its employees and customers alike. Health, safety and fire drills are regularly organised to keep employees alert at all times. Employees are adequately insured against occupational hazzards. In addition, the Company provides medical facilities to its employees and their immediate families at its expense.

   3. Employee involvement and training

The Company encourages participation of employees in arriving at decisions in respect of matters affecting their well being. Towards this end, the Company provides opportunities for employees to deliberate on issues affecting the Company and employees' interests, with a view to making inputs to decisions thereon. The Company places a high premium on the development of its manpower. Consequently, the Company sponsored its employees for various training courses both in Nigeria and abroad in the year under review.

Auditors

Muhtari Danagana & Co (Chartered Accountants) were reappointed as statutory auditor of the Company in 2022 and have indicated their willingness to continue in office in accordance with the Companies and Allied Matters Act, 2020.

A resolution will be proposed at the Annual General Meeting to authorize the directors to fix their remuneration.

By order of the Board

Miss. Halima Jimada Comp. Sec/Legal Adviser

FRC/2024/PRO/NBA/004/605363

STANDARD ALLIANCE INSURANCE PLC

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

CERTIFICATION PURSUANT TO SECTION 60(2) OF INVESTMENT AND SECURITIES ACT NO.29 OF 2007

We the undersigned hereby certify the following with regards to our audited report for the year ended 31 December 2022 that:

1. We have reviewed the report;

2. To the best of our knowledge, the report does not contain:

   1. Any untrue statement of a material fact, or

   2. Omit to state a material fact, which would make the statements, misleading in the light of circumstances under which such statements were made;

3. To the best of our knowledge, the financial statements and other financial information included in the report fairly present in all material respects the financial condition and results of operations of the company as of, and for the periods presented in the report;

4. We:

   1. are responsible for establishing and maintaining internal controls;

   2. have designed such internal controls to ensure that material information relating to the Company is made known to such officers by others within the entity particularly during the period in which the periodic reports are being prepared;

   3. have evaluated the effectiveness of the Company's internal controls as of date within 90 days prior to the report;

   4. have presented in the report our conclusions about the effectiveness of our internal controls based on our evaluation as of that date;

5. We have disclosed to the Auditors of the Company and Audit Committee:

   1. all significant deficiencies in the design or operations of internal controls which would adversely affect the

      Company's ability to record, process, summarize and report financial data;

   2. any fraud, whether or not material, that involves management or other employees who have significant

      roles in the Company's internal controls;

      
      
      
      
      
      

6. We have identified in the report whether or not there were significant changes in internal controls or other factors that could significantly affect internal controls subsequent to the date of our evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Mr. Michael Owope Mr. Paulinus Offorzor

FRC/2018/PRO/ICAN/001/00000017730 FRC/2013/PRO/CIIN/002/00000003287

Chief Finance Officer Managing Director/CEO

REPORT OF AUDIT COMMITTEE

TO THE MEMBERS OF STANDARD ALLIANCE INSURANCE PLC

In accordance with the provisions of Section 404 (7) of the Companies and Allied Matters Act 2020, we the Members of the Audit Committee of Standard Alliance Insurance Plc having carried out our statutory functions under the Act, hereby report as follows:

• We have reviewed the scope and planning of the audit for the year ended 31 December, 2022 and we confirm that they were adequate.

• The Company's reporting and accounting policies as well as internal control systems conform to legal requirements and agreed ethical practices.

• We are satisfied with the departmental responses to the External Auditors' findings on management matters for the year ended 31 December, 2022.

Finally, we acknowledge and appreciate the cooperation of Management and Staff in the conduct of these duties.

Nathaniel Ibitowa

Chairman of the Audit Committee

FRC/2025/PRO/DIR/003/655875

Members of the Audit Committee

Nathaniel Ibitowa - Chairman Appointed October 9, 2024

Musa Lawan - Member Appointed October 9, 2024

Erinfolami Gafar - Member Appointed October 9, 2024 Matthew Esonanjor (SAN - Member Appointed October 9, 2024

Reporting entity

Standard Alliance Insurance Plc is a Company incorporated and domiciled in Nigeria. The address of the Company's registered office is Plot 1, Block 94, Providence Street, Lekki Scheme 1, Lekki - Epe Express way, Lekki, Lagos. The Company underwrites life and non-life insurance risks. The Company is listed on the Nigerian Stock Exchange.

The Company primarily operates in the insurance sector.

Standard Alliance Insurance Plc has over the years built an enviable reputation and has consistently adopted, implemented and applied international best practices in corporate governance, service delivery and value creation for all its stakeholders.

The Company's corporate governance principles are embodied in its Code of Corporate Governance, which represents the core values upon which the Company was founded. The code of Corporate Governance is designed to ensure that the Company's business is conducted in a fair, honest and transparent manner that conforms to high ethical standards. For the entity, good corporate governance goes beyond just adhering to rules and policies of the Regulators; it is about consistently creating excellent value for our stakeholders using the best possible principles within a sustainable and enduring system.

In order to remain a pace setter in the area of good corporate governance practice, the Company's corporate governance practices are constantly under review in line with the dynamics of the business environment and guidelines of the regulatory bodies.

Governance Structure

The Company is committed to high standards of corporate governance. Corporate governance practice in the Company is drawn from various applicable codes of corporate governance issued by National Insurance Commission (NAICOM) and Securities and Exchange Commission (SEC). This ensures compliance with regulatory requirement as well as the core value which the Company upholds.

The provision of the codes is geared towards ensuring transparency and accountability of the Board and Management to shareholders of the Company.

The Board of Directors

The newly reconstituted Board of Directors is made up of seven (7) members; the Chairman, three (3) Non-Exectuve Directors and three (3) Executive Directors.

All the Directors bring various and varied competencies to bear on all Board deliberations. The Directors individually have attained the highest pinnacle of their chosen professions. The Board meets quarterly and is responsible for effective control and monitoring of the Company's strategy.

The ultimate responsibility for the governance of the Company resides with the Board of Directors, which is accountable to the shareholders for creating and delivering sustainable value through the management of the Company's business. The Board is also responsible for the management of the Company's relationship with its various stakeholders. The day to day running of the Company is delegated to the Chief Executive Officer by the Board of Directors assisted by the Management Committees.

Responsibilities of the Board

The responsibilities of the Board of Directors include:

1. Review corporate strategy, major plans of actions, risk policies, business plans, setting performance objectives, monitoring implementation and corporate performance and overseeing major capital expenditures and acquisitions

2. Select, compensate, monitor and when necessary, replace key executives and oversee succession planning.

3. Monitor the effectiveness of the governance practices under which it operates and make changes as may be necessary.

4. Ensure the integrity of the Company's accounting and financial reporting systems, including the independent audit and that appropriate systems of control are in place, in particular, systems for monitoring risk, financial control and compliance with the law.

5. Monitor and manage potential conflicts of interest of management, board members and shareholders, including misuse of corporate assets and abuse in related party transactions.

6. Supervise and monitor the execution of policies and providing direction for the management.

7. Monitor potential risks within the company including recognising and encouraging honest whistle blowing.

8. Oversee the process of disclosure and communication in the company.

Roles of Chairman and Chief Executive Officer

The roles of Chairman and Chief Executive are separate and no one individual combines the two positions. The Chairman's main responsibility is to lead and manage the Board to ensure that it operates effectively and fully discharges its legal and regulatory responsibilities. The Chairman is responsible for ensuring that Directors receive accurate, timely and clear information to enable the Board take informed decisions, monitor effectively and provide advice to promote the success of the Company. The Chairman also facilitates the contributions of Directors and promotes effective relationships and open communications between Executive and non-Executive Directors, both inside and outside the Boardroom.

The Board has delegated the responsibility for the day-to-day management of the Company to the Chief Executive Officer, who is supported by Executive Management. The Chief Executive Officer executes the powers delegated to him in accordance with guidelines approved by the Board of Directors. Executive management is accountable to the Board for the development and implementation of strategies and policies. The Board regularly reviews Company performance, matters of strategic concern and any other matters it regards as material.

Board Committees

The Board carries out some of its responsibilities through the Board sub-committees whose terms of reference set out clearly their roles, responsibilities, scope of authority and procedures for reporting to the Board. Each committee is chaired by a non-Executive Director in compliance with principles of good corporate governance and the Audit Committee is chaired by a non- executive director. These committees report to the Board of Directors on their activities and decisions, which are ratified by the full Board. The Committees are as follows:

1. The Finance, Strategy and General purposes Committee

   This is a standing Committee of the Board with the responsibility to review the Company investment portifolio. The terms of reference of the Committee includes:

   • Review of existing investments;

   • Review of investment strategies;

   • Review of company's investments by way of equities;

   • Review of Budgets.

   • Review and make recommendations on procedural manuals/policies;

   • Make recommendation on recruitment/termination of General Managers and above to the Board;

   • Strategy formulation;

   • Review of Human Capital Management Operations

   • Review of Marketing activities

     The Committee had the following members during the year under review:

     The Committee did not hold any meeting during the year under review because the Board of Directors were not sufficient in number.

2. The Enterprise Risk Management and Governance Committee

   The terms of reference of this Committee includes the following:

   • Establish criteria for Board and Board Committee memberships, review candidate's qualifications and any potential conflict of interest, assess the contribution of current directors in connection with their re-appointment and make recommendations to the Board;

   • Prepare job specification for the Chairman's position, including assessment of time commitment required of the candidate;

   • Periodic evaluation of skills, knowledge and experience required on the Board;

   • Make recommendations on experience required by the Board Committee members, Committee appointments and removal, operating structure, reporting and other Committee operational matters;

   • Make recommendations on compensation structure for Executive Directors;

   • Provide input to the annual report of the Company in respect of Director's compensation;

   • Ensure Succession Policy and Plan, subsists for positions of Chairman, CEO/MD, Executive Directors and subsidiary MDs;

   • Ensure Board conducts Board Evaluation on annual basis;

   • Review performance and effectiveness of the subsidiary's Board on annual basis;

   • Review and make recommendations to Board for approval of the Company's organizational structure and any proposed amendments;

   • Review of performance bonuses;

   • Review of Staff Remuneration package.

   • Review and approval of the Company's Enterprise Risk Management policy including risk appetite and risk strategy;

   • Review the adequacy and effectiveness of risk management and controls;

   • Oversight of management's process for the identification of significant risks across the Company and the adequacy of prevention, detection and reporting mechanisms;

   • Review of the Company's compliance level with applicable laws and regulatory requirements which may impact the

     Company's risk profile;

   • Periodic review of changes in the economic and business environment, including emerging trends and other factors

     relevant to the Company's risk profile;

   • Review and recommend for approval of the Board risk management procedures and controls for new products and services.

     The Committee did not hold any meeting during the year under review because the Board of Directors were not sufficient in number.

3. The Audit and Compliance Committee

   The Audit and Compliance Committee is made up of 6 (six) members, three representatives each of Shareholders and Directors. Its members are elected at the Annual General Meeting.

   In addition to its responsibility to review the scope, independence and objectivity of the audit, the Committee carries out all such matters as are referred to it by the Companies and Allied Matters Act, 2020. These functions include to:

   • Meet at least thrice yearly and once with the External Auditors;

   • Review Whistle blowing policy;

   • Periodic Evaluation of the Committee's performance;

   • Carrying out internal control checks on all company activities;

   • Make recommendations to the Board on sanctions in areas of default where necessary;

   • Receive and review integrity of data of the audited financial statements of the company;

   • Make recommendation on appointment and remuneration of external auditors;

   • Review and make recommendations based on Management letters issued by external auditors;

   • Monitor the quality of internal control procedures and compliance with regulatory policies.

The Committee had the following members during the year under review: Nathaniel Ibitowa - Chairman

Musa Lawan - Member

Rohan Fernando - Member

Erinfolami Gafar - Member Matthew Esonanjor (SAN) - Member Bar. Halima Jimada - Member

This Committee was recently reconstituted after new core investors came on board. The previous Audit Committee of the former management did not hold any meeting in the year under review.

Internal Control

It is the responsibility of the Board of Directors to ensure that all the records are accurate and correctly reflect the financial position of the Company. The Board is mindful of the fact that as an insurance company, great relevance is placed by policy holders and potential investors on the accuracy of information contained in its financial statements.

In order to ensure the accuracy of its records, the Board sets standards that the Quality Assurance department implements system of internal control comprising policies, standards and procedures to ensure that the safety of assets and reduction of the risk of loss, error, fraud and other irregularities. Both the Quality Assurance (Internal Auditors) and the External Auditors independently appraise the adequacy of the internal controls.

Muhtari Dangana & Co (Chartered Acountants) acted as external auditors to the Company for the 2022 financial year. Their report for the year under review is contained on pages 20 - 23 of these financial statements.

Support Committees

1. Executive Management Committee

   The Committee is responsible for strategic marketing activities, review of investment portfolio and approval of new products and branches. The members of the committee are:

   1. Chief Executive Officer

   2. Executive Director

   3. Chief Finance Officer

   4. Company Secretary

2. Senior Management Committee

   The Committee is responsible for strategic initiatives on business generation and membership includes:

   1. Chief Executive Officer

   2. Executive Directors

   3. All Divisional Heads

   4. Head, Technical

   5. Head, Corporate Services

   6. Chief Finance Officer

   7. Head, Internal Control/Quality Assurance

   8. Head, Information Technology (IT)

3. Weekly Activity Review Committee

   This Committee meets weekly to review business development activities of the entire Company. The Committee consists of:

   1. Chief Executive Officer

   2. All Divisional Heads

   3. Head, Technical

   4. Head, Information Technology

   5. Head, Corporate Services

   6. Head, Internal Audit/Quality Assurance

   7. Chief Finance Officer

   8. Head, Enterprise Risk Management

   9. All marketing staff

4. Management Committee

This Committee meets every month to review the Company's performance. The meetings are usually held first Friday and Saturday following the end of each month.The Committee consists of:

1. Chief Executive Officer

2. Executive Director

3. All Divisional Heads

4. All Regional Heads

5. All Branch Managers

6. Head, Technical

7. Head, Information Technology

8. Chief Finance Officer

9. Head, Corporate Services

10. Head, Internal Audit/Quality Assurance

11. Head, Enterprise Risk Management

Mshtari

Dangana & Co.

CHARTERED ACCOUNTANTS

awnEs:

Herbcrl Mecaulay way,

Tel:0M35150831, 00026213784.

KANO:

Fatirng House, 18B, Murtsl6 Mohammed way.

Oppoeis Daula Hotel,

P.O. Bbx 4698, Kano Tel; 08027085740

uâanah Plaza

19, Araromi Street, Oft Moloney Street, Onikan - Lagos

P. O. Box 72293

Victoria Island.

Tel: 09034544908,

09021503792.

muhtarldwgana.can.ng

IhtOEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS OF STANDARD ALLIANCE INSURANCE PLC

REPORT ON THE AUDIT OF THE FINANCIAL STATEMEHTS

opinion

We have: audited the financial statements of Standard Alliance Insurance Plc., which compose, the statement. of financial position :as at 31 December t022, statement of profit or loss and other comprehensive..Income, statement .of changes in equity, and statement of cash flows for the year th"en ended and notesto the tinancat sMtemenn, lncudin$ a summaryot sgniticantaccountin$ poWces and other explanatory notes.

In our opTnlon, Ehe accompanying financial statements give a true and falr view of the financial position of the. Company as at 31 December 2022 and of' ts. financial performance .and cash .flows for the year then ended in accordance with International Financial Reporting Standards, Issued by the International Accounting Standards Board and In compliance with the relevant provisions of the F1nancial Reporting Council of Algeria, Acc No 6, 201 t, the Companfes and Allied Matters ACt 2020, Insurance Act CAP 177, LFN

.2004 and the Prudential Guidelines issued by National Insurance Commission.

Basts for Opinion

We conducted our.audit in accordance with International Standards.on Auditing (ISAs), 0.ur'responsibit›ties. under those standards are further descrtbed In the.Auditors' Responsibilities. for the Audit of the F1nanc›at Statements section of our report. We are. independent of the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethfcs for Professfo.nal Accountants together with the ethical requirements Shat are' retevafit to our aud1t'of the fJnancfat statements in Nigeria, and we have fu1ftlted our other ethical responsibilities in accordance with thase requirements and .the lnternatanat Ethics Standards Board Code. We believethat the audit evidence we have obtaine.d is suff1clent and 'appropriate to provide a basis"forour optnJon.

Material uncertainty relating to go1ng concern

We draw attention to note 42 of the financial statements, whjch indicates that the company recorded a net loss of N838.94 mJtllon durtng the year ended 31 December 20Z2 (2021, N1.724btlllon) and, as at. that 'date, there ts a shortfall of regulatory minimum paid up capital of H8.96Zbilion and shortfall of NIJ.426bitIiori in sal'vency margin. These conditions ato»g Ath other rriatters as. se't. firth in Note 42, ind1cate that.â material uncerta1nty exlsts that may cost signiflcaht doubt on the Company's ability to conn'nueasagolngcontem.

The Board and Management of the Company are working assiduously to jnject fresh capital through a recapJtafizatlon and buslness restructuring plan Involving msjor prospective investor as set forth in Note

43. Our opinion is not modffled in respect of this matter.

Key Aud1t Matters

Key audit matters are those matters t'hat, in our proféssional judgeme"nt, were of most significance in our audit of the financial statemerits of the current penod. These matters were addré*sed in the context of our audit of the ffnanctal sta.tements as a whote, and in forming our opinion theréon, and we do not provide a separace opiriion on these matters.

Muhtari

Dangana & Co.

CHARTERED ACCOUNTANTS

OFFICER:

ABUJA:

3s, Oousb str•a,

P.0.Box 744g Wuas

Tel: 0803515983t, 09028213784.

KANO:

F•sma. House, 18B, Murtata Mohammed way,

Oppa8ite Daula Hold

P.O. Box 4608, Kano

Tal' 08027085749

LAGOS:

Maanah Plaza

19. Araromt Street, Off Moloney Street. Onlkan - Lagos

P. O. Box 72298

Victoria laland.

Tel: 09034544908,

09021503792,

INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS OF STAHDARD ALLIANCE INSURAI'‹CE PLC. - CONT'D

REPORT ON THE AUDIT OF THE' FINANCIAL STATEMENTS - CONT'D

Revenue recogn.ftlon

Due to tKea targe number of policies underwritten ,by the Company there is a risk that .the revenue recorded. in the ffnancfat statements' and the flow of premium ‹nformatton from the underwriting systems to the: financTat reporting ledger may nat be completely accounted for.

Response

We have tested the desfgn and Implementation of the key controls over revenue recognition, focusing on the flow of information from the underwriting systems to. the financial reporting ledger. In addition, wé. performed substantive analytical testing procedures . on thé gross and .unearned premium balances amongst others.

Vatuatton of Investment properties

The Directors have estimated the value of the Company's: investment properties to be u4.0 billion as at December 2021. lndependen't external valuations were obtained In order to support the value in the Company's fi?tancIaI statements. These valuations are dependant on certain key assumptions and

signlflcant judgments ›nciudirig capita(ization rates:and fair market rents,

be "ascertain'ed th"e foIIo'wing

• Evaluated the independent external valuers.' competenc.e, :capabilities and objecttvlty

• Assessed.the. methodol'ogIes used and the appropriateness of the key assumptions.

• Checked the accuracy and relevance of the Input data used.

  We asp reviewed and found the .dixtosures iñ note 11.2 to be appropriate based on the aassumptions: and avai(able evidence,.

  valuat1on of insurance contracts I)abi1tties.

  The Directors have. estimated the value of insurance contract IabiIitie•. in the Company's financial stat'ements to be N4.9 billion as at year ended 3'1 December, 2071 based. on the actuanal valuation and liaoitity adequacy test carried out by in .extern:al firm of Actuaries.

  The valuation has been made on 'the following key assumpti0ns which were.determined by tñe Actuary:.

• "Reserves were calculated via a cash flow projection approach, taking 'into account fMture premiums, expenses and benefit payments including an allowance for benefits.

• The unexpired premium reserve for general business is «alcutated on the assumption that risk y/il occur.evenly during the duration of the pa(icy.

• The Company's claim payment approach will. be sustained nto the future.

• Weighted past average ihfation w1\ remain unchanged over the claim projectTop period.

• Gross claim amount Includes all related clairri expenses.

• An unexpired premium reserve wa's included for Group life busines5, after al!owTngfor acquisition expenses at a ratio of.206 premium.

• An 'allowance was made tor IBHR(lncurred But Not Reported) tlaims in Group Life to take care of' the delay in reporting clatms.

  Our response

• Evaluated and validated controls over insurance contract liabilities,

• Evaluated the independent external Actuary's compdtence, capability and objectiyity,

• Assessed the methodologies used and Lhe appropriatenessof the key assumptions,

• Checked the accuracy and relevance of dara provided to the Actuary by management, Re e ed the result based on the assumption?.

Co.

CHARTERED ACCOUNTANTS

OFFICES:

Tbl: 0803515M31, 090Z8213784.

KANO:

Fatima House, 18B, Murtala Mohammed way,

Opposite Daula Hotel

P.O. Bax.486K8a,no

Tel: 08027085749

ktaanah Plaza

19, Araroml Street, Off Moloney Street, Onikan - Lagos

P. O. Box 72293

ctorla Island. TeI:.06034544908,

09021503792,

JNDEPENDENT, AUDITORS' R£PORT

TO THE SHAREHOLDERS OF STANDARD ALLIANCE INSURANCE PLC. - CONT'D

REPORT ON THE AUDIT OF TFIE FILIANCIAL STATEMENTS - CONT'D

Other Information

The. Directors are responsible for the other information, The other information.Comprises the Information included in the Chatrman's and Directors' statements,.but does 'not include the financtal statements and our auditors report.thereon, Our oplnton on the financial.statementsdoes not cover the other information and we do not expre4s any form of assurance csnctuston thereon.

In connection with our audit of the financial staterttents, .our responsbTlIty is to read the otker information and In doing so, consider whether the other lnformatton Is materially inconsistent with the financial statements or our knowledge obtained during the audit or otherwisei appears: to be materiatI'y mJsstated. If, based on the work we have performed, we conclude that there Is a rriaterlal mtsstatement of this Inforffiation, we.are required rep0rt that fact. We have"nothing to report in thls re'gard.

Responstb1lltles of the Directors for the Financial Statements

The directors are responsible for the preparation and iatr presentation of Lhe financial statements irt accordance wlth International Fihanciat Reporting Stañdards tssued by the ln'ternationat .Accounting and Assurance Standards Bdard, and in compliance with thé relevant provisions of the. Financial Reporting Council of Nigeria Act., No 6, 2011, the Companies and Allied utters Act, 2020, Insurance Act, CAP 117 LFN 2004, and the. Prudential Guidelines issued b'y National Insurance Commission, and for 'such internal control as the directors deterrñine is nécessary to enable the preparation of finañciâl statements that are free .from material. mTssta.tement; whether due to fraud or erro:r.

In preparing the financial statements, the: d1rectors are responsible for assessing the Company's a'bJl ty to continue as a going concern, disclosing, as applicable; matters related to going concern and using the going concern basis of accounting unless the directors either intend to ftquidate the Company or to cease operations, or kas no realistic alternative but to do. so.

Auditor' responsfbllltfés for the Aud1t of the F1nancta:I Statements

Our objectives are to aobtain reasonable. assurance about whether the ftnbncial statements as a whote arc free from material misstatement, whether due to fraud or error, and to Issue a report that includes our opinion. Reasonable: assurance is a high level :of assurance, but 1s not a guarantee that an audit conducted In accordance Cth International Standards on Auditing will always dptect a' material misstateM9rtt when ft exists. Mis«atements cyn arise.from fraud or error and are considered matenat ‹f, individually or in the aggregate, they could reasonably be expected to Influence rhe economic declslons of users' taken on the basis of these flnancfal statements.

As part of an audit n accordance with .International Standards on Auditing, we exercise professfoñal judgment and maintain professlonat!skepticism throughout the audit. We atso:

* Identify and asséss the rIsM éf material misstatement of the financial statements, whether' due to fraud or error, deitgn and perform audit pr6cedures: responsive to those risM, and obtain audit .evidence .that is suffi.cient.and appropñate to provide..a.basis for our cpiñion. The rlsk of not detecting a material misstatement resulting from fraud is htgher than for one resulting from error, as fraud may involve collusion, forgery, intentional emissions, misrepresenta.tioits, cr the override of internal control.

" Obtain an understanding of Internal control relevant to the audlt Tn order to. design audit procedures that are appropriate in the circumstances, but not for the purpose of expressi'ng.an opinion on the eiiectiveness of the Company's internal control.

° Evaluate the appropriatehess of accounting pol!ctes used and the reasonableness of accounting estimates and related distfosures by the directors.

17

éangana &

CHARTERED ACCOUNTANTS

OFFICES:

ABUJA:

36, Douala Street,

Off Herbert Macaulay way, Wuse Zone 5, Abuja

P.O. Box 7436 Wuse

Abuje.

Tel: 08035159631,

09028213784.

KANO:

Fatima House, 18B, Murtala Mohammed way, Opposite Oaula

P.O. Box 4698, Kano Tel: 08027085749

LAGOS:

Maanah Plaza

19, Araromi Street, OP Moloney Street, Onikan - Lagos

P. O. Box 72293

Victoria Island. Tel: 09034544908,

09021503792.

.muhtaridangana.com.ng

inf0@muhtaridangana.com.n

INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS OF STANDARD ALLIANCE INSURANCE PLC. - CONT'D REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS - CONT'D

* Conclude on the appropriateness of directors' use of the going concern basis of accounting and, baséd on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.

" Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit, and significant audit findings and any significant deficiencies in internal control that we identify during our audit.

Contraventioñ of laws and regulations

During the year, the Company contravened certain sections of the Insurance Act, CAP l17, LFN 2004 and NAICOM's operational guidelines. Details of the contraventions and appropriate penalties thereon are disclosed in note 45.

Report on other legal and regulatory requirements

The Companies and Allied Matters Act, 2020 and Insurance Act CAP 117 LFN 2004 require that in carrying out our audit we consider and report to you on the following matters. We confirm that:

i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit

in our opinion, proper books of account have been kept by the Company

the Company's statement of financial position, and its statement of profit or loss and other comprehensive income are in agreement with the books of account.

Abel Atalor FRC/2013/PRO/ICAN/004/00000001 141

.2025

Muhtari Dangana El Co (Chartered Accountants) Lagos, Nigeria

1S

The following are the significant accounting policies adopted by the Company in the preparation of its financial statements. These policies have been consistently applied to all year's presentations.

1 The reporting entity

The Company was incorporated in July 1981 as a Private Limited Liability Company and commenced full operations in 1982 under the name Jubilee Insurance Company Limited. The name was changed to Standard Alliance Insurance Company Limited (Standard Alliance) in August 1996.

The Company successfully merged with its subsidiary Company, Standard Alliance Life Assurance Limited on 27 February 2017.

Standard Alliance Insurance became a Public Liability Company (Plc) on 30th May 2002 and was quoted on the Nigerian Stock Exchange in December 2003.

The Company is 100% fully owned by Nigerian citizens and Institutional investors. Its major shareholders are:

Subsequenly, on 19 2024, the shares that previously belonged to Standard Alliance Investments Limited were sold to a new core investor, Endura Investment Global Limited. The financial statements for the year ended 31 December 2022 which had been in arrears for two (2) years were finally approved by the new Board of Directors on 20th August, 2025.

The Company's principal activity continues to be provision of risk underwriting and related financial services to its customers. Such services include provision of general insurance services and life assurance to both corporate and individual customers.

1. Basis of preparation

   1. Statement of compliance with International Financial Reporting Standards (IFRSs)

      The financial statements are prepared in accordance with International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB) and the interpretations of these standards, issued by the International Financial Reporting Standards Interpretation Committee (IFRIC) and the requirements of the Companies and Allied Matters Act 2020 and the Insurance Act, CAP I17,LFN 2004 and regulatory guidelines as pronounced from time to time by National Insurance Commission (NAICOM).

   2. Going concern

      The Company's financial statements are prepared on a going concern basis. Even though the parties are aware of material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern, the Directors are satisfied that the Company has the resources to continue in business for the foresesable future.

      This conclusion of the Directors is on the mitigating procedures taken to inject fresh capital through a recapitalization and business restructuring plan involving major prospective investors.

   3. Basis of measurement

      Historical cost basis was used in the preparation of the financial statements as modified by certain items of:

      • Investments at fair value

      • Financial assets at fair value through other comprehensive income (FVOCI) that are measured at fair value

      • Investments carried at amortised cost

      • Impaired assets at their recoverable amounts

      • Insurance contract liabilities at fair value

      • Freehold Land and Buildings stated at revalued amount

   4. Functional and Presentation Currency

      The financial statements are presented in Nigerian Naira (N), which is also the functional currency of the Company and rounded to the nearest thousand (N'000) unless otherwise indicated.

   5. Transactions and balances in foreign currencies

      Transactions denominated in foreign currencies are recorded in Naira at the rate of exchange ruling at the date of each transaction. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included in the profit and loss account. Monetary assets and liabilities denominated in foreign currencies at the statement of financial position date are translated at that date. Exchange gains arising from the revaluation of monetary assets and liabilities are recognized in the income statement while those on non-monetary items are recognized in other comprehensive income. For non-monetary financial investments, unrealized exchange differences are recorded directly in equity until the asset is disposed or impaired.

   6. Order of presentation

The Company presents its statement of financial position broadly in order of liquidity. An analysis regarding recovery or settlement within twelve months after the reporting date (current) and more than 12 months after the reporting date (non-current) is presented in the notes.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3 Significant management judgements and key sources of estimation uncertainty

In the process of applying the accounting policies adopted by the Company, the directors make certain judgments and estimates that may affect the carrying values of assets and liabilities in the next financial period. Such judgments and estimates are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the current circumstances. The directors evaluate these at each financial reporting date to ensure that they are still reasonable under the prevailing circumstances based on the information available.

The preparation of the Company's financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require material adjustments to the carrying amount of the asset or liability affected in the future. These factors could include:

1. Significant judgements made in applying the Company's accounting policies

   The judgements made by the directors in the process of applying the Company's accounting policies that have the most significant effect on the amounts recognised in the financial statements include:

   • Whether it is probable that future taxable profits will be available against which temporary differences can be utilised; and

   • Whether the Company has the ability to hold financial assets at amortised cost until they mature. If the Company were to sell other than an insignificant amount of such financial asset before maturity, it would be required to classify the entire class as financial assets through other comprehensive income (FVOCI) and measure them at fair value.

2. Key sources of estimation uncertainty

1. Valuation of insurance contract liabilities

   • Critical assumptions are made by the actuaries in determining the present value of actuarial liabilities. These assumptions are set out in accounting policy 5.19 and as embedded in the report. The liability for insurance contracts is either based on current assumptions or on assumptions established at inception of the contract, reflecting the best estimate at the time increased with a margin for risk and adverse deviation. All contracts are subject to a liability adequacy test, which reflects management's best current estimate of future cash

     flows.

   • Estimates are also made as to future investment income arising from the assets backing insurance contracts. These estimates are based on current market returns as well as expectations about future economic and financial developments.

   • Assumptions on future expenses are based on current expense levels, adjusted for expected expense inflation if appropriate.

2. Property, plant and equipment

   Critical estimates are made by the directors in determining the useful lives and residual values of property, plant and equipment.

3. Impairment losses

   Estimates are made in determining the impairment losses on assets. Such estimates include the determination of the recoverable amount of the asset.

4. Income taxes

   The Company is subject to income taxes under the Nigerian Tax Laws. Significant estimates are required in determining the provisions for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcomes of these matters are different from the amounts that were initially recorded, such differences will impact the income tax and the deferred tax provisions in the period in which such determinations are made.

5. Critical judgments in applying the entity's accounting policies

In the process of applying the Company's accounting policies, management has made judgements in determining:

1. The classification of financial assets and liabilities

2. Whether assets are impaired.

3. Whether land and buildings meet the criteria to be classified as investment property.

1. New standards, interpretations and amendments not yet effective

   There are certain standards, interpretations and amendments that have been published that are not mandatory for the 31 December, 2022 reporting period and have not been early adopted by the Company. Except for IFRS 17: Insurance Contracts, these standards are not expected to have a material impact on the Company in the current or future reporting periods. The most significant of these are:

   • IFRS 17 Insurance Contracts (Effective 1 January 2023)

     In May 2017, the IASB issued IFRS 17 Insurance Contracts (IFRS17), a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. IFRS 17 provides the principles for recognition, measurement, presentation and disclosure of insurance contracts within the scope of the standard. The standard is aimed at providing information that faithfully represents those contracts. In contrast to the requirements in IFRS 4, IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects. The standard requires insurance liabilities to be measured at a current fulfillment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance contracts. When it become effective, IFRS 17 shall supersede IFRS 4 Insurance Contracts.

     Issued and amended standards effective from priods beginning on 1 January 2022.

   • Annual improvements to IFRS standards 2018 - 2020 ( Effective 1 January 2022):

     • IFRS 9: Financial Instruments clarifies which fees should be included in the 10% test for derecognition of financial liabilities.

     • IFRS 16: Leases - amendment to remove the illustration of payments from the less or relating to lease hold improvements, to remove any

       confusion about the treatment of lease incentives.

     • Amendments to IFRS 3: Business Combination - Reference to the Conceptual Framework.

     • Amendments to IAS 1: Presentation of Financial Statements - Classification of liabilities as current or non-current.

     • Amendments to IAS 16: Property, plant and equipment - Proceeds before intended use.

     • Amendments to IAS 37: Onerous Contract - Cost of Fulfilling a Contract

2. Disclosure of various measurement models and their applications under IFRS 17.

   At the transition date, the company will apply the requirements of IFRS 17 retrospectively for each group of insurance contracts unless it is considered impracticable to do so. Where it is assessed as impracticable, an entity may apply a modified retrospective approach ('MRA') or fair value approach ('FVA').

   The choice of transition approach will affect the financial impact of implementation of IFRS 17 (both in terms of future profitability and impacts on equity) and the operational complexity of collating the required information.

   IFRS 17 transition requirements are such that impracticability of the FRA needs to be demonstrated at the IFRS 17 group of contracts level. Paragraph C4 of the standard states that 'to apply IFRS 17 retrospectively, an entity shall at the transition date: (a) identify, recognise and measure each group of insurance contracts as if IFRS 17 had always applied'. Therefore, when assessing whether to apply the FRA, groupings are first determined (portfolio, onerousness, year of inception) and the FRA assessment of practicality is made for each group. If any element of the FRA is considered impracticable for a group, then the entity immediately has a choice between the two simplified options.

   Based on the above principles, the fair value approach will be used for the calculation of the CSM at transition date of restated December 31, 2021 whilst the fully retrospective approach will be used for the Group Life business since those are annually renewable contracts.

   Portfolios	Transition Approach of restated December 2021
   Annuity	Fair Value Approach (FVA)
   Endowment	Fair Value Approach (FVA)
   Protection	Fair Value Approach (FVA)
   Group Life	Fully Retrospective Approach (FRA)

3. Description of risk adjustment, discount rate applied, confidence level and how they are determined

   The risk adjustment is the additional liability the company needs to hold to cover the uncertainty about the amount and timing of the cash flows that arises from non-financial risk as the company fulfils its insurance contracts.

   The uncertainty and timing for the company's Group Life arises in the estimate of the Loss Reserve, hence only the uncertainty arising from claims reserve will be allowed for in the Risk Adjustment calculation for Group Life. The company will use Value at Risk (VAR) approach to estimate the Risk Adjustment. The historical claims as per the data in the IBNR calculation and have ranked the claims and the development factors from the claims and will applied a 70% confidence level to determine the Risk Adjustment factor.

   For the other contracts other than Group Life business, the Value at Risk approach will be use also, for the calculation of the risk adjustment. The Risk Adjustment will be derived by calibrating stresses on the best estimate assumptions to give a set of assumptions allowing for risk, and then differencing the two results. The stress assumptions will be calibrated at 70% confidence level.

   The results of the non-financial stress impacts will be aggregated whilst also allowing for diversification benefits. The result will represent the entity's attitude to and expectation of compensation for taking on non-financial risk. The Risk Adjustment will be calculated at Unit of Account level with a bottom-up approach. The table below shows the risk adjustment factors that will be used for restated 31 December 2021 transition and 31 December 2022 comparatives at the point of transition.

   	December 2021 Risk Adjustment
   Portfolios	RA Factor as % of Risk Driver	Risk Driver
   Group Life	2.0%	LIC
   Protection	4.6%	BEL
   Endowment	4.6%	BEL
   Annuity	4.6%	BEL
   	December 2022 Risk Adjustment
   Portfolios	RA Factor as % of Risk Driver	Risk Driver
   Group Life	2.0%	LIC
   Protection	4.6%	BEL
   Endowment	4.6%	BEL
   Annuity	4.6%	BEL

   The same risk adjustment will be used for the transition and comparatives as there was no material change in the business composition.

4. Impact on the adoption of IFRS 17 to the Company

   In addition to the new financial reporting model (where insurance contracts measure at fulfilment value), IFRS17 introduces the concept of contractual service margins (CSM). This represents the unearned profit on an insurance contract and is amortised over the coverage period to reflect the transfer of services as the insurer fulfils any obligations.

   There are also enhanced disclosure requirements that require companies to provide confidential contract information. This includes details related to risk exposures, assumptions, sensitivity analyses and the impact of changes in estimates or discount rates.

   Actuarial modelling is also crucial in determining key impacts or assumptions used in calculating contract liabilities. So, companies may need to develop or refine actuarial models to ensure that they accurately reflect these contracts' underlying risks and characteristics.

5. INSURANCE CONTRACTS (PRE-ADOPTION DISCLOSURES)

   IFRS 17 supersedes IFRS 4 Insurance Contracts and aims to increase comparability and transparency about profitability. The new standard introduces a new comprehensive model ("general model") for the recognition and measurement of liabilities arising from insurance contracts. In addition, it includes a simplified approach and modifications to the general measurement model that can be applied in certain circumstances and to specific contracts, such as:

   • Reinsurance contracts held;

   • Direct participating contracts; and

   • Investment contracts with discretionary participation features.

     Under the new standard, investment components are excluded from insurance revenue and service expenses. Entities can also choose to present the effect of changes in discount rates and other financial risks in profit or loss or OCI. The new standard includes various new disclosures and requires additional granularity in disclosures to assist users to assess the effects of insurance contracts on the entity's financial statements. The standard is effective for annual periods beginning on or after 1 January 2023. The Company will apply IFRS 17 for the first time on 1 January 2023. This standard is expected to bring significant changes to the accounting for insurance and reinsurance contracts is are expected to have a material impact on the Company' financial statements in the period of initial application.

     Estimated impact of the adoption of IFRS 17

     The Company's assessment of the estimated impact that the initial application of IFRS 17 will have on its financial statements is ongoing and the transition adjustments are expected to have a significant impact on the financial statements. The assessment is in the preliminary stage and the actual impact of adopting IFRS 17 on 1 January 2023 and 2022 will materialise after:

   • the Company has refined the new accounting processes and internal controls required for applying IFRS 17

   • the Company has finalised the testing and assessment of controls over its new IT systems and changes to its governance framework.

     The assessment of the impact of IFRS 17 below is preliminary because not all of the transition work has been finalized. The actual impact of adopting IFRS 17 1 January 2023 and 2022 may change from the information presented below:

   • the Company is continuing to refine the new accounting processes and internal controls required for applying IFRS 17

   • the dry and parallel runs have not been performed as at the end of 2022; also, the new systems and associated controls in place have not been operational for a more extended period;

   • the Company has not finalized the testing and assessment of controls over its IT systems and changes to its governance framework; and

   • the new accounting policies, assumptions, judgments, and estimation techniques employed are subject to change until the Company finalizes its first financial statements that include the date of initial application.

     IFRS 17 INSURANCE CONTRACTS

     IFRS 17 replaces IFRS 4 Insurance Contracts and is effective for annual periods beginning on or after 1 January 2023, with early adoption permitted.

     1. IDENTIFYING CONTRACTS IN THE SCOPE OF IFRS 17 [IFRS 17.C1]

        IFRS 17 establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts, reinsurance contracts and investment contracts with discretionary participation features (DPF). When identifying contracts in the scope of IFRS 17, in some cases the Company will have to assess whether a set or series of contracts needs to be treated as a single contract and whether embedded derivatives, investment components and goods and services components have to be separated and accounted for under another standard. For insurance and reinsurance contracts, the Company does not expect significant changes arising from the application of these requirements.

        If a contract does not meet the definition of an insurance contract or the definition of an investment contract with discretionary participation features, then it falls outside the scope of IFRS17. For products that are outside the scope of IFRS17, the value of liabilities as determined by the applicable IFRS standard will be reported.

     2. LEVEL OF AGGREGATION [IFRS 17.14, 16, 22, A]

        Under IFRS 17, insurance contracts and investment contracts with DPF are aggregated into groups for measurement purposes. Groups of contracts are determined by first identifying portfolios of contracts, each comprising contracts subject to similar risks and managed together. Contracts in different product lines or issued by different Group entities are expected to be in different portfolios. Each portfolio is then divided into annual cohorts (i.e., by year of issue) and each annual cohort into three groups:

   • any contracts that are onerous on initial recognition.

   • any contracts that, on initial recognition, have no significant possibility of becoming onerous subsequently;

   • any remaining contracts in the annual cohort.

     When a contract is recognised, it is added to an existing group of contracts or, if the contract does not qualify for inclusion in an existing group, it forms a new group to which future contracts may be added, Groups of reinsurance contracts are established such that each group comprises a single contract. The level of aggregation requirements of IFRS 17 limit the offsetting of gains on groups of profitable contracts, which are generally deferred as a Contractual Service Margin (CSM), against losses on groups of onerous contracts, which are recognised immediately (see (v) and (vi), on the measurement of the Life and Non-contracts), Compared with the level at which the liability adequacy test is performed under IFRS 4 (i.e. portfolio of contracts level), the level of aggregation under IFRS 17 is more granular and is expected to result in more contracts being identified as onerous and losses on onerous contracts being recognised sooner.

     1. CONTRACT BOUNDARIES

        Compared with the current accounting, the Company expects that for certain contracts the IFRS 17 contract boundary requirements will change the scope of cash flows to be included in the measurement of existing recognised contracts, as opposed to future unrecognised contracts. The period covered by the premiums within the contract boundary is the 'coverage period', which is relevant when applying a number of requirements in IFRS 17.

        INSURANCE CONTRACTS

        For insurance contracts, cash flows are within the contract boundary if they arise from substantive rights and obligations that exist during the reporting period in which the Company can compel the policyholder to pay premiums or has a substantive obligation to provide services (including insurance coverage and investment services). A substantive obligation to provide services ends when:

   • the Company has the practical ability to reassess the risks of the policyholder and can set a price or level of benefits that fully reflects those reassessed risks; or

   • the Company has the practical ability to reassess the risks of the portfolio that contains the contract and can set a price or level of benefits that fully reflects the risks of that portfolio, and the pricing of the premiums up to the reassessment date does not take into account risks that relate to periods after the reassessment date.

   • Risk-attaching reinsurance contracts: The Company reasonably expects that the resulting measurement of the asset for remaining coverage would not differ materially from the result of applying the accounting policies described above.

     Some term life contracts issued by the Company have annual terms that are guaranteed to be renewable each year. Currently, the Company accounts for these contracts as annual contracts. Under IFRS 17, the cash flows related to future renewals (i.e., the guaranteed renewable terms) of these contracts will be within the contract boundary, this is because the Group does not have the practical ability to reassess the risks of the policyholders at individual contract or portfolio level. Some universal life contracts contain a guaranteed annuity option, which allows the policyholder to convert, on maturity of the stated term, the maturity benefit into an immediately starting life- contingent annuity at a predetermined rate. Currently, the Group does not consider the cash flows related to the options when measuring the contracts until the option is exercised, The Group has assessed the contract boundary for the contracts, including the options, and concluded that, under IFRS 17, the cash flow s related to the guaranteed annuity options will fall within the boundary of the contracts, this is because the Group does not have the practical ability to reprice the contract on maturity of the stated term.

     REINSURANCE CONTRACTS

     For reinsurance contracts, cash flows are within the contract boundary if they arise from substantive rights and obligations that exist during the reporting period in which the Company is compelled to pay amounts to the reinsurer or has a substantive right to receive services from the reinsurer. A substantive right to receive services from the reinsurer ends when the reinsurer:

   • has the practical ability to reassess the risks transferred to it and can set a price or level of benefits that fully reflects those reassessed risks; or

   • has a substantive right to terminate the coverage.

     1. MEASUREMENT-OVERVIEW

        IFRS 17 introduces a measurement model based on the estimates of the present value of future cash flows that are expected to arise as the Company fulfills the contracts, an explicit risk adjustment for non-financial risk, and a CSM. Contracts are subject to different requirements depending on whether they are classified as direct participating contracts or contracts without direct participation features. Direct participating contracts are contracts that are substantially investment-related service contracts under which the Company promises an investment return based on underlying items; they are contracts for which, at inception:

   • the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;

   • the Company expects to pay to the policyholder an amount equal to a substantial share of the fair value returns on the underlying items; and

   • the Company expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in fair value of the underlying items.

     All insurance contracts and investment contracts with DPF in the Participating segment are expected to be classified as direct participating contracts.

     PREMIUM ALLOCATION APPROACH (PAA)

     The PAA is an optional simplified measurement model in IFRS 17 that is available for insurance and reinsurance contracts that meet the eligibility criteria. For an explanation of how the Company will apply the PAA. The Company expects that it will apply the PAA to all contracts in the non-life segment because the following criteria are expected to be met at inception.

   • Insurance contracts and loss-occurring reinsurance contracts: The coverage period of each contract in the group is one year or less.

   • Risk-attaching reinsurance contracts: The Company reasonably expects that the resulting measurement of the asset for remaining coverage would not differ materially from the result of applying the accounting policies described above

     1. MEASUREMENT-LIFE CONTRACTS

        Insurance contracts and investment contracts with DPF

        On initial recognition, the Company will measure a group of contracts as the total of:

        1. the fulfilment cash flows, which comprise estimates of future cash flows, adjusted to reflect the time value of money and the associated financial risks, and a risk adjustment for non-financial risk; and

        2. the CSM. The fulfilment cash flows of a group of contracts do not reflect the Company's non-performance risk.

           The Company's objective in estimating future cash flows is to determine the expected value of a range of scenarios that reflects the full range of possible outcomes. The cash flows from each scenario will be discounted and weighted by the estimated probability of that outcome to derive an expected present value. If there are significant interdependencies between cash flows that vary based on changes in market variables and other cash flows, then the Company will use stochastic modelling techniques to estimate the expected present value. Stochastic modelling involves projecting future cash flows under a large number of possible economic scenarios for variables such as interest rates and equity returns. All cash flows will be discounted using risk-free yield curves adjusted to reflect the characteristics of the cash flows and the liquidity characteristics of the contracts. Cash flows that vary based on the returns on any underlying items will be adjusted for the effect of that variability using risk-neutral measurement techniques and discounted using the risk-free rates as adjusted for illiquidity. When the present value of future cash flows is estimated by stochastic modelling, the cash flows will be discounted at scenario-specific rates calibrated, on average, to be the risk-free rates as adjusted for illiquidity.

           The risk adjustment for non-financial risk for a group of contracts, determined separately from the other estimates, is the compensation that the Company would require for bearing uncertainty about the amount and timing of the cash flows that arises from non-financial risk. The CSM of a group of contracts represents the unearned profit that the Company will recognize as it provides services under those contracts. On initial recognition of a group of contracts, the group is not onerous if the total of the following is a net inflow:

           1. the fulfilment cash flows;

           2. any cash flows arising at that date; and any amount arising from the derecognition of any assets or liabilities previously recognised for cash flows related to the group (including assets)

           3. for insurance acquisition cash flows; see below).

           In this case, the CSM is measured as the equal and opposite amount of the net inflow, which results in no income or expenses arising on initial recognition. If the total is a net outflow, then the group is onerous and the net outflow is generally recognised as a loss in profit or loss; a loss component is created to depict the amount of the net cash outflow, which determines the amounts that are subsequently presented in profit or loss as reversals of losses on onerous contracts and are excluded from insurance revenue (see (viii)) on presentation and disclosure.

           Subsequently, the carrying amount of a group of contracts at each reporting date is the sum of the liability for remaining coverage and the liability for incurred claim s. The liability for remaining coverage comprises (a) the fulfilment cash flows that relate to services that will be provided under the contracts in future periods and (b) any remaining CSM at that date. The liability for incurred claims includes the fulfilment cash flows for incurred claims and expenses that have not yet been paid, including claims that have been incurred but not yet reported.

           The fulfilment cash flows of groups of contracts are measured at the reporting date using current estimates of future cash flows, current discount rates and current estimates of the risk adjustment for non-financial risk. Changes in fulfilment cash flows are recognised as follows.

           Changes relating to future services: Adjusted against the CSM (or recognised in the insurance service result in profit or loss if the group is onerous)

           Changes relating to current or past service: Adjusted against the CSM (or recognised in the insurance service result in profit or loss if the group is onerous)

           Effects of the time value of money, financial risk, and changes therein on estimated future cash flows. Recognised as insurance finance income or expenses.

           The CSM is adjusted subsequently only for changes in fulfilment cash flows that relate to future services and other specified amounts and is recognised in profit or loss as services are provided. The CSM at each reporting date represents the profit in the group of contracts that has not yet been recognised in profit or loss because it relates to future service.

           REINSURANCE CONTRACTS

           The Company will apply the same accounting policies to measure a group of reinsurance contracts, with the following modifications:

           The carrying amount of a group of reinsurance contracts at each reporting date is the sum of the asset for remaining coverage and the asset for incurred claims. The asset for remaining coverage comprises:

           1. the fulfilment cash flows that relate to services that will be received under the contracts in future periods and

           2. any remaining CSM at that date estimates of the present value of future cash flows for the underlying insurance contracts, with an adjustment for any risk of non-performance by the reinsurer. The effect of the non-performance risk of the reinsurer is assessed at each reporting date and the effect of changes in the nonperformance risk is recognised in the insurance service result in profit or loss."

           The risk adjustment for non-financial risk will represent the amount of risk being transferred by the Company to the reinsurer.

           The CSM of a group of reinsurance contracts represents a net cost or net gain on purchasing reinsurance. It is measured such that no income or expense arises on initial recognition, except that the Company will:

   • recognise any net cost on purchasing reinsurance coverage immediately in profit or loss as an expense if it relates to insured events that occurred

   • recognise income when it recognises a loss on initial recognition of onerous underlying contracts if the reinsurance contract is entered into before or at the same time as the onerous underlying contracts are recognised. A loss-recovery component is created, which determines the amounts that are subsequently disclosed as reversals of recoveries of losses from the reinsurance contracts and are excluded from the allocation of reinsurance premiums paid.

The CSM is adjusted subsequently only for specified amounts and is recognised in profit or loss as services are received.

INSURANCE ACQUISITION CASH FLOWS

Insurance acquisition cash flows arise from the activities of selling, underwriting and starting a group of contracts that are directly attributable to the portfolio of contracts to which the group belongs. Under IFRS 17, for Life contracts, insurance acquisition cash flows are allocated to groups of contracts using systematic and rational methods based on the total premiums for each group. Insurance acquisition cash flows that are directly attributable to a group of contracts (e.g., non- refundable commissions paid on issuance of a contract) are allocated only to that group and to the groups that will include renewals of those contracts. The allocation to renewals will only apply to certain term life and critical illness contracts that have a one-year coverage period. The Company expects to recover part of the related insurance acquisition cash flows through renewals of these contracts. The allocation to renewals will be based on the manner in which the Company expects to recover those cash flows.

Under IFRS 17, only insurance acquisition cash flows that arise before the recognition of the related insurance contracts are recognised as separate assets and tested for recoverability, whereas other insurance acquisition cash flows are included in the estimates of the present value of future cash flows as part of the measurement of the related insurance contracts. The Company expects that most assets for insurance acquisition cash flows will relate to the renewals of term life and critical illness contracts, as described above. These assets will be presented in the same line item as the related portfolio of contracts and derecognised once the related group of contracts has been recognised. This differs from the Company's current practice, under which all acquisition costs are recognised and presented as separate assets from the related insurance contracts ('deferred acquisition costs'). IFRS 17 will require the Company to assess at each reporting date whether facts and circumstances indicate that an asset for insurance acquisition cash flows may be impaired. If it is impaired, then the Company will:

1. recognise an impairment loss in profit or loss so that the carrying amount of the asset does not exceed the expected net cash inflow for the related group; and

2. if the asset relates to future renewals, recognise an impairment loss in profit or loss to the extent that it expects those insurance acquisition cash flows to exceed the net cash inflow for the expected renewals and this excess has not already been recognised as an impairment loss under (a).

The Company will reverse any impairment losses in profit or loss and increase the carrying amount of the asset to the extent that the impairment conditions have improved.

1. MEASUREMENT - NON-LIFE

   On initial recognition of each group of non-life insurance contracts, the carrying amount of the liability for remaining coverage is measured at the premiums received on initial recognition. The Company will elect to recognise insurance acquisition cash flows as expenses when they are incurred. Subsequently, the carrying amount of the liability for remaining coverage is increased by any further premiums received and decreased by the amount recognised as insurance revenue for services provided. The Company expects that the time between providing each part of the services and the related premium due date will be no more than a year. Accordingly, as permitted under IFRS 17, the Company will not adjust the liability for remaining coverage to reflect the time value of money and the effect of financial risk.

   If at any time before and during the coverage period, facts and circumstances indicate that a group of contracts is onerous, then the Company will recognise a loss in profit or loss and increase the liability for remaining coverage to the extent that the current estimates of the fulfilment cash flows that relate to remaining coverage exceed the carrying amount of the liability for remaining coverage. The fulfilment cash flows will be discounted (at current rates) if the liability for incurred claims is also discounted.

   The Company will recognise the liability for incurred claims of a group of contracts at the amount of the fulfilment cash flows relating to incurred claims. The future cash flows will be discounted (at current rates) unless they are expected to be paid in one year or less from the date the claims are incurred. The Company will apply the same accounting policies to measure a group of reinsurance contracts, adapted where necessary to reflect features that differ from those of insurance contracts.

2. PRESENTATION AND DISCLOSURE

   IFRS 17 will significantly change how insurance contracts, reinsurance contracts are presented and disclosed in the Company's financial statements.

   Under IFRS 17, portfolios of insurance contracts that are assets and those that are liabilities, and portfolios of reinsurance contracts that are assets and those that are liabilities, are presented separately in the statement of financial position. All rights and obligations arising from a portfolio of contracts will be presented on a net basis; therefore, balances such as insurance receivables and payables and policyholder loans will no longer be presented separately. Any assets or liabilities recognised for cash flows arising before the recognition of the related group of contracts (including any assets for insurance acquisition cash flows) will also be presented in the same line item as the related portfolios of contracts.

   Under IFRS 17, amounts recognised in the statement of profit or loss and OCI are disaggregated into

   1. an insurance service result, comprising insurance revenue and insurance service expenses; and

   2. insurance finance income or expenses. Amounts from reinsurance contracts will be presented separately.

The separate presentation of underwriting and financial results under IFRS 17 will provide added transparency about the sources of profits and quality of earnings.

INSURANCE SERVICE RESULT

For contracts not measured using the PAA, insurance revenue for each year represents the changes in the liabilities for remaining coverage that relate to services for which the Company expects to receive consideration and an allocation of premiums that relate to recovering insurance acquisition cash flows. For contracts measured using the PAA, insurance revenue is recognised based on an allocation of expected premium receipts to each period of coverage, which is based on the expected timing of incurred insurance service expenses for certain property contracts and the passage of time for other contracts. The requirements in IFRS 17 to recognise insurance revenue over the coverage period will result in slower revenue recognition compared with the Company's current practice of recognising revenue when the related premiums are written. Expenses that relate directly to the fulfilment of contracts will be recognised in profit or loss as insurance service expenses, generally when they are incurred. Expenses that do not relate directly to the fulfilment of contracts will be presented outside the insurance service result.

Amounts recovered from reinsurers and reinsurance expenses will no longer be presented separately in profit or loss, because the Company will present them on a net basis as 'net expenses from reinsurance contracts' in the insurance service result, but information about these will be included in the disclosures. The Company may choose not to disaggregate changes in the risk adjustment for non-financial risk between the insurance service result and insurance finance income or expenses. All changes in the risk adjustment for non-financial risk recognised in profit or loss will be included in the insurance service result.

INSURANCE FINANCE INCOME AND EXPENSES

Under IFRS 17, changes in the carrying amounts of groups of contracts arising from the effects of the time value of money, financial risk and changes therein are generally presented as insurance finance income or expenses. They include changes in the measurement of groups of contracts caused by changes in the value of underlying items (excluding additions and withdrawals). For Participating and Non-life contracts, the Company will present insurance finance income or expenses in profit or loss, considering that the supporting assets will generally be measured at FVTPL.

PRESENTATION AND DISCLOSURE

An entity is required to present comparative financial information for the annual period immediately preceding the date of initial application i.e., the annual period starting from the transition date.

IFRS 17 requires extensive new disclosures about amounts recognised in the financial statements, including detailed reconciliations of contracts, effects of newly recognised contracts and information on the expected CSM emergence pattern, as well as disclosures about significant judgements made when applying IFRS 17. There will also be expanded disclosures about the nature and extent of risks from insurance contracts, reinsurance contracts and investment contracts with DPF. Disclosures will generally be made at a more granular level than under IFRS 4, providing more transparent information for assessing the effects of contracts on the financial statements.

IMPRACTICABILITY TEST

IFRS17 requires a restatement of the Company's results as if IFRS17 had always been applicable (the "fully retrospective approach" unless it is "impracticable" to do so). Where a fully retrospective approach is impracticable, a "modified retrospective" or "fair value" approach is available. We will follow a fair value approach where a fully retrospective approach is impracticable.

The principles applied to test for impracticability:

1. Risk adjustment

2. Actual historic premiums and charges

3. Actual historic expenses split between acquisition and maintenance expenses

4. Historic discount rates

5. Policy administration system change / past data.

The likely examples of impracticability cut-off points in time will include policy administration system changes where past data was not captured or validated and valuation model/methodology changes e.g., transition from an NPV valuation methodology to a prospective calculation or transition to a more sophisticated valuation model requiring additional data fields.

STANDARD ALLIANCE INSURANCE PLC

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

1. Significant accounting policies

   The principal accounting policies adopted in the preparation of these financial statements are set out below:

   1. Cash and cash equivalents

      Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less. They include bank overdraft in the context of the statement of cash flows.

   2. Financial instruments Recognition

      The Company on the date of origination or purchase recognizes placements, equity securities and deposits at the fair value of consideration paid. Regular-way purchases and sales of financial assets are recognized on the settlement date. All other financial assets and liabilities, including derivatives, are initially recognized on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

      Classification and Measurement

      Initial measurement of a financial asset or liability is at fair value plus transaction costs that are directly attributable to its purchase or issuance. For instruments measured at fair value through profit or loss, transaction costs are recognized immediately in profit or loss. Financial assets include placement with banks, treasury bills and equity instruments.

      Financial assets are classified into one of the following measurement categories:

      1. Amortised cost

      2. Fair Value through Other Comprehensive Income (FVOCI)

      3. Fair Value through Profit or Loss (FVTPL) for trading related assets

The Company classifies all of its financial assets based on the business model for managing the assets and

the asset's contractual cash flow characteristics.

Business Model Assessment

Business model assessment involves determining whether financial assets are managed in order to generate cash flows from collection of contractual cash flows, selling financial assets or both. The Company assesses business model at a portfolio level reflective of how groups of assets are managed together to achieve a particular business objective. For the assessment of business model the Company takes into consideration the following factors:

1. The stated policies and objectives for the portfolio and the operation of those policies in practice. In particular, whether management's strategy focuses on earning contractual interest revenue, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of the liabilities that are funding those assets or realizing cash flows through the sale of the assets

2. How the performance of assets in a portfolio is evaluated and reported to Company heads and other key

decision makers within the Company's business lines;

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