We have audited the financial statements of the Universal Insurance Company Limited as at 31st December 2007 set out on pages10 to 13, which have been prepared on the basis of the accounting policies on pages 8 and 9.

Respective Responsibilities of directors and auditors
In accordance with the Companies and Allied Matters Act 1990, the company’s directors are responsible for the preparation of the financial statements. It is our responsibility to form an independent opinion, based on our audit of those statements and to report our opinion to you.

Basis of opinion
We conducted our audit in accordance with the international standards on auditing issued by the International Federation of Accountants. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations, which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the financial statements and assessed whether the company’s books had been properly kept. We have obtained all the information and explanations we required for the purpose of our audit.

Opinion
In our opinion, the company has kept proper books of account and the financial statements are in agreement with the books. The financial statements drawn up in conformity with the generally accepted accounting standards in Nigeria, give a true and fair view of the state of the affairs of the company at 31st December 2007 and the profit and cash flows for the year ended on that date and have been properly prepared in accordance with the Companies and Allied Matters Act 1990, and the Insurance Act 2003.

STATEMENT OF ACCOUNTING POLICIES

1) Accounting basis
The financial statements have been prepared in accordance with historical cost
convention as modified by revaluation of the fixed assets.

2) Fixed assets
Fixed assets are stated at cost/valuation less aggregate depreciation.

3) Depreciation
Depreciation is calculated on a straight-line basis to write off the cost of the assets over
their estimated useful lives at the following rates per annum:

4) Debtors
Debtors are stated after specific provision has been made for debts considered bad
and doubtful.

5) Determination of under-writing results
The Company determines its under-writing results for general insurance business after taking full account of unexpired risks and outstanding claims, which are computed in accordance with the Insurance Act 2003 and as stated in accounting policies Numbers (6) and (7) below.

6) Reserve for unexpired risks
This is computed on time apportionment basis of the risks accepted in the year, in
accordance with section 20 (1) (a). of Insurance Act 2003

7) Outstanding claims and provision
Full provision is made for the estimated cost of all claims notified to the Company
but not settled at the date of the balance sheet less reinsurance recoveries. In accordance with section 20 (1) (b) of the Insurance Act 2003, an additional provision of 10% is made representing the estimated amounts for claims incurred but not reported at the end of the preceding years.

8) Contingency reserve
Contingency reserve has been provided at the rate of higher of 3% of gross premium and 20% of net profit for general insurance business in accordance with section 21 of the Insurance Act 2003.
THE UNIVERSAL INSURANCE COMPANY LIMITED

STATEMENT OF ACCOUNTING POLICIES

9) Investments
Investments other than Government Securities are valued at market value. The Losses arising from the revaluation of the investments is written off to the profit and loss account. The surplus arising therefore is transferred to investment reserve account in the balance sheet.

10) Pension cost
Retirement benefits to employees are funded by contributions from the Company.
Payments are made to an insurance company, which is financially separate from the Company. These payments which are made in accordance with periodic calculations by professionally qualified actuaries, are charged against the profit of the year in which they become payable.

11) Foreign currency balances
Foreign currency balances have been converted to Naira at the rates of exchange ruling at the balance sheet date. Realised profits and/or Losses arising from currency conversion are included in investment income account.

NOTES TO THE ACCOUNTS

1. The Company
The Universal Insurance Company Limited was incorporated on the 1st of March, 1961 and identified with incorporation certificate number RC 2460 to carry on life and general insurance business. General insurance business include fire, general accident, marine, consequential loss, motor vehicle and fidelity guarantee. However, the Life Business of the company has been ceded to African Alliance Insurance Company, in line with the recapitalisation objective of NAICOM.

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