var textForPages = ["ANNUAL REPORT  AND FINANCIAL    2 0 1 8STATEMENTS    INSURING  HAPPINESS    w w w.ap ai n s u ra n ce.o rg","","CONTENTS                                            ANNUAL REPORT AND                                            FINANCIAL STATEMENTS 2018  Company Information  Group Structure                                                                  6  Board of Directors                                                               7  Management Team                                                             8-9  Chairman’s Statement                                                     10 - 11  Chief Executive Officer’s Statement                                      12 - 14  Corporate Governance Statement                                           16 - 18  Corporate Social Responsibility                                          20 - 21  Directors’ Report                                                        22 - 23  Statement of Directors’ Responsibilities                                       24  Report of the Consulting Actuary                                               25  Report of Independent Auditor                                                  26                                                                            27- 29  FINANCIAL STATEMENTS                                                                                 30  Statement of Comprehensive Income                                              31  Statement of Financial Position                                                32  Statement of Changes in Equity                                                 33  Statement of Cash Flows                                                  34 - 49  Accounting Policies                                                      50 - 76  Notes to the Financial Statements                                                                                 77  SUPPLEMENTARY INFORMATION    Revenue Account                                                                                        3","ANNUAL REPORT AND                                                       FINANCIAL STATEMENTS 2018             Happiness comes        easily when you know      that you and your loved   ones are covered from life’s               uncertainties.       APA, Insuring Happiness    4","ANNUAL REPORT AND                                                                                                                              FINANCIAL STATEMENTS 2018                          MISSION           We put smiles on the faces of                     our stakeholders.                         VISION    We are the region’s most respected Group         creating and protecting wealth.                                                                                                     5","ANNUAL REPORT AND                    FINANCIAL STATEMENTS 2018    COMPANY  INFORMATION    DIRECTORS                                           AUDITOR    R M Ashley*		        - Chairman                     PricewaterhouseCoopers                                                      Certified Public Accountants (Kenya)  D M Ndonye					                                     PwC Tower, Waiyaki Way, Chiromo Road                                                      P.O. Box 43969- 00100  A K M Shah					                                     Nairobi	    P J Shah                                            BANKERS    S M Shah                                            Commercial Bank of Africa Limited                                                      P.O. Box 30437-00100  R Schnarwiler**				                                 Nairobi    P M K Shah*	                                        CONSULTING ACTUARIES    J N Gitoho		         - Resigned 23 August 2018      Giles T Waugh, FASSA, FIA                                                      Independent Actuarial Consultant  M W Kimotho, MBS	    - Appointed 12 February 2019	  +27 11 646 0199/ +27 83 680 7990  					                                                      REGISTERED OFFICE	  *British	**Swiss                                                      Apollo Centre,  COMPANY SECRETARY                                   07 Ring Road Parklands, Westlands                                                      P.O. Box 30389 - 00100  P H Shah                                            Tel: +254 (0) 20 364 1000  Certified Public Secretary (Kenya)                  Nairobi  P.O. Box 30094 - 00100  Nairobi                                             AGENCY OFFICE    SENIOR MANAGEMENT	                                  Barclays Plaza,                                                      Koinange Street  Catherine Karimi		   - Chief Executive Officer      P.O. Box 30389 - 00100                                                      Tel: +254 (0) 20 364 1042  Daniel Mugo		        - Chief Finance Officer        Nairobi    Bernard Kinyanjui		  - Head of Corporate Business   Apollo House                                                      Moi Avenue  Vitalis Mbae		       - Actuarial Officer            P.O. Box 81821 - 80100                                                      Tel: +254 (0) 41 227506  Jane Watiki		        - Head of Operations		         Mombasa  		                	  - Corporate Business    Harriet Aleke		      - Head of Operations		  		                	  - Retail Business    Stephen Muiga		      - B usiness Development                         Manager - Alternative                         Channels    James Njagi		        - B usiness Development                         Manager - Deposit                         Administration    Mark Mumo		          - Business Development                         Manager - Corporate                         Business, Group Life    Benedicto Makena	    - Business Development                         Manager - Retail Business    6","ANNUAL REPORT AND                                      FINANCIAL STATEMENTS 2018    SGGSTRTRROOURUCUUPTPUCRETURE                                  100%                                        (Uganda)                                        (Property Management)                                                                                         7","ANNUAL REPORT AND                                                       FINANCIAL STATEMENTS 2018    BOARD OF DIRECTORS - READY TO LEAD                                                           2                                                                               34                           1                                                                                                                                    5    Mary M’Mukindia  Pratul Shah        S. M. Shah  Piyush Shah  Richard Ashley  Director         Company Secretary  Director    Director     Chairman    8","ANNUAL REPORT AND                                            FINANCIAL STATEMENTS 2018    BOARD OF DIRECTORS (CONTINUED)                           8                                               10                                         9    67    Ashok Shah  P.J. Shah  John Piper      Daniel Ndonye  Reto Shnarwiler  Director    Director   Board Observer  Director       Director                                                                               9","ANNUAL REPORT AND                                                       FINANCIAL STATEMENTS 2018    MANAGEMENT TEAM    CATHERINE KARIMI    Chief Executive Officer                                                                                    Daniel Mugo            Harriet Aleke         Bernard Kinyanjui                                                                                    Chief Finance Officer  Head of Operations -  Head of Corporate                                                                                                         Retail Business       Business                                                                                    Jane Watiki            James Njagi           Mark Mumo                                                                                    Head of Operations -   Business Development  Business Development                                                                                  Corporate Business     Manager – Deposit     Manager – Corporate                                                                                                         Adminstration         Business - Group LIfe                                                                                    Stephen Muiga          Benedicto Makena      Vitalis Mbae                                                                                    Business Development   Business Development  Actuarial Officer                                                                                  Manager – Alternative  Manager – Retail                                                                                  Channels               Business    10","ANNUAL REPORT AND                                                             FINANCIAL STATEMENTS 2018    MANAGEMENT TEAM (CONTINUED)    Keval Shah        Chris Ngala          Benjamin Otieno    Group Chief       Group Head of Audit  Group Head of Risk  Finance Officer    Juliana Nguli     James Nyakomitta     Jackie Tonui    Group Head of     Group Head of ICT    Group Head of  Human Resource                         Corporate                                         Communications    Judith Bogonko                                             INSURING                                                             HAPPINESS  Group Head of  Customer Service                                                                                  11","ANNUAL REPORT AND                                                       FINANCIAL STATEMENTS 2018    CHAIRMAN’S STATEMENT    FOR THE YEAR ENDED 31 DECEMBER 2018           ‘Dear Shareholders,                                                      The continuation of the interest rate cap on commercial bank                                                                                  lending rates will likely curb the availability of credit, and    On behalf of the Board                                                        lead to tougher conversations with multi-lateral agencies like           of Directors, I am                                                     the IMF.          pleased to present                                                                                  In addition to more favourable climatic conditions, the KNBS     the Company’s Annual                                                         cited improved political stability as a factor supporting growth       Report and Financial                                                       in 2018. This stability also helped the local currency maintain                                                                                  its position against the dollar, with the shilling trading at   Statements for the year                                                        101.81 to the US dollar as of December 28. Having opened        ended 31 December                                                         2018 at 103.29 to the dollar, the shilling managed to avoid the                            2018’.                                                volatility that beset many currencies in developing countries                                                                                  during the past year. The local unit gained 1.4% against the  ECONOMY & BUSINESS                                                              USD in 2018, to close the year at 101.8 compared to 103.2  ENVIRONMENT OVERVIEW                                                            at the end of 2017, becoming the only African currency to                                                                                  appreciate against the greenback. The KES is projected  A rebound in agriculture and a return to political                              to continue its stability in the short term. With regard to  stability have helped strengthen the momentum                                   stock market performance, NASI index was down by -18%  of Kenya’s economy in 2018, with the rollout of                                 during 2018. The haemorrhage was largely led by large-cap  large infrastructure projects expected to see this                              stock prices declining from the second quarter as a result of  growth continue in the medium term.                                             global sell-offs by foreign investors from emerging markets.  The IMF forecasts GDP will expand to 6% in 2018,                                Foreign investor outflows increased in 2018 to USD 425.6mn,  an increase on the 4.9% growth recorded in 2017.                                compared to USD 113.7mn in 2017. This was reflected  The fund’s forecast was supported by data from                                  general trend where international investors exited emerging  the Kenya National Bureau of Statistics (KNBS),                                 markets as interest rates went up in the US coupled with the  which showed that GDP had expanded by 6.3%                                      strengthening of the US Dollar  (y-o-y) in the first three quarters of 2018.  A continuation of favourable weather conditions                                 BIG FOUR INFRASTRUCTURE PLANS TO  characterised by heavy downpours, have been a                                   SUPPORT 2019 GROWTH  boon for agricultural and hydroelectric activities.  Healthy diaspora remittance inflows and a marked                                Despite an increase in the cost of key products, the positive  increase in tourism earnings against a strengthening                            performance of 2018 is expected to continue in the near  shilling also drove the strong outturn and helped                               future, with the IMF predicting growth of 6.1% in 2019 as the  to narrow the current account deficit by nearly a                               government continues with the rollout of major infrastructure  quarter compared to the same period last year.                                  projects.  Growth is expected to remain strong in 2019,  thanks to solid domestic demand. Private                                        The country’s “Big Four” plan, which focuses on increasing  consumption should continue to expand at a                                      investment in affordable housing, manufacturing, food  healthy pace, buoyed by solid remittances inflows                               security and universal health care, is expected to gain  and a tight labour market, while upbeat business                                momentum in 2019 following the implementation of a series  confidence should continue to support strong fixed                              of pilot programmes.  investment growth.                                                                                  CHANGES IN THE BOARD  12                                                                                  Mr. James Gitoho, who has been a director resigned to pursue                                                                                  other personal interest in August 2018. On behalf of the Board                                                                                  of the Directors, we wish James well in his future pursuits.                                                                                    At the start of 2019, directors appointed Ms. Mary Kimotho                                                                                  M’Mukindia, ACC, MBS as a member of the Board of Directors                                                                                  of the Company. Mary is a renowned corporate leader and                                                                                  Executive Leadership Coach with over 35 years of a dynamic                                                                                  career both in public and private sectors. Mary joins the                                                                                  Apollo APA family with wealth of experience and the board                                                                                  has expressed confidence in bringing value and diversity                                                                                  within the board. I therefore request the board members and                                                                                  other stakeholders to join me in welcoming Mary on board and                                                                                  looking forward to fruitful contributions.","ANNUAL REPORT AND                                                        FINANCIAL STATEMENTS 2018    CHAIRMAN’S STATEMENT (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    2018 PERFORMANCE REVIEW                               RICHARD M ASHLEY    In 2018, for the ordinary life and group life                                       CHAIRMAN  insurance lines, we recorded gross premium income  of Shs. 963 Million compared to Shs. 908 Million in                                                              13  2017 registering a growth of 6%. The pension line  recorded a decline of 10% in contributions from  Shs.585Million in 2017 to Shs.530 Million. The total  revenue including the DAP contribution remaining  flat at Shs1.492 Million over 2017.    Our loss before tax for the year stood at Shs22  Million (2017: Loss of Shs 59.7 Million) while the  total comprehensive loss stood at Shs 32 Million,  (2017: loss of Shs 26 Million), both remaining flat  under very tight and volatile business environment,  largely attributed to better investments experience  and strict cost controls during the year.    Our deposit administration fund maintained a  steady growth of 12% to stand at Shs 3.5B at end  of the year, up from Shs3.1Billion in 2017. In  consultation with our Statutory Actuary, the Board  of Directors has approved a reversionary bonus of  4% on the “with profit individual life policies” and  an interest of 10.25%, (2017: 9.50%) on deposit  administration schemes and individual pension  plans funds. This was primary occasioned better  performance of investment income and available  for sale investments during the year. The board  continues to support management new initiatives  geared towards improving business efficiency and  improving returns to all stakeholders We believe  that we are on the right track and direction.    Our total asset base surpassed the Shs5 Billion  mark to stand at Shs5.3 Billion from Shs4.7 Billion  translating to a growth of 13%.    The Company continues to enjoy the benefits of  our fully integrated life management system  that has enabled the business to largely  automate its operations. The key benefits  derived from the new system include efficient  and more effective service delivery to our  clients and producers through self-service client  and agent portals. The system is enabling us to  fully exploit the opportunities presented in the  alternative distribution channels of bancassurance,  mobile platforms and other digital strategies.  Through this service differentiation initiative, we  continuously benchmark our service delivery to the  best practices worldwide which is bearing returns  in form of increased business volume.","ANNUAL REPORT AND                                                       FINANCIAL STATEMENTS 2018    CHAIRMAN’S STATEMENT (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    FUTURE OUTLOOK                                                Increased supervision of the financial sector is another                                                                change that is sweeping across the insurance industry both  The insurance industry is at that point where change must     locally and globally. The Insurance Regulatory Authority  be intentionally made. Failure to which we risk letting       introduced the Risk Based Supervision model in 2013. This  our future be dictated by a revolutionary business. The       was followed by the Risk Based Capital. This is a positive  industry is facing changes from different fronts and each     move, and an ongoing process, as it ensures insurance  require different, but implementable, interventions. As a     companies can meet their liabilities and especially to its  starter, the proliferation of technology and its ubiquity in  customers or policy holders, an element that has been the  our everyday life, means that if technology is not ingrained  thorn in the flesh for the industry. The implementation  in our processes and products, we are likely to be left       process is ongoing up to June 2020 when all companies  behind by our competitors and other service providers.        are expected to have complied. Different insurers can  Technology is critical in increasing internal efficiencies    now hold different levels of capital depending on their  and improving customer service.                               business profiles. The Apollo Group has maintained that                                                                compliance is important and the growth projections of APA  Another change that the insurance industry must contend       Life need to be supported to meet the requirements of the  with is the changing consumer. Kenya’s median age is 19       Insurance Act. To this end the Group has increased the  years, 50 per cent of the Kenyan population is aged between   paid up Capital of APA Life.  0 and 19 years, while 25 per cent is aged between 20 and      The implementation of IFRS9 came into force effective  34 years. The 20 to 34 year olds are climbing the income      1 January 2018 which required insurance companies to  ladder and possess long-term purchasing power, they also      make full provisions of receivables therefore affecting  happen to be the most underinsured. These consumers are       the bottom line/profitability of the companies. This calls  tech savvy, well-educated and have a variety of options       for insurance companies to review their credit policy  for insurance products, both formal and informal. Their       and other investment segments in order to minimize and  tastes and preferences for insurance products also differ     manage the impact of the change in accounting policy as  from what has been the norm. For them, understanding          well as becoming compliant with this regulation.  the product and the benefits it offers is paramount. They  prefer to enjoy the benefits within a shorter period, five    ACKNOWLEDGMENT  years and below, and they are also keen on investing as  opposed to only protecting themselves from risk. We need      My appreciation to the policy holders, intermediaries and  to focus on this consumer who will form the bulk of policy    our business partners for their support. I wish to thank the  holders in the short term.                                    management and staff for their commitment, loyalty and                                                                dedication in driving the Company forward. Finally, I wish  Bearing the customers’ requirements in mind, we are           to thank my fellow Directors and record my appreciation  focused on customising products and determining the best      for their continued support and considered advice.  communication and distribution channels.                                                                  RICHARD M ASHLEY                                                                Chairman	 		                                                                  12 March 2019    14","ANNUAL REPORT AND                                                                                FINANCIAL STATEMENTS 2018                SAVING UP           FOR SOMETHING            BROUGHT ME SO            MUCH HAPPINESS.                  “Save save save” was what my mother used to  tell me. “No matter how small the amount, start saving”.  I carried this teaching with me and when I was of age and      aware of APA IMARIKA, I signed up for the product and  started making small contributions monthly. 3 years later,  a piece of land I had always admired was up for sale and     thanks to my Imarika savings, I was able to buy it in full      and still have money in my savings. Who knew small       savings would do something so big. Thank you APA            for putting a smile on my face and insuring                                 my happiness                     APA Imarika                                                                              15","ANNUAL REPORT AND                                                       FINANCIAL STATEMENTS 2018    CEO’S STATEMENT    FOR THE YEAR ENDED 31 DECEMBER 2018    ‘Dear Shareholders,                                                             THE ECONOMY       I am delighted to                                                            The current economic environment in the country provides    present the CEO’s                                                             numerous opportunities for growth. At APA, we are excited     statement for the                                                            about these developments and are positioning ourselves to                                                                                  take advantage of these opportunities as they arise. We are             year ended                                                           committed to matching the highest international standards                                                                                  of product and service delivery and believes that the quality  31 December 2018’.                                                              of our people and the focus on meeting the needs of our                                                                                  customers will enable the Company to outperform both  INSURANCE INDUSTRY                                                              local peers and new entrants. As reported in the Chairman’s                                                                                  statement we strongly believe that the Economy will  The Kenyan insurance market continues to face                                   continue to grow and brings opportunities that we can grow  numerous challenges including very low insurance                                our business.  penetration, high risk and increasing incidence  and cost of fraud and increased competition due to                              COMPANY’S PERFORMANCE  the arrival of new entrants in an already crowded  industry, including an increasing number of global                              Against the back-drop of continued economic challenges  players. A number of market participants have                                   and low overall growth of our business in 2018, I am pleased  responded to these developments by reducing                                     to see our key indicators performing well. 2018 was a very  premiums and as a result underwriting results                                   busy year that focused on expansion of our ordinary life  have deteriorated with a consequent impact on                                   business and strengthening our investments to deliver high  industry profitability and service standards. Not                               and sustainable returns to all stakeholders. We focused on  surprising, therefore, a significant number of                                  improving underwriting processes of the group life business  players witnessed a reduction in profitability                                  for better profitability. Effort was also made in improving  compared to the 2017 results.                                                   our processes and systems to efficiently deliver superior  After the turbulence of 2017 elections during                                   services to our customers.  which the economy had predictably slowed down,                                  Our ordinary life business that had challenges previously,  it was widely expected that 2018 would be a year                                registered an impressive revenue growth of 63% and  of revival and growth. Unfortunately for the                                    a growth in customer retention rate of 40%. We have  insurance industry, in particular, 2018 turned out                              continued to innovate and pursue new markets especially in  to be worse than 2017. Between 2013 & 2016                                      the microinsurance and credit life space. Out of this we have  the industry had registered a CGR of 10% and in                                 realised positive outcomes evidenced by revenue growth  2017 this came down to 2% and slumped further                                   of 129% during the year. Our Group Life and Pension lines  to 1.9% in November 2018. In 2017 the collective                                did not register revenue growth as projected but emerged  underwriting loss exceeded Shs.1 billion up from                                stronger than previous year in terms of profitability. Our  79.13 million during the same period last year                                  investment despite the interest curb and tough environment  which is both unprecedented and unsustainable.                                  performed better giving rise to a two-digit net rate of return  As at June 2018, the Industry registered a                                      to our pension policyholders.  collective underwriting loss of Shs.2.66 billion.                               While these numbers are an important measure of our  Support by the regulator in addressing various                                  achievement we believe success goes beyond them. Customer  challenges has improved the way of doing business                               value and experience are indisputably amongst our key  inspiring more confidence in the market. The fraud                              success metrics. We aim to turn customer experience into  detection unit run by IRA, Insurance Regulatory                                 a competitive differentiator. Riding on our robust IT system,  Authority, is a measure addressing one of the                                   we are increasing our focus on customer engagement;  major challenges affecting the industry.                                        improving customer experience at every interaction and                                                                                  exploring mechanisms to settle our claims faster and more  16                                                                              efficiently. Developing and nurturing our people is also a                                                                                  core element of our success. We strive to enhance employee                                                                                  experience and engagement as well as our corporate culture.                                                                                  We are continuously monitoring our employee engagement                                                                                  score to further support this element of success. We are                                                                                  actively encouraging our employees to embrace a learning                                                                                  mindset and acquire new knowledge and skills. We continue                                                                                  to actively drive innovation to accelerate growth, improve                                                                                  services and product that we offer to our customers as well                                                                                  as improve productivity and quality of our business.","ANNUAL REPORT AND                                                                         FINANCIAL STATEMENTS 2018    CEO’S STATEMENT (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    NEW KEY INITIATIVES                                                    CATHERINE KARIMI    In 2018 APA launched a successful brand campaign titled ‘Insuring                                            CEO  Happiness’. The campaign launch coincided with the International  Day of Happiness which is a day dedicated to inspiring action for                                                               17  a happier world. The campaign ads were centered on the belief  that “Insurance is about people, not things” and sought to build an  emotional connection by focusing on what matters most to people.  This portrays APA as a happy brand that customers would be glad  to associate with. This created a positive essence that we will  continue to leverage to drive higher growth of our retail, portfolio  where we see potential growth for our business.  To this end, we have come out with products focusing on individual  and family cover cross-selling combined solutions for life and  general and targeting medium-size businesses. We have come  up with a package policy for schools to take advantage of the  government directive that all schools should be insured. We have  been strictly monitoring adherence to the customer charter which  was unveiled in 2016. To enhance the customer experience, we  have partially implemented a contact center which is expected to  be fully operational by mid-2019. In 2018 we also amplified our  efforts to build and maintain our client relationships by holding  various client appreciation events across the country.    TECHNOLOGICAL & DIGITAL TRANSFORMATION    As technology disruption continues to take hold, we expect to see the  insurance industry keep investing its capital in digital advancement  and solutions. According to our 2018 Business Environment Study,  80% of companies indicated an increase in IT spending for 2018  and 36% reported a significant increase of greater than 15%. The  role technology plays in meeting customers’ changing wants and  needs across generations is critical. The core of being successful  in innovation is being successful in technology. It’s really about  listening to the customer and adapting that technology to their  needs, we need to listen to the voice of the customer to be  successful. We recently conducted a digital audit across the  Group and found areas of opportunity to digitise our customer  journeys and processes. This audit has given rise to Apollo  Nirvana- our new digital strategy. Nirvana aims to propel us  in just three years to become a digital leader in the market.  The overarching vision for Nirvana is “Insuring happiness with  seamless protection for all customers, at their fingertips”. Some  of the activities of the project will include:  •	 Web and app platforms for our customers and brokers that can        be used to purchase and service multiple insurance products  •	 Automation of our core processes (onboarding, claims and        servicing across general, life and health), eliminating paper and      reducing processing times  •	 Use of our data to drive business value (for example through      better cross-sell, more proactive retention of our customers,      better management of claims cost)  •	 Innovative disruptions to increase our market share","ANNUAL REPORT AND  FINANCIAL STATEMENTS 2018    CEO’S STATEMENT (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    RECOGNITION AND AWARDS                                       With its large population, diverse economy and an                                                               insurance penetration rate of less than 3% of GDP in the  APA participated in the 2018 Annual Think Business           first quarter of 2018, compared to a global average of more  Insurance Awards whose objective is to encourage             than 6%, Kenya holds significant promise as an insurance  innovation and excellence in the Insurance sector            arena. Recent years have seen the government and the  by recognising, awarding and celebrating exemplary           industry regulator attempt to realise this potential:  performers and successes of the sector.                      key measures have included the localisation of marine  APA won six awards, scooping three overall winners’          insurance business, the development of a micro-insurance  positions, two 1st runners up positions and one 2nd          framework, increased training for insurance agents and the  runner up position. We took the overall winner awards        promotion of technology in transacting insurance business.  in three main categories including Fraud Detection and       Juxtaposing these efforts are challenges including a lack  Prevention, Best in product Distribution and Marketing       of awareness among consumers and reputational damage  and Best in Customer Satisfaction (Medical). We also         caused by a number of historical insolvencies, as well as  received 1st runner up in Customer Service and in Claim      systemic weaknesses such as fraudulent claims and the  Settlement (General) and 2nd runner up in Corporate          frequency of delayed claims payments. An ongoing process  Social Responsibility.                                       of regulatory reform is central to tackling these obstacles.  In a service industry like ours, a company is as good as     In the shorter term, solid growth forecasts for the Kenyan  its people. We at APA firmly adhere to this philosophy       economy bode well for the prospects of continued  and to this end our company makes a considerable             premium growth in the sector.  investment every year on training and development of         Further, its notable that the insurance industry continues  our staff. Training is conducted through our APA academy,    to be affected in the medium term though not negatively,  external facilitators and the Swiss Re e-portal. APA was     by two developments. First implementation of risk based  also recognized by the Association of Kenya Insurers (AKI)   capital requirement expected to be operational by June  during the annual sports day in September 2018 which         2020. Secondly the proposed adoption of IFRS 9 and 17  saw us retain our number 1 overall position for the 6th      with effect from 1st January 2018 and 2021 respectively  consecutive year. This shows our commitment to the           will bring in radical changes from the current reporting  health and wellness of our staff is bearing fruit.           system. Further this is expected to put focus on various                                                               aspect of business processes and investment decisions.  CORPORATE SOCIAL RESPONSIBILITY                                                               APPRECIATION  At APA we understand that we have a responsibility to our  society and we have made Corporate Social Responsibility     The contributions of APA’s various stakeholders have  (CSR) an integral part of our business culture. To           ensured that continued strong performance is achieved.  underline our deep commitment to making a difference         These are none other than our business partners,  in people’s lives, we are guided by existing policy and we   intermediaries and customers. I would like to thank you  commit to a substantial budgetary allocation each year       for your continued support and loyalty, which have been  to CSR initiatives through the APA Apollo Foundation. Our    instrumental in reinforcing APA’s position as the financial  objective remains to support sustainable projects that       services provider to reckon with in the Kenyan insurance  uplift the standards of communities that we partner with     market.  for support.                                                 I also thank all our staff across the country who continue                                                               to show dedication and provide superior service to  FUTURE OUTLOOK                                               our customers. I would also like to acknowledge with                                                               appreciation my colleagues in the management and the  Kenya’s economy is expected to expand by between             Board directors for their diligence, guidance and support  6.5 and 7 percent in 2019. Economic growth will also         that has ensured that we achieve superior and excellent  be supported by the increase in the number of mega           results during the year.  projects under execution as well as the early impact of  President Uhuru Kenyatta’s Big Four Agenda. East African     CATHERINE KARIMI  nations are expected to achieve between eight and nine       Chief Executive Officer  percent expansion of the gross domestic product (GDP)  in 2020. This will be largely driven by the oil and gas sub  12 March 2019  sector which will be nearing full commercial production  with crude oil pipeline to Lamu expected to be under  construction.  Technology investments are happening at a record pace  across financial services with insurance companies being  no exception. Strong financial conditions in 2018 have  paved the way for an increased focus on optimising the  digital experience, which directly impacts the customer  experience—a driving strategy for success in the insurance  industry. When it comes to embracing change, there  should be no letting off the pedal. Business leaders must  continually evolve longstanding practices, using new  advances in technology to fuel their journey forward.  18","ANNUAL REPORT AND                                                                                             FINANCIAL STATEMENTS 2018                MY HAPPINESS        IS CATERING FOR MY            CHILD’S FUTURE.    For me, my son’s education is very important. Right now, he  is in class four and going forward I still want him to enjoy the  best education in the best schools. That is why I took the APA  Elimu plan so that I’m able to plan for his education until he      graduates from university. Harvard, here we come! Thank        you APA for putting a smile on my face and insuring                                  my happiness.                       APA Elimu                                                                                    19","ANNUAL REPORT AND                                                       FINANCIAL STATEMENTS 2018    CORPORATE GOVERNANCE STATEMENT    INTRODUCTION    Good corporate governance is key to the integrity of corporations, financial institutions and markets and is central to the  health of our economies and their stability. Corporate governance plays a leading role in making certain how corporations and  their boards and management are directed, controlled and held to account. Corporate governance therefore encompasses  the systems, practices and procedures by which the individual corporation regulates itself in order to remain competitive,  ethical, sustainable and fair.  The Board of APA Life Assurance Limited follows principles of openness, integrity and accountability in its stewardship of the  Company’s affairs.  It recognises the developing nature of corporate governance and assesses the Company’s compliance  with generally accepted corporate governance practice on a regular basis, directly and through its Board committees and  Management.  The role of the Board is to ensure conformance by focusing on and providing the Company overall strategic  direction and policy-making as well as performance review through accountability and ensuring appropriate monitoring and  supervision.  The Board is also responsible for the overall system of internal control and for reviewing its effectiveness.  The  controls are designed to both safeguard the Company’s assets and ensure the reliability of financial information.  A senior management team, comprising executive directors and senior managers meets regularly to consider issues of  operational and strategic importance to the Company.  Below are the key features of the existing corporate governance practices within the Company which are reviewed and  improved on a regular basis:    1. BOARD OF DIRECTORS         The Board of Directors consists of eight directors out of whom three are independent non-executive directors. The       Chairman of the Board is a non-executive director and the Board meets formally at least four times a year.       The Board is responsible for setting the direction of the Company through the establishment of strategic objectives, key       policies and the approval of budgets.  It monitors the implementation of strategies and policies through a structured       approach to reporting by executive management and consequent accountability.        The directors are actively involved in and bring strong independent judgement on Board deliberations and discussions.        These directors have a wide range of knowledge and experience of local and international markets that is applied to       the formulation of strategic objectives and decision making.       All directors have access to the advice and services of the Company Secretary and are entitled to obtain independent       professional advice on the Company’s affairs.       To assist the Board in the discharge of its responsibilities, Board committees have been established. All the Board       committees meet at least four times a year. The committees are as follows: -       (a) Audit and Risk Committee       The audit and risk committee comprises four non-executive directors and the executive director. The committee       is responsible for, inter alia, developing and advising on audit and financial controls and compliance issues of the       Company. It also defines the scope of the internal audit function and acts as a liaison between the external auditors and       management. The current members of the committee are R Schnarwiler (Chairman), P Shah, R M Ashley, D M Ndonye       and A K M Shah.       (b) Information and Communication Technology (ICT) Committee       The ICT committee comprises one non-executive director, the professional nominated under shareholder’s agreement       and the executive director. The committee provides guidance to the Board on ICT requirements for the Company,       provides assurance that the ICT systems in place are able to generate accurate and timely management reports and       also reviews ICT budgets and recommends for their adoption by the Board. The committee also ensures that there are       business continuity plans in place for the Company. The current members of the committee are P H Shah (Chairman),       P Shah and A K M Shah.       (c) Investment Committee       The Board has an investment committee comprising three non-executive directors, board advisor and the executive       director. This committee is responsible for determining the Company’s overall investment strategy and monitoring its       implementation. The current members of the committee are R M Ashley (Chairman), D M Ndonye, S M Shah, P H Shah       and A K M Shah.    20","ANNUAL REPORT AND                                                                                                                                                                                                                                                                                        FINANCIAL STATEMENTS 2018    CORPORATE GOVERNANCE STATEMENT (CONTINUED)    1. BOARD OF DIRECTORS (CONTINUED)         (d) Remuneration Committee       The remuneration committee currently consists of three non-executive directors and the Executive Director. Its primary       objective is to ensure that the right calibre of management is recruited and retained and set guidelines for remuneration       of staff. The non-executive directors on the committee are responsible for agreeing the terms of service in respect of       the executive directors.       The committee is also responsible for ensuring that the terms and conditions of service for management and staff is       fair, appropriate and reflect the market conditions. The current members of the committee are D M Ndonye (Chairman),       R Schnarwiler, P J Shah and A K M Shah.    2. INTERNAL CONTROLS         The Company has implemented and maintains internal controls designed to provide reasonable assurance as to the       integrity and reliability of the financial statements and to adequately safeguard and maintain accountability of the       Company’s assets. Such controls are based on established policies and procedures and are implemented by trained       personnel with appropriate segregation of duties. The effectiveness of the system of internal controls is monitored       regularly through internal audit function, operational meetings and the annual external audit.    3. RELATED PARTY TRANSACTIONS AND DIRECTORS’ REMUNERATION         The related parties’ transactions with the group companies during the year ending, 31 December 2018 are detailed       under note 35 of these annual report and financial statements.       The remuneration for non-executive directors consists of fees and sitting allowances for their services in connection       with the Board and committee meetings. These fees and allowances are approved by the members at the annual       general meetings.       The aggregate amount of directors’ remuneration for services rendered during the year ending 31 December 2018 are       contained under note 31 of these annual report and financial statements.    4. SOCIAL AND ENVIRONMENTAL RESPONSIBILITIES         The Board is conscious of the Company’s social and environmental responsibilities. Particular attention is given to       projects with a long time positive impact to the society and environment. These include employees’ welfare programmes,       education and health activities, empowering the youth and provision of clean and safe drinking water. The Company       encourages staff to participate and actively supports them in various causes.    5. GOING CONCERN         The directors confirm that the Company has adequate resources to continue in business for the foreseeable future and       therefore the continued use of going concern as a basis of preparing the financial statements is appropriate.                                                  						       RICHARD M. ASHLEY						ASHOK SHAH       Chairman								Director       12 March 2019							12 March 2019                                                                                                                                                                       21","ANNUAL REPORT AND                                                       FINANCIAL STATEMENTS 2018    CORPORATE SOCIAL RESPONSIBILITY    Ashok Shah - Apollo Group CEO during construction of a sand dam to support households.       ‘As an insurance                                     Our objective remains to support sustainable projects that                                                          uplift the standards of communities that we partner with for           company, we                                    support.      provide essential                                   The Group’s corporate social responsibility programs focus on                                                          four key pillars:        services to the                                   1. Sustainable clean water supply to communities                                                          2. Empowering the youth          community’                                      3. Education and health activities    We play a role in connecting people with each           4. Environment conservation.  other, with other communities and key community  services. The operation of our services touches on      APA APOLLO FOUNDATION  all members of the community with the potential  to positively impact on their quality of life. We also  APA Apollo Foundation, previously known as ‘Amini Poa Maji  operate from a significant number of properties and     Maisha,’ is the umbrella trust that is funded by APA Apollo  have a responsibility to those living and working       Group and contributes towards the construction of sand  nearby as well as being a significant employer;         dams. The trust has been in existence since 2006 and has  directly employing 353 staff.                           constructed 22 sand dams in arid and semi-arid areas of  Our relationships with the local communities we         Kenya (Machakos, Makueni and Kajiado)  serve are therefore very important to us and are an  essential part of the growth of our business. When      The strategic goal is to enhance food security for all in society  developing our products and services, we have a         by providing communities in semi-arid areas, accessibility to  role to play in improving services for the community    reliable water supply. This is achieved by the construction  as a whole and not just our individual customers.       of sand dams on dry river beds to harness the water that                                                          only flows during rainy seasons. The water is retained in the  22                                                      sand that is deposited behind the dam. An artisan well with                                                          a hand pump is provided for easy access by the community.                                                          The natural filtration through the sand gives clean drinking                                                          water that is used both for agriculture and household.","ANNUAL REPORT AND                                                                                                                                                                                                                                                                                        FINANCIAL STATEMENTS 2018    CORPORATE SOCIAL RESPONSIBILITY (CONTINUED)    In 2018, the communities partnered with APA staff           RECREATION THROUGH SPORTS  members and the Utooni Development Organization;  a non-government organisation that specializes in the       APA promotes sporting activities by supporting the Runda  construction of sand dams and built the two dams that       Youth Sports Association (RYSA) football team. The  will support these households in the long term.             sponsorship includes the fees for RYSA to participate in  These dams are located in Imarat, Kajiado and Ikalaasa,     various leagues and provides the football kits, for logistics  Machakos respectively. The Ikalaasa project was a special   and team allowances.  one as the Khimasia Family partnered with the foundation    The RYSA football team participates in the Nairobi County  to fund and build the dam in celebration of their 100 year  league which is under the Football Kenya Federation.  anniversary in Kenya.                                       Overall the team is in sixth place in a league of 13 teams.                                                              In addition, APA organizes tournaments for the team in  Some of the key objectives that the projects have met       order to boost and continue to nurture the soccer talents  include:                                                    and positively engage the youth in Mji wa Huruma and  •	 Enhancing water and food security for the communities    Githongoro villages.  •	 Increasing accessibility to clean water  •	 Increase in food supply                                  ENVIRONMENT CONSERVATION  •	 Reducing commuting for long distance to fetch water        for women and the children  •	 Ensuring that the community at large is able to        participate in other income-generating activities as      long hours spent in fetching water have been reduced.    YOUTH INITIATIVE PROGRAMMES APA /  APOLLO BURSARY FUND                                                                APA team at the annual ‘Run for Mau’ marathon            Catherine Karimi - APAL Chief Executive Officer     Our commitment to protecting and conserving the          handing over a cheque to Cheleta primary school     environment is core to our business and it is our objective          towards the bursary programme                       to plant and maintain at least 1,500 trees every year. In  The APA bursary scheme was created to educate the top       partnership with Egerton University, we have created the  achieving boy and girl from Cheleta Primary School and      Ngongogeri Park and every year we plant 1500 seedlings  hailing from Githongoro slums in the outskirts of Runda.    with our staff and Egerton students. We are also key  The bursary fund currently in its 13th year and has 12      partners and sponsors in the annual Run for Mau marathon  students in the bursary program.                            in which we have participated for 6 consecutive years.  Cheleta School’s overall performance has greatly improved   Through the APA Apollo Foundation sand dam projects, we  since the bursary program was introduced with the average   ask the benefiting communities to plant trees along the  score rising to above 50%. This is due to competition       river beds to help curb soil erosion, provide food as well  amongst the pupils. The bursary caters for secondary        as beautifying the landscape. A minimum of ten trees is  education tuition and necessary personal effects.           allocated for planting and maintenance to each household                                                              that benefits from the sand dam.                                                              We have partnered with “Friends of Karura” and                                                              “Greenline Project” to plant trees in both the Karura                                                              forest and Nairobi National park in an effort to curb urban                                                              encroachment.                                                              Environment conservation has also been embraced at the                                                              departmental level by the APA staff through the annual                                                              departmental CSR activities.                                                                                                                                                                                                                                                                                                                       23","ANNUAL REPORT AND                                                       FINANCIAL STATEMENTS 2018    DIRECTORS’ REPORT    FOR THE YEAR ENDED 31 DECEMBER 2018    The directors submit their report together with the audited financial statements for the year ended 31 December 2018,  which disclose the state of affairs of APA Life Assurance Limited (the “Company”).    INCORPORATION    The Company is incorporated in Kenya under the Kenyan Companies Act as a private company limited by shares, and is  domiciled in Kenya. The address and the registered office is set out in page 6.    BUSINESS REVIEW    The principal activity of the Company is the transaction of general insurance business.    The key risk that the Company faces is insurance risk which arises from the possibility that the insured event occurs and the  uncertainty of the amount of the resulting claim.    RESULTS    (Loss) / profit before income tax                                                           2018          2017                                                                                           Shs’000       Shs’000                                                                                                            (59,702)                                                                                            (22,198)    Income tax credit /(expense)                                                              (8,398)       (6,643)                                                                                           (30,596)                  (Loss) / profit for the year                                                                                                         (66,345)    Other comprehensive income/ (loss)                                                       (1,413)       40,195    Total comprehensive (loss) /income                                                       (32,009)      (26,150)    DIVIDEND    The net loss for the year amounting to Shs 32,009,000 (2017: Shs 26,150,000) has been deducted from retained earnings.  The directors do not recommend payment of dividends (2017: Nil).    DIRECTORS    The directors who held office during the year and to the date of this report are set out on page 6.    DISCLOSURE TO AUDITORS    The directors confirm that with respect to each director at the time of approval of this report:    (a) there was, as far as each director is aware, no relevant audit information of which the Company’s auditor is unaware;      and    (b) each director had taken all steps that ought to have been taken as a director so as to be aware of any relevant audit      information and to establish that the Company’s auditor is aware of that information.    TERMS OF APPOINTMENT OF AUDITORS    PricewaterhouseCoopers continue in office in accordance with the Company’s Articles of Association and Section 719 of the  Kenyan Companies Act, 2015.	    The directors monitor the effectiveness, objectivity and independence of the auditor. This responsibility includes the  approval of the audit engagement contract and the associated fees on behalf of the shareholders.    By order of the Board    P.H SHAH  Company Secretary    12 March 2019    24","ANNUAL REPORT AND                                                 FINANCIAL STATEMENTS 2018    STATEMENT OF DIRECTORS’ RESPONSIBILITIES    FOR THE YEAR ENDED 31 DECEMBER 2018    The Kenyan Companies Act 2015 requires the directors to prepare financial statements for each financial year which give a  true and fair view of the financial position of the Company at the end of the financial year and its profit or loss for the year  then ended. The directors are responsible for ensuring that the Company keeps proper accounting records that are sufficient  to show and explain the transactions of the Company; disclose with reasonable accuracy at any time the financial position of  the Company; and that enables them to prepare financial statements of the Company that comply with prescribed financial  reporting standards and the requirements of the Kenyan Companies Act 2015. They are also responsible for safeguarding the  assets of the Company and for taking reasonable steps for the prevention and detection of fraud and other irregularities.    The directors accept responsibility for the preparation and presentation of these financial statements in accordance with  International Financial Reporting Standards and in the manner required by the Kenyan Companies Act 2015. They also  accept responsibility for:    i. D esigning, implementing and maintaining internal control as they determine necessary to enable the preparation of      financial statements that are free from material misstatements, whether due to fraud or error;    ii. selecting suitable accounting policies and then apply them consistently; and    iii. Making judgements and accounting estimates that are reasonable in the circumstances    Having made an assessment of the Company’s ability to continue as a going concern, the directors are not aware of any  material uncertainties related to events or conditions that may cast doubt upon the Company’s ability to continue as a  going concern.    The directors acknowledge that the independent audit of the financial statements does not relieve them of their responsibility.    Approved by the Board of Directors on 12 March 2019 and signed on its behalf by:                                            					  RICHARD M. ASHLEY						ASHOK SHAH  Chairman							Director                                                                                25","ANNUAL REPORT AND                                                       FINANCIAL STATEMENTS 2018    REPORT OF THE CONSULTING ACTUARY  TO THE SHAREHOLDERS OF APA LIFE ASSURANCE LIMITED    FOR THE YEAR ENDED 31 DECEMBER 2018    I have conducted an actuarial valuation of the insurer’s insurance liabilities as at 31 December 2018.  The valuation was conducted in accordance with generally accepted actuarial principles and in accordance with the  requirements of the Insurance Act Cap 487 of the Laws of Kenya. Those principles require that prudent principles for future  outgo under contracts, generally based upon the assumptions that current conditions will continue. Provision is therefore  not made for all possible contingencies.  In completing the actuarial valuation, I have relied upon the audited financial statements of the Company.  In my opinion, the insurer’s insurance liabilities of the Company were adequate as at 31 December 2018.    GILES T WAUGH, FASSA, FIA  Independent Actuarial Consultant  12 March 2019    26","ANNUAL REPORT AND                                                                 FINANCIAL STATEMENTS 2018    INDEPENDENT AUDITOR’S REPORT  TO THE SHAREHOLDERS OF APA LIFE ASSURANCE LIMITED    FOR THE YEAR ENDED 31 DECEMBER 2018    Report on audit of the financial statements    Opinion  We have audited the accompanying financial statements of APA Life Assurance Limited (the “Company”), set out on pages  30 to 76 which comprise the statement of financial position as at 31 December 2018, the statement of comprehensive  income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant  accounting policies and other explanatory notes.  In our opinion, the financial statements give a true and of fair view of the financial position of APA Life Assurance Limited at  31 December 2018, and its financial performance and cash flows for the year then ended in accordance with International  Financial Reporting Standards and the requirements of the Kenyan Companies Act, 2015.  Basis for Opinion  We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those  standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our  report.  We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of  Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of  the financial statements in Kenya, and we have fulfilled our ethical responsibilities in accordance with these requirements  and the IESBA Code.  We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.  Key audit matters  Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the  financial statements of the current period. These matters were addressed in the context of our audit of the Company  financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these  matters.    Key audit matter	                                              How our audit addressed the key audit matter  Valuation of insurance contract liabilities    Insurance contract liabilities as disclosed in Notes 23 to     We engaged our actuarial specialists to assess the  the financial statements are of significant magnitude (Shs     reasonableness of the actuarial assumptions, including the  1,039 million) to the overall financial statements. There are  consideration and challenge of management’s rationale for  several methods which can be adopted in the determination      the judgments applied. Our audit work included:  of these reserves which are underpinned by a series of         •	 evaluating the reasonableness of the methodology and  assumptions, and which are also subject to the requirements  of the Insurance Act in Kenya. Changes in these assumptions        assumptions used by comparing them against regulatory  can lead to significant changes in actuarial liabilities. The      requirements, recognised actuarial practices and industry  methodology used can also have a material impact on                standards; and  the valuation of the liabilities. The valuation of insurance   •	 obtaining audit evidence in respect of the key data inputs  contract liabilities was considered a key audit matter due         into the estimation process.  to magnitude of the balance and the estimation uncertainty  involved in determining the liabilities.    Other information  The other information comprises the information included in the annual report other than the financial statements and our  auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial statements  does not cover the other information and we do not express any form of assurance conclusion thereon.  In connection with our audit of the financial statements, our responsibility is to read the other information identified above  and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our  knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed  on the other information, we conclude that there is a material misstatement of this other information, we are required to  report that fact. We have nothing to report in this regard.                                                                                                                 27","ANNUAL REPORT AND                                                       FINANCIAL STATEMENTS 2018    INDEPENDENT AUDITOR’S REPORT  TO THE SHAREHOLDERS OF APA LIFE ASSURANCE LIMITED (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018  Report on audit of the financial statements (continued)    Responsibility of the directors for the financial statements  The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with  International Financial Reporting Standards and the requirements of the Kenyan Companies Act, 2015 and for such internal  control as the directors determine is necessary to enable the preparation of financial statements that are free from material  misstatement, whether due to fraud or error.  In preparing the financial statements, the directors are responsible for assessing the Company’s ability 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 liquidate the Company or to cease operations, or have no realistic alternative but to  do so.  Auditor’s responsibilities for the audit of the financial statements  Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from  material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable  assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always  detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,  individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on  the basis of these financial statements.  As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism  throughout the audit. We also:  •	 Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design        and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to      provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than      for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the      override of internal control.  •	 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate      in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal      control.  •	 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related      disclosures made by the directors.  •	 Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based 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 auditor’s 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 auditor’s 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, including any significant deficiencies in internal control that we identify during our audit.    28","ANNUAL REPORT AND                                                                                                                                                                                                                                                                                        FINANCIAL STATEMENTS 2018    INDEPENDENT AUDITOR’S REPORT  TO THE SHAREHOLDERS OF APA LIFE ASSURANCE LIMITED (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018  Report on audit of the financial statements (continued)    Report on other matters prescribed by the Kenyan Companies Act, 2015  In our opinion the information given in the report of the directors on page 24 is consistent with the financial statements.  Certified Public Accountants  Nairobi 							29 March 2019  CPA Bernice Kimacia – Practising Certificate No 1457.  Signing Partner responsible for the Independent Audit.                                                                                                                                                                       29","ANNUAL REPORT AND                                                          FINANCIAL STATEMENTS 2018    STATEMENT OF COMPREHENSIVE INCOME    FOR THE YEAR ENDED 31 DECEMBER 2018                                            Long term Sharehold-     2018 Long term Sharehold-                    2017                                Notes business ers’ funds          Total business ers’ funds                     Total                                                                                                             Shs’000                                       Shs’000        Shs’000      Shs’000 Shs’000                Shs’000    Gross earned premium          3 962,812             -              962,812           907,579    - 907,579  Reinsurance premium ceded            (495,813)      -            (495,813)         (548,176)    - (548,176)    Net earned premium                    466,999              -     466,999           359,403              -  359,403  Investment income             4 427,681             52,564        480,245           376,449     37,543      413,992  Commissions earned                                                106,069           113,745                 113,745                                          106,069            -                                            -  Total income                                                                       849,597                 887,140                                      1,000,749       52,564 1,053,313                            37,543    Claims and policyholders’     5 (626,056)           - (626,056) (568,720)                                 - (568,720)  benefits  Operating and other           6 (262,457)           (11,511)     (273,968)         (223,025)    (10,740) (233,765)  expenses                             (175,487)                -  (175,487)         (144,357)              - (144,357)  Commissions payable    Total claims and                     (1,064,000)    (11,511) (1,075,511) (936,102)              (10,740) (946,842)  expenses    Profit /(loss) before                     (63,251)  41,053       (22,198)          (86,505)     26,803 (59,702)  income tax                    8(a) (8,398)                  -      (8,398)           (6,643)            - (6,643)  Income tax credit /  (expense)    Profit /(loss) for the               (71,649)       41,053 (30,596) (93,148)                    26,803 (66,345)  year    Items that may be                12          -      --                             23,919            9     23,928  reclassified subsequently        13  (1,413)        - (1,413)                             -           -           -  to profit or loss:            17(b)                 --                                          3,298  -fair value gain from quoted                 -                                     12,969                  16,267  equities  -fair value loss on unquoted  equities  -fair value gain on  government securities    Total other                          (1,413)        - (1,413) 36,888                            3,307      40,195  comprehensive income  for the year    Total comprehensive                  (73,062)       41,053 (32,009) (56,260)                    30,110 (26,150)  (loss) /income    Appropriated as follows:                       -           -               -                 -   3,307        3,307  -To revaluation reserves                       -    41,053         41,053                    -  26,803       26,803  -To retained earnings                (73,062)                    (73,062)          (56,260)                (56,260)  -To statutory reserves                                     -                                           -    Total comprehensive (loss) /         (73,062)       41,053 (32,009)                (56,260)     30,110 (26,150)  income    The notes on pages 50 to 76 form on intergral part of these financial statements    30","ANNUAL REPORT AND                                                                    FINANCIAL STATEMENTS 2018    STATEMENT OF FINANCIAL POSITION    AS AT 31 DECEMBER 2018    Assets                                                  Notes           2018                         2017                                                                      Shs’000                      Shs’000  Intangible asset                                              10                                                                 9         5,183                                 Motor vehicle and equipment                                            16,908                                                                11      155,000                       10,367  Investment properties                                    12 (a)                                                           12 (b)                -                    13,176  Quoted equity investments – available for sale                        222,700                                                                13                                   273,000  Quoted equity investments - FVTPL                                        7,557  Unquoted equity investments                                   14         3,067                     195,119  Life policy loans                                             15         8,245  Other loans receivables                                                11,257                               -  Investment in unit trust                                   8(b)       103,882                         8,970  Reinsurers’ share of insurance liabilities                    16      109,823                         2,240  Receivables arising from direct insurance arrangements                 14,794  Current income tax                                        17(a)         60,923                              -  Other receivables                                         17(b)    2,543,054                        15,729  Government securities - at amortised cost                 17(c)                                    124,546  Government securities - available for sale                                     -                    75,358  Government securities – FVTPL                                 18      770,804                       13,690  Commercial paper and corporate bonds                          19      184,855                        44,450  Deposits with financial institutions                               1,031,841                    2,618,122  Cash and bank balances                                                                             658,058                                                                         65,151  Total assets                                                                                                -                                                                    5,315,044                        185,116                                                                                                     423,327                                                                                                        21,492                                                                                                   4,682,760    Equity and Reserves                                     20 700,000 550,000  Share capital  Investment revaluation reserve                                    - 7,412  Retained earnings  Total shareholders’ funds                               21 (194,646) (134,466)  Statutory reserve                                                                    505,354                      422,946  Total equity and reserves                                                          22 43,145 23,399  Liabilities  Insurance contract liabilities                                    548,499                      446,345  Payables under deposit administration contracts  Payables arising from reinsurance arrangements          23 1,039,706                           984,800  Other payables  Deferred income tax                                     25 3,497,314 3,115,339                                                                      86,482                       22,297                                                            26 124,618 103,952                                                            27 18,425 10,027    Total liabilities                                                 4,766,545                    4,236,415    Total equity and liabilities                                      5,315,044                    4,682,760    The financial statements on pages 30 to 76 were approved and authorised for issue by the board of directors on  12 March 2019 and were signed on its behalf by:                                            							  RICHARD M. ASHLEY								ASHOK SHAH  Chairman									Director                                                                                                   31","ANNUAL REPORT AND                                                          FINANCIAL STATEMENTS 2018    STATEMENT OF CHANGES IN EQUITY    FOR THE YEAR ENDED 31 DECEMBER 2018    The notes on pages 50 to 76 form on intergral part of these financial statements                                             Share         Invest-                     Retained          Total  Statutory        Total                                         capital       ment re-                      earnings        Share-    reserves      equity                                        Shs’000      valuations                       Shs’000      holders’     Shs’000      & re-                                                        Shs’000                                       funds                  serves                                                                                                   Shs’000                 Shs’000    Year Ended 31 December 2017           450,000      4,105                           (89,450)      364,655       7,840     372,495  Balance as at 1 January 2017           100,000            -                                   -   100,000             -   100,000  Issue of new shares                                                                                                       (26,150)  Total comprehensive income for the              -  3,307                           26,803          30,110   (56,260)  year                                            -                                                (71,819)     71,819                -  Transfer from shareholders to long-                - (71,819)                                                            446,345  term business                         550,000  Balance as at                                      7,412 (134,466)                               422,946    23,399        446,345  31 December 2017                                                                                                                    -                                         550,000     7,412 (134,466)                               422,946    23,399  Year Ended 31 December 2018                     -                                                                         (15,837)  As Previously Reported                          -  (7,412)                         7,412              -               -  430,508  Day 1 reclassification of cumulative                       -                       (840)         (840)      (14,997)  AFS reserve on equities               550,000  Changes on initial application of                  - (127,894)                                   422,106    8,402  IFRS 9  At the start of the year  (restated)    Issue of new shares                   150,000      --                                              150,000            -  150,000  Total comprehensive income for the             -   - 41,053                                         41,053  (73,062)     (32,009)  year                                               - (107,805)                                              107,805  Transfer from retained earnings to                                                               (107,805)                         -  statutory reserve    Balance as at                         700,000      - (194,646)                                   505,354    43,145 548,499  31 December 2018    The notes on pages 50 to 76 form on intergral part of these financial statements    32","ANNUAL REPORT AND                                                                                    FINANCIAL STATEMENTS 2018    STATEMENT OF C A S H F L O W S    FOR THE YEAR ENDED 31 DECEMBER 2018    Cash flows from operating activities                  Notes                            2018                         2017  Cash generated from operations                        28 (a)                       Shs’000                      Shs’000  Interest received                                       8 (b)  Income tax paid                                                                                                                                                                                                     32,046                      109,071  Net cash inflow from operating activities                    9                       465,887                      367,448                                                             11                         (1,104)  Cash flows from investing activities                       12                                                        (511)  Purchase of equipment                                                               496,829  Proceeds from disposal of fixed assets                                                                           476,008  Proceeds from disposal of quoted shares                    20                         (8,258)  Proceeds from disposal of investment property                                                 -                    (4,371)  Purchase of quoted shares                                                                                               465  Net investment in unit trusts                         28 (b)                          52,641  Net loans advanced                                                                   128,000                      253,983  Net policy loans recovered                                                         (117,995)                       47,000  Net investment in corporate bonds                                                     (4,471)  Net placement in deposit with financial institutions                                  (8,245)                    (75,969)  Net investment in government securities                                                                               (520)                                                                                           (827)                             -  Net cash outflow from investing activities                                                 260                        (185)    Cash flows from financing activities                                               (638,543)                     (39,657)  Issue of new shares                                                                 (22,194)                               -    Net cash inflow from financing activities                                         (619,632)                     (843,338)    Increase/(Decrease) in cash and cash equivalents                                     150,000                   (662,592)                                                                                      150,000  Movement in cash and cash equivalents :                                                                           100,000  At start of year                                                                      27,197                     100,000  Increase/ (Decrease)                                                                                            (86,584)                                                                                       444,819  At end of year                                                                        27,197                      531,403                                                                                                                   (86,584)                                                                                      472,016                      444,819    The notes on pages 50 to 76 form on intergral part of these financial statements                                                                                                                   33","ANNUAL REPORT AND                                                          FINANCIAL STATEMENTS 2018    ACCOUNTING POLICIES    FOR THE YEAR ENDED 31 DECEMBER 2018     1 Summary of significant accounting policies   (a) Basis of preparation             The company financial statements have been prepared in accordance with International Financial Reporting           Standards (IFRS)            (a) Basis of measurement             The measurement basis used is the historical cost basis except where otherwise stated in the accounting policies           below.           For those assets and liabilities measured at fair value, fair value is the price that would be received to sell an asset           or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When           measuring the fair value of an asset or a liability, the company uses market observable data as far as possible. If           the fair value of an asset or a liability is not directly observable, it is estimated by the company using valuation           techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs (e.g. by           use of the market comparable approach that reflects recent transaction prices for similar items or discounted cash           flow analysis). Inputs used are consistent with the characteristics of the asset / liability that market participants           would take into account.            (b) Use of estimates             The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting           estimates. It also requires management to exercise its judgment in the process of applying the group’s accounting           policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates           are significant to the company financial statements are disclosed in note 1(t).     (b) Changes in accounting policy and disclosures   (i) New and amended standards adopted by the Company              The Company has applied the following standards and amendments for the first time for their annual reporting            period commencing 1 January 2018.            IFRS 9 - Financial Instruments              The Company has adopted IFRS 9 as issued by the IASB in July 2014 with a date of transition of 1 January 2018,            which resulted in changes in accounting policies and adjustments to the amounts previously recognised in the            financial statements. The Company did not early adopt any of IFRS 9 in previous periods.            As permitted by the transitional provisions of IFRS 9, the Company elected not to restate comparative figures.            Any adjustments to the carrying amounts of financial assets and financial liabilities at the date of transition were            recognised in the opening retained earnings and other reserves of the current period. As a result, the comparative            information provided continues to be accounted for in accordance with the company’s previous accounting policy.            The adoption of IFRS 9 has resulted in changes in our accounting policies for recognition, classification and            measurement of financial assets and financial liabilities and impairment of financial assets. IFRS 9 also significantly            amends other standards dealing with financial instruments as IFRS 7 ‘Financial Instruments: Disclosures’.            Set out below are disclosures relating to the impact of the adoption of IFRS 9 on the Company.    34","ANNUAL REPORT AND                                                                          FINANCIAL STATEMENTS 2018    ACCOUNTING POLICIES (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    1 Summary of significant accounting policies (continued)    (b) Changes in accounting policy and disclosures (continued)  (i) New and amended standards adopted by the Company (continued)          IFRS 9 - Financial Instruments (continued)  (a) Classification and measurement of financial instruments                                          Classification    New             Original carrying             New carrying                                        under IAS 39      classification     amount under              amount under  Financial assets                                        under IFRS 9                  IAS 39  Equity investments – quoted                                                        Shs ‘000                     IFRS 9                                        FVTOCI                                                                Shs ‘000  Policy loans                          Loans and         FVTPL                          195,119                                        receivables                                                                           Other receivables                     Loans and         Amortised cost                                          195,119  Reinsurance receivable share of       receivables  liabilities                           Loans and         Amortised cost  2,240                        2,233                                        receivables                                                          Amortised cost  44,450                       44,450                                                            Amortised cost  124,546                      123,618                                                          Amortised cost  Other receivables arising from        Loans and         Amortised cost       75,358                       66,497  direct insurance arrangements         receivables       Amortised cost   2,618,122                    2,615,504  Government securities                 Held to maturity  Amortised cost  Corporate bonds                       Held to maturity  FVTPL               185,116                      184,472  Deposits with financial institutions  Held to maturity  FVTPL               423,327                      420,570  Cash and bank balances                Held to maturity  FVTOCI  Government securities                 FVTOCI                                 21,492                       21,470  Investments in Unit Trusts            FVTOCI                                658,058                      658,058  Unquoted equity investments           FVTOCI  Total financial assets                                                       15,729                       15,729                                                                                 8,970                        8,970                                                                            4,372,527                    4,356,690                                                                                                         35","ANNUAL REPORT AND                                                          FINANCIAL STATEMENTS 2018    ACCOUNTING POLICIES (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    1 Summary of significant accounting policies (continued)  (b) Changes in accounting policy and disclosures (continued)  (i) New and amended standards adopted by the Company (continued)          IFRS 9 - Financial Instruments (continued)    (b) Reconciliation of statement of financial position balances from the IAS 39 to IFRS 9:           The Company performed a detailed analysis of its business models for managing financial assets and analysis of their         cash flow characteristics.         The following table reconciles the carrying amount of financial assets, from their previous measurement categories         in accordance with IAS 39 as at 31 December 2017 to the new measurement categories under IFRS 9 on 1 January         2018:                                               IAS 39 carrying                         Reclassifica-        Remeasure-     IFRS 9 carrying                                                   amount 31                                   tions              ments         amount 1                                              December 2017                                 Shs ’000           Shs ’000     January 2018                                                      Shs ’000                                                                   Shs ’000                                                                                                       -      Financial assets at amortised                          2,240                                     -          (7)           2,233      cost                                                                                             -      Loans receivables                                    75,358                                      -    (8,861)           66,497      Receivables arising out of direct                    44,450                                      -             -        44,450      insurance arrangements                                                                           -      Other receivables                                   124,546                                      -       (928)        123,618                                                       2,618,122                                            (2,618)       2,615,504      Reinsurers’ share of insurance                                                                   -    (2,757)      liabilities and reserves                            423,327                                                           420,570      Government securities:                              185,116                                              (644)        184,472      Deposits with financial institutions                                                                      (22)      Commercial paper and bonds                           21,492                                                             21,470      Cash and Bank                                                                                       (15,837)      Total financial assets at                       3,494,651                                                          3,478,814      amortised cost        Financial assets at FVTPL                                                      - 195,119            - 195,119      Quoted Equity                                                                  - 658,058                           658,058      Government securities                                                          - 15,729      Investments in Unit Trusts                                                     - 868,906            - 15,729      Total financial assets at FVTPL                                                                     - 868,906        Financial assets through OCI          195,119                                  (195,119)            --      Quoted Equity                         658,058                                  (658,058)            --      Government securities                                                                               --      Investments in Unit Trusts             15,729                                   (15,729)            - 8,970      Unquoted equity investments              8,970                                            -        Total financial assets at FVOCI         877,876                                (868,906)                       -         8,970      Total financial assets                4,372,527                                            -        (15,837)       4,356,690    36","ANNUAL REPORT AND                                                                    FINANCIAL STATEMENTS 2018    ACCOUNTING POLICIES (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    1 Summary of significant accounting policies (continued)  (b) Changes in accounting policy and disclosures (continued)  (ii) New and amended standards adopted by the Company (continued)          IFRS 9 - Financial Instruments (continued)        Designation of equity investments at fair value through other comprehensive income (FVOCI):           The Company has elected to irrevocably designate unquoted equity investments at FVOCI as permitted under IFRS 9.         The changes in fair value of these investments cannot be reclassified to profit or loss when they are disposed of.          Reconciliation of impairment allowance balance from IAS 39 to IFRS 9           The following table reconciles the prior period’s closing impairment allowance measured in accordance with IAS 39         incurred loss model to the new impairment allowance measured in accordance with the IFRS 9 expected loss model         at 1 January 2018:    Financial asset                        Impairment Reclassifications Remeasurements                 Expected                                        under IAS 39                                               Credit Loss                                                                                                 under IFRS 9  Loans receivables                     Shs’000       Shs’000       Shs’000  Receivables arising out of direct                -             -          (7)                        Shs’000  insurance arrangements                                                                                         (7)  Other receivables                                -             -    (8,861)  Reinsurers’ share of insurance                   -             -             -                           (8,861)  liabilities and reserves                                                                                         -  Government securities at                         -             -       (928)  amortised cost                                                                                              (928)  Deposits with financial institutions             -             -    (2,618)  Commercial paper and bonds                       -             -    (2,757)                              (2,618)  Cash and Bank                                    -             -                                         (2,757)                                                   -             -       (644)  Total                                                                   (22)                                (644)                                                   -             -                                             (22)                                                                    (15,837)                                                                                                        (15,837)                                                                                                   37","ANNUAL REPORT AND                                                          FINANCIAL STATEMENTS 2018    ACCOUNTING POLICIES (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    1. Summary of significant accounting policies (continued)  (b) Changes in accounting policy and disclosures (continued)          New standards and interpretations not yet adopted        •	 Amendment to IFRS 1 (Annual Improvements to IFRSs 2014–2016 Cycle, issued in December 2016) - The amendment,              applicable to annual periods beginning on or after 1 January 2018, deletes certain short-term exemptions and            removes certain reliefs for first-time adopters.        •	 Amendments to IAS 40 titled Transfers of Investment Property (issued in December 2016) – The amendments,            applicable to annual periods beginning on or after 1 January 2018, clarify that transfers to or from investment            property should be made when, and only when, there is evidence that a change in use of property has occurred.        •	 IFRS 17 Insurance Contracts (issued in May 2017) The new standard, effective for annual periods beginning on or after            1st January 2021, establishes principles for the recognition, measurement, presentation and disclosure of insurance            contracts issued. It also requires similar principles to be applied to reinsurance contracts held and investment            contracts with discretionary participation features issued. The objective is to ensure that entities provide relevant            information in a way that faithfully represents those contracts. The Company does not issue insurance contracts        The Directors do not plan to apply any of the above until they become effective. Based on their assessment of the        potential impact of application of the above, with the exception of IFRS 16 and IFRS 17, they do not expect that there        will be a significant impact on the Company’s financial statements. There are no other standards that are not yet        effective that would be expected to have a material impact on the entity in the current or future reporting periods and        on near future transactions        There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material        impact on the Company.    (c) Revenue recognition       (i) Revenue          For long term insurance business, premiums are recognised as revenue when they become payable by the policyholder.        For single premium business, revenue is recognised on the date on which the policy is effective. Premiums are shown        before deduction of commission. Long term business relates to the underwriting of risks relating to death of an insured        person, and includes contracts subject to the payment of premiums for a term dependent on the termination or        continuance of the life of an insured person         (ii) Other income          Commissions receivable are recognised as income in the period in which they are earned.        Interest income is recognised on a time proportion basis that takes into account the effective yield on the asset.        Dividends receivable are recognised as income in the period in which the right to receive payment is established.        Rental income from operating leases is recognised on a straight line basis over the term of the lease.    (d) Claims incurred          Claims and policyholders’ benefits payable comprise claims paid in the year and changes in the provision for insurance        contract liabilities. Claims are recorded as an expense when they are incurred. Claims arising on maturing policies are        recognised when the claims become due for payment. Death claims are accounted for on notification while surrenders        are accounted for on payment.    38","ANNUAL REPORT AND                                              FINANCIAL STATEMENTS 2018    ACCOUNTING POLICIES (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    1. Summary of significant accounting policies (continued)  (e) Deposit administration contracts         The Company administers the funds of a number of retirement benefit schemes. The Company’s liabilities in relation to       these schemes have been treated as payables in the statement of financial position. The liabilities with respect to the       deposit administration contracts are determined by the Consulting Actuary on an annual basis.    (f) Insurance contract liabilities         The Company issues contracts that transfer insurance risk or financial risk or both. Insurance contracts are those       contracts that transfer significant insurance risk. Such contracts may also transfer financial risk. As a general guideline,       the Company defines as significant insurance risk the possibility of having to pay benefits on the occurrence of an       insured event that are at least 10% more than the benefits payable if the insured event did occur.       Insurance contract liabilities represent the estimated ultimate cost of settling all claims arising from incidents occurring       prior to the end of the reporting period, but not settled at that date. Insurance contract liabilities are computed on the       basis of the best information available at the time the records for the year are closed, and include provisions for claims       intimated but not paid. Insurance contract liabilities are not discounted.    (g) Reinsurance         The Company assumes and cedes reinsurance in the normal course of business, with retention limits varying by line of       business. Ceded reinsurance arrangements do not relieve the Company from its obligations to policyholders. Premiums       on reinsurance assumed are recognised as income in the same manner as they would be if the reinsurance were       considered direct business. Premiums ceded and claims reimbursed are presented on a gross basis in profit and loss and       statement of financial position as appropriate. Reinsurance assets represent balances due from reinsurance companies.       Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision or       settled claims associated with the reinsurer’s policies and are in accordance with the related reinsurance contract.       Impairment occurs when there is objective evidence as a result of an event that occurred after initial recognition of       the reinsurance asset that the Company may not receive all outstanding amounts due under the terms of the contract       and the event has a reliably measurable impact on the amounts that the Company will receive from the reinsurer. The       impairment loss is recognised in the profit or loss.    The Company also assumes reinsurance risk in the normal course of business for life insurance and non-life insurance  contracts where applicable.  Reinsurance assets or liabilities are derecognized when the contractual rights are extinguished or expire or when the  contract is transferred to another party. Premiums and claims on assumed reinsurance are recognised as revenue or  expenses in the same manner as they would be if the reinsurance were considered direct business, taking into account  the product classification of the reinsured business. Reinsurance liabilities represent balances due to reinsurance  companies. Amounts payable are estimated in a manner consistent with the related reinsurance contract.    (h) Equipment    All equipment are initially recorded at cost less depreciation and any accumulated impairment losses. The useful lives  used in determining depreciation charge are:    Computer equipment 			             3 years    Motor vehicles 			                 4 years    Furniture fittings and equipment	  8 years    The residual values of items of equipment and their estimated useful lives are reviewed at the reporting date and  adjusted if appropriate. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is  written down immediately to its recoverable amount.    Gains and losses on disposal of property and equipment are determined by reference to their carrying amounts.                                                                                                                   39","ANNUAL REPORT AND                                                          FINANCIAL STATEMENTS 2018    ACCOUNTING POLICIES (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    1. Summary of significant accounting policies (continued)  (i) Intangible assets – Computer software          Intangible assets comprise of computer software costs which are stated at cost less accumulated amortisation and any        impairment losses. Amortisation is calculated to write off the cost of computer software on a straight line basis over        its estimated useful life of five years.    (j) Investment properties          Investment properties comprises land and buildings held to earn rentals and/or for capital appreciation. They are        carried at fair value, determined at the reporting date by valuation experts with experience and knowledge of the        locations where the properties are located. Fair value is based on active market prices as adjusted, if necessary, for        any difference in the nature, condition or location of the specific asset.        Investment properties are not subject to depreciation. Changes in their carrying amount between end of reporting        periods are dealt with, through profit or loss for the year. Upon disposal of an investment property, the difference        between the net disposal proceeds and the carrying amount is charged or credited to profit or loss for the year.    (k) Financial instruments          From 1 January 2018, the Company classifies its financial assets in the following measurement categories:        •	 Those to be measured subsequently at fair value through either OCI or through profit or loss, and        •	 Those to be measured at amortised cost.        The classification depends on the Company’s business model for managing the financial assets and the collateral terms        of the cash flows        For assets measured at fair value, gains and losses will be recorded in profit or loss. For investments in unquoted        equity instruments that are not held for trading, the Company has made an irrevocable election at the time of initial        recognition to account for them at fair value through other comprehensive income (FVOCI).        The Company reclassifies debt investments when and only when its business model for managing those assets changes.         (i) Recognition and derecognition          Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Company        commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the        investments have expired or have been transferred and the Company has transferred substantially all risks and rewards        of ownership.         (ii) Measurement          At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not        at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to the acquisition of the        financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or        loss.         Debt instruments          Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and        the cash flow characteristics of the asset. There are two measurement categories into which the Company classifies its        debt instruments:        •	 Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely              payments of principal and interest are measured at amortised cost. Interest income from these financial assets is            included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is            recognised directly in profit or loss and presented in other gains/ (losses) together with foreign exchange gains and            losses. Impairment losses are presented as separate line item in the statement of profit or loss.    40","ANNUAL REPORT AND                                       FINANCIAL STATEMENTS 2018    ACCOUNTING POLICIES (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    1. Summary of Significant accounting policies (continued)    (k) Financial instruments (continued)        (ii) Measurement (continued)        Debt instruments (continued)         FVTPL: Assets that do not meet the criteria for amortised cost are measured at FVTPL. A gain or loss on a debt       investment that is subsequently measured at FVTPL is recognised in profit or loss.        Equity instruments         The Company subsequently measures quoted equity investments at fair value. Changes in the fair value of financial       assets at FVTPL are recognised in other gains/ (losses) in the statement of profit or loss as applicable.       The Company’s subsequently measures all equity investments at fair value through profit or loss, except where the       Company’s management has elected, at initial recognition, to irrevocably designate an equity investment at fair value       through other comprehensive income. The Companys policy is to designate equity investments as FVOCI when those       investments are held for purposes other than to generate investment returns. When this election is used, fair value gains       and losses are recognised in OCI and are subsequently reclassified to profit or loss, including on disposal. Impairment       losses (and reversals of impairment losses) are not reported separately from other changes in fair values. Dividends,       when representing a return on such investments, continue to be recognised in profit or loss as other income when the       Company’s right to receive payment is established.       Gains and losses on equity investments at FVPL are included in the “Net trading income” line in the statement of profit       or loss        (iii) Determination of fair value         For financial instruments traded in active markets, the determination of fair values of financial assets and financial       liabilities is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly       transaction between market participants at the measurement date. This includes listed equity securities and quoted       debt instruments on major exchanges (NSE). The quoted market price used for financial assets held by the Company       is the current bid price.       A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available       from an exchange, dealer, broker, industry, pricing service or regulatory agency, and those prices represent actual       and regularly occurring market transactions on an arm’s length basis. If the above criteria are not met, the market is       regarded as being inactive.       For example, a market is inactive when there is a wide bid-offer spread or significant increase in the bid-offer spread       or there are few recent transactions.       For all other financial instruments, fair value is determined using valuation techniques. In these techniques, fair values       are estimated from observable data in respect of similar financial instruments, using models to estimate the present       value of expected future cash flows or other valuation techniques, using inputs existing at the dates of the statement       of financial position.       Fair values are categorised into three levels in a fair value hierarchy based on the degree to which the inputs to the       measurement are observable and the significance of the inputs to the fair value measurement in its entirety:       •	 Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical             assets or liabilities.       •	 Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1             that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).       •	 Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or             liability that are not based on observable market data (unobservable inputs).       Transfers between levels of the fair value hierarchy are recognised by the Company at the end of the reporting period       during which the change occurred.                                                                      41","ANNUAL REPORT AND                                                          FINANCIAL STATEMENTS 2018    ACCOUNTING POLICIES (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    1. Summary of Significant accounting policies (continued)    (k) Financial instruments (continued)       (iv) Impairment          From 1 January 2018, the Company assesses on a forward looking basis the expected credit losses associated with its        debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been        a significant increase in credit risk.        Prior to 1 January 2018, the Company would assess at each reporting date whether there is objective evidence that        a financial asset or group of financial assets is impaired. A financial asset or group of financial assets is impaired and        impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that        have occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on        the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.        Objective evidence that a financial asset or group of assets is impaired includes observable data that comes to the        attention of the Company about the following events:        •	 significant financial difficulty of the issuer or debtor        •	 a breach of contract, such as a default or delinquency in payments        •	 it becoming probable that the issuer or debtor will enter bankruptcy or other financial reorganisation        •	 the disappearance of an active market for that financial asset because of financial difficulties; or        •	 observable data indicating that there is a measurable decrease in the estimated future cash flow from a group of              financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the            individual financial assets in the Company, including:        •	 An adverse change in the payment status of issuers or debtors in the Company; or        •	 National or local economic conditions that correlate with defaults on the assets in the Company.        IFRS 9 replaced the previous ‘incurred loss’ model in IAS 39 with a forward-looking ‘expected credit loss’ (“ECL”) model.        The new impairment model applies to the following financial instruments that are not measured at FVTPL or FVTOCI:        •	 Government securities measured at amortised cost        •	 Receivables arising from reinsurance arrangements        •	 Other receivables.        •	 Loans receivable        •	 Corporate bonds and commercial paper;        •	 Deposits with financial institutions; and        •	 Cash and bank balances.        No impairment loss is recognised on equity investments and financial assets measured at FVTPL. The Company recognises        loss allowance at an amount equal to either 12-month ECLs or lifetime ECLs. Lifetime ECLs are the ECLs that result from        all possible default events over the expected life of a financial instrument, whereas 12-month ECLs are the portion of        ECLs that result from default events that are possible within the 12 months after the reporting date.        The Company will recognise loss allowances at an amount equal to lifetime ECLs, except in the following cases, for        which the amount recognised will be 12-month ECLs:        •	 Debt instruments that are determined to have low credit risk at the reporting date. The Company will consider a            debt instrument to have low credit risk when its credit risk rating is equivalent to the globally understood definition            of ‘investment-grade’ and investments in Government securities; and        •	 Other financial instruments (other than trade receivables) for which credit risk has not increased significantly since            initial recognition.        Loss allowances for receivables arising from reinsurance arrangements and other receivables will always be measured at        an amount equal to lifetime ECLs. The impairment requirements of IFRS 9 require management judgement, estimates        and assumptions, particularly in the following areas, which are discussed in detail below:        •	 assessing whether the credit risk of an instrument has increased significantly since initial recognition; and            Incorporating forward-looking information into the measurement of ECLs.    42","ANNUAL REPORT AND                                       FINANCIAL STATEMENTS 2018    ACCOUNTING POLICIES (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    1. Summary of Significant accounting policies (continued)  (k) Financial instruments (continued)        (iv) Impairment (continued)      Measurement of expected credit losses         ECLs are a probability-weighted estimate of credit losses and will be measured as follows:       •	 Financial assets that are not credit-impaired at the reporting date: the present value of all cash shortfalls – i.e. the             difference between the cash flows due to the entity in accordance with the contract and the cash flows that the           Company expects to receive;       •	 Financial assets that are credit-impaired at the reporting date: the difference between the gross carrying amount           and the present value of estimated future cash flows;       An asset is credit-impaired if one or more events have occurred that have a detrimental impact on the estimated future       cash flows of the asset. The following are examples of such events:       i. Significant financial difficulty of the issuer or the borrower;       ii. A breach of contract - e.g. a default or past-due event;       iii. A lender having granted a concession to the borrower - for economic or contractual reasons relating to the borrower’s            financial difficulty - that the lender would not otherwise consider;       iv. It becoming probable that the borrower will enter bankruptcy or other financial reorganisation;       v. The disappearance of an active market for that financial asset because of financial difficulties; or       vi. The purchase of a financial asset at a deep discount that reflects the incurred credit losses.        Expected credit losses         Expected credit losses are computed as a product of the Probability of Default (PD), Loss Given Default (LGD) and the       Exposure at Default (EAD).       ECL = PD x LGD x EAD       In applying the IFRS 9 impairment requirements, the Company follows the general approach method.        Definition of the general approach         Under the general approach, at each reporting date, the Group determines whether the financial asset is in one of three       stages in order to determine both the amount of ECL to recognise as well as how interest income should be recognised.       •	 Stage 1 - where credit risk has not increased significantly since initial recognition. For financial assets in stage 1, the             Group will recognise 12 month ECL and recognise interest income on a gross basis – this means that interest will be           calculated on the gross carrying amount of the financial asset before adjusting for ECL.       •	 Stage 2 - where credit risk has increased significantly since initial recognition. When a financial asset transfers to           stage 2, the Group will recognise lifetime ECL but interest income will continue to be recognised on a gross basis.       •	 Stage 3 - where the financial asset is credit impaired. This is effectively the point at which there has been an           incurred loss event. For financial assets in stage 3, the Group will continue to recognise lifetime ECL but they will           now recognise interest income on a net basis. As such, interest income will be calculated based on the gross carrying           amount of the financial asset less ECL.       The changes in the loss allowance balance are recognised in profit or loss as an impairment gain or loss.                                                                      43","ANNUAL REPORT AND                                                          FINANCIAL STATEMENTS 2018    ACCOUNTING POLICIES (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    1. Summary of Significant accounting policies (continued)  (k) Financial instruments (continued)         (iv) Impairment (continued)       Definition of default          The Company will consider a financial asset to be in default when:        •	 The counterparty or borrower is unlikely to pay their credit obligations to the Company in full, without recourse by              the Company to actions such as realising security (if any is held); or        •	 The counterparty or borrower is more than 90 days past due on any material credit obligation to the Company and 2              years for receivables arising form reinsurance arrangements. This will be consistent with the rebuttable criteria set            out by IFRS 9 and existing practice of the Company; or        •	 In assessing whether the counterparty or borrower is in default, the Company considers indicators that are:        •	 Qualitative: e.g. Breach of covenant and other indicators of financial distress;        •	 Quantitative: eg. Overdue status and non-payment of another obligation of the same issuer to the Company; and        •	 Based on data developed internally and obtained from external sources.        Inputs into the assessment of whether a financial instrument is in default and their significance may vary over time         to reflect changes in circumstances to reflect changes in circumstances.         Significant increase in credit risk (SIICR)          When determining whether the credit risk (i.e. risk of default) on a financial instrument has increased significantly        since initial recognition, the Company considers reasonable and supportable information that is relevant and available        without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the        Group’s historical experience, expert credit assessment and forward-looking information.        The Company primarily identifies whether a significant increase in credit risk has occurred for an exposure by comparing:        •	 The remaining lifetime probability of default (PD) as at the reporting date; with        •	 The remaining lifetime PD for this point in time that was estimated on initial recognition of the exposure.        The assessment of significant deterioration is key in establishing the point of switching between the requirement to        measure an allowance based on 12-month expected credit losses and one that is based on lifetime expected credit        losses.        The Company monitors the effectiveness of the criteria used to identify significant increases in credit risk by regular        reviews to confirm that:        •	 the criteria are capable of identifying significant increases in credit risk before an exposure is in default;        •	 the criteria do not align with the point in time when an asset becomes 30 days past due;        •	 the average time between the identification of a significant increase in credit risk and default appears reasonable;        •	 exposures are not generally transferred from 12-month ECL measurement to credit-impaired; and        •	 there is no unwarranted volatility in loss allowance from transfers between 12-month and lifetime ECL measurements.    44","ANNUAL REPORT AND                                       FINANCIAL STATEMENTS 2018    ACCOUNTING POLICIES (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    1. Summary of Significant accounting policies (continued)    (k) Financial instruments (continued)      Incorporation of forward-looking information         The Company incorporates forward-looking information into both its assessment of whether the credit risk of an       instrument has increased significantly since initial recognition and its measurement of ECL. It formulates a ‘base case’       view of the future direction of relevant economic variables and a representative range of other possible forecast       scenarios based on advice from the Group risk committee and economic experts and consideration of a variety of       external actual and forecast information. This process involves developing two or more additional economic scenarios       and considering the relative probabilities of each outcome. External information includes economic data and forecasts       published by governmental bodies and monetary authorities in the countries where the company operates, supranational       organisations such as the Organisation for Economic Cooperation and Development and the International Monetary       Fund, and selected private-sector and academic forecasters.       The base case represents a best estimate and is aligned with information used by the Company for other purposes, such       as strategic planning and budgeting. The other scenarios represent more optimistic and more pessimistic outcomes.       The Company also periodically carries out stress-testing of more extreme shocks to calibrate its determination of these       other representative scenarios.       Measurement of ECL       The key inputs into the measurement of ECL are the term structures of the following variables:       •	 Probability of Default       •	 Loss given default (LGD); and       •	 Exposure at default (EAD).       To determine lifetime and 12-month PDs, the Company uses the PD tables supplied by S&P based on the default history       of obligors with the same credit rating. The Company adopts the same approach for unrated investments by mapping its       internal risk grades to the equivalent external credit ratings. The PDs are recalibrated based on current bond yields and       CDS prices, and adjusted to reflect forward-looking information. Changes in the rating for a counterparty or exposure       lead to a change in the estimate of the associated PD.       LGD is the magnitude of the likely loss if there is a default. The Company estimates LGD parameters based on the       history of recovery rates of claims against defaulted counterparties. The LGD models consider the structure, collateral,       seniority of the claim, counterparty industry and recovery costs of any collateral that is integral to the financial asset.       For loans secured by mortgage property, loan-to-¬value ratios are a key parameter in determining LGD. LGD estimates       are recalibrated for different economic scenarios. They are calculated on a discounted cash flow basis using the       effective interest rate as the discounting factor.       EAD represents the expected exposure in the event of a default. The Company derives the EAD from the current       exposure to the counterparty and potential changes to the current amount allowed under the contract, including       amortisation, and prepayments. The EAD of a financial asset is its gross carrying amount.       As described above, and subject to using a maximum of a 12-month PD for financial assets for which credit risk has not       significantly increased, the Group measures ECL considering the risk of default over the maximum contractual period       (including any borrower’s extension options) over which it is exposed to credit risk, even if, for risk management       purposes, the Group considers a longer period. Where modelling of a parameter is carried out on a collective basis, the       financial instruments are grouped on the basis of shared risk characteristics, which include:       •	 instrument type;       •	 credit risk grading;       •	 collateral type;       •	 date of initial recognition;       •	 remaining term to maturity; industry; and       •	 geographic location of the borrower.       The groupings are subject to regular review to ensure that exposures within a particular group remain appropriately       homogeneous. When ECL are measured using parameters based on collective modelling, a significant input into the       measurement of ECL is the external benchmark information that the Company uses to derive the default rates of its       portfolios.                                                                                                                                                                       45","ANNUAL REPORT AND                                                          FINANCIAL STATEMENTS 2018    ACCOUNTING POLICIES (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    1. Summary of Significant accounting policies (continued)  (k) Financial instruments (continued)         Accounting policies applied until 31 December 2017          The Company has applied IFRS 9 retrospectively, but has elected not to restate comparative information. As a result,        the comparative information provided continues to be accounted for in accordance with the Company’s previous        accounting policy.         (i) Classification          Until 31 December 2017, the Company classified its financial assets in the following categories:        •	 Loans and receivables,        •	 Held-to-maturity investments, and        •	 Fair value through other comprehensive income        The classification depended on the purpose for which the investments were acquired.        Management determined the classification of its investments at initial recognition and, in the case of assets classified        as held-to-maturity, re-evaluated this designation at the end of each reporting period.         (ii) Reclassification          The Company could choose to reclassify a non-derivative trading financial asset out of the held for trading category if        the financial asset was no longer held for the purpose of selling it in the near term. Financial assets other than loans        and receivables were permitted to be reclassified out of the held for trading category only in rare circumstances arising        from a single event that was unusual and highly unlikely to recur in the near term. In addition, the Company could        choose to reclassify financial assets that would meet the definition of loans and receivables out of the held for trading        category if the Company had the intention and ability to hold these financial assets for the foreseeable future or until        maturity at the date of reclassification.        Reclassifications were made at fair value as of the reclassification date. Fair value became the new cost or amortised        cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date were subsequently        made. Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories        were determined at the reclassification date. Further increases in estimates of cash flows adjusted effective interest        rates prospectively.         (iii) Subsequent measurement          The measurement at initial recognition did not change on adoption of IFRS 9, see description above.        Subsequent to the initial recognition, loans and receivables and held-to-maturity investments were carried at amortised        cost using the effective interest method.        Financial assets at FVTPL were subsequently carried at fair value. Gains or losses arising from changes in the fair value        were recognised in profit or loss within other gains/(losses)         (iv) Impairment          The Company assessed at the end of each reporting period whether there was objective evidence that a financial asset        or group of financial assets was impaired. A financial asset or a group of financial assets was impaired and impairment        losses were incurred only if there was objective evidence of impairment as a result of one or more events that occurred        after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) had an impact on the estimated        future cash flows of the financial asset or group of financial assets that could be reliably estimated.    46","ANNUAL REPORT AND                                                             FINANCIAL STATEMENTS 2018    ACCOUNTING POLICIES (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    1. Summary of Significant accounting policies (continued)    (l) Translation of foreign currencies	    (i) Functional and presentation currency  Items included in the financial statements of each of the Company’s entities are measured using the currency of the  primary economic environment in which the entity operates (the ‘functional currency’).The financial statements are  presented in Kenya shillings rounded to the nearest thousand (“Shs”), which is the Company’s presentation currency.         (ii) Transactions and balances       Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates       of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the       settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities       denominated in foreign currencies are recognised in profit or loss, except when deferred in other comprehensive       income as qualifying cash flow hedges and qualifying net investment hedges.       Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the       statement of profit or loss within finance income or costs’. All other foreign exchange gains and losses are presented in       the statement of profit or loss within other (losses)/gains.    (m) Accounting for leases         Leases of assets where a significant proportion of the risks and rewards of ownership are retained by the Company       as a lessee are classified as finance leases. All other leases are classified as operating leases. Payments made under       operating leases are charged to profit or loss for the year on the straight-line basis over the term of the lease.    (n) Employee entitlements         Employee entitlements to long service awards are recognised when they accrue to employees. A provision is made for       the estimated liability for such entitlements as a result of services rendered by employees up to the reporting date.       The estimated monetary liability for employees’ accrued annual leave entitlement at the reporting date is recognised       as an expense accrual.    (o) Income tax expense    Income tax expense is the aggregate amount charged/(credited) in respect of current income tax and deferred income  tax in determining the profit or loss for the year. Tax is recognised in the profit or loss except when it relates to items  recognised in other comprehensive income, in which case it is also recognised in other comprehensive income, or to  items recognised directly in equity, in which case it is also recognised directly in equity.    Current income tax    Current income tax is the amount of income tax payable on the taxable profit for the year, and any adjustment  to tax  payable in respect of prior years, determined in accordance with the Kenyan Income Tax Act.    Deferred income tax asset    Deferred income tax is provided in full on all temporary differences except those arising on the initial recognition of an  asset or liability, other than a business combination, that at the time of the transaction affects neither the accounting  nor taxable profit nor loss. Deferred income tax is determined using the liability method on all temporary differences  arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes, using  tax rates and laws enacted or substantively enacted at the balance sheet date and expected to apply when the related  deferred income tax asset is realized or the deferred tax liability is settled.  Deferred income tax assets are recognised only to the extent that it is probable that future taxable profits will be  available against which temporary differences can be utilized.                                                                                                                   47","ANNUAL REPORT AND                                                          FINANCIAL STATEMENTS 2018    ACCOUNTING POLICIES (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    1. Summary of Significant accounting policies (continued)  (p) Retirement benefit obligations          The Company operates a defined contribution scheme for its employees. The assets of the scheme are held in a separate        trustee administered fund, which is funded from contributions from both the Company and employees. Contributions        are determined by the rules of the scheme.        The Company also contributes to the statutory defined contribution pension scheme, the National Social Security Fund        (NSSF). Contributions to this scheme are determined by local statute. The Company’s obligations to these schemes are        charged to profit or loss in the year they fall due.    (q) Dividend distribution          Dividend distributions to the Company’s shareholders are recognised as a liability in the financial statements in the year        in which the dividends are approved by the shareholders.    (r) Share capital          Ordinary shares are recognised at par value and classified as ‘share capital’ in equity. Any amounts received over and        above the par value of the shares issued are classified as ‘share premium’ in equity.        Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction,        net of tax, from the proceeds.        Shares are classified as equity when there is no obligation to transfer cash or other assets.    (s) Bonus stabilisation reserve          The bonus stabilisation reserve represents amount of surplus set aside to allow for smoothening of return of interest        declaration for the deposit administration schemes based on the recommendation of the independent actuarial        consultant.     (t) Critical accounting judgements and key sources of estimation uncertainty          In the process of applying the Company’s accounting policies, management has made estimates and assumptions that        affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgments are        continually evaluated and are based on historical experience and other factors, including expectations of future events        that are believed to be reasonable under the circumstances.         (i) Critical judgments in applying the Company’s accounting policies          The key areas of judgment in applying the Company’s accounting policies are dealt with as follows:        Future benefit payments from long-term insurance contracts        The estimation of future benefit payments from long-term insurance contracts is one of the Company’s most critical        accounting estimates. There are several sources of uncertainty that need to be considered in the estimate of the        liability that the Company will ultimately pay for such claims.        The determination of the liabilities under long-term insurance contracts is dependent on estimates made by the        Company. Estimates are made as to the expected number of deaths for each of the years in which the Company is        exposed to risk. The Company bases these estimates on standard mortality tables that reflect historical mortality        experience. The estimated number of deaths determines the value of the benefit payments and the value of the        valuation premiums. The main source of uncertainty is that epidemics such as AIDS could result in future mortality        being significantly worse than in the past for the age Company’s in which the Company has significant exposure to        mortality risk.    48","ANNUAL REPORT AND                                       FINANCIAL STATEMENTS 2018    ACCOUNTING POLICIES (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    1. Summary of Significant accounting policies (continued)      (i) Critical judgments in applying the Company’s accounting policies (continued)         Future benefit payments from long-term insurance contracts (continued)       However, continuing improvements in medical care and social conditions could result in improvements in longevity in       excess of those allowed for in the estimates used to determine the liability for contracts where the Company is exposed       to longevity risk. For contracts without fixed terms and with discretionary participation in profits, it is assumed that       the Company will be able to increase mortality risk charges in future years in line with emerging mortality experience.       Estimates are also made as to future investment income arising from the assets backing long-term insurance contracts.       These estimates are based on current market returns as well as expectations about future economic and financial       developments. The average estimated rate of investment return is 11.83%p.a. (2017: 11.50% p.a)         Valuation of investment property       Estimates are made in determining valuations of investment properties. The management uses experts in determination       of the values to adopt. In performing the valuation the valuer uses discounted cash flow projections which incorporate       assumptions around the continued demand for rental space, sustainability of growth in rent rates as well as makes       reference to recent sales. The independent valuers also use the highest and best use principle in determining the value       of Investment property. The change in these assumptions could result in a significant change in the canying value of       investment property.       Management monitors the investment property market and economic conditions that may lead to significant change in       fair value and conducts a formal and independent property valuation every year and adjusts the recorded fair values       accordingly for any significant change.         Calculation of loss allowances       The measurement of the expected credit loss allowance for financial assets measured at amortised cost and FVOCI is an       area that requires the use of complex models and significant assumptions about future economic conditions and credit       behaviour (e.g. the likelihood of customers defaulting and the resulting losses).        Key sources of estimation uncertainty         Impairment losses       At the reporting date, the Company reviews the carrying amounts of its tangible and intangible assets to determine       whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the       recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Where it is not       possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of       the cash generating unit to which the asset belongs.       A number of significant judgements are also required in applying the accounting requirements for measuring ECL, such       as:       •	 Determining the criteria for significant increase in credit risk;       •	 Choosing appropriate models and assumptions for the measurement of ECL;       •	 Establishing the number and relative weightings for a forward-looking scenarios for each type of product / market             and associated ECL; and       •	 Establishing groups of similar assets for the purposes of measuring ECL.       If the PD rates on the financial assets had been 5% higher or lower as at 31 December 2018, the loss allowance would       have been Shs 0.4 million higher/lower.         Equipment       Critical estimates are made by the Company’s directors, in determining depreciation rates and useful lives for equipment                                                                      49","ANNUAL REPORT AND                                                          FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS    FOR THE YEAR ENDED 31 DECEMBER 2018  1 INCORPORATION AND REGISTERED OFFICE          APA Life Assurance Limited is a limited liability company incorporated in Kenya under the Kenyan Companies Act and        domiciled in Kenya. The parent company, which is the ultimate holding company is Apollo Investments Limited which is        incorporated in Kenya. The address of its registered office is 07 Apollo Centre, Ring Road Parklands, Westlands, Nairobi.    2 RISK MANAGEMENT OBJECTIVES AND POLICIES          The Company’s activities expose it to a variety of risks, including insurance risk, financial risk, credit risk, and the        effects of changes in property values, debt and equity market prices, foreign currency exchange rates and interest        rates. The Company’s overall risk management programme focuses on the identification and management of risks and        seeks to minimize potential adverse effects on its financial performance, by use of underwriting guidelines and capacity        limits, reinsurance planning, credit policy governing the acceptance of clients, and defined criteria for the approval        of intermediaries and reinsurers. Investment policies are in place which help manage liquidity, and seek to maximize        return within an acceptable level of interest rate risk. The Company manages key risks as follows:         2.1 1nsurance risk management          The risk under any one insurance contract is the possibility that the insured event occurs and the uncertainty of        the amount of the resulting claim. By the very nature of an insurance contract, this risk is random and therefore        unpredictable.        For a portfolio of insurance contracts where the theory of probability is applied to pricing and provisioning, the        principal risk that the Company faces under its insurance contracts is that the actual claims and benefit payments        exceed the carrying amount of the insurance liabilities. This could occur because the frequency or severity of claims        and benefits are greater than estimated. Insurance events are random and the actual number and amount of claims        and benefits will vary from year to year from the level established using statistical techniques. Experience shows that        the larger the portfolio of similar insurance contracts, the smaller the relative variability of the expected outcome will        be. In addition, a more diversified portfolio is less likely to be affected across the board by a change in any subset of        the portfolio.        The Company has developed its insurance underwriting and investment strategy to diversify the type of risks accepted        and within each of these categories to achieve a sufficiently large population of risks to reduce the variability of the        expected outcome. Factors that aggravate insurance risk include lack of risk diversification in terms of type and amount        of risk, geographical, local and type of industry covered.        The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to        minimize potential adverse effects on the Company’s financial performance. It manages these positions within an asset-        liability management (ALM) framework that has been developed to achieve investment returns in excess of obligations        under insurance contracts. The Company produces regular reports at portfolio, legal entity and asset and liability class        level that are circulated to the Company’s key management personnel. The principal technique of the Company’s ALM        framework is to match assets to the liabilities arising from insurance contracts by reference to the type of benefits        payable to contract holders. Separate portfolios of assets are maintained for with-profit business, non-linked non-profit        business, and unit-linked business. For the purposes of the ALM framework, the Company does not manage the fund        for future appropriations as a liability. The Company’s ALM is also integrated with the management of the financial        risks associated with the Company’s other financial assets and liabilities not directly associated with insurance and        investment liabilities. The Company does not use hedge accounting.        The Company has not changed the processes used to manage its risks from previous periods. The notes below explain        how insurance risks are managed using the categories utilized in the Company’s ALM framework.        Under certain contracts, the Company has offered guaranteed annuity options. In determining the value of these        options, estimates have been made as to the percentage of contract holders that will exercise them. There is not        enough historical information available on which to base these estimates.    50","ANNUAL REPORT AND                                                                           FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    2 RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)    2.1 1nsurance risk management (continued)    The table below shows the contractual timing of undiscounted cash flows arising from assets and liabilities included in  the company’s ALM framework for management of long term insurance contracts as at 31 December 2018.                                                         Total   No stated   0-1 year 1-5 years              >5 years                                                   Shs’000      maturity   Shs’000 Shs’000                 Shs’000                                                                 Shs’000    Financial assets                                 3,864,992            -  337,226     1,230,579           2,297,187  Debt securities:                                   770,804   770,804              -              -                   -  -Government bonds and treasury bills fixed rate    215,280                                                           -  - at amortized cost                                                   -   74,979       140,301  - at fair value                                    222,700  Listed securities-fixed rate                          7,557  222,700           -           -             -  Equity securities:                                              7,557          -           -             -  - Listed                                             12,101           -  7,261       4,840               -  - Unlisted                                         115,194  Investment in unit trusts                                    103,882     3,067       8,245               -  Life policy loans, other loans and receivables     109,823  from reinsurance contracts                           60,923  - 109,823                     -             -  Receivables arising from direct insurance  arrangements                                     1,096,992   - 60,923                      -             -  Other receivables                                            - 1,096,992                   -             -  Cash and cash equivalents    Total                                            6,476,366 1,104,943 1,690,271 1,383,965 2,297,187    Liabilities:    Insurance contracts                              1,039,706   - 1,039,706 - -    Payables arising from reinsurance arrangements   86,482      - 86,482 - -    Payables under deposit insurance contracts       3,497,314 3,497,314     -                            -  -    Other liabilities                                124,618     - 124,618 - -    Total                                            4,748,120 3,497,314 1,250,806                        - 587,468    Difference in contractual cash flows             1,728,246 (2,392,371) 439,465 1,383,695 2,297,187                                                                                                             51","ANNUAL REPORT AND                                                          FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    2 RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)       2.1 1nsurance risk management (continued)          The table below shows the contractual timing of discounted cash flows arising from assets and liabilities included in        the company’s Asset Liability Management framework for management of long term insurance contracts movement as        at 31 December 2017.                                                         Total     No stated      0-1 Year 1-5 years      >5 years                                                   Shs’000        maturity      Shs’000 Shs’000         Shs’000                                                                   Shs’000    Financial assets                                  3,827,775             -     720,845     559,920     2,547,010  Debt securities:                                     658,058   658,058                 -           -              -  -Government bonds and treasury bills fixed rate      236,375                                                      -  - at amortised cost                                                     -      95,741     140,634  - at fair value                                      195,119  Listed securities-fixed rate                            8,970  195,119              -     --  Equity securities:                                                8,970  - Listed                                              15,729            -           -     15,729      -  - Unlisted                                           126,786                  2,240              -    -  Investment in unit trusts                                      124,546  Life policy loans and receivables from                84,579  reinsurance contracts                                 44,450             - 84,579                   --  Receivables arising from direct insurance            444,819             - 44,450                   --  arrangements                                                             - 444,819                  --  Other receivables                                5,642,660  Cash and cash equivalents                                      986,693 1,392,674          716,283 2,547,010    Total                                              984,800         35,000     984,800               --                                                       22,297                -   22,297               --  Liabilities:                                                                           -            --  Insurance contracts                              3,115,339     3,115,339                            --  Payables arising from reinsurance arrangements     103,952                 -  103,952  Payables under deposit insurance contracts                                                          --  Other liabilities                                4,126,388 3,150,339 1,111,049                                                                                            716,283 2,547,010  Total                                            1,416,272 (2,163,646) 281,625    Difference in contractual cash flows    52","ANNUAL REPORT AND                                                                                                                                                                                                                                                                                        FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    2 RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)      2.1 1nsurance risk management (continued)      Long-term insurance contracts      (a) Frequency and severity of claims         For contracts where death is the insured risk, the most significant factors that could increase the overall frequency       of claims are epidemics (such as AIDS, TB and a human form of avian flu) or widespread changes in lifestyle, such as       eating, smoking and exercise habits, resulting in earlier or more claims than expected. For contracts where survival       is the insured risk, the most significant factor is continued improvement in medical science and social conditions that       would increase longevity.       At present, these risks do not vary significantly in relation to the location of the risk insured by the Company. However,       undue concentration by amounts could have an impact on the severity of benefit payments on a portfolio basis.       The table below presents the concentration of insured benefits across five bands of insured benefits per individual life       assured. The benefit insured figures are shown gross and net of the reinsurance contracts described above. At year-end,       none of these insurance contracts had triggered a recovery under the reinsurance held by the Company.       These tables do not include annuity contracts, for which a separate analysis is reported further below.    All amounts in KSh’000                                Total Benefits Insured    Benefits assured per life assured at the end of 2018         Before         %           After                                                        Reinsurance         11%  Reinsurance  0-500                                                                      5%  500-1,000                                                  Shs ‘000       23%       Shs ‘000  1,000-3,000                                                     44,060    14%            44,060  3,000-5,000                                                     20,374    24%            20,374  5,000-10,000                                                    93,389    23%            55,000  Above 10,000                                                    55,851  100%             14,000  Total                                                           94,646                   13,000                                                                  91,672                    6,000  All amounts in KSh’000                                                               399,992                  152,434  Benefits assured per life assured at the end of 2017                                                        Total Benefits Insured  0-500  500-1,000                                                    Before         %            After  1,000-3,000                                           Reinsurance         13%  Reinsurance  3,000-5,000                                                                6%  5,000-10,000                                               Shs ‘000       26%       Shs ‘000  Above 10,000                                                    44,359    36%            44,359  Total                                                           20,498     9%            20,498                                                                  91,873    10%            49,000                                                                124,454   100%             32,000                                                                  32,162                    5,000                                                                  35,800                    3,000                                                                 349,146                  153,857                                                                                   53","ANNUAL REPORT AND                  FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    2 RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)      2.1 1nsurance risk management (continued)      Long-term insurance contracts (continued)      (a) Frequency and severity of claims (continued)         The following tables for annuity insurance contracts illustrates the concentration of risk based on five bands that group       these contracts in relation to the amount payable per annum as if the annuity were in payment at the year end. The       Company does not hold any reinsurance contracts against the liabilities carried for these contracts.        Annuity payable in Shs per annum per life insured at the end of 2018        All amounts in KSh’000                                                Shs ‘000   %        0-50                                                                      526       1%      51-100                                                                 4,120        8%      101-200                                                                9,509      19%      201-500                                                               18,167      37%      501-1,000                                                             13,635      27%      Over 1,000                                                             3,916        8%             Total                                                                                                                                                             49,873     100%        All amounts in KSh’000      Annuity payable in Shs per annum per life insured at the end of 2017        0-50                                                                       526      1%      51-100                                                                  4,198       8%      101-200                                                                 9,738      19%      201-500                                                               17,825       34%      501-1,000                                                             15,924       30%      Over 1,000                                                              3,916       8%             Total                                                                                                                                                              52,128     100%    54","ANNUAL REPORT AND                                                                                                                                                                                                                                                                                        FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018  2 RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)        2.2 Financial risk management         The Company is exposed to a range of financial risks through its financial assets, financial liabilities (investment       contracts and borrowings), reinsurance assets and policyholder liabilities. In particular, the key financial risk is that the       proceeds from financial assets are not sufficient to fund the obligations arising from insurance policies and investment       contracts as they fall due. The most important components of this financial risk are market risk (including interest rate       risk, equity price risk and currency risk), credit risk and liquidity risk.       These risks arise from open positions in interest rate, currency and equity products, all of which are exposed to general       and specific market movements. The risks that the Company primarily faces due to the nature of its investments and       liabilities are interest rate risk and equity price risk.        (a) Market risks         (i) Interest rate risk       Interest rate risk arises primarily from investments in fixed interest securities. In addition to the extent that claims       costs are related to interest rates, liabilities to policyholders are exposed to interest rate risk. Insurance and non-       profit investment contracts have benefit payments that are fixed and guaranteed at the inception of the contract. The       financial component of these benefits is usually a guaranteed fixed interest rate (for the insurance contracts, this rate       may apply to maturity and/or death benefits) and hence the company’s primary financial risk on these contracts is the       risk that interest income and capital redemptions from the financial assets backing the liabilities are insufficient to       fund the guaranteed benefits payable.       The Company monitors interest rate risk by calculating the mean duration of the investment portfolio and of the liabilities       to policyholders under insurance and investment contracts. The mean duration is an indicator of the sensitivity of the       assets and liabilities to changes in current interest rates. The mean duration of the liabilities is determined by means       of projecting expected cash flows from the contracts using best estimates of mortality and voluntary terminations.       This is calculated in a consistent manner with the prior year. Any gap between the mean duration of the assets and       the estimated mean duration of the liabilities is minimised by means of buying and selling fixed interest securities of       different durations.       The sensitivity analysis for interest rate risk illustrates how changes in the fair value or future cash flows of a financial       instrument will fluctuate because of changes in market interest rates at the reporting date. For the guaranteed element       of liabilities under with-profits contracts, changes in interest rate will not cause a change to the amount of the liability       because their carrying amounts are not affected by the level of market interest rates. However, the with profits       element of the liabilities is directly affected by changes in the level of interest rates to the extent that they affect the       carrying amount of the assets held in the with-profits funds.       The Company’s management monitors the sensitivity of reported interest rate movements on a monthly basis by       assessing the expected changes in the different portfolios.       Interest bearing securities represent 92% (2017: 95%) of total investments. If interest rates in market indices had       increased / decreased by a further 5%, with all other variables held constant, and all the company’s investments moving       according to the historical correlation with the index, income would increase / decrease by Shs 227.3 million (2017:       Shs 194 million).         (ii) Equity price risk       The Company is exposed to equity securities price risk as a result of its holdings in equity investments, classified as       financial assets available for sale. Exposures to individual companies and to equity shares in aggregate are monitored in       order to ensure compliance with the relevant regulatory limits for solvency purposes. Investments held are listed and       traded on the Nairobi Stock Exchange.                                                                                                                                                                       55","ANNUAL REPORT AND                                                          FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018  2 RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)         2.2 Financial risk management (continued)          (ii)	 Equity price risk (continued)        The Company has a defined investment policy which sets limits on the Company’s exposure to equities both in aggregate        terms and by geography, industry and counterparty. This policy of diversification is used to manage the company’s        price risk arising from its investments in equity securities. Investment management meetings are held daily. At these        meetings, senior investment managers meet to discuss investment return and concentration across the company.        The sensitivity analysis for equity risk illustrates how changes in the fair value of equity securities will fluctuate because        of changes to market prices, whether those changes are caused by factors specific to the individual equity issuer, or        factors affecting all similar equity securities traded in the market.        Listed equities securities represent 97% (2017: 96%) of total equity investments. If equity market indices had increased        / decreased by a further 5%, with all other variables held constant, and all the company’s equity investments moving        according to the historical correlation with the index, equity would increase / decrease by Shs 11.1 million (2017: Shs        9.7 million).        (iii)	 Currency risk        Foreign currency exchange risk arises when future commercial transactions or recognised assets and liabilities are        denominated in a currency that is not the entity’s functional currency. The Company primarily transacts in the Kenya        shilling and its assets and liabilities are denominated in the same currency. The company is therefore not exposed to        currency risk.         (b)	 Credit risk          Credit risk is the risk that a counterparty will be unable to pay amounts in full when due. Key areas where the company        is exposed to credit risk are:        •	 reinsurers’ share of insurance liabilities and reserves;        •	 amounts due from reinsurers in respect of claims already paid;        •	 amounts due from insurance contract holders;        •	 amounts due from insurance intermediaries;        •	 amounts due from corporate bond issuers and        •	 amount held with financial institutions - under cash and cash equivalents        The Company manages the levels of credit risk it accepts by placing limits on its exposure to a single counterparty, or        companies of counterparties and to geographical and industry segments. Such risks are subject to regular review. Limits        on the level of credit risk by category and territory are approved quarterly by the board of directors.        Reinsurance is used to manage insurance risk. This does not, however, discharge the Company of its liability as the        primary insurer. If a reinsurer fails to pay a claim, the company remains liable for the payment to the policyholder.        The creditworthiness of reinsurers is considered on an annual basis by reviewing their financial strength prior to        finalization of any contract. In addition, management assesses the creditworthiness of all reinsurers and intermediaries        by reviewing credit grades provided by rating agencies and other publicly available financial information. The recent        payment history of reinsurers is also used to update the reinsurance purchasing strategy.    56","ANNUAL REPORT AND                                                                               FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    2 RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)    2.2 Financial risk management (continued)    (b)	 Credit risk (continued)    Management information reported to the directors include details of provisions for impairment on receivables and  subsequent write offs. Internal audit makes regular reviews to assess the degree of compliance with the company’s  procedures on credit. Exposures to individual policyholders and groups of policyholders are within the ongoing monitoring  of the controls associated with regulatory solvency. Where there exists significant exposure to individual policyholders  or homogenous groups of policyholders, a financial analysis is carried out by the management. The Company’s assets  bearing credit risk are summarized below:    Investment in unit link           Gross carrying        Provision of          Net of impair-                  2017  Government securities                     amounts       Impairments          ment provision               Shs ‘000  Reinsurers share of insurance                  2018  liabilities                               Shs ‘000                2018                     2018               15,729  Receivables arising from direct                11,257        Shs ‘000                 Shs ‘000            3,276,180  insurance arrangements                     3,316,404  Life policy & other loans                                                 -                11,257           124,546  Other receivables                            104,662             (2,546)               3,313,858  Corporate bonds and                                                                                           75,358  commercial paper                             120,046                (780)                 103,882  Deposits with financial                                                                                        2,240  institutions                                   11,322   (10,223)             109,823                          44,450  Cash and bank                                  60,923  Total assets bearing credit risk                             (10)             11,312                        185,116                                               185,499              -           60,923                                                                                                              423,327                                             1,040,373        (644)            184,855                                                                                                                21,492                                                 65,216    (8,532)             1,031,841                    4,168,438                                             4,915,702                                                               (65)                65,151                                                          (22,800)             4,892,902    The concentration of credit risk is substantially unchanged compared to prior year. No credit limits were exceeded  during the period. The amounts that are past due and not impaired are as shown below:    Receivables arising from direct insurance arrangements                       109,823                      75,358  Life policy & other loans                                                     11,012                       2,240  Other receivables                                                             60,923                                                                                                            44,450    Total assets past due but not impaired                                       181,758                      122,048    The assets reported above include Shs 11.3 million (2017: Shs 15.7 million) related to the assets backing unit linked  contracts. The holders of these contracts bear the credit risk arising from these assets. The assets above also include  assets held in the with-profits funds where the company is able to transfer part of the credit risk arising from these  assets to holders of with-profits investment and insurance contracts to the extent that the future level of discretionary  bonuses can be reduced to absorb any associated credit losses (as well as losses arising from all other financial risks).  During the year, there was no financial assets that were impaired.    (c) Liquidity risk    Liquidity risk is the risk that cash may not be available at a reasonable cost to pay obligations as they fall due. The  primary liquidity risk of the Company is the obligation to pay claims to policyholders as they fall due. The projected  settlement of these liabilities is modelled, on a regular basis, using actuarial techniques. The board sets limits on the  minimum proportion of maturing funds available to meet such calls and on the minimum level of borrowing facilities  that should be in place to cover anticipated liabilities and unexpected levels of demand.                                                                                                              57","ANNUAL REPORT AND      FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    2 RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)        2.2 Financial risk management (continued)        (c) Liquidity risk (continued)        The table below provides the contractual maturity analysis of the Company’s financial liabilities at 31 December 2018:                                                          No stated   Less than More than       Total                                                         maturity   1 year      1 year      Sh’000                                                             Sh’000   Sh’000      Sh’000        Insurance contract liabilities                        20,000  310,968     708,738     1,039,706       Payables under deposit insurance contracts        3,497,314            -           -  3,497,314      Payables arising out of reinsurance arrangements                       -           -      Other payables                                        86,482           -           -      86,482                                                          124,614                             124,614        The table below provides a contractual maturity analysis of the company’s financial liabilities as at 31      December 2017:                                                          No stated   Less than More than       Total                                                         maturity   1 year      1 year      Sh’000                                                             Sh’000   Sh’000      Sh’000        Insurance contract liabilities                        35,000  187,111     762,689       984,800      Payables under deposit insurance contracts        3,115,339            -           -  3,115,339      Payables arising out of reinsurance arrangements                       -           -      Other payables                                        22,297           -           -      22,297                                                          103,952                             103,952        (d) Unit-linked contracts        For unit-linked contracts, the Company matches all the liabilities with assets in the portfolio in which the unit prices      are based. There is therefore no interest, price, currency or credit risk for the Company on these contracts        2.3 Fair value hierarchy        The table below analyses financial instruments carried at fair value, by valuation method. The different levels have      been defined as follows:      •	 Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).      •	 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly            (that is, as prices) or indirectly (that is, derived from prices) (Level 2).      •	 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).    58","ANNUAL REPORT AND                                                                    FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    2 RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)    2.3 Fair value hierarchy (continued)    The following table presents the company’s financial assets measured at fair value at 31 December 2017 and  31 December 2018    31 December 2018                      Level 1       Level 2       Level 3                            Total  Fair value through profit and loss    Shs’000       Shs’000       Shs’000                        Shs’000  - Government securities  - Quoted equities                      770,804                 -             -                     770,804  - Unquoted equities                    222,700                 -             -                     222,700  Total                                                   7,557                -                                                   -      7,557                -                        7,557                                        993,504                                                  1,001,061    31 December 2017                       658,058                -   - 658,058  Available for sale                     195,119                -   - 195,119  - Government securities                                8,970      - 8,970  - Quoted equities                               -      8,970      - 862,147  - Unquoted equities                   853,177  Total    There were no transfers between levels 1 and 2 during the year.  The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet  date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer,  broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring  market transactions on an arm’s length basis. The quoted market price used for financial assets held by the company  is the current bid price. These instruments are included in level 1. Instruments included in level 1 comprise primarily  Nairobi Securities Exchange (“NSE”) equity investments and government bonds classified as available for sale.  The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives)  is determined by using valuation techniques. These valuation techniques maximise the use of observable market data  where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair  value an instrument are observable, the instrument is included in level 2.  If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.  Specific valuation techniques used to value financial instruments include  •	 Quoted market prices or dealer quotes for similar instruments  •	 The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on        observable yield curves.  •	 The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance        sheet date, with the resulting value discounted back to present value.  Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial  instruments.  There was no movement in level 3 during the year.                                                                                                   59","ANNUAL REPORT AND         FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    2 RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)    The following table presents the company’s financial assets and liabilities classified under various categories, measured  and carried at fair value at 31 December 2017 and 31 December 2018. The values are as represented in the statement of  financial position.    As at 31st December 2018                         Held to        Loans and       Available-          Total  Assets                                          maturity            receiv-        for-sale     carrying  Quoted equities                                  Shs’000              ables       Shs’000       amount Fair values  Unquoted investments                                               Shs’000                      Shs’000 Shs’000  Investments in Government securities  Reinsurance share of liabilities                            -            -      222,700           222,700       222,700  Receivable arising from direct insurance                    -            -         7,557             7,557         7,557  arrangements                                    2,543,054                -  Commercial Paper & Corporate Bonds                          -   103,882         770,804         3,313,858     3,313,858  Investment in Unit Trust                                                                 -        103,882       103,882  Life policy loans  Other loans receivables                                      -      109,823                  -      109,823       109,823  Other receivables                                   184,855                  -               -      184,855       184,855  Cash and short term deposits                                                 -       11,257  Total                                                        -                               -       11,257        11,257                                                               -         3,067                 -         3,067         3,067                                                               -         8,245                 -         8,245               -                                                               -       60,923                  -                                                               -   1,096,992                           60,923        60,923                                                                                  1,012,318        1,096,992     1,096,992                                                  2,727,909       1,382,932                                                                                                  5,123,159     5,114,914    Liabilities                                     1,039,706                -      - 1,039,706 1,039,706  Insurance contract liabilities                  3,497,314                -      - 3,497,314 3,497314  Payable under deposit administration contracts                   86,482         - 86,482 86,482  Payable arising from reinsurance arrangement                -   124,618         - 124,618 124,618  Other Payables and accruals                                 -    Total                                           4,537,020 211,100               - 4,748,120 4,748,120    As at 31st December 2017                                     -            -     195,119           195,119       195,119  Assets                                                       -            -        8,970             8,970         8,970  Quoted equities for various companies            2,618,122                -  Unquoted investments                                         -   124,546        658,058         3,276,180     3,276,180  Investments in Government securities                                                     -        124,546       124,546  Reinsurance share of liabilities                             -    75,358  Receivable arising from direct insurance            185,116               -               -          75,358        75,358  arrangements                                                              -               -         185,116       185,116  Commercial Paper & Corporate Bonds                           -                    15,729  Investment in Unit Trusts                                    -      2,240                 -          15,729        15,729  Life policy loans                                            -    44,450                  -            2,240         2,240  Other receivables                                            -   444,819                  -  Cash and short term deposits                    2,803,238       691,413                              44,450        44,450  Total                                                                           877,876             444,819       444,819                                                                                                    4,372,527     4,372,527    Liabilities                                         984,800               -     - 984,800 984,800  Insurance contract liabilities                   3,115,339                -     - 3,115,339 3,115,339  Payable under deposit administration contracts                    22,297        - 22,297 22,297  Payable arising from reinsurance arrangement                 -   103,952        - 103,952 103,952  Other Payables and accruals                                  -                                                                  126,249         - 4,226,388 4,226,388  Total                                           4,100,139    60","ANNUAL REPORT AND                                                                                                                                                                                                                                                                                        FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    2 RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)      2.4 Capital risk management         The Company maintains an efficient capital structure from a combination of equity shareholders’ funds and borrowings,       consistent with the company’s risk profile and the regulatory and market requirements of its business.       The Company is subject to a number of regulatory capital tests and also employ a number of realistic tests to allocate       capital and manage risk.       In reporting the Company’s financial strength, capital and solvency is measured using the regulations prescribed by the       Insurance Regulatory Authority (IRA). These regulatory capital tests are based upon required levels of solvency capital       and a series of prudent assumptions in respect of the type of business written by the company.       The Company’s objectives in managing its capital are:       •	 to match the profile of its assets and liabilities, taking account of the risks inherent in the business;       •	 to maintain financial strength to support business growth;       •	 to satisfy the requirements of its policyholders, regulators and rating agencies;       •	 to retain financial flexibility by maintaining strong liquidity and access to a range of capital markets;       •	 to allocate capital efficiently to support growth; and       •	 to manage exposures to movement in exchange rate         An important aspect of the Company’s overall capital management process is the setting of target risk-adjusted rates       of return for individual business units, which are aligned to performance objectives and ensure that the Company is       focused on the creation of value for shareholders.       The Company has a number of sources of capital available to it and seeks to optimise its debt to equity structure       in order to ensure that it can consistently maximise returns to shareholders. The Company considers not only the       traditional sources of capital funding but the alternative sources of capital including reinsurance, as appropriate, when       assessing its deployment and usage of capital. The Company manages as capital all items that are eligible to be treated       as capital for regulatory purposes.       The Company is regulated by the Insurance Regulatory Authority in Kenya and as such, is subject to insurance solvency       regulations which specify the minimum amount and type of capital that must be held in addition to the insurance       liabilities.       The Kenya Insurance regulatory authority has also introduced Risk Based Capital model which will result in risk based       approach to supervision. In line with risk based methodology, IRA has developed a Risk Based Capital (RBC) model,       which is aimed at introducing capital requirements that are commensurate to the levels of risk being undertaken, and       provide appropriate incentives for good risk management. The RBC model is a factor based model that computes the       capital requirement based on four risk segments: insurance, market, credit and operational risk.       The new capital requirement (Risk Based Capital) were introduced in the Finance Act, 2015. Insurance companies are       required to hold paid up capital by the 30th June 2020; the higher of:-       i. Shs 400 million; or       ii. risk based capital determined by the Insurance Regulatory Authority (IRA) from time to time; or       iii. 5% of the liabilities of the life business for the financial year.                                                                                                                                                                       61","ANNUAL REPORT AND              FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    2 RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)        2.4 Capital risk management (continued)        The Capital Adequacy ratio of the Company as at 31 December 2018 and 2017 is illustrated below.        Available Capital                                     2018                                          2017      Required Capital                                   Shs’000                                       Shs’000                                                          526,410                                       422,802                                                          400,000                                       400,000        Capital Adequacy Ratio                             132%                                               106%      Minimum Required Capital Adequacy Ratio            100%                                               100%        The actuarial valuation results by Independent Actuary for the year ended 2018 used an investment margin of 20%      as required by regulation guidelines issued by the authority. Management has assessed the impact if the margin was      reduced to 10%, the profit/surplus would have increased by Shs 60million for the year and the Capital Adequacy Ratio      would have gone up to stand at 147% as at 31 December 2018. (2017: 132%)    3 GROSS EARNED PREMIUM        The Company is organised into two main divisions, ordinary life and group life business. The premium income of the      Company is analysed between the main classes of business as shown below:        Class of business                                      2018                                          2017                                                         Shs ‘000                                      Shs ‘000      Ordinary life      Group life                                                                                                                                                              125,301                                         77,583                                                           837,511                                       829,996         Total                                             962,812                                       907,579      	    62","ANNUAL REPORT AND                                                                                          FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    4 INVESTMENT INCOME                                Long-term          Shareholders’         2018                         2017                                                       business                    funds       Total                        Total        Interest from government securities            Shs ‘000                           Shs ‘000                     Shs ‘000        Bank deposit interest                                                  Shs ‘000        Rental income from investment properties                                                                                           Dividends received from equity investments    364,458           45,892              410,350                      343,289        Fair value gain on investment properties       49,671             5,866        (Note 11)                                      12,265                   -             55,537                       24,159        Fair value losses on quoted equities             8,524                  -             12,265                       12,185        Fair value gains from government securities        Gain on sale of quoted equities                10,000                   -              8,524                        9,896        Gain on sale of government securities        (39,800)                   -        Other income                                                         806              10,000                        7,000        Total                                          14,968                   -           (39,800)                               -                                                         2,028                  -                                                  -                                                               -                -             15,774                                                         5,567                                 2,028                           197                                                                        52,564                        -                    13,113                                                     427,681                                   5,567                                                                                                                            4,153                                                                                           480,245                                                                                                                        413,992    5 CLAIMS AND POLICYHOLDERS BENEFITS PAYABLE                                                 2018                         2017                                                                                          Shs ‘000                     Shs ‘000       Life and death claims       Surrenders and annuity payments                                                      162,965                      154,739       Maturities                                                                             58,739                       60,860       Increase in actuarial value of insurance contract liabilities                          15,164                       18,556       Interest declared on deposit administration contracts (Note 25)                        74,526                       74,243       Total                                                                                            314,662                      260,322                                                                                             626,056                      568,720                                                                                                                         63","ANNUAL REPORT AND      FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    6 OPERATING AND OTHER EXPENSES                    Long term Shareholders’          2018          2017                                                    business          funds           Total         Total       Employee benefit expense (Note 7)                                         Shs ‘000      Shs ‘000       Auditors’ remuneration                       Shs ‘000          Shs ‘000       Directors emoluments – fees                                                               118,652       Depreciation (Note 9)                         135,440                  -    135,440          2,463       Amortization (Note 10)                           2,475                 -                     3,773       Repairs and maintenance expenditure              6,034                 -       2,475         5,556       Rent of office space                                   -         4,526         6,034         5,184       Advertising and promotion                              -         5,184         4,526       Professional fees                                                      -       5,184        11,039       Business levies and taxes                      14,505                  -      14,505        16,134       Insurances costs                               18,635                  -      18,635        16,927       Travelling, motor vehicle and accommodation    17,479                  -      17,479       License and subscriptions                      13,276                  -      13,276         5,760       Training and seminars                                                  -       7,198         4,306       Communication                                    7,198                 -      12,496        12,186       Printing & stationery                          12,496                  -       2,490         3,264       Other Board expenses                                                   -       1,701         1,181       Provisions for impairment of receivables         2,490                 -       5,544         3,349       Other expenses                                   1,701                 -       2,827         3,338                                                        5,544                 -       2,161         2,423       Total                                            2,827              652        2,763         2,474                                                        2,161           1,150         6,964                                                        2,763                        12,270                -                                                        6,312         11,512                       15,756                                                      11,120                      273,968                                                                                                233,765                                                    262,456    7 EMPLOYEE BENEFIT EXPENSE                        Long term Shareholders’          2018          2017                                                    business          funds           Total         Total        Salaries and wages                                                       Shs ‘000      Shs ‘000        Social security benefit costs               Shs ‘000          Shs ‘000        Retirement benefit costs                                                                 101,115       Total                                         116,350          -            116,350             230                                                           288        -                                                                      -                  288       17,307                                                      18,802                         18,802                                                                      -                         118,652                                                    135,440                       135,440        The Company had 60 employees as at 31 December 2018 (2017: 56)    64","ANNUAL REPORT AND                                                                FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    8 CURRENT INCOME TAX                             Long-term Shareholders’       2018            2017                                                   business     funds             Total           Total      (a) Current income tax expense                                         Shs ‘000        Shs ‘000       Current income tax                          Shs ‘000     Shs ‘000       Deferred income charge /(credit) (Note 27)                                                         -      ---       Income tax expense                          8,398      Reconciliation of current income tax:                                  8,398           6,643       (Loss) /profit before tax                   8,398       Income tax calculated at a tax rate of 30%               - 8,398 6,643        (2017: 30%)       Effect of income not subject to tax         (63,251)     41,053       (22,198)        (59,702)       Effect of expenses not deductible for tax       Net tax on transfer to long-term business   (18,975)       12,316      (6,689)        (17,911)       Deferred income tax (Note 27)                 18,975       Income tax expense                                    -    16,476       35,451          36,235                                                             -     3,550        3,550           3,222      (b) Taxation recoverable                        8,398                                                                (32,342)     (32,342)        (21,546)       At 1 January                                   8,398               -     8,398           6,643       Tax paid during the year       Current taxation charge (Note 8(a))                                -     8,398           6,643       At 31 December                                                   Long-term Shareholders’       2018            2017                                                   business     funds             Total           Total                                                                             Shs ‘000        Shs ‘000                                                   Shs ‘000     Shs ‘000                                                                               (13,690)        (13,179)                                                   - (13,690)                   (1,104)            (511)                                                   - (1,104)                             -               -                                                   --                                                                               (14,794)        (13,690)                                                   - (14,794)                                                                                               65","ANNUAL REPORT AND                                  Furniture,                                                          FINANCIAL STATEMENTS 2018                                                                                       Motor                 fittings &  NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)                                                   vehicle     Comput-     equip-          Total                                                                                     Shs’000            ers   ment       Shs’000  FOR THE YEAR ENDED 31 DECEMBER 2018  9 MOTOR VEHICLE AND EQUIPMENT                                                          6,561   Shs’000 Shs’000            44,266                                                                                         1,175                               4,371        At 1 January 2017                                                                 (630)  20,047      17,658           (630)        Additions                                                                        7,106    2,860          336        Disposal                                                                                        -           -       48,007        At 31 December 2017        At 1 January 2018                                                                        22,907      17,994        Additions        Disposal                                                                      7,106      22,907      17,994      48,007        At 31 December 2018                                                           3,900          934      3,424       8,258       Depreciation:                                                                                    -           -           -        At 1 January 2017                                                                   -        Charge for the year                                                                      23,841      21,418      56,265        Disposal                                                                     11,006        At 31 December 2017                                                                                     5,770       16,085       8,050      29,905        At 1 January 2018                                                              524        3,196       1,836       5,556        Charge for the year                                                                             -                  (630)        Disposal                                                                     (630)                          -                                                                                                 19,281                  34,831        At 31 December 2018                                                          5,664                    9,886       Net book value:                                                                           19,281                  34,831       At 31 December 2018                                                           5,664        2,205       9,886       4,526       At 31 December 2017                                                             585              -     1,736             -                                                                                           -  10 INTANGIBLE ASSET                                                                            21,486             -    39,358                                                                                     6,249        At 1 January                                                                                         11,622        Amortization        At 31 December                                                               4,757       2,355       9,796       16,908                                                                                     1,442       3,626       8,108       13,176                                                                                                                   2018        2017                                                                                                             Shs '000    Shs ‘000                                                                                                                  10,367       15,550                                                                                                                (5,184)     (5,183)                                                                                                                    5,183      10,367    66","ANNUAL REPORT AND                                                                        FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    11 INVESTMENT PROPERTIES                                                                                                        2018          2017                                                                                                  Shs ‘000      Shs ‘000    At 1 January                                                                                      273,000     313,000  Disposal                                                                                        (128,000)     (47,000)    Fair value gain                                                                                 10,000            7,000            At 31 December                                                                          155,000       273,000  	    Investment properties were last revalued on 31 December 2018, by Axis Real Estate Limited, independent valuers, on  the basis of open market value for existing use. The table below analyses the non-financial assets carried at fair value,  by valuation method. The different levels have been defined as follows:    •	 Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).    •	 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly      (that is, as prices) or indirectly (that is, derived from prices) (Level 2).    •	 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)    •	 (1evel 3).    At 31 December 2018                                     Level 1       Level 2                   Level 3           Total  Investment property                                     Shs’000       Shs’000                   Shs’000       Shs’000                                                                         155,000                                 155,000                                                                     -                                       -    At 31 December 2017                                     - 273,000                                  - 273,000  Investment property    Valuation technique used to derive level 2 fair values    Level 2 fair value of land and building has been derived using the discounted cash flow approach.    Sensitivity analysis    The gross annual rent and yield are the significant unobservable inputs used in the valuation of investment properties.  The effect of changes in gross annual rental and yield will have the following effect on the fair value of investment  property;                                                                          % change                  2018              2017                                                                                                    Kes’000 Kes’000    Gross annual rent                                                       10%                     13,872            13,178  Gross annual rent                                                      -10%                     11,350            10,782  Yield                                                                  0.5%  Yield                                                                 -0.5%                      1,077             1,039                                                                                                      975               940                                                                                                                      67","ANNUAL REPORT AND              2018          2017                                                          FINANCIAL STATEMENTS 2018  Shs ‘000      Shs ‘000    NOTES TO THE                                                                         195,119       349,411  FINANCIAL STATEMENTS (CONTINUED)                                                              -     75,969                                                                                                -  FOR THE YEAR ENDED 31 DECEMBER 2018                                                           -  (254,189)                                                                                                      23,928  12 QUOTED EQUITY INVESTMENTS                                                       (195,119)                -          (a) Available for sale quoted equity securities                                         -    195,119           At 1 January                                                                    2018          2017         Additions                                                                   Shs ‘000      Shs ‘000         Disposals         Fair value (gain)/losses                                                              -   -         Reclassified to fair value through profit or loss                           195,119       -         At 31 December                                                              117,995       -                                                                                     (50,614)      -        (b) Fair value through profit or loss quoted equity securities               (39,800)      -            At 1 January                                                               222,700       -          Reclassified from available for sale          Additions                                                                      2018          2017          Disposals                                                                  Shs ‘000      Shs ‘000          Fair value losses          At 31 December                                                               8,970       8,970                                                                                     (1,413)             -  13 UNQUOTED EQUITY INVESTMENTS                                                                                       7,557       8,970        Fair value through other comprehensive income (OCI)            At 1 January          Fair value losses          At 31 December    68","ANNUAL REPORT AND                                                 FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    14 INVESTMENT IN UNIT TRUSTS                      2018                         2017                                                 Shs’000                      Shs’000         At 1 January         Net contributions                          15,729                       15,209         At 31 December                            (4,472)                           520    15 REINSURERS’ SHARE OF INSURANCE LIABILITIES     11,257                       15,729                                                      2018                         2017                                                 Shs’000                      Shs’000    At 31 December (Note 24)                       104,662                      124,546  -Less: Provision for impairment                   (780)                              -    At 31 December (Note 24)                       103,882                               -    Amounts due from reinsurers in respect of claims outstanding with the Company on contracts that are reinsured are  included as reinsurers’ share of liabilities in the statement of financial position.    16 OTHER RECEIVABLES                                                      2018                         2017                                                 Shs’000                      Shs’000    Due from related parties (Note 31)             14,797                           886  Prepayments and deposits                       11,445                       12,397  Staff advances                                 11,162  Agents advances and other loans                11,701                        9,428  Rent receivables                                                             9,290  Accrued dividend income                         2,623                        3,407  Proceeds receivables from disposal of shares    2,434                        1,223  Others                                          5,134                        7,339                                                  1,627  At 31 December                                                                  480                                                 60,923                                                                              44,450                                                                                69","ANNUAL REPORT AND              2018          2017                                                          FINANCIAL STATEMENTS 2018  Shs’000       Shs’000    NOTES TO THE                                                                                       643,612  FINANCIAL STATEMENTS (CONTINUED)                                                                   355,839                                                                                       301,396     1,618,671  FOR THE YEAR ENDED 31 DECEMBER 2018                                                  782,838                                                                                     1,461,366                 -  17 GOVERNMENT SECURITIES                                                              (2,546)    2,618,122          (a) Government Securities – at amortised cost                                2,543,054         Treasury bills and bonds maturing:         - In 1 year                                                                    2018          2017         - In 1- 5 years                                                             Shs’000       Shs’000         - After 5 years         - Less: Provision for impairment                                              658,058       733,221                                                                                                -    140,577         Total                                                                                  -  (137,969)                                                                                                -   (94,038)        (b) Government Securities-available for sale                                            -         At 1 January                                                                                 16,267         Purchases                                                                   (658,058)                -         Maturity         Disposal                                                                               -    658,058         Fair value gains         Reclassified to fair value through profit or loss                               2018          2017                                                                                     Shs’000       Shs’000         Total                                                                                       658,058     -        (c) Government Securities-at fair value through profit or loss                 352,733     -         At 1 January                                                                (255,760)     -         Purchases                                                                                 -         Maturity                                                                       15,773         Fair value gains                                                                          -         Total                                                                         770,804  18 COMMERCIAL PAPER & CORPORATE BONDS                                                                                         2018          2017         Commercial paper and bonds held to maturity:                                KSh 000       KSh 000         -Less: Provision for impairment         Total                                                                       185,500       185,116                                                                                        (645)               -  70                                                                                     184,855       185,116","ANNUAL REPORT AND                                                                  FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    19 DEPOSITS WITH FINANCIAL INSTITUTIONS                             2018                         2017                                                                  KSh 000                      KSh 000        Held to maturity:            - Within 90 days                                        406,865                      418,292            - Within 1 year                                         633,508                         5,035                                                                     (8,532)                              -        -Less: Provision for impairment                           1,031,841        Total                                                                                    423,327    20 SHARE CAPITAL                                                  Number                     Shs’000                                                                  of Shares                     550,000        Balance at 31 December 2017, and 1 January 2018                                         150,000        New shares issued during the year                           5,500,000        Balance at 31 December 2018                                 1,500,000                  700,000                                                                    7,000,000    An additional share capital was injected during the year. The total authorized number of ordinary shares is 7,000,000  with a par value of Shs 100. All shares are fully issued and paid up.    21 RETAINED EARNINGS        The retained earnings / (deficits) represent the transfer of accumulated surpluses / (deficits) from the long-term      insurance business net of tax. Movement in the retained earnings is shown in the statement of changes in equity.    22 STATUTORY RESERVE        The statutory reserve represents unappropriated actuarial surpluses from the long term business whose distribution is      subject to restrictions imposed by the Insurance Act. The Act restricts the amounts of surpluses of the long-term business      available for distribution to shareholders to 30% of the accumulated surplus of the long term insurance business. The      movement in the statutory reserve is shown in the statement of changes in equity.    23 INSURANCE CONTRACT LIABILITIES                                                                       2018                         2017                                                                  Shs’000                      Shs’000    Long term insurance contracts at 31 December                      179,027                    198,647      - claims reported and claims handling expenses                860,679                    786,153      - actuarial liabilities with respect to contracts in force                                                                  1,039,706                    984,800  Total    Insurance contract liabilities comprises gross claims reported, claims handling expenses and actuarial liabilities with  respect to all contracts in force for ordinary (including unit linked policies) and group life business                                                                                                 71","ANNUAL REPORT AND             FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018        24 MOVEMENTS IN INSURANCE LIABILITIES AND REINSURANCE ASSETS        At start of year                      Gross    2018                Net     Gross     2017               Net      Cash paid for claims               Shs’000     Reinsur-      Shs’000    Shs’000     Reinsur-      Shs’000      settled in the year                 984,801                   860,255    862,532                    789,039                                                          ance                                 ance                                                     Shs’000                              Shs’000       (183,985)                                                     (124,546)                             (73,493)       605,054                                           (399,993)   241,758       (158,235)  (349,147)     165,162                                           584,808   117,212         702,020    513,385       91,669        (Decrease) /increase               212,439      (77,220)     135,219     81,110      (59,060)      22,050                                         242,458     (144,653)      97,805    390,305     (157,156)     233,149      in liabilities arising             454,897     (221,873)                471,415     (216,216)     255,199      - from prior year claims                                     233,025      - from current year claims      Total increase in liabilities        Total                              1,039,706 (104,661)       935,045    984,800 (124,547)         860,253         Notified claims                   179,027 (104,662)         74,366     198,647 (124,547)          74,100       Actuarial value of                                                                               786,153        life contract liabilities           860,679             -  860,679     786,152               -                                         1,039,706   (104,662)     935,045                                             Total at the end of year                                                            (124,547)     860,253                                                                              984,800    25 AMOUNTS PAYABLE UNDER DEPOSIT ADMINISTRATION CONTRACTS          Liabilities due under deposit administration contracts are recorded at amortized cost. Movements in amounts payable        under deposit administration contracts during the year are as shown below. The liabilities are shown inclusive of        interest accumulated to 31 December. Interest was declared and credited to the customer accounts at a weighted        average rate of 10.25%, (2017:9.50%).        At 1 January                                                                            2018          2017      Pension fund deposits received                                                      Shs’000       Shs’000      Pension fund withdrawals                                                            3,115,339     2,601,453      Interest payable to policyholders                                                     530,487       585,374                                                                                          (463,174)     (331,811)      At 31 December                                                                        314,662       260,323                                                                                            3,497,314     3,115,339    72","ANNUAL REPORT AND                                                               FINANCIAL STATEMENTS 2018    NOTES TO THE                                                    2018                         2017  FINANCIAL STATEMENTS (CONTINUED)                             Shs’000                      Shs’000    FOR THE YEAR ENDED 31 DECEMBER 2018                             1,914                        4,353                                                                 73,620                       42,059  26 OTHER PAYABLES                                                                  1,730                        1,948       Due to related companies (Note 31)                        16,432                        2,185       Accrued expenses                                          27,773                       45,147       Rental deposits                                                                         8,260       Trade creditors                                            3,149       Premium deposits                                                                     103,952       Other liabilities                                       124,618               At 31 December    27 DEFERRED INCOME TAX    Deferred income tax is calculated using the enacted tax rate of 30% (2017: 30%). The movement on the  deferred income tax account is as follows                                                                    2018                         2017                                                               Shs’000                      Shs’000    At 1 January                                                 10,027                        3,384  (Credit) /charge to profit or loss (Note 8(a))                8,398                        6,643    At 31 December                                               18,425                       10,027    Deferred tax movement is made up as follows:                                              11,283  Movement in unappropriated surplus /(deficit)                  33,427                     33,427  At 1 January                                                   61,421                     22,144  At 31 December                                               (27,994)  Movement of the surplus during the year                                                               (8,398)                      6,643  Deferred income tax charged/ (credit) at 30% (2017: 30%)    At 31 December                                                                                              73","ANNUAL REPORT AND                   NOTES       2018          2017                                                          FINANCIAL STATEMENTS 2018                    Shs’000       Shs’000                                                                                                   4  NOTES TO THE                                                                                     4                  (59,702)  FINANCIAL STATEMENTS (CONTINUED)                                                                 4    (22,198)                                                                                                   4  FOR THE YEAR ENDED 31 DECEMBER 2018                                                              4   (465,887)     (367,448)                                                                                                   9      (2,028)         (197)  28 (a) NOTES TO THE STATEMENT OF CASH FLOWS                                                      10             -                                                                                                   11     39,800      (13,113)         Reconciliation of profit before taxation to cash generated                                                             -         from operations:                                                                               (15,774)                -                                                                                                            4,526         Profit /(loss) before income tax                                                                   5,184         5,556        Adjustments for:                                                                                                  5,183         Interest income                                                                                (10,000)        (7,000)         Profit on sale of quoted equities                                                                        -       (464)         Profit on sale of government securities         Fair value loss on quoted equities                                                                 6,966               -         Fair value gain on government securities         Depreciation charge                                                                           457,545         585,099         Amortization charge                                                                             64,185      (104,497)         Fair value gain on investment properties                                                        20,666         Gain from sale of fixed assets                                                                                 15,836         Provision for impairment on account of IFRS 9                                                 (50,939)         49,818           Changes in:                                                                                     32,046        109,071         - technical provisions         - receivables arising from reinsurance arrangements                                            65,151        21,492         - other payables                                                                              406,865       423,327         - other receivables                                                                                                       472,016       444,819         Cash outflow from operations         (b) CASH AND CASH EQUIVALENTS           For the purposes of the cash flow statement, cash and cash         equivalents comprise the following:         Cash and bank balances         Deposits with financial institutions (Note 19)                   Total    74","ANNUAL REPORT AND                                                                                                                                                                                                                                                                                        FINANCIAL STATEMENTS 2018    NOTES TO THE  FINANCIAL STATEMENTS (CONTINUED)    FOR THE YEAR ENDED 31 DECEMBER 2018    29 CONTINGENT LIABILITIES        In common with the insurance industry in general, the Company is subject to litigation arising in the normal course of      insurance business. At the reporting date, there was no litigation that the company was aware of. The directors are of      the opinion that any litigation that may arise from this source will not have a material effect on the financial position      or profits of the Company.      In 2015, the Company received a tax assessment for principal tax of Shs 33,745,125 relating to prior periods, which is      in dispute and the company is contesting the assessment. No provision has been made in these financial statements for      these amounts as the Company considers it has adequate grounds to dispute the assessment.    30 OPERATING LEASE COMMITMENTS         The future minimum lease payments under operating leases are as follows:                                                                                      2018      2017                                                                                 Shs’000   Shs’000     Due not later than 1 year                                                      11,920   11,352   Due after 1 year and not later than 5 years                                    71,779   68,361   Later than 5 years                                                             18,683   17,793      Total                                                                         102,382   97,506    31 RELATED PARTIES    In the normal course of business, insurance policies are sold to related parties at terms and conditions similar to those  offered to major clients. The Company is a wholly owned subsidiary of Apollo Investments Limited, also incorporated in  Kenya. Apollo Holdings Limited, Apollo Asset Management Company Limited, Gordon Court Limited and APA Insurance  Limited are related to APA Life Assurance Limited through common shareholdings and directorships.    Outstanding balances with related parties                                          2018      2017                                                                                 Shs’ 000  Shs’ 000  (i) Due from related parties (Note 16)      Due from a Director                                                        13,911       -      Due from Apollo Investments Limited                                            886   886                                                                                   14,797    886  Total                                                                                             75","ANNUAL REPORT AND                2018     2017                                                          FINANCIAL STATEMENTS 2018     Shs 000  Shs 000    NOTES TO THE                                                                              92     105  FINANCIAL STATEMENTS (CONTINUED)                                                      1,279    1,636                                                                                                 2,612  FOR THE YEAR ENDED 31 DECEMBER 2018                                                     543                                                                                                 4,353  31 RELATED PARTIES (Continued)                                                        1,914         (ii) Due to related parties (Note 26)                                            14,163   10,856          Due to Gordon Court Limited                                                     11,908   11,229        Due to Apollo Asset Management Limited        Due to APA Insurance Limited                                                    86,773   82,621        Total                                                                            5,665    4,376                                                                                         9,360       (iii) Related party transactions                                                          11,598         Apollo Asset Management Company Limited        Fees for asset management         Gordon Court Company Limited        Office rent       APA Insurance Limited        Contributions received for pension scheme        Premium received for group life assurance        Premium paid for general insurance business        Other related party transactions                                                  - 47,000      Sale of investment property to a director                                                                                         6,034    3,870      (iv) Key management and directors’ compensation                                   20,701   17,109                                                                                        58,643   48,025      Directors’ fees                                                                   85,378   69,004      Other remuneration      Key management compensation      Total    32 WEIGHTED AVERAGE EFFECTIVE INTEREST RATES        The following table summarises the company’s weighted average effective interest rates realized during the year on      the principal interest-bearing investments:                                                                                          2018     2017                                                                                          %%        Government securities                                                             12.08    11.93        Deposits with financial institutions                                              9.56 9.63        Commercial paper & corporate bonds                                                12.97    12.95    76","ANNUAL REPORT AND                                                                               FINANCIAL STATEMENTS 2018    SUPPLEMENTARY INFORMATION  REVENUE ACCOUNT    FOR THE YEAR ENDED 31 DECEMBER 2018                                                      Ordinary        Group         Other            2018         2017                                                          Life         Life    Shs’ 000             Total        Total                                                                                               Shs’ 000     Shs’ 000                                                    business     business                                                    Shs’ 000     Shs’ 000    INCOME:                                             125,301       837,511    - 962,812 907,579  Gross earned premium                                (2,339)    (493,474)     - (495,813) (548,176)  Reinsurance premiums ceded                        122,962       344,037      - 466,999 359,403  Net earned premium    Investment income                                      3,455       67,225    357,002          427,681       376,449  Commission earned                                           7   106,062                      106,069       113,745    Total income                                      126,424      517,324       357,002 1,000,749            849,597    OUTGO:                                             (1,105)     (162,137)                  -   (163,242)    (154,739)  Claims and policy holder benefit                      (402)     (58,337)                  -     (58,739)     (60,860)  Life and death claims                                                     -               -     (14,887)     (18,556)  Surrenders and annuity payments                   (14,887)          9,676                 -     (74,526)     (74,243)  Maturities                                        (84,202)               -   (314,662)  Increase in insurance contract liabilities                                                   (314,662)    (260,322)  Interest on deposit administration policyholders           -    Net claims and policyholder benefits              (100,596) (210,798) (314,662) (626,056) (568,720)  payable                                                    (105,394) (127,371)         (29,692) (262,457) (223,025)  Expenses                                          (42,593) (122,270)         (10,622) (175,485) (144,357)  Operating and other expenses  Commissions payable                               (147,987) (249,641) (40,314) (437,942) (367,382)    Total expenses and commissions    (Loss) / profit the year before income tax        (122,159)     56,885       2,025           (63,249)     (86,505)  Income tax expense                                 (2,347)     (9,576)       3,525           (8,398)      (6,643)    (Loss)/ profit for the year after tax             (124,506) 47,309           5,550 (71,647) (93,148)    The above supplementary information was approved by the board of directors on 12 March 2019 and signed on its behalf by:                                            							  RICHARD M. ASHLEY								ASHOK SHAH  Chairman									Director                                                                                                              77","ANNUAL REPORT AND                                                       FINANCIAL STATEMENTS 2018               I AM THE       HAPPIEST IN MY        RETIREMENT YEARS.      I never knew retirement would be this fun, 3 years after I   still feel as fresh, young and vibrant. Having always wanted        to make good of all the ideas I had over the years, like     starting a hotel business in my village, I needed a regular   income to be able to fund my dreams. I had enrolled for the     APA Personal Pension plan and they came through for me     in my retirement years giving me the steady income and      being able to enjoy my life.Thank you APA for putting a               smile on my face and insuring my happiness.                      APA Personal                       Pension    78","","30065  Regulated by the Insurance Regulatory Authority (IRA)"]; var positionForPages = [];