CHAIRMAN STATEMENT

[Corporate Information] [Chairman Statement] [ Report of the Auditor] [Performance Highlights]

Distinguished shareholders, ladies and gentlemen, it is my pleasure to welcome you to the 17th Annual General Meeting of our Company. I am also delighted to present to you the Annual Reports and Financial Statements of the Company for the year ended 31st December, 2004. In order to appreciate the performance of our company, I will briefly recall some of the events, which influenced the direction of business practices in the country during the year under review. SOCIO – POLITICAL ENVIRONMENT After six years of civil rule, the newly created democratic structures continued to grow with increasing absorptive capacity in spite of occasional flash points. Some of the returning and newly elected political office holders who came into office as a result of 2003 general elections were able to settle down for government business during the year 2004. However, the mutual suspicion and mistrust that have characterised the relationship between the executive and legislative arms of government still persisted without much improvement. As a result, several moments of anxiety and over-heated polity were witnessed during the year sending wrong signals to the existing and would-be investors within and outside the country. The Appropriation Act for the year was not ready for implementation until about the third quarter of the year due to some differences between the executives and the legislatures. Government could not therefore, release the much-needed fund to fuel the economy at the appropriate time. The battle against corruption and crimes by the Federal Government was vigorously pursued during the year. Though, not much has been achieved, but the Government has demonstrated a resolve to stamp out corruption and crimes in our society. As major players in the Insurance sub-sector, our desire for a corruption and crime free society is understandable. We require assurance of transparency, due diligence and high level of integrity from all our business associates. With increasing awareness of the evils of corruption and crimes, we can hope for a more conducive environment for the practice of insurance business on the much-cherished principle of utmost good faith. MACRO ECONOMIC ENVIRONMENT The full-blown de-regulation of the down stream sector of the oil industry was a major fiscal policy that attracted much attention and generated widespread controversy in the year 2004. The Government was resolute in its defense of the economics of deregulation but this could not avert the resultant immediate increase in prices of fuel, food and other basic items. This development pitched the government against organized labour and civil society during the year resulting in prolonged industrial action with its attendant crippling effects on the economy. The government continued to press for a low interest rate regime pegging the official lending rate at 19% for most part of the year. By their actions, it was clear that banks and other credit institutions were not very comfortable with the margin between the Minimum Rediscount Rate (MRR) and the lending rate. They therefore, resorted to various unofficial means of raising the cost of credits to their numerous customers introducing all manner of sundry charges. The banking sector and the business community were taken by surprise when the Central Bank of Nigeria (CBN) issued a new guideline requiring all banks to meet a minimum capital base of N25 billion before the end of year 2005. In a frantic move to meet this requirement, the sector resorted to the capital market to seek for funding and consolidation through planned mergers and acquisitions. The Insurance sub-sector is conscious that a similar directive on the capital base of insurance companies can be issued by the relevant regulatory authorities at any time from now. Our company will not be caught unaware as we have since started the process of enhancing our capital base. As the nerve centre of the economy, the new development in the banking sector impacted on all businesses as liquidity and credit to bank customers were curtailed in the face of the banking reforms. This further added to the inflationary pressure in the economy which official statistics put at an average of 15% during the year. On a positive note, the federal government engaged in wide consultations with various sectors of the economy during the year emphasizing the need for interactive and collaborative partnership among all stakeholders in the economy. Further more, the government acceded to some of the long outstanding demands of various sectors of the economy. Particularly, the Manufacturer’s Association of Nigeria succeeded in influencing the government to place a ban on importation of some basic consumer goods for which Nigeria has capacity to manufacture. The marginal increase in capacity utilization in some industries during the year could be linked to this development. It is expected that the policy, which seeks to protect the local industries will continue. Obviously, the Insurance Industry stands to benefit immensely from such policy. OPERATING RESULTS I am pleased to state that the Company was able to make the best use of the available business opportunities while deliberate efforts were made to mitigate the effects of the numerous constraints in the year under review. As a result, the performance of the Company for the year is very commendable in all aspects. The Company achieved 22% increase in gross premium, which moved upward from N908.5 million in 2003 to N1.1 billion in 2004. The increase in investment income is particularly noteworthy as it grew from N32.2 million in the previous year to N63.6 million in the year under review representing 102% increase. An increase of 70.75% was recorded on the pre-tax profit, which rose from N87 million in 2003 to N148.6 million during the year. The Company maintained increasing growth in the Total Assets and Shareholders Fund, which stood at N1.3 billion and N685.9 million respectively. The corresponding figures for the previous year being N903 million and N420.2 million; represent 44.2% and 63% increase respectively. On your behalf, I wish to particularly congratulate our management team and staff for rising to the challenge of business in the year under review. RECAPITALISATION As we are all aware, the recapitalisation programme for our company has started with the necessary resolutions passed at our extra ordinary general meeting held January 12, 2005. In accordance with the resolutions, the authorised share capital of the company now stands at N1.5 billion having registered additional 1 billion ordinary shares of N1.00 each. Also, the Board is in the process of giving effect to the resolution on the Rights Issue and Private Placement. These matters are addressed in details in my circular letter to the shareholders dated July 21st, 2005. BONUS ISSUE Fellow shareholders, our company has in the past few years been on a steady growth path. We have achieved this through a combination of proactive activities including the implementation of a sound dividend policy and Bonus Issues. This year, we intend to sustain our company on this growth pattern by ensuring that substantial amount of resources is ploughed back into the company’s business. In the light of this and as part of the ongoing recapitalisation exercise, the Board is recommending a Bonus Issue of one share for every four shares presently held. For this purpose, a sum of N96.7 million will be appropriated from the General Reserve subject to your approval at this meeting. BOARD MATTERS The voluntary retirement of Mr. A. B. Ajomale as the Managing Director/Chief Executive Officer with effect from 30th September, 2004 was announced at our last year Annual General Meeting. He has since continued to serve on the Board in non-executive capacity while Mr. Fola Daniel came on board as the Managing Director/Chief Executive Officer with effect from 2nd August, 2004. Mr. Jon Quirk joined the Board to replace Mr. H. I. E. Omoragbon who retired from AIICO Insurance Plc and invariably ceased to be a director. In accordance with the company’s articles of Association, Mr. N. S. R. Chandraprasad will retire by rotation and being eligible has offered himself for re-election. MANPOWER TRAINING AND DEVELOPMENT During the year under review, the company continued to upgrade and review its human resources through accelerated training and development programmes. Accordingly, senior and other management staff of the company participated in local and international seminars and conferences, which offered them opportunity to share experience with counterparts from all parts of the globe. The 2004 edition of our yearly Advance ReInsurance course was a huge success. We were able to enrich the career of the numerous staff of our local and international ceding companies who participated in the programme. We shall strive to improve on the past achievements in the future editions. The on-going recapitalisation exercise, amongst other purposes, is with a view to enabling us operate on a larger scale at higher level of efficiency and profitability. Certainly, we shall depend on a well-motivated workforce to achieve this and for this purpose; sufficient resources will be committed consistently to staff welfare, training and development programmes. FUTURE OUTLOOK With an enhanced capital base, which will surely empower our company to undertake larger insurance businesses and participate more in money and capital market investment, we are confident of a brighter future full of promises for higher yield on our investment in the company. We shall continue to be proactive with a measured aggression ensuring that we fail not to seize any business opportunity. We shall also remain in the forefront of the crusade for professionalism and due diligence in our industry. CONCLUSION In conclusion, I wish to thank all our business associates without exception – Local and Foreign Cedants, Brokers, Actuaries and Retrocessionaires for their immense contribution to the growth and development of our company. I wish to also thank Management and staff of our company for their dedication and loyalty, which have enabled us to sustain current growth momentum. My colleagues on the Board have continued to give unalloyed support to the cause of the company. I thank them for this and for their cooperation, which I enjoyed throughout the year. Finally, let us give glory to the almighty God for his grace and abundant blessings, which have uplifted our company and placed us on a sure path of success. Ladies and gentlemen, thank you for your attention. CHIEF S. O. SONNY- OYEKUNLE CHAIRMAN