1. NIGERIA Business market Intelligence AXA CORPORATE SOLUTIONS International Network Department May- 2014

2. Key country facts: Nigeria is most populated country in Africa. With a growth GDP above 7% and a decreasing inflation the country is booming economically speaking. However, Nigeria is over dependent on oil exports (95% of the total exports); it endangers its good economical state and future growth. In addition, the country is still very poor (84,5% below poverty line) and the wealth remains concentrated in a few people. Key country data : Nigeria is now the first economy in Africa in terms of GDP and has a strong overall economic growth. However, considering GDP per capita Nigeria is below South Africa and Angola. Its petroleum exports maintain a positive balance of payments. Finally FDI remains high, especially in the mining and oil sectors. Future growth will be linked to oil exports and to modernization and diversification of the global economy to decrease its dependence on oil. Country risk assessment: Despite the war declared by the government against terrorists, the situation is getting worst, the sect Boko Haram strikes the country with violent terrorist attacks and kidnappings. Nigeria’s dependence on oil exports, the high degree of corruption and the insecurity can also endanger investments. However, its economic growth, the low level of foreign debt and the quality of its banking system are assets for investors. In addition, insurance risks are moderate (for S&P). Its is a very interesting country and economy but still unstable and insecure, especially in the North. Insurance Market : The market is growing and is composed by a very important number of players. The market penetration is low regarding other African economic powers. Globally it is an interesting market, one of the biggest in Africa. Good historical and prospective profitability. Regulation: Cash before cover country with a strict control of the National Insurance Commission (NAICOM). Fronting is generally prohibited with therefore low reinsurance cessions. Local Partner (Leadway): Occasional partnership with Leadway with a few accounts. Strong company, leader of the Nigerian market with more than 10% of market share. Recommendations: Nigeria, as the new economic leader in Africa, cannot be ignored in a global strategy of expansion in Africa. It is still a risky country in which terrorist groups like Boko Haram endanger the security, especially in the North. The insurance market is controlled by a strong regulator and the rule of law seems to be followed in this sector. AXA Corporate Solutions has just started an occasional partnership with a local company: Leadway. It is the leader on the Nigerian market, and the collaboration is stable. Recommendations are to strengthen the partnership and follow up the situation, especially regarding terrorism. Recommendations   

3. General overview (Source: IMF and World Bank) 20112012201320142015 Gross domestic product growth (%) 7,46,66,37,17,0 Inflation, average consumer prices (%) 10,812,28,57,37,0 Population (million) 160,3164,8169,3173,9178,7 Current account balance (% of GDP) 3,57,74,74,94,0 Quick Facts GDP per capita (CIA) 2013 2800 Poverty ratio at $2 per day in 2010(World Bank) 84,5% Life expectancy (year) (World Bank) in 2012 52,6 HDI* (UN) (value/rank) 0,5/152 Next election (Axco) 2015 Key country facts Key country data Country risk assessment Insurance Market Insurance Regulation Local partner analysis Analysis: Nigeria is most populated country in Africa. With a growth GDP above 7% and a decreasing inflation the country is booming economically speaking. However, Nigeria is over dependent on oil exports (95% of the total exports) and it endangers its good economical state and future growth. In addition, the country is still very poor (84,5% below poverty line) and the wealth remains concentrated in a few people. *: Human Development indicators (including: Life expectancy, GDP per capita and level of education)

4. GDP % Growth, annual Source: World Bank Current account balance, % GDP Unemployment, total (% of total labor force) in 2012: 7,5% Key country facts Key country data Country risk assessment Insurance Market Insurance Regulation Local partner analysis Foreign direct investment, net inflows (BoP*, current Mn US$) External debt stocks, total (DOD, current Mn US$) *: Balance of payments

5. 2009201020112012 Nigeria 169,5366,4413,5459,6 South Africa 284363,2401,8384,3 Chad 9,310,712,212,9 Angola 75,582,5104,2114,1 Key country facts Key country data Country risk assessment Insurance Market Insurance Regulation Local partner analysis Analysis: Nigeria is now the first economy in Africa in terms of GDP and has a strong overall economic growth. However, considering GDP per capita Nigeria is below South Africa and Angola. Its petroleum exports maintain a positive balance of payments. Finally FDI remains high, especially in the mining and oil sectors. Future growth will be linked to oil exports and to modernization and diversification of the global economy to decrease its dependence on oil. 2009201020112012 Nigeria 1091229425192722 South Africa 5654713777907352 Chad 81490910061035 Angola 3989421951595482 GDP Current billion US$ GDP per capita current US$

6. COFACE 2013 Country ratingD Business climate assessment D Strenghts Substantial hydrocarbon resources and considerable agricultural potential The most populated country in Africa (162 million) Low foreign debt Banking sector largely consolidate thanks to the reforms launched in 2009 Weaknesses Highly dependence on oil revenues (90% of exports, 80% of tax revenues) Refining capacity very reduced, resulting in burdensome imports Ethnic and religious tensions Insecurity, corruption constraining the business environment Unemployment, poverty, inadequate health and education systems Transparency International 2013 Rank144/177 Score25/100 Fitch ratings ( 2014-04-11) Standard & Poors’ ( 2012-11-07) Moody’s BB- (Stable)BB- / Worldwide governance indicators comparison in 2013 (World Bank): Key country facts Key country data Country risk assessment Insurance Market Insurance Regulation Local partner analysis  Analysis: Despite the war declared by the government against terrorists, the situation is getting worst, the sect Boko Haram strikes the country with violent terrorist attacks and kidnappings. Nigeria’s dependence on oil exports, the high degree of corruption and the insecurity can also endanger investments. However, its economic growth, the low level of foreign debt and the quality of its banking system are assets for investors. In addition, insurance risks are moderate (S&P). Its is a very interesting country and economy but still unstable and insecure, especially in the North.

7. Key country facts Key country data Country risk assessment Insurance Market Insurance Regulation Local partner analysis Market concentration (% of top 5 players in 2010): 33,8% Source: AXCO Market Penetration CountryNon-life (P&C)Total %Per capita% Nigeria 0,516,270,688,46 South Africa2,05150,4716,291195 Angola0,5628,750,8845,17 Market size Non-LifeTotal market Premium in NGN mn 149 042201 284,36 Premium in USD mn 991,641 339,23 % of total market 74,05%100% Analysis: the market is growing and is composed by a very important number of players. The market penetration is low regarding other African economic powers. Globally it is an interesting market, one of the biggest in Africa. Good historical and prospective profitability.

8. Key country facts Key country data Country risk assessment Insurance Market Insurance Regulation Local partner analysis: BODI Regulator: National Insurance Commission (NAICOM) It is part of the Federal Ministry of Finance and was formed in accordance with National Insurance Commission Decree, No 1, 1997. It also sets standards for the conduct of insurance business, approving premium and commission rates and regulating transactions between insurers and reinsurers both inside and outside of Nigeria. The commissioner has power to wind up, put into receivership or withdraw licenses from offending companies. Fronting: In terms of the Insurance and Reinsurance Guidelines issued by the National Insurance Commission (NAICOM) in May 2006 fronting is forbidden in respect of: fire insurance and reinsurance business, motor insurance and reinsurance business, liability insurance and reinsurance business, life insurance and reinsurance business, accident insurance and reinsurance business, such other insurance and reinsurance and business as the commission may from time to time prescribe. Cash before cover: YES, under the terms of the National Insurance Commission (NAICOM) Guidelines on Insurance Premium Collection and Remittance (NAICOM/CFI/DC/G/12/12) of 1 January 2013, all insurance covers should be provided strictly on a 'no premium no cover' basis. Control of exchange: NA Pools: NA Non-admitted insurance: Non-admitted insurance is not permitted because the law provides that insurance must be purchased from locally authorized insurers. There are no exceptions specified in the legislation to the general prohibition on non-admitted placements, other than permission may be sought from the regulator to effect such a placement. Compulsory insurance: third party motor insurance, builders' liability, property owners' liability and healthcare providers' professional indemnity cover Premium taxes: NA Retentions: There are no statutory limitations on retention levels. Source: AXCO Insurance legislation: Insurance Act, No 1 of 2003 repealed and replaced Insurance Decree, No 2 of 1997. The legislation deals with, amongst other things, the registration and operation of insurers and insurance intermediaries. The act applies to both life and non- life classes Insurance legislation Analysis: Cash before cover country with a strict control of the National Insurance Commission (NAICOM). Fronting is generally prohibited with therefore low reinsurance cessions.

9. Founded in 1970, Leadway Assurance Company Ltd - Leadway is a composite insurer. Leadway is 81% Nigerian-owned and 19% owned by the International Finance Corporation. In 2010 the company had a non-life market share of 10.35% and a life market share of 5.06%. 3 policies with Leadway today Rating by AM Best: B- A composite company underwriting all classes of insurance business. The Company has enjoyed a steady growth in premium Income and total assets, which currently stands at over N 30.5 billion (Thirty billion five hundred million naira) and N 66.3 billion (sixty six billion, three hundred million naira) respectively as at December 31, 2012. LEADWAY Key country facts Key country data Country risk assessment Insurance Market Insurance Regulation Local partner analysis SOURCE: Analysis: Occasional partnership with Leadway with a few accounts. Strong company, leader of the Nigerian market with more than 10% of market share. Financial analysis Financial rating: BB-

10. Appendix - Sources PageSourceComments Axco Worldbankhttp://data.worldbank.org/ Transparency Internationalhttp://www.transparency.org/cpi2012 CIA factbookhttps://www.cia.gov/library/publications/the-world-factbook/ Cofacehttp://coface.com/ IMFhttp://www.imf.org/external/data.htm

11. Appendix - Definitions Gross domestic product, constant prices (Percent change) Annual percentages of constant price GDP are year-on-year changes; the base year is country-specific. Expenditure-based GDP is total final expenditures at purchasers’ prices (including the f.o.b. value of exports of goods and services), less the f.o.b. value of imports of goods and services. [SNA 1993] Inflation, average consumer prices (Percent change) Annual percentages of average consumer prices are year-on-year changes. Unemployment rate (Percent of total labor force) Unemployment rate can be defined by either the national definition, the ILO harmonized definition, or the OECD harmonized definition. The OECD harmonized unemployment rate gives the number of unemployed persons as a percentage of the labor force (the total number of people employed plus unemployed). Current account balance (Percent of GDP) Current account is all transactions other than those in financial and capital items. The major classifications are goods and services, income and current transfers. The focus of the BOP is on transactions (between an economy and the rest of the world) in goods, services, and income. The current account balance is defined by the sum of the value of imports of goods and services plus net returns on investments abroad, minus the value of exports of goods and services, where all these elements are measured in the domestic currency. GNI Index (GNI per capita, Atlas method current US$) GNI per capita (formerly GNP per capita) is the gross national income, converted to U.S. dollars using the World Bank Atlas method, divided by the midyear population. GNI is the sum of value added by all resident producers plus any product taxes (less subsidies) not included in the valuation of output plus net receipts of primary income (compensation of employees and property income) from abroad