The Cornerstone investment proposition

17th of November, 2005

Introduction

In September 2005, the Minister of Finance in the company of the Commissioner of Insurance announcednew capitalization requirements for insurance companies.

The capital requirements for insurance companies are:

1. Life insurance companies $14Million

2. Non-life-underwriting companies $21Million3. Composite insurance companies

$35Million4. Reinsurance companies

$75Million

The re-capitalisation process is meant to:

Achieve consolidation of the insurance industry

Raise the entry barrierCreate mega players

What are the implications?

Fewer but mega playersIncreased demand for higher returnsShareholding dilutionBoard and management restructuringResource rationalizationChallenges of integrationMarket development

and theopportunities?

Repositioning for competitive advantageAcquisition of necessary skill and

competence Increase in the value proposition delivery

options or capacityFast track achievement of long-term

corporate strategic objectives

Introducing Cornerstone Insurance

Cornerstone Insurance is a composite insurance firm established in 1991 by agroup of visionaries to change the wayinsurance is practiced in Nigeria.

From inception, our focus was on the delivery of excellent insurance services with an emphasis on people and adding value.

Our clients

South Africaninvestment in theNigerian insuranceindustry

There is significant South African investment in the following sectors of the Nigerian market:

Financial

Telecoms/Internet Service Providers

Food

Entertainment

Airlines

Hospitality

Retail

Insurance:

Cornerstone provides a prime opportunity forSouth African investment in the Nigerianinsurance industry.

The major plus here is first mover advantage.

The Cornerstone Investment Proposition

There are 4 key elements that investors typically look out for when considering aninvestment in an insurance company.

We have dubbed these elements: The 4 Pillars of Enduring Insurance Companies

Therefore, it is with the aforementioned in mind that our presentation is divided into 4 major sections.

Stability

Good financials

Brand reputation

Future outlook

1. Stability

Cornerstone’s stability lies in its depth of leadership, professional skillsand its strong set of values.

Management & Board

The present management has its roots in the Late Tunji Ogunkanmi* led management team

The team comprises visionary, enterprising and highly motivated young men and women.

An active board provides strength and support to Cornerstone’s management

* Pioneering CEO

Board of DirectorsMr. Ambrose Feese - CHAIRMAN(FCCA, FCA)

Mr. Richard Ikiebe - VICE CHAIRMAN(B.Sc. Hons, M.Sc)

Mrs Funmi Babington- Ashaye - MANAGING DIRECTOR/ CEO(MBA,, FCII London)

Engr. (Dr.) Barnabas Gemade – DIRECTOR(B.Sc. Hons., FSNC)

Alhaji Hussaini Abdulrahman - DIRECTOR(LLB., BL)

– Mr. Peter Ameadaji - ALTERNATE DIRECTOR

(LLB., BL, MBA)

– Mr. Dapo Egbeyemi - DIRECTOR (B. Sc. Hons.)

– Mrs Abiodun Ogunkanmi - DIRECTOR (B. Sc. Hons., ACIS)

– Vice Admiral Okhai M. Akhigbe - DIRECTOR (LLB, BL, LLM) GCON, mni

– Mr. Ayodeji Bankole-Olusina - EXECUTIVE DIRECTOR

(MBA,)

EXECUTIVE MANAGEMENT TEAM Mrs. Funmi Babington- Ashaye - Managing Director/CEO (MBA, FCII London)

Mr. Ayodeji Bankole-Olusina - Executive Director (MBA,)

Dominic Ichaba - Company Secretary/Legal Adviser

LLB, BL, M.B.A., ACS Tayo Ajibulu - Deputy General Manager LLB (Hons) BL., MBA (Marketing)

Soji Emiola Deputy General Manager, - Business Network Group MBA, ACII

Core values

Our organisation is built on a foundation of:Integrity, Empathy, Professionalism, Creativity and Innovation, Team Spirit.

This has preserved the integrity of ourbrand over time.

2. Good financials

The mathematics of 4

Our statistics paint pictures:

GiraffeHorse

Tiger Camel

Short term investments enable a company meet its current liabilities and connotes liquidity

Like the giraffe, which stands taller thanother animals, Cornerstone has the benefit of a broader view. Our investments are based on skill, experience and discernment.

Long term investments are a major source of income for the company and its shareholders

Like the Camel, which has the ability to sustain itself for long periods, Cornerstone is enduring and resilient

Fixed assets refer to property owned by an organization. They are the backbone of its operations

Like the tiger, which is noted for its speed and agility, Cornerstone exhibits dexterity and speed in product innovation and performance.

Profit after tax indicates the profitability and viability of a company

Like the horse which has the ability tomaintain its focus in chaoticenvironments, Cornerstone will continueto forge ahead and thrive in its markets

Other indicators

During its first year of operation, Cornerstone made profit and paid dividend to its shareholders

Cornerstone has consistently made returns for shareholders since 1992

Cornerstone went public after 5 years (creating wealth for others)

It is pertinent to state here that insurancecompanies that will survive the recapitalization exercise will have financial strength.

Our emphasis therefore is not only to meet the capital requirement but also to create value and strengthen other success factors.

Success Factors

Leadership strategic managementFinancial strengthSkill, people quality and CultureCustomer serviceRisk managementTechnology leverageNetwork reachAsset management skill

3. Brand reputation

In 14 years of existence, Cornerstone has established critical brand strength in the following areas:

The Cornerstone Insurance brand is arguably one of the top three brands in the insurance market.

Cornerstone has maintained a high level of corporate governance & ethical standards.

Cornerstone has a polarized share holding structure, making it a highly democratized brand.

Cornerstone is a brand truly focused on the customer and service.

In the aftermath of the January 27, 2002,Ikeja cantonment bomb blast in Lagos, Cornerstone was the first insurancecompany to settle claims.

Awards and accolades

Cornerstone is the first Nigerian insurance company to be rated by AIO’S Standard and Poor’s Financial Services Ratings, London.

Cornerstone has also been the recipient of a series of awards:

1995 – Chartered Insurance Institute of Nigeria (CIIN) Merit Award.

1997 – Nigerian Insurers Association (NIA) Distinguished Insurer of the Year Award.

1999 – NAICOM Award for Design and Development of New Products.

2002 – The Nigerian Stock Exchange 25th President’s Merit Award in the Insurance Group.

4. Future outlook

Having achieved a stable status, strong brand name and financial track record within a 14 year time frame, Cornerstonehas set its gaze on:

COFU 2010

COFU 2010

COFU 2010 are growth objectives and strategic imperatives to position Cornerstone to take advantage of emerging opportunities. They are:

Attain #3 position by 2008 and #1 position by 2010 in the insurance industry

Attain premium income market share of 7.5%

Increase capital (shareholder’s funds) to $35Million by 2006 and $57Million by 2010

Create effective and unparalleled visibility of the Cornerstone brand to increase brand equity

Identify and explore alternative business channels that will ensure 100% direct premium collection

Drive and position life business to contribute at least 50% of premium income by 2010

Underwrite 270,000 policies by 2007 and 601,796 policies by 2010 with an average premium of N20,000

Achieve 90% retention ratio of existing business portfolio

Leverage on technology and improve turnaround by 50%

Each of the foregoing objectivesunderscores our corporate vision, which is:

“The first choice financial servicesprovider of global standard”

Discriminating Competencies

To achieve our vision, we will leverage onthe following discriminating competencies:

Relationship management Innovation Alliance management Risk management Financial strength/capacity

Our Asset Management capability will also be a key resource and will serve as an additional success factor in the post-consolidation era.

Consolidationstrategies

Proposed strategies for Cornerstone’scapitalization and consolidation are as follows:

Consolidation strategies

1. Public offer Cornerstone will make an offer to the general public, existing shareholders, specific and institutional investors

2. Capitalization (bonus issue)The share premium arising from the public offer and profit realized during the year may be capitalized to further strengthen the capital base of Cornerstone Insurance

3. Mergers and acquisitionsThis will be pursued simultaneously with the offer. Merger and acquisition talks with specific qualifying partners immediately

4. Re-branding/brand re-launchThis process will commence after the post consolidation phase

Timeline

Time line for proposed strategies are:

1. Public offer (Nov 2005 - Feb 2006)

2. Mergers and acquisitions (Sept 2005 - May 2006)

3. Re-branding/brand re-launch (Feb 2005 - June 2006)

*Please note that the timeline includes the initiation and execution phases of each task.

Conclusion

Cornerstone has embarked on a significant journey, having worked out plans and strategies not only to achieve N5 billion capitalization but to position the company as the undisputed leader in the provision of excellent service to clients.

This is with a view to preserving the essenceof the Cornerstone Insurance brand:

Cornerstone’s Brand Essence

At Cornerstone:

We are dependable. We give hope, peace of mind and ensure the future.

Thank You.