Content · billion. Our firm, in 2011, the annual premium increases by 2.78%. And have the annual total of 14.17 million baht. But, firm has other indirect income from the rental

Bangkok Union Insurance Public Company Limited Annual Report 2011 Page 1

Content

1. Report of the Board of Director 2

2. Report from the Audit Committee 3

3. Report from the Nomination and Remuneration Committee 5

4. General Information 7

5. Risk Factors 9

6. Related Party Transaction 11

7. Financial Information 12

8. Nature of Business 13

9. The Shareholders and Management 16

10. Explanation and Analysis of Financial Status and Performance 29

11. Report of Independent Auditor 33

12. Financial Statements 34


Report of the Board of Director

To: The shareholders

In 2011, Thailand economic growth is reduced from the last year. The economic is influenced by two main causes: (i) Japan Tsunami in March and (ii) Thailand Flood in 3rd quarter subsequent to 4th quarter. This catastrophe reduces Thailand industry both direct effect (loss of productivity) and indirect effect (reduce of demand and exporting).

Although, there are low expansion of economic in Thailand on last year, this situation does not reduce the growth of insurance company significantly. The economical analysis of IPRB says that insurance growth in 2011 is about 11.87%; in which, there are total of 140 billion. Our firm, in 2011, the annual premium increases by 2.78%. And have the annual total of 14.17 million baht. But, firm has other indirect income from the rental cost of building. Thus, there are total profits 5.86 million.

The trend of insurance in 2012, IPRB forecast that the industries will growth about 9.66%. This increase caused by the demand incremental by flood in 2554. Vise versa, the insurer need to adjust the insured criteria and increase premium rate of flood insurance. Basically, the premium increase.

With will power of service and unity of officer, those will lead the company made the profit significantly. Also, shareholder will be paid high rate of return. Customer will be satisfied by the service, responsibility and fairness including gain of company goodwill. We want to thank every officer including agency, insuring, shareholder and broker that trusting and supporting our product and service, all the time.

(Mr.Manu Leopairote) Chairman of the Board of Director


Report from the Audit Committee

To: The shareholders

The Audit Committee is appointed by the Board of Director dated May 12th, 2011 and it is composed of four directors with all qualification and experience in accounting and human resources, all of them are independent director.

1. Mr. Thavich Taechanavakul Chairman of the Audit Committee 2. Asso. Prof. Pramom Kowinwipat Audit Committee 3. Mr. Pichit Sinpatanasakul Audit Committee 4. Mr. Soontorn Konantakiat Audit Committee

During Y2011, the audit committee has carried out their duty according to company’s charter by the approval of company’s committee. Thereby, the audit committee would like to report the audit result. In Y2011, the audit committee has had the meeting for 4 times in order to make consideration on many matters with the issues and main points as following;

1. To consider financial budget by quarter and financial budget for fiscal year 2011, and other related financial reports including counterchecking the list, the list among shareholders and concerned companies. This is for confiding that the occurred transactions are the list from normal business operation, no profit transfer among stakeholders to protect company and shareholder’s benefits.

2. To countercheck for internal well-control system. There should be the suitable and effective internal audit, explicit overall operation including having risk management. It is to check the result of internal audit for Y2010 and consider the plan of internal audit for Y2011 in order that the audit plan can cover all significant issues including to develop inter auditors in continuity.

3. To countercheck for maintaining law force, the regulation of SET and all relative laws in Insurance business in accurate manner and in conformity with the good corporate governance with being revealed accuracy financial information and reports.

4. The audit committee confers for the freedom of CPA auditors and they get confirmation that the CPA auditors have freedom in auditing and get good cooperation from the company.

5. To consider appointing to Dharmniti Auditing Co., Ltd. as the auditing company for Y2012. Auditors are Mr. Poj Aswasuntichai with license no.4891, Ms. Chantra Wongsriudomporn with license no.4996, Mr. Tanawut Pibulsawat with license no.6699, and Ms. Wannisa Ngambuathong with license No.6838. due to;

- Professional in Auditing, good standard and performance.


- No conflicts of interest so that they should give comments on Company’s financial statements without any forces.

The annual compensation for audit is Baht 845,000.00. For the evaluation fee of internal control system by CPA of Insurance Company in Y2012, it is Baht 140,000.00, totally Baht 985,000.00 to Board of Director for proposing to the meeting of shareholder.

In the previous year, The Audit Committee draws a conclusion that the company’s director and management are in line with good corporate governance and have a willing to keep their accountability to obtain the company’s goals with all requirements based on generally-certified accounting principles. The information has been exposed in between as well as the lists that cause the conflicts on benefit. There should also have the internal control system, the conduct owing to the regulation of SET and the relative laws in accuracy and completion apart from the appropriateness to the business condition.

Mr. Tavich Taychanavakul Chairman of the Audit Committee


Report from the Nomination and Remuneration Committee

To the Board of Directors and Shareholders of Bangkok Union Insurance Public Company Limited

The Nomination and Remuneration Committee, Bangkok Union Insurance Public Company Limited has been appointed by Company’s Committee comprising three committees who are non-authorized management and every committee is independent with the names as followed;

1. Associate Professor, Pranom Kowinwipat, Chairman of The Nomination and Remuneration Committee

2. Mr.Soonthon Konantakiat, Committee of The Nomination and Remuneration Committee

3. Mr.Pichit Sinpatanasakul, Committee of The Nomination and Remuneration Committee

The Nomination and Remuneration Committee has duty as followings;

1. To select the qualified person to take the position of Company’s Committee with regards to all the qualification according to the Act of Public Company B.E.2535 and having leadership, vision, virtue, morality and having knowledge, capability, experience and good working history that is beneficial to the company’s business operation, being the person to pay attention to the company’s undertaking and can devote sufficient time to the company. Besides, it has to consider a number of committees that are suitable for the change of business circumstances for good business management.

2. To consider the compensation to the committees relaying on international standard which been considered the suitable responsibility and accountability and also laying the standard that is using the same comparative standard of compensation rate of other Non-Insurance Companies in SET and in the same Industry including the similar size business in domestic and overseas by considering the company’s status and turnover at most.

For B.E.2555, The Nomination and Remuneration Committee has considered the adjustment of compensation regarding the duty and insurance business in SET. However, it is not exceeding to BHT 2, 000,000 same as B.E.2554.

There are 5 committees exempting from the position as obliged in B.E.2555 as followings ; 1. Mr. Thavich Taechanavakul Chairman of the Audit Committee

2. Mr. Pichit Sinpatanasakul Audit Committee Member/ Nomination and Remuneration Committee Member/ Independent Director

3. Mr. Kitcha Leelavanichkul Executive Director


4. Dr. Chavin Iamsopana Audit Committee Member/ Nomination and Remuneration Committee Member/ Independent Director

5. Ms. Sujintana Champeesri Executive Director

The Nomination and Remuneration Committee has considered 5 committees who could return to continue being the committee for another period because they have the qualification, knowledge, capability and experience in the business related to the company’s operation that can develop the company well to propose to Company’s Committees then Shareholders Meeting. In which, the committee on the meeting has no hidden agenda from the result.

The board is considered to have the appropriate ratio and also the professionals on various field which responding to the firm strategy. Also, increase the value of the firm and share holder significantly. Thus, we represent Mr. Prachai Leawpairat which has all qualification, as the board on 2012. And already accept already.

Associate Professor, Pranom Kowinwipat Chairman of the Nomination and Remuneration Committee


General Information

Name Bangkok Union Insurance Public Company Limited

Type of business Non-Life Insurance

Head Office 175 – 177 Bangkok Union Insurance Building, Surawonge, Bangrak, Bangkok 10500

Tel : 0-2233-6920-9, 0-2238-4111 Fax : 0-2237-1856 Website http://www.bui.co.th/ E-mail : bui @ bui.co.th

Branch Offices :

1. Nakornsawan Branch 36/13-14 Kositai Road, Tumbol Paknampo Amphur Muang, Nakorsawan 60000 Tel : 0-5633-1885-7 Fax : 0-5622-7098

2. Amphur Klongluang Branch 25-27 Moo 12, Phaholyothin Road, Tumbol Kolngneung, Amphur Klongluang, Phatumthani 12120

Tel : 0-2529-0963, 0-2529-1615 Fax : 0-2529-3082

3. Chonburi Branch 192/3 Moo 1 Sukhumvit Road, Tumbol Klongtumru Amphur muang, Chonburi 20000

Tel : 0-3827-8440, 0-3827-8441 Fax : 0-3827-8441

4. Suratthani Branch 182/100 Moo 2 Surath-Punpin Road, Tumbol Makhamtia Amphur Muang, Suratthani 84000

Tel : 0-7722-0159, 0-7722-0149 Fax : 0-7722-0149

Sub branch:

1. Lampang 199/2 Moo 13 Lampang-Ngao Road, Tumbol Pichai, Amphur Muang, Lampang 52000

Tel. 0-5438-2847

2. Trang 2/11 Lak-Jan Road, Tumbol Thap Thiang, Amphur Muang, Trang 92000

Tel. 0-7521-7770-1

3. Ko Yo 618/2 Moo2 Tumbol pavong, Amphur Muang,

Songkhla 90100

Tel.0-7433-4128-9

Paid Capital Baht 200,000,000 (Two hundred Million Baht)


Type of Shares Common Shares : 20,000,000, Valued at Baht 10 per share

Ordinary Shares Registrar Securities Depository (Thailand) Co.,Ltd. 62 Rachadapisek Road, Klongton, Klongtoey, Bangkok 10110 Tel : 0-2359-1200-01 Fax : 0-2359-1259

Auditor 2009-2010 Mr Pichai Dachanapirom Dharmniti Auditing Co.,ltd.

267/1 Pracharaj Sai 1 Road, Bangsue Bangkok 10800 G.P.O.Box 1047 Bangkok 10501 Thailand Tel : (66) 0-2587-8080 Fax : 66) 0-2586-0301

E-mail : pichai@ dharmniti.com

Auditor 2011 Mr Pojana Asavasontichai Dharmniti Auditing Co.,ltd.

267/1 Pracharaj Sai 1 Road, Bangsue Bangkok 10800 G.P.O.Box 1047 Bangkok 10501 Thailand Tel : (66) 0-2587-8080 Fax : 66) 0-2586-0301 E-mail : pojana @ dharmniti.com


Risk factors Risk factors and risk management

The company has managed the risk based on the system of international standards by focusing on loss reduction of the assets in the organization, including the image and reputation of the company under the suitable expenses, which shows efficiency, effectiveness, honesty, and can be examined in order to increase the value of the products, insured and value of the organization.

To manage risks is a part of the company’s plan in every organization. It is the responsibility of top executives or team management of the organization to report this to the president monthly.

To develop risk management continuously in order to meet the objectives and the purpose of the company by responding to changes in the environment.

To follow up, assess, revise and adjust risk management plans continuously.

The important risks of the company, including the related risk factors and the risk management for each item can be summarized as follows:

1. Strategic Risk

Strategic Risk means the risks which may arise from determination of the policies, strategies, business plan, intense competition of the insurance industry and implementation improperly or inconsistently with the internal factors and the external environment. All of which unavoidably impact the policy and strategic determination in business operations.

2. Insurance Risk

Insurance Risk which may arise from the underwriting of the company which affects indemnity, cash flow that the company has forecasted in order to follow the regulation of the OIC related to Risk base Capital or RBC that the company has considered. The consequences of underwriting consideration are as follows:

2.1. Inadequacy of the premium rate compared to the indemnity that the company has to pay or the error in calculation of premium rate.

2.2. The record of indemnity is too low or there is no record at all.

2.3. The obligation of the contract with indemnity.

2.4. The fluctuation of indemnity and premium rate.

3. Liquidity Risk

Liquidity Risk means the risks which may arise from the company’s inability to pay the debt or obligation which becomes due, because of the inability to convert the assets into cash or cannot obtain adequate capital or can obtain the required capital but at the higher cost to be acceptable which doesn’t match with Risk base Capital (RBC) of the OIC, are as follows:


3.1. The amount of capital assets in each type.

3.2. The limitation of the investments in the market.

3.3. The over-possession in the assets.

3.4. The investment in foreign currency.

4. Operational Risk

Operational risk means the risks which may arise from the failure, inadequacy or insatiability of the staff, internal processes or from the external factors.

The important strategic risk factors of the company are the corporate culture, the structure of the organization, the determination of indemnity, underwriting, product design, premium rate, re-insurance and all the equipments in the company.

5. Market Risk

Market Risk means the risks which may arise from the change in the market price of the invested assets, interest rate, exchange rate, equity price, commodity price, economic recession, and the competition in premium rate of insurance business, to relate and match with the effect of capital required per the Risk-Based Capital Supervision which is expected to be implemented in 2011.

5.1. The movement of interest rate and equity price.

5.2. The reduction in commodity price.

5.3. The change in the SET index.

5.4. The fluctuation of exchange rate.

5.5. The change in equity price

5.6. The fluctuation of commodity price.

6. Credit Risk

Credit risk means the risks which may arise from the counterparties that cannot comply with the agreed obligations with the company, including the opportunity which the counterparties may be downgraded on their trustworthiness. As per Risk base Capital which criteria stipulated by the OIC, the important credit risk factors of the company are as follows:

6.1. The inability of spreading the risk in re-insurance business.

6.2. The agreed obligation of the insured with the company contract.

6.3. The insured do not remit the premium to the company.

6.4. The mortgage securities or collateral by the criteria stipulated by the company.

6.5. The exceed amount of money assurance from reinsures.


Related Party Transactions

1. Characteristic Transaction

During a year period, the company had related transaction in a from of shareholders and / or share member of board – that were consistent basis operation of which based on the highest benefit for the company itself and at the same time strictly comply with the regulation of the business supervised by the Department of Insurance. The related transaction incurred were insurance premium of the related companies which the insurance cover and premium rate are as follows:

Unit : Thousand Baht

Transaction 2011 2010

Premium written 152,450 131,972

Rental and service income 5,230 5,503

2. Necessity and Reason of Related Transaction

The related business transactions supported the operation of the company including keep and extend our customer groups. The insurance premiums provided to customers were approved and comply with the regulation and condition of Department of Insurance. Besides, the company also had internal control and supervision system to ensure to efficiency of the operation.

3. Standard of Approval Process of Related Transaction

In Term of limitation of coverage and insurance premium, the underwriter will carefully underwrite by considering on the particular risks including property survey, The approval of each steps were compliance with both company’s regulation and Department of Insurance.

4. Related Transaction Policy in future

The company will operate business with related companies by necessity and reason explained as the above and would run the business with honesty to customers, business partners and shareholders and maintain every benefit of company as our priority.


Financial Information

Unit : million Baht

2011 2010 2009 2008 2007

(restated)

Operation Results

Total Gross Premium 698.37 677.70 494.19 425.07 371.59

Net Premium Written 431.28 454.97 285.03 240.81 214.51

Underwriting Income 436.18 403.63 253.95 230.69 221.64

Loss Incurred and Loss adjustment

expenses– normal operation 158.80 176.66 95.85 94.81 102.46

Loss Incurred and Loss adjustment

expenses – severe flooding in Thailand 65.04 - - - -

Underwriting Expenses 344.26 293.60 166.27 105.65 116.47

Income on Underwriting 91.92 111.03 87.68 125.04 105.18

Income on Investments 15.33 12.39 15.69 18.17 19.26

Other Income 68.96 67.29 65.87 64.19 59.47

Gains (losses) on securities trading 7.73 (0.42) (3.79) (7.91) 25.62

Total Income 790.39 756.96 571.96 499.52 475.94

Operating expenses 209.64 186.82 160.29 165.21 173.82

Net Income 5.86 28.04 27.98 22.81 23.32

Financial Status

Total Assets 2,116.10 1,184.96 1,045.69 954.48 1,090.42

Total Liabilities 1,532.37 578.01 499.48 484.30 524.44

Shareholder’s Equity 583.73 606.95 546.20 470.18 565.98

Financial Ratio

Ratio between Income on Underwriting

to premium Written (%) 33.10 39.75 52.75 51.92

49.03

Ratio between Net Profit to Total

Income (%) 0.74 3.70 4.40 4.57 4.90

Loss Ratio (%) 51.32 40.09 32.00 41.10 46.31

Return on Assets (%) 0.28 2.55 2.56 2.39 2.14

Return on Equity (%) 1.00 4.62 4.58 4.85 4.12

Pay-out Ratio (%) - 57.06 59.91 61.38 60.04

Net Profit per share (Baht) 0.29 1.40 1.25 1.14 1.17

Book Value per share (Baht) 29.19 30.35 27.31 23.51 28.30

Dividends per share (Baht) - 0.80 0.75 0.70 0.70


Nature of Business

Nature of Product or Service

Bangkok Union Insurance Public Company Limited has two businesses, first is non-life insurance business, and second is rental and services business in two Buildings (BUI 1 and BUI 2).

For insurance Business, the company providing to both Corporate and Consumer Clients through a diversified range of tailored products such as fire, marine, automobile, miscellaneous insurance and reinsurance etc. of which cover the specific requirements and economic background of each insured. The summaries of our basic insurance polices are as follows:

1. Fire Insurance

Provide cover for losses or damages to insured properties i.e. buildings, goods in stock, furniture etc. that caused by fire, lightning and explosion.

2. Marine Insurance

Provide cover for losses or damage to insured goods transported and delivered by sea, land and air, the storage of these goods and the means by which they moved. It covers the hulls of large cargo ships down to private pleasure, all classes of aviation insurance and cargo policies of various types.

3. Motor Insurance

Provide protection for loss or damage to the insured vehicles and its accessories resulting from fire, theft, malicious and accidental damage as well as cover for third party liability; body injury and / or property damage. The automobile insurance is divided to 2 types:

1. Compulsory: According to Act of Protection for Automobile Victims B. E. 2535 2. Voluntary: The insurance covers are varied from type 1, 2 and 3 depending on

car owner decision.

4. Miscellaneous Insurance

Provide cover for other losses or damages excluded from the above lists such as personal Accident, Health, travel accident, liabilities to third parties, construction and installation, industrial all risks etc.

Industry environment trends and future competitive outlook

1. Industry Competitiveness

From the economical report form Office of the National Economic and Social Development Board (NESDB) conclusion, Thai economist in 2011 was expanded about 0.1% due to flood catastrophe damaging the asset and productivity equipment. The damage total is estimated, at 2011, as 328 billion baht. Inflation is 3.8%. Consumption rate is increased by


1.3%. Investment rate is increased by 3.8%. The exporting in Dollar currency is expanded by 16.4%. The domestic account balance exceed 12 billion Dollars (about 3.4% of GDP)

In 2012, Thailand economic have trend to expand widely due to the increasing overall demand and recovery from the last year. In which the factors those support the expansion are:

Structuring Increment: The increments are included the building reparation of the damaged structure and the protection structure such as the water gate or wall.

Instantly Recovery Industry: This consist of (i) Traveling, (ii) Exporting, (iii) Unemployment and (iv) Industrial Productivity.

Increase of Overall Income: This scheme is caused by the government renovation of salary structure. For example, increase the minimum wage and the new graduated.

Reduction of Interest Rate: From the pressure that reduces the inflation, the interest trend to be reduced. The low of interest rate basically increase the rate of investment.

From the evidence of expansion forecasting in 2012, there consist of some risk and limitation which being shown below.

Catastrophe: If the catastrophe is occurred subsequently from the last year, government payment will be surely increased significantly. This situation affects the stability of Thailand and reduces the Confidence of foreign investor.

Retarding of World Economist: Especially the Europe, the high publicly dept lead to reduce of government payment. In addition, this effect is again retard by the poor productivity and high unemployment rate.

Instability of Currency Market: This effect is caused by (i) the unstable of overall economic, especially the Europe and (ii) the significant increase of money supply by the overall government that can lead to the inflation.

Significant Increase of Oil Price Decrease of Agriculture Goods Price: From the decrease of overall demand,

retarding economic will limit the exporting the of agriculture goods. Low Expansion in First Quarter: The industry locating in high severity from flood,

need more time (than others) to recover the factory and office. In which, this will reduce the exporting rate in the first quarter.

Increase of Unemployment Rate: Due to the government policy of increase the salary, this lead to the high unemployment rate. Also, this can lead to the relocation of factory and building. The un-cleared of the overall policy can lead to the illegal labor.

Forecasting Economic in 2012

We forecast that Thai economic will expand about 5.5 – 6.5%, explicitly from the last year expansion of 0.1%. The inflation would be 3.5 – 4.0%. Domestic account balance would exceed the breakeven by 1.2% of GDP.

Although, in the 2011 Thai economic expand only 0.1% by flood and Japan Tsunami, there are no significant effect on the insurance industry. In which, in 2011, the insurance industry grow about 11.87% by amount of 140 billion.


From the economical analysis, the insurance industry in 2012 retains the appropriate growth. IPRB forecast the growth about 9.66% due to the increment of vehicle after the Tsunami period (reducing the supply). The property insurance has increase the premium since the flood catastrophe is occurred. The reinsurance also increases the premium and constrains more criteria. The consumer demand of insurance is increased. From those effects, every insurance company should adjust themselves to the appropriate position. Especially they should hedging against the flood catastrophe which teaching them last year.

2. Market Shares

In 2011, The Research and Statistical and Information Technology Department of the Office of Insurance Commission summarized that there were 41.98 million insurance policies with the sum insured of 68.52 billion Baht and the premium of 139,834 million Baht which has been collected from the customers directly. This showed that the growth rate of insurance policy has increased by 11.60 percent and 10.40 percent of sum insure and 11.87 percent of the premium.

The company has sold the insurance policies in the total of 314,628 policies in 2011 with the sum insure of 383,664 million Baht and direct premium total was 672.83 million Baht.

The growth rate of the insurance policy was 5.63 percent, decreased in sum insure by 11.14 percent and 2.78 percent of growth rate-gross premium. Therefore, the market share in 2011 was calculated by 0.48 percent which was lower compared to last year with 0.52 percent.

The market shares of Bangkok Union Insurance Public Co., Ltd. in non-life insurance industry = 0.48 percent. and ranking: 40, that divided by type or core products were as follows

1. Fire Insurance Market Share: 1.24 percent. 2. Miscellaneous Insurance Market Share: 0.56 percent. 3. Marine Insurance Market Share: 0.49 percent. 4. Motor Insurance Market Share: 0.36 percent.

Source: Written Premium January – December 2011, Office of Insurance Commission

Income Structure Unit : Baht

2011 2010 2009 Table of Income Amount Size % Diff Amount Size % Diff Amount Size % Diff

Premium Written Fire 114,983,588 14.55 1.70 113,066,925 14.94 13.61 99,520,830 17.49 (11.18) Marine 23,456,907 2.97 (4.82) 24,644,983 3.26 11.22 22,159,043 3.89 (19.23) Motor 301,905,170 38.20 (5.81) 320,538,699 42.35 84.51 173,727,001 30.53 41.89 Miscellaneous 258,022,988 32.65 17.58 219,449,921 28.99 10.40 198,779,136 34.93 21.84 Total Premium Written 698,368,653 88.36 3.05 677,700,528 89.53 37.13 494,186,010 86.85 16.26

Other Income 92,015,817 11.64 16.10 79,256,200 10.47 5.92 74,829,657 13.15 0.51 Total Income 790,384,470 100.00 4.42 756,956,728 100.00 33.03 569,015,667 100.00 13.91


The Shareholders and Management

1. Shares holders

The top-ten major shareholders as at December 30, 2011, are as follow :- (Report from Securities Depository (Thailand) Co., Ltd.) No. Name of Shareholders Amount Percentage 1 Liewpairat Enterprises Co., Ltd. 5,164,830 25.82 2 BUI Life Insurance Co., Ltd. 1,837,500 9.19 3 Hong Yiah Seng Real Estates and Investment Co., Ltd. 1,598,220 7.99 4 Mr. Sukit kamolsiriwat 880,000 4.40 5 Mr. Prachai Leophairatana 810,000 4.05 6 Ms. Malinee Leopairat 763,052 3.82 7 Dr. Chavin Iamsopana 472,650 2.36 8 Ms. Tanyaratt Iamsopana 313,554 1.57 9 Bangkok Union Broker Co., Ltd. 277,695 1.39 10 Ms. Maneeratt Iamsopana 272,273 1.36

2. Management

Management Structure Board of Directors

1. Mr. Manu Leopairote 2. Mr. Chainarong Taepaisitpong 3. Mr. Prateep Leophairatana 4. Mr. Tavich Taychanavakul 5. Assoc. Prof. Pranom Kowinwipat 6. Mr. Soonthorn Konuntakiet 7. Mr. Pichit Sinpatanasakul 8. Ms. Malinee Leophairatana 9. Ms. Tanyaratt Iamsopana 10. Mr. Kitcha Leelavanichkul 11. Dr. Chavin Iamsopana 12. Mr. Pong Laowarawit 13. Ms. Sujintana Champeesri

Chairman / Independent Director First Vice Chairman / Director Second Vice Chairman / Director Director / Independent Director Director / Independent Director Director / Independent Director Director / Independent Director Chairman of Executive Director Managing Director Director Director Director Director / Secretary Company

Executive Board

1. Ms. Malinee Leophairatana 2. Mr. Chainarong Taepaisitpong 3. Mr. Prateep Leophairatana 4. Mr. Kitcha Leelavanichkul 5. Dr. Chavin Iamsopana 6. Ms. Tanyaratt Iamsopana 7. Mr. Pong Laowarawit 8. Ms. Sujintana Champeesri

Chairman Executive Director Executive Director Executive Director Executive Director Executive Director Executive Director Executive Director


Audit Committee

1. Mr. Tavich Taychanavakul 2. Assoc. Prof. Pranom Kowinwipat 3. Mr. Soonthorn Konuntakiet 4. Mr. Pichit Sinpatanasakul

Chairman Audit Committee Member Audit Committee Member Audit Committee Member

Nomination and Remuneration Committee

1. Assoc. Prof. Pranom Kowinwipat 2. Mr. Soonthorn Konuntakiet 3. Mr. Pichit Sinpatanasakul

Chairman Nomination and Remuneration Committee Member Nomination and Remuneration Committee Member

Leadership and Vision

The Board of Directors, consisting of directors who has expertise and strong experience in business operation, has participated in establishing policy, strategies, operating goals as a framework for the business operation. This is to ensure that management team can implement the company’s policy effectively and efficiently to create the economic values for the company and its shareholders. As the Board of Directors has realized the importance of the Good Corporate Governance, then the internal control system are established for the internal audit supervised by the Audit Committee to ensure the appropriation and the effectiveness of the system. There is a continuous monitor on this issue in the Board of Directors’ Meeting.

The authority of the Board of Directors

1. The Board of Directors has the authority as followed;

1.1 To control and manage the company to be conformed to the laws, the objectives, regulation and consensus of shareholder’s meeting

1.2 To have the power to appoint one committee to be the chairman and appoint another committee or many committees to be vice chairman upon the situation

1.3 To appoint the administrative committee to conduct the business according to the committee’s determination

1.4 To determine and make amendment for the persons who can have the authorized signature on behalf of company

1.5 To fix the dividend for shareholders during the period of time

1.6 To appoint or demote the company’s employee; this power can be assigned to any directors or many directors of company

1.7 To fix the date to pay bonus, reward to company’s employees, workers or job-holders to the company and they can be permanent or temporary

2. The Board of Directors has the duty and accountability as followed;

2.1 To have the duty as company’s regulation which includes to control and operate the business in conformity with the law, the objectives and the company’s regulation and also the consensus of shareholder’s meeting


2.2 To view as proper for the policy, vision, mission, expected value and ethic in conducting the business

2.3 To consider and approve the strategies, business plan and annual budget and to follow up the operation and the execution of top management to run business in line with business plan and set budget in effectiveness

2.4 To determine the internal control system to continue effectively and arrange the risk management appropriately

2.5 To control the check-up from both internal auditors and external auditors to carry out their duty in effective manner

2.6 The committee has to hold 3 times of meeting per month

2.7 The committee has to arrange the meeting for shareholders. It is the ordinary meeting and it should be held within 4 months counting from the last day of company’s fiscal year. The other shareholder’s meeting is considered extraordinary or uncommon and it can be held at any time or upon the situation

2.8 The committee has to arrange the balanced sheet and Profit & Loss statement on the last day of company’s fiscal year in order to propose such information in the annual ordinary meeting of shareholders for their approval. The committee has to provide CPA auditors to conduct the audit before proposing to the meeting of shareholder

2.9 To pay the dividend at intervals to shareholders when the company can make the profit in a level. The paid dividend should be reported in the next meeting of shareholder

The definition of Independent Director

Independent Director means the Director with all qualification and has the independence to express their idea pertaining to the business direction, business operation in order to improve and develop the administration of organization in good corporate governance. There should have following qualifications;

1. To hold the shares not over 1 percent out of all shares that can vote for the whole of company, affiliates, joint ventures, or other juristic persons that are relative or have the conflicts and it also includes the shares held by the related persons

2. No involvement in the management of company, affiliates, joint ventures, or other related juristic persons, including not being employees, staffs, auditors, lawyers or advisors who obtain the salary from the company or being the authorized person or being a person to have any conflicts

3. Not being the person who has the same blood lineage or do legal registration with the executives, major shareholders, persons in authority or persons who are expected to be executives or authorized persons

4. No gain and loss from the company’s benefit for both direct or indirect ways in part of Finance and the management of affiliates, joint ventures, or other juristic persons that might have the conflict


5. No business relation with the company or being the person who might have the conflict in the manner of opposing the discretion

6. To express their idea independently concerning the work operation of company and their expression should not be under the control of executives or company’s major shareholders including other related persons or relatives. Besides, there should not have any influencing situation on their opinion.

Bangkok Union Insurance Public Company Limited has definition of Independent Directors which is equal to those defined by Securities and Exchange Commission and the Stock Exchange of Thailand. Executive Board

1. Ms. Malinee Leophairatana 2. Mr. Chainarong Taepaisitpong 3. Mr. Prateep Leophairatana 4. Mr. Kitcha Leelavanichkul 5. Dr. Chavin Iamsopana 6. Mr. Pong Laowarawit 7. Ms. Tanyaratt Iamsopana 8. Ms. Sujintana Champeesri

Chairman Executive Director Executive Director Executive Director Executive Director Executive Director Executive Director

Executive Director

The authority of Executive Board 1. To control the business operation based on company’s policy assigned by the

company’s committee

2. To scrutinize the issues that will be proposed to the committee for their consideration and approval

3. To run the company to get conformed to the laws, the objectives and the regulations and the consensus of shareholder’s meeting with the responsibility, the loyalty and the carefulness with regards to the utmost benefit of company, shareholders or person who have gain and loss in order to add the economics value of company

Audit Committee


Chairman Audit Committee Member Audit Committee Member Audit Committee Member

The authority of Audit Committee

1. To control and check up that the company has financial report which is reliable and accurate

2. To countercheck that the company has the suitable and effective internal control system and internal audit

3. To consider the selection and appointment CPA auditors


4. To manage the company to run the operation in conformity with the regulation and relative laws

5. To make report for the governance of audit committee in the company’s annual report

Audit Committee Meeting

In 2011 Audit Committee held 4 meetings. The attendance of these meetings by each of member can be summarized as follow:

Name Attendance (times) /Number of

Meeting (times)


4 / 4

4 / 4

4 / 4

4 / 4

Board of Directors’ Meeting

The Board of Directors must meet at least one time in three months period where its meeting dates must be on the first Thursday of the month. The ad-hoc meetings are call as necessary. Invitations to attend the Board of Directors’ Meeting must be delivered at least seven day prior to the meeting date together with adequate supporting information for the meeting. Generally, the meeting is last for two hours. In addition, the minutes of the meeting with all significant information are prepared and the previous minutes of meeting, approved by all of the directors, are also kept systematically for reference.

In 2011 The Board of Directors held 4 meetings. The attendance of these meetings by each of Directors can be summarized as follow:

Name Attendance (times) /Number of Meeting (times)

1. Mr. Manu Leopairote

2. Mr. Chainarong Taepaisitpong

3. Mr. Prateep Leophairatana

4. Mr. Tavich Taychanavakul

5. Assoc. Prof. Pranom Kowinwipat

6. Mr. Soonthorn Konuntakiet

7. Mr. Pichit Sinpatanasakul

8. Ms. Malinee Leophairatana

9. Mr. Kitcha Leelavanichkul

10. Dr. Chavin Iamsopana

11. Mr. Pong Laowarawit

12. Ms. Tanyaratt Iamsopana

13. Ms. Sujintana Champeesri

4 / 4

3 / 4

4 / 4

4 / 4

4 / 4

4 / 4

4 / 4

4 / 4

4 / 4

4 / 4

0 / 4

4 / 4

4 / 4


Board of Directors’ Reports

The Board of Director is responsible for the financial statement and financial information, which published, in the annual report. The company’s financial report has been prepared in accordance with the standard of general accepted accounting principles in Thailand. The Board also considers the appropriation of accounting policy to apply and ensure the consistent implementation of that policy. Moreover, the Board also uses the thorough judgment and good estimation in preparing such financial statement. The Board also provides adequate notes to financial statement.

Nomination and Remuneration Committee




Chairman

Nomination and Remuneration Committee Member

Nomination and Remuneration Committee Member

The authority of the Nomination and Remuneration committee

1. To determine the policy, the qualification and the selection way for searching the committee and top management

2. To set the criteria for selection which is in line with specified laws and company’s regulation

3. To select and propose the qualified persons to be in the position of committee and top management

4. To foster the company to have the company’s committee, this is appropriate with the organization including the adjustment to be suitable for changing environment. The company’s committee should be the persons with the knowledge, the capability and the various kinds of experience

Remarks: According to the section 68 in Public Company Act, it defines the qualification of the committee in Public Co. as followed; Section 68 The committee should be ordinary persons and

(1) Reach the one’s majority

(2) Not to be bankrupted person, incompetent person, or quasi-incompetent person

(3) Never be sentenced in prison by the final judgment to the last with the culpability concerning the money by corruption

(4) Never be penalized to get fired or dismissed from the government or the organization or the state agency by the allegation of corruption

Besides, the company determines that the committee to fix the compensation rate is the selecting committee to consider the compensation. The standard rate is referred to the compensation rate of the same line industry and similar size of organization including the overall operation of company to be considered as well. It should be considered before proposing to the meeting of shareholder for their approval.


In 2011 the Nomination and Remuneration Committee held 1 meeting. The attendance of these meetings by each of member can be summarized as follow:

Name Attendance (times) /Number of Meeting (times)




1 / 1

1 / 1

1 / 1

Balance of Power from Non-Management Directors

Board of Directors should consist of no fewer than 13 directors, of whom eight directors with management position and five directors who are non-management directors. Among the five non-management directors, there will be all independent directors (where their independence is based on the rules of the Stock Exchange of Thailand) or one-third of the directors. The four independent directors also perform as the Audit Committee, and the three independent directors also perform as the Nomination and Remuneration Committee.

Unification and Separation of the Significant Official Position

Chairman of the Board of Directors is the independent director. Duties of Chairman of the Board and Chief Executive Officer have been clearly separated where a policy is the two persons holding these two offices must not be the same. The recruitment and appointing persons to become the directors of the company do not go through the process of the recruit committee. However, the company has established the recruit guidelines for these positions in accordance with the rules and regulations of the company.

Management Team, as of December 31, 2011

1. Ms. Malinee Leopairat

2. Ms. Tanyaratt Iamsopana

3. Dr. Chavin Iamsopana

4. Mrs. Kobkul Wongsantimeth

5. Ms. Sujintana Champeesri

6. Ms. Sunee Khunavorathum

Chairman of Executive Director

Executive Director /Managing Director / Manager,

Marketing Department

Executive Director /Senior Manager , Claim

Department

Manager, Underwriting Department

Executive Director / Secretary Company /

Manager, Finance & Accountancy Department

Manager, Human Resources Department


Directors and Management Team

Name – Surname Mr. Manu Leopairote

Position Chairman, Independent Director Nationality Thai Age 68

Qualification Honorary Doctorate, Business Administration, Thammasat University

M.Sc. (Economics) University of Kentucky, U.S.A. B.S.C Economics (Honour) Thammasat University Certificate, Industrial Development, “Nagoya, Japan” National Defense College class 34 Certificate from Thai Institute of Directors Association

Directors Certification Program – DCP Class 30/2003 Role of Chairman –RCM Class 3/2001

Working Profile Current Position Member of the Council of State, group 5 (Trade and Industrial

Law), The Council of State. Chairman Thai Oil Power Co., Ltd. Chairman Khon Kaen Sugar Industry Plc. Chairman of the Audit Committee Siam Steel International Plc. Chairman / Chairman of the Audit Committee Polyplex (Thailand)

Plc. Past Experience Permanent Secretary, Ministry of Industry Director PTT Exploration and Production Public Company Limited Director, PTT Plc. Director General Ministry of Industry Chairman, PTT Plc. Chairman of the Cane and Sugar Board, Office of the Cane and

Sugar Board Director Thai Oil Plc. Chairman of the Executive Director, Neighboring Countries

Economic Development Cooperation Agency (Public Organization) : NEDA

Chairman Technonet Asia (Singapore) Director PTT Chemical Plc

Name - Surname Mr. Chainarong Taepaisitpong

Position First Vice Chairman Nationality Thai Age 70

Qualification MBA Syracuse University, U.S.A. Bachelor of Economics Thammasat University


Certificate from Thai Institute of Directors Association Directors Accreditation Program – DAP Class 19/2004

Working Profile Current Position Director TPI Holding Co., ltd. Director TPI Polene Public Co., Ltd. Deputy Managing Director Thanapornchai Co., Ltd. Managing Director Thai Patana Intertrade Co., Ltd. Director Betrago Co., Ltd.

Name - Surname Mr. Prateep Leophairatana

Position Second Vice Chairman Nationality Thai Age 65

Qualification M.S. (Engineering), Stanford University, U.S.A. Bachelor of Engineering, Chulalongkorn University National Defense College Government and Private Certificate from Thai Institute of Directors Association

Directors Accreditation Program – DAP Class 28/2004 Directors Certification Program – DCP Class 53/2005 Audit Committee Program – ACP Class 8/2005 Finance for Non Finance - FND Class 15/2005 Improving Board Decision Class 1/2005 Understanding the Fundamental of Finance Statements (UFS)

Class 1/2006 Chartered Director Class (CDC) Class 5/200

Working Profile Current Position Managing Director TPI Concrete Co., Ltd. Executive Director Union Grains Woven Bag Industry Co., Ltd. Executive Director Rangsit Pratumporn Housing Co., Ltd Managing Director TPI Polene Public Co., Ltd. Managing Director TPI Polene Power Co., Ltd. Director Tanapornchai Co., Ltd.

Name - Surname Mr. Tavich Taychanavakul

Position Chairman of the Audit Committee, Director, Independent Director Nationality Thai Age 62

Qualification Bachelor of Business Administration Kinki University Osaka Japan National Defense College Government and Private Class 366 Certificate from Thai Institute of Directors Association

Directors Accreditation Program – DAP Class 27/2004 Finance for Non Finance Directors - FND Class 30/2006

Working Profile Current Position


Chairman of Executive Board Hi-Tech Nissu Co., Ltd Chairman of Executive Board Ayudhaya Technical Training Center Secretary-General Thai Industrial Estates Association Managing Director Thai Industrial Estates Co., Ltd.

Name - Surname Assoc. Professor Pranom Kowinwipat

Position Independent Director, Audit Committee Member , Chairman of the Nomination and Remuneration Committee

Nationality Thai Age 69

Qualification Master of Business Administration (Accounting) Georgia State University, Atlanta, Georgia. U.S.A.

Bachelor of Commercial and Accounting Thammasat University Audit Committees in a New ERA of Government, Harvard Business

School, U.S.A. Certificate from Thai Institute of Directors Association

Directors Certification Program – DCP Class 12/2001 Role of Chairman –RCM Class 10/2004 Corporate Fraud Detection and Prevention Audit Committee Program (ACP) What the Board Should Do in a Downturn Situation

Working Profile Current Position Director, Audit Committee Member Thai Industrial Coating Plc. Consultants, Audit Committee Member The Bangchak Petroleum

Plc. Professor, Faculty of Accountancy and Management,

Mahasarakham University Past Experience Director, Audit Committee Member The Bangchak Petroleum Plc. Director The Office of National Education Standard and Quality

Assessment (Private Organization) ONESQA Director, Faculty of Commerce and Accountancy, Thammasat

University

Name - Surname Mr. Soonthon Konantakiat

Position Independent Director, Audit Committee Member, Nomination and Remuneration Committee Member


Qualification Business Administration University of Detroit, Michigan, U.S.A. Certificate from Thai Institute of Directors Association

Directors Accreditation Program – DAP Class 6/2003 Finance for Non Finance Directors - FND Class 12/2004 Understanding the Fundamental Statements –UFS Class 2/2006


Role of the Compensation Committee (RCC) Class 11/2010 Working Profile Current Position

Assistant, Marketing Manager Good World Intertrade Co.,Ltd. Past Experience Manager Sea Value Co.,Ltd.

Name - Surname Mr. Pichit Sinpatanasakul

Position Director, Audit committee Member , Nomination and Remuneration Committee Member, Independent Director


Qualification Master of Business Administration “Sasin College, Chulalongkorn University”

Bachelor of Business Administration “Boston University Massachusetts U.S.A.”

Certificate from Thai Institute of Directors Association Directors Accreditation Program – DAP Class 6/2003 Directors Certification Program – DCP Class 46/2004 Audit Committee Program - ACP Class 15/2006 Monitoring Fraud Risk Management Role of the Compensation Committee (RCC) Class 11/2010

Working Profile Current Position Director Bangkok Cotton Factory Co., Ltd.

Name - Surname Ms. Malinee Leopairat

Position Chairman of Executive Director


Qualification Master Degree in Actuarial Science, “Georgia University, U.S.A.” Bachelor of Commerce and Accounting Major in Statistics (Second

Honour), Chulalongkorn University Certificate from Thai Institute of Directors Association

Directors Certification Program – DCP Class 22/2002 Actuary, Certificate #78/2 Actuary, Certificate #18/2551

Working Profile Current Position Director Liewpariat Enterprises Co., Ltd. Director Thai Special Steel Industry Public Co., Ltd Director Bangkok Union Life Insurance Co., Ltd Past Experience Managing Director Bangkok Union Insurance Public Co., Ltd.

Name - Surname Mr. Kitcha Leelavanichkul

Position Director, Executive Director



Qualification Accounting, Bangkok Commercial College Working Profile Current Position

Manager Toa saeng Ltd. Managing Director Imperial Industry Co., Ltd.

Name - Surname Dr. Chavin Iamsopana

Position Director, Executive Director Nationality Thai Age 69

Qualification Doctor of Engineering, OSAKA CITY University, Japan. Master of Engineering and Bachelor of Engineering, Doshesa

University, Tokyo, Japan. Certificate from Thai Institute of Directors Association

Directors Certification Program – DAP Class 28/2004 Working Profile Current Position

Director TPI Polene Public Co., Ltd. Managing Director BUI Life Co., Ltd Director Union Grains Industry Co., Ltd. Chairman Thai Plastic Film Co., Ltd. Chairman Thai Plastic Product Co., Ltd.

Name - Surname Mr. Pong Laowarawit

Position Director, Executive Director Nationality Thai Age 78

Qualification Bachelor of Engineering University of California (Dawis), U.S.A. Working Profile Current Position

Managing Director Central Food product Co., Ltd.

Name - Surname Ms. Tanyaratt Iamsopana

Position Executive Director, Managing Director, Manager Marketing Department


Qualification Master of Engineering, Technical University Berlin, Germany. Bachelor of Engineering, Thammasat University Certificate from Thai Institute of Directors Association

Directors Certification Program – DAP Class 58/2006 Working Profile Current Position

Managing Director Bangkok Union Insurance Public Co., Ltd. Manager, Marketing Department Bangkok Union Insurance PCL.


Past Experience Assistant, Managing Director Bangkok Union Insurance PCL.

Name - Surname Mrs. Kobkul Wongsantimeth

Position Manager, Underwriting Department Nationality Thai Age 57

Qualification Bachelor of Business Administration (International Business Management), University of the Thai Chamber of Commerce

Working Profile Current Position Manager, Underwriting Department Bangkok Union Insurance PCL. Past Experience Assistant Manager, Underwriting Department Bangkok Union Insurance

PCL. Manager, International Division Bangkok Union Insurance PCL.

Name - Surname Ms. Sujintana Champeesri

Position Executive Director, Secretary Company , Manager, Finance & Accountancy Department

Nationality Thai

Age 52

Qualification Master of Arts (Business Economics), Thammasat University Bachelor of Accounting, Ramkhamhang University Certificate from Thai Institute of Directors Association

Directors Certification Program – DAP Class 60/2006 Company Secretary Program – CSP Class 20/2006

Working Profile Current Position Manager Finance & Accountancy Department Bangkok Union Insurance PCL. Secretary Company Bangkok Union Insurance PCL. Past Experience Assistant Manager, Office of the Managing Director Bangkok Union

Insurance PCL. Internal Audit Manager Bangkok Union Insurance PCL. Manager Accountant Bangkok Union Insurance PCL.

Name - Surname Ms. Sunee Khunvoratham

Position Manager ,Human Resources Department

Nationality Thai

Age 49

Qualification Bachelor of Business Administration, Sukhothai Thammathirat Open University

Working Profile Current Position Human Resources Department Bangkok Union Insurance PCL. Past Experience Finance Manager Department Bangkok Union Insurance PCL.


Explanation and Analysis of Financial Status and Performance Operating performance for 2011

In 2011 The Company had total premiums written of Baht 698.37 million which increased of Baht 20.67 million from the previous year or 3.05% and other income of Baht 92.02 million increased of Baht 12.76 million from the previous year or 16.10%, which came from rental and services of building, net investment and investment in the securities.

Expenses of the company comprised underwriting expense and operating expense. During 2011, underwriting expense had Baht 344.26 million, which increased of Baht 50.67 million from the previous year or 17.26%. Operating expense during 2011 amounted to Baht 156.92 million increased of Baht 24.19 million from the previous year or 18.22 %

In 2011, the company had a profit before tax of Baht 19.36 million, which decreased of Baht 26.41 million from the previous year or 57.71%, and tax of Baht 13.50 million. The company’s net profit therefore amounted to Baht 5.86 million decreased of Baht 22.18 million from the previous year. This resulted in an earning per share of Baht 0.29

Overall underwriting

In 2011, the company had a loss from underwriting of Baht 14.17 million, profit decreased of Baht 40.23 million form the previous year or 154.41%. This reducing profit is caused by the flood catastrophe on 2011 which damaging to the overall economic. Our company is influenced by the damage and loss about Bath 14.17 million. This was a result from the company had a total gross premiums written of Baht 698.37 million increased of Baht 20.67 million or 3.05% from 2010. The company’s reinsurance premiums and premiums ceded amounted to Baht 267.09 million or 38.24% of total premium written. The company had a net premium written of Baht 431.28 million. The total underwriting expenses was Baht 344.26 million or 49.30% of premium written.

The total underwriting expenses of Baht 344.26 million comprised losses incurred, loss adjustment expenses, commissions and brokerages and other underwriting expenses. This was an increased of Baht 50.67 million or 17.26% of losses incurred which net value of Baht 223.88 million. The total loss from non-flood is Baht 158.8 million reducing from last year, and from flood is Baht 65.04 million. Thus, loss adjustment expenses of Baht 47.18 million or losses incurred rate (Loss ratio) of 51.32% of earned underwriting income, an increased from 43.77% in 2010.

Fire underwriting

The company had a Earning on underwriting Fire amounted to Baht 40.08 million in 2011, premiums written amount Baht 114.98 million or 16.46% of the total premiums written, increased of 1.70% from 2010. The company’s reinsurance premiums and premiums ceded amounted to Baht 50.97 million or 44.33% of fire premiums written. The company had net fire premiums written of Baht 64.01 million.

The company’s fire underwriting expenses was Baht 48.10 million or 41.83% of fire premiums written. The losses incurred and loss adjustment expenses amounted to Baht 14.43 million or losses incurred rate (Loss ratio) of 21.54% of earned underwriting premium. Loss


from non-flood is Baht 3.45 million reduced by 73.41% and loss from flood is Baht 10.98 million which increase the total loss Baht 1.45 million (increase 11.21%).

Marine underwriting

In 2011, The company had a Earning on underwriting Marine amounted to Baht 9.78 million , premiums written amount Baht 23.46 million or 3.36% of total premiums written, decreased of 4.82% from 2010. The company’s reinsurance premiums and premiums ceded amounted to Baht 4.47 million or 19.05% of marine premiums written. The company had net marine premiums written of Baht 18.99 million.

The company’s marine underwriting expense was Baht 9.85 million or 42.01% of marine premiums written. The losses incurred and loss adjustment expenses amounted to Baht 4.45 million or losses incurred rate (Loss ratio) of 23.68% of earned underwriting premium.

Motor insurance

The company had Earning on underwriting Motor amounted to Baht 106.29 million, a total income of Baht 301.91 million from motor premiums written or 43.23% of the total premiums written, a decreased of 5.81% from 2010. The premiums ceded amounted to Baht 5.05 million or 1.67% of motor premiums written, with a net motor premiums written of Baht 296.85 million.

The company’s motor insurance underwriting expense amounted to Baht 194.58 million or 64.45% of motor premiums written. The company has insurance claim expense during the period and insurance claim administrative expense of Baht 130.13 million or losses incurred rate (Loss ratio) of 43.25% of earned underwriting premium. Loss from non-flood is Baht 128.13 million increased by 2.51% and loss from flood is Baht 2.00 million which increase the total loss Baht 5.14 million (increase 4.11%).

Miscellaneous insurance

The company had Earning on underwriting Miscellaneous amounted to Baht 13.40 million, premium in 2011 for the amount Baht 258.02 million or 36.95% from over all acquired insurance premiums. It increases from 2010 for 17.58%. In 2008, the company has received the project of natural gas stand drilling - a national mega-project which is the collaboration and the half investment of Thai & Malaysian government. It is under the control of the combined organization between two countries. The project is located in the Thai Gulf between the territory of Thailand and Malaysia of which the area is 7,000 square kilometer. Previously, Malaysian Insurance Consortium insured for all project and the project is valued at BHT 5.7 ten thousand million. There are 8 companies to insure this project and BUI can gain the insured share at 20% of total and transfer risk Insurance to other Insurance companies by keeping at our own for 0.4% of the insured amount, and renewed in 2009-2011.

The company’s miscellaneous underwriting expense amounted to Baht 91.73 million or 35.55% of miscellaneous premiums written. The company has insurance claims expense during the period and insurance claims administrative expense of Baht 74.84 million or losses incurred rate (Loss ratio) of 151.07% of earned underwriting premium. Loss from non-flood is


Baht 22.78 million reduced by 33.27% and loss from flood is Baht 52.07 million which increase the total loss Baht 40.71 million (increase 119.26%).

Investment

On December 31, 2011, the company has the investment assets for Baht 355.71 million, decreasing from 2010 for Baht 126.37 million or 26.21% out of the investment value in stock exchange that the company had in last year. The company can have net investment income from the investment for Baht 15.33 million decreasing 23.73%. It comprises the acquired interest and dividend and has gains on investment in securities for Baht 7.77 million.

Other income

The company had profit from rental and services in except of BUI office at 7-streoys Bangkok Union Insurance Building 1 and 20-stroeys Bangkok Union Insurance Building 2 amounting to Baht 14.73 million, an increase of Baht 1.53 million from 2010 or 11.63%.

Financial status

Assets

(1) Contents of assets as of 31 December 2011 comprised of cash and cash equivalents 4.21%, accrued investment income 0.05%, premium due and uncollected 6.32%, reinsurance assets 49.24%, investment assets 16.81%, premises and equipment 21.78%, intangible assets 0.06% and other assets 1.53%.

As of 31 December 2011, the company’s total assets amount Baht 2,116.11 million, an increased from 2010 of Baht 931.14 million or 78.58%. Cash and cash equivalents increased of Baht 64.72 million , accrued investment income decreased by Baht 0.81 million or 43.59%, premium due and uncollected decreased by Baht 18.78 million or 12.13%, reinsurance assets increased Baht 955.22 million or 1,061.16%, Investment assets decreased of Baht 126.46 million or 26.23%. Premises and equipment increased by Baht 47.76 million or 17.56%. Intangible assets (computer software) increased by Baht 0.21 million or 18.99% and other assets (withholding tax deducted at source, prepaid expense and others) increase Baht 12.28 million or 67.18%.

(2) Quality of assets

Cash and cash equivalents as of 31 December 2011 the company had Baht 89.11 million in cash and cash equivalents, an increased of Baht 64.72 million or 265.41% include cash on hand and at financial institutions with an original maturity of 3 months or less, and free form restrictions.

Investment assets as of 31 December 2011, the company has invested in securities, such as bonds, common stocks, unit trusts, bill of exchange and cash at financial institutions due over 3 months amounting to Baht 355.71 million, which was the fair value. The company recorded unrealized gain from change in investment values in shareholders’ equity amounting to Baht 40.12 million. The company pledged bonds with a face value of Baht 14.00 million as collateral with the Registrar in accordance with Non-life Insurance Act of 1992.

Premises and equipment as of 31 December 2011, the company had a net value on premises and equipment of Baht 460.89 million. In the year 2011, the Company reappraised


the value of land by using the independent appraisal company (Thai Property Appraisal lynn Phillips Co., Ltd). The appraisal company valued the land by using comparison method with market price. The surplus on revaluation amount of Baht 61.80 million is presented in other comprehensive income. The Company has a policy to reappraise the value of land every period approximate of 3 years.

Reinsurance assets as of 31 December 2011, the company had a reinsurance assets Baht 1,041.95 million increased by Baht 955.22 million of 1,061.16%. This was a result from the company had recorded insurance reserve refundable from reinsurances by the flood catastrophe on 2011.

Premiums due and uncollected as of 31 December 2011, the company had a total of Baht 133.76 million in net uncollected premiums, decreased of Baht 18.78 million of 12.31%.

Liquidity

Cash flow Cash flow from the operation of the company has always been positive. However, cash flow from fund-raising activities was negative over the past 3 years, which resulted from repayment of principals of loans from financial institutions. The company had a completed repayment in 2010.

Liquidity ratio as of 31 December 2011, the company had sufficient liquidity and acceptable debt payment ability. The liquidity ratio was 37.37% which lower than OIC’s (Office of Insurance Commission:OIC) standard (greater than 100%). This was a result from the company had recorded loss reserved and outstanding claims amount Baht 1,193.74 million (included loss from flood already). On the other hand the company had recorded insurance reserve refundable from reinsurances amount Baht 997.97 million (included insurance reserve from flood already).

Sources of funds

The company’s sources of funds were underwriting income, provident fund and loans, which the company used these funds for investment for increase returns.

Main factors and influences effecting future operation and financial status.

Considered from risk factors of the company

Maintaining various ratios according to the regulations of the relevant agencies and other important ratios specific to the industry.

The company has allocated Baht 10.33 million as reserve fund or 5.16% of the company’s registered capital in accordance with the Public Company Limited Act of 1992, which the company was required to appropriate at least 5% of net income after deduction of the deficit brought forward (if any) until this reserve reaches at least 10% of the registered capital.

The company has allocated reserve fund according the Ministry of Commerce’s Notice regarding. Reserve funds for Unearned Premiums Income and for Insurance Claims for Non-life Insurance Companies. As of 31 December 2011, the company has reserved funds of Baht 189.30 million for unearned premiums income reserve and Baht 1,193.74 million for insurance claims reserve, included in the insurance claims and insurance claim payable reserve-account.


Report of Independent Auditor To the Board of Directors and Shareholders of Bangkok Union Insurance Public Company Limited

I have audited the accompanying the statements of financial position of Bangkok Union Insurance

Public Company Limited as at December 31, 2011, and the related statements of comprehensive income,

changes in shareholders’ equity and cash flows for the year then ended. These financial statements are the

responsibility of the Company’s management as to their correctness and the completeness of the

presentation. My responsibility is to express an opinion on these financial statements based on my audit.

Another independent auditor in the same office has previously audited, in accordance with generally

accepted auditing standards, the financial statements for the year ended December 31, 2010 of Bangkok

Union Insurance Public Company Limited, he expressed an unqualified opinion on those financial statements in

his report date February 28, 2011.

I conducted my audit in accordance with generally accepted auditing standards. Those standards

require that I plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, as well as evaluating the overall

financial statements presentation. I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects,

the financial position of Bangkok Union Insurance Public Company Limited as at December 31, 2011 and 2010,

and the results of its operations, its changes in shareholders’ equity and its cash flows for the year then

ended in accordance with generally accepted accounting principles.

As described in the note to financial statements No.2.2, during the year 2011, the Company has

adopted revised and new issued financial reporting standard, which issued by Federation of Accounting

Professions (FAP) and the preparation of financial statements according to the Instruction of the

Notification of the Office of Insurance Commission. It requires compliance with the financial statement for

the period beginning on or after January 1, 2011. In order to prepare and present the financial statements,

the financial statements for year ended December 31, 2010 have been presented in accordance with the new

format in order to comply with the financial statements for year ended December 31, 2011.

(Mr. Pojana Asavasontichai)

Certified Public Accountant

Registration No. 4891

Dharmniti Auditing Company Limited

Bangkok, Thailand

February 29, 2012

2012/203/0266


Financial Statements

BANGKOK UNION INSURANCE PUBLIC COMPANY LIMITED

STATEMENTS OF FINANCIAL POSITION

AS AT DECEMBER 31, 2011 AND 2010

Note 2011 2010

Assets

Cash and cash equivalents 3.5, 6 89,107,582 24,385,424

Accrued investment income 1,043,735 1,850,113

Premium due and uncollected - net 3.7, 7, 21 133,755,152 152,531,290

Reinsurance assets - net 8 1,041,950,712 89,733,810

Investment assets 3.6, 9

Investment in securities

Available for sale investment securities 175,374,638 224,861,996

Held to maturity investment securities 132,821,759 209,702,399

Other Investments 47,515,515 47,515,676

Mortgage loans - 87,161

Premises and equipment - net 3.8, 10 460,888,903 413,133,130

Intangible assets 3.9, 11 1,303,771 1,096,282

Other assets

Withholding tax deducted at source 13,550,506 3,144,120

Prepaid expenses 1,767,898 1,567,153

Others 17,024,707 15,355,546

Total other assets 32,343,111 20,066,819

Total assets 2,116,104,878 1,184,964,100


Financial Statements

BANGKOK UNION INSURANCE PUBLIC COMPANY LIMITED STATEMENTS OF FINANCIAL POSITION (CONT.)

AS AT DECEMBER 31, 2011 AND 2010

Note 2011 2010 Liabilities and shareholders' equity

Liabilities Income tax payable - 1,203,593 Due to reinsurers 12 57,128,756 44,406,583 Insurance contract liabilities Loss reserve and outstanding claims 3.3, 13 1,193,740,645 220,350,605 Unearned premium reserve 3.2, 14 189,297,365 194,195,759 Employee benefit obligations 15 4,351,641 - Bank overdrafts 16 - 877,732 Commission and brokerages payable 16,786,272 36,208,527 Other liabilities Accrued expenses 29,899,334 34,833,619

Premium received in advance 6,856,437 17,580,212 Deposit 21 16,184,925 15,410,987 Others 18,126,428 12,942,763 Total other liabilities 71,067,124 80,767,581

Total liabilities 1,532,371,803 578,010,380

Shareholders' equity

Share capital Registered

20,000,000 ordinary shares of Baht 10 each 200,000,000 200,000,000 Issued and paid-up

20,000,000 ordinary shares of Baht 10 each 200,000,000 200,000,000 Premium on share capital 86,593,183 86,593,183 Revaluation increment in land 10 218,600,000 156,800,000 Gain (loss) from revaluation of investments 9 40,122,096 115,001,884 Retained earnings

Appropriated Statutory reserve 27 10,326,345 10,033,388

Unappropriated 28,091,451 38,525,265 Total shareholders' equity 583,733,075 606,953,720 Total liabilities and shareholders' equity 2,116,104,878 1,184,964,100

The accompanying notes are an integral part of the financial statements.


BANGKOK UNION INSURANCE PUBLIC COMPANY LIMITED

STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010 (Unit: Baht)

Note 2011 2010 Revenues 17, 21 Net premium earned 436,179,729 403,632,137 Fee and commission income 50,830,804 48,750,498 Total revenues 487,010,533 452,382,635 Expenses Underwriting expenses 17 Insurance claims

Insurance claims and loss adjustment expenses - normal operation 158,800,260 176,662,772

Insurance claims and loss adjustment expenses – severe flooding in Thailand 65,043,141 -

Unexpired risk reserve increase (decrease) - - Commissions and brokerages expenses 81,090,114 80,707,682 Other underwriting expenses 15,000,516 13,884,687 Contributing to Road Accident Victims Protection Co., Ltd. 24,327,233 22,340,449

Operating expenses 18 156,923,406 132,734,326

Total underwriting expenses 501,184,670 426,329,916 Profit (loss) from underwriting (14,174,137) 26,052,719

Net investment income 15,327,093 12,387,996

Gains (loss) on investment in securities 7,728,031 (419,488) Other income 1,510,200 7,920 Rental income 21 67,450,493 67,280,706

Other expenses - Premises and equipment expenses for rental (52,720,290) (54,084,602) Profit from operations 25,121,390 51,225,251 Contribution to Office of Insurance Commission 1,946,083 1,963,425

Contribution to Non-life guarantee fund 1,563,120 1,121,895

Contribution to Road victims protection fund 1,934,093 2,000,942

Finance cost 321,872 368,013 Profit before income tax 19,356,222 45,770,976 Corporate income tax 29 13,497,079 17,729,038

Net profit (loss) for the year 5,859,143 28,041,938

Other comprehensive income Revaluation increment in Land 10 61,800,000 -

Gain (loss) on change in value of investments (74,879,788) 47,706,829

Total other comprehensive income for the year (13,079,788) 47,706,829 Total comprehensive income for the year (7,220,645) 75,748,767

Basic earnings per share (Baht) 20 Net profit for the year 0.29 1.40 Notes to financial statements form an integral part of these statements.


BANGKOK UNION INSURANCE PUBLIC COMPANY LIMITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

Retained earnings

Issued and paid-up hare

capital

Premium on share capital

Revaluation increment in land

Gain (loss) from

revaluation of

investments

Appro- priated – statutory reserve

Unappro- priated

Total

Balance as at December 31, 2009

200,000,000 86,593,183 156,800,000 67,295,055 8,631,291 26,885,424 546,204,953

Total comprehensive income for the year

- - - 47,706,829 - 28,041,938 75,748,767

Appropriated - Statutory reserve

- - - - 1,402,097 (1,402,097) -

Dividend paid (Note 25)

- - - - - (15,000,000) (15,000,000)


200,000,000 86,593,183 156,800,000 115,001,884 10,033,388 38,525,265 606,953,720

Total comprehensive income for the year

- - 61,800,000 (74,879,788) - 5,859,143 (7,220,645)

Appropriated - Statutory reserve

- - - - 292,957 (292,957) -

Dividend paid (Note 25)

- - - - - (16,000,000) (16,000,000)


200,000,000 86,593,183 218,600,000 40,122,096 10,326,345 28,091,451 583,733,075

Notes to financial statements form an integral part of these statements.


BANGKOK UNION INSURANCE PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010 (Unit: Baht)

The accompanying notes are an integral part of the financial statements.

2011 2010 Cash flows from (used in) operating activities

Direct premium written 682,695,139 596,881,032 Cash received from (paid for) reinsurance (168,185,242) (135,058,947) Losses incurred of direct insurance (199,097,206) (140,860,316) Loss adjustment expenses of direct insurance (24,992,707) (8,566,467) Commissions and brokerages of direct insurance (89,394,030) (58,754,289) Other underwriting expenses of direct insurance (40,423,734) (24,082,047) Interest income 6,242,536 3,202,579 Dividend income 9,830,155 8,819,590 Other income 69,412,525 66,652,206 Operating expenses (191,635,478) (196,104,535) Corporate income tax (25,075,309) (13,136,281)

Net cash flows from (used in) operating activities 29,376,649 98,992,525 Cash flows from (used in) investing activities

Cash flows from Investments in Bonds 3,010,000 1,800,000 Investments in securities 91,421,598 16,512,378 Time deposits 179,000,000 5,000,000 Mortgage loans 87,161 247,717 Premises and equipment 1,895,000 1,000

Net cash flows from investing activities 275,413,759 23,561,095 Cash flows used in

Investments in bonds (34,778,090) (10,071,043) Investments in securities (109,085,836) (9,747,456) Bill of exchange (50,000,000) - Time deposits (20,290,491) (24,000,000) Premises and equipment (8,714,229) (4,264,079)

Net cash flows used in investing activities (222,868,646) (48,082,578)

Net cash flows from (used in) investing activities 52,545,113

(24,521,483)

Cash flows from (used in) financing activities Cash flows from

Bank overdraft - - Net cash flows from financing activities - -

Cash flows used in Bank overdraft (877,732) (46,008,993)

Payment of interest expenses (321,872) (384,089) Payment of dividend (16,000,000) (15,000,000)

Net cash flows used in financing activities (17,199,604) (61,393,082) Net cash flows used in financing activities (17,199,604) (61,393,082) Net increase (decrease) in cash and cash equivalents 64,722,158 13,077,960 Cash and cash equivalents at beginning of the year 24,385,424 11,307,464 Cash and cash equivalents at end of the year 89,107,582 24,385,424 Notes to financial statements form an integral part of these statements.


BANGKOK UNION INSURANCE PUBLIC COMPANY LIMITED NOTES TO FINANCIAL STATEMENTS AS AT DECEMBER 31, 2011 AND 2010

1. GENERAL INFORMATION

1.1 Legal status

The Company was incorporated as a public limited company under Thai laws and listed on the Stock Exchange of Thailand.

1.2 Address

The registered office address of the Company is located at 175 - 177 Surawong Road, Suriyawong, Khet Bangrak, Bangkok, Thailand.

1.3 Nature of the Company’s business

The Company operates its business in Thailand and its principal activities are non-life insurance and rental of office space.

2. PRINCIPLES OF PREPARATION AND PRESENTATIONS OF FINANCIAL STATEMENTS

2.1 Basis for preparation of financial statements

The financial statements have been prepared in accordance with the accounting standards prescribed by Thai Accounts Act enunciated under the Accounting Profession Act B.E.2547 by complying with the financial reporting standards for Publicly Accountable Entities and presented accordingly to the Instruction of the Notification of the Office of Insurance Commission regarding the presentation of the financial statements of non-life insurance companies No. 2 B.E.2553 date 27 May 2010.

The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies.

The financial statements in Thai Language are the official statutory financial statements of the Company. The financial statements in English language have been translated from such financial statements in Thai language.

2.2 New accounting standards and financial reporting standards effective for using in this year.

During the years 2010 and 2011, the Federation of Accounting Professions (FAP) has issued Notifications to mandate the use of the revised 2009, new issued of accounting standards, financial reporting standards and the interpretations of which they are effective for using in the periods beginning on or after January 1, 2011, as follows.

Framework for the Preparation and Presentation of Financial Statements (revised 2009)

TAS 1 (revised 2009) Presentation of Financial Statements


TAS 2 (revised 2009) Inventories TAS 7 (revised 2009) Statement of Cash Flows TAS 8 (revised 2009) Accounting Policies, Changes in Accounting Estimates and

Errors TAS 10 (revised 2009) Events after the Reporting Period TAS 11 (revised 2009) Construction Contracts TAS 16 (revised 2009) Property, Plant and Equipment TAS 17 (revised 2009) Leases TAS 18 (revised 2009) Revenue TAS 19 Employee Benefits TAS 23 (revised 2009)Borrowing Costs TAS 24 (revised 2009)Related Party Disclosures TAS 26 Accounting and Reporting by Retirement Benefit Plans TAS 27 (revised 2009)Consolidated and Separate Financial Statements TAS 28 (revised 2009)Investments in Associates TAS 29 Financial Reporting in Hyperinflationary Economies TAS 31 (revised 2009) Interests in Joint Ventures TAS 33 (revised 2009)Earnings per Share TAS 34 (revised 2009)Interim Financial Reporting TAS 36 (revised 2009) Impairment of Assets TAS 37 (revised 2009)Provisions, Contingent Liabilities and Contingent Assets TAS 38 (revised 2009) Intangible Assets TAS 40 (revised 2009)Investment Property TFRS 2 Share-based Payment TFRS 3 (revised 2009)Business Combinations TFRS 5 (revised 2009) Non-current Assets Held for sale and Discontinued

Operations TFRS 6 Exploration for and Evaluation of Mineral Resources TFRIC 15 Agreements for the Construction of Real Estate TSIC 31 Revenue - Barter Transactions Involving Advertising Services

The management of the Company has assessed the effect of these accounting standards and financial reporting standards and believes that they will not have any significant impact on the financial statements for this year. However, TAS 1 (revised 2009) Presentation of Financial Statements, TAS 16 (revised 2009) Property, Plant and Equipment and TAS 19 Employee Benefits of which the Company has adopted of using in this year, have the effects of changes in the Company’s accounting policies as disclosed in Note 2.3. These changes of accountings policies mostly affect to the presentation of financial statements in new format and prospective adjustment, except for the accounting standards of Employee Benefits which the company has adopted by adjusting to expense by the straight-line method throughout the period of 5 years in the statement of comprehensive income in accordance with the practice during the change of accounting standard No 19.

2.3 Changes in accounting policies


From 1 January 2011, consequent to the adoption of new and revised TFRS as set out in note 2.2, the Company has changed its accounting policies as follows : TAS 1 (revised 2009) Presentation of Financial Statements

Under the revised TAS, a set of financial statements comprises : Statement of financial position; Statement of comprehensive income; Statement of changes in shareholders’ equity; Statement of cash flows; and Notes to the financial statements.

TAS 16 (revised 2009) Property, Plant and Equipment Under the revised TAS, there are the principal changes as follows:

1. Costs of asset dismantlement, removal and restoration have to be included as asset costs and subject to annual depreciation;

2. The depreciation charge has to be determined separately for each significant part of an asset;

3. In determining the depreciable amount, the residual value of an item of assets has to be measured at the amount estimated receivable currently for the asset if the asset were already of the age and in the condition expected at the end of its useful life. Furthermore, the residual value and useful life of an asset have to be reviewed at least at each financial year-end.

The changes have been applied prospectively in accordance with the transitional provisions of the revised TAS, except that consideration of the costs of asset dismantlement, removal and restoration, have been applied retrospectively.

TAS 19 Employee Benefits.

Under the new policy, the Company has the obligations in respect of the severance payments to employees upon retirement under the Company’s article and labour law. The Company treats these severance payment obligation as a defined benefit plan. Previously, this obligation was recognized as occurred. The obligation under the defined benefit plan is calculated based on the actuarial principles which using the projected unit credit method. Such determination is made based on various assumptions, including discount rate, future salary increase rate, staff turnover rate, mortality rate and inflation rates.

The Company has opted to record the liabilities as an expense by the straight-line method throughout the period of 5 years in the statement of comprehensive income in accordance with the practice during the change of accounting standard No. 19.

3. SIGNIFICANT ACCOUNTING POLICIES

3.1 Revenue recognition


(a) Premium

For insurance policies with coverage periods of up to 1 year, premium income is recognised on the date the insurance policy comes into effect after deducting premium ceded and cancelled. For long-term insurance policies with coverage periods of longer than 1 year, related revenues and expenses are recorded as unearned and prepaid items, and amortised to income and expenses over the coverage period.

(b) Reinsurance premium income

Reinsurance premium income is recoginsed when the reinsurer places the reinsurance application or statement of accounts with the Company.

(c) Interest and dividends

Interest is recognised as income based on the principle of period of time, taking into accounts the effective yield rate. Dividends are recognised as income on the date the right to receive the dividend arises.

(d) Revenue from rental and services

Rental income is recognised over the lease period and the related service income is recognised when services are rendered.

(e) Gains (losses) on securities trading

Gains (losses) on trading in securities are recognised as income or expenses on the transaction dates.

3.2 Unearned premium reserve

Unearned premium reserve is set aside in compliance with the Notification of the Ministry of Commerce governing the appropriation of unearned premium reserves of non-life insurance companies as follows:.

Fire, motor, hull and miscellaneous

- Monthly average basis (the one-twenty fourth basis)

Marine and transportation (cargo)

- Net premium written for the last ninety days

Travelling accident - Net premium written for the last thirty days

3.3 Loss reserve and outstanding claims

Claims are recognised as expenses when notification of loss is received from the insureds. They are recorded at the value appraised by an independent appraiser, or by the Company’s staff, as the case may be, net of the portion refundable through reinsurance agreements. The maximum value of claim estimated is not however, to exceed the suminsured under the relevant policy. In addition, the Company sets up provision for losses incurred but not yet reported (IBNR) at 2.5 percent of net premium written for the last 12 months in compliance with the Notification of the Ministry of Commerce governing the appropriation of loss


reserves of non-life insurance companies. Since January 1, 2009, the Company shall allocate according to the past experience by chain ladder approach or other international approaches but not less than 2.5% of the total net written premium on all types of risk in the previous twelve months. The reserve calculation report has to be endorsed by an actuary of the Company.

Differences between the estimated costs of claims and the amount actually paid are included in the statements of earnings in the year they are expensed.

3.4 Commissions and brokerages

Commissions and brokerages are recorded as expenses when they occurred.

3.5 Cash and cash equivalents

Cash and cash equivalents include cash on hand and at financial institutions with an original maturity of 3 months or less, and free from restrictions.

3.6 Investments in securities

Investments in available-for-sale securities are determined at fair value. The changes in the value of securities is recorded as the statements of comprehensive income until securities are sold, the change shall be included in determining earnings.

Investments in held-to-maturity debt securities are determined at amortised cost with premium or discount on straight line basis.

Investments in non-marketable equity securities, which the Company holds as other investment, are valued at cost net from allowance on impairment (if any).

The fair value of marketable securities is based on the latest bid price of the last working day of the year quoted on the Stock Exchange of Thailand. The fair value of debt securities is based on the market price quoted by the Thai Bond Market Association. The fair value of unit trust is valued at net assets value.

Losses on impairment of investments in available-for-sale securities, held-to-maturity debt securities, and other investments are included in determining earnings when the carrying amount exceeds its recoverable amount.

Weighted average method is used for the computation of cost of investments.

3.7 Premium due and uncollected and allowance for doubtful accounts

Premium due and uncollected is carried at its net realisable value. The Company sets up an allowance for doubtful accounts based on the estimated loss that may be incurred in the collection of the premium due, on the basis of collection experience and review of current status of the premium due as at the balance sheet date.

3.8 Premises and equipment/Depreciation

Land is stated at its reappraised value. Premises and equipment are stated at cost less accumulated depreciation and allowance on impairment (if any).

Cost is initially recognized upon acquisition of assets along with other direct costs attributing to acquiring such assets in the condition ready to serve the


objectives, including the costs of asset demolition, removal and restoration of the asset location, which are the obligations of the company.

Depreciation of Premises and equipment is calculated by cost less residual value on the straight-line basis over the following estimated useful lives:

Building and building improvements 20, 27 years Furniture, fixtures and office equipment 5 - 10 years

Motor vehicles 5 years

The Company has reviewed the residual value and useful life of the assets every year.

The depreciation for each asset component is calculated on the separate components when each component has significant cost compared to the total cost of that asset.

Depreciation is included in determining income.

No depreciation is provided on land and construction in progress.

Premises and equipment are written off at disposal. Gains or losses arising from sale or write-off of assets are recognized in the statement of comprehensive income.

3.9 Intangible asset and amortization

Intangible asset represents computer software, stated at cost less accumulated amortisation. The amortised expense of intangible asset is calculated by reference to its cost on a straight-line basis over the estimate useful life of 5 years.

3.10 Finance lease contracts

The Company regards a lease that transfers substantially all the risks and rewards of ownership as a finance lease whereby the fair value of the leased properties is recorded as assets and future rental commitments (minus the interest portion) as liabilities.

Interest expenses or finance charges are included in determining earnings in proportion to the remaining balance of the liabilities.

3.11 Operating lease

Lease of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under an operating lease are recognised as expense on a straight-line basis over the lease term.

3.12 Financial instruments

The Company has no policy to speculate in or engage in the trading of any financial derivative instruments.

Financial instruments carried in the financial statements include deposits at financial institutions, investments in securities, premium due and uncollected and


bank overdrafts. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.

3.13 Foreign currencies

Transactions in foreign currency during the year are translated into Baht at the rates applied on the transaction dates. Monetary assets and liabilities in foreign currency outstanding on the reporting date are translated into Baht at the rates applied on the reporting date.

Exchange gains and losses are included in determining earnings.

3.14 Employee benefits

Short-term employment benefits

The Company recognizes salary, wage, bonus and contributions to social security fund and provident fund as expenses when incurred.

Post-employment benefits (Defined contribution plans)

The Company and its employees jointly established a provident fund under the Provident Fund Act B.E. 2530. The fund is contributed to on a monthly basis by the employees at the rates ranging from 3 to 5 percent, and by the Company at rates ranging from 3 to 5 of the basic salaries, based on the length of employment and will be paid to the employees upon termination in accordance with the rules of the fund. The fund’s assets are held in a separate trust fund and the Company’s contributions are recognized as expenses when incurred.

Post-employment benefits (Defined benefit plans)

The Company has obligations in respect of the severance payments that it must pay to the employees upon retirement under the labor law and the Company’s article. The Company treats these severance payment obligations as a defined benefit plan.

The obligation under the defined benefit plan is calculated based on the actuarial principles which using the projected unit credit method. Such estimates are made based on various assumptions, including discount rate, future salary increase rate, staff turnover rate, mortality rate, and inflation rate.

Actuarial gains and losses for post-employment benefits of the employees are recognized immediately in profit or loss.

The Company has opted to record the entire amount of this liability as an expense by the straight-line method throughout the period of 5 years (2011 - 2015) in accordance with the transitional provisions of TAS 19

3.15 Using of accounting estimation

Preparation of financial statements in conformity with generally accepted accounting principles in Thailand requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and


liabilities and disclosure of contingent assets and liabilities. Actual results may differ from those estimates.

3.16 Income tax

The Company record income tax expense, based on the amount currently payable under the Revenue Code and at the rate specified by law.

Corporate income tax has been calculated on the profit before tax after adjusting of adding back certain provisions and expenses which are disallowable for tax computation purposes, deducting certain income which are exemption or allowable from income tax and loss brought forward from previous year (if any).

3.17 Impairment of assets

As at the financial statement date, the Company assesses whether there is an indication of asset impairment. If any such indication exists, the Company will make an estimate of the asset’s recoverable amount. If the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recognized in the statement of comprehensive income. In addition, impairment loss is reversed if there is a subsequent increase in the recoverable amount. The reversal shall not exceed the carrying value that would have been determined net of accumulated depreciation or amortization. The recoverable amount of the asset is the asset’s value in use or fair value less costs to sell.

4. EFFECT OF CHANGES IN ACCOUNTING POLICIES DUE TO ADOPTION OF NEW ACCOUNTING STANDARDS

From January 1, 2011, consequent to the adoption of new and revised TFRS, the Company has affected to the financial statements as follows:

As at January 1, 2011, the Company has employee benefit obligations in the amount of Baht 13,771,241 (past service cost). The Company has opted to record the liabilities as an expense by the straight-line method throughout the period of 5 years (2011 - 2015) in the amount of Baht 2,754,248 per year or Baht 688,562 per quarter in the statement of comprehensive income.

Adjustment of financial statements Detail employee benefit obligations as at December 31, 2011 Baht Present value of the defined benefit plans (past service cost), as at January 1, 2011 13,771,241 Unrecognized transitional liabilities (10,391,364)

Employee benefit obligation recorded in the statement of comprehensive income for the years 3,379,877

Statement of financial position as at December, 2011 Baht Increase in employee benefit obligations in this year 5,240,318 Less benefits paid (888,677)

Employee benefit obligations as at December 31, 2011 4,351,641


Statement of comprehensive income for the years period ended December 31,2011 Baht Increase in employee benefit expenses resulting in : Increase in finance cost 54,188 Increase in administrative expenses 1,806,253

Total cost of services and interest in the present year 1,860,441 The cost of services and interest in the past that gradually recognized 5 years in this year

3,379,877

Total 5,240,318

Decrease in earnings per share; - Basic earnings per share (in Baht) (0.26)

5. ISSUE OF NEW INTERPRETATION OF ACCOUNTING STANDARDS DURING THE YEAR

During the year 2011, the Federation of Accounting Professions (FAP) has issued Notifications to mandate the use of the new interpretations of accounting standards of which are effective for the fiscal year beginning on or after January 1, 2013, as follows.

TSIC 10 Government Assistance - No Specific Relation to Operating Activities TSIC 21 Income Taxes - Recovery of Revalued Non - Depreciable Assets TSIC 25 Income Taxes - Changes in the Tax Status of an Entity or its

Shareholders

The management of the Company is in the process of reviewing the effect of such interpretation of accounting standards to the financial statements for the year in which they are initially applied.

6. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of :- Baht 2011 2010

Cash on hand 52,374 668,101 Cheques due on hand 3,204,960 5,366,983 Cash at bank - uncallable term 31,350,248 13,850,340 Cash at bank - callable term 124,790,491 183,500,000

Total cash and deposits at financial institutions 159,398,073 203,385,424 Less Cash at financial institutions and other financial institutions due over 3 months (70,290,491) (179,000,000)

Cash and cash equivalents 89,107,582 24,385,424

7. PREMIUM DUE AND UNCOLLECTED - NET

Aging analyze for premiums receivable as at December 31, 2011 and 2010 were as follows :


Baht

2011 2010

From assured

From insurance agents and

brokers

From reinsurance

Total From assured From insurance agents and

brokers

From reinsurance

Total

Not due 13,947,315 29,613,841 - 43,561,156 - - - - Due

Over due within 30 days 22,867,247 19,787,291 142,392 42,796,930 13,773,027 40,738,837 60,942 54,572,806 Over due 30 - 60 days 463,545 19,426,047 175,359 20,064,951 20,415,208 23,755,360 81,653 44,252,221 Over due 60 - 90 days 373,340 7,664,329 71,563 8,109,232 6,209,860 6,183,555 215,641 12,609,056

Overdue 90 day - 1 years 1,333,942 21,646,891 2,925,536 25,906,369 5,721,749 33,104,990 1,427,749 40,254,488

Overdue 1 years 262,648 26,965,090 1,560,687 28,788,425 2,811,574 28,833,011 2,153,440 33,798,025

Total Premium receivable 39,248,037 125,103,489 4,875,537 169,227,063 48,931,418 132,615,753 3,939,425 185,486,596

Less : Allowance for

doubtful accounts

(682,887) (34,591,241) (197,783) (35,471,911) (3,373,860) (29,383,663) (197,783) (32,955,306)

Premium receivable - net 38,565,150 90,512,248 4,677,754 133,755,152 45,557,558 103,232,090 3,741,642 152,531,290

8. REINSURANCE ASSETS, NET

Reinsurance assets consist of : Baht 2011 2010

Amount deposit on reinsurance treaties 2,092,913 1,684,102 Amount receivable from reinsurers - net 40,689,991 46,249 Insurance reserve refundable from reinsurers 997,973,558 84,974,185 Other receivable from reinsurance 1,194,250 3,029,274

Reinsurance asset, net 1,041,950,712 89,733,810

Aging analyze for amount receivable from reinsurers as at December 31, 2011 and 2010 were as follows : Baht 2011 2010 Not due 37,694,066 50,580 Over due less than 1 year 1,998,473 - Over due 1- 2 years 357,273 - Over due more than 2 years 640,179 (4,331)

Total receivable from reinsurers 40,689,991 46,249 Less : Allowance for doubtful accounts - -

Amount receivable from reinsurers - net 40,689,991 46,249


9. INVESTMENTS IN SECURITIES

The balance as at December 31, 2011 and 2010 of investments in securities were as follows :

9.1 Available for sale investment securities Baht

2011

Cost Unrealized

gain

Unrealized

loss

Fair value % of total

asset

Individual

Common stocks 135,421,740 42,783,697 (3,221,453) 174,983,984 8.27

Unit trust 983,461 628,467 (68,615) 1,543,313 0.07

total 136,405,201 43,412,164 (3,290,068) 176,527,297 8.34

Less Allowance for

impairment (1,152,659) - - (1,152,659) (0.05)

Total available for sale 135,252,542 43,412,164 (3,290,068) 175,374,638 8.29

Baht

2010

Cost Unrealized

gain

Unrealized

loss

Fair value % of total

asset

Individual

Common stocks 110,029,310 114,817,940 (478,537) 224,368,713 18.93

Unit trust 983,461 668,801 (6,320) 1,645,942 0.14

total 111,012,771 115,486,741 (484,857) 226,014,655 19.07

Less Allowance for

impairment (1,152,659) - - (1,152,659) (0.09)

Total available for sale 109,860,112 115,486,741 (484,857) 224,861,996 18.98

9.2 Held to maturity investment securities Baht 2011 2010 Amortize Cost % of total

asset Amortize Cost % of total

asset Government and State Enterprise

Government bond 62,531,268 2.96 30,702,399 2.59 Less Allowance for impairment - - - - Total 62,531,268 2.96 30,702,399 2.59

Individual Bill of exchange 50,000,000 2.36 - - Less Allowance for impairment - - - - Total 50,000,000 2.36 - -

Cash at financial institutions and other financial institutions due over 3 months Time deposit 20,290,491 0.96 179,000,000 15.11 Less Allowance for impairment - - - - Total 20,290,491 0.96 179,000,000 15.11

Total held to maturity investment securities 132,821,759 6.28 209,702,399 17.70


9.3 Non marketable equity securities Baht 2011 2010 Cost % of total

asset Cost % of total

asset Equity securities 47,521,166 2.25 47,521,166 4.01 Less Allowance for impairment (5,651) 0.00 (5,490) 0.00 Total non Marketable equity securities 47,515,515 2.25 47,515,676 4.01

Investments in other companies consist of the following : Type of

Business

Relationship Paid-up share capital (Baht) Holding

portion (%)

Amount (Baht)

Companies 2011 2010 2011 2010 2011 2010

1.ANUMAN SPAREPARTS

CO.,LTD.

Trading Co -

shareholders

200,000 200,000 10 10 20,000 20,000

2.ROAD VICTIMS PROTECTION

CO.,LTD.

Insurance Co -

shareholders

100,000,000 100,000,000 0.58 0.58 577,910 577,910

3. THAI INSURERS DATAnet

CO.,LTD.

Service Co -

shareholders

10,000,000 10,000,000 0.88 0.88 87,500 87,500

4. T.I.I. COMPANY LIMITED Training Co -

shareholders

17,803,300 17,803,300 0.11 0.11 20,000 20,000

5. BUI LIFE INSURANCE CO.,LTD. Life

insurance

Co -

shareholders

500,000,000 500,000,000 9.60 9.60 46,815,756 46,815,756

Total other investments 47,521,166 47,521,166

Less Allowance for loss on impairment in other investments

ANUMAN SPAREPARTS CO.,LTD. (5,651) (5,490)

Total other investments – net 47,515,515 47,515,676

9.4 Classified as held to maturities investment securities

As at December 31, 2011 and 2010, debt securities which are classified as held to maturities investment securities were classifield by the remaining maturities as follows :

Baht

2011 2010

Due Total Due Total

1 year 1 - 5 year Over 5

year

1 year 1 - 5 year Over 5 year

Held to maturity investment securities

Government and state

Enterprise

Government bond 11,698,808 45,934,644 4,897,816 62,531,268 4,730,574 19,996,110 5,975,715 30,702,399

Less Allowance

for impairment

- - - - - - - -

Total 11,698,808 45,934,644 4,897,816 62,531,268 4,730,574 19,996,110 5,975,715 30,702,399

Individual

Bill of exchange 50,000,000 - - 50,000,000 - - - -

Less Allowance

for impairment

- - - - - - - -

Total 50,000,000 - - 50,000,000 - - - -


Baht

2011 2010

Due Total Due Total

1 year 1 - 5 year Over 5

year

1 year 1 - 5 year Over 5 year

Cash at financial institutions and other financial institutions due over 3 months

Time deposit 20,290,491 - - 20,290,491 179,000,000 - - 179,000,000

Less Allowance

for impairment

- - - - - - - -

Total 20,290,491 - - 20,290,491 179,000,000 - - 179,000,000

Total held to maturity investment

securities 81,989,299 45,934,644 4,897,816 132,821,759 183,730,573 19,996,110 5,975,715 209,702,399

Total investment

in debt

securities 81,989,299 45,934,644 4,897,816 132,821,759 183,730,573 19,996,110 5,975,715 209,702,399

As at December 31, 2011 and 2010, the investment in available-for-sale securities, bonds and time deposit total amount Baht 59.19 million and 114.84 million, respectively have been used as security with registrar, for assets allocated as a reserve with the Registrar and assets that have restrictions and obligations, please see the notes to financial statements no. 23, 24 and 25.

10. PREMISES AND EQUIPMENT

Baht

Balance as at Transactions during the period Balance as at

December 31, 2010 Increase Decrease December 31, 2011

Cost/reappraised value :

Land (reappraised value) 167,518,000 61,800,000 - 229,318,000

Building and building improvement 573,995,006 453,262 - 574,448,268

Office furniture and fixture 114,351,481 1,090,376 - 115,441,857

Vehicle 9,299,449 11,294,612 (6,123,449) 14,470,612

Total 865,163,936 74,638,250 (6,123,449) 933,678,737

Accumulated depreciation

Building and building improvement (333,572,809) (22,402,046) - (355,974,855)

Office furniture and fixture (109,043,355) (1,721,532) - (110,764,887)

Vehicle (7,956,642) (2,380,280) 5,744,830 (4,592,092)

Total (450,572,806) (26,503,858) 5,744,830 (471,331,834)

Less Allowance for declining

value of land (1,458,000) (1,458,000)

Premises and equipment – net 413,133,130 460,888,903


Baht

Balance as at Transactions during the year Balance as at

December 31,

2009

Increase Disposal December 31, 2010

Cost/reappraised value :

Land (reappraised value) 167,518,000 - - 167,518,000

Building and building improvement 573,636,536 358,470 - 573,995,006

Office furniture and fixture 110,777,046 3,612,850 (38,415) 114,351,481

Vehicle 9,299,449 - - 9,299,449

Total 861,231,031 3,971,320 (38,415) 865,163,936

Accumulated depreciation

Building and building improvement (311,276,689) (22,296,120) - (333,572,809)

Office furniture and fixture (107,460,866) (1,620,903) 38,414 (109,043,355)

Vehicle (7,284,042) (672,600) - (7,956,642)

Total (426,021,597) (24,589,623) 38,414 (450,572,806)

Less Allowance for declining

value of land (1,458,000) (1,458,000)

Premises and equipment - net 433,751,434 413,133,130

The Company’s premises and equipment are mainly leased out under operating lease agreements.

One building and building improvement is located on lease land from a company (Note 31.1)

In the year 2011, the Company reappraised the value of land by using the independent appraisal company (Thai Property Appraisal lynn Phillips Co., Ltd). The appraisal company valued the land by using comparison method with market price. The surplus on revaluation amount of Baht 61.80 million is presented in other comprehensive income. The Company has a policy to reappraise the value of land every period approximate of 3 years.

Baht Balance per book Additions Deductions Balance per book

As at As at

December 31,

2010

December 31,

2011

Revaluation increment in land 156,800,000 61,800,000 - 218,600,000

Baht 2011 2010

Depreciation for the years 26,503,858 24,589,623

As at December 31, 2011 certain equipment items have been fully depreciated but are still in use. The original cost, before deducting accumulated depreciation, of those assets amounted to Baht 119.04 million. (2010 : Baht 118.53 million)


As at December 31, 2011, vehicles at net book value of Baht 2,419,402 are assets under the hire purchase agreements.

As at December 31, 2011, vehicles at net book value of Baht 6,370,418 are assets under the financial lease agreements.

11. INTANGIBLE ASSETS

Intangible assets are deferred computer software expenses as at December 31, 2011 and 2010 are as follows : Baht 2011 2010 Computer software expense -at cost 5,948,928 5,656,168 Add Purchase 854,400 292,760 Less Accumulated amortization (5,499,557) (4,852,646) Computer software expense - net 1,303,771 1,096,282

Baht

2011 2010 Amortisation for the years 646,911 594,165

12. DUE TO REINSURERS

Due to reinsurers present by type of debt as follows : Baht 2011 2010

Reinsurance premium payable 4,786,920 6,455,744 Amount withheld on reinsurance treaties 39,212,308 30,809,136 Other due to reinsurers 13,129,528 7,141,703 Total due to reinsurers 57,128,756 44,406,583

13. LOSS RESERVES AND OUTSTANDING CLAIMS

Changing in the loss reserves and outstanding claims consist of : Baht 2011 2010

Beginning balance 220,350,605 164,545,412 Loss incurred and loss adjustment expenses in this years

- Incurred but not reported (592,386) 4,248,417 - Incurred but not yet agreed 973,084,295 55,293,037 - Incurred and agreed and adjustment 215,426,431 157,030,612 Loss paid and loss adjustment paid in this year (214,528,300) (160,766,873) Ending balance 1,193,740,645 220,350,605

14. Premium reserve


14.1 Unearned premium reserves Baht 2011 2010

Beginning balance 194,195,759 142,857,845 Premium written in the year 431,281,335 454,970,051 Earned premium in the year (436,179,729) (403,632,137)

Ending balance 189,297,365 194,195,759

14.2 Unexpired risk reserves

The Company has not set unexpired risk reserves because the estimated unexpired risk reserves of the Company as at December 31, 2011 and 2010 has total amount of Baht 88.68 million and Baht 104.45 million, respectively are lower than unearned premium reserves.

14.3 Additional Unearned premium reserves

As at December 31, 2011, the retained earnings of the Company excluded Baht 23,043,280 of additional unearned premium reserve (December 31, 2010: Baht 19,875,337) which the Company set aside for the premium ceded to a foreign reinsurer, in compliance with the regulations of the Office of Insurance Commission.

15. EMPLOYEE BENEFIT OBLIGATIONS

The Company has been complied with the accounting standards No.19 (TAS19) on employee benefits, which effective from January 1, 2011. The impact on the financial statement has been disclosed in note to interim financial statement no. 4

As at January 1, 2011, the Company has employee benefit obligations in the amount of Baht 13,771,241 (past service cost). The Company has opted to record the liabilities as an expense by the straight-line method throughout the period of 5 years (2011 - 2015) in the amount of Baht 2,754,248 per year or Baht 688,562 per quarter in the statement of comprehensive income.

Baht Expenses under the defined benefits plan Current service cost 1,806,253 Past service cost 3,379,877 Interest cost 54,188 Less expected return on plan assets - Total 5,240,318 Defined benefit obligations Net present value of defined benefit obligations 15,631,682 Less fair value of fund’s asset - 15,631,682 Unrecognized actuarial (gains)/losses - Unrecognized past service cost (10,391,364) Less benefits paid (888,677) Total benefit obligations 4,351,641


Baht Change in present value of defined benefit obligations Beginning balance - Current service cost 1,806,253 Past service cost 3,379,877 Interest cost 54,188 Contribution from employee - Less benefits paid (888,677) Actuarial (gains)/losses - Ending balance 4,351,641

Principal actuarial assumptions at the reporting date Percentage For the years ended December 31, 2011 Discount rate 3.00 Salary increase rate 3.00 Employee turnover rate Age 20 - 25 year 10.00 Age 26 - 30 year 5.00 Age 31 - 50 year 3.00 Age 51 - 60 year 0.50 Mortality rate 50% of TMO 97 : Mortality Table

16. BANK OVERDRAFTS

Baht 2011 2010

Bank overdrafts - 877,732

As at December 31, 2010 the Company has overdraft facilities with 4 local banks, totally Baht 84 million which were guaranteed by fixed deposits.

As at December 31, 2011 the Company has not any overdraft facilities.


17. REPORTING BY INSURANCE TYPE

Underwriting income, claims expenses and underwriting expenses by type consist of:-

For the year ended December 31,

2011 (Baht)

Fire Marine Motor Personal accident Miscellaneous Total

Under writing income

Premium written 114,983,588 23,456,907 301,905,170 4,908,715 253,114,273 698,368,653

Less reinsurance premium (50,970,277) (4,468,688) (5,053,753) (4,589,530) (202,005,070) (267,087,318)

Net premium written 64,013,311 18,988,219 296,851,417 319,185 51,109,203 431,281,335

Less unearned premium reserves 2,984,281 (213,846) 4,014,924 831,621 (2,718,586) 4,898,394

Premium income is recognized 66,997,592 18,774,373 300,866,341 1,150,806 48,390,617 436,179,729

Commission and brokerage income 21,182,764 857,980 - 915,134 27,874,926 50,830,804

Total underwriting income 88,180,356 19,632,353 300,866,341 2,065,940 76,265,543 487,010,533

Underwriting expense

Insurance claims and loss adjustment

expenses

3,450,821 4,445,351 128,125,893 607,616 22,170,579 158,800,260

Insurance claims and loss adjustment

expenses - severe flooding in Thailand

10,977,496

-

2,000,000

-

52,065,645

65,043,141

Unexpired risk reserve increase

(decrease)

-

-

-

-

-

-

Commission and brokerage 30,274,260 2,999,036 34,214,596 729,443 12,872,779 81,090,114

Other underwriting income 3,393,390 2,408,894 5,912,610 155,281 3,130,341 15,000,516

Contribution Road accident Victims

protection Co., Ltd. -

-

24,327,233

-

-

24,327,233

Total underwriting expenses 48,095,967 9,853,281 194,580,332 1,492,340 90,239,344 344,261,264


Underwriting income, claims expenses and underwriting expenses by type consist of:- For the year ended December 31,

2010 (Baht)

Fire Marine Motor Personal

accident

Miscellaneous Total

Under writing income

Premium written 113,066,925 24,644,983 320,538,699 7,515,253 211,934,668 677,700,528

Less reinsurance premium (42,521,758) (7,150,253) (100,579) (2,953,117) (170,004,770) (222,730,477)

Net premium written 70,545,167 17,494,730 320,438,120 4,562,136 41,929,898 454,970,051

Less unearned premium reserves (5,772,742) (362,310) (42,008,263) (609,784) (2,584,815) (51,337,914)

Premium income is recognized 64,772,425 17,132,420 278,429,857 3,952,352 39,345,083 403,632,137

Commission and brokerage

income 22,615,732 1,141,648 (395,437) 1,053,193 24,335,362 48,750,498

Total underwriting income 87,388,157 18,274,068 278,034,420 5,005,545 63,680,445 452,382,635

Underwriting expense

Insurance claims and loss

adjustment expenses 12,973,740 4,564,323 124,989,442 602,226 33,533,041 176,662,772

Unexpired risk reserve increase

(decrease) - - - - - -

Commission and brokerage 30,521,998 3,190,974 34,868,579 823,841 11,302,290 80,707,682

Other underwriting income 3,971,619 1,866,714 5,627,737 123,322 2,295,295 13,884,687

Contribution Road accident

Victims protection Co., Ltd. - - 22,340,449 - - 22,340,449

Total underwriting expenses 47,467,357 9,622,011 187,826,207 1,549,389 47,130,626 293,595,590

18. OPERATING EXPENSES

Operation expenses for the years ended December 31, 2011 and 2010 are summarized as follows : Baht 2011 2010

Staff cost 46,314,871 45,850,953 Expenditure on building and equipment 15,190,310 16,644,823 Tax and duties 95,480 87,720 Bad debts and doubful debts 1,916,579 2,970,772 Other operation expense 93,406,166 67,180,058

Total operation expense 156,923,406 132,734,326

19. EMPLOYEES’ EXPENSE

Employees’ expenses for the years ended December 31, 2011 and 2010 are summarized as follow :


Baht 2011 2010 Salary and wage 63,027,802 64,845,955 Social security 1,479,513 1,382,619 Contribution under the defined benefits plan 5,240,318 - Other benefit 4,358,562 4,115,517 Total employees’ expense 74,106,195 70,344,091

20. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profit for the period by the weighted average number of ordinary shares outstanding during the year. 2011 2010 Net profit for the year (Baht) 5,859,143 28,041,938 Weighted average number of ordinary shares (shares) 20,000,000 20,000,000 Basic earnings per share (Baht/Share) 0.29 1.40

21. RELATED PARTY TRANSACTIONS

The relationship between the Company and the related parties are summarised below:

Company’s name Relationship Bangkok Union Life Insurance Co., Ltd. Partial co-directors and holding at 9.60% of

shares in that company and shareholder holding at 9.19% of shares

TPI Polene Pcl. Partial co-directors and holding at 0.12% of shares in that company

Significant transactions for the years ended December 31, 2011 and 2010 are summarized below:

Baht 2011 2010 Pricing policies Transactions with related parties Premium written 152,449,956 115,574,594 Premium rates for general

customers Rental and service income 5,229,859 5,298,553 Rental rate and service fee

for general customers.

As at December 31, 2011 and 2010, the Company had the following significant balances with related parties : Baht 2011 2010 Premium due and uncollected

TPI Polene Plc. 40,631,937 39,919,083 Other liabilities - Deposit

Bangkok Union Life Insurance Co., Ltd. 1,504,094 1,504,094

22. MANAGEMENT BENEFIT EXPENSE

Management benefit expenses represents the benefits paid to the Company’s management and directors such as salaries, related benefit and directors’ remuneration,


including the employee benefit. The Company’s management is the persons who are defined under the Securities and Exchange Act.

For the years ended December 31, 2011 and 2010, the Company has paid the management benefit expense to its management and directors totaling Baht 9.26 million and Baht 8.89 million, respectively.

23. SECURITIES DEPOSITED WITH THE REGISTRAR

As at December 31, 2011 and 2010, investments in held to maturity debt securities were deposited with the Registrar in accordance with the Non-Life Insurance Act No. 2 B.E. 2551 (2008) as follows:

Baht 2011 2010 Government Bonds 14,000,000 16,780,000

24. ASSETS ALLOCATED AS A RESERVE WITH THE REGISTRAR

As at December 31, 2011 and 2010, investments in time deposit and available for sale securities were deposited in accordance with the Notification of the Office of Insurance Commission regarding “Rates, Rules and Procedures for pledge of unearned premium reserve of Non-life Insurance Company B.E.2552” as follows:

Baht 2011 2010 Government Bonds 34,541,685 - Time deposit - 24,000,000 Available for sale securities 5,895,810 4,101,106 Total 40,437,495 28,101,106

25. COLLATERIZED ASSETS

As at December 31, 2011 and 2010, the Company’s collaterized assets are as follows :- Baht 2011 2010 Bonds as collateral for Court - Drivers in Criminal 3,040,000 3,750,000

- Electrical usage 1,710,000 1,710,000 Time deposit as collateral for-Bank overdrafts - 64,500,000 Total 4,750,000 69,960,000

26. CAPITAL MANAGEMENT

The primary objectives of the Company’s capital management are to maintain the Company’s ability to continue as a going concern and to maintain net capital rule in accordance with Notifications of the Office of Insurance Commission.

Under the Non-life Insurance Act, the Company shall maintain the capital fund during the undertaking of non-life insurance business in the amount of not less than ten percent of net premium written for the last calendar year but not lower than thirty million


baht. As at December 31, 2011 and 2010, the Company maintains the capital fund exceed the requirement.

27. STATUTORY RESERVE

Pursuant to the Public Limited Companies Act B.E. 2535 the Company is required to set aside at least 5% of its net profit as a statutory reserve until such reserve reaches 10% of the registered share capital. The statutory reserve is not available for dividend distribution.

28. DIVIDEND PAID

On April 1, 2011, the Annual General Meeting of the shareholders resolved the appropriation of earnings by paying cash dividend from retained earnings as at December 31, 2010 to the Company’s shareholders of Baht 0.80 per share, or a total of Baht 16.00 million. The Company paid cash dividend on April 29, 2011.

On April 9, 2010, the Annual General Meeting of the shareholders resolved the appropriation of earnings by paying cash dividend from retained earnings as at December 31, 2009 to the Company’s shareholders of Baht 0.75 per share, or a total of Baht 15 million. The Company paid cash dividend on May 7, 2010.

29. CORPORATE INCOME TAX

Corporate income tax for the years ended December 31, 2011 is calculated by multiplying earnings by the rate 30% of net profit after adding back certain expenses which are non-deductible for income tax computation purposes, and less certain transactions which are exemption or allowable from income tax.

Corporate income tax for the years ended December 31, 2010 is calculated by multiplying earnings by the rate 25% of net earnings not exceed Baht 300 million which the tax rates applied are in compliance with the provision of Royal Decree 475 (B.E. 2551) dated July 29, 2008, issued under the Revenue Code, regarding the reduction of income tax rates. Such earnings represents net earnings before income tax for the period, after adding back certain expenses which are non-deductible for income tax computation purposes, and less certain transactions which are exemption or allowable from income tax.

30. RENTAL OFFICE SPACE AGREEMENTS

The Company entered into certain office rental and service agreements to rent out office spaces with many customers. Under these agreements, the Company shall receive rental and service payments as classified by time period as follows:-

Baht 2011 2010 Receivable within : 1 year 47,820,785 45,023,693 Over 1 year but under 5 years 38,200,641 36,454,517 Over 5 years - -

31. COMMITMENTS


31.1 The Company has entered into a land rental agreement with Bangkok Union Broker Company Limited, the shareholder holding at 1.38%, for a period of 30 years, commencing on July 6, 1992 to July 6, 2022. The Company is committed to pay annual rental of Baht 1.80 million and the outstanding balance of commitment as at December 31, 2011 and 2010 payable as follows:

Baht 2011 2010 Payable within : 1 year 1,800,000 1,800,000 Over 1 year but under 5 years 7,200,000 7,200,000 Over 5 years 9,900,000 11,700,000

31.2 As at December 31, 2011 and 2010, the Company has outstanding commitments in respect of leases agreements as follows ; for the building of 4 and 2 agreements, equipment of 3 and 4 agreements and commitments in respect of services of 3 and 4 agreements, respectively. These agreements have a term of 1 year to 3 years. The Company is committed to pay monthly rental and services approximately Baht 130,930 and 118,175 and the outstanding balance of commitments are payable as follows:

Baht 2011 2010 Payable within : 1 year 1,471,360 1,095,500 Over 1 year but under 5 years 2,594,460 629,800 Over 5 years - -

32. CONTINGENT LIABILITIES

As at December 31, 2011, the Company has been sued for damaged totaling approximately Baht 71,476,885 (December 31, 2010 : Baht 71,843,360) as insurer. The outcomes of these causes have not yet been finalised but the Company has set aside reserves for its contingent losses amounting to approximately Baht 57,812,381 (December 31, 2010 : Baht 58,178,856)

33. FINANCIAL INFORMATION BY SEGMENT

The Company mainly operates in two main industrial segments, insurance and rental of office space. These business are mainly carried on in Thailand.

The operating results for the years ended December 31, 2011 and 2010 which are classified by segments are as follows:-

For the years ended December 31, (Baht) Insurance Rental of office space Total 2011 2010 2011 2010 2011 2010

Income 487,010,533 452,382,635 67,450,493 67,280,706 554,461,026 519,663,341 Net investment income 15,327,093 12,387,996 - - 15,327,093 12,387,996 Gains (losses) on

investment in securities 7,728,031 (419,488) - - 7,728,031 (419,488)


For the years ended December 31, (Baht) Insurance Rental of office space Total 2011 2010 2011 2010 2011 2010

Other income 1,510,200 7,920 - - 1,510,200 7,920

Total revenues 511,575,857 464,359,063 67,450,493 67,280,706 579,026,350 531,639,769

Operating profit 167,314,592 170,763,472 21,333,497 17,312,525 188,648,089 188,075,997

Operating expenses

(168,969,995) (141,937,008)

Interest expenses (321,872) (368,013)

Corporate income tax (13,497,079) (17,729,038)

Net earnings for the periods 5,859,143 28,041,938

Assets classified by segments as at December 31, 2011 and 2010 as reflected in the financial statements of the Company are as follows :- (Baht) Insurance Rental of office space Total 2011 2010 2011 2010 2011 2010

Premises and equipment - net

124,483,297 81,898,942 336,405,606 331,234,188 460,888,903 413,133,130

Other assets 1,655,215,975 771,830,970

Total assets 2,116,104,878 1,184,964,100

Additional cash flows information classified by segments are as follows:- For the years ended December 31, (Baht) Insurance Rental of office space Total 2011 2010 2011 2010 2011 2010 Cash flows:- Operating activities

(18,164,961) 52,946,196 47,541,610 46,046,329 29,376,649 98,992,525

Investing activities

52,545,113 (24,521,483) - - 52,545,113 (24,521,483)

Financing activities

(17,199,604) (61,393,082) - - (17,199,604) (61,393,082)

17,180,548 (32,968,369) 47,541,610 46,046,329 64,722,158 13,077,960

34. DISCLOSURE OF FINANCIAL INSTRUMENTS

The Company does not speculate or engage in the trading of any derivative financial instruments.

Financial instruments carried in the statement of financial position include deposits at financial institutions, investments in securities, premium due and uncollected and bank overdrafts. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.

Financial instruments carried in the statement of financial position include deposits at financial institutions, investments in securities, premium due and uncollected and bank overdrafts. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.

34.1 Credit risk


Concentrations of credit risk with respect to premiums due and uncollected are insignificant, due to the large number of customers comprising the customer base and their dispersion across different industries and geographic regions in Thailand. The maximum exposure to credit risk is the book value of assets after deduction of allowance for doubtful accounts as presented in the statement of financial position.

34.2 Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate and the Company’s cash flows will affect due to changes in market interest rates.

The financial instruments with interest and without interest are classified below :-

Baht Net book value as at December 31, 2011 Floating

interest rate

Fixed interest

rate

Interest – free

Total

Financial assets Deposits at financial institutions 24,897,124 54,500,000 6,453,124 85,850,248 Investments in securities Equity securities - - 173,831,325 173,831,325 Unit trust - - 1,543,313 1,543,313 Bond - 62,531,268 - 62,531,268 Bill of exchange - 50,000,000 - 50,000,000 Time deposit - 20,290,491 - 20,290,491 - 132,821,759 175,374,638 308,196,397

The financial instruments carrying interest at fixed rates are classified below, according to the period from the statements of financial position date to the contractual reprising date, or the maturity date (whichever is earlier) :-

Baht At call Within 1

year 2 - 5 years 6 - 10

years Total Average interest

rate Percent

Financial assets Deposits at financial institutions - 54,500,000 - - 54,500,000 0.29 Investments in securities Bond - 11,698,808 45,934,644 4,897,816 62,531,268 3.50 Bill of exchange - 50,000,000 - - 50,000,000 3.70 Time deposit - 20,290,491 - - 20,290,491 3.50 - 81,989,299 45,934,644 4,897,816 132,821,759

34.3 Fair value

The following methods and assumptions were used by the Company in estimating the fair values of financial instruments:

Investment in securities

The fair value of listed securities is based on their quoted market prices.


The fair value of other investments cannot be properly calculated, and therefore no disclosure is made.

Bonds which are determined as the investments held-to-maturity debt securities are presented at amortised cost. The fair value is not calculated, therefore no disclosure is made.

As at December 31, 2011, the aggregate carrying values of the Company’s financial instruments are insignificantly different from their aggregate fair value.

35. LOSS RESERVES FOR CLAIM WHICH INCURRED BUT NOT REPORTED - IBNR

According to the notification of Ministry of Commerce regarding “Allocation of Unearned Premium Reserve and Loss Reserve”, dated 30 September 2005, from 1 January 2009, the Company is to allocate IBNR according to the actuarial method, but it is not to be less than 2.5% of the total net premium written on all types of risk in the twelve months prior to the allocation date.

The financial statements for the years period ended December 31, 2011 and 2010, the Company recorded the claims reserve at 2.5% of the total net premium written on all types of risk in the previous twelve months because it is higher than the actuarial method.

36. EFFECT FROM THE FLOODS

From the severe flooding situation that occurred in the end of 2011 in several areas of Thailand. The Company’s management has estimated loss reserve based on the loss affected from floods area and the surveyor reports and for claims refundable from reinsurers, with reference to the related reinsurance contracts. The Company has already recorded the compensation of approximately Baht 65.04 million (net from reinsurance) in the financial statements of 2011. However, there are inherent uncertainties in the assumptions used by the management in preparing the loss reserves, which could affect the amount of claim reserve refundable from reinsurers. The actual result might differ in the estimation.

The Impact of flooding in the financial statements described as follows: Baht 2011 Gross claims 853,367,962 Claims reserve refundable from reinsurers (635,804,825) Net Claims 217,563,137 Claims reserve refundable under Excess of Loss contracts (152,519,996) Net claims expense - the statements of comprehensive income

65,043,141

37. RECLASSIFICATION OF ACCOUNTS

Some accounting transaction in financial statement for the years period ended December 31, 2010 had been reclassified in order to comply with transaction shown in financial statement for the years ended December 31, 2011.


Baht As at December 31, 2010

As previously reported As reclassifiedStatement of financial position

Cash and deposits at financial institutions 203,385,424 - Cash and cash equivalents - 24,385,424 Premium due and uncollected - net 148,789,649 152,531,290 Reinsurance assets - net - 89,733,810 Amount deposit on reinsurance treaties 1,684,102 - Due from reinsurers - net 6,611,610 - Investment assets Investment in securities Available for sales investment securities - 224,861,996 Held to maturity financial assets - 209,702,399 Other Investments - 47,515,676 Bonds 30,702,399 - Stocks - net 270,731,730 - Other securities 1,645,942 - Other assets Others 14,312,018 15,355,546 Income tax payable - 1,203,593 Due to reinsurers 16,421,167 44,406,583 Insurance contract liabilities Loss reserve and outstanding claims 131,303,617 220,350,605 Amounts withheld on reinsurance treaties 30,809,135 - Other liabilities 81,971,174 80,767,581 Baht For the years ended December 31, 2010

As previously reported As reclassifiedStatement of comprehensive income

Fee and commission income - 48,750,498 Insurance claims and loss adjustment expenses - 176,662,772 Losses incurred during the period - net 155,356,394 - Loss adjustment expense - net 6,471,955 - Commission and brokerages 31,957,184 80,707,682 Other underwriting expenses 29,009,544 13,884,687 Contribution to Road accident Victims Protection Co., Ltd. - 22,340,449 Operating expenses - 132,734,326 Personnel expenses 70,344,091 - Premises and equipment expenses 71,820,041 - Taxes and duties 126,808 - Bad debt and allowance for doubtful accounts

2,970,772 -

Directors’ remuneration 1,722,000 - Other operating expenses 67,388,572 - Other expense - Premises and equipment expenses for rental - 54,084,602 Contribution to Office of Insurance commission

- 1,963,425

Contribution to Non - life guarantee fund - 1,121,895 Contribution to Road victims protection fund - 2,000,942 Finance cost - 368,013

38. APPROVAL OF THE FINANCIAL STATEMENTS These financial statements were authorized for issue by the Board of Directors on

February 29, 2012.

Documents

Content · billion. Our firm, in 2011, the annual premium increases by 2.78%. And have the annual total of 14.17 million baht. But, firm has other indirect income from the rental