MODEL INSURANCE FINANCIAL STATEMENTS - MICPA€¦ · The Council of the Institute has approved the publication of this Statement, Model Insurance Financial Statements for members’

MODEL INSURANCE BERHAD (Incorporated in Malaysia) – 882009-A

FINAL (July 30, 2010)

MODEL INSURANCE FINANCIAL STATEMENTS



MICPA STATEMENT MODEL INSURANCE FINANCIAL STATEMENTS

The Council of the Institute has approved the publication of this Statement, Model Insurance Financial Statements for members’ guidance. The Model Insurance Financial Statements have incorporated accounting standards issued and pronouncements announced by the Malaysian Accounting Standards Board (MASB) up to October 1, 2009. ------------------------------------------------------------------------------------------------------------------------------------------------------- ACKNOWLEDGEMENT

Special appreciation is expressed to the following persons for their contributions and technical input towards the production of the Model Insurance Financial Statements: Mr Ken Pushpanathan (Chairman)

Ms Chong Kooi Wah / Ms Tong Seuk Ying (Project Managers)

Mr Koh Kong Yong / Ms Avinder Sandhu / Ms Toh Ying Ying / Mr Peter Lee Eng Boon / Cik Wan Malawati Wan Mansor

(Bank Negara Malaysia)

Ms Tan Bee Leng / Ms Stephanie Lip / Cik Mas Sukmawati / Ms Wong Chee Cheng

(Malaysian Accounting Standards Board)

Ms Rachel Chee / Mr Lim Kian Tong (Malaysian Institute of Accountants)

Mr Tang Loon Koon (Life Insurance Association of Malaysia)

Mr Clarence Heng (Persatuan Insurans Am Malaysia)

En Muhammad Fikri Mohamad Rawi / Ms Maggie Chong Cik Noraidawati Hanapi

(Malaysia Takaful Association)

Mr Teh Loo Hai (Teh Actuarial Services Sdn Bhd)

Ms Teoh Bee Lan (Malaysian Re-Insurance Berhad)

Mr Gan Hock Soon / Mr Lum Chiew Mun (BDO Binder)

Mr Brandon Bruce Sta Maria (Ernst & Young)

Mr Alex Khaw / Mr Loh Kam Hian (KPMG)

Mr Tang Kin Kheong / Mr Francis Joseph (Mazars)

Mr Sridharan Nair / Ms Choo Mei Ping / Ms Chan Suit Lye (PricewaterhouseCoopers)

Copyright @ July 2010 by The Malaysian Institute of Certified Public Accountants (MICPA). All rights reserved. No part of this publication may be reproduced, stored in retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior permission of the MICPA. This Statement is published by The Malaysian Institute of Certified Public Accountants (3246 – U) No. 15, Jalan Medan Tuanku, 50300 Kuala Lumpur, Malaysia Tel No : 03-2698 9622 Fax No : 03-2698 9403 E-mail : [email protected] Website : www.micpa.com.my

mailto:[email protected]

http://www.micpa.com.my/



M O D E L I N S U R A N C E B E R H A D ( 8 8 2 0 0 9 - A )

(Incorporated in Malaysia)

Directors‟ Report and Audited Financial Statements

31 December 2010



CONTENTS PAGE

Directors’ report 1 - 4

Statement by directors 5

Statutory declaration 5

Independent auditors' report 6 - 7

Balance sheet 8

Income statement 9

Statement of comprehensive income 10

Statement of changes in equity 11

Cash flow statement 12

Notes to the financial statements 13 - 78


DIRECTORS' REPORT FINAL (July 30, 2010)

- 1 -

DIRECTORS' REPORT CA169(5)-(13)

The Directors have pleasure in presenting their report together with the audited financial statements of the Company for the financial year ended 31 December 2010.

169(5)

PRINCIPAL ACTIVITIES

The Company is engaged principally in the underwriting of life insurance and general insurance business.

169(6)(b) 101.126(b)

There have been no significant changes in the nature of the principal activities during the financial year.

RESULTS RM‟000

Net profit for the year 9,464 169(6)(c)

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.

169(6)(d)

In the opinion of the Directors, the results of the operations of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature.

169(6)(p) 169(7)

DIVIDENDS

The amount of dividends* declared and paid by the Company since the end of the previous financial year were as follows:

169(6)(h)

RM‟000

In respect of the financial year ended 31 December 2009 as reported in the Directors’ Report of that year:

Final dividend of 3.9% less 25% taxation, on 100,000,000 Ordinary Shares, declared on 30 April 2010 and paid on 5 May 2010

2,960

[* Insert particulars for declaration and payment of Interim dividends, if applicable.

In respect of the financial year ended 31 December 2010: Interim dividend of X% less 25% taxation, on 100,000,000 Ordinary Shares, declared on dd/mm 2010 and paid on dd/mm 2010

XXX]

At the forthcoming Annual General Meeting, a Final dividend in respect of the financial year ended 31 December 2010, of 3.0% less 25% taxation on 100,000,000 Ordinary Shares, amounting to a dividend payable of RM2,250,000 (2.2 sen net per Ordinary Share) will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2011.

110.12 110.13



- 2 -

DIRECTORS

The names of the Directors of the Company in office since the date of the last report and at the date of this report are:

169(6)(a)

AAA BBB CCC DDD EEE FFF GGG (alternate to AAA) III (appointed on 31 March 2010) HHH (resigned on 31 March 2010)

CORPORATE GOVERNANCE

[Insert appropriate disclosure as required under JPI/GPI 25 (Consolidated): Prudential Framework for Corporate Governance for Insurers, for example:

Board Responsibility and Oversight

Management Accountability

Corporate Independence

Internal Controls and Operational Risk Management

Public Accountability

Financial Reporting Disclosure shall be company-specific and reflect actual practices. Any departure from the Principles of the Framework and the circumstances justifying such departure shall be specifically explained for. In addition, Insurers may wish to highlight certain significant practices or distinct applications that differ from the best practices but nevertheless demonstrate compliance with the Principles of the Framework.]

DIRECTORS' BENEFITS

During and at the end of the financial year, no arrangement subsisted to which the Company is a party with the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate*. [* Disclose such benefits, e.g., share options, if applicable.]

169(6)(f)(i)

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the Directors or the fixed salary of a full-time employee of the Company as shown in Note 27 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 34 to the financial statements.

169(8)

DIRECTORS' INTERESTS 169(6)(g)

According to the register of Directors' shareholdings, the interests of Directors in office at the end of the financial year in shares and options over shares* in the Company and its related corporations during the financial year were as follows: [* Disclose other equity instruments, if applicable.]

|-----------Number of Ordinary Shares of RM1 each--------| 1 January

2010

Acquired

Sold 31 December

2010

The Company Direct Interest: AAA 1,000,000 - - 1,000,000 BBB 2,000,000 - - 2,000,000 CCC 1,000,000 - - 1,000,000 DDD - 500,000 - 500,000



- 3 -

|----------Number of Ordinary Shares of RM1 each----------| 1 January

2010

Acquired

Sold 31 December

2010

The Company Deemed Interest * AAA 500,000 - - 500,000 Holding Company Ins Holdings Berhad Direct Interest: AAA 250,000 - - 250,000

Other than as disclosed, none of the Directors in office at the end of the financial year had any interest in shares in the Company or its related corporations during the financial year.

[* In accordance with the requirements of Section 134 of the Companies Act, 1965 (as amended).] OTHER STATUTORY INFORMATION

(a) Before the balance sheet and income statement of the Company were made out, the Directors

took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts

and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and

169(6)(i)

(ii) to ensure that any current assets which were unlikely to realise their value as shown in

the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

169(6)(k)

(b) At the date of this report, the Directors are not aware of any circumstances which would render:

(i) the amount written off for bad debts or the amount of the provision for doubtful debts in

the financial statements of the Company inadequate to any substantial extent; and

169(6)(j)

(ii) the values attributed to the current assets in the financial statements of the Company

misleading.

169(6)(l)(i)

(c) At the date of this report, the Directors are not aware of any circumstances which have arisen

which would render adherence to the existing method of valuation of assets or liabilities of the Company misleading or inappropriate.

169(6)(l)(ii)

(d) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt

with in this report or financial statements of the Company which would render any amount stated in the financial statements misleading.

169(6)(o)

(e) As at the date of this report, there does not exist:

(i) any charge on the assets of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

169(6)(m)(i)

(ii) any contingent liability of the Company which has arisen since the end of the financial

year.

169(6)(m)(ii)



- 4 -

(f) In the opinion of the Directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Company to meet its obligations when they fall due; and

169(6)(n)

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval

between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Company for the financial year in which this report is made.

169(6)(q)

For the purpose of paragraphs (e) and (f), contingent and other liabilities do not include liabilities arising from contracts of insurance underwritten in the ordinary course of business of the Company.

(g) Before the income statement and balance sheet of the Company were made out, the Directors

took reasonable steps to ascertain that there was adequate provision for its insurance liabilities in accordance with the valuation methods specified in the risk-based capital framework for insurers issued by Bank Negara Malaysia.

AUDITORS

The Auditors, XYZ & Co., have expressed their willingness to continue in office. 172(2)

Signed on behalf of the Board in accordance with a resolution of the Directors dated dd/mm/yyyy. 169(5)

AAA CCC



- 5 -

STATEMENT BY DIRECTORS CA169(15)

PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

We, AAA and CCC, being two of the Directors of MODEL INSURANCE BERHAD, do hereby state that, in the opinion of the Directors, the accompanying financial statements set out on pages 8 to 78 are drawn up in accordance with the provisions of the Companies Act, 1965 and Financial Reporting Standards in Malaysia so as to give a true and fair view of the financial position of the Company as at 31 December 2010 and of the financial performance and the cash flows of the Company for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the Directors dated dd/mm/yyyy. AAA CCC

STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965 169(16)

I, CCC, being the Director* primarily responsible for the financial management of MODEL INSURANCE BERHAD, do solemnly and sincerely declare that the accompanying financial statements set out on pages 8 to 78 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

[* or Officer, if applicable]

Subscribed and solemnly declared by the abovenamed CCC at Kuala Lumpur in Wilayah Persekutuan on dd/mm/yyyy CCC Before me,


- 6 -

INDEPENDENT AUDITORS‟ REPORT TO THE MEMBERS OF CA174(2)

MODEL INSURANCE BERHAD (Incorporated in Malaysia) Report on the Financial Statements

We have audited the financial statements of MODEL INSURANCE BERHAD, which comprise the balance sheet as at 31 December 2010 of the Company, the income statement, statement of changes in equity and cash flow statement of the Company for the year then ended, and a summary of significant policies and explanatory notes, as set out on pages 8 to 78.

Directors‟ Responsibility for the Financial Statements

The Directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors‟ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Approved Standards on Auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Company as at 31 December 2010 and of its financial performance and cash flows of the Company for the year then ended.

174(2)(a)

Reporting on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report that in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act.

174(2)(b)


- 7 -

INDEPENDENT AUDITORS‟ REPORT TO THE MEMBERS OF

MODEL INSURANCE BERHAD

(Incorporated in Malaysia)

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

XYZ & Co. XYZ AF: 0888 No. 1888/08/12(J/PH) Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia dd/mm/yyyy



- 8 -

BALANCE SHEET

AS AT 31 DECEMBER 2010

Note 2010 2009 FRS

RM‟000 RM‟000 Assets

Property and equipment 3 12,876 18,150 101.68(b)

Investment properties 4 18,957 17,802 101.68(a)

Intangible assets 5 9,600 10,113 101.68(c)

Investments* 6 349,473 329,100 101.68(d)

Malaysian government securities 14,140 10,222 Debt securities 124,951 159,173 Equity securities 173,700 124,500 Unit and property trust funds 20,003 20,007 Loans 7,550 6,354 Deposits with financial institutions 9,129 8,844 [* Insert Derivative financial instruments, if applicable.]

Reinsurance assets 7 109,617 104,181 4.36

Insurance receivables 8 121,860 112,515 101.68(h)

Other receivables 9 15,879 14,907 101.68(h)

Deferred acquisition costs 10 40,338 34,431 4.36

Cash and bank balances 47,647 12,849 101.68(i)

Total assets 726,247 654,048

Equity, policyholders‟ funds and liabilities

Share capital 11 100,000 100,000 101.68(p)

Share premiums 8,919 8,919 Retained earnings 12 14,131 7,627 101.68(p)

Other reserves 12 6,796 6,460 101.68(p)

Total equity 129,846 123,006

Insurance contract liabilities 13 437,859 392,429 4.36

Investment contract liabilities 14 35,124 34,674 4.36

Provisions 15 18,612 17,730 101.68(k)

Deferred tax liabilities 16 8,870 6,389 101.68(n)

[* Insert Derivative financial instruments, if applicable.] Other financial liabilities 17 23,229 21,816 101.68(l)

Insurance payables 18 15,471 14,523 101.68(j)

[Insert Deferred income, if applicable.] Tax payable 5,095 5,002 101.68(m)

Other payables 19 52,141 38,479 101.68(j)

Total liabilities 596,401 531,042

Total equity, policyholders‟ funds and liabilities 726,247 654,048

The accompanying notes form an integral part of the financial statements



- 9 -

INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010

Note 2010 2009

RM‟000 RM‟000 Operating revenue 20 241,095 243,387 101.81(a)

Gross earned premiums 21(a) 216,438 220,341 Premiums ceded to reinsurers 21(b) (56,268) (57,333)

Net earned premiums 160,170 163,008

Investment income 22 24,657 23,046 Realised gains and losses 23 639 279 Fair value gains and losses 24 3,315 3,126 Fee and commission income 25 15,858 6,543 Other operating revenue 1,530 1,494

Other revenue 45,999 34,488

Gross benefits and claims paid 26(a) (115,254) (118,230) Claims ceded to reinsurers 26(b) 30,813 31,590 Gross change to contract liabilities 26(c) (27,631) (30,053) 101.87(g)

Change in contract liabilities ceded to reinsurers 26(d) 4,770 5,073 101.87(g)

Net claims (107,302) (111,620)

Fee and commission expense (49,998) (37,338) Management expenses 27 (34,698) (30,690) 101.86

Other expenses (84,696) (68,028)

Profit/surplus before Taxation 14,171 17,848

Taxation 28 (4,707) (5,919)

Net profit for the year 9,464 11,929

Earnings per share (sen) 29

Basic 9.5 11.9 133.66

Fully diluted 9.5 11.9 133.66

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



- 10 -

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2010

2010 2009 101.81

RM‟000 RM‟000 Net profit for the year 9,464 11,929 Other comprehensive income: Available-for-sale fair value reserves Net gain/(loss) arising during the year 690 15,014 Net realised gain transferred to Income Statement (138) (123)

552 14,891 Tax effects thereon (216) (3,579)

336 11,312

Total comprehensive income for the year 9,800 23,241




- 11 -

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2010

|-----Non-Distributable-----| Distributable

Share Capital

Share Premiums

Available-for-sale Fair

Value Reserves*

Retained Earnings

Total Equity

Note (Note 11) (Note 12)

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

At 1 January 2009 100,000 8,919 (4,852) 22,959 127,026 101.97(b)&(c)

Total comprehensive income for the year - - 11,312 11,929 23,241

Dividends paid during the year 30 - - - (27,261) (27,261) 101.97(a)

At 31 December 2009 100,000 8,919 6,460 7,627 123,006

At 1 January 2010 100,000 8,919 6,460 7,627 123,006

Total comprehensive income for the year - - 336 9,464 9,800

Dividends paid during the year 30 - - - (2,960) (2,960) 101.97(a)

At 31 December 2010 100,000 8,919 6,796 14,131 129,846

[* Insert additional columns for Other Reserves, if applicable. E.g., there may be Cash Flow Hedging Reserve if Hedge Accounting is applied.]


MODEL INSURANCE BERHAD (Incorporated in Malaysia) – 882009-A FINAL (July 30, 2010))

- 12 -

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2010

Note 2010 2009

RM‟000 RM‟000

Operating Activities* 107.10

Cash generated from operating activities 31 18,221 14,758 107.10

Dividend/distribution income received 8,500 9,090 107.33

Interest/profit income received 12,027 14,200 107.33

Rental income on investment properties received 650 600

Income tax paid (4,050) (5,500) 107.35

Net cash flows from operating activities 35,348 33,148

Investing Activities 107.10

Proceeds from disposal of property and equipment 10,000 3,000 107.16

Purchase of property and equipment 3 (7,242) (5,949) 107.16 Purchase of intangibles 5 (348) (954) 107.16 Net cash flows from investing activities 2,410 (3,903)

Financing Activities 107.10

Dividends paid to equity holders 30 (2,960) (27,261) 107.31

Net cash flows from financing activities (2,960) (27,261)

Net increase in cash and cash equivalents 34,798 1,984

Cash and cash equivalents at beginning of year 12,849 10,865

Cash and cash equivalents at end of year 47,647 12,849 107.45

Cash and cash equivalents comprise:

Fixed and call deposits (with maturity of less than three months): CA Sch 9(m)(vii)

Licensed financial institutions 2,000 1,000

Others - 1,000

Cash and bank balances 45,647 10,849

47,647 12,849 107.45

Cash and cash equivalents of the Life fund of RM27,818,000 (2009: RM9,934,000) are not available for the general use of the Company other than to meet the obligations under the insurance fund).

[* If the direct method is used, disclosures in accordance with FRS4.37(b) is required.]


MODEL INSURANCE BERHAD (Incorporated in Malaysia) – 882009-A NOTES TO THE FINANCIAL STATEMENTS


- 13 -

NOTES TO THE FINANCIAL STATEMENTS FRS

31 DECEMBER 2010 101.8(e), 101.103

1. CORPORATE INFORMATION

The Company is an unquoted public limited liability company, incorporated and domiciled in Malaysia. The registered office of the Company is located at Level 8, Plaza Model, Jalan Model, 50088 Kuala Lumpur.

101.126(a)

The immediate and ultimate holding company of the Company is Ins Holdings Bhd., which is incorporated in Malaysia and produces financial statements available for public use.

101.126(c)

The Company is engaged in the underwriting of life insurance and general insurance business. There have been no significant changes in the nature of the principal activities during the financial year.

101.126(b)

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on dd/mm/yyyy.

110.17

2. SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation 110.14

The financial statements comply with the Financial Reporting Standards (“FRS”) in Malaysia and the provisions of the Companies Act, 1965, the Insurance Act, 1996 and Guidelines/Circulars issued by Bank Negara Malaysia (“BNM”).

At the beginning of the current financial year, the Company had adopted new and revised FRSs which are mandatory for financial periods beginning on or after 1 January 2010 as described fully in Note 2.4.

101.105(a)

The financial statements of the Company have also been prepared on a historical cost basis, except for investment properties and those financial instruments that have been measured at their fair values and insurance liabilities in accordance with the valuation methods specified in the risk-based capital framework for insurers issued by BNM (“the Framework”). The Company has met the minimum capital requirements as prescribed by the framework as at the balance sheet date.

101.108(a)

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liability simultaneously. Income and expense will not be offset in the income statement unless required or permitted by any accounting standard or interpretation, as specifically disclosed in the accounting policies of the Company.

The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated.

101.46(d)&(e)

2.2 Summary of Significant Accounting Policies

(a) Property and Equipment 116.73(a)

All items of property and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit or loss during the financial period in which they are incurred.



- 14 -

Subsequent to recognition, property and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

116.73(a)

Depreciation of property and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates:

116.73(a)

Furniture and fittings 10% 116.73(c)

Motor vehicles 20%

Office equipment and computers 25%

The residual values, useful lives and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property and equipment.

116.51

An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in profit or loss.

116.71

(b) Investment Properties 140.5

Investment properties are properties which are held either to earn rental income or for capital appreciation or for both.

Such properties are measured initially at cost, including transaction costs.

Subsequent to initial recognition, investment properties are stated at fair value*. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information is not available, the Company uses alternative valuation methods such as recent prices on less active markets or discounted cash flow projections. Fair value is reviewed at every balance sheet date and a formal valuation by an independent professional valuer is carried out once in every three years or earlier if the carrying value of the investment properties is materially different from the market value. [* If Cost model is adopted, insert appropriate accounting policy.]

140.33 140.36

Gains or losses arising from changes in the fair values of investment properties are recognised in profit or loss in the year in which they arise.

140.35

A property interest under an operating lease is classified and accounted for as an investment property on a property-by-property basis when the Company holds it to earn rentals or for capital appreciation or both. Any such property interest under an operating lease classified as an investment property is carried at fair value.

140.30

Investment properties are derecognised when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year in which they arise.

140.66 140.69

(c) Intangible Assets* 138.118

[* Insert appropriate Accounting Policy on Goodwill, if applicable.]

Other Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets are not capitalised and expenditure is reflected in profit or loss in the period in which the expenditure is incurred. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.



- 15 -

Acquired computer software licences* are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of three to five years.

Costs associated with maintaining computer software programmes are recognised as an expense when incurred. Costs that are directly associated with identifiable and unique software products controlled by the Company, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Costs include employee costs incurred as a result of developing software and an appropriate portion of relevant overheads. Computer software development costs recognised as assets are amortised using the straight line method over their estimated useful lives, not exceeding a period of 3 years.

[* Insert notes on other specific intangible assets, as applicable.] Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating-unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to definite is made on a prospective basis.

138.88

138.121

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.

(d) Impairment of Non-Financial Assets* 136.134

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. The carrying amounts of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated to determine the amount of impairment loss. Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

136.9

For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the cash-generating unit (“CGU”) to which the asset belongs.

An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the units or groups of units on a pro-rata basis.

An impairment loss is recognised in profit or loss in the period in which it arises, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for as a revaluation decrease to the extent that the impairment loss does not exceed the amount held in the asset revaluation reserve for the same asset.

An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset is recognised in profit or loss, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase.

[* Insert appropriate note for impairment of Goodwill, if applicable.]



- 16 -

(e) Investments and Other Financial Assets*

The Company classifies its investments into financial assets at fair value through profit or loss (“FVTPL”), held-to-maturity financial assets (“HTM”), loans and other receivables (“LAR”) and available-for-sale financial assets (“AFS”).

139.9 7.21

The classification depends on the purpose for which the investments were acquired or originated. Management determines the classification of its investments at initial recognition and re-evaluates this at every reporting date. Financial assets are classified as fair value through profit or loss where the Company’s documented investment strategy is to manage financial assets on a fair value basis, because the related liabilities are also managed on this basis. The available-for-sale and held-to-maturity categories are used when the relevant liability (including shareholders’ funds) are passively managed and/or carried at amortised cost. All regular way purchases and sales of financial assets are recognised on the trade date which is the date that the Company commits to purchase or sell the asset. Regular way purchases or sales of financial assets require delivery of assets within the period generally established by regulation or convention in the market place.

FVTPL Financial assets at FVTPL include financial assets held for trading and those designated at fair value through profit or loss at inception. Investments typically bought with the intention to sell in the near future are classified as held-for-trading. For investments designated as at fair value through profit or loss, the following criteria must be met:

the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or liabilities or recognising gains or losses on a different basis, or

the assets and liabilities are part of a group of financial assets, financial liabilities or both which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy.

These investments are initially recorded at fair value. Subsequent to initial recognition, these investments are remeasured at fair value. Fair value adjustments and realised gains and losses are recognised in profit or loss.

HTM Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as HTM when the Company has the positive intention and ability to hold until maturity. These investments are initially recognised at cost, being the fair value of the consideration paid for the acquisition of the investment. After initial measurement, HTM financial assets are measured at

amortised cost, using the effective yield method, less provision for impairment. Gains and losses are

recognised in profit or loss when the investments are derecognised or impaired, as well as through the amortisation process.

LAR LAR are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These investments are initially recognised at cost, being the fair value of the consideration paid for the acquisition of the investment. All transaction costs directly attributable to the acquisition are also included in the cost of the investment. After initial measurement, loans and receivables are measured at amortised cost, using the effective yield method, less provision for impairment. Gains and losses are recognised in profit or loss when the investments are derecognised or impaired, as well as through the amortisation process.

139.70 139.9



- 17 -

AFS AFS are non-derivative financial assets that are designated as available-for-sale or are not classified in any of the three preceding categories. These investments are initially recorded at fair value. After initial measurement, AFS are remeasured at fair value. Fair value gains and losses of monetary and non-monetary securities are reported as a separate component of equity until the investment is derecognised or investment is determined to be impaired except that for the life business, such fair value gains and losses are reported as a separate component of contract liabilities. Fair value gains and losses of monetary securities denominated in a foreign currency are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences on monetary securities are recognised in profit or loss; translation differences on non-monetary securities are reported as a separate component of equity until the investment is derecognised. On derecognition or impairment, the cumulative fair value gains and losses previously reported in equity is transferred to profit or loss.

139.67 – 70

[* Insert Derivative Financial Instruments, if applicable.]

(f) Fair Value of Financial Instruments 139.48 & 48A

The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to quoted market bid prices for assets and offer prices for liabilities, at the close of business on the balance sheet date.

7.27

For investments in unit and real estate investment trusts, fair value is determined by reference to published bid values.

For financial instruments where there is not an active market, the fair value is determined by using valuation techniques. Such techniques include using recent arm’s length transactions, reference to the current market value of another instrument which is substantially the same, discounted cash flow analysis and/or option pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs. For discounted cash flow techniques, estimated future cash flows are based on management’s best estimates and the discount rate used is a market related rate for a similar instrument. Certain financial instruments are valued using pricing models that consider, among other factors, contractual and market prices, co-relation, time value of money, credit risk, yield curve volatility factors and/or prepayment rates of the underlying positions. The use of different pricing models and assumptions could produce materially different estimates of fair values.

The fair value of floating rate and over-night deposits with financial institutions is their carrying value. The carrying value is the cost of the deposit/placement and accrued interest/profit. The fair value of fixed interest/yield-bearing deposits is estimated using discounted cash flow techniques. Expected cash flows are discounted at current market rates for similar instruments at the balance sheet date.

If the fair value cannot be measured reliably, these financial instruments are measured at cost, being the fair value of the consideration paid for the acquisition of the instrument or the amount received on issuing the financial liability. All transaction costs directly attributable to the acquisition are also included in the cost of the investment.

(g) Impairment of Financial Instruments 139.58

The Company assesses at each balance sheet date whether a financial asset or group of financial assets is impaired.



- 18 -

Assets Carried at Amortised Cost If there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate/yield. The carrying amount of the asset is reduced and the loss is recorded in profit or loss.

139.63

The Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. The impairment assessment is performed at each balance sheet date.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

AFS Investments

134.67 - 70

If an AFS financial asset is impaired, an amount comprising the difference between its cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in other comprehensive income, is transferred from other comprehensive income to profit or loss. Reversals in respect of equity instruments classified as AFS are not recognised in profit or loss. Reversals of impairment losses on debt instruments classified as AFS are reversed through profit or loss if the increase in the fair value of the instruments can be objectively related to an event occurring after the impairment losses were recognised in profit or loss.

(h) Derecognition of Financial Assets 139.16 - 23

Financial assets are derecognised when the rights to receive cash flows from them have expired or where they have been transferred and the Company has also transferred substantially all risks and rewards of ownership.

(i) Equity Instruments

Ordinary Share Capital

The Company has issued ordinary shares that are classified as equity. Incremental external costs that are directly attributable to the issue of these shares are recognised in equity, net of tax.

132.60

Dividends on Ordinary Share Capital Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by the Company’s shareholders. Interim dividends are deducted from equity when they are paid. Dividends for the year that are approved after the balance sheet date are dealt with as an event after the balance sheet date.

132.35



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(j) Product Classification

The Company issues contracts that transfer insurance risk or financial risk or both. Financial risk is the risk of a possible future change in one or more of a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of price or rate, credit rating or credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract. Insurance risk is the risk other than financial risk. Insurance contracts are those contracts that transfer significant insurance risk. An insurance contract is a contract under which the Company (the insurer) has accepted significant insurance risk from another party (the policyholders) by agreeing to compensate the policyholders if a specified uncertain future event (the insured event) adversely affects the policyholders. As a general guideline, the Company determines whether it has significant insurance risk, by comparing benefits paid with benefits payable if the insured event did not occur.

4 Appx A 4.37(a)

Investment contracts are those contracts that do not transfer significant insurance risk.

4 Appx A 4.37(a)

Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder of its life-time, even if the insurance risk reduces significantly during this period, unless all rights and obligations are extinguished or expire. Investment contracts can, however, be reclassified as insurance contracts after inception if insurance risk becomes significant.

4 Appx B. 29 & 30

Insurance and investment contracts are further classified as being either with or without discretionary participation features (“DPF”). DPF is a contractual right to receive, as a supplement to guaranteed benefits, additional benefits that are:

likely to be a significant portion of the total contractual benefits;

whose amount or timing is contractually at the discretion of the issuer; and

that are contractually based on the: o performance of a specified pool of contracts or a specified type of contract; o realised and/or unrealised investment returns on a specified pool of assets held by the

issuer; or o the profit or loss of the company, fund or other entity that issues the contract.

Under the terms of the contracts, surpluses in the DPF funds can be distributed on a 90/10* basis to the policyholders and the shareholders respectively. The Company has the discretion over the amount and timing of the distribution of these surpluses to policyholders. All DPF liabilities, including unallocated surpluses, both guaranteed and discretionary, at the end of the reporting period are held within insurance or investment contract liabilities, as appropriate.

[*State basis which comply with statutory requirements and Company’s actual experience.]

4 Appx A 4.34

For financial options and guarantees which are not closely related to the host insurance contract and/or investment contract with DPF, bifurcation is required to measure these embedded derivatives separately at fair value through profit or loss. However, bifurcation is not required if the embedded derivative is itself an insurance contract and/or investment contract with DPF, or if the host insurance contract and/or investment contract itself is measured at fair value through profit or loss.

4.7 – 4.9

When insurance contracts contain both a financial risk component and a significant insurance risk component and the cash flows from the two components are distinct and can be measured reliably, the underlying amounts are unbundled. Any premiums relating to the insurance risk component are accounted for on the same bases as insurance contracts and the remaining element is accounted for as a deposit through the balance sheet similar to investment contracts.

(k) Reinsurance 4.37(a)

The Company cedes insurance risk in the normal course of business for all of its businesses. Reinsurance assets represent balances due from reinsurance companies. Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision or settled claims associated with the reinsurer’s policies and are in accordance with the related reinsurance contracts. Ceded reinsurance arrangements do not relieve the Company from its obligations to policyholders. Premiums and claims are presented on a gross basis for both ceded and assumed reinsurance.



- 20 -

Reinsurance assets are reviewed for impairment at each reporting date or more frequently when an indication of impairment arises during the reporting period. Impairment occurs when there is objective evidence as a result of an event that occurred after initial recognition of the reinsurance asset that the Company may not receive all outstanding amounts due under the terms of the contract and the event has a reliably measurable impact on the amounts that the Company will receive from the reinsurer. The impairment loss is recorded in profit or loss.

4.20

Gains or losses on buying reinsurance are recognised in profit or loss immediately at the date of purchase and are not amortised *. [* Policy option in FRS 4 para 37(b)(ii) could also be used.]

4.37(b)(i)

The Company also assumes reinsurance risk in the normal course of business for life insurance and general (non-life) insurance contracts when applicable. Premiums and claims on assumed reinsurance are recognised as revenue or expenses in the same manner as they would be if the reinsurance were considered direct business, taking into account the product classification of the reinsured business. Reinsurance liabilities represent balances due to reinsurance companies. Amounts payable are estimated in a manner consistent with the related reinsurance contract.

Reinsurance assets or liabilities are derecognised when the contractual rights are extinguished or expire or when the contract is transferred to another party.

4.14(c)

Reinsurance contracts that do not transfer significant insurance risk are accounted for directly through the balance sheet. These are deposit assets or financial liabilities that are recognised based on the consideration paid or received less any explicit identified premiums or fees to be retained by the reinsured. Investment income on these contracts is accounted for using the effective yield method when accrued.

[Note : policies on reinsurance inwards is included in insurance contracts]

4 Appx B.20

(l) Life Insurance Underwriting Results

The surplus transferable from the Life fund to the income statement is based on the surplus determined by an annual actuarial valuation of the liabilities to policyholders.

Gross Premiums Gross premiums are recognised as soon as the amount of the premiums can be reliably measured. First premium is recognised from inception date and subsequent premium is recognised when it is due. At the end of the financial period, all due premiums are accounted for to the extent that they can be reliably measured.

4.37(a)

Reinsurance Premiums Gross reinsurance premiums are recognised as an expense when payable or on the date on which the policy is effective.

4.14(d)



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Benefits, Claims and Expenses Benefits and claims that are incurred during the financial period are recognised when a claimable event occurs and/or the insurer is notified. Benefits and claims, including settlement costs, are accounted for using the case-by-case method and for this purpose, the amounts payable under a policy are recognised as follows:

maturity and other policy benefit payments due on specified dates are treated as claims payable on the due dates;

death, surrender and other benefits without due dates are treated as claims payable, on the date of receipt of intimation of death of the assured or occurrence of contingency covered; and

bonus on DPF policy upon its declaration Reinsurance claims are recognised when the related gross insurance claim is recognised according to the terms of the relevant contracts.

4.37(a) 4.14(d)

Commission and Agency Expenses

Gross commission and agency expenses, which are costs directly incurred in securing premium on insurance policies, and income derived from reinsurers in the course of ceding of premiums to reinsurers, are charged to profit or loss in the period in which they are incurred.

(m) General Insurance Underwriting Results The general insurance underwriting results are determined for each class of business after taking into account reinsurances, commissions, unearned premiums and claims incurred.

Gross Premiums Gross premiums are recognised in a financial period in respect of risks assumed during that particular financial period.

4.37(a)

Reinsurance Premiums Inwards facultative reinsurance premiums are recognised in the financial period in respect of the facultative risks assumed during that particular financial period, as in the case of direct policies, following the individual risks’ inception dates. Inwards treaty reinsurance premiums comprise both proportional and non-proportional treaties. In respect of reinsurance premiums relating to proportional treaties, it is recognised on the basis of periodic advices received from the cedants given that the periodic advices reflect the individual underlying risks being incepted and reinsured at various inceptions dates of these risks and contractually accounted for, as such to reinsurers under the terms of the proportional treaties. In respect of reinsurance premiums relating to non-proportional treaties which cover losses occurring during a specified treaty period, the inwards treaty reinsurance premiums are recognised based on the contractual premiums already established at the start of the treaty period under the non-proportional treaty contract. [Note: Insert policy on Open Underwriting method, if applicable].

4.37(b)

Unearned Premium Reserves Unearned premium reserves (“UPR”) represent the portion of the net premiums of insurance policies written that relate to the unexpired periods of the policies at the end of the financial period. In determining UPR at balance sheet date, the method that most accurately reflects the actual unearned premiums used is as follows:

25% method for marine cargo, aviation cargo and transit

1/24th

method (or other more accurate) method for all other classes of Malaysian general policies

1/8th

method for all other classes of overseas inward treaty business

Non-annual policies are time-apportioned over the period of the risks

4.37(a)



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Claims and Expenses A liability for outstanding claims is recognised in respect of both direct insurance and inward reinsurance. The amount of outstanding claims is the best estimate of the expenditure required together with related expenses less recoveries to settle the present obligation at the balance sheet date. Provision is also made for the cost of claims, together with related expenses, incurred but not reported at balance sheet date, using a mathematical method of estimation.

4.37(a)

Acquisition Costs and Deferred Acquisition Cost (“DAC”)

4.37(a)

The gross costs of acquiring and renewing insurance policies and income derived from ceding reinsurance premiums are recognised as incurred and properly allocated to the periods in which it is probable they give rise to income.

Those costs are deferred to the extent that these costs are recoverable out of future premiums. All other acquisition costs are recognised as an expense when incurred.

Subsequent to initial recognition, these costs are amortised on a straight-line basis based on the term of expected future premiums. Amortisation is recognised in profit or loss.

Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in these assets are accounted for by changing the amortisation period and are treated as a change in an accounting estimate.

An impairment review is performed at each reporting date or more frequently when an indication of impairment arises. When the recoverable amount is less than the carrying value, an impairment loss is recognised in profit or loss. DAC is also considered in the liability adequacy test for each accounting period. DAC is derecognised when the related contracts are either settled or disposed of.

4.37(e)

(n) Insurance Receivables

Insurance receivables are recognised when due and measured on initial recognition at the fair value of the consideration received or receivable. Subsequent to initial recognition, insurance receivables are measured at amortised cost, using the effective yield method. If there is objective evidence that the insurance receivable is impaired, the Company reduces the carrying amount of the insurance receivable accordingly and recognises that impairment loss in profit or loss. The Company gathers the objective evidence that an insurance receivable is impaired using the same process adopted for financial assets carried at amortised cost. The impairment loss is calculated under the same method used for these financial assets. These processes are described in Note 2.2 (g). Insurance receivables are derecognised when the derecognition criteria for financial assets, as described in Note 2.2(h), have been met.

4.37(a)

(o) Insurance Contract Liabilities

Life Insurance Contract Liabilities Life insurance liabilities are recognised when contracts are entered into and premiums are charged.

These liabilities are measured by using a prospective actuarial valuation method. The liability is determined as the sum of the present value of future guaranteed and, in the case of a participating life policy, appropriate level of non-guaranteed benefits, and the expected future management and distribution expenses, less the present value of future gross considerations arising from the policy discounted at the appropriate risk discount rate. The liability is based on best estimate assumptions and with due regard to significant recent experience. An appropriate allowance for provision of risk margin for adverse deviation from expected experience is made in the valuation of non-participating life policies, the guaranteed benefits liabilities of participating life policies, and non-unit liabilities of investment-linked policies.

4.15



- 23 -

The liability in respect of policies of a participating insurance contract is taken as the higher of the guaranteed benefit liabilities or the total benefit liabilities at the contract level derived as stated above. In the case of a life policy where a part of, or the whole of the premiums are accumulated in a fund, the accumulated amount, as declared to the policy owners, are set as the liabilities if the accumulated amount is higher than the figure as calculated using the prospective actuarial valuation method.

Where policies or extensions of a policy are collectively treated as an asset at the fund level under the valuation method adopted, the value of such asset is eliminated through zerorisation. In the case of a 1-year life policy or a 1-year extension to a life policy covering contingencies other than death or survival, the liability for such life insurance contracts comprises the provision for unearned premiums and unexpired risks, as well as for claims outstanding, which includes an estimate of the incurred claims that have not yet been reported to the Company.

RBC Framework

Adjustments to the liabilities at each reporting date are recorded in profit or loss. Profits originated from margins of adverse deviations on run-off contracts, are recognised in profit or loss over the life of the contract, whereas losses are fully recognised in profit or loss during the first year of run-off. The liability is derecognised when the contract expires, is discharged or is cancelled. At each reporting date, an assessment is made of whether the recognised life insurance liabilities are adequate, net of present value of in-force business (“PVIF”) and DAC by using an existing liability adequacy test.

Any inadequacy is recorded in profit or loss, initially by impairing PVIF and DAC, and subsequently by establishing technical reserves for the remaining loss. In subsequent periods, the liability for a block of business that has failed the adequacy test is based on the assumptions that are established at the time of the loss recognition. Impairment losses resulting from liability adequacy testing can be reversed in future years if the impairment no longer exists.

General (Non-Life) Insurance Contract Liabilities General insurance contract liabilities are recognised when contracts are entered into and premiums are charged.

4.15

These liabilities comprise outstanding claims provision and provision for unearned premiums. Outstanding claims provision are based on the estimated ultimate cost of all claims incurred but not settled at the balance sheet date, whether reported or not, together with related claims handling costs and reduction for the expected value of salvage and other recoveries. Delays can be experienced in the notification and settlement of certain types of claims, therefore, the ultimate cost of these claims cannot be known with certainty at the balance sheet date. The liability is calculated at the reporting date using a range of standard actuarial claim projection techniques based on empirical data and current assumptions that may include a margin for adverse deviation. The liability is not discounted for the time value of money. No provision for equalisation or catastrophe reserves is recognised. The liabilities are derecognised when the contract expires, is discharged or is cancelled.

The provision for unearned premiums represents premiums received for risks that have not yet expired. Generally, the reserve is released over the term of the contract and is recognised as premium income.

At each reporting date, the Company reviews its unexpired risks and a liability adequacy test is performed to determine whether there is any overall excess of expected claims and deferred acquisition costs over unearned premiums. This calculation uses current estimates of future contractual cash flows (taking into consideration current loss ratios) after taking account of the investment return expected to arise on assets relating to the relevant general insurance technical provisions. If these estimates show that the carrying amount of the unearned premiums less related deferred acquisition costs is inadequate, the deficiency is recognised in profit or loss by setting up a provision for liability adequacy.

(p) Investment Contract Liabilities

Investment contracts are classified between contracts with and without DPF. The accounting policies for investment contract liabilities with DPF are the same as those for life insurance contract liabilities.

4.15



- 24 -

Investment contract liabilities without DPF are recognised when contracts are entered into and premiums are charged. These liabilities are initially recognised at fair value being the transaction price excluding any transaction costs directly attributable to the issue of the contract. Subsequent to initial recognition, investment contract liabilities are remeasured at fair value through profit or loss*. [* If at amortised cost, insert appropriate note.] [Note: Insert appropriate note for non-unitised contracts, if applicable.]

Deposits and withdrawals are recorded directly as an adjustment to the liability in the balance sheet.

Fair value adjustments are performed at each reporting date and are recognised in profit or loss. Fair value is determined through the use of prospective discounted cash flow techniques. For unitised contracts, fair value is calculated as the number of units allocated to the policyholder in each unit-linked fund multiplied by the unit-price of those funds at the balance sheet date. The fund assets and fund liabilities used to determine the unit-prices at the balance sheet date are adjusted to take into account the effect of deferred tax on unrealised gains and losses on assets in the fund.

The liability is derecognised when the contract expires, is discharged or is cancelled. For a contract that can be cancelled by the policyholder, the fair value cannot be less than the surrender value.

(q) Other Revenue Recognition

118.35

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.

Rental Income Rental income from investment property is recognised on a straight-line basis over the term of the lease. The aggregate cost of incentives provided to lessees is recognised as a reduction of rental income over the lease term on a straight-line basis.

117.50

Interest and Profit Income Income is recognised on an accrual basis using the effective yield method. Fees and commissions that are an integral part of the effective yield of the financial asset or liability are recognised as an adjustment to the effective yield of the instrument.

118.30(a)

Dividend Income

Dividend income is recognised when the Company’s right to receive payment is established.

Realised Gains and Losses on Investments Realised gains and losses recorded in profit or loss on investments include gains and losses on financial assets and investment properties. Gains and losses on the sale of investments are calculated as the difference between net sales proceeds and the original or amortised cost and are recorded on occurrence of the sale transaction.

118.30(c)

Fees and Commission Income

Insurance and investment contract policyholders are charged for policy administration services, investment management services, surrenders and other contract fees. These fees are recognised as revenue over the period in which the related services are performed. If the fees are for services to be provided in future periods, then, they are deferred and recognised over those future periods.

118.20

(r) Income Tax

112.44

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit and surplus for the year and is measured using the tax rates that have been enacted at the balance sheet date.

112.12 112.46



- 25 -

Deferred tax is provided for, using the liability method. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

112.15 112.24

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised as income or an expense and included in the profit or loss for the period, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised directly in equity. Deferred tax is also provided in the Life insurance contract liabilities for the shareholders’ portion of the unallocated surpluses.

112.45 112.46 112.58 112.61

(s) Provisions

137.36

Provisions are recognised when the Company has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as finance cost.

137.45 137.47 137.14

(t) Employee Benefits

Short-Term Benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

119.11

Defined Contribution Plans Defined contribution plans are post-employment benefit plans under which the Company pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in the profit or loss as incurred. As required by law, the Company makes such contributions to the Employees Provident Fund (“EPF”).

119.8 119.45

(u) Foreign Currencies

The financial statements are presented in Ringgit Malaysia which is also the functional currency of the Company.

121.9

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are re-translated at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to profit or loss.

121.21

Non-monetary items that are measured in terms of historical cost in foreign currency are not subsequently restated. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. All foreign exchange differences are taken to profit or loss, except for differences relating to items where gains or losses are recognised directly in equity, in which case, the gain or loss is recognised net of the exchange component in equity.

121.23 121.30



- 26 -

(v) Other Financial Liabilities and Insurance Payables

Other liabilities and payables are recognised when due and measured on initial recognition at the fair value of the consideration received less directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using the effective yield method.

(w) Cash and Cash Equivalents

Cash and cash equivalents consist of cash in hand, deposits held at call with financial institutions with original maturities of three months or less. It excludes deposits which are held for investment purpose.

107.46

2.3 Significant Accounting Judgements, Estimates and Assumptions

101.113

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. These factors could include:

(a) Critical Judgements Made in Applying Accounting Policies

101.113

In the process of applying the Company’s accounting policies, management has made the following judgements, apart from those involving estimations and assumptions, which have the most significant effect on the amounts recognised in the financial statements. [E.g. – “significant insurance risk” in respect of classification of insurance/investment contracts, classification of Investment Properties.]

Operating Lease Commitments – the Company as Lessor

The Group has entered into commercial property leases on its investment property portfolio. The Group has determined that it retains all the significant risks and rewards of ownership of these properties which are leased out on operating leases.

(b) Key Sources of Estimation Uncertainty and Assumptions 101.116

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Valuation of Life Insurance Contract Liabilities (including Investment Contract Liabilities with DPF)

4.37(c)

The liability for life insurance contracts and investment contracts with DPF is based on current assumptions, reflecting the best estimate at the time increased with a margin for risk and adverse deviation. All contracts are subject to a liability adequacy test, which reflect management’s best current estimate of future cash flows.

The main assumptions used relate to mortality, morbidity, longevity, investment returns, expenses, lapse and surrender rates and discount rates. The Company bases mortality and morbidity on established industry and Malaysian* tables which reflect historical experiences, adjusted when appropriate to reflect the Company’s unique risk exposure, product characteristics, target markets and own claims severity and frequency experiences. For those contracts that insure risk to longevity, prudent allowance is made for expected future mortality improvements. [* or regional, as appropriate]

Estimates are also made as to future investment income arising from the assets backing life insurance contracts. These estimates are based on current market returns as well as expectations about future economic and financial developments. Assumptions on future expenses are based on current expense levels, adjusted for expected expense inflation adjustments, if appropriate. Lapse and surrender rates are based on the Company’s historical experience of lapses and surrenders.



- 27 -

Discount rate for non-participating policies, guaranteed benefits of participating policies and the non-unit liability of investment-linked policies accord a level of guarantee which is no less certain than that accorded by a Malaysian Government Security (“MGS”). In the case of the total benefits liabilities of participating policies, the discount rate is based on the historical yield and future investment outlook of the participating fund, net of tax on investment income of the life fund.

Valuation of General Insurance Contract Liabilities

For general insurance contracts, estimates have to be made for both the expected ultimate cost of claims reported at the balance sheet date and for the expected ultimate cost of claims incurred but not yet reported at the balance sheet date (“IBNR”).

It can take a significant period of time before the ultimate claims costs can be established with certainty and for some type of policies, IBNR claims form the majority of the balance sheet liability. The ultimate cost of outstanding claims is estimated by using a range of standard actuarial claims projection techniques, such as Chain Ladder and Bornheutter-Ferguson methods.

The main assumption underlying these techniques is that a company’s past claims development experience can be used to project future claims development and hence, ultimate claims costs. As such, these methods extrapolate the development of paid and incurred losses, average costs per claim and claim numbers based on the observed development of earlier years and expected loss ratios. Historical claims development is mainly analysed by accident years, but can also be further analysed by geographical areas, as well as by significant business lines and claims type. Large claims are usually separately addressed, either by being reserved at the face value of loss adjustor estimates or separately projected in order to reflect their future development. In most cases, no explicit assumptions are made regarding future rates of claims inflation or loss ratios. Instead, the assumptions used are those implicit in the historic claims development data on which the projections are based. Additional qualitative judgement is used to assess the extent to which past trends may not apply in future, (for example, to reflect one-off occurrences, changes in external or market factors such as public attitudes to claiming, economic conditions, levels of claims inflation, judicial decisions and legislation, as well as internal factors such as portfolio mix, policy features and claims handling procedures) in order to arrive at the estimated ultimate cost of claims that present the likely outcome from the range of possible outcomes, taking account of all the uncertainties involved.

Fair Value of Financial Assets Determined Using Valuation Techniques

139.48 139.48A

Fair value, in the absence of an active market, is estimated by using valuation techniques, such as recent arm’s length transactions, reference to the current market value of another instrument which is substantially the same, discounted cash flow analysis and/or option pricing models. For reference to similar instruments, instruments must have similar credit ratings.

For discounted cash flow analysis, estimated future cash flows and discount rates are based on current market information and rates applicable to financial instruments with similar yields, credit quality and maturity characteristics. Estimated future cash flows are influenced by factors such as economic conditions (including country specific risks), concentrations in specific industries, types of instruments or currencies, market liquidity and financial conditions of counter-parties. Discount rates are influenced by risk-free interest rates and credit risk.

Option pricing models incorporate all factors that market participants would consider and are based on observable market data when available. These models consider, among other factors, contractual and market prices, correlation, time value of money, credit risk, yield curve volatility factors and/or prepayment rates of the underlying positions.

The valuation techniques described above are calibrated annually.

[* Insert any other notes, as appropriate, if applicable.

E.g., Appropriate considerations shall be given to judgemental matters, e.g., goodwill impairment testing, fair value of derivative financial instruments and investments contracts without DPF, computation of UPR and URR, confidence level in the computation of IBNR, etc.]

2.4 Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs and Issues Committee Interpretations (“IC Interpretations”)

108.28 101.38

On 1 January 2010, the Company adopted the following FRSs mandatory for financial periods beginning on or after 1 January 2010:

[Insert appropriate note.]



- 28 -

Adoption of new and revised FRSs and IC Interpretations that do not have any impact on the financial statements of the Company:


New and revised FRSs and IC Interpretations that are deemed not relevant to the operations of the Company:


2.5 Standards and IC Interpretations Issued but Not Yet Effective

[Insert appropriate note] 108.30 108.31

3. PROPERTY AND EQUIPMENT*

Furniture

and Fittings Motor

Vehicles

Office Equipment

and Computers

Total 116.73(e)

RM‟000 RM‟000 RM‟000 RM‟000 Cost At 1 January 2009 10,000 690 14,000 24,690 116.73(d)

Additions - - 5,949 5,949 116.73(e)

Disposals - - (6,699) (6,699)

At 31 December 2009 10,000 690 13,250 23,940 Additions - - 7,242 7,242 Disposals - - (14,181) (14,181)

At 31 December 2010 10,000 690 6,311 17,001

Accumulated Depreciation At 1 January 2009 1,200 150 5,073 6,423 Charge for year 1,000 140 2,697 3,837 Disposals - - (4,470) (4,470)

At 31 December 2009 2,200 290 3,300 5,790 Charge for year 1,000 140 2,265 3,405 Disposals - - (5,070) (5,070)

At 31 December 2010 3,200 430 495 4,125

Net carrying amount 31 December 2009 7,800 400 9,950 18,150 31 December 2010 6,800 260 5,816 12,876

[* Self-occupied properties shall be classified as Property and Equipment, if applicable.]

4. INVESTMENT PROPERTIES 140.75

Note 2010 2009

RM‟000 RM‟000 At 1 January 17,802 16,854 Additions from acquisitions 609 - Additions from subsequent expenditure 387 657 Fair value changes 24 159 291

At 31 December 18,957 17,802

Investment properties are stated at fair value, which had been determined based on valuations performed by an external independent valuer* as at 31 December 2010. Valuations are performed on an annual basis and the fair value changes (gains/losses) are recorded in profit or loss. [* As best practice, disclose name of valuer.]



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Leasehold land of RM10,000,000 (2009: RM10,000,000) are held under lease terms.

Investment properties comprise a number of commercial properties leased to third parties. Rental income from the properties is included in Investment Income – Note 22.

Direct operating expenses (included within Management Expenses – Note 27) arising in respect of such properties during the year was RM1,000,000 (2009: RM800,000). [* Disclose also direct operating expenses which did not generate rental income, if applicable.]

5. INTANGIBLE ASSETS*

2010 2009

RM‟000 RM‟000 Cost At 1 January 14,859 13,905 138.118(e)

Additions from internal development 348 954

At 31 December 15,207 14,859

Accumulated Amortisation At 1 January 4,746 3,873 Amortisation 207 144 Impairment loss recognised in profit or loss 654 729

At 31 December 5,607 4,746

Net carrying amount 9,600 10,113

Intangible assets comprise computer application software which were developed or acquired to meet the unique requirements of the Company. [* Insert relevant disclosures for Goodwill, if applicable]

6. INVESTMENTS 2010 2009 7.7

RM‟000 RM‟000 139.45

Malaysian government securities 14,140 10,222

Debt securities 124,951 159,173

Equity securities 173,700 124,500

Unit and property trust funds 20,003 20,007

Loans 7,550 6,354

Deposits with financial institutions 9,129 8,844

349,473 329,100

The Company’s financial investments are summarised by categories as follows:

Held-to-maturity financial assets (“HTM”) 12,807 8,751 7.8(b)

Loans and receivables (“LAR”) 22,212 18,531 7.8(c)

Available-for-sale financial assets (“AFS”) 253,731 238,251 7.8(d)

Held-for-trading (“HFT”) 40,703 43,507 7.8(a)

Designated upon initial recognition 20,020 20,060 7.8(e)

349,473 329,100

The following investments mature after 12 months:

HTM 5,000 5,000

LAR 15,000 12,000

AFS 150,000 120,000

170,000 137,000



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(a) HTM

2010 2009

RM‟000 RM‟000

Amortised Cost 7.8(b)

Malaysian government securities 10,807 8,000 139.63

Corporate debt securities:

Quoted in Malaysia 2,000 -

Quoted outside Malaysia - 751

12,807 8,751

Fair Value 7.25

Malaysian government securities 11,000 8,000

Corporate debt securities:

Quoted in Malaysia 2,000 -

Quoted outside Malaysia - 1,000

13,000 9,000

The fair values of the financial investments are their quoted prices on the stock exchanges or broker/dealer price quotations. Where this information is not available, fair value has been estimated using quoted market prices for securities with similar credit, maturity and yield characteristic.

7.27

(b) LAR 2010 2009

RM‟000 RM‟0000 Amortised Cost 7.8(c)

Malaysian government-guaranteed loans 3,333 2,222 7.6

Unquoted corporate debt securities 2,200 1,111 Fixed and call deposits with: Licensed financial institutions 8,986 8,700 Others 143 144 Policy loans 5,555 4,230 Mortgage loans [net of impairment allowance of RM195,000

(2009: RM66,000)]

1,995 2,124

22,212 18,531

Fair Value Malaysian government-guaranteed loans 3,398 3,108 Unquoted corporate debt securities 2,543 1,300 Fixed and call deposits with:

Licensed financial institutions 9,250 8,984 Others 150 150

Policy loans 5,664 4,334 Mortgage loans 1,995 2,124

23,000 20,000

The fair values of the LAR have been established by comparing current market interest rates for similar financial instruments to the rates offered when the LAR were first recognised together with appropriate market credit adjustments.

7.25 7.27

(c) AFS 7.8(d)

2010 2009 7.6

RM‟000 RM‟0000

Fair Value

Equity securities:

Quoted in Malaysia 153,000 100,500

Unquoted - 500

Debt securities:

Quoted in Malaysia 50,731 87,251

Unquoted 50,000 50,000

253,731 238,251



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(d) FVTPL

2010 2009

RM‟000 RM‟0000

Fair Value

Held-for-Trading

Equity securities 20,700 23,500

Unit and property trust funds 20,003 20,007

40,703 43,507

Designated upon Initial Recognition

Debt securities 20,020 20,060

60,723 63,567

(e) Carrying Values of Financial Instruments

HTM LAR AFS HFT De-

signated Total

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

At 1 January 2009 6,861 15,390 230,352 37,672 20,060 310,335

Purchases 1,593 6,942 15,000 12,000 - 35,535

Maturities (255) (3,735) (195) - - (4,185)

Disposals - - (19,569) (9,000) - (28,569)

Fair value gains/(losses) recorded in:

Profit or loss - - - 2,835 - 2,835 7.20(a)

Other comprehensive income - - 15,014 - - 15,014 7.20(a)

Insurance contract liabilities (Note 13(a))

- - (5,000) - - (5,000)

Movement in impairment allowance

- (66) - - - (66)

Amortisation adjustment 552 - 2,649 - - 3,201 7.20(b)

At 31 December 2009 8,751 18,531 238,251 43,507 20,060 329,100

Purchases 3,774 7,722 24,000 15,000 - 50,496

Maturities (300) (3,912) (261) - - (4,473)

Disposals - - (29,532) (20,960) (40) (50,532)

Fair value gains/(losses) recorded in:

Profit or loss - - - 3,156 - 3,156 7.20(a)

Other comprehensive income - - 690 - - 690 7.20(a)

Insurance contract liabilities (Note 13(a))

- - 18,000

-

- 18,000

Movement in impairment allowance

- (129) -

-

- (129)

Amortisation adjustment 582 - 2,583 - - 3,165 7.20(b)

At 31 December 2010 12,807 22,212 253,731 40,703 20,020 349,473

(f) Fair Values of Financial Investments The following tables show financial investments recorded at fair value analysed by the different basis of fair values as follows:

139.48A 7.27

AFS HFT De-

signated Total

RM‟000 RM‟000 RM‟000 RM‟000 7.6

31 December 2010 Quoted market price 153,000 40,703 - 193,703 Valuation techniques – market observable inputs 100,731 - 20,020 120,751 Valuation techniques – non-market observable

inputs - -

- -

253,731 40,703 20,020 314,454

31 December 2009

Quoted market price 100,500 43,507 20,060 164,067 Valuation techniques – market observable inputs 137,251 - - 137,251 Valuation techniques – non-market observable inputs

500

-

-

500

238,251 43,507 20,060 301,818



- 32 -

Included in the quoted price category are financial instruments that are measured in whole or in part by reference to published quotes in an active market. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, secondary market via dealer and broker, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis.

Financial instruments measured using a valuation technique based on assumptions that are supported by prices from observable current market transactions are instruments for which pricing is obtained via pricing services but where prices have not been determined in an active market, instruments with fair values based on broker quotes, investment in unit and property trusts with fair values obtained via fund managers and instruments that are valued using the Company’s own models whereby the majority of assumptions are market observable.

7.27

Non-market observable inputs means that fair values are determined in whole or in part using a valuation technique based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. The main asset class in this category are unquoted equity securities. Valuation techniques are used to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the instrument at the measurement date. However, the fair value measurement objective remains the same, that is, an exit price from the perspective of the Company. Therefore, unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the instrument (including assumptions about risk). These inputs are developed based on the best information available, which might include the Company’s own data.

For financial instruments that are recorded at fair value with valuation techniques using non-market observable inputs, the potential effect of using reasonable possible alternative assumptions for volatility and credit risk in valuing those instruments would reduce fair value by RM50,000 or increase fair value by RM55,000.

For financial instruments whose fair value is estimated using valuation techniques with non-market observable inputs, the net unrealised amount recorded in profit or loss in the year due to changes in inputs was RM15,000 (2009: RM20,000).

No day-1 profits were unrecognised because of the use of valuation techniques for which not all the inputs are observable in the market.

7. REINSURANCE ASSETS Note 2010 2009 4.37(b)

RM‟000 RM‟000

Reinsurance of insurance contracts 13 90,300 85,110 Reinsurance of investment contracts 14 19,317 19,071

109,617 104,181

The carrying amounts disclosed above in respect of the reinsurance of investment contracts approximate fair value at the balance sheet date.

7.25 7.29

During the year, the Group entered into reinsurance arrangements which resulted in profits on inception of RM126,000 (2009: RM114,000). This profit has been reflected in profit or loss.

8. INSURANCE RECEIVABLES

2010 2009 4.37(b)

RM‟000 RM‟000

Due premiums including agents/brokers and co-insurers balances 100,500 98,000

Due from reinsurers and cedants 30,500 25,000

131,000 123,000 Allowance for impairment (9,140) (10,485)

121,860 112,515

[GPI/JPI 25 (Consolidated) – Disclosure should be made of the balance and nature of unreconciled items in an Insurer’s Balance Sheet which constitute more than 2% of the category of assets (at gross carrying amounts before allowance) to which the unreconciled items relate.].



- 33 -

9. OTHER RECEIVABLES

2010 2009

RM‟000 RM‟000 101.75(b)

Income due and accrued 12,000 10,500 Other receivables 3,879 4,407

15,879 14,907 Receivable after 12 months 3,300 3,200 The carrying amounts approximate fair values due to the relatively short-term maturity of these balances.

10. DEFERRED ACQUISITION COSTS

Insurance Contracts

Investment Contracts with DPF Total

4.37(b)

RM‟000 RM‟000 RM‟000 4.37(e)

At 1 January 2009 18,126 12,966 31,092 Expenses deferred 4,878 4,788 9,666 Amortisation (3,672) (2,655) (6,327)

At 31 December 2009 19,332 15,099 34,431 Expenses deferred 8,247 7,857 16,104 Amortisation (5,934) (4,263) (10,197)

At 31 December 2010 21,645 18,693 40,338 [Note: In Malaysia, DAC is generally not practised in the Life fund.]

11. SHARE CAPITAL

2010 2009

No. of Shares

(„000) RM‟000

No. of Shares

(„000) RM‟000

Authorised: 101.75(e)

Ordinary shares of RM1.00 each 101.76(a) (i),(iii)

At beginning and end of year 100,000 100,000 100,000 100,000 Issued and Paid-up:

Ordinary shares of RM1.00 each

At beginning and end of year 100,000 100,000 100,000 100,000

12. RESERVES 101.75(e)

Presently, Malaysian companies adopt the full imputation system. In accordance with the Finance Act, 2007, which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders (“single-tier system”). However, there is a transitional period of six years expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard their accumulated tax credit under Section 108 of the Income Tax Act, 1967 (“Section 108 balance”) and opt to pay dividends under the single-tier system. The change in the tax legislation also provides for the Section 108 balance to be locked in as at 31 December 2007 in accordance with Section 39 of the Finance Act, 1967.

*The Company did not elect for the irrevocable option to disregard the Section 108 balance. During the transitional period, the Company may utilise the credits in the Section 108 balance as at 31 December 2007 to distribute cash dividend payments to ordinary shareholders as defined under the Finance Act, 2007. [* Insert suitable note for option elected during the transitional period]

The Company has sufficient Section 108 balance and balance in the tax-exempt account to frank the payment of dividends out of its entire retained earnings as at 31 December 2010.

112.81(i)

As at 31 December 2010, the Company has tax exempt profits available for distribution of approximately RM2,800,000 (2009: RM2,000,000), subject to the agreement of the Inland Revenue Board.



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13. INSURANCE CONTRACT LIABILITIES

2010 2009 4.37(b)

Note Gross Re-

insurance Net Gross Re-

insurance Net

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 Life insurance 13(a) 285,867 (52,302) 233,565 249,707 (49,431) 200,276 General insurance 13(b) 151,992 (37,998) 113,994 142,722 (35,679) 107,043

437,859 (90,300) 347,559 392,429 (85,110) 307,319

(a) Life Insurance 4.37(a)

The life insurance contract liabilities and its movements are further analysed as follows:

2010 2009

Gross Re-


insurance Net

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

Actuarial liabilities 248,000 (52,302) 195,698 235,000 (49,431) 185,569

Unallocated surplus 15,207 - 15,207 9,006 - 9,006

Available-for-sale fair value reserves 21,100 - 21,100 4,600 - 4,600

Net asset value attributable to unitholders 1,560 - 1,560 1,101 - 1,101

285,867 (52,302) 233,565 249,707 (49,431) 200,276

Gross Reinsurance

With DPF

Without DPF Total

With DPF

Without DPF Total Net

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

At 1 January 2009 81,244 152,246 233,490 (14,886) (31,635) (46,521) 186,969 Premiums received

(Note 21(a)) 45,066 95,763 140,829 (11,268) (23,940) (35,208) 105,621

Liabilities paid for death, maturities, surrenders, benefits and claims (Note 26(a)) (20,766) (44,124) (64,890) 5,190 11,031 16,221 (48,669)

[Insert appropriate assumptions used to measure the liabilities as relevant / specific to the Company, e.g.]

4.37(d)

Benefits and claims experience variation (19,158) (40,707) (59,865) 4,932 10,485 15,417 (44,448)

Fees deducted (2,637) (5,601) (8,238) 660 1,401 2,061 (6,177) Credit of interest or change in

unit-prices 432 921 1,353 (108) (231) (339) 1,014

Adjustments due to changes in assumptions:

Mortality/morbidity 744 1,578 2,322 (186) (393) (579) 1,743 Longevity 600 1,275 1,875 (150) (318) (468) 1,407 Investment returns (504) (1,071) (1,575) 126 267 393 (1,182) Expenses 357 762 1,119 (90) (189) (279) 840 Lapse and surrender rates 243 513 756 (63) (132) (195) 561 Discount rate (111) (237) (348) 27 60 87 (261) Foreign exchange adjustment 30 48 78 (3) (18) (21) 57 Net asset value attributable to

unitholders (Note 40) - 253 253 - - - 253

Available-for-sale fair value reserves (5,000) - (5,000) - - - (5,000)

Unallocated surplus 2,198 6,000 8,198 - - - 8,198 Deferred tax effects: Available-for-sale fair value

reserves (Note 16) (400) - (400) - - - (400)

Unallocated surplus (Note 16) (75) (175) (250) - - - (250)

At 31 December 2009 82,263 167,444 249,707 (15,819) (33,612) (49,431) 200,276



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Gross Reinsurance

With DPF

Without DPF Total

With DPF

Without DPF Total Net

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 At 31 December 2009 82,263 167,444 249,707 (15,819) (33,612) (49,431) 200,276 Premiums received

(Note 21(a)) 44,010 93,525 137,535 (11,004) (23,379) (34,383) 103,152

Liabilities paid for death, maturities, surrenders, benefits and claims (Note 26(a)) (19,926) (42,339) (62,265) 4,980 10,584 15,564 (46,701)

Benefits and claims experience variation (19,077) (40,542) (59,619) 4,896 10,404 15,300 (44,319)

Fees deducted (2,550) (5,421) (7,971) 636 1,356 1,992 (5,979) Credit of interest or change in

unit-prices 402 858 1,260 (102) (213) (315) 945

Adjustments due to changes in assumptions:

4.37(d)

Mortality/morbidity 735 1,566 2,301 (183) (390) (573) 1,728 Longevity 576 1,224 1,800 (147) (309) (456) 1,344 Investment returns (486) (1,032) (1,518) 120 258 378 (1,140) Expenses 339 717 1,056 (84) (180) (264) 792

Lapse and surrender rates 219 468 687 (48) (117) (165) 522 Discount rate (99) (207) (306) 24 51 75 (231) Foreign exchange adjustment 27 45 72 (6) (18) (24) 48 Net asset value attributable to

unitholders (Note 40) - 459 459 - - - 459

Available-for-sale fair value reserves 18,000 - 18,000 - - - 18,000

Unallocated surplus 2,319 4,000 6,319 - - - 6,319 Deferred tax effects: Available-for-sale fair value

reserves (Note 16) (1,500) - (1,500) - - - (1,500)

Unallocated surplus (Note 16) (50) (100) (150) - - - (150)

At 31 December 2010 105,202 180,665 285,867 (16,737) (35,565) (52,302) 233,565

(b) General Insurance 4.37(a)

2010 2009

Gross Re-


insurance Net

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

Provision for claims reported by policyholders 37,017 (9,252) 27,765 34,758 (8,688) 26,070

Provision for incurred but not reported claims (“IBNR”) 83,616 (20,907) 62,709 78,495 (19,623) 58,872

Provision for outstanding claims(i) 120,633 (30,159) 90,474 113,253 (28,311) 84,942 Provision for unearned premiums (ii) 30,057 (7,515) 22,542 28,227 (7,056) 21,171 Provision for liability adequacy (iii) 1,302 (324) 978 1,242 (312) 930

151,992 (37,998) 113,994 142,722 (35,679) 107,043

(i) Provision for Outstanding Claims 4.37(e)

At 1 January 113,253 (28,311) 84,942 105,525 (26,373) 79,152 Claims incurred in the current accident year 43,485 (10,878) 32,607 45,282 (11,334) 33,948 Insert appropriate assumptions used to

measure the liabilities as relevant / specific to the Company, e.g.]

Adjustment to claims incurred in prior accident years due to changes in assumptions* [* for case reserve and IBNR or indicate development factors in IBNR triangles.]

E.g. Development factors (by major class) 2,400 (600) 1,800 2,475 (618) 1,857 XXX (blind reserves, settlement practices) 2,055 (513) 1,542 2,079 (519) 1,560 XXX 1,620 (393) 1,227 1,704 (414) 1,290

Other movements in claims incurred in prior accident Years 4,095 (1,023) 3,072 2,706 (675) 2,031

Claims paid during the year (Note 26(a)) (46,323) 11,583 (34,740) (46,563) 11,643 (34,920) Foreign exchange adjustment 48 (24) 24 45 (21) 24

At 31 December 120,633 (30,159) 90,474 113,253 (28,311) 84,942



- 36 -

2010 2009

Gross Re-


insurance Net

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

(ii) Provision for Unearned Premiums 4.37(e)

At 1 January 28,227 (7,056) 21,171 26,382 (6,594) 19,788 Premiums written in the year (Note 21(a)) 73,533 (18,384) 55,149 73,878 (18,468) 55,410 Premiums earned during the year (71,703) 17,925 (53,778) (72,033) 18,006 (54,027)

At 31 December 30,057 (7,515) 22,542 28,227 (7,056) 21,171

(iii) Provision for Liability Adequacy 4.37(e)

At 1 January 1,242 (312) 930 1,182 (297) 885 Incurred during the year 483 (120) 363 516 (129) 387 Utilised during the year (423) 108 (315) (456) 114 (342)

At 31 December 1,302 (324) 978 1,242 (312) 930

14. INVESTMENT CONTRACT LIABILITIES

2010 2009

Gross Re-


insurance Net

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 With DPF (Note 14(a)) 13,092 (7,200) 5,892 12,843 (7,062) 5,781 Without DPF (Note 14(b)) 22,032 (12,117) 9,915 21,831 (12,009) 9,822

35,124 (19,317) 15,807 34,674 (19,071) 15,603

(a) Investment Contract with DPF 4.37(e)

At 1 January 12,843 (7,062) 5,781 12,393 (6,816) 5,577 Premiums received (Note 21(a)) 7,200 (3,960) 3,240 7,491 (4,119) 3,372 Liability assumed for benefits (Note 26(a)) (6,666) 3,666 (3,000) (6,777) 3,726 (3,051) Fees deducted (639) 351 (288) (702) 387 (315) Credit of income 195 (108) 87 216 (120) 96 Insert appropriate assumptions used to

measure the liabilities as relevant / specific to the Company, e.g.]

Adjustment due to changes in assumptions: Mortality/morbidity 75 (42) 33 105 (57) 48 4.37(d)

Longevity 63 (33) 30 90 (51) 39 Investment return (24) 12 (12) (33) 18 (15) Expense 18 (9) 9 27 (15) 12 Lapse and surrender rates 12 (6) 6 21 (12) 9 Discount rate (6) 3 (3) (12) 9 (3) Foreign exchange adjustment 21 (12) 9 24 (12) 12

At 31 December 13,092 (7,200) 5,892 12,843 (7,062) 5,781

Investment contract liabilities with DPF above represent the guaranteed and discretionary benefits attributable to these policyholders.

As permitted by FRS 7, the Company has not disclosed fair values for investment contract liabilities with DPF as fair values or fair value ranges for DPF cannot be reliably estimated. There is no active market for these instruments which will be settled with policyholders in the normal course of business. (b) Investment Contracts without DPF 2010 2009

Gross Re-


insurance Net

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 At 1 January 21,831 (12,009) 9,822 21,507 (11,829) 9,678 Deposits (creation of units) 1,389 (765) 624 1,575 (867) 708 Withdrawals (1,000) 600 (400) (1,000) 700 (300) Fees deducted (270) 150 (120) (285) 156 (129) Credit of income 126 (75) 51 183 (108) 75 Fair value adjustment - Investments 78 (36) 42 117 (69) 48 Foreign exchange adjustment 18 (9) 9 21 (12) 9 Changes in insurance liabilities and

actuarial assumptions* (140) 27 (113) (287) 20 (267)

At 31 December 22,032 (12,117) 9,915 21,831 (12,009) 9,822

[* This pertains to the insurance element of the product.]



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Investment contract liabilities without DPF are stated at fair value. 7.25 7.29 Investment contract liabilities without DPF are further analysed as follows: 2010 2009 RM‟000 RM‟000 Unit-linked liabilities valued using valuation techniques with market observable inputs 19,959 20,400 7.27(c) Other liabilities valued using valuation techniques with non-market observable inputs* 2,073 1,431

22,032 21,831

Fair value of unit-linked liabilities is based upon the fair value of the underlying asset of the funds. The fair value of other liabilities is determined using discounted cash flows of the amounts expected to be paid.

[* FRS7.27(c) stipulates that if changing one or more of assumptions to reasonably possible alternative assumptions would change fair value significantly, state this fact and disclose the effect of those changes.]

15. PROVISIONS 137.84

2010 2009 RM‟000 RM‟000 At 1 January 17,730 15,000 137.84(a)

Additional provision 882 5,730 137.84(b)

Utilisation of provision - (2,000) 137.84(c)

Unused amount reversed - (1,000) 137.84(d)

At 31 December 18,612 17,730 137.84(a)

The provision is the estimated costs in respect of dismantlement, removal or restoration of property and equipment arising from the acquisition or use of such assets, which are capitalised and included in the cost of property and equipment. [To disclose amounts expected to be utilised/settled after more than twelve months, where applicable.]

137.85(a)

16. DEFERRED TAXATION Note 2010 2009 RM‟000 RM‟000

At 1 January 6,389 (501) 112.37

Recognised in: Profit or loss 28 615 2,661

Other comprehensive income 216 3,579 Insurance contract liabilities 13(a) 1,650 650

At 31 December 8,870 6,389

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against

current tax liabilities and when the deferred taxes relate to the same tax authority.

2010 2009 RM‟000 RM‟000 Presented after appropriate offsetting as follows: Deferred tax liabilities 16,370 14,015 Deferred tax assets (7,500) (7,626)

8,870 6,389



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The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting* are as follows: [* Or if shown after offsetting, disclose appropriate reconciliation of components and movements.]

Deferred tax liabilities

Unallocated

Surplus Accelerated

Depreciation

Revaluation – Investment Properties

Revaluation – Investments Total

112.81

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 At 1 January 2009 20 1,870 2,748 1,448 6,086 Recognised in:

Profit or loss - 700 2,000 1,000 3,700 112.79(f)(ii)

Other comprehensive income - - - 3,579 3,579 112.79(a)

Insurance contract liabilities (Note 13(a)

250 - - 400 650

At 31 December 2009 270 2,570 4,748 6,427 14,015 Recognised in: Profit or loss - 200 300 (11) 489 Other comprehensive income - - - 216 216 Insurance contract liabilities

(Note 13(a)

150 - - 1,500 1,650

At 31 December 2010 420 2,770 5,048 8,132 16,370 112.79(f)(i)

Deferred tax assets Allowance -

Doubtful Debts Provisions Total 112.80

RM‟000 RM‟000 RM‟000 At 1 January 2009 2,611 3,976 6,587 112.79(f)(ii)

Recognised in profit or loss 539 500 1,039

At 31 December 2009 3,150 4,476 7,626 Recognised in profit or loss (450) 324 (126)

At 31 December 2010 2,700 4,800 7,500 112.79(f)(i)

17. OTHER FINANCIAL LIABILITIES 2010 2009 RM‟000 RM‟000 101.52

Deposits received from reinsurers 6,174 5,796 Outstanding purchases of investment securities 17,055 16,020

23,229 21,816

The carrying amounts disclosed above approximate fair value at the balance sheet date. 7.25

All amounts are payable within one year. 7.25, 7.29

18. INSURANCE PAYABLES 4.37(a),(b)

2010 2009

RM‟000 RM‟000

Due to agents and intermediaries 10,002 9,390 Due to reinsurers and cedants 5,469 5,133

15,471 14,523

The carrying amounts disclosed above approximate fair value at the balance sheet date. 7.25

All amounts are payable within one year. 7.29

[GPI/JPI 25 (Consolidated) – Disclosures should be made of the balance and nature of unreconciled items in an Insurer’s Balance Sheet which constitute more than 2% of the category of liabilities to which the unreconciled items relate.]

19. OTHER PAYABLES

2010 2009

RM‟000 RM‟000

Accrued expenses 40,000 30,432 Others 12,141 8,047

52,141 38,479

The carrying amounts disclosed above approximate fair value at the balance sheet date. 7.25 All amounts are payable within one year. 7.29



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20. OPERATING REVENUE

2010 2009

RM‟000 RM‟000

Gross premiums (Note 21) 216,438 220,341 Investment income (Note 22) 24,657 23,046

241,095 243,387

21. NET EARNED PREMIUMS 4.37

2010 2009

RM‟000 RM‟000 (a) Gross Premiums Insurance contracts: Life (Note 13(a)) 137,535 140,829 General (Note 13(b)(ii)) 73,533 73,878 Investment contracts with DPF (Note 14(a)) 7,200 7,491

218,268 222,198 Change in unearned premiums provision (1,830) (1,857)

216,438 220,341

(b) Premiums ceded 4.37(b)

Insurance contracts: Life (34,383) (35,208) General (18,384) (18,468) Investment contracts with DPF (3,960) (4,119) Change in unearned premiums provision 459 462

(56,268) (57,333)

Net Earned Premiums 160,170 163,008

22. INVESTMENT INCOME*

2010 2009

RM‟000 RM‟000

Rental income from investment properties 669 642 Financial assets at FVTPL – held for

trading purposes

Interest/profit income 1,548 1,461 Dividend/distribution income - equity securities quoted in Malaysia 1,000 1,000

- equity securities quoted outside Malaysia 521 419 Financial assets at FVTPL – designated upon initial recognition Interest/profit income 1,320 1,236 Dividend/distribution income - equity securities quoted in Malaysia 1,000 1,000

- equity securities quoted outside Malaysia 200 191 - unit and property trusts 99 - HTM financial assets interest/profit income 978 906 AFS financial assets Interest/profit income 7,770 7,260 Dividend income - equity securities quoted in Malaysia 6,000 6,000

- equity securities quoted outside Malaysia 852 435 LAR interest/profit income 2,436 2,250 Cash and cash equivalents interest/profit income 264 246

24,657 23,046

[* Disclose any other specific items, where applicable.

Eg. FRS7.20(d) – disclose interest income on impaired financial assets accrued].



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23. REALISED GAINS AND LOSSES

2010 2009

RM‟000 RM‟000 Property and equipment Realised gains 501 156

AFS financial assets Realised gains: Equity securities - quoted in Malaysia 70 63 - quoted outside Malaysia 8 - Debt securities - quoted in Malaysia 90 87 - quoted outside Malaysia 9 - Realised losses: Equity securities - quoted in Malaysia (20) (15) - quoted outside Malaysia (7) (6) Debt securities - quoted in Malaysia (10) (6) - quoted outside Malaysia (2) -

Total realised gains for AFS financial assets 138 123

639 279

24. FAIR VALUE GAINS AND LOSSES Note 2010 2009

RM‟000 RM‟000

Investment properties 4 159 291

Financial investments - held for trading purposes 3,156 2,835 7.20(a)

Financial investments – designated upon initial recognition - -

Total fair value gains on financial investments at FVTPL 3,156 2,835

3,315 3,126

[* Include impairment on AFS, if any.]

25. FEES AND COMMISSION INCOME

2010 2009 4.37(b)(i)

RM‟000 RM‟000

Policyholder administration and investment management

services 7,485 2,880 Surrender charges and other contract fees 6,636 2,874 Reinsurance commission income 1,737 789

15,858 6,543

Fees and commission income related to insurance contracts 15,092 5,993

26. NET BENEFITS AND CLAIMS Note 2010 2009

RM‟000 RM‟000 4.37(b)

(a) Gross Benefits and Claims Paid Insurance contracts: Life 13(a) (62,265) (64,890) General 13(b)(i) (46,323) (46,563) Investment contracts with DPF 14(a) (6,666) (6,777)

(115,254) (118,230)



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Note 2010 2009

RM‟000 RM‟000 4.37(b)

(b) Claims Ceded to Reinsurers Insurance contracts: Life 13(a) 15,564 16,221 General 13(b)(i) 11,583 11,643 Investment contracts with DPF 14(a) 3,666 3,726

30,813 31,590

(c) Gross Change in Contract Liabilities Insurance contracts: Life (20,080) (21,869) General (7,332) (7,683) Investment contracts with DPF (228) (426) Investment contracts without DPF 66 (15) Liability adequacy provision (57) (60)

(27,631) (30,053)

(d) Change in Contract Liabilities Ceded to Reinsurers Insurance contracts: Life 2,847 2,889 General 1,824 1,917 Investment contracts with DPF 126 234 Investment contracts without DPF (39) 21 Liability adequacy provision 12 12

4,770 5,073

27. MANAGEMENT EXPENSES* 101.93

Note 2010 2009

RM‟000 RM‟000

Employee benefits expense 27(a) 29,455 19,001 Directors’ fees 27(b) 500 500 Auditors’ remuneration:

- statutory audits 400 400 - other services 100 100

Depreciation of property and equipment 3 3,405 3,837 Direct operating expenses of investment properties –

revenue-generating 4

1,000 800 Gain on disposal of property and equipment (889) (771) Amortisation of intangible assets 5 207 144 Impairment loss on intangible assets 5 654 729 Allowance for doubtful debts 2,000 2,154 Reversal of allowance for doubtful debts (3,345) (1,000) Bad debts written off 200 - Impairment loss on LAR 129 66 Provisions 15 882 5,730 Reversal of unutilised provisions 15 - (1,000)

34,698 30,690

[* Disclose any other specific items, where applicable.

Eg. FRS7.20(c) – disclose fee expense arising from financial assets or financial liabilities that are not at FVTPL].



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(a) Employee Benefits Expense 101.93

2010 2009

RM‟000 RM‟000

Wages and salaries 20,955 12,301 Social security contributions 1,000 800 Contributions to defined contribution plan, EPF 3,500 3,000 Other benefits 4,000 2,900

29,455 19,001 (b) Directors‟ Remuneration The details of remuneration receivable by Directors during the year are as follows: 2010 2009

RM‟000 RM‟000

Executive*:

Salaries and other emoluments 700 700 Fees 100 100 Bonus 280 280 Contribution to defined contribution plan 220 220 Estimated money value of benefits-in-kind 120 120

1,420 1,420 Non-executive: Fees 400 400

1,820 1,820

Represented by: Directors’ fees 500 500 Amount included in Employee Benefits Expense 1,200 1,200 Estimated money value of benefits-in-kind 120 120

The number of executive and non-executive directors whose total remuneration received during the year falls within the following bands is:

Number of directors

2010 2009

Executive director: RM950,001 – RM1,000000 1 1 Non-executive directors: Below RM50,000 6 6 RM50,000 – RM100,000 1 1 RM100,001 – RM150,000 1 1

Include other disclosure requirements as appropriate, e.g. disclosures required by listing requirements.] [* Details of remuneration for the Chief Executive Officer (“CEO”) are required to be disclosed separately. Such disclosure can be made separately within the sub-note(b) above pertaining to Directors’ Remuneration for Executive Directors if the CEO is a member of the Board of Directors (“BOD”). If the CEO is not a member of the BOD, such disclosure can be made in a separate sub-note, e.g., sub-note (c) below. Note: The CEO for Model Insurance Berhad is not a member of the BOD. ]



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(c) The details of remuneration receivable by the CEO* during the year are as follows:

2010 2009

RM‟000 RM‟000

Salaries and other emoluments 600 600

Fees - -

Bonus 200 200

Contribution to defined contribution plan 80 90

Estimated money value of benefits-in-kind 75 75

955 955

Amount included in Employee Benefits Expense

880 880

28. INCOME TAX EXPENSE

Note 2010 2009 112.74, 112.80

RM‟000 RM‟000

Current income tax: Malaysian income tax 4,092 5,002 Over provision in prior years - (1,744)

4,092 3,258 Deferred tax: Relating to origination and reversal of temporary differences 16 615 2,661

4,707 5,919

The income tax for the Shareholders’ and General funds are calculated based on the tax rate of 25% (2009: 25%) of the estimated assessable profit for the financial year. The income tax for the Life fund is calculated based on tax rate of 8% (2009: 8%) of the assessable investment income net of allowable deductions for the financial year. The taxes of the respective funds are disclosed in Note 40 – Insurance Funds.

A reconciliation of income tax expense applicable to profit/surplus before taxation at the statutory income tax rate to income tax expense at the effective income tax rate is as follows:

112.80

2010 2009 112.79(c)

RM‟000 RM‟000

Profit/surplus before tax 14,171 17,848

Taxation at Malaysian statutory tax rate of 25% 3,543 4,462 Tax rate differential of 17% in respect of Life fund (2,500) (2,400) Income not subject to tax (516) (389) Expenses not deductible for tax purposes 4,180 5,990 Over provision in prior years - (1,744)

Tax expense for the year 4,707 5,919



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29. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the profit for the financial year attributable to ordinary equity holders of the Company by the weighted average number of Ordinary Shares in issue during the financial year.

133.70(a), 133.70(c)

2010 2009

RM‟000 RM‟000

Profit attributable to Ordinary equity holders 9,464 11,929 Weighted average number of shares in issue 100,000 100,000 133.70(b)

Basic earnings per share (sen) 9.5 11.9 133.66

Diluted earnings per share are not presented as there were no dilutive potential Ordinary Shares as at the balance sheet date.

There have been no other transactions involving Ordinary Shares between the reporting date and the date of completion of these financial statements.

133.70(d)

30. DIVIDENDS

Dividends in respect of Year Dividends

Recognised in Year

2010 2009 2008 2010 2009

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 [Insert Interim dividends, if applicable.] Proposed for approval at AGM (not

recognised as at 31 December):

Final dividends 2,250 2,960 27,261 2,960 27,261

Dividend rate (%), gross 3.0 3.9

Dividend per share (sen), net 2.2 3.0

At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 December 2010, of 3.0% less 25% taxation on 100,000,000 Ordinary Shares, amounting to a dividend payable of RM2,250,000 (2.2 sen per Ordinary Share) will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for as an appropriation of retained earnings in the financial year ending 31 December 2011.

101.125(a)



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31. CASH FLOWS

Note 2010 2009

RM‟000 RM‟000 Profit before tax 14,171 17,848 Investment income (24,657) (23,046) Realised gains recorded in profit or loss (639) (279) Fair value gains recorded in profit or loss (3,315) (3,126) Purchases of investment properties 4 (996) (657) Purchases of FVTPL financial investments 6(e) (15,000) (12,000) Proceeds from sale of FVTPL financial

investments

6(e) 21,000 9,000

Purchases of AFS investments 6(e) (24,000) (15,000) Proceeds from sale of AFS financial investments 6(e) 29,532 19,569 Maturity of AFS financial investments 6(e) 261 195 Purchase of HTM financial investments 6(e) (3,774) (1,593) Maturity of HTM financial investments 6(e) 300 255 Increase in LAR 6(e) (3,681) (3,141) Non-cash items: Depreciation of property and equipment 3,405 3,837 Gain on disposal of property and equipment (889) (771) Amortisation of intangible assets 207 144 Impairment losses on intangible assets 654 729 Expenses deferred during the year (16,104) (9,666) Amortisation of deferred expenses 10,197 6,327 Allowance for doubtful debts 2,000 2,154 Reversal of allowance for doubtful debts (3,345) (1,000) Bad debts written off 200 - Provisions 882 5,730 Reversal of unutilised provisions - (1,000) Utilisation of provisions - (2,000)

Changes in working capital: Increase in reinsurance assets (5,436) (5,500) Increase in insurance receivables (9,345) (9,200) Increase in other receivables (972) (1,050) Increase in insurance contract liabilities 30,633 19,129 Increase in investment contract liabilities 450 550 Increase in other financial liabilities 1,872 2,200 Increase in insurance payables 948 1,080 Increase in other payables 13,662 10,090

Cash generated from operating activities 18,221 14,758 107.10

The Company classifies the cash flows from the acquisition and disposal of financial assets as operating cash flows, as the purchases are funded from the cash flows associated with the origination of insurance and investment contracts, net of the cash flows for payments of benefits and claims incurred for insurance and investment contracts, which are respectively treated under operating activities.



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32. OPERATING LEASE ARRANGEMENTS

The Company (as lessor) has entered into non-cancellable operating lease agreements on its investment properties portfolio. These leases have remaining non-cancellable lease terms of between 5 and 10 years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions and certain contracts include contingent rental arrangements computed based on sales achieved by tenants. 117.35(d)

The future minimum lease payments receivable under non-cancellable operating leases contracted for as at the balance sheet date but not recognised as receivables, are as follows: 117.35(a)

2010 2009

RM‟000 RM‟000 Not later than 1 year Later than 1 year and not later than 5 years 1,000 - Later than 5 years 5,000 6,000

4,000 4,000

10,000 10,000

33. CAPITAL COMMITMENTS

2010 2009

RM‟000 RM‟000 Capital expenditure

Approved and contracted for:

Investment properties 1,000 1,000 101.105(d)(i)

Property and equipment 1,000 7,000 116.74(c)

Intangible assets 1,000 350 138.122(e)

3,000 8,350

Approved but not contracted for: Property and equipment 2,000 - CA 89(2)(l)(t)

5,000 8,350

5,000 7,350

34. RELATED PARTY DISCLOSURES CA95(2)(1)(t)

(a) In addition to the transactions detailed elsewhere in the financial statements, the Company had the following transactions and balances with related parties during the financial year:

124.17

2010 2009

RM‟000 RM‟000

Transactions:

Management fees paid to the holding company 50 50 124.18(a)

Related companies:*

Acquisition of services 100 120 124.18(g)

Sale of general insurance contracts 250 250

Sale of life insurance contracts 300 300

Purchases of furniture and fittings 500 -

Interest income 250 265

Purchases of investment properties from a company in which a director of the Company is a controlling shareholder 609 - 124.18(g)

Balances: Deposits and placements with related financial institutions 5,000 5,000

* related companies are companies within the Ins Holdings Bhd. group. (i) The sale of insurance contracts were made according to the published prices and conditions

offered to the major customers of the Company. 124.17

(ii) The purchase of furniture and fittings was made according to the published prices and

conditions offered by these related parties to their major customers. 124.17

(iii) The interest income arose from deposits and placements with related financial institutions at the published rates offered by the related party to their major customers. 124.17



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(b) Compensation of key management personnel

The remuneration of directors and other members of key management during the year was as follows: 124.16

2010 2009

RM‟000 RM‟000

Short-term employee benefits 2,800 2,700 Post-employment benefits:

Defined contribution plan, EPF 700 500

3,500 3,200

Included in the total key management personnel are:

Directors’ remuneration (Note 27(b)) 1,700 1,700

Members of key management comprise those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity*. [*Or alternatively, insert designation of such personnel.]

35. RISK MANAGEMENT FRAMEWORK

[This note is only an illustrative example to meet the relevant disclosure requirements of FRS 7. The nature, amount and level of detail of the disclosure shall be Company-specific.]

FRS 7 para 33(b) requires disclosure of each type of risk arising from financial instruments – its objectives, policies, and processes for managing the risk and the methods used to measure the risk.

7.33(b)

Example: (a) Risk Management Framework (b) Capital Management Objectives, Policies and Approach* [*FRS 101 (Amendment) generally requires an entity to disclose information that enables users of financial statements to evaluate the objective, policy and process for managing capital. This shall also entail disclosure of:

Quantitative data about what the entity regards as capital

Whether the entity has complied with any externally-imposed capital requirements and if it has not complied, the consequences of such non-compliance. Also, refer to the detailed disclosure of the Regulatory Capital Requirements as disclosed in Note 40]

101.134

(c) Governance and Regulatory Framework (d) Asset-Liability Management (“ALM”) Framework

36. INSURANCE RISK 4.39(a)

[This note is only an illustrative example to meet the relevant disclosure requirements of FRS 4 and FRS 7. The nature, amount and level of detail of the disclosure shall be Company-specific.]

(1) Life Insurance Contracts (including Investments Contracts with DPF) 4.34 – 35

[Insert appropriate note.] 7.33 – 42

Example: [Disclose analysis of: - concentration of life insurance and investment with DPF by type of contract - geographical concentration of the Company’s life and investment with DPF contracts - key assumptions and their sensitivities – impact on liabilities, profit and equity]



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Example: The table below shows the concentration of life insurance and investment contract liabilities with DPF by type of contract.

Gross Reinsurance

With DPF Without DPF Total With DPF Without DPF Total Net

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 31 December 2010 Whole life 44,517 100,000 144,517 (10,000) (21,000) (31,000) 113,517 Term assurance 20,163 42,846 63,009 (3,600) (7,650) (11,250) 51,759 Pure endowment 11,592 24,630 36,222 (2,898) (6,156) (9,054) 27,168 Mortgage 7,955 11,904 19,859 (239) (759) (998) 18,861

Total life insurance 84,227 179,380 263,607 (16,737) (35,565) (52,302) 211,305

XXX* 13,092 - 13,092 (7,200) - (7,200) 5,892

Total investment contracts with DPF 13,092 - 13,092 (7,200) - (7,200) 5,892

Total 97,319 179,380 276,699 (23,937) (35,565) (59,502) 217,197

31 December 2009 Whole life 37,198 86,000 123,198 (10,000) (20,000) (30,000) 93,198 Term assurance 20,000 40,000 60,000 (3,500) (8,000) (10,000) 50,000 Pure endowment 15,000 30,000 45,000 (1,500) (5,000) (9,000) 36,000 Mortgage 5,540 10,518 16,058 (819) (612) (431) 15,627

Total life insurance 77,738 166,518 244,256 (15,819) (33,612) (49,431) 194,825

XXX* 12,843 - 12,843 (7,062) - (7,062) 5,781

Total investment contracts with DPF 12,843 - 12,843 (7,062) - (7,062) 5,781

Total 90,581 166,518 257,099 (22,881) (33,612) (56,493) 200,606

As all of the business is derived from Malaysia, the entire life insurance and investment contract liabilities are in Malaysia. The geographical analysis is based on the countries where the business is written. [* List other types of contracts, as applicable.]



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Key Assumptions

Material judgment is required in determining the liabilities and in the choice of assumptions. Assumptions in use are based on past experience, current internal data, external market indices and benchmarks which reflect current observable market prices and other published information. Assumptions and prudent estimates are determined at the date of valuation and no credit is taken for possible beneficial effects of voluntary withdrawals. Assumptions are further evaluated on a continuous basis in order to ensure realistic and reasonable valuations. The key assumptions to which the estimation of liabilities is particularly sensitive are as follows:

Mortality and morbidity rates XXX

Longevity XXX

Investment return XXX

Expenses XXX

Lapse and surrender rates XXX

Discount rate XXX



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The assumptions that have the great effect on the Balance Sheet and Income Statement of the Company are listed below by portfolio assumptions impacting net liabilities.

Mortality and morbidity rates Investment return Lapse and surrender rate Discount rate

4.39(a)

2010 2009 2010 2009 2010 2009 2010 2009 % % % % % % % % Type of business With fixed and guaranteed terms and

with DPF contracts

Life insurance X - X

(1) X – X

(1) 3.5 – 4.0 3.0 – 3.5 3.5 – 4.0 3.0 – 3.5 4.5 4.0

XXX* X - X (1)

X – X (1)

4.0 3.5 4.0 3.5 4.5 4.0 Without DPF contracts Term assurance X - X

(2) X – X

(2)

Male X - X (2)

X – X (2)

3.5 – 4.0 3.0 – 3.5 4.5 4.0 4.5 4.0 Female X - X

(2) X – X

(2) 4.0 3.5 4.5 4.0 4.5 4.0

XXX* X - X

(3) X – X

(3)

Male X - X (3)

X – X (3)

4.0 3.5 4.5 4.0 4.5 4.0 Female X - X

(3) X – X

(3) 4.0 3.5 4.5 4.0 4.5 4.0

(1)

Industry mortality and morbidity experience tables for XXX that were observed in Malaysia between year XXXX and XXXX (2)

Industry mortality and morbidity experience tables for term assurance that were observed in Malaysia between year XXXX and XXXX (3)

Industry mortality and morbidity experience tables for XXX that were observed in Malaysia between year XXXX and XXXX [* List other types of contracts, as applicable.]



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Sensitivities 5

The analysis below is performed for reasonably possible movements in key assumptions with all other assumptions held constant, showing the impact on gross and net liabilities, profit before tax and equity. The correlation of assumptions will have a significant effect in determining the ultimate claims liabilities, but to demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual basis. It should be noted that movements in these assumptions are non-linear. Sensitivity information will also vary according to the current economic assumptions.

Change in Assumptions

Impact on Gross Liabilities

Impact on Net Liabilities

Impact on Profit before Tax

Impact on Equity*

4.39(c)

Life Insurance Contracts % RM‟000 RM‟000 RM‟000 RM‟000 31 December 2010 Mortality/morbidity +10 9,600 6,900 (1,800) (1,450) Longevity -10 8,900 6,600 (1,500) (1,200) Investment return +1 (9,300) (6,900) 1,800 1,350 Expenses +10 8,999 6,600 (1,600) (1,350) Lapse and surrender rates +10 8,900 6,300 (1,500) (1,280) Discount rate +1 (8,100) (6,000) 1,550 1,200 31 December 2009 1 Mortality/morbidity +10 9,900 6,800 (1,900) (1,550) Longevity -10 8,100 6,900 (1,600) (1,300) Investment return +1 (8,900) (6,700) 1,800 1,300 Expenses +10 8,800 6,750 (1,700) (1,450) Lapse and surrender rates +10 8,100 6,380 (1,600) (1,380) Discount rate +1 (7,500) (6,100) 1,650 1,100

Investment Contracts with DPF 31 December 2010 +10 1,250 600 (150) (120) Mortality/morbidity -10 1,180 480 (120) (100) Longevity +1 (1,300) (600) 140 120 Investment return +10 1,000 450 (130) (90) Expenses +10 990 390 (120) (70) Lapse and surrender rates +1 (580) (330) 120 60 Discount rate 31 December 2009 Mortality/morbidity +10 1,100 500 (100) (100) Longevity -10 1,000 400 (70) (70) Investment return +1 (1,100) (500) 110 90 Expenses +10 900 400 (110) (70) Lapse and surrender rates +10 800 300 (100) (60) Discount rate +1 (500) (300) 100 30

* impact on Equity reflects adjustments for tax, where applicable The method used and significant assumptions made for deriving sensitivity information did not change from the previous period.



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(2) General Insurance [Disclose analysis of: - hypothetical claims arising from various realistic disaster scenarios based on the Company’s average risk exposures in 2010 - concentration of general contracts by type of contracts - geographical concentration - key assumptions and their sensitivities – impact on liabilities, profit and equity - claims development table

As a further guide to the level of catastrophe exposure written by the Company, the table below shows hypothetical claims arising for various realistic disaster scenarios based on the Company’s average risk exposures during 2010. Modelled Industry

claims Estimated Gross

claims Estimated Net

claims RM‟000 RM‟000 RM‟000

Penang Tsunami 150,000 30,000 6,000 Johore flood 210,000 28,000 4,050 Ampang landslide 120,000 24,000 3,060 The table below sets out the concentration of General insurance contracts by type of contract.

31 December 2010 31 December 2009 4.39(c) Gross Reinsurance Net Gross Reinsurance Net RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

Motor 50,000 (5,008) 44,992 45,700 (5,070) 40,630 Fire 30,090 (8,090) 22,000 28,020 (7,009) 21,011 Marine Cargo, Aviation Cargo & Transit 40,900 (20,900) 20,000 39,002 (19,000) 20,002 Miscellaneous 31,002 (4,000) 27,002 30,000 (4,600) 25,400

151,992 (37,998) 113,994 142,722 (35,679) 107,043



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Key Assumptions 4.39(c)

The principal assumptions underlying the estimation of liabilities is that the Company’s future claims development will follow a similar pattern to past claims development experience. This includes assumptions in respect of average claim costs, claim handling costs, claim inflation factors and average number of claims for each accident year. Additional qualitative judgments are used to assess the extent to which past trends may not apply in the future, for example, isolated occurrence, changes in market factors such as public attitude to claiming, economic conditions, as well as internal factors, such as, portfolio mix, policy conditions and claims handling procedures. Judgment is further used to assess the extent to which external factors, such as, judicial decisions and government legislation affect the estimates. Other key circumstances affecting the reliability of assumptions include variation in interest rates, delays in settlement and changes in foreign currency rates. Sensitivities

The general insurance claim liabilities are sensitive to the key assumptions shown below. It has not been possible to quantify the sensitivity of certain assumptions, such as, legislative changes or uncertainty in the estimation process. The analysis below is performed for reasonably possible movements in key assumptions with all other assumptions held constant, showing the impact on Gross and Net liabilities, Profit before Tax and Equity. The correlation of assumptions will have a significant effect in determining the ultimate claims liabilities, but to demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual basis. It should be noted that movements in these assumptions are non-linear. Change in

assumptions Impact on

Gross Liabilities Impact on

Net Liabilities Impact on

Profit before Tax Impact on

Equity* RM‟000 RM‟000 RM‟000 RM‟000 31 December 2010 Average claim cost +10% 7,200 3,900 (990) (780) Average number of claims +10% 4,800 3,600 (900) (700) Average claim settlement period Reduce from 30 months to 24 months 4,500 3,300 (800) (660) 31 December 2009 Average claim cost +10% 5,100 3,600 (930) (720) Average number of claims +10% 4,500 3,300 (870) (660) Average claim settlement period Reduce from 30 months to 24 months 4,400 3,200 (840) (630) * impact on Equity reflects adjustments for tax, when applicable The method used for deriving sensitivity information and significant assumptions did not change from the previous period.



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Claims Development table 4.39(c)(iii)

The following tables show the estimate of cumulative incurred claims, including both claims notified and IBNR for each successive accident year at each Balance Sheet date, together with cumulative payments to-date. In setting provisions for claims, the Company gives consideration to the probability and magnitude of future experience being more adverse than assumed and exercises a degree of caution in setting reserves when there is considerable uncertainty. In general, the uncertainty associated with the ultimate claims experience in an accident year is greatest when the accident year is at an early stage of development and the margin necessary to provide the necessary confidence in adequacy of provision is relatively at its highest. As claims develop and the ultimate cost of claims becomes more certain, the relative level of margin maintained should decrease. In 2010, there has been an overall deficit of RM7,641,000 (2009: deficit of RM6,738,000) due primarily to additional business interruption claims on the 2009 accident year (2009: Motor liability claims arising from unfavourable court rulings on the 2003 and 2004 accident years).



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Gross General Insurance Contract Liabilities for 2010:

Note Before

2003

2003

2004

2005

2006

2007

2008

2009

2010

Total Accident year RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

At end of accident year 34,001 35,005 43,555 41,496 47,070 46,888 51,001 43,479 One year later 35,002 36,004 44,444 42,000 48,500 48,000 52,761 Two years later 36,003 37,003 45,333 43,496 49,000 49,821 Three years later 37,004 38,002 46,222 44,000 49,578 Four years later 38,005 39,001 47,001 44,496 Five years later 39,006 40,000 47,061 Six years later 40,007 40,794 Seven years later 40,281

Current estimate of cumulative claims incurred

40,281

40,794

47,061

44,496

49,578

49,821

52,761

43,479

At end of accident year (32,333) (32,001) (33,003) (29,999) (26,006) (26,111) (26,123) (17,547) One year later (33,444) (33,000) (34,004) (30,500) (27,007) (26,888) (27,582) Two years later (34,555) (33,888) (35,003) (31,030) (28,008) (27,693) Three years later (35,666) (35,000) (36,002) (32,008) (28,800) Four years later (36,777) (35,999) (37,001) (32,538) Five years later (37,888) (37,000) (37,320) Six years later (38,999) (37,977) Seven years later (39,069)

Cumulative payments to-date (39,069) (37,977) (37,320) (32,538) (28,800) (27,693) (27,582) (17,547)

Gross general insurance

contract liabilities per Balance Sheet

13(b)

888

1,212

2,817

9,741

11,958

20,778

22,128

25,179

25,932

120,633

Current estimate of

surplus/(deficiency)

(3,519)

(4,089)

(1,101)

(2,262)

(1,677)

159

(7,482)

% surplus/(deficiency) of initial gross reserve

(10%)

(11%)

(2%)

(5%)

(4%)

0%

(17%)



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Net General Insurance Liabilities for 2010:

Note Before

2003

2003

2004

2005

2006

2007

2008

2009

2010

Total Accident year RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

At end of accident year 26,765 22,888 28,111 31,600 33,003 37,612 38,479 32,604 One year later 27,987 23,543 29,888 32,700 34,002 39,000 40,479 Two years later 28,789 24,345 31,000 33,800 35,001 39,612 Three years later 29,567 25,321 31,888 34,900 35,685 Four years later 30,345 26,123 32,999 35,172 Five years later 31,123 27,000 33,045 Six years later 32,000 27,510 Seven years later 32,406

Current estimate of cumulative claims incurred

32,406

27,510

33,045

35,172

35,685

39,612

40,479

32,604

At end of accident year (24,800) (20,009) (21,555) (21,008) (19,000) (21,005) (21,888) (13,161) One year later (25,050) (20,800) (22,666) (22,006) (19,666) (21,555) (22,065) Two years later (26,004) (22,000) (23,777) (23,004) (20,066) (22,155) Three years later (27,004) (23,800) (24,888) (24,002) (21,006) Four years later (28,050) (24,600) (25,999) (24,522) Five years later (29,800) (25,000) (26,265) Six years later (30,854) (25,686) Seven years later (31,854)

Cumulative payments to-date (31,854) (25,686) (26,265) (24,522) (21,006) (22,155) (22,065) (13,161)

Net general insurance

contract liabilities per Balance Sheet

13(b)

675

552

1,824

6,780

10,650

14,679

17,457

18,414

19,443

90,474

Current estimate of

surplus/(deficiency)

(2,400)

(2,600)

(980)

(1,800)

(1,350)

75

(6,000)

% surplus/(deficiency) of initial gross reserve

(8%)

(11%)

(3%)

(5%)

(4%)

0%

(19%)



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37. FINANCIAL RISKS 7.31, 7.36

[This note is only an illustrative example to meet the relevant disclosure requirements of FRS 7. The nature, amount and level of detail of the disclosure shall be Company-specific.]

(1) Credit Risk

[Insert appropriate note to disclose:

(a) the exposure to the risk and how it arises (b) its objectives, policies and processes for managing the risk and the methods used to measure the risk (c) any changes in (a) or (b) from the previous period

7.33

Credit Exposure

The table below shows the maximum exposure to credit risk for the components on the Balance Sheet and items such as future commitments. The maximum exposure is shown gross, before the effect of mitigation through the use of master netting or collateral agreements.



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Insurance and Shareholders‟ Funds

Unit-linked

Total

31 December 2010 Note RM‟000 RM‟000 RM‟000

HTM financial investments 6(a) Malaysian government securities 10,807 - 10,807 Debt securities 2,000 - 2,000 LAR 6(b) Malaysian government-guaranteed loans 3,333 - 3,333 Debt securities 9,750 - 9,750 Fixed and call deposits 9,129 - 9,129 AFS financial investments 6(c) Equity securities 153,000 - 153,000 Debt securities 100,731 - 100,731 Financial investments at FVTPL 6(d) Equity securities 700 20,000 20,700 Debt securities 5,020 15,000 20,020 Trust funds 10,405 9,598 20,003 Reinsurance assets 7 100,000 9,617 109,617 Insurance receivables 8 121,860 - 121,860 Cash and bank balances 40,000 7,647 47,647

566,735 61,862 628,597

31 December 2009 HTM financial investments 6(a) Malaysian government securities 8,000 - 8,000 Debt securities 751 - 751 LAR 6(b) Malaysian government-guaranteed loans 2,222 - 2,222 Debt securities 8,844 - 8,844 Fixed and call deposits 7,465 - 7,465 AFS financial investments 6(c) Equity securities 101,000 - 101,000 Debt securities 137,251 - 137,251 Financial investments at FVTPL 6(d) Equity securities 1,686 21,814 23,500 Debt securities 10,060 10,000 20,060 Trust funds 10,007 10,000 20,007 Reinsurance assets 7 100,000 4,181 104,181 Insurance receivables 8 112,515 - 112,515 Cash and bank balances 10,000 2,849 12,849

509,801 48,8.44 558,645



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Credit Exposure by Credit Rating

The table below provides information regarding the credit risk exposure of the Company by classifying assets according to the Company’s credit ratings of counterparties. Neither past-due nor impaired

Investment grade

Non-investment grade:

satisfactory


unsatisfactory

Unit-linked

Past-due but

not impaired

Total RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 31 December 2010 HTM financial investments Malaysian government securities 10,807 - - - - 10,807 Debt securities 2,000 - - - - 2,000 LAR Malaysian government-guaranteed loans 3,333 - - - - 3,333 Debt securities - 6,000 500 - 3,250 9,750 Fixed and call deposits 9,129 - - - - 9,129 AFS financial investments Equity securities 100,000 53,000 - - - 153,000 Debt securities 50,000 50,731 - - - 100,731 Financial investments at FVTPL Equity securities 700 - - 20,000 - 20,700 Debt securities 5,000 20 - 15,000 - 20,020 Trust funds 10,000 405 - 9,598 - 20,003 Reinsurance assets 90,000 9,000 - 9,617 1,000 109,617 Insurance receivables 100,000 21,415 - - 445 121,860 Cash and bank balances 40,000 - - 7,647 - 47,647

420,969 140,571 500 61,862 4,695 628,597



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Neither past-due nor impaired

Investment grade


satisfactory


unsatisfactory

Unit-linked

Past-due but

not impaired

Total RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 31 December 2009 HTM financial investments Malaysian government securities 8,000 - - - - 8,000 Debt securities 751 - - - - 751 LAR Malaysian government-guaranteed loans 2,222 - - - - 2,222 Debt securities - - 8,283 - 561 8,844 Fixed and call deposits 7,465 - - - - 7,465 AFS financial investments Equity securities 100,000 1,000 - - - 101,000 Debt securities 50,000 80,000 7,251 - - 137,251 Financial investments at FVTPL Equity securities 1,000 686 - 21,814 - 23,500 Debt securities 10,040 - 20 10,000 - 20,060 Trust funds 10,000 7 10,000 - 20,007 Reinsurance assets 90,000 8,716 - 4,181 1,284 104,181 Insurance receivables 100,000 10,523 - - 1,992 112,515 Cash and bank balances 10,000 - - 2,849 - 12,849

389,478 100,932 15,554 48,844 3,837 558,645



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The table below provides information regarding the credit risk exposure of the Company by classifying assets according to the Rating Agency of Malaysia’s (“RAM”)* credit ratings of counterparties. AAA is the highest possible rating. Assets that fall outside the range of AAA to BBB are classified as speculative grade.

AAA AA BBB BB Not rated Unit-linked Total 31 December 2010 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000

HTM financial investments Malaysian government securities 10,807 - - - - - 10,807 Debt securities 2,000 - - - - - 2,000 LAR Malaysian government-guaranteed loans 3,333 - - - - - 3,333 Debt securities - - - - 9,750 - 9,750 Fixed and call deposits 9,129 - - - - - 9,129 AFS financial investments Equity securities 100,000 53,000 - - - - 153,000 Debt securities 50,000 50,000 731 - - - 100,731 Financial investments at FVTPL Equity securities 700 - - - - 20,000 20,700 Debt securities 5,000 - 20 - - 15,000 20,020 Trust funds 10,000 405 - - - 9,598 20,003 Reinsurance assets 90,000 10,000 - - - 9,617 109,617 Insurance receivables 100,000 21,860 - - 121,860 Cash and bank balances 40,000 - - - - 7,647 47,647

420,969 135,265 751 - 9,750 61,862 628,597

31 December 2009 HTM financial investments Malaysian government securities 8,000 - - - - - 8,000 Debt securities 751 - - - - - 751 LAR Malaysian government-guaranteed loans 2,222 - - - - - 2,222 Debt securities - - - - 8,844 - 8,844 Fixed and call deposits 7,465 - - - - - 7,465 AFS financial investments Equity securities 100,000 1,000 - - - - 101,000 Debt securities 50,000 80,000 7,251 - - - 137,251 Financial investments at FVTPL Equity securities 1,000 686 - - - 21,814 23,500 Debt securities 10,040 - 20 - - 10,000 20,060 Trust funds 10,000 7 - - - 10,000 20,007 Reinsurance assets 90,000 10,000 - - - 4,181 104,181 Insurance receivables 100,000 12,000 515 - - - 112,515 Cash and bank balances 10,000 - - - - 2,849 12,849

389,478 103,693 7,786 - 8,844 48,844 558,645

[* Insert name of rating agency and rating criteria used.]



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The table below provides information regarding the credit risk exposure of the Company according to the Company’s categorisation of counter-parties by RAM’s credit rating. AAA AA BBB BB Not rated Total Unit-linked Total RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 31 December 2010 Investment grade 420,969 - - - - 420,969 40,000 460,969 Non-investment grade: Satisfactory - 134,571 - - 6,000 140,571 21,265 161,836 Unsatisfactory - - - - 500 500 597 1,097 Past-due but not impaired - 694 751 - 3,250 4,695 - 4,695

420,969 135,265 751 - 9,750 566,735 61,862 628,597

31 December 2009 Investment grade 389,478 - - - - 389,478 40,000 429,478 Non-investment grade: Satisfactory - 103,693 - - - 103,693 8,000 111,693 Unsatisfactory - - 7,000 - 5,793 12,793 844 13,637 Past-due but not impaired - - 786 - 3,051 3,837 - 3,837

389,478 103,693 7,786 - 8,844 509,801 48,844 558,645

It is the Company’s policy to maintain accurate and consistent risk ratings across its credit portfolio. This enables Management to focus on the applicable risks and the comparison of credit exposures across all lines of business and products. The rating system is supported by a variety of financial analytics combined with processed market information to provide the main inputs for the measurement of counterparty risk. All internal risk ratings are tailored to the various categories and are derived in accordance with the Company’s rating policy. The attributable risk ratings are assessed and updated regularly. The Company has not provided the credit risk analysis for the financial assets of the unit-linked business. This is due to the fact that, in unit-linked business, the liability to policyholders is linked to the performance and value of the assets that back those liabilities and the shareholders have no direct exposure to any credit risk in those assets. During the year, no credit exposure limits were exceeded. The Company actively manages its product mix to ensure that there is no significant concentration of credit risk.



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Age Analysis of Financial Assets Past-Due But Not Impaired

< 30 days

31 to 60 days

61 to 90 days

91 to 180 days

Unit-linked

Total

31 December 2010

Loans and receivables 3,000 250 - - - 3,250

Reinsurance assets 637 363 - - - 1,000 Insurance receivables - 349 36 60 - 445

3,637 962 36 60 - 4,695 31 December 2009 Loans and receivables 561 - - - - 561 Reinsurance assets 1,029 255 - - - 1,284 Insurance receivables 1,251 654 27 60 - 1,992

2,841 909 27 60 - 3,837

Impaired Financial Assets

At 31 December 2010, based on a collective assessment of receivables*, there are impaired insurance receivables of RM9,140,000 (2009: RM10,485,000). For assets to be classified as “past-due and impaired”, contractual payments must be in arrears for more than six (6) months. No collateral is held as security for any past due or impaired assets. The Company records impairment allowance for loans and receivables and insurance receivables in separate Allowance for Doubtful Debts accounts. A reconciliation of the allowance for impairment losses for loans and receivables and insurance receivables is as follows:

Insurance Receivables 2010 2009 RM‟000 RM‟000 At 1 January 10,485 9,331 Charge for the year 2,000 2,154 Recoveries (3,345) (1,000)

At 31 December 9,140 10,485

[* FRS7.37(b) – For receivables assessed to be individually impaired, disclose an analysis including the factors that the Company considered in determining that they are impaired]. Collateral

The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Guidelines are implemented regarding the acceptability of types of collateral and the valuation parameters. Credit risk is also mitigated by entering into collateral agreements. Management monitors the market value of the collateral, requests additional collateral when needed and performs an impairment valuation, when applicable. No collaterals were received from any counterparty during the year (2009: Nil).



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(2) Liquidity Risk 7.39



Example: Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial instruments. In respect of catastrophic events, there is also a liquidity risk associated with the timing differences between gross cash outflows and expected reinsurance recoveries. The following policies and procedures are in place to mitigate the Company’s exposure to liquidity risk:

A Company-wide liquidity risk policy setting out the evaluation and determination of the components of liquidity risk for the Company. Compliance with the policy is monitored and reported monthly and exposures and breaches are reported to the Company’s Risk Management Committee (“RMC”) as soon as practicable. The policy is regularly reviewed for pertinence and for changes in the risk environment.

Set guidelines on asset allocations, portfolio limit structures and maturity profiles of assets, in order to ensure sufficient funding is available to meet insurance and investment contracts obligations.

Setting up contingency funding plans which specify minimum proportions of funds to meet emergency calls as well as specifying events that would trigger such plans.

The Company’s catastrophe excess-of-loss reinsurance contracts contain clauses permitting the immediate draw down of funds to meet claim payments should claim events exceed a certain amount.



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Maturity Profiles

The table below summarises the maturity profile of the financial assets* and financial liabilities of the Company based on remaining undiscounted contractual obligations, including interest/profit payable and receivable. For insurance contracts liabilities and reinsurance assets, maturity profiles are determined based on estimated timing of net cash outflows from the recognised insurance liabilities. Unearned premiums and the reinsurers’ share of unearned premiums have been excluded form the analysis as they are not contractual obligations. Unit-linked liabilities are repayable or transferable on demand and are included in the “up to a year” column. Repayments which are subject to notice are treated as if notice were to be given immediately. Carrying

value Up to a

year* 1 – 3

years 3 – 5

years 5 – 15 years

Over 15 years

No maturity date

Total

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 31 December 2010

Financial investments: HTM 12,807 1,000 1,000 3,000 8,000 2,807 - 15,807 LAR 22,212 2,212 5,000 5,000 5,000 8,000 - 25,212 AFS 253,731 50,731 35,000 20,000 - 153,000 258,731 FVTPL 60,723 18,000 1,000 2,020 - - 40,703 61,723 Reinsurance assets 109,617 100,000 9,000 1,600 10 7 - 110,617 Insurance receivables 121,860 121,860 - - - - - 121,860 Cash and bank balances 47,647 47,647 - - - - - 47,647

Total assets 628,597 341,450 51,000 31,620 13,010 10,814 193,703 641,597

Insurance contract liabilities: With DPF 84,227 24,227 15,000 15,000 15,000 20,000 - 89,227 Without DPF 331,372 181,372 80,000 50,000 18,000 10,000 - 339,372 Investment contract liabilities: With DPF 13,092 3,092 3,000 3,000 8,000 1,000 - 18,092 Without DPF 22,032 15,032 3,000 1,000 1,500 1,500 - 22,032 Other financial liabilities 24,789 20,000 5,789 - - - - 25,789 Insurance payables 15,471 15,471 - - - - - 15,471 Other payables 52,141 52,141 - - - - - 52,141

Total liabilities 543,124 311,335 106,789 69,000 42,500 32,500 - 562,124

[*FRS7.39(a) requires disclosure of maturity analysis for financial liabilities only; similar disclosures for financial assets are on voluntary basis.]



- 66 -

Carrying

value Up to a

year* 1 – 3

years 3 – 5

years 5 – 15 years

Over 15 years

No maturity date

Total

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 31 December 2009 Financial investments: HTM 8,751 751 1,000 2,000 10,000 - - 13,751 LAR 18,531 8,531 5,000 10,000 - - - 23,531 AFS 238,251 37,251 50,000 30,000 10,000 15,000 101,000 243,251 FVTPL 63,567 2,000 2,000 20,060 - - 43,507 67,567 Reinsurance assets 104,181 100,000 4,000 1,100 50 31 - 105,181 Insurance receivables 112,515 112,515 - - - - - 112,515 Cash and bank balances 12,849 12,849 - - - - - 12,849

Total assets 558,645 273,897 62,000 63,160 20,050 15,031 144,507 578,645

Insurance contract liabilities: With DPF 77,738 17,198 20,000 22,000 18,000 3,540 - 80,738 Without DPF 309,240 156,000 30,000 40,000 50,000 43,240 - 319,240 Investment contract liabilities: With DPF 12,843 843 3,000 3,000 5,000 11,000 - 22,843 Without DPF 21,831 15,831 1,500 1,500 2,000 1,000 - 21,831 Other financial liabilities 22,917 20,000 2,917 - - - - 22,917 Insurance payables 14,523 14,523 - - - - - 14,523 Other payables 38,047 38,047 - - - - - 38,047

Total liabilities 497,139 262,442 57,417 66,500 75,000 58,780 - 520,139



- 67 -

The table below summarises the expected utilisation or settlement of assets. Current* Non-current Unit-linked Total RM‟000 RM‟000 RM‟000 RM‟000 31 December 2010

Property and equipment - 12,876 - 12,876 Investment properties - 18,957 - 18,957 Intangible assets - 9,600 - 9,600 Financial investments HTM 2,807 10,000 - 12,807 LAR 2,212 20,000 - 22,212 AFS 150,000 103,731 - 253,731 FVTPL 14,574 1,551 44,598 60,723 Reinsurance assets 90,000 10,000 9,617 109,617 Insurance receivables 121,860 - - 121,860 Other receivables 14,000 1,879 - 15,879 Deferred acquisition costs 3,338 37,000 - 40,338 Cash and bank balances 40,000 - 7,647 47,647

Total assets 438,791 225,594 61,862 726,247

31 December 2009 Property and equipment - 18,150 - 18,150 Investment properties - 17,802 - 17,802 Intangible assets - 10,113 - 10,113 Financial investments HTM 1,751 7,000 - 8,751 LAR 1,531 17,000 - 18,531 AFS 100,000 138,251 - 238,251 FVTPL 20,000 1,753 41,814 63,567 Reinsurance assets 85,000 15,000 4,181 104,181 Insurance receivables 112,515 - - 112,515 Other receivables 14,000 907 - 14,907 Deferred acquisition costs 4,431 30,000 - 34,431 Cash and bank balances 10,000 - 2,849 12,849

Total assets 349,228 255,976 48,844 654,048

* expected utilisation or settlement within 12 months from the Balance Sheet date



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(3) Market Risk 7.40



Example: Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three (3) types of risk – foreign exchange rates (Currency risk), market interest rates/profit yields (Interest Rate/Profit Yield risk) and market prices (Price risk). The key features of the Company’s market risk management practices and policies are as follows:

A Company-wide market risk policy setting out the evaluation and determination of components of market risk for the Company. Compliance with the policy is monitored and reported monthly to the Risk Management Committee (“RMC”) and exposures and breaches are reported as soon as practicable.

Set asset allocation, portfolio limit structure and diversification benchmark to ensure that assets back specific contract liabilities and that assets are held to deliver income and gains for policyholders in line with terms of the respective contracts expectations of policyholders. The Company’s policies on asset allocation, portfolio limit structure and diversification benchmark have been set in line with the Company’s risk management policy after taking cognisance of the regulatory requirements in respect of maintenance of assets and solvency.

Strict control over derivative transactions; such transactions are only permitted for hedging purposes and strictly not for speculative purposes. The Company also issues unit-linked investment policies in a number of its products. In the unit-linked business, the policyholders bear the investment risk on the assets held in the unit-linked funds as the policy benefits are directly linked to the value of the assets in the funds. The Company’s exposure to market risk on this business is limited to the extent that income arising from asset management charges is based on the value of the assets in the funds.



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Currency Risk

Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company’s primary transactions are carried out in Ringgit Malaysia (RM) and its exposure to foreign exchange risk arises principally with respect to Euro and US Dollar (USD). As the Company’s business is conducted primarily in Malaysia, the Company’s financial assets are also primarily maintained in Malaysia as required under the Insurance Act, 1996, and hence, primarily denominated in the same currency (the local RM) as its insurance and investment contract liabilities. Thus, the main foreign exchange risk from recognised assets and liabilities arises from transactions other than those in which insurance and investment contract liabilities are expected to be settled. The Company does not engage in derivative transactions for speculative purposes. Where deemed necessary in line with the Company’s risk management policy, the Company enters into derivative transactions solely for hedging purposes. As the Company’s main foreign exchange risk from recognised assets and liabilities arises from reinsurance transactions for which the balances are expected to be settled and realised in less than a year, the impact arising from sensitivity in foreign exchange rates is deemed minimal as the Company has no significant concentration of foreign currency risk. [* Disclose a summary quantitative data by listing the Company’s financial assets and financial liabilities by major currencies - FRS7.34(a).]



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Interest Rate/Profit Yield Risk

Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes in market interest rate/profit yield. Floating rate/yield instruments expose the Company to cash flow interest/profit risk, whereas fixed rate/yield instruments expose the Company to fair value interest/profit risk. The Company’s interest/profit risk policy requires Management to manage the risk by maintaining an appropriate mix of variable and fixed rate/yield instruments. The policy also requires Management to manage the maturities of interest/profit-bearing financial assets and liabilities. Gaps between variable and fixed rate/yield instruments and their maturities, exceeding a tolerable amount, will be managed by the Company through derivative instruments. Interest or floating rate/yield instruments will be re-priced at intervals of not more than one (1) year. Interest/profit on fixed rate/yield instruments is priced at inception of the financial instrument and is fixed until maturity. The Company has no significant concentration of interest rate/profit yield risk. The analysis below is performed for reasonably possible movements in key variables with all other variables held constant, showing the impact on Profit before Tax (due to changes in fair value of floating rate/yield financial instruments) and Equity (that reflects adjustments to Profit before Tax and re-valuing fixed rate/yield AFS financial assets). The correlation of variables will have a significant effect in determining the ultimate impact on interest rate/profit yield risk but to demonstrate the impact due to changes in variables, variables had to be changed on an individual basis. It should be noted that movements in these variables are non-linear. Impact on Equity*

Change in variables Impact on

Profit before Tax Up to

a year 1 – 3

years 3 – 5

years Over 5 years

Total

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 31 December 2010

USD +100 basis points (200) (200) (200) (250) (250) (900) USD -100 basis points 125 150 150 200 200 700 Euro +100 basis points (100) (100) (100) (125) (125) (450) Euro -100 basis points 62 75 75 100 100 350 31 December 2009 USD +100 basis points (180) (150) (150) (200) (300) (800) USD -100 basis points 135 100 100 100 150 450 Euro +100 basis points (90) (75) (75) (100) (150) (400) Euro -100 basis points 67 50 50 50 75 225 * impact on Equity reflects adjustments for tax, when applicable.

The method used for deriving sensitivity information and significant variables did not change from the previous period.



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Price Risk

Equity price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate/profit yield risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer or factors affecting similar financial instruments traded in the market. The Company’s equity price risk exposure relates to financial assets and financial liabilities whose values will fluctuate as a result of changes in market prices, principally investment securities not held for the account of unit-linked business. The Company’s price risk policy requires it to manage such risks by setting and monitoring objectives and constraints on investments, diversification plans, limits on investments in each country, sector, market and issuer, having regard also to such limits stipulated by BNM. The Company complies with BNM stipulated limits during the financial year and has no significant concentration of price risk. The analysis below is performed for reasonably possible movements in key variables with all other variables held constant, showing the impact on Profit before Tax (due to changes in fair value of financial assets and liabilities whose changes in fair values are recorded in Income Statement) and Equity (that reflects adjustments to Profit before Tax and changes in fair value of AFS financial assets). The correlation of variables will have a significant effect in determining the ultimate impact on price risk, but to demonstrate the impact due to changes in variables, variables had to be changed on an individual basis. It should be noted that movements in these variables are non-linear. 31 December 2010 31 December 2009

Changes in variables Impact on


Equity* Impact on


Equity* Market indices

Bursa Malaysia +15% 700 600 600 450 Bursa Malaysia -15% (600) (450) (550) (450) The potential impacts arising from other market indices are deemed insignificant as the Company’s holdings in equity securities listed in other bourses are not material. * impact on Equity reflects adjustments for tax, when applicable The method used for deriving sensitivity information and significant variables did not change from the previous period.



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Operational Risks

Operational risk is the risk of loss arising from system failure, human error, fraud or external events. When controls fail to perform, operational risks can cause damage to reputation, have legal or regulatory implications or can lead to financial loss. The Company cannot expect to eliminate all operational risks but by initiating a rigorous control framework and by monitoring and responding to potential risks, the Company is able to manage the risks. Controls include effective segregation of duties, access controls, authorisation and reconciliation procedures, staff training and evaluation procedures, including the use of Internal Audit. Business risks, such as, changes in environment, technology and the industry are monitored through the Company’s strategic planning and budgeting process.



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38. OTHER SIGNIFICANT EVENTS 101.103(c)

[Insert appropriate note, if any] 101.15

39. SUBSEQUENT EVENTS

[Insert appropriate note, if any] 110.21

40. REGULATORY CAPITAL REQUIREMENTS

The capital structure of the Company as at 31 December 2010, as prescribed under the Framework is provided below:

Note 2010 2009 RM‟000 RM‟000 Eligible Tier 1 Capital Share capital (paid-up) 11 100,000 100,000 Reserves, including retained earnings 256,615 216,822 * Capital instruments which qualify as Tier 1 Capital XXX XXX

356,615 316,822

Tier 2 Capital *Capital instruments which qualify as Tier 2 Capital XXX XXX Eligible reserves 6,796 6,460

6,796 6,460

*Amounts deducted from Capital (XXX) (XXX)

Total Capital Available 363,411 323,282

[* This relates to the total amounts of qualifying capital instruments of Tier-1 Capital and Tier-2 Capital, as well as total deductions respectively.]



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41. INSURANCE FUNDS

The Company’s activities are organised by funds and segregated into the Life, General and Shareholders’ funds in accordance with the Insurance Act, 1996 and Insurance Regulations, 1996. The Company’s balance sheet and income statement have been further analysed by funds and the Shareholders’ and General Funds has been presented together as one fund. [Note: Insert appropriate note on organisation of funds, products, etc.]

Example: The Life insurance business offers a wide range of participating and non-participating Whole Life, Term Assurance, Endowment and Annuity products, as well as Unit-linked products. The General insurance business offers general insurance products which include Motor, Fire, Marine, Aviation and Transit (“MAT”), Health & Surgical and Miscellaneous products.



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Balance Sheet by Funds As at 31 December

Shareholders‟ and General Funds

Life Fund

Total

2010 2009 2010 2009 2010 2009

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 Assets Intangible assets 2,835 2,500 6,765 7,613 9,600 10,113 Financial investments 179,339 170,000 170,134 159,100 349,473 329,100 Reinsurance assets 37,998 35,679 71,619 68,502 109,617 104,181 Insurance receivables 36,558 32,515 85,302 80,000 121,860 112,515 Other assets 98,739 72,376 36,958 25,763 135,697 98,139

355,469 313,070 370,778 340,978 726,247 654,048

Equity, Policyholders‟ Fund and Liabilities Total Equity 152,846 128,006 - - 152,846 128,006

Insurance contract liabilities 151,992 142,722 285,867 249,707 437,859 392,429 Investment contract liabilities - - 35,124 34,674 35,124 34,674 Other liabilities 50,631 42,342 49,787 56,597 100,418 98,939

Total policyholders‟ funds and liabilities 202,623 185,064 370,778 340,978 573,401 526,042

355,469 313,070 370,778 340,978 726,247 654,048



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Income Statement / Revenue Accounts by Funds For the year ended 31 December


Life Fund

Total

2010 2009 2010 2009 2010 2009

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 Operating revenue 79,089 78,939 162,003 164,448 241,092 243,387

Gross premiums 71,691 72,027 144,738 148,314 216,429 220,341 Premiums ceded to reinsurers (17,922) (18,006) (38,343) (39,327) (56,265) (57,333)

Net premiums 53,769 54,021 106,395 108,987 160,164 163,008

Fee and commission income 4,824 2,007 11,268 4,686 16,092 6,693 Investment income 7,398 6,912 17,265 16,134 24,663 23,046 Gains and losses and other operating revenue 1,836 1,722 3,414 3,027 5,250 4,749

Other revenue 14,058 10,641 31,947 23,847 46,005 34,488

Gross benefits and claims paid (46,323) (46,563) (68,931) (71,667) (115,254) (118,230) Claims ceded to reinsurers 11,583 11,643 19,230 19,947 30,813 31,590 Gross change to contract liabilities (7,389) (7,743) (20,242) (22,310) (27,631) (30,053) Change in contract liabilities to reinsurers 1,836 1,929 2,934 3,144 4,770 5,073

Net claims (40,293) (40,734) (67,009) (70,886) (107,302) (111,620)

Depreciation and amortisation (3,313) (2,726) (6,626) (11,452) (9,939) (14,178) Other operating and management expenses (14,432) (7,645) (60,325) (46,205) (74,757) (53,850)

Other expenses (17,745) (10,371) (66,951) (57,657) (84,696) (68,028)

9,789 13,557 4,382 4,291 14,171 17,848 Transfer from Revenue Accounts 3,000 3,000 (3,000)* (3,000)* - -

Profit/Surplus before Tax 12,789 16,557 1,382 1,291 14,171 17,848 Taxation (Note 28) (3,325) (4,628) (1,382) (1,291) (4,707) (5,919)

Net profit/Surplus after Tax 9,464 11,929 - - 9,464 11,929

* The amount transferred from the Life Fund’s Revenue Accounts to the Shareholders’ Fund’s Income Statement is net of tax.



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Investment-linked Fund Balance Sheet As at 31 December

2010 2009

RM‟000 RM‟000 Assets Financial investments 44,598 41,814 Reinsurance assets 9,617 4,181 Other assets 7,647 2,849

Total assets 61,862 48,844

Liabilities Insurance contract liabilities 3,500 3,000 Investment contract liabilities 50,500 40,000 Other liabilities 6,302 4,743

60,302 47,743

Net asset value of funds (Note 13(a)) 1,560 1,101

Investment-linked Fund Income Statement For the Year Ended 31 December

2010 2009

RM‟000 RM‟000 Investment income 1,209 1,066 Realised gains and losses 21 12 Fair value gains and losses (98) (148)

1,132 930 Management expenses (581) (597)

Profit before taxation 551 333 Taxation (92) (80)

Net profit for the year (Note 13(a)) 459 253



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Information on Cash Flows by Funds As at 31 December


Life Fund

Total

2010 2009 2010 2009 2010 2009

RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 RM‟000 Cash flows from: Operating activities 15,000 23,148 20,348 10,000 35,348 33,148 Investing activities 1,200 (2,000) 1,210 (1,903) 2,410 (3,903) Financing activities (2,960) (27,261) - - (2,960) (27,261)

Net increase in cash and cash equivalents: 13,240 (6,113) 21,558 8,097 34,798 1,984 At beginning of year 5,844 6,890 7,005 3,975 12,849 10,865

At end of year 19,084 777 28,563 12,072 47,647 12,849



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Disclaimer The basis and scope of guidance provided in this Model Insurance Financial Statements is given with due care but cannot be construed to arise by virtue of any contractual or fiduciary or any special relationship between the person who uses this Model Insurance Financial Statements and the Institute or the Council. Neither the MICPA, its Council or any of its Committees shall be held responsible and/or liable for any claims, loss, damage, cost or expenses arising in any way out of or in connection with any person relying or acting upon this Model Insurance Financial Statements.

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MODEL INSURANCE FINANCIAL STATEMENTS - MICPA€¦ · The Council of the Institute has approved the publication of this Statement, Model Insurance Financial Statements for members’