m pi g enerali i nsurans b erhad · executive officer of hartford life insurance kk. between 2003...

M P I G E N E R A L I I N S U R A N S B E R H A D (14730-X) (Incorporated in Malaysia)

Directors’ Report and Audited Financial Statements 31 December 2018

14730-X

MPI Generali Insurans Berhad

(Incorporated in Malaysia)

Contents Page

Directors' report 1 - 20

Statement by directors 21

Statutory declaration 21

Independent auditors' report 22 - 25

Statements of financial position 26

Income statements 27

Statements of comprehensive income 28

Statements of changes in equity 29 - 30

Statements of cash flows 31 - 33

Notes to the financial statements 34 - 140

14730-X



Directors' report

Principal activity

Results

Group Company

RM'000 RM'000

Net profit for the year 33,081 29,360

Profit attributable to:

Equity holder of the Company 29,163 29,360

Non-controlling interests 3,918 - 33,081 29,360

Dividend

The Directors have pleasure in presenting their report together with the audited financial

statements of the Group and the Company for the financial year ended 31 December 2018.

The Company is principally engaged in underwriting general insurance business.

There were no material transfers to or from reserves or provisions during the financial year other

than as disclosed in the financial statements.

In the opinion of the directors, the results of the operations of the Group and of the Company

during the financial year were not substantially affected by any item, transaction or event of a

material and unusual nature.

No dividend has been declared or paid by the Company since the end of the previous financial

year. The directors do not recommend the payment of any dividends in respect of the current

financial year.

The principal activities of the subsidiaries or wholesale unit trust funds are investments in fixed

income instruments and money market instruments.

Other information relating to the subsidiaries are disclosed in Note 6(c) to the financial

statements.

1

14730-X



Board of Directors (the "Board")

Mohd Azlan bin Mohammed Independent Non-Executive Chairman

Kheoh And Yeng Non-Independent Executive Director

Datuk Tan Leh Kiah Independent Non-Executive Director

Tam Chiew Lin Independent Non-Executive Director

Jennifer Susan Sparks Non-Independent Non-Executive Director

Profile of Directors

The following are the profile of the Directors of the Company:

MOHD AZLAN BIN MOHAMMED

Independent Non-Executive Chairman

KHEOH AND YENG

Non-Independent Executive Director

The names of the directors of the Company in office since the beginning of the financial year to

the date of this report are:

Ms Kheoh And Yeng was appointed to the Board of the Company as a Non-Independent Non-

Executive Director on 30 May 2006. Ms Kheoh was re-designated as a Non-Independent

Executive Director on 30 May 2017. Ms Kheoh obtained a Bachelor of Commerce (Hons) from

the University of Manitoba, Canada in 1979 and a Master of Business Administration from the

University of Windsor, Canada in 1981.

Ms Kheoh is currently the Chief Executive Officer ("CEO") of MPHB Capital Berhad (“MPHB

Capital”) and she is responsible for ensuring the effective control of the general management and

operation of MPHB Capital, and developing and implementing the overall business strategies and

direction of MPHB Capital. Prior to that, she was the Chief Operating Officer (“COO”) of MPHB

Capital from 14 May 2013 to 17 November 2016. During her tenure as COO of MPHB Capital,

she was responsible for the overall management of the operations of the MPHB Capital Group.

Encik Mohd Azlan bin Mohammed was appointed to the Board of the Company as an

Independent Non-Executive Director on 15 August 2014. On 7 May 2015, he was appointed as

an Independent Non-Executive Chairman of the Company. Encik Mohd Azlan holds a Bachelor of

Arts Degree (Honours) majoring in Accounting and Business.

Encik Mohd Azlan is currently the Managing Director of Wasco Oilfield Services Sdn Bhd

(“Wasco”) which is principally involved in the provision of oil and gas services. He is responsible

for overseeing the business operations of Wasco. He is currently a director of various

subsidiaries of Wah Seong Corporation Berhad, a subsidiary of Ancom Berhad, and several

private limited companies in Malaysia.

2

14730-X



Profile of Directors (cont'd.)

The following are the profile of the Directors of the Company (cont'd.):

KHEOH AND YENG (CONT'D.)

Non-Independent Executive Director

DATUK TAN LEH KIAH

Independent Non-Executive Director

TAM CHIEW LIN


Datuk Tan Leh Kiah was appointed to the Board of the Company on 7 May 2015. He is a

consultant with Azman, Davidson & Co, a law firm. He was the Managing Partner from 1986 to

2008. He is a fellow of the Malaysian Institute of Chartered Secretaries and Administrators

(MAICSA) and an associate of the Chartered Tax Institute of Malaysia. He is also a solicitor of

the Supreme Court of England and Wales.

Datuk Tan possesses considerable experience in corporate and tax matters. He has advised on

business structures and takeovers and mergers, particularly from the aspect of tax efficiency. He

also appears regularly before the Special Commissioners of Income Tax and the superior court

on tax and company law matters. He was a member of the Securities Commission from 1999 to

2018.

Ms Kheoh was a Senior Manager at Hong Leong Bank Berhad before joining Magnum and

throughout her twelve (12) years of banking experience, she was principally involved in various

areas.

Ms Kheoh was managing a leasing and hire purchase company prior to joining Hong Leong Bank

Berhad.

Prior to joining MPHB Capital in May 2013, she was the COO of Magnum Berhad (“Magnum”).

She joined Magnum as General Manager in 2002 and was subsequently promoted to Senior

General Manager in 2003 before assuming the position of Chief Operating Officer in 2007 until

May 2013.

Madam Tam was appointed as an Independent Non-Executive Director of the Company on 7

May 2015. She is a Fellow of the Institute of Chartered Accountants in England and Wales, a

Chartered Accountant of the Malaysian Institute of Accountants and Public Accountant of the

Malaysian Institute of Certified Public Accountants. She also holds a Diploma in Applied

International Management from the Swedish Institute of Management and a Postgraduate

Certificate in Banking and Finance from the University of Wales, Bangor.

3

14730-X



Profile of Directors (cont'd.)

The following are the profile of the Directors of the Company (cont'd.):

TAM CHIEW LIN (CONT'D.)


JENNIFER SUSAN SPARKS

Non-Independent Non-Executive Director

External professional Commitments

Tenure of independent Director

Ms. Jenni Sparks was appointed to the Board of the Company on 26 September 2016. She holds

a Bachelor of Science with First Class Honours in Applied Mathematics from the University of

Adelaide. She is also a Fellow of the Institute of Actuaries of Australia.

Ms. Jenni Sparks is currently the Regional Chief Financial Officer, Asia of Assicurazioni Generali

S.p.A (“Generali”). She drives the regional finance and accounting operations as well as

monitors the financial management of Generali’s businesses in Asia.

Ms. Jenni Sparks has over 30 years of international experience in insurance and financial

services across Australia, Japan and Korea. Prior to joining Generali, she was the Chief

Executive Officer of Hartford Life Insurance KK. Between 2003 and 2011, she held various senior

management positions within AIG, including Chief Financial Officer for AIG Edison Life in Japan

and Regional Controller for AIG Life companies in Japan and Korea.

None of the Directors holds more than 25 directorships (including the directorship in the

company).

The maximum tenure of service of an Independent Director of the Company shall not exceed

nine (9) years.

Currently, Madam Tam also sits on the Board of JAB Capital Berhad (formerly known as Jerneh

Asia Berhad) and PPB Group Berhad.

Madam Tam was the Managing Director of the Jerneh Asia Berhad from 2005 until her retirement

in 2012. Prior to joining the Jerneh group, she held various positions in the IMC group of

companies from 1991 to 2000.

4

14730-X



Directors' interest

As at As at

1.1.2018 Acquired Disposed 31.12.2018

Ultimate Holding Company

MPHB Capital Berhad

("MPHB Capital")

Direct interest:

Kheoh And Yeng 464,400 - - 464,400

Datuk Tan Leh Kiah 220,000 30,000 30,000 220,000

Indirect interest:

Datuk Tan Leh Kiah (a) 80,000 - - 80,000

Note:

(a)

Directors' benefits

Deemed interest by virtue of Section 8(4) of the Companies Act 2016 held through his

shareholdings of more than 20% interest in AD Consult Sdn Bhd.

According to the register of directors' shareholdings, the interests of directors in office at the end

of the financial year in shares in the Company and its related corporations during the financial

year were as follows:

Number of Ordinary Shares

Other than as disclosed above, 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.

Neither at the end of the financial year, nor at any time during that year, did there subsist any

arrangement, to which the Company was a party, whereby directors might acquire benefits by

means of the acquisition of shares in, or debentures of, the Company or any other body

corporate.

Since the end of the previous financial year and at the date of this report, 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 directors as shown in Notes 23 and 28

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.

5

14730-X



Indemnification of Directors

Corporate governance

(i) Board responsibility and oversight

(i)

(ii)

The Company, through its ultimate holding company, MPHB Capital Berhad has maintained on a

group basis, a Directors’ and Officers’ Liability Insurance in respect of any legal action taken

against or legal liability incurred by the Directors and Officers in the discharge of their duties

while holding office for the Company.

The Directors and Officers shall not be indemnified by such insurance for any deliberate

negligence, fraud, intentional breach of law or breach of trust proven against them.

The total amount of insurance coverage effected for any Director and Officer of the Company

during the financial year was RM20,000,000. The premium paid for the policy was RM18,000.

The Company has adopted the management practices that are consistent with the principles

prescribed under Policy Document on Corporate Governance issued by Bank Negara Malaysia

("BNM").

The membership roles and terms of reference of the Board, Audit Committee, Risk Management

Committee, Nominating Committee and Remuneration Committee of the Company are as

follows:

The Board of the Company has the overall responsibility of promoting the sustainable growth

and financial soundness of the Company and ensuring reasonable standards of fair dealing,

without undue influence from any party. This includes a consideration of the long-term

implications of the Board’s decisions on the Company and its customers, officers and the

general public.

In fulfilling the above role, the Board shall assume, among others, the following

responsibilities:

setting and overseeing the implementation of business and risk strategies of the

Company and in doing so, the Board shall have regard to the long term financial

soundness of the Company and reasonable standards of fair dealing;

ensuring and overseeing the effective design and implementation of sound internal

controls, compliance and risk management systems that commensurate with the

nature, scale and complexity of the business and structure of the Company, including

ensuring that all control functions and internal audit have the proper authority and are

adequately staffed and resourced;

6

14730-X



Corporate governance (cont'd.)

(i) Board responsibility and oversight (cont'd.)

(iii)

(iv)

(v)

(vi)

(vii)

(viii)

(ix)

(x)

(xi)

(xii)

overseeing the implementation of the Company’s governance framework and internal

control framework, and periodically review whether these remain appropriate in the

light of material changes to the size, nature and complexity of the Company’s

operations;

ensuring that there is a reliable and transparent financial reporting process within the

Company and consider all relevant risk, including non-quantifiable risk;

overseeing the selection, performance, remuneration and succession plans of the

Chief Executive Officer, control function heads and other members of senior

management, such that the Board is satisfied with the collective competence of senior

management to effectively lead the operations of the Company;

promoting sustainability through appropriate environmental, social and governance

considerations in the Company’s business strategies;

overseeing and approving the recovery and resolution as well as business continuity

plans for the Company to restore its financial strength, and maintain or preserve

critical operations and critical services when it comes under stress;

establishing and regularly review succession plans for the Board to promote Board

renewal and address any vacancies; and

promoting timely and effective communications between the Company and BNM on

matters affecting or that may affect the safety and soundness of the Company.

overseeing the performance of the senior management in managing the business and

affairs of the Company to ensure that the business and affairs of the Company are

being properly and competently managed. These include ensuring the solvency of the

Company and the ability of the Company to meet its contractual obligations and to

safeguard its assets, and setting clear expectations for senior management to ensure

the integrity of the essential reporting and monitoring systems;

Reviewing and approving the risk appetite, business plans and other initiatives which

will, singularly or cumulatively, have a material impact on the Company’s risk profile,

financial soundness, reputation or key operational controls of the Company, including

taking appropriate steps to ensure that business and operational decisions are aligned

with the risk appetite set;

promoting, together with senior management, a sound corporate culture within the

Company which reinforces ethical, prudent and professional behavior; and

establishing the tone at the top.

7

14730-X




(ii) Financial reporting

(iii) Membership and meetings of the committees

Risk

Board of Audit Nominating Remuneration Management

Directors Committee Committee Committee Committee

Encik Mohd Azlan Chairman Member - Member -

bin Mohammed 8/86/6 7/7 4/4

Ms Kheoh And Member - - - -

Yeng 8/86/6

Datuk Tan Leh Member Member Chairman Member Chairman

Kiah 8/86/6 7/7 4/4 4/4 6/6

Madam Tam Member Chairman Member Chairman Member

Chiew Lin 8/84/4 7/7 4/4 4/4 6/6

Ms Jennifer Member - Member - Member

Susan Sparks 8/82/2 4/4 6/6

(iv) Training attended

(i)

(ii)

The Directors will continue to undergo relevant training programmes to upgrade themselves

to effectively discharge their duties as Directors.

Details of the training attended by the Directors during the financial year are set out below:-

World Capital Markets Symposium KL - Renaissance of Capitalism: Markets for

Growth;

The composition of the Committees, meetings held and attendance of directors at meetings

during the financial year ended 31 December 2018 are as follows:

The Changing Role of Company’s Board & Its Members In The Wake of the new CG

Code’;

The Company maintains proper accounting records and the financial statements are

prepared in accordance with Malaysian Financial Reporting Standards, International

Financial Reporting Standards, the requirements of Companies Act, 2016 and the Financial

Services Act 2013, in Malaysia.

Attendance/Number of Meetings

8

14730-X




(iv) Training attended (cont'd.)

(iii)

(iv)

(v)

(vi)

(vii)

(viii)

(ix)

(x)

(xi)

(xii)

(xiii)

(xiv)

(xv)

(xvi)

(xvii)

(xviii)

(xix)

(xx)

Financial Institutions Directors’ Education Programme entitled “Understanding Fintech

and its Implications for Banks;

Business Foresight Forum (BFF) 2018;

Corporate liability under the Malaysia Anti-Corruption Commission (Amendment) Act

2018;

Asian Confederation of Institutes of Internal Auditors Conference 2018;

Power Talk – Effective Boards in a VUCA World;

Malaysia in transition : Policy challenges and opportunities;

Digital transformation and navigating through its disruptive nature;

The 8th Annual Malaysia Roundtable-Global Pensions and Investments : Impact of

Fintech and the Emerging Landscape;

Breakfast Series for Directors of Public Listed Companies: Non-Financials-Does it

Matter?

Review of Strategic Planning by Directors-Bursa Requirements;

Seminar Percukaian Kebangsaan 2018-Lembaga Hasil Dalam Negeri;

Briefing on MFRS 9 Financial Instruments;

Sustainability Engagement Series for Directors/Chief Executive Officer;

Actuarial Conference by the Actuaries Institute Australia;

InsureTech Conference by Asia Insurance Review;

Conference on Chief Financial Officer of the Future;

Conference on IFRS17; and

Conference on FinTech and Innovation.

9

14730-X




(v) Responsibilities of the Committees

The duties and responsibilities of the Committees are as follows:

Audit Committee

(i)

(ii)

- reviewing and approving the audit scope, procedures and frequency;

-

-

-

(iii)

-

-

-

making recommendations to the Board on the appointment, removal and

remuneration of the external auditor;

exercising oversight over the external auditor, which include the following:

monitoring and assessing the effectiveness of the external audit, including

meeting with the external auditor without the presence of senior management at

least annually;

monitoring and assessing the independence of the external auditor including

approving the provision of non-audit services by the external auditor;

The Audit Committee is a committee of the Board with the function of assisting the Board in

fulfilling its oversight responsibilities. The Audit Committee reviews the Company’s financial

reporting process, the system of internal control and management of risk, the audit process

and the Company’s process for monitoring compliance with laws and regulations, and such

other matters which may be delegated by the Board.

The duties and responsibilities of the Audit Committee includes the following:

supporting the board in ensuring that there is a reliable and transparent financial

reporting process within the Company;

establishing a mechanism to assess the performance and effectiveness of the

internal audit function.

noting significant disagreements between the chief internal auditor and the rest

of the senior management team, irrespective of whether these have been

resolved, in order to identify any impact the disagreements may have on the

audit process or findings, if any; and

overseeing the effectiveness of the internal audit function which include the following:

reviewing key audit reports and ensuring that senior management is taking

necessary corrective actions in a timely manner to address control weaknesses,

non-compliance with laws, regulatory requirements, policies and other problems

identified by the internal audit and other control functions;

10

14730-X




(v) Responsibilities of the Committees (cont'd.)

The duties and responsibilities of the Committees are as follows (cont'd.):

Audit Committee (cont'd.)

-

-

(iv)

(v)

(vi)

(vii)

(viii)

(ix)

(x)

(xi)

Nominating Committee ("NC")

The NC is responsible for:

(i)

ensuring that supervisory issues raised by Bank Negara Malaysia are resolved in a

timely manner.

reviewing and updating the Board on all related party transactions;

ensuring that the Company's accounts are prepared in a timely and accurate manner

for regulatory, management and general reporting purposes, with regular reviews

carried out on the adequacy of provisions made; and

monitoring compliance with the Board’s conflicts of interest policy;

ensuring that senior management is taking necessary corrective actions in a

timely manner to address external audit findings and recommendations.

maintaining regular, timely, open and honest communication with the external

auditor, and requiring the external auditor to report to the board audit committee

on significant matters; and

reviewing the accuracy and adequacy of the directors’ report and corporate

governance disclosures in relation to the preparation of financial statements;

reviewing third-party opinions on the design and effectiveness of the Company’s

internal control framework;

reviewing any conflicts of interest situations that may arise within the Company

including any transaction, procedure or conduct that raises questions of management

integrity;

ensuring that the Company complies with Bank Negara Malaysia’s Policy Document

on Financial Reporting which requires the Company to publish its accounts within 14

days of the laying of its accounts at its annual general meeting;

establishing the procedure and requirements for appointment and removal of

Directors and key senior officers of the Company;

11

14730-X






Nominating Committee ("NC") (cont'd.)

(ii)

(iii)

-

-

-

(iv)

(v)

(vi)

(vii)

assessing the independence of Independent Directors;

the proposed re-election/re-appointment of Directors prior to tabling to the

shareholders for approval at the Annual General Meeting of the Company,

which includes conducting assessments on the fitness, probity and propriety of

the proposed candidates, Directors, CEO, key senior officers and Company

Secretary;

the proposed re-appointment of Directors and CEO before application for

approval is submitted to Bank Negara Malaysia (“BNM”); and

the nominees to be appointed to the Board and nominees for the positions of

Chief Executive Officer (“CEO”), key senior officers and Company Secretary;

overseeing the overall composition of the Board in terms of the appropriate size and

skills, the balance between executive directors, non-executive directors and

independent directors, and mix of skills and other core competencies or skill sets

required by the directors, and also ensuring that the Board composition is in

compliance with the requirements as set out in paragraph 11 of Bank Negara

Malaysia’s Policy Document on Corporate Governance (“Policy Document on

Corporate Governance”) through annual reviews;

assessing and recommending to the Board:

assessing and recommending to the Board on removal of a Director and Company

Secretary, if he/she no longer meets the requirements as set out in the Policy

Document on Corporate Governance, the Financial Services Act, 2013 (“FSA”) and

other regulatory requirements (where applicable), or if he/she is ineffective, errant or

otherwise unsuited to carry out his/her responsibilities;

establishing a mechanism for formal assessment and assessing the effectiveness of

the Board as a whole, the contribution by each Director to the effectiveness of the

Board, the contribution/performance of the various Board committees and the

performance of the CEO or key senior officers;

reporting its recommendations/findings to the Board on the effectiveness of the Board

as a whole, the contribution by each Director to the effectiveness of the Board, the

contribution/performance of the various Board committees and the performance of

the Chief Executive Officer or key senior officers;

12

14730-X






Nominating Committee ("NC") (cont'd.)

(viii)

(ix)

Remuneration Committee ("RC")

The RC is also responsible for:

(i)

-

-

(ii)

(iii)

- be based on an objective consideration and approved by the Board;

-

reviewing and recommending to the Board for approval of the overall remuneration

framework/policy of the Company;

take due consideration of the assessments of the Nominating Committee of the

effectiveness and contribution of the Director, CEO and key senior officers

concerned;

reviewing and recommending to the Board for approval/adoption of any major

changes in employees’ benefit structures throughout the Company;

ensuring that all directors undergo appropriate training programmes and receive

continuous training; and

reviewing and recommending to the Board for approval/adoption of the policy or

framework for the Company’s annual employees’ incentive scheme which may

include merit increment, merit bonus and other incentives.

overseeing the appointment, management succession planning and performance

evaluation of CEO or key senior officers, and recommending to the Board the removal

of CEO or key senior officers or company secretary, if he/she no longer meets the

minimum requirements set out in the Policy Document on Corporate Governance, the

FSA and other regulatory requirements, or has been assessed to be ineffective, errant

or otherwise unsuited to carry out his/her responsibilities.

The RC is responsible to recommend to the Board a framework of remuneration structure for

the Directors, CEO and employees of the Company.

supporting the Board in overseeing the design and operation of the Company’s

remuneration system, which shall include the following:

reviewing and recommending to the Board the specific remuneration packages for

Directors, CEO, key senior officers and other material risk takers of the Company.

The remuneration packages should:

13

14730-X






Remuneration Committee ("RC") (cont'd.)

-

-

(iv)

Risk Management Committee ("RMC")

The RMC is responsible for:

(i)

(ii)

(iii)

(iv)

(v)

carrying out periodic review of the remuneration of Directors, particularly on whether

their remuneration remains appropriate to each Director’s contribution, taking into

account the level of expertise, commitment and responsibilities undertaken.

Support the Board in ensuring that the Company’s corporate objectives are supported

by a sound risk strategy and an effective risk management framework (the Company's

risk map includes compliance risk as one of its operational risks and any mention of

risk management includes compliance risk management) that is appropriate to the

nature, scale and complexity of its activities;

reviewing and assessing management’s implementation of risk strategy and obtaining

assurance that the organisational units are operating within the parameters of the

Company’s risk appetite;

not to be decided by the exercise of the sole discretion of any one individual or

restricted group of individuals; and

be competitive and is consistent with the Company’s culture, objective and

strategy.

The RC must regularly review and approved the list of officers who fall within the

definition of “other material risk takers”;

reviewing and recommending the Company’s risk management strategies, policies

and risk tolerance and risk strategy (including the risk appetite) for the Board's

approval and oversee the implementation thereof;

reviewing and assessing the adequacy of risk management policies and framework

for identifying, measuring, monitoring and controlling risks as well as the extent to

which these are operating effectively;

reviewing and assessing the Company’s risk appetite regularly to ensure that it

continues to be relevant and reflects any changes in the Company’s capacity to take

on risk, its inherent risk profile, as well as market and macroeconomic conditions;

14

14730-X






Risk Management Committee ("RMC") (cont'd.)

(vi)

(vii)

(viii)

Remuneration policy

Scope of remuneration policy

ensuring adequate infrastructure, resources and systems are in place for an effective

risk management systems i.e. ensuring that the staff responsible for implementing risk

management systems perform those duties independently of the Company's risk

taking activities;

Meeting periodically to ensure effective exchange of information and reviewing

management’s periodic reports on risk exposure, risk portfolio composition and risk

management activities; and

assisting the Board in the implementation of a sound remuneration system, examining

whether the incentives provided by the Company’s remuneration system take into

consideration of risks, capital, liquidity and the likelihood and timing of earnings,

without prejudice to the tasks of the Remuneration Committee.

The objective of the remuneration policy is to facilitate the attraction, engagement and retention

of suitable employees of relevant capabilities and to provide the necessary skills and experience

as required and commensurate with the responsibilities for the effective management and

operations of the Company. In addition, it seeks to be balanced to ensure the proper

management of the Company’s funds and is not excessive nor creates incentive for imprudent,

unsustainable or unethical behaviour in managing the Company. It takes into account the

Company’s corporate culture and values, business objective and strategy as well as its the long-

term interests.

The scope of this policy applies to the Company, which operates its business only in Malaysia,

and to its employees.

15

14730-X



Remuneration policy (cont'd.)

Remuneration components and structure

The Company's integrated remuneration structure is made up of three components:

Internal control and risk management framework

(i)

(ii)

(iii) Internal Audit, which represents the third line of defence.

The operating functions (the “Risk Owners”), which represent the first line of defence and

have ultimate responsibility for management of risks relating to their area of

expertise/operations;

Actuarial, Compliance, and Risk Management Functions, which represent the second line of

defence; and

The key feature of the policy is that remuneration is focused on being competitive in the

insurance industry and will reinforce desired characteristics in the Company. The remuneration

has a fixed component and a variable component. The fixed component consists of fixed basic

salaries, allowances and other benefits which commensurate with the employee’s position and

scope of responsibilities while the variable component (typically a variable cash bonus) considers

the performance of the Company against the criteria set and the performance of the individual.

The Company’s performance metrics are determined by the Board as appropriate. These metrics

are used to determine the Company’s performance, as to whether it is strong, acceptable or

weak as well as the corresponding impact on variable remuneration for employees. An

employee’s variable remuneration is influenced significantly by the Company’s performance

metrics. As such, should the Company perform well, an employee’s variable remuneration will

increase and vice versa.

An individual’s performance and contribution is focused on appropriate measures based on their

role. This may include financial performance, operating efficiency and effectiveness, customer

experience, compliance, managerial effectiveness and people metrics. As appropriate,

employees with control functions are measured differently in determining their individual

performance. Their individual performance does not take into account revenue or financial

measures. Depending on their role, they may be measured on the effectiveness of the control

measures they are responsible for.

In considering the variable compensation component, which is typically a variable cash bonus or

short term incentive, the performance of the company and the performance of the individual are

key components used to determine the amount of variable compensation to an individual

employee.

The Company’s internal control and risk management system consists of the policies,

administrative and accounting procedures and organisational structures aimed at identifying,

measuring, managing, and monitoring the main risks. It is based on the three lines of defence

model:

16

14730-X



Internal control and risk management framework (cont'd.)

(i) Internal control environment

(ii) Internal control activities

(iii) Awareness

All employees are required to be:

- Aware of their role in the internal control system;

-

-

Control activities are set up throughout the organization, at all levels and in the business

functions. The control activities include approvals, authorizations, verifications,

reconciliations, reviews of operating performance, security of assets. Duties and

responsibilities must be clearly allocated, segregated and coordinated, and reflected in the

description of tasks and responsibilities. Internal controls include the task of identifying and

managing any areas of potential conflicts of interest appropriately.

Aware of internal and external rules and other proper information for the proper

carrying out of their responsibilities as well as of each individual role and

responsibilities in the management of risks; and

Aware of the essential need to embed the controls to manage risks in their daily

activities.

Positive internal control environment is the foundation for all other key elements of the

internal control and risk management system, providing discipline and structure. It sets the

tone of the organization, influencing and strengthening the control consciousness of the

Company’s employees. It includes the integrity, ethical values, competencies development

of the personnel, management’s philosophy and operating style, the way roles and

responsibilities are assigned, the organization set-up and governance.

The internal control system must ensure the Company’s compliance with applicable laws and

regulations, and the effectiveness and efficiency of the Company’s operations in light of its

objectives as well as to ensure the availability and reliability of financial and non-financial

information.

The risk management system must allow risks, including those arising from non-compliance with

regulations, to be identified, assessed even on a forward-looking basis, managed, monitored,

and reported. The Internal Capital Adequacy Assessment Process (ICAAP) is part of the risk

management system.

The key elements of the internal control and risk management system are:

Collectively, Actuarial, Compliance, Risk Management and Internal Audit functions are referred to

as the Company’s Control Functions.

17

14730-X



Internal control and risk management framework (cont'd.)

(iv) Monitoring and reporting

System of governance

Actuarial function is responsible to certify the calculation or valuation of technical provisions and

prepare the financial condition report in accordance to regulatory requirements.

The Board is ultimately responsible of the internal control and risk management system and

ensures that it is always complete, functional and effective.

Risk Management Committee ("RMC") supports the Board in overseeing the Company’s internal

control and risk management system by providing advice and making proposals, in determining

policy and guidelines in relation to the system of internal controls, periodical checks on its

adequacy and effective functioning, the identification and management of main corporate risks.

Remuneration Committee ("RC") is delegated by the Board to perform a competent and

independent judgement on the remuneration policy and its oversight.

CEO implements, maintains and monitors the system of internal controls and risk management,

including risks arising from non-compliance with regulations, in accordance to the directives of

the Board.

EXCO assists the CEO in ensuring the effectiveness of the Company’s internal control and risk

management system in the day-to-day management of the Company’s business and operation

activities.

Monitoring and reporting mechanisms within the internal control system must be established

in order to provide the Executive Committee ("EXCO") and the Board with the relevant

information for the decision-making processes.

Compliance function has the responsibility to advise the RMC on compliance with relevant laws

and regulations, and relevant internal compliance-related policies. The function also assesses the

possible impact of any changes in the legal environment on the operation of the Company and to

identify and assess the compliance risks, including adequacy of the measures adopted to prevent

non-compliance in accordance with the Company’s Compliance Management System Policy and

Compliance Operating Model Guidelines.

Risk Management function drives the effective implementation of the risk management system in

accordance with the Company’s Risk Management Policy. The function supports the Board and

EXCO in defining the risk management strategies and tools for identifying, monitoring, managing

and measuring risks.

Risk Owners are directly responsible to take charge for risks, manage them and implement

appropriate control measures.

18

14730-X



Other statutory information

(a)

(i)

(ii)

(b)

(i)

(ii)

(c)

(d)

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

(i)

(ii)

(f) In the opinion of the directors:

(i)

At the date of this report, the directors are not aware of any circumstances which would

render:

to ascertain that proper action had been taken in relation to the writing off of bad

debts and the making of allowance for doubtful debts, and had satisfied themselves

that all known bad debts had been written off and that adequate allowance had been

made for doubtful debts; and

to ensure that any current assets which were unlikely to realise their values as shown

in the accounting records in the ordinary course of business have been written down

to an amount which they might be expected so to realise.

the values attributed to the current assets in the financial statements of the Group and

the Company misleading.

the amount written off as bad debts or the amount of allowance for doubtful debts in

the financial statements of the Group and of the Company inadequate to any

substantial extent; and

Before the statements of financial position, income statements and statements of

comprehensive income of the Group and the Company were made out, the directors took

reasonable steps:

any charge on the assets of the Group and of the Company which has arisen since

the end of the financial year which secures the liabilities of any other person; or

any contingent liability of the Group and of the Company which has arisen since the

end of the financial year other than as disclosed in Note 35 of the financial

statements.

no contingent liability 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 Group and of the Company to meet its

obligations as and when they fall due;

At the date of this report, the directors are not aware of any circumstances which have

arisen which render adherence to the existing method of valuation of assets or liabilities of

the Group and the Company misleading or inappropriate.

At the date of this report, the directors are not aware of any circumstances not otherwise

dealt with in this report or the financial statements of the Group and of the Company which

would render any amount stated in the financial statements misleading.

19

14730-X



Statements of financial position

As at 31 December 2018

Note 31.12.2018 31.12.2017 01.01.2017 31.12.2018 31.12.2017 01.01.2017

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Restated Restated Restated Restated

ASSETS

Property and

equipment 3 8,485 8,513 7,938 8,485 8,513 7,938

Investment properties 4 6,939 7,701 7,862 6,939 7,701 7,862

Deferred tax assets 15 4,097 2,936 1,549 4,097 2,936 1,549

Intangible assets 5 11,279 4,650 3,158 11,279 4,650 3,158

Investment securities 6 1,068,821 1,029,190 976,516 1,003,945 968,112 912,940

Loans - - 15 - - 15

Reinsurance assets 7 366,250 366,253 381,056 366,250 366,253 381,056

Insurance receivables 8 110,137 179,464 145,356 110,137 179,464 145,356

Other receivables 9 112,382 104,365 106,581 101,973 99,229 103,114

Cash and bank

balances 10 20,308 21,247 19,447 16,789 15,938 19,228

Total assets 1,708,698 1,724,319 1,649,478 1,629,894 1,652,796 1,582,216

EQUITY AND

LIABILITIES

Share capital 11 100,200 100,200 100,000 100,200 100,200 100,000

Share premium - - 200 - - 200

Retained earnings 12 420,683 405,120 366,359 420,676 394,701 360,770

Fair value reserve 12 - (5,893) (9,165) - 4,526 (6,098)

Shareholders' equity 520,883 499,427 457,394 520,876 499,427 454,872

Non-controlling

interests 33 76,617 71,385 64,627 - - -

Total equity 597,500 570,812 522,021 520,876 499,427 454,872

Insurance contract

liabilities 13 967,664 936,777 916,361 967,664 936,777 916,361

Insurance payables 14 59,570 138,654 121,808 59,570 138,654 121,808

Tax payable 5,153 4,732 7,478 5,153 4,732 7,478

Other payables 16 78,811 73,344 81,810 76,631 73,206 81,697

Total liabilities 1,111,198 1,153,507 1,127,457 1,109,018 1,153,369 1,127,344

TOTAL EQUITY AND

LIABILITIES 1,708,698 1,724,319 1,649,478 1,629,894 1,652,796 1,582,216

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

CompanyGroup

26

14730-X



Income statements

For the year ended 31 December 2018

Note 2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

Gross earned premium 626,899 637,842 626,899 637,842

Premiums ceded to

reinsurers (213,246) (219,962) (213,246) (219,962)

Net earned premiums 17 413,653 417,880 413,653 417,880

Investment income 18 50,065 46,789 45,487 41,141

Realised gains 19 1,921 6,309 526 5,352

Unrealised losses (362) - 524 -

Commission income 20 42,072 46,889 42,072 46,889

Other operating

revenue/(expenses) 21 3,367 (11,104) 3,596 (11,104)

Other revenue 97,063 88,883 92,205 82,278

Gross claims paid 22 (357,653) (344,105) (357,653) (344,105)

Claims ceded to

reinsurers 22 110,213 96,267 110,213 96,267

Gross change to contract

liabilities 22 (55,357) (360) (55,357) (360)

Change in contract liabilities

ceded to reinsurers 22 19,744 (24,536) 19,744 (24,536)

Net claims incurred (283,053) (272,734) (283,053) (272,734)

Commission expenses (85,132) (91,124) (85,132) (91,124)

Management expenses 23 (100,231) (94,205) (99,094) (93,981)

Other expenses (185,363) (185,329) (184,226) (185,105)

Profit before taxation 42,300 48,700 38,579 42,319

Taxation 24 (9,219) (8,388) (9,219) (8,388)

Net profit for the year 33,081 40,312 29,360 33,931

Earnings per share (sen)

Basic and diluted 25 29.2 38.8


Group Company

27

14730-X



Statements of comprehensive income


2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

Net profit for the year 33,081 40,312 29,360 33,931

Other comprehensive

income:

Items that are or may be

reclassified subsequently

to profit or loss

Fair value reserves

Net gain arising during

the year - 19,682 - 18,948

Net realised gains transferred

to income statements - (6,309) - (5,352)

- 13,373 - 13,596

Tax effects - (2,972) - (2,972)

- 10,401 - 10,624

Total comprehensive income

for the year 33,081 50,713 29,360 44,555

Profit attributable to:

Equity holder of the Company 29,163 38,761 29,360 33,931

Non-controlling interests 3,918 1,551 - -

33,081 40,312 29,360 33,931

Total comprehensive income

attributable to:

Equity holder of the Company 29,163 42,033 29,360 44,555

Non-controlling interests 3,918 8,680 - -

33,081 50,713 29,360 44,555


Group Company

28

14730-X



Statements of changes in equity


Group

Distributable

Fair Non-

Share Share value Retained Shareholder's controlling

capital premium reserves earnings equity interests Total

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At 1 January 2017 100,000 200 (9,165) 366,359 457,394 64,627 522,021

Fair value reserves

Net gain arising

during the year - - 14,821 - 14,821 1,889 16,710

Net realised gains

transferred to

income statements - - (11,549) - (11,549) 5,240 (6,309)

Total other

comprehensive

income for the year - - 3,272 - 3,272 7,129 10,401

Profit for the year - - - 38,761 38,761 1,551 40,312

Total comprehensive

income for the year - - 3,272 38,761 42,033 8,680 50,713 Effect of

implementation of Companies Act,

2016 200 (200) - - - - -

Creation of units, net - - - - - 1,476 1,476

Distribution to unit

holders - - - - - (3,398) (3,398)

As 31 December

2017 100,200 - (5,893) 405,120 499,427 71,385 570,812

At 31 December 2017,

as previously stated 100,200 - (5,893) 405,120 499,427 71,385 570,812

Impact of adopting

MFRS 9 (Note 2.2) - - 5,893 (13,804) (7,911) - (7,911)

At 1 January 2018,

as restated 100,200 - - 391,316 491,516 71,385 562,901

Profit for the year,

representing total

comprehensive

income for the year - - - 29,163 29,163 3,918 33,081

Creation of units, net - - - 204 204 4,851 5,055

Distribution to unit

holders - - - - - (3,537) (3,537)

As 31 December

2018 100,200 - - 420,683 520,883 76,617 597,500


<Non-distributable>

29

14730-X



Statement of changes in equity (cont'd.)

For financial year ended 31 December 2017

Company

<Non-Distributable> Distributable

Share Share Fair value Retained

capital premium reserves earnings Total

RM'000 RM'000 RM'000 RM'000 RM'000

At 1 January 2017 100,000 200 (6,098) 360,770 454,872

Fair value reserves

Net gain arising during the year - - 15,976 - 15,976

Net realised gains transferred to

income statements - - (5,352) - (5,352)

Total other comprehensive

income for the year - - 10,624 - 10,624

Profit for the year - - - 33,931 33,931

Total comprehensive

income for the year - - 10,624 33,931 44,555

Effect of implementation

of Companies Act, 2016 200 (200) - - -

As 31 December 2017 100,200 - 4,526 394,701 499,427

At 31 December 2017,

as previously stated 100,200 - 4,526 394,701 499,427

Impact of adopting MFRS 9 (Note 2.2) - - (4,526) (3,385) (7,911) At 1 January 2018,

as restated 100,200 - - 391,316 491,516

Profit for the year,

representing total

comprehensive income

for the year - - - 29,360 29,360

As 31 December 2018 100,200 - - 420,676 520,876


30

14730-X



Statement of cash flows


Note 2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

Cash flows from operating

activities


Adjustments for:

Investment income 18 (50,065) (46,789) (45,487) (41,141)

Realised gains recorded

in profit or loss 19 (1,921) (6,309) (526) (5,352)

Realised gains on disposal

of investment property 21 (372) - (372) -

Depreciation of property

and equipment 23 1,943 1,633 1,943 1,633

Realised loss/(gain) on

disposal of property and

equipment 21 2 (1) 2 (1)

Depreciation of investment

properties 23 162 161 162 161

Amortisation of intangible

assets 23 2,044 1,132 2,044 1,132

Impairment losses on

available-for-sale ("AFS")

financial assets 21 - 17,941 - 17,941

(Reversal of)/allowance for

impairment loss on

insurance receivables 23 (13,707) 1,560 (13,707) 1,560

Bad debts written off 23 10,619 1,780 10,619 1,780

Operating (loss)/profit before

working capital changes (8,995) 19,808 (6,743) 20,032

Decrease/(increase) in

receivables 20,364 (5,049) - 1,101

Decrease in reinsurance assets 3 14,803 3 14,803

Decrease/(increase) in

insurance receivables 64,504 (37,448) 64,504 (37,448)

Increase in other

receivables (9,178) (183) (3,905) (183)

Increase in insurance contract

liabilities 30,887 20,416 30,887 20,416

(Decrease)/increase in

insurance payables (79,084) 16,846 (79,084) 16,846

Increase/(decrease) in other

payables 4,130 (4,570) 2,088 (4,594)

22,631 24,623 7,750 30,973

Group Company

31

14730-X



Statement of cash flows (cont'd.)


Note 2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

Cash flows from operating

activities (cont'd.)

Dividend income received 2,220 1,683 2,220 1,683

Interest income received 47,845 43,622 43,267 39,504

Income tax paid (7,461) (15,493) (7,461) (15,493)

Net cash flows generated from/

(used in) operating activities 65,235 54,435 45,776 56,667

Cash flows from investing

activities

Proceeds from disposal of

property and equipment 10 1 10 1

Purchase of property and

equipment 3 (1,927) (2,208) (1,927) (2,208)

Purchase of intangible

assets 5 (8,673) (2,624) (8,673) (2,624)

Purchase of investment

properties 5 (163) - (163) -

Purchase of AFS financial

assets (254,248) (325,692) (32,000) (103,500)

Proceeds from sale of

investment properties 1,135 - 1,135 -

Proceeds from sale of AFS

financial assets - 270,779 - 47,273

Proceeds from sale of fair value

through profit or loss

("FVTPL") financial assets 268,665 - 57,164 -

Deposits placed with financial

institutions (51,275) 41,960 (51,275) 41,960

Redemption of fixed income

securities - 9,000 - -

Net cash flows (used in)/generated

from investing activities (46,476) (8,784) (35,729) (19,098)

Group Company

32

14730-X



Statement of cash flows (cont'd.)


Note 2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

Cash flows from financing

activities

Payment for cancellation of

units - (227) - -

Proceeds from subcription

of units 5,055 1,703 - -

Payment for distributions (3,537) (3,398) - -

Net cash flows generated from/

(used in) financing activities 1,518 (1,922) - -

Net increase in cash and

cash equivalents 20,277 43,729 10,047 37,569

Cash and cash equivalents

at beginning of year 79,470 35,741 64,315 26,746

Cash and cash equivalents

at end of year 10 99,747 79,470 74,362 64,315


Group Company

33

14730-X



Notes to the financial statements - 31 December 2018

1. Corporate information

2. Significant accounting policies

2.1 Basis of preparation

The Company is a public limited liability company, incorporated and domiciled in Malaysia.

The principal place of business of the Company is at 8th Floor, Menara Multi-Purpose,

Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur.

The holding and ultimate holding companies of the Company are Multi-Purpose Capital

Holdings Berhad and MPHB Capital Berhad respectively, both of which are incorporated in

Malaysia. MPHB Capital Berhad is listed on Bursa Malaysia Securities Berhad.

The Company is engaged in the underwriting of all classes of general insurance business.

Information relating to the subsidiaries are disclosed in Note 6(c).

The financial statements were authorised for issue by the Board of Directors in accordance

with a resolution of the Directors on 21 March 2019.

The financial statements of the Group and the Company have been prepared in

accordance with Malaysian Financial Reporting Standards ("MFRS"), International

Financial Reporting Standards ("IFRS") and the requirements of the Companies Act,

2016, in Malaysia.

The accounting policies set out in Note 2.4 have been applied in preparing the financial

statements of the Group and the Company for the financial year ended 31 December

2018.

The financial statements of the Group and the Company have been prepared on a

historical cost basis, except for those financial instruments which have been measured

at their fair values and insurance liabilities which have been measured in accordance

with the valuation methods specified in the Risk-Based Capital Framework ("RBC

Framework") for Insurers issued by Bank Negara Malaysia ("BNM").

The financial statements are presented in Ringgit Malaysia ("RM") and all values are

rounded to the nearest thousand (RM'000) except when otherwise stated.

34

14730-X



2. Significant accounting policies (cont'd.)

2.2 Changes in accounting policies

MFRS 9, Financial Instruments

MFRS 15, Revenue from Contracts with Customers

MFRS 15, Revenue from Contracts with Customers - Clarifications to

MFRS 15, Revenue from Contracts with Customers

Amendments to MFRS 2, Share-based Payments – Classification and

Measurement of Share-based Payment Transactions (Amendments to MFRS 2)

Amendments to MFRS 4, Insurance Contracts – Applying MFRS 9

Financial Instruments with MFRS 4 , Insurance Contracts

Amendments to MFRS 1, First-time Adoption of Malaysian Financial

Reporting Standards (Annual Improvements 2014-2016 Cycle)

Amendments to MFRS 128, Investments in Associates and Joint Ventures

(Annual Improvements 2014-2016 Cycle)

Amendments to MFRS 140, Investment Properties – Transfers of

Investment Property

IC Interpretation 22, Foreign Currency Transactions and Advance Consideration

MFRS 9 Financial Instruments

The adoption of this Standard resulted in changes in accounting policies and

adjustments to the financial statements. The accounting policies that relate to the

recognition, classification, measurement and derecognition of financial instruments

and impairment of financial assets are amended to comply with the provisions of this

Standard, while the hedge accounting requirements under this Standard are not

relevant to the Group and the Company. In accordance with the transition requirements

of this Standard, comparatives are not restated and the financial impact of the adoption

of this Standard is recognised in retained earnings as at 1 January 2018.

The accounting policies adopted are consistent with those of the previous financial year.

On 1 January 2018, the Group and the Company adopted the following new and

amended MFRSs and Interpretation mandatory for annual financial periods beginning on

or after 1 January 2018.

The initial adoption of the above standards did not have any material impact to the

financial statements except as described below:

35

14730-X




2.2 Changes in accounting policies (cont'd.)

MFRS 9 Financial Instruments (cont'd.)

i. Changes in accounting policies

Financial assets

-

-

-

-

-

-

Financial liabilities

There is no impact on the classification and measurement of the Group's and the

Company's financial liabilities.

Listed equity investments previously classified as AFS financial assets are now

classified and measured as financial assets at FVTPL.

The Group and the Company classifies its financial assets into the following

measurement categories:

Those to be measured at amortised cost; and

Those to be measured subsequently at fair value through profit or loss

The classification above depends on the Group's and the Company's business

model for managing the financial assets and the terms of contractual cash flows.

The following summarises the key changes:

The available-for-sale ("AFS") and loans and receivables ("LAR") financial

asset categories were removed.

A new financial asset category measured at amortised cost was introduced.

This applies to financial assets with contractual cash flow characteristics

that are solely payments of principal and interest and held in a business

model whose objective is achieved by collecting contractual cash flows only.

Quoted and unquoted debt instruments previously classified as AFS financial

assets are now classified and measured as financial assets at FVTPL. The

Group and the Company expect not to hold the assets to collect contractual

cash flows, but to sell a significant amount on a relatively frequent basis.

36

14730-X






i. Changes in accounting policies (cont'd.)

Impairment of financial assets

a. Financial assets measured at amortised cost

ECL: Simplified approach

MFRS 9 Financial Instruments requires impairment assessments to be

based on an Expected Credit Loss ("ECL") model. The key changes in the

Group's and Company's accounting policies in relation to impairment of financial

assets are as follows:

For individual impairment assessment, the amount of ECL is measured as the

probability-weighted present value of all cash shortfalls over the expected life

of the financial asset discounted at its original effective interest rate. The cash

shortfall is the difference between all contractual cash flows that are due to the

Group and the Company and all the cash flows that the Group and the

Company expect to receive.

At each reporting date, the Group and the Company assess allowance for ECL

for amount due from the reinsurers and cedants based on available external

credit ratings for probability of default and external information for loss given

default.

For collective impairment assessment, the Group and the Company have

established a transition matrix that is based on its historical credit loss

experience, adjusted for forward-looking factors specific to the debtors and the

economic environment.

The Group and the Company applies the simplified approach prescribed by

MFRS 9 Financial Instruments, which requires expected lifetime losses to be

recognised from initial recognition of the trade and other receivables which are

financial assets measured at amortised cost.

37

14730-X






(ii) Classification and measurement of financial instruments and impairment

Original New Original New

(MFRS 139) (MFRS 9) (MFRS 139) (MFRS 9)

RM'000 RM'000

Financial assets:

Investment securities

- Quoted shares AFS FVTPL 96,021 96,021

- Unquoted debt

instruments * AFS FVTPL 344,535 344,535

Deposits with financial

institutions LAR Amortised 588,634 588,634

cost

Insurance receivables LAR Amortised 179,464 179,464

cost

Other receivables LAR Amortised 104,365 104,365

cost

Cash and bank balances LAR Amortised 21,247 21,247

cost

* including debt sucurities and unit trust funds.

Group

Classification and

measurement category

Carrying amount

as at 1 January 2018

The following table summarises the classification and measurement of the financial

assets as at 1 January 2018:

38

14730-X






(ii)

Original New Original New

(MFRS 139) (MFRS 9) (MFRS 139) (MFRS 9)

RM'000 RM'000

Financial assets:


- Quoted shares AFS FVTPL 34,972 34,972

- Unquoted debt

instruments * AFS FVTPL 354,352 354,352


institutions LAR Amortised

cost 578,788 578,788

Insurance receivables LAR Amortised

cost 179,464 179,464

Other receivables LAR Amortised

cost 99,229 99,229

Cash and bank balances LAR Amortised

cost 15,938 15,938

* including debt sucurities and unit trust funds.

Receivables, cash and bank balances and deposits with financial instituitions are

financial assets measured at amortised cost. The Group and the Company intends

to collect contractual cash flows from these financial assets and these cashflows

consist solely of payments of principal and interest on the principal amount

outstanding.

The Group and the Company elected to reclassify as FVTPL, its quoted shares

previously classified as AFS. Debt instruments that have previously been classified

as AFS are now reclassified to FVTPL. The Group's and the Company's business

model for these investment securities are achieved both by collecting contractual

cash flows and selling of these assets. The contractual cash flows of these

investments are solely principal and interest.

Company

Classification and measurement of financial instruments and impairment

(cont'd.)

Classification and

measurement category

Carrying amount

as at 1 January 2018

39

14730-X






iii. The effect of adopting MFRS is as follows:

Classification Expect

& credit Tax

Group 31-12-2017 measurement losses effect 01-01-2018

RM'000 RM'000 RM'000 RM'000 RM'000

ASSETS

Property and

equipment 8,513 - - - 8,513

Investment properties 7,701 - - - 7,701

Deferred tax assets 2,936 - - 2,498 5,434

Intangible assets 4,650 - - - 4,650

Investment securities 1,029,190 - - - 1,029,190

Reinsurance assets 366,253 - - - 366,253

Insurance

receivables 179,464 - (10,346) - 169,118

Other receivables 104,365 - (63) - 104,302

Cash and bank

balances 21,247 - - - 21,247

Total assets 1,724,319 - (10,409) 2,498 1,716,408

EQUITY AND

LIABILITIES

Share capital 100,200 - - - 100,200

Retained earnings 405,120 (5,893) (10,409) 2,498 391,316

Fair value reserve (5,893) 5,893 - - -

Shareholders' equity 499,427 - (10,409) 2,498 491,516

Non-controlling

interests 71,385 - - - 71,385

Total equity 570,812 - (10,409) 2,498 562,901

Insurance contract

liabilities 936,777 - - - 936,777

Insurance payables 138,654 - - - 138,654

Tax payable 4,732 - - - 4,732

Other payables 73,344 - - - 73,344

Total liabilities 1,153,507 - - - 1,153,507

TOTAL EQUITY AND

LIABILITIES 1,724,319 - (10,409) 2,498 1,716,408

Restatements upon adoption

of MFRS 9

40

14730-X






iii. The effect of adopting MFRS is as follows:

Classification Expect

& credit Tax

Company 31-12-2017 measurement losses effect 01-01-2018

RM'000 RM'000 RM'000 RM'000 RM'000

ASSETS

Property and

equipment 8,513 - - - 8,513

Investment

properties 7,701 - - - 7,701

Deferred tax assets 2,936 - - 2,498 5,434

Intangible assets 4,650 - - - 4,650

Investment securities 968,112 - - - 968,112

Reinsurance assets 366,253 - - - 366,253

Insurance

receivables 179,464 - (10,346) - 169,118

Other receivables 99,229 - (63) - 99,166

Cash and bank

balances 15,938 - - - 15,938

Total assets 1,652,796 - (10,409) 2,498 1,644,885

EQUITY AND

LIABILITIES

Share capital 100,200 - - - 100,200

Retained earnings 394,701 4,526 (10,409) 2,498 391,316

Fair value reserve 4,526 (4,526) - - -

Total equity 499,427 - (10,409) 2,498 491,516

Insurance contract

liabilities 936,777 - - - 936,777

Insurance payables 138,654 - - - 138,654

Tax payable 4,732 - - - 4,732

Other payables 73,206 - - - 73,206

Total liabilities 1,153,369 - - - 1,153,369

TOTAL EQUITY AND

LIABILITIES 1,652,796 - (10,409) 2,498 1,644,885

of MFRS 9

Restatements upon adoption

41

14730-X





MFRS 15 introduces a five-steps approach to recognising revenue:

- Identify contracts with customers;

- Identify the separate performance obligations;

- Determine the transaction price of the contract;

-

- Recognise the revenue as each performance obligation is satisfied.

2.3 Standards issued but not yet effective

Effective for

annual financial

periods beginning

Description on or after

Amendments to MFRS 9 Prepayment Features with

Negative Compensations

Amendments to MFRS 128 Long-term Interests in

Associates and Joint Ventures

MFRS 16 Leases

IC Interpretation 23: Uncertainty over

Income Tax Treatments

Amendments to MFRS 119

Plan Amendment, Curtailment or Settlement

Amendments to MFRS 3: Business Combinations

contained in the document entitled "Annual Improvements

to MFRS Standards 2015-2017 Cycle"

The Group and the Company plan to adopt the following pronouncements when they

become effective in the respective financial periods.

MFRS 15 "Revenue from Contracts with Customers" replaces MFRS 118 "Revenue" and

MFRS 111 "Construction Contracts" and related interpretations. MFRS 15 established

new five-step model that applies to revenue arising from contracts with customers,

based on the underlying principle that an entity should recognise revenue in a manner

which depicts the transfer of promised goods or services to customers in an amount that

reflects the consideration to which the entity expects to be entitled in exchange for those

goods or services.

The adoption of MFRS 15 did not have any material financial impact because the Group

and the Company have been recognising their non-insurance contracts and non-

financial instruments related revenue in a manner consistent with the principles of MFRS

15.

Allocate the transaction price to each of the separate performance obligations; and

1 January 2019

1 January 2019

1 January 2019

1 January 2019

1 January 2019

1 January 2019

42

14730-X




2.3 Standards issued but not yet effective (cont'd.)

Effective for

annual financial

periods beginning

Description on or after

Amendments to MFRS 112: Income Tax Consequences of

Payments on Financial Instruments Classified as Equity

Improvements to MFRS Standards 2015-2017 Cycle"

Amendments to MFRS 11: Joint Arrangements contained

in the document entitled "Annual Improvements to

MFRS Standards 2015-2017 Cycle"

Amendments to MFRS 123: Borrowing Costs Eligible for

Capitalisation contained in the document entitled

MFRS 17 Insurance Contracts

Amendments to MFRS 10 and MFRS 128: Sale or

Contribution of Assets between an Investor and

its Associate or Joint Venture

MFRS 16 Leases

1 January 2021

1 January 2019

These pronouncements are expected to have no significant impact to the financial

statements of the Group and the Company upon their initial application except as

described below:

MFRS 16 will replace MFRS 117 Leases, IC Interpretation 4 Determining whether an

Arrangement contains a Lease, IC Interpretation 115 Operating Lease-Incentives and IC

Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of

a Lease. MFRS 16 sets out the principles for the recognition, measurement,

presentation and disclosure of leases and requires lessees to account for all leases

under a single on-balance sheet model similar to the accounting for finance leases

under MFRS 117.

At the commencement date of a lease, a lessee will recognise a liability to make lease

payments and an asset representing the right to use the underlying asset during the

lease term. The right-of-use asset is initially measured at cost and subsequently

measured at cost (subject to certain exceptions), less accumulated depreciation and

impairment losses, adjusted for any remeasurement of the lease liability. The lease

liability is initially measured at present value of the lease payments that are not paid at

that date. Subsequently, the lease liability is adjusted for interest and lease payments,

as well as the impact of lease modifications.

To be determined by MASB

1 January 2019

1 January 2019

contained in the document entitled "Annual

2015-2017 Cycle"

"Annual Improvements to MFRS Standards

43

14730-X





MFRS 16 Leases (cont'd.)

MFRS 17 Insurance Contracts

-

-

MFRS 17 is effective for reporting periods beginning on or after 1 January 2021, with

comparative figures required. Early application is permitted, provided the entity also

applies MFRS 9 and MFRS 15 on or before the date it first applies MFRS 17.

Classification of cash flows will also be affected as operating lease payments under

MFRS 117 are presented as operating cash flows, whereas under MFRS 16, the lease

payments will be split into a principal (which will be presented as financing cash flows)

and an interest portion (which will be presented as operating cash flows).

Lessor accounting under MFRS 16 is substantially the same as the accounting under

MFRS 117. Lessors will continue to classify all leases using the same classification

principle as in MFRS 117 and distinguish between two types of leases: operating and

finance leases. MFRS 16 also requires lessees and lessors to make more extensive

disclosures than under MFRS 117.

MFRS 17 will replace MFRS 4 Insurance Contracts. MFRS 17 applies to all types of

insurance contracts (i.e life, non-life, direct insurance and re-insurance), regardless of

the type of entities that issue them, as well as to certain guarantees and financial

instruments with discretionary participation features. The overall objective of MFRS 17 is

to provide an accounting model for insurance contracts that is more useful and

consistent for insurers. In contrast to the requirements in MFRS 4, which are largely

based on grandfathering previous local accounting policies, MFRS 17 provides a

comprehensive model for insurance contracts, covering all relevant accounting aspects.

The core of MFRS 17 is the general model, supplemented by:

A specific adaptation for contracts with direct participation features (the variable fee

approach); and

A simplified approach (the premium allocation approach) mainly for short-duration

contracts.

MFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early

application is permitted but not before an entity applies MFRS 15. A lessee can choose

to apply the standard using either a full retrospective or a modified retrospective

approach.

The standard will affect primarily the accounting for the Group’s and Company's

operating leases. As at 31 December 2018, the Group and Company have non-

cancellable operating lease commitments of RM3,845,000. The Group and the

Company are currently assessing the impact of adopting this Standard.

44

14730-X





MFRS 17 Insurance Contracts (cont'd.)

2.4 Summary of significant accounting policies

(a) Subsidiaries and basis of consolidation

(i) Subsidiaries

(ii) Basis of consolidation

(i)

(ii)

(iii) The ability to use its power over the investee to affect its returns.

(i)

The Group and the Company have appointed a consultant to look into the requirements

of MFRS 17 and have completed the assessment of the operational impacts for adopting

MFRS 17 and intend to assess the financial impacts in the financial year ending 2019.

In the Company's separate financial statements, investments in subsidiaries are

initially recognised at cost. Subsequently, investments in subsidiaries,

comprising unit trust funds, are measured in accordance with the requirements

of MFRS 9, as further elaborated in Note 2.4(e).

The consolidated financial statements comprise the financial statements of the

Company and its subsidiaries as at the reporting date. The financial statements

of the subsidiaries, used in the preparation of the consolidated financial

statements are prepared for the same reporting date as the Company.

Consistent accounting policies are applied for like transactions and events in

similar circumstances.

Power over the investee (i.e existing rights that give it the current ability to

direct the relevant activities of the investee);

Exposure, or rights, to variable returns from its investment with the

investee; and

The Company controls an investee if and only if the Company has all the

following:

When the Company has less than a majority of the voting rights of an investee,

the Company considers the following in assessing whether or not the

Company’s voting rights in an investee are sufficient to give it power over the

investee:

The size of the Company’s holding of voting rights relative to the size and

dispersion of holdings of the other vote holders;

45

14730-X




2.4 Summary of significant accounting policies (cont'd.)

(a) Subsidiaries and basis of consolidation (cont'd.)

(ii) Basis of consolidation (cont'd.)

(ii)

(iii) Rights arising from other contractual arrangements; and

(iv)

Losses within a subsidiary are attributed to the non-controlling interests even if

that results in a deficit balance.

Any additional facts and circumstances that indicate that the Company

has, or does not have, the current ability to direct the relevant activities at

the time that decisions need to be made, including voting patterns at

previous shareholders’ meetings.

Subsidiaries are consolidated when the Company obtains control over the

subsidiaries and ceases when the Company loses control of the subsidiaries.

All intra-group balances, income and expenses and unrealised gains and

losses resulting from intra-group transactions are eliminated in full.

Potential voting rights held by the Company, other vote holders or other

parties;

Changes in the Group’s ownership interests in subsidiaries that do not result in

the Group losing control over the subsidiaries are accounted for as equity

transactions. The carrying amounts of the Group’s interests and the non-

controlling interests are adjusted to reflect the changes in their relative interests

in the subsidiaries. The resulting difference is recognised directly in equity and

attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss calculated as the

difference between (i) the aggregate of the fair value of the consideration

received and the fair value of any retained interest and (ii) the previous carrying

amount of the assets and liabilities of the subsidiary and any non-controlling

interest, is recognised in profit or loss. The subsidiary’s cumulative gain or loss

which has been recognised in other comprehensive income and accumulated in

equity are reclassified to profit or loss or where applicable, transferred directly

to retained earnings. The fair value of any investment retained in the former

subsidiary at the date control is lost is regarded as the cost on initial recognition

of the investment.

46

14730-X





(b) Property and equipment and depreciation

Lands and buildings 2 %

Motor vehicles 20 %

Office equipment and computer 12.5 to 33 %

Renovation, furniture and fittings 12.5 to 20 %

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 Group and 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 profit or loss during the financial year

in which they are incurred.

Subsequent to recognition, property and equipment are stated at cost less

accumulated depreciation and accumulated impairment losses. The policy for the

recognition and measurement of impairment losses is in accordance with Note

2.4(j).

Depreciation on property and equipment is provided on a straight line basis to write

off the cost of each asset to its residual value over the estimated useful life. Work-in-

progress is not depreciated as it is not available for use. When work-in-progress is

completed and the asset is available for use, it is reclassified to the relevant

category of property and equipment. The annual depreciation rates are:

The residual values, useful lives and depreciation methods 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.

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.

47

14730-X





(c) Investment properties

(d) Intangible assets

Intangible assets comprise computer application software which were developed or

acquired to meet the unique requirements of the Group and the Company.

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 the income

statement in the period in which the expenditure is incurred. The policy for the

recognition and measurement of impairment losses is in accordance with Note

2.4(j).

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.

Acquired computer software licenses 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 five years.

Investment properties are properties that are held either to earn rental income or for

capital appreciation or for both.

Investment properties are measured initially at cost, including related transaction

costs. Subsequent to initial recognition, investment properties are stated at cost less

accumulated depreciation and any accumulated impairment losses. The

depreciation policy for investment properties are in accordance with that for

depreciation of property and equipment as described in Note 2.4(b).

Investment property is derecognised when it has 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 disposal of an

investment property are recognised in profit or loss in the year in which they arise.

48

14730-X





(d) Intangible assets (cont'd.)

(e) Financial assets

Policy applicable from 1 January 2018

(i) Initial recognition and initial measurement

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.

The classification of financial assets at initial recognition depends on the

financial asset’s contractual cash flow characteristics and the Group's and the

Company's business model for managing them. With the exception of trade

receivables that do not contain a significant financing component or for which

the Group and the Company have applied the practical expedient, the Group

and the Company initially measure a financial asset at its fair value plus, in the

case of a financial asset not at FVTPL, transaction costs.

In order for a financial asset to be classified and measured at amortised cost or

fair value, it needs to give rise to cash flows that are ‘solely payments of

principal and interest' ("SPPI") on the principal amount outstanding. This

assessment is referred to as the SPPI test and is performed at an instrument

level.

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 Group and 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 five years.

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.

49

14730-X





(e) Financial assets (cont'd.)

Policy applicable from 1 January 2018 (cont'd.)

(i) Initial recognition and initial measurement (cont'd.)

(ii) Classification and subsequent measurement

- Financial assets at amortised cost (debt instruments)

- Financial assets at FVTPL

(a) Financial assets at amortised cost (debt instruments)

-

-

The contractual terms of the financial asset give rise on

specified dates to cash flows that are solely payments of

principal and interest on the principal amount

outstanding; and

The financial asset is held within a business model with

the objective to hold financial assets in order to collect

contractual cash flows.

The Group's and the Company’s financial assets at amortised cost

include insurance receivables, other receivables, cash and bank

balance and deposits from financial institutions.

The Group's and the Company's business model for managing financial assets

refers to how it manages its financial assets in order to generate cash flows.

The business model determines whether cash flows will result from collecting

contractual cash flows, selling the financial assets, or both.

Purchases or sales of financial assets that require delivery of assets within a

time frame established by regulation or convention in the market place (regular

way trades) are recognised on the trade date, i.e., the date that the Group and

the Company commit to purchase or sell the asset.

The Group and the Company measure financial assets at amortised

cost if both of the following conditions are met:

Financial assets at amortised cost are subsequently measured using

the effective interest ("EIR") method and are subject to impairment.

Gains and losses are recognised in profit or loss when the asset is

derecognised, modified or impaired.

For purposes of subsequent measurement, the Group and the Company have

classified financial assets into two categories:

50

14730-X







(ii) Classification and subsequent measurement (cont'd.)

(b) Financial assets at FVTPL

Policy applicable before 1 January 2018

(a) AFS financial assets

(b) LAR

LAR are non-derivative financial assets with fixed or determinable payments

that are not quoted in an active market. LAR are initially recognised at cost,

being the fair value of the consideration paid for the acquisition of the loans and

receivables. All transaction costs directly attributable to the acquisition are also

included in the cost of the loans and receivables. 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.

Prior to 1 January 2018, the Group and the Company classified their investments

into available-for-sale (“AFS”) financial assets and loans and receivables ("LAR").

Financial assets with cash flows that are not solely payments of principal

and interest are classified and measured at FVTPL, irrespective of the

business model. Financial assets at FVTPL are carried in the statements of

financial position at fair value with net changes in fair value recognised in

profit or loss.

This category includes listed equity investments and debt instruments

which the Group's and the Company’s business model is achieved both by

collecting contractual cash flows and selling off these assets.

AFS are non-derivative investments that are designated as available-for-sale or

are not classified in any of the preceding categories. These investments are

initially recorded at fair value. After initial measurement, AFS investments are

re-measured at fair value with unrealised gains or losses recognised directly in

equity. Upon derecognition or impairment, the cumulative fair value gains and

losses previously reported in equity are transferred to profit or loss.

51

14730-X






Policy applicable before 1 January 2018 (cont'd.)

(b) LAR (cont'd.)

(f) Fair value measurement

(a)

(b)

Amortised cost is computed using the effective interest method less any

allowance for impairment and principal repayment or reduction. The calculation

takes into account any premium or discount on acquisition and includes

transaction costs and fees that are an integral part of the effective interest rate.

Fair value is the price that would be received to sell an asset or paid to transfer a

liability in an orderly transaction between market participants at measurement date.

The fair value measurement is based on the presumption that the transaction to sell

the asset or transfer the liability takes place either:

In the absence of a principal market, in the most advantageous market for the

asset or liability

In the principal market for the asset or liability; or

The Group and the Company use valuation techniques that are appropriate in the

circumstances and for which sufficient data are available to measure fair value,

maximising the use of relevant observable inputs and minimising the use of

unobservable inputs.

The principal or the most advantageous market must be accessible by the Group

and the Company.

The fair value of an asset is measured using the assumptions that market

participants would use when pricing the asset or liability, assuming that market

participants act in their economic best interests.

52

14730-X





(f) Fair value measurement (cont'd.)


Level 1 :

Level 2 :

Level 3 :

(g) Impairment of financial assets

Policy applicable from 1 January 2018

(i) Overview of expected credit losses ("ECL")

Inputs for the asset or liability that are not based on observable market

data (unobservable inputs).

For financial instruments where there is no active market such as unquoted

securities, the fair value is determined based on the average quotes obtained from

one licensed financial institution which are also the principal dealers.

From 1 January 2018, the Group and the Company have been recording the

allowance for expected credit losses for debt financial assets not held at

FVTPL. Equity instruments are not subject to impairment under MFRS 9.

All assets for which fair value is measured or disclosed in the financial statements

are categorised within the fair value hierarchy, described as follows:

Quoted prices (unadjusted) in active markets for identical assets or

liabilities.

Inputs other than quoted prices included within Level 1 that are observable

for the asset or liability, either directly (ie. as prices) or indirectly (ie.

derived from prices).

All financial instruments are recognised initially at the transacted price, which is the

best indicator of fair value. The fair value of investments 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 reporting

date. For investments in unit trusts, the fair value is determined by reference to

published net assets values.

The Group and the Company assess at each reporting date whether a financial

asset or group of financial assets is impaired.

53

14730-X





(g) Impairment of financial assets (cont'd.)


(i) Overview of expected credit losses ("ECL") (cont'd.)

(ii)

Both 12-month ECL and lifetime ECL are calculated on either an individual

basis or a collective basis, depending on the nature of the underlying portfolio

of financial instruments.

The Group and the Company applies the simplified approach prescribed by

MFRS 9 Financial Instruments , which requires expected lifetime losses to be

recognised from initial recognition of the debt financial assets not held at

FVTPL.

Calculation of ECL

For debt instruments measured at amortised cost, the Group and the Company

apply a simplified approach in calculating ECL. Therefore, the Group and the

Company do not track changes in credit risk, but instead recognises a loss

allowance based on lifetime ECL at each reporting date.

The Group and the Company have established a transition matrix that is based

on its historical credit loss experience, adjusted for forward-looking factors

specific to the debtors and the economic environment.

For individual impairment assessment, the amount of ECL is measured as the

probability-weighted present value of all cash shortfalls over the expected life of

the financial asset discounted at its original effective interest rate.

The cash shortfall is the difference between all contractual cash flows that are

due to the Group and the Company and all the cash flows that the Group and

the Company expects to receive.

For credit exposures for which there has not been a significant increase in

credit risk since initial recognition, ECL are provided for credit losses that result

from default events that are possible within the next 12-months (a 12-month

ECL). For those credit exposures for which there has been a significant

increase in credit risk since initial recognition, a loss allowance is required for

credit losses expected over the remaining life of the exposure, irrespective of

the timing of the default (a lifetime ECL).

54

14730-X







(iii)

- Gross Domestic Product

- Inflation

- FTSE Bursa Malaysia KLCI index

- Unemployment rates

Policy applicable before 1 January 2018

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 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 instrument's original effective interest rate/yield.

The carrying amount of the asset is reduced and the loss is recorded in profit or

loss.

Forward looking information

In its ECL models, the Group and the Company rely on a broad range of

forward looking information as economic inputs, such as:

The inputs and models used for calculating ECL may not always capture all

characteristics of the market at the date of the financial statements. To reflect this,

qualitative adjustments or overlays are occasionally made as temporary

adjustments when such differences are significantly material.

55

14730-X







Assets carried at amortised cost (cont'd.)

AFS financial assets

The Group and Company first assess 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 the 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 reporting date.

A review of all outstanding amounts is performed at the end of the reporting period.

Specific allowance for impairment are made for other receivables that have been

individually reviewed and specifically identified as impaired. The carrying amount of

the asset is reduced through the use of an allowance account and the amount of

the loss is recognised in profit or loss. Other receivables are written off when

deemed irrecoverable. If a write-off is later recovered, the recovery is recognised in

profit or loss.

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 impairment loss previously recognised in other comprehensive income, is

transferred from other comprehensive income to the income statement.

Reversals in respect of equity instruments classified as AFS are not recognised in

the income statement. 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.

56

14730-X





(h) Derecognition of financial assets

(i) Equity instruments

(j) Impairment of non-financial assets

Financial assets are derecognised when the Group's and the Company’s

contractual rights to receive cash flows from the financial assets expire or where the

financial assets have been transferred and the Group and the Company have also

transferred substantially all risks and rewards of ownership.

Ordinary shares are classified as equity on the statements of financial position.

Dividends on ordinary shares are recognised and reflected in the statements of

changes in equity in the period in which they are declared.

Non-financial assets are tested annually for impairment. The carrying amounts of

these assets are reviewed at each reporting 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.

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 are

allocated to reduce the carrying amount of the assets in the unit or groups of units

on a pro-rata basis.

57

14730-X





(j) Impairment of non-financial assets (cont'd.)

(k) Financial liabilities

An impairment loss is recognised in the income statement 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 of an asset 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 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 assets in prior years. A reversal of

impairment loss for an asset is recognised in profit or loss.

Financial liabilities are classified according to the substance of the contractual

arrangements entered into and the definitions of a financial liability.

Financial liabilities, are recognised in the statements of financial position when, and

only when, the Group and the Company become a party to the contractual

provisions of the financial instrument.

Financial liabilities are recognised initially at fair value plus directly attributable

transaction costs and subsequently measured at amortised cost using the effective

interest method.

For other financial liabilities, gains and losses are recognised in profit or loss when

the liabilities are derecognised, and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is

extinguished. When an existing financial liability is replaced by another from the

same lender on substantially different terms, or the terms of an existing liability are

substantially modified, such an exchange or modification is treated as a

derecognition of the original liability and the recognition of a new liability, and the

difference in the respective carrying amounts is recognised in profit or loss.

58

14730-X





(l) Lease

(i) As lessee

(ii) As lessor

(m) Product classification

The Company issues contracts that transfer insurance risk only.

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.

Finance leases, which transfer to the Group and the Company substantially all

the risks and rewards incidental to ownership of the leased item, are capitalised

at the inception of the lease at the fair value of the leased assets or, if lower, at

the present value of the minimum lease payments. Any initial costs are also

added to the amount capitalised.

Leased assets are depreciated over the estimated useful life of the asset.

However, if there is no reasonable certainty that the Group and the Company

will obtain ownership by the end of the lease term, the asset is depreciated over

the shorter of the estimated useful life and the lease term.

Operating lease payments are recognised as an expense in the income

statement on an accrual basis over the lease term.

Leases where the Group and the Company retain substantially all the risks and

rewards of ownership of the asset are classified as operating leases. Operating

lease receipts are recognised as an income on an accrual basis over the lease

term.

59

14730-X





(m) Product classification (cont'd.)

(n) Reinsurance

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.

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.

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.

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.

Gains or losses on buying reinsurance are recognised in profit or loss immediately

at the date of purchase and are not amortised.

The Company also assumes reinsurance risk in the normal course of business for

general insurance contracts when applicable.

The Company does not have any investment contracts and the insurance contracts

issued do not contain any DPF.

60

14730-X





(n) Reinsurance (cont'd.)

(o) General insurance underwriting results

(i) Gross Premiums

(ii) Reinsurance Premiums

(iii) Premium liabilities

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.

The general insurance underwriting results are determined for each class of

business after taking into account, inter alia, reinsurances, unearned premium,

commissions and claims incurred.

Gross premiums are recognised in a financial period in respect of risks

assumed during that particular financial period.

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.

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 inception dates of these risks.

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.

61

14730-X





(o) General insurance underwriting results (cont'd.)

(iii) Premium liabilities (cont'd.)

(a) URR

(b) UPR

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 into 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 the income statement by setting up a provision for

liability adequacy.

Premium liability is reported at the higher of the aggregate of the unearned

premium reserve (“UPR”) for all lines of business and the best estimate value of

the insurer’s unexpired risk reserves (“URR”) at the end of the financial year

and the provision of risk margin for adverse deviation ("PRAD") calculated at

75% confidence level at the overall Company level. The best estimate value is

a prospective estimate of the expected future payments arising from future

events insured under policies in force at the end of the financial year including

allowance for insurer’s expenses.

The URR is the prospective estimate of the expected future payments

arising from future events insured under policies in force as at the end of

the financial year and also includes allowance for expenses, including

overheads and cost of reinsurance, expected to be incurred during the

unexpired period in administering these policies and settling the relevant

claims, and expected future premium refunds.

The UPR represents the portion of net premiums less the related net

acquisition costs of insurance policies written that relate to the unexpired

periods of the policies at the end of the financial year.

62

14730-X






(iii) Premium liabilities (cont'd.)

(b) UPR (cont'd.)

- 25% method for marine and aviation cargo, and transit business;

-

- Motor and bonds 10%

- Fire, engineering, aviation and marine hull 15%

- Medical 10 - 15%

- Other classes 20%

-

-

(iv) Claim liabilities

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

General insurance contract liabilities are recognised when contracts are

entered into and premiums are charged. 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 reporting 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 reporting 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.

In determining the UPR at reporting date, the methods used in calculation

of actual unearned premium are as follows:

1/24th method for all other classes of general business in respect of

Malaysian policies, with the following deduction rates, or actual

commission incurred, whichever is lower:

1/8th method for all other classes of overseas inward treaty

business, with a deduction of 20% for commission.

63

14730-X






(iv) Claim liabilities (cont'd.)

(v) Acquisition costs

(p) Insurance receivables

Claim liabilities are recognised as the obligation to make future payments in

relation to all claims that have been incurred as at the end of the financial year.

They are recognised in respect of both direct insurance and inward

reinsurance. The value is the best estimate value of claim liability which

includes provision for claims reported, claims incurred but not enough reserved

("IBNER"), claims incurred but not reported (“IBNR”) and direct and indirect

claim-related expenses as well as PRAD at 75% confidence level calculated at

the overall Company level. These are based on an actuarial valuation by a

qualified actuary, using a mathematical method of estimation based on, among

others, actual claims development pattern.

The costs of acquiring and renewing insurance policies, net of 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.

Insurance receivables are recognised when due and measured at the fair value of

the consideration received and receivable.

The Company gathers the objective evidence that an insurance receivable is

impaired using the same process and method adopted for financial assets carried at

amortised cost. These processes are described in Note 2.4(g).

Insurance receivables are derecognised when the derecognition criteria for financial

assets, as described in Note 2.4(h), have been met.

64

14730-X





(q) Other revenue recognition

(i) Rental income

(ii) Investment income and interest income on loan

(iii) Dividend/distribution income from unit trust funds

(iv) Realised gains and losses on investments

Revenue is recognised to the extent that it is probable that the economic benefits

associated with the transactions will flow to the Group and the Company and the

revenue can be measured reliably. The following specific recognition criteria must

also be met before revenue is recognised.

Rental income is recognised on an accrual basis except where default in

payment of rent has already occurred and rent due remains outstanding for

over six months, in which case the recognition of rental income is suspended.

Subsequent to suspension, income is recognised on receipt basis until all

arrears have been paid.

Investment and interest income is recognised in the financial statements on an

accrual basis using the effective interest method.

Dividend/distribution income from unit trust funds is recognised on a declared

basis, when the Company's right to receive payment is established.

Realised gains and losses recorded in the income statements 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.

65

14730-X





(r) Foreign currencies

(s) Income tax

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 for the year and is measured using the tax rates that have been

enacted at the reporting date.

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 goodwill or negative goodwill or 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.

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 the tax rates that have

been enacted or substantively enacted at the reporting date. Deferred tax is

recognised in the income statement, except when it arises from a transaction which

is recognised directly in equity, in which case the deferred tax is also charged or

credited directly in equity.

The financial statements are presented in Ringgit Malaysia which is also the

functional currency of the Group and the Company.

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 retranslated at the functional currency rate of

exchange ruling at the reporting date. All differences are taken to profit or loss.

66

14730-X





(t) Employee benefits

(i) Short term benefits

(ii) Defined contribution plans

(u) Cash and cash equivalents

(v) Non-controlling interests

Wages, salaries, bonuses and social security contributions are recognised as

an expense in the year in which the associated services are rendered by

employees of the Group and the Company. 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, and short term non-accumulating compensated

absences such as sick leave are recognised when the absences occur.

As required by law, companies in Malaysia make contributions to the

Employees' Provident Fund ("EPF"). Such contributions are recognised as an

expense in the income statement as incurred.

For the purpose of the statements of cash flow, cash and cash equivalents consist

of cash and bank balances and fixed deposits with original maturities of 3 months or

less.

The cash flow statements have been prepared using the indirect method.

Non-controlling interest represents the equity in subsidiaries not attributable, directly

or indirectly, to owners of the Company, and are presented separately in the

statements of comprehensive income and within equity in the statements of

financial position, separately from equity attributable to owners of the Company.

Changes in the Company owners’ ownership interest in a subsidiary that do not

result in a loss of control are accounted for as equity transactions. In such

circumstances, the carrying amounts of the controlling and non-controlling interests

are adjusted to reflect the changes in their relative interests in the subsidiary. Any

difference between the amount by which the non-controlling interest is adjusted and

the fair value of the consideration paid or received is recognised directly in equity

and attributed to owners of the Company.

67

14730-X




2.5 Significant accounting judgements, estimates and assumptions

(a) Critical judgements in applying the Group's accounting policies

(b) Key sources of estimation uncertainty

(i) Valuation of insurance contract liabilities

The preparation of financial statements in conformity with MFRS requires

management to exercise judgement on the use of estimates and make assumptions

that affect the application of policies and reported amounts of assets, liabilities,

income and expenses. Although these estimates are based on management’s best

knowledge of current events and actions, actual results may differ from those

estimates. There are no critical judgement which requires disclosure in the financial

statements.

The key assumptions concerning the future and other key sources of estimation

uncertainty at the reporting date, that have a significant risk of causing a material

adjustment to the carrying amounts of assets and liabilities within the next financial

year is discussed below:

For insurance contracts, estimates have to be made for both the expected

ultimate cost of claims reported at the reporting date and for the expected

ultimate cost of claims incurred but not yet reported ("IBNR") at the reporting

date.

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 reporting liability. The ultimate cost of outstanding claims is

estimated by using a range of standard actuarial claims projection techniques,

such as the Chain Ladder and Bornhuetter-Ferguson methods.

68

14730-X




2.5 Significant accounting judgements, estimates and assumptions (cont'd.)

(b) Key sources of estimation uncertainty (cont'd.)

(i) Valuation of insurance contract liabilities

The main assumption underlying these techniques is that the 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 the loss

adjuster's 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 ratio. 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, level 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. The movement and carrying amount of

insurance contract liabilities of the Group and the Company are as disclosed in

Note 13.

69

14730-X



3. Property and equipment

Office Renovation,

Lands and Motor equipment furniture

buildings vehicles and computer and fittings Total

RM'000 RM'000 RM'000 RM'000 RM'000

Group and Company

2018

Cost

At 1 January 2018 3,185 651 11,301 7,578 22,715

Additions - - 1,851 76 1,927

Disposals - - (634) (795) (1,429)

At 31 December 2018 3,185 651 12,518 6,859 23,213

Accumulated

depreciation

`

At 1 January 2018 562 218 7,990 5,432 14,202

Charge for the year 64 130 1,266 483 1,943

Disposals - - (633) (784) (1,417)

At 31 December 2018 626 348 8,623 5,131 14,728

Net carrying amount

At 31 December 2018 2,559 303 3,895 1,728 8,485

Indicative fair value for lands and buildings*

RM'000

At 31 December 2018 5,020

70

14730-X



3. Property and equipment (cont'd.)

Office Renovation,

Lands and Motor equipment furniture

buildings vehicles and computer and fittings Total

RM'000 RM'000 RM'000 RM'000 RM'000

Group and Company

2017

Cost

At 1 January 2017 3,185 385 10,001 7,081 20,652

Additions - 266 1,442 500 2,208

Disposals - - (142) (3) (145)

At 31 December 2017 3,185 651 11,301 7,578 22,715

Accumulated

depreciation

At 1 January 2017 498 97 7,168 4,951 12,714

Charge for the year 64 121 964 484 1,633

Disposals - - (142) (3) (145)

At 31 December 2017 562 218 7,990 5,432 14,202

Net carrying amount

At 31 December 2017 2,623 433 3,311 2,146 8,513

Indicative fair value for lands and buildings*

RM'000

At 31 December 2017 4,970

*

The cost of fully depreciated property and equipment which are still in use as at 31

December 2018 amounted to RM9,099,176 (2017: RM9,645,374).

The disclosed fair value was derived based on valuation performed by an appointed

independent valuer using the comparison method as disclosed in Note 4. The

movements and key assumptions used in the valuation are disclosed in Note 32.

71

14730-X



4. Investment properties

2018 2017

Group and Company RM'000 RM'000

Cost

At 1 January 8,063 8,063

Additions 163 -

Disposals (792) -

At 31 December 7,434 8,063

Accumulated depreciation

At 1 January 362 201

Charge for the year 162 161

Disposals (29) -

At 31 December 495 362

Net carrying amount 6,939 7,701

Indicative fair value 8,350 9,400

2018 2017

Group and Company RM'000 RM'000

Rental income from investment properties 80 167

Direct operating expenses (62) (33)

Net rental arising from investment properties 18 134

Investment properties consist of 3 units (2017: 4 units) of residential properties and a

commercial building which are located in Penang.

Investment properties and lands and buildings disclosed in the property and equipment note

are stated at cost. Estimated fair value is based on valuations performed by an accredited

independent valuer with recent experience in the location and category of properties being

valued. Fair value is determined using the comparison method of valuation.

Under the comparison method, fair value is estimated by considering the sale of similar or

substitute properties and related market data and fair value estimates by making adjustments

to certain factors including location, accessibility, market conditions, size, shape and terrain

of land that affect fair value.

The valuation updates were performed by the valuers in January 2019 (2017: January 2018)

for the fair value of investment properties and lands and buildings of property and equipment

as at 31 December 2018. There have been no significant changes in method of valuation

used as compared with the previous full valuation report performed by the valuer in 2018.

The movements and key assumptions used in the valuation are disclosed in Note 32.

72

14730-X



5. Intangible assets

2018 2017

RM'000 RM'000

Group and Company

Cost

At 1 January 11,657 9,033

Additions 8,673 2,624

Disposals (18) -

At 31 December 20,312 11,657

Accumulated amortisation

At 1 January 7,007 5,875

Charge for the year 2,044 1,132

Disposals (18) -

At 31 December 9,033 7,007

Net carrying amount 11,279 4,650

6. Investment securities

2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

Malaysian Government

Papers - 9,940 - -

Debt securities 369,055 334,595 - -

Equity securities 32,040 34,972 32,040 34,972

Unit trust funds * 6,601 61,049 332,646 354,352

Deposits with financial institutions 661,125 588,634 639,259 578,788

1,068,821 1,029,190 1,003,945 968,112

*

Group Company

Included in unit trust funds of the Company are investments in subsidiaries amounting to

RM326.0 million (2017: RM293.3 million) as disclosed in Note 6(c).

Intangible assets comprise computer application software which were developed or acquired

to meet the unique requirements of the Group and the Company.

73

14730-X



6. Investment securities (cont'd.)

2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

AFS - 440,556 - 389,324

LAR - 588,634 - 578,788

FVTPL 407,696 - 364,686 -

Financial assets at amortised

cost 661,125 - 639,259 - 1,068,821 1,029,190 1,003,945 968,112

(a) Financial assets at FVTPL and AFS financial assets

Group Company Group Company

RM'000 RM'000 RM'000 RM'000

At fair value

Equity securities

Quoted in Malaysia 32,040 32,040 58,828 58,828

Allowance for impairment - - (23,856) (23,856)

32,040 32,040 34,972 34,972


Papers


Securities - - 9,940 -

Debt securities

Unquoted in Malaysia 369,055 - 334,595 -

Unit trust funds

Quoted in Malaysia 6,601 120,086 61,049 142,900

Unquoted in Malaysia - 212,560 - 211,452

6,601 332,646 61,049 354,352

407,696 364,686 440,556 389,324

* classified as financial assets at FVTPL.# classified as AFS financial assets.

2018 * 2017 #

The Group's and the Company's investment securities are summarised by categories as

follows:

Group Company

74

14730-X




(a) Financial assets at FVTPL and AFS financial assets (cont'd.)

Movement of allowance for impairment:

Group Company Group Company

RM'000 RM'000 RM'000 RM'000

At 31 December,

as previously stated 23,856 23,856 5,915 5,915

Impact from adoption of

MFRS 9 (23,856) (23,856) - -

At 1 January, as restated - - 5,915 5,915

Addition - - 17,941 17,941

At 31 December - - 23,856 23,856

(b) Financial assets at amortised cost/LAR

2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

At amortised cost/LAR

Fixed and call deposits

with licensed financial

institutions 661,125 588,634 639,259 578,788

- Fixed and call deposits

with original maturities of less

than or equal to 3 months

classified as cash and cash

equivalents (Note 10) 79,439 58,223 57,573 48,377

- Weighted average effective

interest rate (per annum) 3.5% 2.9% 3.6% 3.5%

- Maturity periods < 3 months < 3 months < 3 months < 3 months

- Fixed and call deposits

with original maturities of

more than 3 months

classified as cash and cash

equivalents (Note 10) 581,686 530,411 581,686 530,411

- Weighted average effective

interest rate (per annum) 4.2% 4.0% 4.2% 4.0%

- Maturity periods 4-18 months 4-15 months 4-18 months 4-15 months

2018 2017

Group Company

75

14730-X




(b) Financial assets at amortised cost/LAR (cont'd.)

(c) Investments in subsidiaries

2018 2017

RM'000 RM'000

At 1 January 293,303 225,542

Additions 32,742 67,761

At 31 December 326,045 293,303

2018 2017

% %

Unquoted unit trust funds:

Opus Institutional Income 66.87 67.70

Fund 2 ("Opus IIF2") *

United Institutional Income 98.49 98.49

Fund 2 ("United IIF2")

The carrying amounts of fixed and call deposits approximate fair values due to the

relatively short-term nature of these balances and insignificant risk of changes in value.

In compliance with MFRS 10, the Group's financial statements include unit trust funds

which have been consolidated with the Company's financial statements. The Company

has established that it has control over these unit trust funds in accordance with the

accounting policy described in Note 2.4(a).

Details of these unquoted unit trust funds in Malaysia, at fair value, are as follows:

Company

The subsidiaries of the Company, which are established in Malaysia and held directly by

the Company, are as follows:

Fixed and call deposits with financial institutions are classified as financial assets at

amortised cost in 2018. Prior to 1 January 2018, they were classified as LAR.

Company's

effective interest Principal activities

Wholesale unit trust fund

invested in fixed income

securities


invested in fixed income

securities

76

14730-X




(c) Investments in subsidiaries (cont'd.)

2018 2017

% %

Quoted unit trust funds:

Nomura i-Income Fund * 97.44 99.19

("Nomura IIF")

* Not audited by Ernst & Young or its affiliated firms

7. Reinsurance assets

2018 2017

RM'000 RM'000

Group and Company

Reinsurance of insurance contracts

Claim liabilities (Note 13) 279,976 260,232

Premium liabilities (Note 13) 86,274 106,021

366,250 366,253

Company's

Principal activitieseffective interest

The remaining 33.13% (2017: 32.30%) in Opus IIF2 and 1.51% (2017: 1.51%) in United

IIF2 are held by the Company's immediate holding company whilst the remaining 2.56%

(2017: 0.81%) in Nomura IIF are held by third parties.


invested in money market

77

14730-X



8. Insurance receivables

2018 2017

RM'000 RM'000

Group and Company

Due premiums including agent/brokers and

co-insurers balances 94,314 144,383

Due from reinsurers and cedants 33,700 56,139

Due from related companies * 84 264

128,098 200,786

Less: Impairment

- Individual impairment (1,029) (17,846)

- Collective impairment (16,932) (3,476)

(17,961) (21,322)

110,137 179,464

The breakdown of allowance for ECL under MFRS 9 is as follows;

Allowance for ECL

- Lifetime ECL not credit impaired (8,415) -

- Lifetime ECL credit impaired (9,546) -

(17,961) -

*

9. Other receivables

2018 2017 2016 2018 2017 2016

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Restated Restated Restated Restated

Proportionate share

of net assets of

Malaysian Motor

Insurance Pool

("MMIP") 51,585 47,502 49,771 51,585 47,502 49,771

Income due and

accrued 10,541 9,832 10,017 10,541 9,832 10,017

Deposits and

prepayments 2,390 2,071 1,572 2,390 2,071 1,572

Allowance for

impairment (66) - - (66) - -

2,324 2,071 1,572 2,324 2,071 1,572

Other receivables 48,524 45,060 45,321 38,015 39,824 41,754

Allowance for

impairment (592) (100) (100) (492) - -

47,932 44,960 45,221 37,523 39,824 41,754

112,382 104,365 106,581 101,973 99,229 103,114

CompanyGroup

The amount due from related companies is unsecured, non interest bearing and is

subject to normal credit terms of 90 days (2017: 90 days).

78

14730-X



9. Other receivables (cont'd.)

10. Cash and bank balances

2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

Cash and bank balances 20,308 21,247 16,789 15,938

2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

Cash and bank balances 20,308 21,247 16,789 15,938


institutions with original

maturity of 3 months

or less (Note 6(b)) 79,439 58,223 57,573 48,377

Total cash and cash

equivalents 99,747 79,470 74,362 64,315

The carrying amount of cash and bank balances approximate fair values due to the relatively

short-term nature of these balances.

Cash and cash equivalents included in the statements of cash flows comprise the following:

Group Company

Group Company

The carrying amounts of other receivables (other than the proportionate share of net assets

of MMIP and prepayments) approximate fair values due to the relatively short-term maturity

of these balances.

The proportionate share of net assets of MMIP (which excludes the share of insurance

contract liabilities of MMIP which has been included in Note 13) is after taking into

consideration cash release of RM3.5 million (2017: NIL) received from MMIP during the year.

79

14730-X



11. Share capital

2018 2017 2018 2017

'000 '000 RM'000 RM'000

Issued and fully paid up:

At 1 January 100,000 100,000 100,200 100,000

Effect of implementation

of Companies Act, 2016 - - - 200

At 31 December 100,000 100,000 100,200 100,200

12. Reserves

(i) Retained earnings

(ii) Fair value reserve

Number of ordinary

shares Amount

The retained earnings as at 31 December 2018 can be distributed as dividends under

the single tier system.

The fair value reserves at 31 December 2017 was in respect of unrealised gain/(loss) on

AFS financial assets, net of deferred taxation. All balances remaining in the AFS

reserves as at 1 January 2018 has been reclassified to retained earnings as disclosed in

Note 2.2.

80

14730-X



13. Insurance contract liabilities

2018 2017

Gross Reinsurance Net Gross Reinsurance Net

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Group and Company

Provision for claims reported by policyholders 522,389 (215,128) 307,261 484,238 (208,065) 276,173

Provision for IBNR 162,222 (64,848) 97,374 145,016 (52,167) 92,849

Claim liabilities 684,611 (279,976) 404,635 629,254 (260,232) 369,022

Premium liabilities 283,053 (86,274) 196,779 307,523 (106,021) 201,502 Insurance contract liabilities 967,664 (366,250) 601,414 936,777 (366,253) 570,524

(i) Claim Liabilities

At 1 January 629,254 (260,232) 369,022 628,894 (284,768) 344,126

Claims incurred in current accident year 380,033 (114,138) 265,895 341,593 (92,017) 249,576

Claims incurred in prior accident year 15,771 (3,138) 12,633 (3,703) 23,936 20,233

Movement in PRAD of claim liabilities at 75% -

confidence level 36,878 (19,921) 16,957 13,289 (5,264) 8,025

Movement in claims handling expenses 654 - 654 336 - 336

Adjustment in IBNR (20,326) 7,240 (13,086) (7,050) 1,614 (5,436)

Claims paid during the year (Note 22) (357,653) 110,213 (247,440) (344,105) 96,267 (247,838) At 31 December 684,611 (279,976) 404,635 629,254 (260,232) 369,022

81

14730-X



13. Insurance contract liabilities (cont'd.)

2018 2017


RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Group and Company

(ii) Premium Liabilities

At 1 January 307,523 (106,021) 201,502 287,467 (96,288) 191,179

Premiums written in the year (Note 17) 602,429 (193,499) 408,930 657,898 (229,695) 428,203

Premiums earned during the year (Note 17) (626,899) 213,246 (413,653) (637,842) 219,962 (417,880) At 31 December 283,053 (86,274) 196,779 307,523 (106,021) 201,502

As at 31 December 2018, included in insurance contract liabilities of the Group and Company are the Group's and the Company's

proportionate share of MMIP's claims and premium liabilities amounting to RM35.7 million (2017: RM31.0 million) and RM2.8 million (2017:

RM1.5 million), respectively.

82

14730-X



14. Insurance payables

2018 2017

RM'000 RM'000

Group and Company

Due to agents and intermediaries 8,939 6,412 Due to reinsurers and cedants 46,654 131,307 Due to ultimate holding company * 20 21

Due to related companies * 3,957 914

59,570 138,654

*

15. Deferred tax (assets)/liabilities

2018 2017

RM'000 RM'000

Group and Company

At 31 December, as previously stated (2,936) (1,549)

Impact from adoption of MFRS 9 (2,498) -

At 1 January, as restated (5,434) (1,549)

Recognised in other comprehensive income - 2,972

Recognised in the income statements (Note 24) 1,337 (4,359)

At 31 December (4,097) (2,936)

Presented in the statements of financial position as follows:

Deferred tax assets (4,097) (2,936)

Presented after appropriate offsetting as follows:


Deferred tax liabilities 1,966 1,779

(4,097) (2,936)

The amounts due to ultimate holding company and related companies are unsecured,

non interest bearing and subject to normal credit term of 90 days (2017: 90 days).

The carrying amounts approximate fair values due to the relatively short-term maturity of

these balances.

83

14730-X



15. Deferred tax (assets)/liabilities (cont'd.)

Deferred tax liabilities

Unearned Accelerated

premium capital

reserve allowances Total

RM'000 RM'000 RM'000

Deferred tax liabilities

2018

At 1 January - 1,779 1,779

Recognised in:

Income statements - 187 187

At 31 December - 1,966 1,966

2017

At 1 January 228 1,436 1,664

Recognised in:

Income statements (228) 343 115

At 31 December - 1,779 1,779

Fair value Allowance for

changes on impairment

investments loss Total

RM'000 RM'000 RM'000

Deferred tax assets

2018

At 31 December, as previously stated 1,017 (5,732) (4,715)

Impact from adoption of MFRS 9 - (2,498) (2,498)

At 1 January, as restated 1,017 (8,230) (7,213)

Recognised in:

Income statements (1,017) 2,167 1,150

At 31 December - (6,063) (6,063)

2017

At 1 January (1,955) (1,258) (3,213)

Recognised in:

Other comprehensive income 2,972 - 2,972

Income statements - (4,474) (4,474)

At 31 December 1,017 (5,732) (4,715)

84

14730-X



16. Other payables

2018 2017 2016 2018 2017 2016

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Provisions and accruals 15,970 15,524 18,766 15,970 15,524 18,766

Ultimate holding

company * 110 134 532 110 134 532

Other payables 62,731 57,686 62,512 60,551 57,548 62,399

78,811 73,344 81,810 76,631 73,206 81,697

*

17. Net earned premium

2018 2017

RM'000 RM'000

Group and Company

(a) Gross premium (Note 13(ii)) 602,429 657,898

Change in premium liabilities 24,470 (20,056)

Gross earned premium (Note 13(ii)) 626,899 637,842

(b) Gross premium ceded (Note 13(ii)) (193,499) (229,695)

Change in premium liabilities (19,747) 9,733

Premium ceded (Note 13(ii)) (213,246) (219,962)

Net earned premiums 413,653 417,880

Group Company

The amount due to ultimate holding company is unsecured, non interest bearing and is

repayable on demand.

The carrying amounts of other payables (other than provisions) approximate fair values due

to the relatively short-term maturity of these balances.

85

14730-X



18. Investment income

2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

Interest income from debt

securities 47,827 45,424 43,249 23,448

Rental income from

investment properties 18 134 18 134

Amortisation of premium, net - (452) - -

AFS financial assets

Dividend/distribution income:

- equity securities quoted

in Malaysia - 1,683 - 1,683

- unquoted unit trust fund - - - 10,688

- quoted unit trust fund - - - 5,188

Financial assets at FVTPL

Dividend from equity securities

quoted in Malaysia 2,220 - 2,220 -

50,065 46,789 45,487 41,141

19. Realised gains

2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

Realised gains/(losses) for:

AFS financial assets:

Equity securities quoted

in Malaysia - 5,403 - 5,221


outside Malaysia - (51) - (51)

Unit trust funds quoted

in Malaysia - - - (10)

Unit trust funds unquoted

in Malaysia - - - 192

Debt securities quoted

in Malaysia - 110 - -

Debt securities unquoted

in Malaysia - 847 - -

Group Company

Group Company

86

14730-X



19. Realised gains (cont'd.)

2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

Financial assets at FVTPL:


in Malaysia 77 - 77 -

Unit trust funds quoted

in Malaysia 449 - 449 -

Unit trust funds unquoted

in Malaysia 1,395 - - -

1,921 6,309 526 5,352

20. Commission income

2018 2017

RM'000 RM'000

Group and Company

Reinsurance commission income 42,072 46,889

21. Other operating revenue/(expenses)

2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

Realised (loss)/gain on disposal

of property and equipment (2) 1 (2) 1

Realised gain on disposal of

investment property 372 - 372 -

(Reversal of)/ impairment

losses on AFS financial assets - (17,941) - (17,941)

Service income earned

from MMIP 3,298 5,961 3,298 5,961

Sundry (expenses)/income (301) 875 (72) 875

3,367 (11,104) 3,596 (11,104)

Group Company

Group Company

87

14730-X



22. Net claims incurred

Note 2018 2017

RM'000 RM'000

Group and Company

Gross claims paid less salvage 13(i) 357,653 344,105

Reinsurance recoveries 13(i) (110,213) (96,267)

Net claims paid 247,440 247,838

Gross change in contract liabilities

At 31 December 13(i) 684,611 629,254

At 1 January 13(i) (629,254) (628,894)

55,357 360

Change in contract liabilities ceded to

reinsurers

At 31 December 13(i) (279,976) (260,232)

At 1 January 13(i) 260,232 284,768

(19,744) 24,536

Net claims incurred 283,053 272,734

23. Management expenses

2018 2017 2018 2017

Note RM'000 RM'000 RM'000 RM'000

Employee benefits

expense 23(a) 59,203 52,903 59,203 52,903

Directors'

remuneration 23(b) 373 280 373 280

Parent auditors'

remuneration:

- statutory audit 252 317 243 308

- audit-related

services 9 9 9 9

- over provision of

audit fees

in prior year (20) - (20) -

Other auditors'

remuneration 22 15 - -

Group Company

88

14730-X



23. Management expenses (cont'd.)

2018 2017 2018 2017

Note RM'000 RM'000 RM'000 RM'000

(Reversal of allowance

for ECL)/impairment

losses on insurance

receivables (13,707) 1,560 (13,707) 1,560

Rental of properties 2,803 2,783 2,803 2,783

Depreciation of property

and equipment 3 1,943 1,633 1,943 1,633

Depreciation of

investment

properties 4 162 161 162 161

Amortisation of

intangible assets 5 2,044 1,132 2,044 1,132

Fund managers' 1,049 1,023 1,049 1,023

expenses

Bad debts written off 10,619 1,780 10,619 1,780

Marketing expenses 17,816 16,909 17,816 16,909

Management fees 489 397 489 397

Bank charges 3,190 2,946 3,190 2,946

Computers maintenance 4,077 2,699 4,077 2,699

Printing and stationery 3,864 3,465 3,864 3,465

Other expenses 6,043 4,193 4,937 3,993

100,231 94,205 99,094 93,981

(a) Employee benefits expense

2018 2017

RM'000 RM'000

Group and Company

Wages and salaries 41,974 39,226

Bonus 5,539 2,949

Social security contributions 406 371

Contributions to defined contribution plan, EPF 5,565 5,144

Other benefits 5,719 5,213

59,203 52,903

Group Company

89

14730-X



23. Management expenses (cont'd.)

(b) Directors' remuneration

Group and Company

2018 2017

RM'000 RM'000

Non-executive Directors:

Fees 270 210

Emoluments 103 70

373 280

2018 2017

Non-executive Directors

RM50,000 and below 1 1

RM50,001 - RM100,000 1 3

RM100,001 - RM150,000 2 -

Executive Directors

RM50,000 and below 1 1

(c) Chief Executive Officer's remuneration

2018 2017

RM'000 RM'000

Salaries and other emoluments 863 849

Contribution to defined contribution plan, (EPF) 104 102

Benefits-in-kind 27 28

Amount included in employee benefits expenses 994 979

The details of remuneration received or receivable by directors during the year are as

follows:

The number of directors whose total remuneration (received/receivable) during the

financial year are as follows:

Number of Directors

Remuneration received by the Chief Executive Officer ("CEO") during the year are as

follows:

90

14730-X



24. Taxation

2018 2017

RM'000 RM'000

Group and Company

Income tax:

Malaysian income tax 9,822 12,255

(Over)/under provision of tax expense in prior year (1,940) 492

7,882 12,747

Deferred tax (Note 15):

Relating to origination and reversal of

temporary differences 1,498 (5,174)

(Over)/under provision of deferred tax in prior year (161) 815

1,337 (4,359)

Tax expense for the year 9,219 8,388

2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000


Taxation at Malaysian

statutory tax rate of 24% 10,152 11,688 9,259 10,157

Income not subject to tax (3,168) (5,736) (2,275) (4,205)

Effect of expenses not

deductible for tax purposes 4,336 1,129 4,336 1,129

(Over)/under provision of

deferred tax in prior years (161) 815 (161) 815

(Over)/under provision

of tax expense in prior years (1,940) 492 (1,940) 492

Tax expense for the year 9,219 8,388 9,219 8,388

Domestic current income tax is calculated at the statutory tax rate of 24% (2017: 24%) of the

estimated assessable profit for the year.

A reconciliation of income tax expense applicable to profit before taxation at the statutory tax

rate to income tax expense at the effective tax rate of the Group and the Company is as

follows:

Group Company

91

14730-X



25. Earnings per share

26. Capital commitments

2018 2017

RM'000 RM'000

Group and Company

Approved and contracted for:

Computer software and hardware 250 1,071

Property and equipment 64 80

314 1,151

27. Operating lease arrangements

(a) The Company as lessor

2018 2017

RM'000 RM'000

Future minimum rental payments receivables:

Not later than 1 year 192 -

Later than 1 year and not later than 5 years 304 -

496 -

The Group's basic and diluted earning per ordinary share has been calculated based on the

Group profit after taxation for the year attributable to the equity holder of the Company of

RM29.2 million (2017: RM38.8 million) and the weighted average number of ordinary shares

in issue of 100,000,000 (2017: 100,000,000) shares.

The Company has entered into operating lease agreements for the lease of certain

office premises. These leases have an average life of 3 years (2017: nil) with certain

contracts carrying renewal options in the contracts. These contracts include fixed rentals

over the tenure of the lease period.

The future aggregate minimum lease payments receivable under operating lease

contracted for as at the reporting date but not recognised as receivables, are as follows:

92

14730-X



27. Operating lease arrangements (cont'd.)

(b) The Company as lessee

2018 2017

RM'000 RM'000

Future minimum rental payments:

Not later than 1 year 2,535 2,656

Later than 1 year and not later than 5 years 1,400 379

3,935 3,035

28. Significant related party disclosures

(a) Related parties

Name Relationship

MPHB Capital Berhad Ultimate holding company

Assicurazioni Generali S.p.A Related Companies

Flamingo Management Sdn Bhd^ ^Subsidiary of the ultimate holding

Magnum Leisure Sdn Bhd^ company

Syarikat Perniagaan Selangor Sdn Bhd^

Magnum 4D Berhad* *Company in which there is common

Magnum Corporation Bhd* significant shareholder

Magnum Information Technology

Sdn Bhd*

Metra Management Sdn Bhd*

Sababumi (Sandakan) Sdn Bhd*

Asas Resources Holdings Sdn Bhd# #

Company which certain directors

Ganda Persona Sdn Bhd* have interest

The Company has entered into operating lease agreements for the use of certain office

premises. These leases have an average life of between 2 to 3 years (2017: 2 to 5

years) with certain contracts carrying renewal options in the contracts. These contracts

include fixed rentals over the tenure of the lease period.

The future aggregate minimum lease payments under operating leases contracted for as

at the reporting date but not recognised as liabilities, are as follows:

For the purpose of these financial statements, parties are considered to be related to the

Group if the Group has the ability, directly or indirectly, to control the party or exercise

significant influence over the party in making financial and operating decisions, or vice versa,

or where the Group and the party are subject to common control or common significant

influence. Related parties may be individuals or other entities.

Related parties also include key management personnel as disclosed in Note 28(d).

93

14730-X



28. Significant related party disclosures (cont'd.)

(b)

2018 2017

RM'000 RM'000

Group and Company

Income/(expenses):

Ultimate holding company:

Insurance premium received 231 247

Commission paid (32) (30)

Claim paid (121) (53)

Management fees paid for service provided (536) (824)

General expenses (18) (20)

Subsidiaries of the ultimate holding company:

Insurance premium received 464 673


Claims paid (216) (355)

General expenses - (50)

Related company:

Insurance premium ceded (9,889) (34,737)

Commission received 2,658 8,549

Claim paid recovery 8,326 10,574

General expenses - (120)

Payment recovery - 22

Companies in which certain directors'

have financial interest:

Insurance premium received 2,053 2,474


Claims paid (413) (586)

Sponsorship received 50 55

General expenses (17) (26)

In addition to the transactions detailed elsewhere in the financial statements, the Group

and the Company had the following significant transactions and balances with related

parties during the year:

94

14730-X




(b)

2018 2017

RM'000 RM'000

Group and Company

Income/(expenses) (cont'd.):

Amount due from:

Amount due from ultimate holding company:

MPHB Capital Berhad 4 -

Amount due from subsidiaries of the

ultimate holding company:

Syarikat Perniagaan Selangor Sdn Bhd - 106

Amount due from companies in which there

is a common significant shareholder:

Magnum 4D Berhad 7 3

Magnum Corporation Bhd 4 -

Metra Management Sdn Bhd 69 155

80 158

Amount due to:

Amount due to ultimate holding company:

MPHB Capital Berhad 130 155

Amount due to a related company:

Assicurazioni Generali S.p.A 3,953 914

Amount due to subsidiaries of the ultimate

holding company:

Magnum Leisure Sdn Bhd 3 -

Syarikat Perniagaan Selangor Sdn Bhd 1 -

4 -

Amount due to a company in which there

is a common significant shareholder:

Metra Management Sdn Bhd 1 -

In addition to the transactions detailed elsewhere in the financial statements, the Group

and the Company had the following significant transactions and balances with related

parties during the year (cont'd.):

95

14730-X




(c)

(d) Compensation of key management personnel

2018 2017

RM'000 RM'000

Short term employee benefits 3,773 3,870

Other long-term benefits 429 441

4,202 4,311

29. Risk management framework

- Internal control environment and activities;

- Awareness and monitoring;

- Reporting duties; and

-

The Directors are of the opinion that all the transactions above have been entered into in

the normal course of business and have been established on terms and conditions that

are not materially different from those obtainable in transactions with unrelated parties.

The remuneration of directors and other members of key management personnel during

the year was as follows:

Key management personnel are those persons having authority and responsibility for

planning, directing and controlling the activities of the Company, directly or indirectly.

Risk governance is part of the Company’s internal control and management system to

manage risks within the Board approved tolerances and risk appetites. The objectives of the

framework are to create value and protect the interest of the Company's shareholders and to

fulfil its strategic intent.

The Company’s internal control and management system is a set of principles, rules,

procedures and structures that ensure the effective operation of the Company and enable it

to identify, manage, report and monitor the main risks to which it is exposed. Key elements of

the system are:

Roles and responsibilities that the Board of Directors ("BOD") and its committees, the

Executive Committee, including the Chief Executive Officer ("CEO"), who is also in

charge of the internal control and risk management system, and the Chief Financial

Officer ("CFO"), who oversees the preparation of the Company’s financial reports, as

well as, risk owners and Control Functions must discharge within the internal control and

risk management system.

96

14730-X



29. Risk management framework (cont'd.)

-

-

- Internal Audit, which represents the third line of defence.

The key roles and responsibilities within the risk management system are outlined below:

-

-

-

The BOD is ultimately responsible for the internal control and risk management system

and ensures that it is always functional, complete and effective, with the Risk

Management Committee's support, and establishes the risk appetite framework (RAF) at

least once a year. It also governs the Company and ensuring its long term financial

soundness including determining the Company's business and risk strategy defines the

organisational setup, appoints the heads of the Control Functions and defining their

mandates, establishes and approves risk policies, approves the Internal Capital

Adequacy Assessment Process ("ICAAP") report, and based on them defines the risk

appetite and tolerance limits;

The Executive Committee ("EXCO") is then responsible for executing the defined

strategy, and ensuring that day to day management of the Company's activities is

consistent with the risk strategy, including the risk appetite, and policies approved by the

Board. It is also responsible for establishing a management structure that promotes

accountability and the effective oversight of delegated authority and responsibilities for

risk-taking decisions, with adequate checks and balances; and

The risk management function supports BOD and EXCO in ensuring the effectiveness of

the risk management system and provides risk perspective in business decision-making

processes.

The Company’s internal control and risk management system is founded on the

establishment of the three lines of defence:

The operating functions (the “Risk Owners”), which represent the first line of defence

and have ultimate responsibility for management of risks relating to their area of

expertise/operations;

Actuarial, Compliance, and Risk Management Functions, which represent the second

line of defence; and

Collectively, Actuarial, Compliance, Risk Management and Internal Audit functions are

referred to as the Company’s Control Functions.

97

14730-X




Risk Management System

The risk management system is founded on the following five processes:

1. Risk identification;

2. Risk measurement;

3. Risk management and control;

4. Risk reporting; and

5. Risk monitoring.

Risk Identification

The categorisation of identified risks is consistent with BNM’s regulation.

The audit function verifies business processes and the adequacy and effectiveness of

controls in place, provides assurance to the Board that the Company is operating in a sound

control environment and ensures that control weaknesses are appropriately dealt with.

Head of Compliance and Chief Risk Officer report functionally to the Risk Management

Committee ("RMC"), while the Head of Actuarial Function reports functionally to the BOD.

The Head of Internal Audit reports functionally to the Audit Committee.

The principles defining the Company risk management system are provided in the

Company’s Risk Management Policy, which is the cornerstone of all risk-related policies and

guidelines. The Risk Management Policy covers all risks the company is exposed to, on

current and forward-looking basis.

The purpose of risk identification is to ensure that all material risks to which the Company is

exposed to are properly identified. To this end, the Risk Management Function liaises with

business functions in order to identify the main risks are identified and assessed based on

their likelihood of occurrence and severity and ensure that mitigating actions are identified

and properly assigned to risk owner. Within this process, emerging risks are also considered.

The actuarial function coordinates the technical provisions calculation and grants their

adequacy of underlying methodologies, models and assumptions, verifies the quality of the

related data and expresses an opinion on the overall underwriting practices.

The compliance function forms part of the Company's internal control function and

determines the compliance risks measurement and assessment and ensuring the Company's

compliance to the applicable laws, regulations, internal policies procedures and limits.

98

14730-X




Risk Measurement

Risk Management & Control

Risk measurement of single risk is complemented by Stress test and Scenario analysis. The

purpose is to assess the vulnerabilities of the Company under unexpected and potentially

severe, but plausible, events. The outcome, in terms of impact on financial and capital

position, should prepare the Company to take appropriate management actions if such

events were to materialize.

The Company’s Risk Appetite Framework ("RAF") supports the effective selection of risks by

establishing the risks that the Company wishes to acquire, avoid, retain or remove, along with

the measures in place to orient the Company activities consistently, the monitoring and

escalation procedures.

The purpose of the RAF is to set the desired level of risk on the basis of the Company’s

strategy and should reflect the wilingness and capacity of the Company to take on risk while

taking a longer term view that considers the Company's financial capacity, and continuing

ability to meet obligations towards stakeholders. The RAF statement is complemented by

qualitative assertions (risk preferences) supporting decision-making processes as well as risk

tolerances providing quantitative boundaries, limiting excessive risk-taking.

The RAF governance provides a framework for guiding strategy development and business

plans and direct the Company's priorities and embedding risk management into day-to-day

and extraordinary business operations and control mechanisms as well as the escalation and

reporting to be applied in case of risk tolerance breaches.

Tolerance levels are set based on capital metrics. Should the indicator approach or breach

the defined tolerance levels, escalation mechanisms are activated.

Common risk measurement methodologies (both qualitative and quantitative) are applied in

order to provide an integrated measurement of risks at Company level. For assessing risks

identified in accordance to the Company Risk Map, a quantitative approach is implemented.

The Risk Management Function shall liaise with other competent Company functions for the

definition of the methodologies for evaluating other risks.

The qualitative approach shall be based on capital requirements calculation stipulated in

BNM RBC for Insurers, complemented by additional measurement techniques deemed

appropriate and proportionate.

The capital charge for the operational risk under Risk-Based Capital Framework for Insurers

published by BNM is calculated based on 1% of total assets.

99

14730-X




Risk Reporting

Risk Monitoring

30. Insurance risk

The Company operates in the retail, middle market and corporate and commercial segments

and has a client centric philosophy based on multichannel distribution model. The Company

coordinates a variety of distribution channels (i.e. agents, brokers, financial advisors, affinity

partners, digital partners, and direct channels), with the objective of improving the service

provided to its customers and also to diversify the risks. The Company favours longstanding

relationship with clients to reduce the risk of moral hazard and adverse selection.

The purpose of the risk monitoring and reporting is to keep business functions, EXCO, BOD

and also regulators aware and informed on the development of the risk profile, on the risk

trends and on the breaches of risk tolerances.

Under BNM’s Guidelines, the ICAAP is the main risk reporting process and is coordinated by

Risk Management Function. Its purpose is to provide the assessment of main risks and of the

overall solvency position on a current and forward-looking basis. The ICAAP ensures

adequate capital to meet its capital need on an ongoing basis based on the Company’s

Strategic Plan and Capital Management Plan, followed by a regular communication of the

results to BNM after BOD’s approval.

The ICAAP provides an overall risk profile assessment, taking into consideration the year-end

financial data of previous year. Within the ICAAP, stress test and scenario / sensitivity

analyses are also performed to assess the resilience of the Solvency Position and risk profile

to changed market conditions or specific risk factor.

The ICAAP report, documenting main results of this process, is produced on an annual basis.

The purpose of risk monitoring and reporting requirements across the organisation, including

the development and use of key risk indicators is to provide early warnings on adverse risk

developments to ensure the Company is able to manage and mitigate their risks in a timely

manner.

100

14730-X



30. Insurance risk (cont'd.)

-

-

-

The Company’s underwriting limits define the maximum size of risks and classes of business

the Company shall be allowed to write without seeking any additional or prior approval. The

limits may be set based on value, risk type, product exposure or class of occupancy. The

purpose of these limits is to attain a coherent and profitable book of business founded on the

expertise within the Company.

Additional indicators such as relevant exposures, risk concentration, and risk capital figures

are used for insurance risks monitoring.

Reinsurance is the key mitigating factor for balancing the portfolio. It aims to optimize the use

of risk capital by ceding part of the insurance risk to selected counterparties, while

simultaneously minimising the credit risk associated with such operations.

Insurance risks arise in relation to the perils covered and the processes used in the conduct

of the business model described above. They include the risk of underestimating the

frequency and/or severity of the claims in defining the pricing and reserves (respectively

pricing and reserving risk), the risk of losses arising from extreme or exceptional events

(catastrophe risk) and the risk of policyholder lapses from insurance contracts:

The pricing and catastrophe risks derive from the possibility that premiums are not

sufficient to cover future claims, contract expenses and extremely volatile events;

The reserving risk relates to the uncertainty of the claims reserves’ run off around its

expected value; and

The lapse risk arises from the uncertainty of the underwriting profits recognized in the

premium provisions.

The insurance risks are assessed by means of stress testing and scenario analysis. The

assessments are based mainly on the models developed by the in-house actuarial team.

The Company’s insurance risk is mainly driven by reserving risks and pricing risks, followed

by catastrophe risks.

In terms of catastrophe risk, the Company’s largest catastrophe exposures are floods in

Malaysia.

101

14730-X




The reinsurance program is designed as follows:

-

-

- Substantial risk capital has been saved by means of the protection.

The estimation of the Company’s insurance contract liabilities (claims liabilities and premium

liabilities) is performed and certified by an in-house Appointed Actuary. In estimating the

insurance contract liabilities (claims liabilities and premium liabilities), the principal

assumption underlying the estimates 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 claims costs, claims handling cost and claims numbers for each accident

period.

Additional qualitative judgements are used to assess the extent to which past trends may not

apply in the future, for example, isolated occurrence, change in market factors such as public

attitude to claiming, economic conditions, as well as internal factors, such as, portfolio mix,

policy conditions, claims handling and settling procedures. Judgement is further used to

assess the extent to which external factors, such as, judicial decisions, changes in foreign

exchange rates, and government legislation affect the estimation.

In accordance to the requirement set by BNM under the RBC for Insurers, the Company has

included risk margin for adverse deviation for the insurance contract liabilities at 75% level of

sufficiency.

The protection aims to cover single occurrence losses up to a return period of at least

250 years (2017: 200 years);

The protection has proven capable in all recent major catastrophe losses, i.e. flood; and

Alternative risk transfer solutions are continuously analysed. As an example, in addition to

traditional reinsurance, a Stop Loss protection has been placed to reduce the impact of high

loss ratio for motor business due to liberalisation and escalating claims cost, and medical

business due to escalating medical cost, for policies underwritten in 2017.

102

14730-X





RM RM RM RM'000 RM'000 RM'000

Group and Company

Claim liabilities

Motor 312,729 (41,619) 271,110 247,304 (13,094) 234,210

Fire 90,138 (63,532) 26,606 70,803 (49,223) 21,580

Marine, Aviation & Transit 20,434 (12,377) 8,057 83,572 (76,140) 7,432

Miscellaneous 261,310 (162,448) 98,862 227,575 (121,775) 105,800

684,611 (279,976) 404,635 629,254 (260,232) 369,022

Premium liabilities

Motor 125,432 (14,614) 110,818 124,330 (8,525) 115,805 Fire 41,289 (24,575) 16,714 39,136 (22,714) 16,422

Marine, Aviation & Transit 8,462 (5,553) 2,909 18,225 (15,172) 3,053

Miscellaneous 107,870 (41,532) 66,338 125,832 (59,610) 66,222

283,053 (86,274) 196,779 307,523 (106,021) 201,502

2018 2017

The table below sets out the concentration of the Group's and the Company's insurance contract liabilities by type of insurance product:

103

14730-X




Sensitivities

Group and Company

Sensitivities

An analysis of sensitivity around various scenarios provides an indication of the adequacy of

the Company's estimation process in respect of its insurance contracts. The table presented

below demonstrates the sensitivity of the insurance contract liabilities estimates to particular

movements in assumptions used 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.

Impact Impact Impact Impact

Change in on gross on net on profit on

assumption liabilities liabilities before tax equity*

RM'000 RM'000 RM'000 RM'000

2018

Motor Act Accident Year ("AY")

2016-2018 Loss Ratio +20% 25,903 24,685 (24,685) (18,761)

-20% (25,903) (24,685) 24,685 18,761

Motor Others AY 2018 Loss Ratio +10% 17,243 16,445 (16,445) (12,498)

-10% (17,243) (16,168) 16,168 12,288

Non-Motor AY 2018 Loss Ratio +10% 48,991 24,120 (24,120) (18,331)

-10% (48,991) (23,227) 23,227 17,653

Indirect Claims Handling Expenses +10% 673 1,067 (1,067) (811)

-10% (673) (1,067) 1,067 811

PRAD +10% 7,549 5,464 (5,464) (4,153)

-10% (7,549) (5,464) 5,464 4,153

<------------Increase/(decrease)--------------->

104

14730-X




Sensitivities (cont'd.)

* impact on equity reflects adjustments for tax, when applicable

Claim Development Table

The following tables show the estimate of cumulative incurred claims, including both claims

notified and IBNR for each successive accident period at reporting 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 period is greater when the

accident period 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.

The Management of the Company believes that the estimate of total claims outstanding as of

31 December 2018 are adequate. However, due to the inherent uncertainties in the reserving

process, it cannot be assured that such balances will ultimately prove to be adequate.

Impact Impact Impact Impact

Change in on gross on net on profit on

assumption liabilities liabilities before tax equity*

RM'000 RM'000 RM'000 RM'000

2017

Motor Act AY 2015-2017 Loss Ratio +20% 17,259 21,997 (21,997) (16,718)

-20% (17,259) (21,380) 21,380 16,249

Motor Others AY 2017 Loss Ratio +10% 18,072 26,244 (26,244) (19,945)

-10% (17,824) (21,448) 21,448 16,300

Non-Motor AY 2017 Loss Ratio +10% 68,763 39,254 (39,254) (29,833)

-10% (50,896) (28,908) 28,908 21,970

Indirect Claims Handling Expenses +10% 604 1,028 (1,028) (781)

-10% (604) (1,028) 1,028 781

PRAD +10% 7,214 5,261 (5,261) (3,998)

-10% (7,214) (5,261) 5,261 3,998

<------------Increase/(decrease)--------------->

105

14730-X




Claim Development Table (cont'd.)

Gross general insurance contract liabilities 2018

Prior 2011 2012 2013 2014 2015 2016 2017 2018 TotalAccident year RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At end of accident year 221,092 225,900 250,573 319,927 337,467 364,500 401,803 449,601

One year later 196,535 218,491 275,039 298,232 359,040 347,516 392,322

Two years later 185,600 206,308 268,228 290,607 350,844 342,492

Three years later 177,983 201,210 250,437 287,349 349,912

Four years later 174,818 199,640 241,723 280,690

Five years later 172,081 195,018 231,935

Six years later 164,040 186,863

Seven years later 178,328 Current estimate of cumulative

claims incurred 178,328 186,863 231,935 280,690 349,912 342,492 392,322 449,601

At end of accident year (66,857) (68,404) (78,103) (107,625) (87,568) (113,618) (145,432) (156,798)

One year later (132,063) (140,189) (157,222) (208,729) (248,442) (237,522) (270,662)

Two years later (152,569) (160,186) (185,018) (239,950) (295,397) (274,066)

Three years later (159,273) (176,761) (209,525) (251,184) (316,073)

Four years later (161,056) (181,867) (210,092) (263,185)

Five years later (162,157) (183,360) (216,430)

Six years later (162,648) (184,200)

Seven years later (166,642) Cumulative payments to date (166,642) (184,200) (216,430) (263,185) (316,073) (274,066) (270,662) (156,798)

Gross general insurance outstanding liabilities (direct and facultative) 11,686 2,663 15,505 17,505 33,839 68,426 121,660 292,803 564,087

Gross general insurance outstanding liabilities (treaty inward) 32,831

Best estimate of claim liabilities 596,918

Claim handling expenses 5,967

PRAD at 75% confidence interval 81,726 Gross general insurance contract liabilities per statements of financial position (Note 13) 684,611

106

14730-X





Net general insurance contract liabilities 2018



One year later 123,352 137,868 158,587 176,155 190,773 256,607 286,231

Two years later 121,023 129,143 152,215 171,634 189,304 253,533


Four years later 114,584 126,592 142,940 158,020

Five years later 112,575 123,431 140,775



claims incurred 106,445 121,170 140,775 158,020 185,588 253,533 286,231 321,951


One year later (85,415) (98,085) (115,460) (130,314) (137,924) (183,461) (207,900)

Two years later (98,114) (110,481) (128,322) (142,578) (157,446) (208,498)


Four years later (103,911) (118,966) (136,168) (152,585)

Five years later (104,370) (120,302) (137,358)

Six years later (104,815) (120,630)


Net general insurance outstanding liabilities (direct and facultative) 1,132 540 3,417 5,435 16,363 45,035 78,331 195,370 345,623

Net general insurance outstanding liabilities (treaty inward) 32,831

Best estimate of claim liabilities 378,454 Claim handling expenses 5,968

PRAD at 75% confidence interval 38,160

Stop loss recovery (17,947)

Net general insurance contract liabilities per statements of financial position (Note 13) 404,635

107

14730-X





Gross general insurance contract liabilities 2017



One year later 297,469 196,535 218,491 275,039 298,232 359,040 347,516

Two years later 283,844 185,600 206,308 268,228 290,607 350,844


Four years later 258,719 174,818 199,640 241,723

Five years later 246,172 172,081 195,018



claims incurred 221,631 164,040 195,018 241,723 287,349 350,844 347,516 401,803


One year later (145,219) (132,063) (140,189) (157,222) (208,729) (248,442) (237,522)

Two years later (164,223) (152,569) (160,186) (185,018) (239,950) (295,397)

Three years later (182,266) (159,273) 176,761 (209,525) (251,184)

Four years later (190,640) (161,056) (181,867) (210,092)

Five years later (201,360) (162,157) (183,360)

Six years later (202,735) (162,647)


Gross general insurance outstanding liabilities (direct and facultative) 15,480 1,393 11,658 31,631 36,165 55,447 109,994 256,371 518,139

Gross general insurance outstanding liabilities (treaty inward) 28,599 Best estimate of claim liabilities 546,738


PRAD at 75% confidence interval 77,149 Gross general insurance contract liabilities per statements of financial position (Note 13) 629,254

108

14730-X





Net general insurance contract liabilities 2017



One year later 122,605 123,352 137,868 158,587 176,155 190,773 256,607

Two years later 120,212 121,023 129,143 152,215 171,634 189,304


Four years later 116,153 114,584 126,592 142,940

Five years later 113,704 112,575 123,431



claims incurred 107,358 105,743 123,431 142,940 164,212 189,304 256,607 294,262


One year later (85,718) (85,415) (98,085) (115,460) (130,314) (137,924) (183,461)

Two years later (96,694) (98,114) (110,481) (128,322) (142,578) (157,448)


Four years later (104,087) (103,911) (118,966) (136,168)

Five years later (104,591) 104,370 (120,304)

Six years later (105,489) (104,817)


Net general insurance outstanding

liabilities (direct and facultative) 1,248 926 3,127 6,772 14,607 31,856 73,146 170,181 301,863

Net general insurance outstanding liabilities (treaty inward) 28,602

Best estimate of claim liabilities 330,465


PRAD at 75% confidence interval 33,188 Net general insurance contract liabilities per statements of financial position (Note 13) 369,022

109

14730-X



31. Financial risks

As a result, the Company is exposed to the financial risks that:

-

-

(i)

(ii)

(iii)

(iv) Currency risk arising from adverse changes in exchange rates;

(v)

(vi)

Credit risk

Interest rate risk, defined as the risk of adverse changes in the market value of the

assets or in the value of liabilities due to change in the level of interest rates in the

market;

Property risk arising from changes in the level of property market prices. Exposure to

property risk arises from property asset positions; and

Currency risk arising from adverse changes in exchange rates.

The Company is exposed to credit risks related to investment assets and also arising from

other counterparties (i.e. reinsurance). Similarly to financial risk, the Company has to ensure

that the value of assets do not fall below the value of insurance obligations.

The Company invests collected premiums in financial assets, with the purpose of honouring

future promises to policyholders and generating value for its shareholders.

Cash from maturing bonds is reinvested at unfavourable market conditions, typically

lower interest rates.

For its business, the Company has to ensure that the benefits can be paid on timely basis

when claims occur. In more detail, the Company is exposed to:

Equity risk arising from the risk of adverse changes in the market value of the assets or

in the value of liabilities due to changes in the level of equity market prices which can

lead to financial losses;

Equity volatility risk arising from the changes in the volatility of equity markets. Exposure

to equity volatility is typically related to equity option contracts;

Invested assets do not perform as expected because of falling or volatile market prices;

110

14730-X



31. Financial risks (cont'd.)

Credit risk (cont'd.)

Credit risks include the following two categories:

-

-

Credit exposure

2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

LAR:

Fixed and call deposits - 588,634 - 578,788

Other receivables - 70,095 - 64,959

Cash and bank balances - 21,247 - 15,938

Financial assets at amortised

cost:

Fixed and call deposits 661,125 - 639,259 -

Other receivables 112,382 - 101,973 -

Cash and bank balances 20,308 - 16,789 -



Papers - 9,940 - -

Debt securities - 334,595 - -

Unit trust funds - 61,049 - 354,352


Debt securities 369,055 - - -

Unit trust funds 6,601 - 212,560 -

Reinsurance assets 366,250 366,253 366,250 366,253

Insurance receivables 110,137 179,464 110,137 179,464

1,645,858 1,631,277 1,446,968 1,559,754

Spread widening risk, defined as the risk of adverse changes in the market value of

assets due to change in the market value of non-defaulted credit assets. The decrease

in the market value of an asset due to spread widening can be linked either to the

market’s assessment of the creditworthiness of the specific obligor (often implying also a

decrease in rating) or to market-wide systemic reduction in the price of credit assets;

and

Default risk, defined as the risk of incurring in losses because of the inability of

counterparty to honour its financial obligations.

The table below shows the maximum exposure to credit risk for the components on the

statements of financial position.

Group Company

111

14730-X




Credit exposure (cont'd.)

Investment

grade Not Rated Total

RM'000 RM'000 RM'000

Group

2018

Financial assets at amortised cost:

Fixed and call deposits 649,625 11,500 661,125

Other receivables - 112,382 112,382

Cash and bank balances 20,199 109 20,308


Debt securities 333,609 35,446 369,055

Unit trust funds - 6,601 6,601

Reinsurance assets 62,505 303,745 366,250

Insurance receivables 6,042 104,095 110,137

1,071,980 573,878 1,645,858

Past-due

Investment but not

grade Not Rated impaired Total

RM'000 RM'000 RM'000 RM'000

Group

2017

LAR:

Fixed and call deposits 522,634 66,000 - 588,634


Cash and bank balances 20,754 493 - 21,247



Papers - 9,940 - 9,940

Debt securities 289,190 45,405 - 334,595

Unit trust funds - 61,049 - 61,049

Reinsurance assets 203,812 161,341 - 365,153

Insurance receivables (before

collective impairment) 8,069 156,289 18,582 182,940

1,044,459 604,882 18,582 1,667,923

The table below provides information regarding the credit risk exposure of the Group and the

Company by classifying assets according to the Company's credit ratings of counterparties.

impaired

Neither past-due nor

112

14730-X




Credit exposure (cont'd.)

Investment

grade Not Rated Total

RM'000 RM'000 RM'000

Company

2018


Fixed and call deposits 627,759 11,500 639,259

Other receivables - 101,973 101,973

Cash and bank balances 16,680 109 16,789


Unit trust funds - 332,646 332,646


Insurance receivables 6,042 104,095 110,137

712,986 854,068 1,567,054

Past-due

Investment but not

grade Not Rated impaired Total

RM'000 RM'000 RM'000 RM'000

Company

2017

LAR:

Fixed and call deposits 512,788 66,000 - 578,788


Cash and bank balances 15,445 493 - 15,938


Unit trust funds - 354,352 - 354,352

Reinsurance assets 204,912 161,341 - 366,253

Insurance receivables (before

collective impairment) 8,069 156,289 18,582 182,940

741,214 837,704 18,582 1,597,500

Neither past-due nor

impaired

113

14730-X




Credit exposure by credit rating (cont'd.)

AAA AA A BBB to B Not rated Total

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Group

2018

Financial assets at amortised cost:Fixed and call deposits 283,521 249,797 116,307 - 11,500 661,125

Other receivables - - - - 112,382 112,382

Cash and bank balances 1,963 3,858 14,378 - 109 20,308

Financial assets at FVTPL

Debt securities 81,852 194,790 56,967 - 35,446 369,055

Unit trust funds - - - - 6,601 6,601

Reinsurance assets - 3 56,083 6,419 303,745 366,250

Insurance receivables - - 5,503 539 104,095 110,137 367,336 448,448 249,238 6,958 573,878 1,645,858

The table below provides information regarding the credit risk exposure of the Group and the Company by classifying assets according to the

Rating Agency of Malaysia's ("RAM"), Malaysian Rating Corporation Berhad ("MARC"), A.M. Best Company ("A.M. Best") and Standards &

Poor's ("'S&P") credit ratings of counterparties. AAA is the highest possible rating.

114

14730-X






RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Group

2017

LAR:

Fixed and call deposits 275,544 43,289 203,801 - 66,000 588,634

Other receivables - - - - 104,365 104,365 Cash and bank balances 2,310 6,165 12,279 - 493 21,247


Malaysian Government Papers - - - - 9,940 9,940

Debt securities 77,615 175,273 36,302 - 45,405 334,595

Unit trust funds - - - - 61,049 61,049

Reinsurance assets 485 713 203,099 615 161,341 366,253

Insurance receivables - - 8,069 - 171,395 179,464 355,954 225,440 463,550 615 619,988 1,665,547

115

14730-X






RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Company

2018




Cash and bank balances 1,963 339 14,378 - 109 16,789

Financial assets FVTPL

Unit trust funds - - - - 332,646 332,646

Reinsurance assets - 3 56,083 6,419 303,745 366,250

Insurance receivables - - 5,503 539 104,095 110,137 277,160 236,597 192,271 6,958 854,068 1,567,054

2017

LAR:



Cash and bank balances 2,310 856 12,279 - 493 15,938


Unit trust funds - - - - 354,352 354,352

Reinsurance assets 485 713 203,099 615 161,341 366,253

Insurance receivables - - 8,069 - 171,395 179,464 272,738 40,613 427,248 615 852,810 1,594,024

116

14730-X





Not credit Credit

impaired impaired Total

RM'000 RM'000 RM'000

As at 1 January 2018 177,046 23,740 200,786

Reduction (53,720) (18,968) (72,688)

As at 31 December 2018 123,326 4,772 128,098

Allowance for ECL

As at 31 December 2017, as previosly stated 3,476 17,846 21,322

Effect from adoption of MFRS 9 7,857 2,489 10,346

As at 1 January 2018, restated 11,333 20,335 31,668

Reversal, net (2,918) (10,789) (13,707)

As at 31 December 2018 8,415 9,546 17,961

Aging analysis of insurance receivables:

2017

RM'000

Neither past-due nor impaired 164,358

Past-due but not impaired 18,582

Past-due and impaired 17,846

Total 200,786

It is the Group and the Company's policy to monitor and update current 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

attributable risk ratings are assessed and updated regularly.

During the year, there were no significantly adverse credit risk exposures.

The Group and the Company actively manages its product mix to ensure that there is no

significant concentration of credit risk.

Gross carrying amount

The table below shows the gross insurance receivables and the movement of allowance

for ECL after the adoption of MFRS 9 in 2018. The comparative information are under

MFRS 139.

117

14730-X





2018 2017

RM'000 RM'000

(i) Individual allowance for impairment

At 1 January 17,846 16,986

(Reversal)/charge for the year (16,817) 860

At 31 December 1,029 17,846

(ii) Collective allowance for impairment

At 1 January 3,476 2,776

Charge for the year 13,456 700

At 31 December 16,932 3,476

Liquidity risk

Liquidity is defined as the uncertainty, emanating from business operations, investment or

financial activities, over the ability of the Company to meet payment obligations in full and

timely manner, in a current or stressed environment. This could include meeting

commitments only through accessing credit markets at unfavourable conditions or through

the sales of financial assets, incurring in additional costs due to liquidity of (or difficulties in

liquidating) the assets.

At 31 December 2018, there are impaired insurance receivables of approximately RM1.0

million (2017: RM17.9 million). For assets to be classified as "past-due and impaired",

contractual payments must be in arrears for more than twelve (12) months. No collateral is

held as security for any past due or impaired assets.

The Group and the Company records impairment allowance for insurance receivables in a

separate allowance account. A reconciliation of the allowance for impairment losses for

insurance receivables is as follows:

118

14730-X




Liquidity risk (cont'd.)

Maturity profiles

The table below summarises the maturity profile of the financial assets, financial liabilities,

reinsurance assets and insurance contract liabilities of the Group and 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

from the analysis as they are not contractual obligations.

As far as investment process is concerned, the Company identified liquidity risk as the main

risks connected with investments. As a result, the Company asset allocations, portfolio limit

structures and maturity profiles of assets are governed by its Investment Policy to ensure

sufficient funding is available to meet insurance and investment contracts obligations.

The Company's treaty reinsurance contracts contain clauses permitting the Company to call

for funding to meet claims payment should claim events exceed a specified amount.

119

14730-X




Maturity profiles (cont'd.)

Carrying More than No maturity

value Up to a year 1-5 years 5 years date Total

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Group

2018

Investment securities:Financial assets at amortised cost 661,125 624,625 36,500 - - 661,125

Financial assets at FVTPL 407,696 12,243 130,238 226,573 38,642 407,696

Reinsurance assets - claim liabilities 279,976 158,945 108,354 12,677 - 279,976

Insurance receivables 110,137 110,137 - - - 110,137 Other receivables 111,275 111,275 - - - 111,275

Cash and bank balances 20,308 - - - 20,308 20,308 1,590,517 1,017,225 275,092 239,250 58,950 1,590,517

Insurance contract liabilities - claim liabilities 684,611 413,327 256,935 14,349 - 684,611

Insurance payables 59,570 59,570 - - - 59,570

Other payables 62,951 62,951 - - - 62,951 807,132 535,848 256,935 14,349 - 807,132

120

14730-X







RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Group

2017

Investment securities:

Fixed and call deposits 588,634 583,634 5,000 - - 588,634 AFS financial assets 440,556 4,992 110,314 226,626 98,624 440,556


Insurance receivables 179,464 179,464 - - - 179,464

Other receivables 103,443 103,443 - - - 103,443 Cash and bank balances 21,247 - - - 21,247 21,247

1,593,576 1,001,679 230,701 241,325 119,871 1,593,576



Other payables 57,819 57,819 - - - 57,819 825,727 563,959 244,895 16,873 - 825,727

121

14730-X







RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Company

2018


Financial assets at amortised cost 639,259 602,759 36,500 - - 639,259

Financial assets at FVTPL 364,686 - - - 364,686 364,686



Other receivables 100,867 100,867 - - - 100,867 Cash and bank balances 16,789 - - - 16,789 16,789

1,511,714 972,708 144,854 12,677 381,475 1,511,714



Other payables 60,771 60,771 - - - 60,771 804,952 533,670 256,933 14,349 - 804,952

122

14730-X







RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Company

2017


Fixed and call deposits 578,788 573,788 5,000 - - 578,788

AFS financial assets 389,324 10,000 1,245 - 378,079 389,324



Other receivables 98,307 98,307 - - - 98,307

Cash and bank balances 15,938 - - - 15,938 15,938 1,522,053 991,705 121,632 14,699 394,017 1,522,053



Other payables 57,682 57,682 - - - 57,682 825,590 563,822 244,895 16,873 - 825,590

123

14730-X





Current Non-current Total

RM'000 RM'000 RM'000

Group

2018

Property and equipment - 8,485 8,485

Investment properties - 6,939 6,939

Intangible assets - 11,279 11,279

Investment securities -

Financial assets at amortised cost 624,625 36,500 661,125

Financial assets at FVTPL 12,243 395,453 407,696


Insurance receivables 110,137 - 110,137

Other receivables 112,382 - 112,382

Deferred tax assets - 4,097 4,097

Cash and bank balances 20,308 - 20,308

Total assets 1,124,914 583,784 1,708,698

Insurance contract liabilities 696,380 271,284 967,664

Insurance payables 59,570 - 59,570

Tax payable 5,153 - 5,153

Other payables 78,811 - 78,811

Total liabilities 839,914 271,284 1,111,198

2017





LAR 583,634 5,000 588,634

AFS 4,992 435,564 440,556






Total assets 1,129,869 594,450 1,724,319

The table below summarises the current and non-current portions of the assets and liabilities

presented in the statements of financial position.

124

14730-X






RM'000 RM'000 RM'000

Group

2017






Company

2018





Financial assets at amortised cost 602,759 36,500 639,259

Financial assets at FVTPL - 364,686 364,686






Total assets 1,076,877 553,017 1,629,894






125

14730-X






RM'000 RM'000 RM'000

Company

2017





LAR 573,788 5,000 578,788

AFS 10,000 379,324 389,324






Total assets 1,114,586 538,210 1,652,796






Market risk

(i)

(ii)

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.

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.

The Company manages its subsidiary's market risk in the same manner with the above risk

management practices and policies.

126

14730-X




Currency risk

Interest rate/profit yield risk

The Group and the Company does not engage in derivative transaction.

As the Group's and the Company’s main foreign exchange risk from recognised assets and

liabilities arises from reinsurance and investment 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 Group and the Company has no significant

concentration of foreign currency 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 rates/profit yield.

The Group and the Company is exposed to interest rate risk primarily through its investments

in fixed income securities and deposits placements. Interest rate risk is managed by the

Group and the Company on an ongoing basis.

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 Group's and the Company’s primary transactions are carried out in Ringgit Malaysia

(RM) and its exposure to foreign exchange risk arises principally with respect to United State

Dollar (USD).

As the Group's and the Company’s businesses are conducted primarily in Malaysia, the

Group's and Company’s financial assets are also primarily maintained in Malaysia as required

under the Financial Services Act 2013, and hence, primarily denominated in the same

currency (the local RM) as its insurance contract liabilities, the main foreign exchange risk

from recognised assets and liabilities arises from transactions other than those in which

insurance contract liabilities are expected to be settled.

127

14730-X




Change

in basis

pointsGroup Company

RM'000 RM'000

2018 - impacting profit or loss

Debt securities +25 / -25 (923)/923 -

2017 - impacting equity


Papers +25 / -25 (25/)/25 -

Debt securities +25 / -25 (832)/832 -

Price risk

The Group and the Company has no significant concentration of interest rate/profit yield risk.

The sensitivity analysis of the Group's and the Company's fixed income securities is as follows:

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), irregardless whether those changes are caused by factors specific to

the individual financial instruments or its issuer or factors affecting similar financial instruments

traded in the market.

The Group's and 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.

Increase/(decrease)

Sensitivity of changes

in fair value ofinvestment securities

128

14730-X




Price risk (cont'd.)

Changes

in variable profit or loss * equity *

2018 2017

% RM'000 RM'000

Group

Market indices:

Stock exchange +10% 2,937 7,298

Stock exchange -10% (2,937) (7,298)

Changes

in variable profit or loss * equity *

2018 2017

% RM'000 RM'000

Company

Market indices:

Stock exchange +10% 11,562 5,333

Stock exchange -10% (11,562) (5,333)

* Impact reflects adjustments for tax, when applicable.

Impact on

<--Increase/(decrease)-->

Impact on

The Group and the Company is exposed to equity price risk arising from investments held by

the Group and the Company and classified in the statements of financial positions as

financial assets at FVTPL that comprises quoted equities and unit trusts. Prior to 1 January

2018, these investments are classified as AFS financial assets.

The analysis below is performed for reasonably possible movements in equity price with all

other variables held constant, showing the impact of statements of comprehensive income

and equity (due to changes in fair value of available-for-sale financial assets).

<--Increase/(decrease)-->

129

14730-X




Operational risks

32. Fair value hierarchy

(a) Level 1 :

(b) Level 2 :

(c) Level 3 :

Operational risk is the risk of loss arising from inadequate or failed internal processes,

personnel or systems, or from external events. Losses from events such as fraud, litigation,

damages to the Company’s premises, cyber-attack and failure to comply with regulations are

therefore covered in the definition. It also includes financial reporting risk but excludes

strategic and reputational risks.

Although ultimate responsibility for managing the risks sits in the first line, the so-called risk

owners, the Risk Management Function with its methodologies and processes ensures an

early identification of the most severe threats to the Company. In doing so, it provides

management at all levels with a holistic view of the broad operational risk spectrum that is

essential for prioritizing actions and allocation of resources in the most risk related critical

areas.

The target is achieved by adopting methodologies and tools in line with industry best

practices and by establishing a strong dialogue with the first line of defence.

Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Inputs other than quoted prices included within Level 1 that are observable for

the asset or liability, either directly (ie. as prices) or indirectly (ie. derived from

prices).

Inputs for the asset or liability that are not based on observable market data

(unobservable inputs).

To further strengthen the internal control systems and in addition to the usual risk owners’

responsibilities for managing their risks on day to day basis, various company-wide key

initiatives and action plans were developed to address the key operational risks identified.

The progress of these initiatives and plans are monitored closely on regular basis and

updated to the Risk Management Committee.

The table below analyses those financial instruments carried at fair value by their valuation

methods and non-financial assets which are carried at cost in the statements of financial

position, of which their fair value are disclosed. The different levels have been defined as

follows:

130

14730-X



32. Fair value hierarchy (cont'd.)

(i) Financial assets carried at fair value

Level 1 Level 2 Level 3 Total

RM'000 RM'000 RM'000 RM'000

Group

2018

Quoted equity securities 32,040 - - 32,040

Debt securities - 369,055 - 369,055

Quoted unit trust funds 6,601 - - 6,601

2017



Papers - 9,940 - 9,940

Debt securities - 334,595 - 334,595

Quoted unit trust funds 61,049 - - 61,049

Company

2018


Unit trust funds 120,086 212,560 - 332,646

2017


Unit trust funds 142,900 211,452 - 354,352

(ii) Non-financial assets carried at cost but with fair value disclosed

Level 1 Level 2 Level 3 Total

RM'000 RM'000 RM'000 RM'000

Group and Company

2018

Lands and buildings - - 5,020 5,020

Investment properties - - 8,350 8,350

2017

Lands and buildings - - 4,970 4,970

Investment properties - - 9,400 9,400

131

14730-X



32. Fair value hierarchy (cont'd.)

(ii) Non-financial assets carried at cost but with fair value disclosed (cont'd.)

Movement in Level 3 fair value hierarchy is as follows:

Lands and Investment

buildings properties

RM'000 RM'000

As at 1 January 2017 4,950 9,400

Fair value increase 20 -

As at 31 December 2017 4,970 9,400

Fair value increase/(decrease) 50 (1,050)

As at 31 December 2018 5,020 8,350

(a) Key assumption used

2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

Price per square

metres 4 - 9 4 - 9 6 - 10 5 - 10

(b) Sensitivity analysis

2018 2017 2018 2017

RM'000 RM'000 RM'000 RM'000

Increase in price per

square metres

by 10% 4 - 10 4 - 10 6 - 11 6 - 11

Decrease in price per

square metres

by 10% (3) - (8) (3) - (8) (5) - (9) (5) - (9)

The significant unobservable valuation input used in the valuation of property and

equipment and investment properties is as follows:

Investment properties

Significant increase/(decrease) in estimated price per square metres in isolation

would result in significantly higher/(lower) fair value as follows:

Lands and buildings Investment properties

Lands and buildings

<------------------Increase/(decrease)-------------------->

132

14730-X



33. Non-controlling interests

2018 2017

RM'000 RM'000

Group

At beginning of year 71,385 64,627

Share of profit for the year 3,918 1,551

Share of other comprehensive income - 7,129

Creation of units to non-controlling interests, net 4,851 1,476

Distribution paid (3,537) (3,398)

At end of year 76,617 71,385

Proportion of equity interest held by non-controlling interests:

Country of

incorporation

and 2018 2017

Name of the subsidiaries operation % %

OPUS Institutional Income Fund 2 Malaysia 33.13 32.30

United Institutional Income Fund 2 Malaysia 1.51 1.51

Nomura i-Income Fund Malaysia 2.56 0.81

2018 2017

RM'000 RM'000

Accumulated balances of non-controlling interests:

OPUS Institutional Income Fund 2 72,621 69,711

United Institutional Income Fund 2 1,013 1,007

Nomura i-Income Fund 2,983 667

76,617 71,385

Profit allocated to non-controlling interests:

OPUS Institutional Income Fund 2 3,703 1,539

United Institutional Income Fund 2 51 11

Nomura i-Income Fund 164 1

3,918 1,551

Financial information of the subsidiaries that have material non-controlling interests are

provided below:

133

14730-X



33. Non-controlling interests (cont'd.)

Opus Institutional Income Fund 2

2018 2017

RM'000 RM'000

Summarised statement of

comprehensive income:

Investment income 11,842 11,744

Management expenses (664) (678)

Profit before taxation 11,178 11,066

Taxation - -

Net profit for the year, representing

total comprehensive income for the year 11,178 11,066

Profit attributable to non-controlling interests 3,703 1,539

2018 2017

RM'000 RM'000

Summarised statement of financial position

as at 31 December:

Investments 218,309 211,383

Cash and bank balances 5 4,251

Other receivables/(payables) 905 (69)

Total equity 219,219 215,565

Attributable to:

Equity holders of parent 146,598 145,854

Non-controlling interest 72,621 69,711

219,219 215,565

134

14730-X




Opus Institutional Income Fund 2

2018 2017

RM'000 RM'000

Summarised cash flow information

for year ended 31 December:

Operating activities 14,794 9,134

Financing activities (5,497) (7,067)

Net increase in cash

and cash equivalents 9,297 2,067

United Institutional Income Fund 2

2018 2017

RM'000 RM'000






Taxation - -



Profit attributable to non-controlling interests 51 11

The summarised financial information of these subsidiaries are provided below. This

information is based on amounts before inter-company eliminations. (cont'd.)

135

14730-X




United Institutional Income Fund 2

2018 2017

RM'000 RM'000


as at 31 December:


Other receivables

Cash and bank balances 158 5,659

Other receivables/(payables) 830 (34)

Total equity 66,978 66,582

Attributable to:


Non-controlling interest 1,013 1,007

66,978 66,582

2018 2017

RM'000 RM'000



Operating activities (1,012) 16,862

Financing activities (2,975) (18,015)

Net decrease in cash

and cash equivalents (3,987) (1,153)



136

14730-X




Nomura i-Income Fund

2018 2017

RM'000 RM'000






Taxation - -



Profit attributable to non-controlling interests 164 1

2018 2017

RM'000 RM'000


as at 31 December:


Cash and bank balances 3,356 5,246

Other receivables/(payables) 6,493 (34)

Total equity 116,472 82,540

Attributable to:


Non-controlling interest 2,983 667

116,472 82,540



137

14730-X




Nomura i-Income Fund

2018 2017

RM'000 RM'000



Operating activities (22,607) (73,087)

Financing activities 27,527 78,323

Net increase in cash and cash equivalents 4,920 5,236

34. Regulatory capital requirement

2018 2017

RM'000 RM'000

Eligible Tier 1 Capital

Share capital 100,200 100,200

Retained Earnings 420,676 394,701

520,876 494,901

Tier 2 Capital

Fair value reserves - 4,526

Amount deducted from Capital

Intangible assets (11,279) (4,650)


Total Capital Available 505,500 491,841



Company

The Company is required to comply with the regulatory capital requirements prescribed in the

RBC Framework which is imposed by the Ministry of Finance. Under the RBC Framework

guidelines issued by Bank Negara Malaysia, insurance companies are required to satisfy a

minimum capital adequacy ratio of 130%. As at the reporting date, the Company has met

with the minimum capital adequacy ratio of 130%.

The capital structure of the Company, as prescribed under the RBC Framework is provided

below:

138

14730-X



35. Updates to legal case

MYCC's Proposed Decision against PIAM and its 21 members

The MYCC had investigated PIAM (Persatuan Insurans Am Malaysia) together with its 22

members, including MPI Generali, for an alleged infringement of the prohibition under section

4(2)(a) of the Competition Act 2010 (“the Act”) for fixing parts trade discount and labour rates

for PARS (PIAM Authorised Repairers Scheme) workshops.

On 23 February 2017, the MYCC issued its proposed decision to impose a financial penalty

on all 22 general insurance companies amounting to RM213,454,814. MPI Generali’s share

of the penalty is amounting to RM4,089,138.

Following this decision, MPI Generali and other insurance companies, with the

recommendation of PIAM, have made oral representation on 29 January 2018 to collectively

challenge the proposed decision and penalty. Bank Negara Malaysia (“BNM”) has made an

oral representation on 26 February 2018. The oral representation session by BNM is a closed

session and no counsels and insurance representatives from any other insurance companies

are allowed to be present.

On 21 February 2019, the cousel for PIAM made their oral representations to the MYCC

Commissioners and it was treated as de novo hearing (fresh hearing - starting from the

beginning). All previous submissions of the insurers' counsels were allowed to be adopted

and will form part of the record of evidence. This matter is fixed for further oral

representations on May and June 2019.

Management has also sought legal opinion from the general counsel (acting on behalf of a

group of insurance companies including the Company) on this matter. The Company will take

all necessary and appropriate actions to defend its position and at all times maintain that the

Company acted in accordance with the directives issued by the regulator. As such, no

provision has been made in the financial statements as at 31 December 2018.

139

14730-X



36. Comparative

As

previously Re- As

stated classification restated

RM'000 RM'000 RM'000

Group

Statements of Financial Position

At 1 January 2017

Assets

Other receivables 68,414 38,167 106,581

Liabilities

Other payables 43,643 38,167 81,810

At 31 December 2017

Assets


Liabilities

Other payables 39,074 34,270 73,344

Company

Statements of Financial Position

At 1 January 2017

Assets


Liabilities

Other payables 43,530 38,167 81,697

At 31 December 2017

Assets


Liabilities

Other payables 38,936 34,270 73,206

Certain amounts in the comparative financial statements and notes disclosures have been

reclassified to conform with the current year's presentation. The reclassification is as follows:

The above reclassification relates to cash collateral received from policyholders on bond

policies issued which was previously set-off against amounts due to the policyholders in other

payables.

140

m pi g enerali i nsurans b erhad · executive officer of hartford life insurance kk. between 2003...

Documents