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A VISION       COMMITMENT      EMPOWERING       ENSURING        ENHANCING        FINANCIAL
                 TO SERVE        TO LEAD          GROWTH        SUSTAINABILITY  GOVERNANCE       STATEMENTS        211

            Notes to the fiNaNcial statemeNts







            45.   INSURaNCE RISkS
                 The principal underwriting risk to which the Group and the Bank is exposed is credit risk in connection with credit, guarantee
                 and political risk insurance underwriting activities. Management has established underwriting processes and limits to manage
                 this risk by performing credit review on its policy holders and buyers.
                 The underwriting function undertakes qualitative and quantitative risk assessments on all buyers and clients before deciding
                 on an approved insured amount. Policies in riskier markets may be rejected or charged at a higher premium rate accompanied
                 by stringent terms and conditions to commensurate the risks.

                 Concentration limits are set to avoid heavy concentration within a specific region or country. Maximum limits are set for buyer
                 credit limits and client facility limits for prudent risk mitigation.
                 For the monitoring of buyer risks, the Group and the Bank takes into consideration both qualitative and quantitative factors and
                 conducts regular reviews on the buyers’ credit standing and payment performance to track any deterioration in their financial
                 position that may result in a loss to the Group and the Bank.

                 On country risk, the Group and the Bank periodically reviews the economic and political conditions of the insured markets so
                 as to revise its guidelines, wherever appropriate. In order to mitigate the insurance risk, the Group and the Bank may cede or
                 transfer the risk to another insurer company. The ceding arrangement minimises the net loss to the Group and the Bank arising
                 from potential claims.
                 Key assumptions

                 The sensitivity analysis is based upon the assumptions set out in the actuarial report and is subject to the reliance’s and
                 limitations contained within the report. One particular reliance is that the net sensitivity results assume that all reinsurance
                 recoveries are receivable in full.

                 The sensitivity items shown are independent of each other. In practice, a combination of adverse and favourable changes
                 could occur.

                 The sensitivity results are not intended to capture all possible outcomes. Significantly more adverse or favourable results are
                 possible.
                 sensitivity analysis

                 The independent actuarial firm engaged by the Group and the Bank re-runs its valuation models on various bases. An analysis
                 of  sensitivity  around  various  scenarios  provides  an  indication  of  the  adequacy  of  the  Group’s  and  the  Bank’s  estimation
                 process in respect of its Insurance contracts and Takaful certificates. The table presented below demonstrates the sensitivity of
                 the  Insurance  contract  liabilities  and  Takaful  certificates  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.

                                                                                                    2022        2021
                                                                                                     Net         Net
                                                                                                  rM’000      rM’000
                 Estimated claim liabilities (Note 24)                                            38,326       43,051
   208   209   210   211   212   213   214   215   216   217   218