Page 215 - EXIM-Bank_Annual-Report-2022

A VISION COMMITMENT EMPOWERING ENSURING ENHANCING FINANCIAL
TO SERVE TO LEAD GROWTH SUSTAINABILITY GOVERNANCE STATEMENTS 213

Notes to the fiNaNcial statemeNts

45. INSURaNCE RISkS (cont’d.)
Claim liability sensitivity analysis (cont’d.)

d. Change in PRaD %
Assumed a claim Provision of Risk Margin for Adverse Deviation (“PRAD”) of 25%. Changing this by 10% (to 27.5% and
22.5% respectively) gives the following result:

2022 2021
Net Net
rM’000 rM’000 rM’000 rM’000
high Low high Low
+10% -10% +10% -10%
Estimated claim liabilities 39,093 37,560 43,911 42,189

2022 2021
Net Net
rM’000 rM’000
Estimated premium 8,601 12,061

Premium/contribution liability sensitivity analysis

a. Change in probability of default
Management has assumed 1-year probability of default of ranging from 0.5% to 5% for short-term contracts, depending
on the type of contract. For the medium long term (“MLT”) policies, all 1-year probabilities were assumed to have a B
rating which equated to a 3.2% 1-year probability of default. Changing this rating assumption to B- rating (less trustworthy
- for the “High” Scenario) and B+- rating (more trustworthy - for the “Low” Scenario) gives the following result:

2022 2021
Net Net
high Low high Low
B- rating B+ rating B- rating BBB- rating
points points points points
Estimated premium/contribution 12,880 7,363 18,580 10,233

b. Change in recovery rates
On the premium liability front, some of the MLT policies have reinsurance cover. For the “High” Scenario, management
has reduce all of these by 10%. For the “Low” scenario management has increase them by 10%.

2022 2021
Net Net
high Low high Low
B- rating B+ rating B- rating BBB- rating
points points points points
Estimated premium liabilities/contribution 10,532 6,670 14,700 9,422