Page 134 - EXIM-Bank_Annual-Report-2023

EXIM BANk MALAySIA
132 A Vision to Serve Empowering Growth Management Discussion and Analysis
ANNUAL REPORT 2023
Notes to the fiNaNcial statemeNts

2. MATErIAL ACCouNTING PoLICy INForMATIoN (cont’d)
2.4 Summary of material accounting policy information (cont’d)

(m) Insurance contracts/takaful certificates and reinsurance contracts (cont’d)
(ii) Measurement (cont’d)
General Measurement Model (‘’GMM’’) (cont’d)

- On loss component, the allocation of the reversal of the loss component and subsequent changes to the
Fulfilment Cash Flows (“FCF”) will use the same allocation method that would be applied for the systematic
allocation of CSM, that is to be based on straight-line allocation over the passage of time would be used for
contract groups that have a fixed policy limit over the coverage period.
- For discount rate, the Bank is using the bottom-up approach as government yield curves are readily available
and is a good foundation for determining a risk-free yield curve.
- The currency of the risk-free yield curve used to determine discount rates for a group of insurance contracts
shall also take into consideration the currency denomination of the group of insurance contracts.
Premium Allocation Approach (“PAA”)

For policies/certificates with contract boundary of less than one (1) year coverage period and that pass the
PAA eligibility test.

Upon initial recognition of LRC, the Bank will amortise the insurance acquisition cash flows over the coverage
period. Amortising the insurance acquisition cash flows would lead to more stable changes in the LRC and
profit or loss figures. The Bank is not required to adjust the LRC to reflect the time value of money and the
effect of financial risk.
On subsequent measurement, the Bank will allocate insurance/takaful revenue to the period for services
provided on the basis of passage of time. This will be applicable for most contracts considering that the risk
coverage period is one year or less. Judgments are needed to determine if the expected pattern of release of
risk differs significantly from the passage of time. If passage of time does not reflect the services provided in
each period, the Bank will use different proxy on a case-by-case basis to allocate based on expected timing of
incurred insurance/takaful service expenses.
(iii) Presentation and disclosure

Group and the Bank aggregates insurance/takaful and reinsurance contracts held and these are presented
separately in the statement of financial position as
- Portfolios of insurance contracts/takaful certificates issued;
- Portfolios of reinsurance contracts held that are assets;

The portfolios referred above are those established at initial recognition in accordance with the MFRS 17
requirements.