Page 219 - EXIM-Bank_Annual-Report-2023

Management Discussion and Analysis Ensuring Sustainability Commitment to Lead Upholding Accountability Financial Statements 217

Notes to the fiNaNcial statemeNts

44. INSurANCE rISkS (cont’d)
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. 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.
2023 2022
Net Net
rM’000 rM’000
Estimated Liabilities for incurred claims (“LIC”) 26,824 38,326

Claim liability sensitivity analysis

a. Change in claim costs
Assumed 3% of the total Comprehensive Policy Shipments and Comprehensive Takaful Shipments policies, and 6% of the
total Domestic Credit Insurance and Domestic Credit Takaful policies as the expected claim frequency for 2023. Changing
this by 10% gives the following results.
2023 2022
Net Net
rM’000 rM’000 rM’000 rM’000
high Low high Low
+10% -10% +10% -10%
Estimated LIC 26,874 26,774 38,713 37,940