Syarikat Takaful Malaysia Am Berhad (Company No. 201701032316 (1246486-D)) (Incorporated in Malaysia) Condensed Interim Financial Statements - unaudited for the financial period from 1 January 2020 to 30 June 2020
Syarikat Takaful Malaysia Am Berhad(Company No. 201701032316 (1246486-D))
(Incorporated in Malaysia)
Condensed Interim Financial Statements - unaudited
for the financial period from
1 January 2020 to 30 June 2020
1
Syarikat Takaful Malaysia Am Berhad(Company no. 201701032316 (1246486-D))
(Incorporated in Malaysia)
Condensed statement of financial position as at 30 June 2020 - unaudited
Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
ASSETS
Property and equipment 4,198 - 5,658 4,556 - 6,016
Right-of-use assets - - 6,960 - - 6,960
Investment properties - 10,620 2,200 - 10,620 2,200
Intangible assets 40 - 40 45 - 45
Other investments 2 139,344 367,426 506,770 141,569 371,947 513,516
Retakaful assets 3 - 455,063 455,063 - 386,272 386,272
Deferred tax assets 38,375 - 38,375 37,746 - 37,746
Current tax assets 5,524 - 5,524 7,846 - 7,846
Loans and receivables,
excluding takaful receivables 4 313,355 433,976 720,961 223,391 358,766 562,641
Takaful receivables - 60,530 60,530 - 113,717 113,717
Cash and cash equivalents 5 23,174 42,889 66,063 37,427 52,534 89,961
TOTAL ASSETS 524,010 1,370,504 1,868,144 452,580 1,293,856 1,726,920
EQUITY AND LIABILITIES
Share capital 100,000 - 100,000 100,000 - 100,000
Reserves 211,331 - 211,331 148,886 - 148,886
Total equity attributable to
owners of the Company 311,331 - 311,331 248,886 - 248,886
LIABILITIES
Takaful contract liabilities 6 - 1,225,053 1,225,053 - 1,115,115 1,115,115
Expense reserves 165,319 - 165,319 157,092 - 157,092
Takaful payables 10,159 65,748 75,907 10,092 85,700 95,792
Other payables 37,201 74,708 85,539 36,510 86,719 103,713
Current tax liabilities - 4,995 4,995 - 6,322 6,322
TOTAL LIABILITIES 212,679 1,370,504 1,556,813 203,694 1,293,856 1,478,034
TOTAL EQUITY AND LIABILITIES 524,010 1,370,504 1,868,144 452,580 1,293,856 1,726,920
The notes on pages 7 to 32 are an integral part of these financial statements.
Company
Takaful
Operator
General
Takaful
Takaful
Operator
General
Takaful Company
2Syarikat Takaful Malaysia Am Berhad(Company no. 201701032316 (1246486-D))
(Incorporated in Malaysia)
Condensed statement of profit or loss and other comprehensive income
for the period ended 30 June 2020 - unaudited
Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Operating revenue 7 7,727 397,967 405,694 6,181 383,593 389,774
Takaful operator income 183,219 - - 167,937 - -
Gross earned contributions 8(i) - 364,791 364,791 - 370,442 370,442
Contributions ceded to retakaful 8(ii) - (150,324) (150,324) - (138,386) (138,386)
Net earned contributions 8(iii) - 214,467 214,467 - 232,056 232,056
Administrative income - 40,549 40,549 - 31,198 31,198
Investment income on financial assets
not measured at fair value through
profit or loss 7,252 15,399 22,651 5,651 14,551 20,202
Investment income - others 475 537 1,012 530 1,153 1,683
Realised gains and losses - - - 135 1,489 1,624
Fair value gains and losses 103 (127) (24) 837 993 1,830
Other operating income 4 96 100 48 53 101
Other income 7,834 56,454 64,288 7,201 49,437 56,638
Gross benefits and claims paid 9 - (105,768) (105,768) - (147,807) (147,807)
Claims ceded to retakaful 9 - 40,087 40,087 - 62,541 62,541
Gross change to contract liabilities 9 - (83,368) (83,368) - (33,493) (33,493)
Change to contract liabilities ceded
to retakaful 9 - 68,613 68,613 - 20,460 20,460
Net benefits and claims 9 - (80,436) (80,436) - (98,299) (98,299)
Wakalah fee expense - (160,194) - - (167,937) -
Administrative fees (36,501) - (36,501) (35,014) - (35,014)
Expense reserves (8,227) - (8,227) (15,018) - (15,018)
Management expenses (58,521) - (58,521) (60,538) - (60,538)
Impairment losses on financial instruments - (16) (16) (62) (2,371) (2,433)
Other operating expenses (6,088) (382) (6,470) (3,148) (19) (3,167)
Other expenses (109,337) (160,592) (109,735) (113,780) (170,327) (116,170)
Total profit for the period 81,716 29,893 88,584 61,358 12,867 74,225
Profit attributable to the
Takaful Operator/participants - (29,893) (6,868) - (12,867) (12,867)
Profit before zakat and taxation 81,716 - 81,716 61,358 - 61,358
Zakat (300) - (300) (300) - (300)
Tax expense 10 (20,659) - (20,659) (14,987) - (14,987)
Profit for the year 60,757 - 60,757 46,071 - 46,071
Takaful
Operator
General
Takaful Company
Takaful
Operator
General
Takaful Company
3 Company No. 201701032316 (1246486-D)
Condensed statement of profit or loss and other comprehensive income
for the period ended 30 June 2020 (continued) - unaudited
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Profit for the year 60,757 - 60,757 46,071 - 46,071
Other comprehensive income,
net of tax
Items that may be reclassified
subsequently to profit or loss
Debt investments measured at
fair value through other
comprehensive income (FVOCI)
- net change in fair value 1,688 6,217 7,905 3,718 11,504 15,222
Other comprehensive income
attributable to participants - (6,217) (6,217) - (11,504) (11,504)
Total other comprehensive income
for the year 1,688 - 1,688 3,718 - 3,718
Total comprehensive income
for the year 62,445 - 62,445 49,789 - 49,789
The notes on pages 7 to 32 are an integral part of these financial statements.
Takaful
Operator
General
Takaful Company
Takaful
Operator
General
Takaful Company
4Syarikat Takaful Malaysia Am Berhad(Company no. 201701032316 (1246486-D))
(Incorporated in Malaysia)
30 June 2020 - unaudited
Distributable
Share Fair value Retained Total
capital reserve earnings equity
Company RM’000 RM’000 RM’000 RM’000
At 1 January 2019 100,000 855 53,607 154,462
Fair value of debt investments
measured at FVOCI - 4,690 - 4,690
Other comprehensive income
for the period - 4,690 - 4,690
Profit for the period - - 89,734 89,734
Total comprehensive income
for the period - 4,690 89,734 94,424
At 31 December 2019 / 1 January 2020 100,000 5,545 143,341 248,886
Fair value of debt investments
measured at FVOCI - 1,688 - 1,688
Other comprehensive income
for the period - 1,688 - 1,688
Profit for the period - - 60,757 60,757
Total comprehensive income
for the period - 1,688 60,757 62,445
At 30 June 2020 100,000 7,233 204,098 311,331
The notes on pages 7 to 32 are an integral part of these financial statements.
Condensed statements of changes in equity for the period ended
5Syarikat Takaful Malaysia Am Berhad(Company no. 201701032316 (1246486-D))
(Incorporated in Malaysia)
Condensed statements of cash flows for the period ended
30 June 2020 - unaudited
6 months 6 months
period period
ended ended
30.06.2020 30.06.2019
RM’000 RM’000
Cash flows from operating activities
Profit before zakat and taxation 81,716 61,358
Adjustments for:
Depreciation 935 1,247
Amortisation of intangible assets 5 -
Fair value change of fair value through profit or loss financial assets 24 (1,830)
Profit from Islamic debt securities and investment accounts (23,588) (20,578)
Dividend income from Shariah approved shares - (1,159)
Amortisation of premiums, net of accretion of discounts 476 630
Profit from Malaysian Government Islamic papers (354) (736)
Operating profit before changes in working capital 59,214 38,932
Profit received from Islamic debt securities, investment accounts
and Malaysian Government Islamic papers 22,038 19,704
Dividend income from Shariah approved shares - 1,159
Purchase of investments - (88,738)
Proceeds from sale of investments 1,580 53,285
Maturity of other investments 15,000 23,000
Increase in retakaful assets (68,791) (10,536)
Increase in receivables (105,141) (113,083)
Increase in Takaful contract liabilities 102,394 37,918
Decrease in payables (30,116) (10,438)
(3,822) (48,797)
Income taxes paid (19,500) (16,000)
Net cash used in operating activities (23,322) (64,797)
Cash flows from investing activity
Purchase of property and equipment (576) (509)
Net cash used in investing activity (576) (509)
6
Condensed statements of cash flows for the period ended
30 June 2020 (continued) - unaudited
6 months 6 months
period period
ended ended
30.06.2020 30.06.2019
RM’000 RM’000
Net decrease in cash and cash equivalents (23,898) (65,306)
Cash and cash equivalents at 1 January 89,961 192,000
Cash and cash equivalents at 30 June 66,063 126,694
The notes on pages 7 to 32 are an integral part of these financial statements.
Company No. 201701032316 (1246486-D)
7
Syarikat Takaful Malaysia Am Berhad(Company no. 201701032316 (1246486-D))
(Incorporated in Malaysia)
Notes to the condensed interim financial statements
1. Basis of preparation
(a) Statement of compliance
• Amendments to MFRS 9, Financial Instruments, MFRS 139, Financial Instruments:
Recognition and Measurement and MFRS 7, Financial Instruments: Disclosures
– Interest Rate Benchmark Reform
• Amendments to MFRS 3, Business Combination – Definition of a Business
• Amendments to MFRS 101, Presentation of Financial Statements and MFRS 108,
Accounting Policies, Changes in Accounting Estimates and Errors – Definition of Material
A Takaful Operator is required to present consolidated financial statements for itself and the
Takaful fund it manages and controls in accordance with the requirements of MFRS 10,
Consolidated Financial Statements. The statement of financial position and the statement of
profit or loss and other comprehensive income of the Takaful Operator and General Takaful
Fund are supplementary financial information presented in accordance with the requirements
of BNM and Islamic Financial Services Act 2013 in Malaysia to segregate assets, liabilities,
income and expenses of Takaful funds from its own. The statement of financial position and
the statement of profit or loss and other comprehensive income of the Takaful Operator
include only assets, liabilities, income and expenses of the Takaful Operator, excluding the
Takaful fund managed by it. The statement of financial position and the statement ofprofit or
loss and other comprehensive income of the General Takaful Fund include only the assets,
liabilities, income and expenses of the General Takaful Fund that is set up, managed and
controlled by the Takaful Operator.
The condensed interim financial statements of the Company are unaudited and have been
prepared in accordance with MFRS 134: Interim Financial Reporting issued by the
Malaysian Accounting Standard Board ("MASB"), IAS 34 Interim Financial Reporting
issued by International Accounting Standards Board and Guidelines / Circulars issued by
Bank Negara Malaysia (“BNM”) and Shariah rulings and precepts. They do not include all
of the information required for full annual financial statements, and should be read in
conjunction with the Company’s annual financial statements for the year ended 31 December
2019.
MFRSs, Interpretations and amendments effective for annual periods beginning on or
after 1 January 2020
The accounting policies and presentation adopted by the Company for the condensed interim
financial statements are consistent with those adopted in the Company's audited financial
statements for the financial year ended 31 December 2019, except for the adoption of the
following:
8
1. Basis of preparation (continued)
(a) Statement of compliance (continued)
2. Other investments30.06.2020 31.12.2019
Note RM’000 RM’000
Takaful Operator
Fair value through profit or loss ("FVTPL") (a) 16,959 16,856
Fair value through other comprehensive income ("FVOCI") (b) 122,385 124,713
139,344 141,569
General Takaful
Fair value through profit or loss ("FVTPL") (a) 5,058 15,199
Fair value through other comprehensive income ("FVOCI") (b) 362,368 356,748
367,426 371,947
Company
Fair value through profit or loss ("FVTPL") (a) 22,017 32,055
Fair value through other comprehensive income ("FVOCI") (b) 484,753 481,461
506,770 513,516
MFRSs, Interpretations and amendments effective for annual periods beginning on or after
1 January 2020 (continued)
The initial application of the abovementioned standards, amendments and interpretations do not
have any material impacts to the financial statements of the Company.
Company No. 201701032316 (1246486-D)
9
2. Other investments (continued)
(a) FVTPL financial assets
30.06.2020 31.12.2019
At fair value RM’000 RM’000
Takaful Operator
Islamic debt securities
- Unquoted in Malaysia 16,959 16,856
16,959 16,856
General Takaful
Islamic debt securities
- Unquoted in Malaysia 5,058 15,199
5,058 15,199
Company
Islamic debt securities
- Unquoted in Malaysia 22,017 32,055
22,017 32,055
Company No. 201701032316 (1246486-D)
10
2. Other investments (continued)
(b) FVOCI financial assets
30.06.2020 31.12.2019
At fair value RM’000 RM’000
Takaful Operator
Islamic debt securities
- Unquoted in Malaysia 88,296 91,536
Institutional Trust Account 22,645 22,090
Malaysian Government Islamic papers 11,444 11,087
122,385 124,713
General Takaful
Islamic debt securities
- Unquoted in Malaysia 298,218 294,174
Institutional Trust Account 58,393 57,053
Malaysian Government Islamic papers 5,757 5,521
362,368 356,748
Company
Islamic debt securities
- Unquoted in Malaysia 386,514 385,710
Institutional Trust Account 81,038 79,143
Malaysian Government Islamic papers 17,201 16,608
484,753 481,461
Company No. 201701032316 (1246486-D)
11
2. Other investments (continued)
(c) Carrying values of financial instruments
FVTPL FVOCI Company
RM’000 RM’000 RM’000
At 1 January 2019 52,956 483,143 536,099
Purchases 27,738 78,198 105,936
Maturities (49,200) (26,600) (75,800)
Disposals (1,272) (75,361) (76,633)
Dividend capitalised - 3,437 3,437
Fair value gains recorded in:
Profit or loss 1,904 - 1,904
Other comprehensive income - 6,089 6,089
Participants’ fund - 13,728 13,728
Amortisation of premiums,
net of accretion of discounts (71) (1,173) (1,244)
At 31 December 2019 / 1 January 2020 32,055 481,461 513,516
Maturities (10,000) (5,000) (15,000)
Disposals - (1,580) (1,580)
Dividend capitalised - 1,904 1,904
Fair value gains / (losses) recorded in:
Profit or loss (24) - (24)
Other comprehensive income - 2,220 2,220
Participants’ fund - 6,210 6,210
Amortisation of premiums,
net of accretion of discounts (14) (462) (476)
At 30 June 2020 22,017 484,753 506,770
(d) Fair values of financial instruments
Quoted market prices category are financial instruments that are measured in whole or in part by
reference to published quotes in an active market. A financial instrument is regarded as quoted
in an active market if quoted prices are readily and regularly available from an exchange and
published market price from print medias.
Market observable financial instruments are measured using a valuation technique based on
assumptions that are supported by prices from observable current market transactions and are
instruments for which pricing is obtained from Bond Pricing Agency Malaysia and regulatory
agency. The fair value of investments in structured products are obtained via investments
bankers and / or fund managers.
Company No. 201701032316 (1246486-D)
12
2. Other investments (continued)
(d) Fair values of financial instruments (continued)
(e) Maturity of other investments
The following investments mature after 12 months:
30.06.2020 31.12.2019
RM’000 RM’000
Takaful Operator
FVTPL financial assets 16,959 16,856
FVOCI financial assets 105,922 114,650
General Takaful
FVTPL financial assets 5,058 -
FVOCI financial assets 306,216 315,552
Company
FVTPL financial assets 22,017 16,856
FVOCI financial assets 412,138 430,202
3. Retakaful assets30.06.2020 31.12.2019
Note RM’000 RM’000
General Takaful / Company
Claims liabilities 6(a) 364,251 295,638
Contribution liabilities 6(b) 90,812 90,634
455,063 386,272
Non-market observable inputs means that fair values are determined in whole or in part using a
valuation technique based on assumptions that are neither supported by prices from observable
current market transactions in the same instrument nor are they based on available market data.
The main asset class in this category is Institutional Trust Account.
Company No. 201701032316 (1246486-D)
13
4. Loans and receivables, excluding takaful receivables
30.06.2020 31.12.2019
RM’000 RM’000
Takaful Operator
Fixed and call deposits with licensed financial institutions
with maturity more than three months
Licensed banks in Malaysia 269,266 189,160
269,266 189,160
Other receivables
Investment receivable 5,278 3,345
Due from General Takaful 26,370 19,516
Prepayment 1,473 371
Sundry receivables 10,968 10,999
44,089 34,231
313,355 223,391
General Takaful
Financing receivables
Secured financing - 5,292
Allowance for impairment - (381)
- 4,911
Fixed and call deposits with licensed financial institutions
with maturity more than three months
Licensed banks in Malaysia 422,889 343,347
422,889 343,347
Other receivables
Investment receivable 9,622 7,540
Prepayment 23 37
Sundry deposits 1,217 1,130
Sundry receivables 225 116
Due from immediate holding company - 1,685
11,087 10,508
433,976 358,766
Company No. 201701032316 (1246486-D)
14
4. Loans and receivables, excluding takaful receivables (continued)
30.06.2020 31.12.2019
RM’000 RM’000
Company
Financing receivables
Secured financing - 5,292
Allowance for impairment - (381)
- 4,911
Fixed and call deposits with licensed financial institutions
with maturity more than three months
Licensed banks in Malaysia 692,155 532,507
692,155 532,507
Other receivables
Investment receivable 14,900 10,885
Prepayment 1,496 408
Sundry deposits 1,217 1,130
Sundry receivables 11,193 11,115
Due from immediate holding company - 1,685
28,806 25,223
720,961 562,641
The following loans and receivables, excluding takaful receivables mature after 12 months:
30.06.2020 31.12.2019
RM’000 RM’000
General Takaful
Fixed and call deposits with licensed financial institutions 12,245 -
Other receivables 1,217 1,130
13,462 1,130
Company
Fixed and call deposits with licensed financial institutions 12,245 -
Other receivables 1,217 1,130
13,462 1,130
Offsetting of financial assets and financial liabilities
Company No. 201701032316 (1246486-D)
No financial assets and liabilities have been set off for presentation purposes.
15
5. Cash and cash equivalents30.06.2020 31.12.2019
RM’000 RM’000
Takaful Operator
Cash and bank balances 2,737 3,094
Fixed and call deposits with licensed financial
institutions with maturity less than three months
Licensed banks in Malaysia 20,437 34,333
23,174 37,427
General Takaful
Cash and bank balances 12,039 23,904
Fixed and call deposits with licensed financial
institutions with maturity less than three months
Licensed banks in Malaysia 30,850 28,630
42,889 52,534
Company
Cash and bank balances 14,776 26,998
Fixed and call deposits with licensed financial
institutions with maturity less than three months
Licensed banks in Malaysia 51,287 62,963
66,063 89,961
6. Takaful contract liabilities
The takaful contract liabilities comprise the following:
30.06.2020 31.12.2019
Note RM’000 RM’000
General Takaful / Company
Provision for outstanding claims (a) 614,092 530,724
Provision for unearned contributions (b) 411,580 394,340
Participants’ fund (c) 199,381 190,051
1,225,053 1,115,115
Company No. 201701032316 (1246486-D)
16
6. Takaful contract liabilities (continued)
(a) Provision for outstanding claims
Gross Retakaful Net Gross Retakaful Net
Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
General Takaful / Company
Provision for claims reported by participants 343,006 (228,635) 114,371 302,067 (190,182) 111,885
Provision for IBNR 271,086 (135,616) 135,470 228,657 (105,456) 123,201
Provision for outstanding claims 614,092 (364,251) 249,841 530,724 (295,638) 235,086
Movement of provision for outstanding claims:
At 1 January 9 530,724 (295,638) 235,086 467,984 (258,030) 209,954
Claims incurred during the period 161,726 (94,388) 67,338 378,916 (192,966) 185,950
Adjustment to claims incurred in prior
accident years (15,019) 15,848 829 (25,540) 27,126 1,586
Claims paid during the period 9 (105,768) 40,087 (65,681) (318,603) 141,496 (177,107)
Movement in IBNR 42,429 (30,160) 12,269 27,967 (13,264) 14,703
At 30 June / 31 December 9 614,092 (364,251) 249,841 530,724 (295,638) 235,086
Company No. 201701032316 (1246486-D)
17
6. Takaful contract liabilities (continued)
(b) Provision for unearned contributions
Gross Retakaful Net Gross Retakaful Net
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
General Takaful / Company
Provision for unearned contributions 411,580 (90,812) 320,768 394,340 (90,634) 303,706
Movement of provision for unearned contributions:
At 1 January 394,340 (90,634) 303,706 376,971 (76,884) 300,087
Contributions written during the period 8 382,031 (150,502) 231,529 723,567 (290,365) 433,202
Contributions earned during the period 8 (364,791) 150,324 (214,467) (706,198) 276,615 (429,583)
At 30 June / 31 December 411,580 (90,812) 320,768 394,340 (90,634) 303,706
(c) Participants’ fund
Gross Retakaful Net Gross Retakaful Net
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
General Takaful / Company
Unallocated surplus / accumulated surplus 177,075 - 177,075 173,962 - 173,962
Fair value reserves 22,306 - 22,306 16,089 - 16,089
199,381 - 199,381 190,051 - 190,051
Company No. 201701032316 (1246486-D)
18
6. Takaful contract liabilities (continued)
(c) Participants’ fund (continued)
The participants’ fund movements are analysed as follows:
Gross Retakaful Net Gross Retakaful Net
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
General Takaful / Company
At 1 January 190,051 - 190,051 171,129 - 171,129
Net earned contributions 214,467 - 214,467 429,583 - 429,583
Investment income on financial assets not
measured at FVTPL 15,399 15,399 29,341 - 29,341
Investment income - others 537 - 537 1,882 - 1,882
Realised gains and losses - - - 2,697 - 2,697
Fair value gains and losses (127) - (127) 791 - 791
Reversal of impairment losses on financial instruments - - 642 - 642
Other operating income 96 - 96 224 - 224
Net benefits and claims (80,436) - (80,436) (202,239) - (202,239)
Fees deducted (net) (119,645) - (119,645) (245,632) - (245,632)
Other operating expenses (398) - (398) (44) - (44)
Profit paid to participants (4,541) - (4,541) (7,802) - (7,802)
Profit attributable to the Takaful Operator (23,025) - (23,025) - - -
Net change in fair value on debt investments at FVOCI 6,218 - 6,218 13,831 - 13,831
Tax expense 1,327 - 1,327 (3,329) - (3,329)
Withholding tax paid (542) - (542) (1,023) - (1,023)
At 30 June / 31 December 199,381 - 199,381 190,051 - 190,051
Company No. 201701032316 (1246486-D)
19
7. Operating revenue
30.06.2020 30.06.2019
Note RM’000 RM’000
Takaful Operator
Investment income on financial assets not measured at FVTPL 7,252 5,651
Investment income - others 475 530
7,727 6,181
General Takaful
Gross contributions 8 382,031 367,889
Investment income on financial assets not measured at FVTPL 15,399 14,551
Investment income - others 537 1,153
397,967 383,593
Company
Gross contributions 8 382,031 367,889
Investment income on financial assets not measured at FVTPL 22,651 20,202
Investment income - others 1,012 1,683
405,694 389,774
8. Net earned contributions
30.06.2020 30.06.2019
Note RM’000 RM’000
General Takaful / Company
(i) Gross contributions 6(b),7 382,031 367,889
Change in unearned contributions reserves (17,240) 2,553
Gross earned contributions 6(b) 364,791 370,442
(ii) Retakaful 6(b) (150,502) (128,462)
Change in unearned contributions reserves 178 (9,924)
Contributions ceded to retakaful 6(b) (150,324) (138,386)
(iii) Net earned contributions 214,467 232,056
Company No. 201701032316 (1246486-D)
6 months period ended
6 months period ended
20
9. Net benefits and claims
30.06.2020 30.06.2019
Note RM’000 RM’000
General Takaful / Company
Gross benefits / claims paid 6(a) (105,768) (147,807)
Retakaful recoveries 6(a) 40,087 62,541
Net benefits / claims paid (65,681) (85,266)
Gross change in contract liabilities:
At 30 June 6(a) (614,092) (501,477)
Less:
At 1 January 6(a) (530,724) (467,984)
(83,368) (33,493)
Change in contract liabilities
ceded to retakaful companies:
At 30 June 6(a) 364,251 278,490
Less:
At 1 January 6(a) 295,638 258,030
68,613 20,460
(80,436) (98,299)
Company No. 201701032316 (1246486-D)
6 months period ended
21
10. Tax expense
30.06.2020 30.06.2019
Takaful Operator / Company RM’000 RM’000
Recognised in profit or loss
Current tax expense
Current year 21,821 18,639
Deferred tax benefits
Deferred tax recognised in profit or loss (1,162) (3,652)
Total tax expense 20,659 14,987
Reconciliation of tax expense
Profit before zakat and taxation 81,716 61,358
Income tax using Malaysian tax rate of 24% 19,612 14,726
Items not subject to tax (247) (2,365)
Non-deductible expenses 1,294 2,626
Tax expense 20,659 14,987
Recognised directly in equity
Deferred tax
FVOCI financial assets 533 1,174
Company No. 201701032316 (1246486-D)
6 months period ended
22
11. Financial instruments
11.1 Fair value information
Fair value of financial instruments Fair value of financial instruments Total Carrying
carried at fair value not carried at fair value fair value amount
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2020 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Takaful Operator
Financial assets
Institutional Trust
Account - - 22,645 22,645 - - - - 22,645 22,645
Islamic debt securities - 105,255 - 105,255 - - - - 105,255 105,255
Malaysian Government
Islamic papers - 11,444 - 11,444 - - - - 11,444 11,444
- 116,699 22,645 139,344 - - - - 139,344 139,344
The table below analyses financial instruments carried at fair value and those not carried at fair value for which fair value is disclosed, together with their
fair values and carrying amounts shown in the statement of financial position.
Company No. 201701032316 (1246486-D)
23
11. Financial instruments (continued)
11.1 Fair value information (continued)
Fair value of financial instruments Fair value of financial instruments Total Carrying
carried at fair value not carried at fair value fair value amount
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2020 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
General Takaful
Financial assets
Institutional Trust
Account - - 58,393 58,393 - - - - 58,393 58,393
Islamic debt securities - 303,276 - 303,276 - - - - 303,276 303,276
Malaysian Government
Islamic papers - 5,757 - 5,757 - - - - 5,757 5,757
- 309,033 58,393 367,426 - - - - 367,426 367,426
Company No. 201701032316 (1246486-D)
24
11. Financial instruments (continued)
11.1 Fair value information (continued)
Fair value of financial instruments Fair value of financial instruments Total Carrying
carried at fair value not carried at fair value fair value amount
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
30 June 2020 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Company
Financial assets
Institutional Trust
Account - - 81,038 81,038 - - - - 81,038 81,038
Islamic debt securities - 408,531 - 408,531 - - - - 408,531 408,531
Malaysian Government
Islamic papers - 17,201 - 17,201 - - - - 17,201 17,201
- 425,732 81,038 506,770 - - - - 506,770 506,770
Company No. 201701032316 (1246486-D)
25
11. Financial instruments (continued)
11.1 Fair value information
Fair value of financial instruments Fair value of financial instruments Total Carrying
carried at fair value not carried at fair value fair value amount
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
31 December 2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Takaful Operator
Financial assets
Institutional Trust
Account - - 22,090 22,090 - - - - 22,090 22,090
Islamic debt securities - 108,392 - 108,392 - - - - 108,392 108,392
Malaysian Government
Islamic papers - 11,087 - 11,087 - - - - 11,087 11,087
- 119,479 22,090 141,569 - - - - 141,569 141,569
The table below analyses financial instruments carried at fair value and those not carried at fair value for which fair value is disclosed, together with
their fair values and carrying amounts shown in the statement of financial position.
Company No. 201701032316 (1246486-D)
26
11. Financial instruments (continued)
11.1 Fair value information (continued)
Fair value of financial instruments Fair value of financial instruments Total Carrying
carried at fair value not carried at fair value fair value amount
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
31 December 2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
General Takaful
Financial assets
Institutional Trust
Account - - 57,053 57,053 - - - - 57,053 57,053
Islamic debt securities - 309,373 - 309,373 - - - - 309,373 309,373
Malaysian Government
Islamic papers - 5,521 - 5,521 - - - - 5,521 5,521
- 314,894 57,053 371,947 - - - - 371,947 371,947
Company No. 201701032316 (1246486-D)
27
11. Financial instruments (continued)
11.1 Fair value information (continued)
Fair value of financial instruments Fair value of financial instruments Total Carrying
carried at fair value not carried at fair value fair value amount
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
31 December 2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Company
Financial assets
Institutional Trust
Account - - 79,143 79,143 - - - - 79,143 79,143
Islamic debt securities - 417,765 - 417,765 - - - - 417,765 417,765
Malaysian Government
Islamic papers - 16,608 - 16,608 - - - - 16,608 16,608
- 434,373 79,143 513,516 - - - - 513,516 513,516
Company No. 201701032316 (1246486-D)
28
11. Financial instruments (continued)
11.1 Fair value information (continued)
Policy on transfer between levels
Level 1 fair value
Level 2 fair value
Non-derivative financial liabilities
Transfer between Level 1 and 2 fair values
Level 3 fair value
Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical
financial assets or liabilities that the entity can access at the measurement date.
Level 2 fair value is estimated using inputs other than quoted prices included within Level 1
that are observable for the identical financial assets or liabilities, either directly or indirectly.
There has been no transfer between Level 1 and 2 fair values during the financial period.
(31.12.2019 : No transfer in either direction).
Fair value, which is determined for disclosure purposes, is calculated based on the present
value of future principal and profit cash flows, discounted at the market rate of profit at the
end of the reporting period.
The fair value of an asset to be transferred between levels is determined as of the date of the
event or change in circumstances that caused the transfer.
Level 3 fair value is estimated using unobservable inputs for the financial assets and
liabilities.
Company No. 201701032316 (1246486-D)
29
11. Financial instruments (continued)
11.1 Fair value information (continued)
Level 3 fair value (continued)
30.06.2020 31.12.2019
Institutional Trust Account RM’000 RM’000
Takaful Operator
Balance at 1 January 22,090 -
Addition - 21,000
Gains and losses recognised in profit or loss
Investment income - realised 539 681
Gains and losses recognised in other comprehensive income
Net change in fair value (unrealised) 16 409
Balance at 30 June / 31 December 22,645 22,090
General Takaful
Balance at 1 January 57,053 42,603
Addition - 12,000
Gains and losses recognised in profit or loss
Investment income - realised 1,364 2,397
Gains and losses recognised in other comprehensive income
Net change in fair value (unrealised) (24) 53
Balance at 30 June / 31 December 58,393 57,053
Company
Balance at 1 January 79,143 42,603
Addition - 33,000
Gains and losses recognised in profit or loss
Investment income - realised 1,903 3,078
Gains and losses recognised in other comprehensive income
Net change in fair value (unrealised) (8) 462
Balance at 30 June / 31 December 81,038 79,143
The following table shows a reconciliation of Level 3 fair values:
Company No. 201701032316 (1246486-D)
30
11. Financial instruments (continued)
11.1 Fair value information (continued)
Level 3 fair value (continued)
Financial instruments carried at fair value
Inter-relationship
Significant between significant
unobservable unobservable inputs and
Type Valuation technique inputs fair value measurement
Institutional Trust Discounted cash flows Discount rate The estimated fair value
Account using market interest of 4.58% would increase (decrease)
rates for a similar if the discount rate were
instrument at the (lower) higher.
measurement date.
Sensitivity analysis for Level 3
Impact on Impact on Impact on
Change in profit Impact on operating participants’
variables after tax equity* surplus fund
RM’000 RM’000 RM’000 RM’000
30 June 2020
Takaful Operator
Discount rate +1% - (597) - -
Discount rate -1% - 624 - -
General Takaful
Discount rate +1% - - (810) (810)
Discount rate -1% - - 842 842
Company
Discount rate +1% - (597) (810) (810)
Discount rate -1% - 624 842 842
* impact on equity reflects adjustments for tax, when applicable.
The following table shows the valuation technique used in the determination of fair values
within Level 3, as well as the key unobservable inputs used in the valuation models.
Company No. 201701032316 (1246486-D)
31
11. Financial instruments (continued)
11.1 Fair value information (continued)
Sensitivity analysis for Level 3 (continued)
Impact on Impact on Impact on
Change in profit Impact on operating participants’
variables after tax equity* surplus fund
RM’000 RM’000 RM’000 RM’000
31 December 2019
Takaful Operator
Discount rate +1% - (659) - -
Discount rate -1% - 692 - -
General Takaful
Discount rate +1% - - (1,057) (1,057)
Discount rate -1% - - 1,100 1,100
Company
Discount rate +1% - (659) (1,057) (1,057)
Discount rate -1% - 692 1,100 1,100
* impact on equity reflects adjustments for tax, when applicable.
Valuation processes applied by the Company for Level 3 fair value
The Company has an established control framework in respect to the measurement of fair
values of financial instruments. This includes a valuation team that has overall responsibility
for overseeing all significant fair value measurements, including Level 3 fair values, which
reports directly to the Chief Investment Officer and Chief Financial Officer. The valuation
team regularly reviews significant unobservable inputs and valuation adjustments.
Company No. 201701032316 (1246486-D)
32
12. Regulatory capital requirements
30.06.2020 31.12.2019
RM’000 RM’000
Tier 1 capital 411,271 347,960
Tier 2 capital 29,539 21,634
Amount deducted from capital (38,415) (37,790)
Total capital available 402,395 331,804
Company No. 201701032316 (1246486-D)
The Company’s capital management policy is to optimise the efficient and effective use of
resources to maximise the return on equity and provide an appropriate level of capital to protect
participants and meet regulatory requirements.
The Company is required to comply with the regulatory capital requirement prescribed in the Risk
Based Capital for Takaful (RBCT) Framework issued by Bank Negara Malaysia where Takaful
operators are required to satisfy a minimum capital adequacy ratio of 130%. As at period end, the
Company has a capital adequacy ratio in excess of the minimum requirement.
The capital structure of the Company as at 30 June 2020, as prescribed under the RBCT
Framework is provided below: