Allianz Life Insurance Malaysia Berhad

Registration No. 198301008983 (104248-X)

(Incorporated in Malaysia)

Financial statements for the year

ended 31 December 2022
(in Ringgit Malaysia “RM”)

Domiciled in Malaysia
Principal place of business
Level 29, Menara Allianz Sentral,
203, Jalan Tun Sambanthan,
Kuala Lumpur Sentral,
50470 Kuala Lumpur
Allianz Life Insurance Malaysia Berhad
Registration No. 198301008983 (104248-X)
(Incorporated in Malaysia)

Contents Page

Directors’ report 1-39

Statement of financial position 40

Statement of profit or loss 41

Statement of profit or loss and other comprehensive income 42

Statement of changes in equity 43-44

Statement of cash flows 45-47

Notes to the financial statements 48-188

Statement by Directors 189

Statutory declaration 190

Independent Auditors’ Report 191-194

 1
Registration No. 198301008983 (104248-X)

Allianz Life Insurance Malaysia Berhad

Registration No. 198301008983 (104248-X)
(Incorporated in Malaysia)

Directors’ report for the financial year ended 31 December

2022
The Directors have pleasure in submitting their report and the audited financial statements of
the Company for the financial year ended 31 December 2022.

Principal activities
The Company is principally engaged in the underwriting of life insurance and investment-
linked business. There has been no significant change in the nature of these activities during
the financial year.

Results
RM’000

Net profit for the financial year 175,718

Dividend
Since the end of the previous financial year, the Company paid a single tier interim dividend
of 28.5 sen per ordinary share totalling RM67,431,000 in respect of the financial year ended
31 December 2022 on 19 January 2023.

The Directors have not recommended any final dividend to be paid for the financial year under
review.

Reserves and provisions

There were no material transfers to or from reserves and provisions during the financial year
under review except as disclosed in the financial statements.

Life insurance liabilities

Before the financial statements of the Company were made out, the Directors took reasonable
steps to ascertain that the life insurance liabilities are adequate in accordance with the
valuation methods specified in Part D of the Risk-Based Capital Framework issued by Bank
Negara Malaysia (“BNM”).
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Registration No. 198301008983 (104248-X)

Bad and doubtful debts

Before the financial statements of the Company were made out, the Directors took reasonable
steps to ascertain that actions had been taken in relation to the writing off of bad debts and
the making of provision for doubtful debts and satisfied themselves that all known bad debts
had been written off and that adequate provision had been made for doubtful debts.

At the date of this report, the Directors are not aware of any circumstances that would render
the amount written off for bad debts or the amount of the provision for doubtful debts in the
financial statements of the Company inadequate to any substantial extent.

Current assets
Before the financial statements of the Company were made out, the Directors took reasonable
steps to ascertain that any current assets other than debts, which were unlikely to be realised
in the ordinary course of business, their values as shown in the financial statements of the
Company, have been written down to an amount which they might be expected to realise.

At the date of this report, the Directors are not aware of any circumstances that would render
the value attributed to the current assets in the financial statements of the Company
misleading.

Valuation methods
At the date of this report, the Directors are not aware of any circumstances which have arisen
which render adherence to the existing method of valuation of assets or liabilities in the
financial statements of the Company misleading or inappropriate.

Contingent and other liabilities

At the date of this report, there does not exist:-
(i) any charge on the assets of the Company that has arisen since the end of the financial
year and which secures the liabilities of any other person; or
(ii) any contingent liability in respect of the Company that has arisen since the end of the
financial year.

No contingent liability or other liability of the Company has become enforceable, or is likely to
become enforceable within the period of twelve months after the end of the financial year
which, in the opinion of the Directors, will or may substantially affect the ability of the
Company to meet its obligations as and when they fall due.

For the purpose of the above paragraphs, contingent liability and other liability do not include
liabilities arising from contracts of insurance underwritten in the ordinary course of business
of the Company.
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Registration No. 198301008983 (104248-X)

Change of circumstances
At the date of this report, the Directors are not aware of any circumstances not otherwise dealt
with in this report or the financial statements of the Company that would render any amount
stated in the financial statements of the Company misleading.

Items of an unusual nature

In the opinion of the Directors, the results of operations of the Company for the financial year
ended 31 December 2022 have not been substantially affected by any item, transaction or
event of a material and unusual nature nor has any such item, transaction or event occurred
in the interval between the end of the financial year and the date of this report.

Issue of shares
There were no changes in the issued share capital of the Company during the financial year.

Options granted over unissued shares

No options were granted to any person to take up unissued shares of the Company during the
financial year.

Indemnity and insurance costs

The Company maintains a Directors’ and Officers’ Liability Insurance for the purpose of Section
289(5) of the Companies Act 2016 in Malaysia, throughout the year, which provides
appropriate insurance cover for the Directors and Officers of the Company. The amount of
insurance premium paid during the financial year amounted to RM37,687.

There was no indemnity given to, or insurance effected for auditors of the Company in respect
of the liability for any act or omission in their capacity as auditors during the financial year.

To the extent permitted by law, the Company has agreed to indemnify its auditors as part of
the terms of non-audit engagement against claims by third parties arising from the non-audit
engagement. No payment has been made to indemnify the auditor during the financial year.
 4
Registration No. 198301008983 (104248-X)

Directors of the Company

The Directors of the Company who served during the financial year and during the period
from the end of the financial year to the date of this report are:

Goh Ching Yin (Chairman - Independent Non-Executive Director)

Peter Ho Kok Wai (Independent Non-Executive Director)
Lim Fen Nee (Independent Non-Executive Director)
Foo Chee It (Independent Non-Executive Director) (Appointed on 1 November 2022)
Ong Eng Chow (Non-Independent Executive Director) (Appointed on 1 January 2023)
Anusha A/P Thavarajah (Non-Independent Executive Director) (Resigned on 21 January
2022)
Dato’ Dr. Kantha A/L Rasalingam (Independent Non-Executive Director) (Retired on 7 July
2022)
Joseph Kumar Gross (Non-Independent Executive Director) (Resigned on 31 December 2022)

Directors’ interests
The Directors of the Company do not hold any shares in the Company as the Company is a
wholly-owned subsidiary of Allianz Malaysia Berhad (“AMB”). The interests and deemed
interests in the shares of AMB and of its related corporations (other than wholly-owned
subsidiaries) of those who were Directors at year end (including the interest of the spouses or
children of the Directors who themselves are not Directors of the Company) as recorded in the
Register of Directors’ Shareholdings are as follows:

Number of registered shares

Interests in the Ultimate Holding As at As at
Company, Allianz SE 1.1.2022 Bought Sold 31.12.2022
Joseph Kumar Gross
- Direct Interest 1(a) 1(a) - 2

Note:
(a)
Free share granted under Allianz Free Share Program

Save as disclosed above, none of the other Directors holding office as at 31 December 2022
had any interest in the shares of the Company and of its related corporations during the
financial year.
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Registration No. 198301008983 (104248-X)

Directors’ benefits
Since the end of the previous financial year, no Director of the Company has received nor
become entitled to receive any benefit (other than those fees and other benefits included in
the aggregate amount of remuneration received or due and receivable by Directors as
disclosed in the “Directors Remuneration” of this report or the fixed salary of a full time
employee of the Company or of related corporations) by reason of a contract made by the
Company or a related corporation with the Director or with a firm of which the Director is a
member, or with a company in which the Director has a substantial financial interest.

There were no arrangements during and at the end of the financial year which had the
objective of enabling Directors of the Company to acquire benefits by means of the acquisition
of shares in or debentures of the Company or any other body corporate.

Directors’ remuneration
The details of the directors’ remuneration paid to the directors of the Company during the
financial year are as follows:

(RM ‘000)
Other Benefits-
Fees Emoluments (a) in-kind Total
Non-Executive Directors
Goh Ching Yin 120 162 - 282
Peter Ho Kok Wai 120 15 - 135
Lim Fen Nee 120 15 - 135
Foo Chee It 20 3 - 23
Dato’ Dr. Kantha A/L 62 6 - 68
Rasalingam
Total remuneration of 442 201 - 643
Non-Executive Directors of
the Company

Executive Director
Joseph Kumar Gross(b) - - 9 - -
6
Notes:-
(a)
Other emoluments comprising Chairman’s allowances and meeting allowances.
(b)
No remuneration received for his position as the Executive Director of the Company. The remuneration received for his
position as the Chief Executive Officer is disclosed in Note 25.
 6
Registration No. 198301008983 (104248-X)

Corporate governance disclosures

A. Board of Directors

The Board of Directors (“Board”) has overall responsibility for reviewing and
adopting strategic plans for the Company, overseeing the conduct of business of the
Company, implementing an appropriate system of risk management and ensuring
the adequacy and integrity of the Company’s internal control system.

The detailed responsibilities of the Board are set out in the Board Charter, which is
available at Allianz Malaysia’s website, www.allianz.com.my.

A1. Composition of the Board

The Board is made up of 4 Independent Non-Executive Directors and 1 Non-

Independent Executive Director.

The Board comprises members from various fields with a balance of skills and
experiences appropriate to the business of the Company.

All members of the Board complied with the minimum criteria of “A Fit and Proper
Person” as prescribed under the Financial Services Act, 2013 (“FSA 2013”).

The appointments and re-appointments of all Board members were approved by

BNM.

The profiles of the Board members are as follows:-

Goh Ching Yin

Chairman - Independent Non-Executive Director
Working experience Goh Ching Yin holds an MBA from the Cranfield
University, and has held various leadership and
management positions in capital market strategy,
development and regulations; investment banking,
regional business development, strategic consultancy,
corporate recovery and insolvency; and auditing. He
started his professional career with Peat Marwick
Mitchell (now known as KPMG PLT), and then moved on
to consultancy at Price Waterhouse Associates in 1990.
 7
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

A. Board of Directors (continued)
A1. Composition of the Board (continued)

Goh Ching Yin (continued)

Chairman - Independent Non-Executive Director
Working experience Goh Ching Yin commenced his foray into the investment
banking industry when he was with RHB Sakura
Merchant Bankers Berhad as a General Manager for
Corporate Finance. Subsequently, he assumed the roles
as the Managing Director of Corporate Finance with the
BNP Paribas Group in Malaysia from 2000 to 2004, and
as Chief Executive Officer of Southern Investment Bank
of the Southern Bank Group from 2005 to 2007. He then
held positions as Executive Director in the Chairman’s
Office, Strategy and Development, and Market Oversight
Divisions during his stint with the Securities Commission
of Malaysia from 2007 to 2016.

At the Securities Commission of Malaysia, Goh Ching Yin

led projects on landmark initiatives such as financial
technology, sustainability and inclusiveness, Trans
Pacific Partnership Agreement, the Capital Market
Masterplan 2, the Corporate Governance Blueprint and
Code of Corporate Governance 2012; and the setting up
of the Audit Oversight Board in 2010 of which he was a
founding Board Member.

He was also the Head of the Continuing Professional

Education Advisory Group and represented the
Securities Commission of Malaysia on the Audit
Licensing Committee within the Accountant General’s
office of the Ministry of Finance, and was a member of
the Cluster Working Group on Funding Support for the
Biotechnology Industry under the Malaysian
Biotechnology Corporation (a Ministry of Finance
incorporated company). He was also a member of the
National Cyber Security Advisory Committee, Ministry of
Science, Technology and Innovation Malaysia, and the
Intellectual Capital Development Committee,
Innovation Agency Malaysia.

Goh Ching Yin was appointed by the Government of

Malaysia as a Director of Khazanah Nasional Berhad in
July 2018.

Shareholding in the Nil

Company
 8
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

A. Board of Directors (continued)

A1. Composition of the Board (continued)

Peter Ho Kok Wai

Independent Non-Executive Director
Working experience Peter Ho is a Member of the Malaysian Institute of
Accountants, Fellow of the Institute of Chartered
Accountants in England and Wales and a Member of the
Malaysian Institute of Certified Public Accountants.

Peter Ho forged his early career with Everett Pinto & Co.,
a central London Firm of Chartered Accountants and
qualified as a Chartered Accountant in 1984.

Subsequently, in 1987, Peter Ho joined KPMG Kuala

Lumpur where he progressed to Head of Department in
1992. He was transferred to KPMG Ipoh in 1993 to head
the branch and was admitted as Partner in 1995. He was
transferred back to KPMG Kuala Lumpur in 2005, where
he had, at various times, headed the Technical
Committee, Audit Function and Marketing Department.

He has more than 35 years of auditing experience in a

wide range of companies including public listed
companies and multinationals, with particular emphasis
in manufacturing, distribution and financial services.
Peter Ho retired from KPMG in December 2014.

Shareholding in the Nil

Company
 9
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

A. Board of Directors (continued)

A1. Composition of the Board (continued)

Lim Fen Nee

Independent Non-Executive Director
Working experience Lim Fen Nee was the Regional Partner of Deloitte
Southeast Asia (“SEA”), SEA Regulatory and Public
Policy Leader and the Audit and Assurance Partner for
Malaysia from 2017 to 2019. Her main role involves
dealing with assurance and advisory, professional
practice, quality initiatives, regulatory and public
policy. In addition to being the Chief Financial Officer
Program Co-Leader for Malaysia, she also actively
supported the firm’s gender equality initiatives and
was a partner mentor to young women talent.
Previously, she was a mentor to ACCA’s Leaders for
Tomorrow. She appeared as moderator or panelist in
various public speaking engagements to support
views ranging from standard settings to regulatory,
public policy, and governance matters.

Prior to her role in Deloitte SEA, she was with Securities

Commission of Malaysia from 2010 to 2016. She was
the Head of Audit Oversight Board and was one of the
founding management team. In addition, she also
served as a Project Advisor to the Securities Commission
of Malaysia covering various capital market projects and
actively involved in international and ASEAN audit
oversight activities.

She gained extensive experience in assurance and

advisory in public listed companies, multinational
company, initial public offerings, debt securitisation
and corporate restructuring during her roles in Ernst &
Young, Kuala Lumpur and PricewaterhouseCoopers
United States during the period from 1997 to 2009. In
her early career, she has also served her posting in the
United States and held consulting roles in the World
Bank covering governance and financial reporting.
 10
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

A. Board of Directors (continued)

A1. Composition of the Board (continued)

Lim Fen Nee (continued)

Independent Non-Executive Director
Working experience Amongst her other contributions, she represented the
authorities, accounting profession and the industry both
locally and internationally. This included having served
as a Council Member of MIA, Chair of MIA Digital
Technology Implementation Committee and as the
Chair of ACCA Malaysia Advisory Committee. She was
also a past member of the Audit Licensing Committee of
the Ministry of Finance Malaysia.

Shareholding in the Nil

Company
 11
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

A. Board of Directors (continued)

A1. Composition of the Board (continued)

Foo Chee It
Independent Non-Executive Director
Working experience Foo Chee It (“Serrina”) is a dynamic and seasoned
insurance practitioner with 40 years working
experiences in the insurance industry (Life/Non-life)
covering underwriting and claims administration,
strategic and business development, sales and multi-
channel distribution, partner relationship
management, implementation of cross marketing/
upselling initiatives via data mining and deployment of
digitalisation of bank sales application/processing
tools.

She began her professional career in 1980 as a District

Manager at QBE Insurance (M) Sdn Bhd, responsible for
managing branch operations which comprised of
underwriting and claims handling, business
development, recruitment of agents and servicing of
corporate and retail accounts. Thereafter, she was
relocated to Head Office in Kuala Lumpur and was
appointed as the Assistant Underwriting Manager. In
1994, Serrina was appointed as Manager, Research &
Development in Malaysia Assurance Alliance Bhd.
From 1996 to 1998, she assumed the role of Senior
Manager – Accident & Health at Perdana Cigna
Insurance Bhd.

She joined American International Assurance Berhad in

1998 as Vice President Specialty Marketing Division
and was redesignated to Vice President, AIG Marketing
in 2000. She had served as Head of Alternative
Distribution in Allianz Life Insurance Malaysia Berhad
(“ALIM”) from 2001 to 2007 before joining AXA Affin
Life Insurance Berhad as Chief Officer –
Bancassurance/ Alternative Distribution from 2007 to
2011. She re-joined AIA Bhd as the Chief Partnership
Distribution Officer in 2011 and served until her
retirement on 30 September 2021.

Shareholding in the Nil

Company
 12
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

A. Board of Directors (continued)

A1. Composition of the Board (continued)

Ong Eng Chow

Chief Executive Officer (“CEO”) - Non-Independent Executive Director
Working experience Ong Eng Chow (“Charles”) has more than 34 years of
experience in the financial services industry, of which 27
years have been in the insurance industry. He started his
professional career as an auditor in KPMG Peat Marwick,
New Zealand in 1988. In 1991, Charles joined Hume
Industries (Malaysia) Berhad (a related company of
Hong Leong Group) as the Group Accountant,
responsible for the preparation of financial information
for Merger and Acquisitions activities and group
planning process and tax planning. In 1993, he was
transferred to Akoko Sdn Bhd, a newly acquired
subsidiary of Hong Leong Industries Bhd and assumed
the position as Finance Manager responsible for the
overall financial functions of Akoko Sdn Bhd. He left
Hong Leong Group in 1995 and assumed the position as
the Finance Manager EON CMG Life Assurance Berhad
from 1995 to 1999.

He joined ALIM on 1 June 1999 as Financial Controller

and was promoted to Chief Financial Officer ("CFO") in
2003. In addition to his role as CFO of ALIM, he was the
Chief Risk Officer of ALIM from 2005 to 2010. He was
appointed as CFO of AMB in 2008, to oversee the
financial management of AMB Group and part of the
leadership driving business growth, profitability and
financial sustainability of AMB Group. He relinquished
his positions as CFO of ALIM and AMB on 31 March 2022
before he assumed his current position as CEO of ALIM
on 1 April 2022.

Shareholding in the Nil

Company
 13
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

A. Board of Directors (continued)

A1. Composition of the Board (continued)

During the financial year, the following trainings had been organised internally for
the Board of ALIM:-
• Cybersecurity Awareness Training
• Malaysian Financial Reporting Standard 17 Insurance Contract
• Data Privacy and Personal Data Protection Act 2010
• Guidelines for the Reporting Framework on Beneficial Ownership under
Companies Act 2016
• Cyber Threats for Top Executive

In addition, the newly appointed Directors of the Company attended the mandatory
Financial Institutions Directors’ Education Core Programme and in-house
orientation programmes organised by the Company.

Save for the above trainings, the Directors also attended external training
programmes, conferences and seminars that covered among others, areas of
corporate governance, sustainability, risk management, compliance, directors’
responsibilities, requirement on finance, accounting and insurance, and relevant
industry or regulation updates.
 14
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

A. Board of Directors (continued)

A2. Board Meetings

There were 5 Board Meetings held during the financial year ended 31 December
2022 and the attendance of the Directors was as follows:-

Name of Directors No. of Board No. of Board Meetings

Meetings Held Attended
Goh Ching Yin 5 5
Peter Ho Kok Wai 5 5
Dato’ Dr. Kantha A/L Rasalingam 5 2 out of 3 meetings held prior
to his retirement as Director on
7 July 2022
Lim Fen Nee 5 5
Foo Chee It 5 1 out of 1 meeting held after
her appointment as Director on
1 November 2022
Joseph Kumar Gross 5 5

A3. Board Committees

The following Board Committees are centralised at its immediate holding company,
AMB:

(a) Audit Committee;

(b) Risk Management Committee; and
(c) Nomination and Remuneration Committee.

The Board Committees are operating on the terms of reference approved by the Board
of AMB and adopted by the Board of the Company, to assist the Board in the execution
of its responsibilities.
 15
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

A. Board of Directors (continued)

A3. Board Committees (continued)

A3.1. Audit Committee of AMB Board (“AC”)

The composition of the AC during the financial year is as follows:

Peter Ho Kok Wai (Chairman - Independent Non-Executive Director of ALIM and

AMB)
Goh Ching Yin (Independent Non-Executive Director of ALIM and AMB)
Gerard Lim Kim Meng (Independent Non-Executive Director of AMB) (Appointed as
AC member on 15 July 2022)
Tan Sri Datuk (Dr.) Rafiah Binti Salim (Non-Independent Non-Executive Director of
Allianz General Insurance Company (Malaysia) Berhad (“AGIC”) and AMB) (Retired
on 22 June 2022)

There were 6 AC Meetings held during the financial year ended 31 December 2022
and the attendance of the abovementioned AC members were as follows:

Name of Members No. of AC No. of AC Meetings

Meetings Attended
Held
Peter Ho Kok Wai 6 6
Goh Ching Yin 6 6
Gerard Lim Kim Meng 6 2 out of 2 meetings held
after his appointment as AC
member on 15 July 2022

Tan Sri Datuk (Dr.) Rafiah Binti 6 4 out of 4 meetings held

Salim prior to her retirement as AC
member on 22 June 2022

The AC is charged with the responsibilities of assisting the Board of AMB and its
subsidiaries (“AMB Group” or “Group”) in its oversight, amongst others, as follows:

• support the Board in ensuring that there is a reliable and transparent financial
reporting process;
• monitor and evaluate the performance and effectiveness of the external and
internal audit functions;
• assess the internal control environment; and
• review and report to the Board of conflict of interest situations and related
party transactions.

The detailed terms of reference of the AC is available at Allianz Malaysia’s website,

www.allianz.com.my.
 16
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

A. Board of Directors (continued)

A3. Board Committees (continued)

A3.2. Risk Management Committee of AMB Board (‘‘RMC”)

The composition of the RMC during the financial year is as follows:

Lim Tuang Ooi (Chairman – Independent Non-Executive Director of AGIC)

(Appointed as RMC member on 1 April 2022 and redesignated as RMC Chairman
on 22 June 2022)
Dr. Muhammed Bin Abdul Khalid (Independent Non-Executive Director of AGIC and
AMB) (Redesignated as RMC member on 22 June 2022)
Goh Ching Yin (Independent Non-Executive Director of ALIM and AMB)
Peter Ho Kok Wai (Independent Non-Executive Director of ALIM and AMB)

There were 5 RMC Meetings held during the financial year ended 31 December 2022
and the attendance of the abovementioned RMC members were as follows:

Name of Members No. of RMC No. of RMC Meetings

Meetings Held Attended
Lim Tuang Ooi 5 4 out of 4 meetings held after his
appointment as RMC member on 1
April 2022

Dr. Muhammed Bin

Abdul Khalid 5 5

Goh Ching Yin 5 5

Peter Ho Kok Wai 5 5

The RMC is responsible for effective risk identification, measurement, monitoring and
control of the AMB Group, and oversees the Senior Management’s activities in
managing the key risk areas of the AMB Group and to ensure that the risk
management process is in place and functioning effectively.

The detailed terms of reference of the RMC is available at Allianz Malaysia’s website,
www.allianz.com.my.
 17
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

A. Board of Directors (continued)

A3. Board Committees (continued)

A3.3. Nomination and Remuneration Committee of AMB Board (“NRC”)

The composition of the NRC during the financial year is as follows:

Tunku Zain Al-‘Abidin Ibni Tuanku Muhriz (Chairman - Independent Non-Executive

Director of AMB)
Goh Ching Yin (Independent Non-Executive Director of ALIM and AMB)
Dr. Muhammed Bin Abdul Khalid (Independent Non-Executive Director of AGIC and
AMB) (Appointed as NRC member on 15 July 2022)
Tan Sri Datuk (Dr.) Rafiah Binti Salim (Non-Independent Non-Executive Director of
AGIC and AMB) (Retired on 22 June 2022)

There were 5 NRC Meetings held during the financial year ended 31 December 2022
and the attendance of the abovementioned NRC members were as follows:-

Name of Members No. of NRC No. of NRC Meetings

Meetings Held Attended
Tunku Zain Al-‘Abidin Ibni
Tuanku Muhriz 5 5
Goh Ching Yin 5 5
Dr. Muhammed Bin Abdul
Khalid 5 2 out of 2 meetings held after his
appointment as NRC member on
15 July 2022
Tan Sri Datuk (Dr.) Rafiah Binti 5 3 out of 3 meetings held prior to
Salim her retirement as NRC member
on 22 June 2022

The primary objectives of the NRC are:-

(a) to establish a documented formal and transparent procedure for the
appointment and removals of Directors, CEOs and Key Responsible Persons
(“KRP(s)”) of AMB Group;
(b) to assess the effectiveness of individual Director, the respective Boards
(including various committees of the Board), CEOs and KRPs of AMB Group on
an on-going basis;
(c) to provide formal and transparent procedure for developing a remuneration
policy for Directors, CEOs and KRPs of AMB Group; and
(d) to ensure that the compensation is competitive and consistent with the culture,
objective and strategy of AMB Group.

The detailed terms of reference of the NRC is available at Allianz Malaysia’s website,
www.allianz.com.my.
 18
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework

B1. Risk Management Framework

The Board recognises the importance of having in place a risk management system to
identify key risks and implement appropriate controls to manage such risks as an
integral part of the Company’s operations. The Company has in place a Risk
Management Framework Manual (“RMFM”). The RMFM outlines the guiding
principles of the risk management approach, structure, roles, responsibilities,
accountabilities, reporting requirements as well as the risk identification, evaluation
and monitoring process of the Company. It is designed to formalise the risk
management functions and practices across the Company and to increase awareness
of the Company’s employees to risk identification, measurement, control, on-going
monitoring and reporting.
 19
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B1. Risk Management Framework (continued)

The RMFM is in compliance with the relevant requirements of the guidelines and/or
policies issued by Bank Negara Malaysia (“BNM”) and Allianz SE Group.

The system of risk governance process is integrated into the core management
processes and forms part of the daily business process so that a value-added
contribution in terms of sustainable competitive advantage and improved business
performance can be established. Various standards are implemented by the Company,
including organisational structure, risk strategy, written policies, authority limits,
system documentation and reporting, to ensure accurate and timely flow of risk-
related information and a disciplined approach towards decision making and
execution.

The Company also adopts the three lines of defence model where the “first line of
defence” rests with the business managers. They are responsible in the first instance
for both the risks and returns of their decisions.

The “second line of defence” is made up of the oversight functions comprising

Compliance and Risk Management that are independent from business operations.

• The Compliance function assists the Board and Senior Management of the
Company in managing and mitigating the compliance risks due to any non-
compliance of the requirements of the law, regulations as well as regulatory
and industry guidelines.

• Risk Management function assists the Board and Senior Management of the
Company to achieve its strategic goals and objectives by implementing risk
management activities and controls across the organisation.

Both the Compliance and Risk Management functions report to the RMC which assists
the Board of the Company to discharge its oversight function effectively. As part of its
responsibilities, the Compliance and Risk Management functions advise the Board and
Senior Management of the Company on compliance, risk and regulatory matters; and
promote risk and compliance awareness amongst the Company’s employees through
trainings and workshops.
 20
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B1. Risk Management Framework (continued)

In addition to the above oversight functions, Legal and Actuarial functions of the
Company constitute additional components of the “second line of defence”. An
appropriate control framework has been established to avoid any potential conflict of
interest to fulfil their roles as the second line of defence.

• The Legal function seeks to mitigate legal risks arising from legislative changes,
major litigation and disputes, regulatory proceedings and unclear contractual
terms.

• The Actuarial function contributes towards assessing and managing risks in

line with regulatory requirements and reports to the Board and Senior
Management of the Company. Its scope of work includes coordination and
calculation of technical reserves, providing oversight on product pricing and
profitability and contribution to the effective implementation of the risk
management system.

The RMC drives the risk management framework of the Company and reports
quarterly to the Board on its recommendations and/or decisions. The Risk
Management Working Committee (“RMWC”) is established at the Management level
of the Company and serves as a platform for two-way communication between the
Management and the RMC on matters relating to risk strategy and management.
Through the quarterly reporting from RMWC, the RMC consolidates the status of the
risks and presents them to the Board of the Company for consideration.

The Governance and Control Committee (“GovCC”) supports the Company’s

Management to fulfil its responsibilities with respect to regulatory governance,
organisational and control requirements. The GovCC also provides a platform for
structured and institutionalised interaction and collaboration on cross functional and
control related topics to facilitate a consistent approach in terms of processes,
methodologies, assessments, materiality and others. GovCC members consist of
senior management from governance and operation functions. The GovCC reports to
the Company’s Senior Management Committee on governance and internal control
system related matters.
 21
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B1. Risk Management Framework (continued)

Risk Management Process

Risk management is considered and managed as part of the daily process of managing
and directing the business. These include the implementation of a limit system,
various frameworks, manuals and policies.

Besides the embedded process, the following risk management cycle to identify,
assess, mitigate, monitor and report will also be carried out by the Risk Management
function together with the respective risk owners: -

Risk Identification & Assessment process

Preparation of Top Identification and Risk mitigation RMWC/Risk

plans/key risk Management
-
Board approval
Risk Assessment evaluation of risk
indicators Committee review

Review and follow ups Updates

Supplementary Risk Assessments (e.g. Risk and Control Self-Assessment, Emerging Risk)

(i) Top Risk Assessment (“TRA”)

TRA approach is in place to periodically analyse all material quantifiable and non-
quantifiable risks including market, credit, underwriting, business, operational,
liquidity, reputational and strategic risks, and also transversal risks such as
concentration risks, emerging risks and Environmental, Social or Governance
(“ESG”) risk.

The Company identifies and remediates significant threats to financial results,

operational viability or the delivery of key strategic objectives, regardless of
whether they relate to quantifiable or non-quantifiable risks using the approved
TRA Matrix. The identified top risks are assessed quarterly by the assigned risk
owners; and the same is reviewed by the RMWC and the RMC and approved by
the Board. Key risk indicators are also put in place to monitor changes in risk
exposure or control effectiveness for the top risks on a quarterly basis. The key
risks and their salient points on how the Company manages these risks are set
out below:-
 22
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B1. Risk Management Framework (continued)

Risk Management Process (continued)

Key risks Broad Definition Risk Management Practices

Market Unexpected losses arising due to • Investment activity is strictly
changes in market prices or governed by the pre-
parameters influencing market approved limits and appetite
prices, as well as the resultant risk and monitored through a
from options and guarantees that front end system. Any
are embedded in contracts or from exception requires pre-
changes to the net worth of assets approval.
and liabilities in related • An asset and liability process
undertakings driven by market has been put in place to
parameters. In particular, these manage the risks and returns
include changes driven by equity expected from the insurance
prices, interest rates, real estate obligations.
prices, exchange rates, credit • Selectively using derivative to
spreads and implied volatilities. It either hedge the portfolio
also includes changes in market against adverse market
prices due to worsening of market movements or reduce
liquidity. reinvestment risk.
Credit Unexpected losses in the market • Credit analyses are
value of the portfolio due to conducted prior to purchase
deterioration in the credit quality and regular review on
of counterparties including their portfolio.
failure to meet payment • Investment activity is strictly
obligations or due to non- governed by the pre-
performance of instruments. approved limits to ensure the
diversification of investment
portfolio in order to minimise
the impact of default by any
single counterparty.
• Only uses pre-approved
reinsurance partners with
strong credit profiles.
 23
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B1. Risk Management Framework (continued)

Risk Management Process (continued)

Key risks Broad Definition Risk Management Practices

Underwriting Unexpected financial losses due to • Managed through a
inadequacy of premiums for comprehensive and strict
catastrophe and non-catastrophe standard for underwriting
risks, due to the inadequacy of limit guidelines. Where
reserves or due to the necessary, the risk will be
unpredictability of mortality or surveyed by the loss control
longevity. engineers.
• Regular monitoring of
products, assumptions used
against actual industry
statistics and re-pricing will
be considered if necessary.
• Adequate reinsurance is
purchased and reviewed
annually to ensure adequate
continuous cover within
acceptable appetite and
costs.
• New products undergo a
robust product development
process.
Business Unexpected decrease in actual • Regular monitoring of actual
results as compared to business experience.
assumptions, which leads to a • New products undergo a
decline in income without a robust product development
corresponding decrease in review process.
expenses; this includes lapse risk.
Legal and Losses arising from a breach of • Trainings will be provided
Regulatory relevant laws and regulations. and annual declarations
required from all staff.
• New guidelines will be
published in the Group's staff
e-portal and highlighted
through e-mails.
• Regular reviews are
conducted to ensure
compliance.
 24
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B1. Risk Management Framework (continued)

Risk Management Process (continued)

Key risks Broad Definition Risk Management Practices

Information Information security breach losses • Strict policy and disciplinary
Security triggered by both information action for security breach.
technology (“IT”) and non-IT • Staff awareness on IT Security
leading to loss of data and Privacy.
confidentiality, loss of data • Access Control.
integrity, as well as business • Regular review on User ID
disruption and loss of availability of access.
services resulting in legal costs, • Use of virus protection
fines, forensic costs, remediation software.
costs, compensation and/or • Data Loss Prevention
reputation management costs. solution.
• Conduct of Annual
Penetration Testing by
independent party to detect
possible external and internal
vulnerabilities.
• IT security controls in place,
such as Firewall, Malware
Protection and Distributed
Denial-of-Service protection.
• Privilege Identity
Management.
• Database encryption.
• Privacy Impact Assessment.
• Data privacy contractual
obligations for Service
Providers.
 25
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B1. Risk Management Framework (continued)

Risk Management Process (continued)

(ii) Operational Risk Management (“ORM”)

ORM is a continuous process which includes operational risk identification,

measurement, quantification, management and monitoring to mitigate the
operational loss resulting from inadequate or failed internal processes, people,
system or from external events.

ORM is monitored through a combination of the following activities: -

• Integrated Risk and Control System.
• Analysis of actual loss events reported into the Loss Data Capture database.
• Periodic audits by the Internal Audit Department and reviews by Risk
Management function.
• Other key risk indicators and feedback from subject matter experts (for
example IT Security Officer, Data Privacy Officer, Business Continuity
Management Officers, Anti-Fraud and Anti-Corruption Coordinators, as well
as respective operation managers).

(iii) Reputational Risk Management

All activities within Company can influence its reputation, which is determined
by the perceptions and beliefs of its stakeholders. Hence, thorough management
of any potential reputational risks is required. Any risks that might have
significant impact on all operating entities within the Allianz SE Group will be
escalated to Allianz SE.

The Company has adopted Allianz SE Group’s Allianz Standard for Reputational
Risk Management (“ASRRIM”) which establishes a core set of principles and
processes for the management of reputational risks within the Company. The
management of direct reputational risks requires balancing the benefits of a
given business decision against the potential reputational impacts, taking into
account the Company’s reputational risk strategy as well as ESG approach.
Indirect reputational risks are managed through the TRA as well as risk and
control self-assessment processes, which apply the same reputational risk
assessment methodology used for direct reputational risks.

The Corporate Communications function of the Company actively manages the

reputational risk by assessing any potential risk arising from media, social media
or any transaction relating to pre-defined sensitive areas.
 26
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B1. Risk Management Framework (continued)

Risk Management Process (continued)

(iv) Liquidity Risk Management

Liquidity risk is a consequential risk, i.e. another adverse event has to happen
before the Company runs into liquidity issues. On this background, the Company
has identified various events that might lead to liquidity shortages. To mitigate
this, limits on minimum liquid asset have been put in place and closely
monitored. In addition to this, stress testing is performed to assess the liquidity
intensity ratio against the defined limits and action required at the various
defined limits.

(v) ESG Risk Management

ESG events or conditions (include climate change) are those which, if they occur,
may potentially have significant negative impacts on the assets, profitability or
reputation of the Company and/or Allianz SE.

Climate risks and opportunities that are emerging today are expected to increase
over the mid- and long-term. In acknowledgement of this, and to align with ESG
initiatives of BNM and Allianz SE, the Company has set-up a cross-functional
Climate Change Working Group that discusses and executes climate-related
initiatives as directed by the Local ESG Board. The Local ESG Board, comprising
top management, reports to respective Boards of the Company and is tasked
with driving ESG, including climate-related matters, as part of business
considerations.

ESG-related matters are considered in operational, underwriting and investment

decisions as guided by Sensitive Business Guidelines under ASRRIM to facilitate
the identification of reputational risks, while physical risks such as floods are
simulated and considered in both operations and underwriting activities
annually.

Efforts are undertaken to promote ESG in the Company’s dealings with the
business partners and stakeholders through awareness trainings and
engagement.

In addition, as the Company is operating in insurance business, the following risk

evaluation tools are also adopted as part of the Company’s risk management
framework:-
 27
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B1. Risk Management Framework (continued)

Risk Management Process (continued)

(v) ESG Risk Management

(i) Internal Capital Adequacy Assessment Process (“ICAAP”)

ICAAP is an overall process by which the Company adopted to ensure it has

adequate capital to meet its capital requirements which reflects its own risk
profile on an on-going basis. The formal assessment is conducted at least on
an annual basis and its results are reported to the Board of the Company.

The review of the ICAAP coincides with the annual planning process and any
changes in the strategic directions and business plans of the Company will
be updated in its Risk Strategy, and accordingly all risks identified will also
be taken into account when computing the Individual Target Capital Level
(“ITCL”) of the Company.

The ITCL is validated by stress testing to ensure that it will still be above the
Supervisory Target Capital Level imposed by the regulator even after the
occurrence of a severe plausible event demonstrating a focus on balance
sheet strength and protection of shareholders’ value. A Capital Management
Plan (“CMP”) was drawn up with the objective to optimise risk and return,
while maintaining sufficient level of capital in accordance with the
Company’s risk appetite and regulatory requirements. The CMP identified
the action plans and sources of capital that are available for a pre-
determined ITCL thresholds if they are triggered to bring the capital
adequacy ratio above the internal soft threshold level.

(ii) Stress Testing

Stress test is an effective risk management tool and the Company conducts
such stress test regularly. The stress test process is designed based on the
Company’s solvency position, lines of business, current position within the
market, investment policy, business plan and general economic conditions.
The results of the stress test will then be incorporated into the respective
Company’s management plan, in determining the extent of capital affected
by the threats arising from adverse events and the actions required to
mitigate such threats.

The Board and Management of the Company’s participated actively in

providing feedback on the stress test results and appropriateness of the
methodology and assumptions adopted to perform the stress test for the
Company.
 28
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B2. Internal Audit

The Internal Audit function of the Company, which reports to the AC, undertakes
independent reviews or assessments of the Company’s operations and its system of
internal controls. It provides monitoring of the controls and risk management
procedures as well as highlights significant risks impacting the Company. The internal
audit personnel form the “third line of defence”, are independent from the day-to-day
activities of the Company and have unrestricted access to all activities conducted by
the Company.
 29
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B2. Internal Audit (continued)

Internal Audit Plan is developed based on annual risk assessment and approved by the
AC. The audit scope covers auditable areas encompassing various activities of finance
and tax, risk capital management, compliance program, legal, human resource
operation, reinsurance management, customer experience, various operation
process such as underwriting , claims management, various IT process and system;
and, internal and regulatory compliance audit such as business continuity
management, and replacement of policy.

Internal audit findings are discussed at management level. Senior and functional line
management are tasked to ensure that management action plans are carried out in
accordance with the internal audit recommendations. All internal audit reports are
submitted to the AC. The AC deliberates on key audit findings and management
actions to address these findings during the AC meetings.

Follow-up audits are also performed to monitor continued compliance and the internal
auditors will provide quarterly updates to the AC on the progress of the management
action plans as well as progress of the Internal Audit plan.

B3. Other Key Internal Control Process

The other key processes that the Board has established to provide effective internal
control include: -

Clear and Defined Organisational Structure

The Company has established an organisational structure with clearly defined lines of
responsibility, authority limits and accountability aligned to its business and operation
requirements and control environment. Relevant Board Committees with specific
responsibilities delegated by the Board are established to provide oversight
governance over the Company’s activities. The Board Committees are centralised at its
immediate holding company, AMB. The Board Committees have the authority to
examine matters under their terms of reference and report to the respective Board of
the Company with their observations and/or recommendations. Although specific
authority is delegated to the Board Committees, the ultimate responsibility for the final
decision on all matters, however, lies with the respective Board of the Company.

Various Management Committees are established by the Management of the

Company to assist in managing the day-to-day operations and ensure its effectiveness.
The Management Committees formulate tactical plans and business strategies,
monitor performance and ensure activities are carried out in accordance with
corporate objectives, strategies, business plans and policies as approved by the
respective Board of the Company.
 30
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B3. Other Key Internal Control Process (continued)

Management Authority Limit

The Board’s approving authority is delegated to the Management through formal and
defined operational authority limits that governs business procedures and decision
making process in the Company. The operational authority limits incorporate
segregation of duties and check and balance in delegation of authority.

The Management’s authority limits include limits for underwriting of risks, claims
settlement, reinsurance, and capital expenditures and are reviewed and updated to
ensure relevance to the Company’s operations. Such authority limits are documented
and made available to all staff via the Group’s staff e-portal.

In ensuring that the decision making process is transparent and to the best interest of
the Company, all Directors and staff including the Chief Executive Officer are required
to declare their interest in other entities on an annual basis. In addition, they are also
required to disclose to the Company, any circumstance that may give rise to a conflict
of interest situation during the course of carrying out their duties.

Policies and Procedures

Clear, formalised and documented internal policies and procedures are in place to
ensure continued compliance with internal controls and relevant rules and regulations
imposed by the relevant authorities.

These policies and procedures are subject to review and improvement to reflect
changing risks and process enhancement, as and when required. Policies and
procedures are also made available via the Group’s staff e-portal for easy access by the
employees.

Annual Business Plan and Performance Review

Annual business plans are submitted to the Board for approval. Financial condition and
business performance reports are also submitted to the respective Board of the
Company for review during the Board meetings. These reports cover all key
operational areas and provide a sound basis for the respective Board of the Company
to assess the financial performance of the Company and to identify potential problems
or risks faced by the Company, thus enabling the respective Board of the Company to
effectively monitor on an on-going basis, the affairs of the Company.
 31
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B3. Other Key Internal Control Process (continued)

Related Party Transactions

The Company has established the necessary controls and procedures to ensure
compliance with the relevant regulatory requirements in respect of related party
transaction. Necessary disclosures are made to the respective Board of the Company
and where required, prior approval of the respective Chief Executive Officers or Board
of the Company in accordance with the levels of authority prior to execution of the
transactions.

A due diligence working group was formed to review the related party transactions
and submit its recommendations to the Chief Executive Officer, Audit Committee and
the Board of Directors for approval in accordance with the internal authority limits
approved by the Board of Directors.

The AC also review the related party transaction review procedures on an annual basis
to ensure that the procedures and processes are sufficient and adequate to monitor,
track and identify related party transactions including recurrent transactions in a
timely and orderly manner.

Underwriting and Reinsurance

The Company employs high standards in their respective underwriting process. This
includes among others, risk segmentation and selection, setting adequate pricing and
terms and conditions, setting of right retention limit and adequate reinsurance
protection.

Underwriting authority is controlled centrally at the Head Office level. Reinsurance is

in place primarily to ensure that no single loss or aggregation of losses arising from a
single event will have an adverse financial impact on the Company. Reinsurers
selection is guided by the guidelines issued by the regulator and the Allianz SE Group.
Reinsurance needs are reviewed annually in respect of reinsurance treaties and on
case to case basis on facultative arrangements.

Financial Control Procedures

Financial control procedures are put in place and are documented in the procedural
workflows of each business unit. These workflows are subject to reviews and
improvements to reflect changing risks and process enhancement as and when
required.
 32
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B3. Other Key Internal Control Process (continued)

Investment

The Investment Committee of the Company is responsible for setting investment

policies, objectives, guidelines and controls for the Investment function, whereas the
Investment function is responsible for managing the investment functions of the
Company within the pre-determined parameters.

The Company has in place the Group Investment Manual which sets out the detailed
investment procedures and controls, including an Investment Code of Ethics to ensure
the fiduciary duties to policyholders and the Company’s interests are always upheld.

The investment limits are set at various levels with limits which are more stringent
than the regulatory limits as prescribed by BNM. The investment levels are monitored
monthly to ensure compliance with the investment limits as specified in the Risk Based
Capital Framework for Insurers and the Investment-linked Business Policy Document
issued by BNM.

The investment performance reports are amongst the reports submitted to the
Investment Committee and the Board of the Company for review at their quarterly
meetings.

Code of Conduct (“COC”)

Every employee is required to attest on an annual basis that they understand and
comply with the Allianz SE Group’s COC. The COC among others, is essential in
promoting ethical conduct within the Company and reflects Company’s values and
principles and provides guidance to employees in their actions and decisions. Each
employee has a responsibility to live by the principles contained in the COC, i.e. to

(i) Treat each other fairly and respectfully

(ii) Act with integrity
(iii) Be transparent and tell the truth
(iv) Take ownership and responsibility
 33
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B3. Other Key Internal Control Process (continued)

Anti-Money Laundering/Counter Financing of Terrorism (“AML/CFT”) and

Targeted Financial Sanctions (“TFS”)

The Company has in place internal policies and procedures relating to AML/CFT and
TFS to prevent and detect money laundering and terrorism financing activities. These
include customer due diligence, screening against sanctions list, suspicious
transaction reporting to the Compliance function where customer profiling, due
diligence and on-going transactions monitoring procedures are in place. In respect
of education, staff and agents are trained on AML/CFT requirements to promote
understanding of their fundamental responsibilities in adhering to the procedures of
verifying customers’ identities and reporting of suspicious transactions.

Product Development

The Company has each in place a Product Development Management Policy (“PDM
Policy”) which sets out the policies and procedures on product development in
accordance with the requirements of the Guideline on Introduction of New Products
by Insurers and Takaful Operators (BNM/RH/STD 029-10) issued by BNM.

The PDM Policy aims to promote sound risk management practices in managing and
controlling product risk by ensuring the appropriate assessment and mitigation of risk
during the development and marketing stages. The PDM Policy will also assist to
ensure that the products developed and marketed by the Company are appropriate to
the needs, resources and financial capability of the targeted consumer segments.

The on-going product risk management is embedded within the risk management
framework of the Company.

Whistleblowing and Anti-Fraud

The oversight of whistleblowing and fraud matters of the Company is performed by

the Company’s Integrity Committee (“InC”). The InC coordinates all activities
concerning prevention and detection of fraud and handling of whistleblowing
incidents.
 34
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B3. Other Key Internal Control Process (continued)

Whistleblowing and Anti-Fraud (continued)

The Company has in place the Group’s Anti-Fraud Policy and Group’s Whistleblowing
Policies and Procedures (“WBP Policy”) to address fraud and whistleblowing issues
respectively. The Anti-Fraud Policy defines fraud events, investigation process,
reporting procedures, fraud risk assessments, training and the roles and
responsibilities of Management and employees. The WBP Policy on the other hand,
describes the Company’s Speak-Up Policy, avenues for filing a concern and handling of
whistleblowing incidents.

In respect of whistleblowing, the Company has established a whistleblowing

mechanism to enable anonymous and non-anonymous reporting of any breach of the
COC, any laws, regulations, orders or any internal rules. These whistleblowing cases
are assessed confidentially by the InC to determine its validity and reports the findings
and any recommendations to the AC.

The effectiveness of the whistleblowing policies and procedures are reviewed

periodically at least once in 3 years.

Anti-Corruption

The Company has adopted a localised Anti-Corruption Policy (“Policy”) that outlines
the guiding principles of Allianz SE, Malaysian Anti-Corruption Commission Act 2009
and Listing Requirements. The Anti-Corruption Policy serves to outline the Company’s
existing controls and behavioral guidelines on the risk areas of dealing with
government officials, business courtesies, hiring of representatives, political
contributions, charitable contributions, joint ventures and outsourcing agreements as
well as facilitation payments.

Corruption risk are being assessed annually and the effectiveness of the policies and
procedures are reviewed periodically at least once in three years.

The Vendor Integrity Screening process which is a part of the Allianz SE Group’s Anti-
Corruption Programme aims at ensuring an integrity based due diligence is performed
before any third party vendor is engaged. The screening contains a self-assessment
section which among others, includes questions on anti-corruption to be answered by
the potential vendor and a risk evaluation to be completed by the relevant
staff/department in charge. Only those vendors whose screening does not reveal any
negative findings will be engaged.
 35
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B3. Other Key Internal Control Process (continued)

Employees

All staff are required to make an annual declaration that they fulfilled the minimum
criteria of “A Fit and Proper Person” as prescribed in Sections 59(1), (2) and (3) of the
Financial Services Act, 2013. In addition, all staff are also required to attest that they
understand and comply with the requirements of the following internal guidelines and
policies: -

(i) Related Party Transaction Declaration;

(ii) Disclosure of Data;
(iii) Conflict of Interest;
(iv) COC;
(v) IT Security Policy and Guideline e-Awareness Declaration;
(vi) Anti-Corruption Policy;
(vii) Anti-Fraud Awareness Declaration; and
(viii) Guidelines on the Code of Conduct for the General Insurance Industry and Code
of Ethics and Conducts for the Life Insurance Industry.

Sales Standard and Sales Agent Code of Conduct

The Company’s insurance intermediaries are guided by the Allianz SE Sales Standard
and Allianz SE Singapore Branch (“AZAP”) Sales Agent Code of Conduct in order to
promote professional sales conduct of intermediaries representing the Company. The
Company has established an Ethics and Compliance Committee to deal with
intermediary behaviour that are contrary to the Sales Standard and AZAP Sales Agent
Code of Conduct.

In addition, agents of the Company are also required to comply with the Code of Ethics
and Conduct imposed by the respective insurance associations.

All internal control deficiencies or breaches related to the Sales Policy and Sales Agent
Code of Conduct are reported to the Senior Management Committee together with
corrective measures.

Agent Sales Disciplinary Policy

As part of the measures to improve uniformity in disciplining the agency force,

Company has each formalised a Sales Disciplinary Policy detailing definition of types of
offences/misconduct and the associated recommended disciplinary actions.
 36
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B3. Other Key Internal Control Process (continued)

Business Continuity Management

Business Continuity Plans for Company has been formulated to ascertain that the
Company will recover and restore any interrupted critical functions within a
predetermined time upon the occurrence of any disastrous events.

The testing for Business Continuity Plan is conducted at least once a year whilst the
Disaster Recovery Plan test for all main application systems is conducted at least twice
a year.

Crisis Management

Crisis Management Plans for Company have been developed to outline the processes
and procedures that guides crisis handling and manage any incident with crisis
potential. The plan helps to mitigate the impact of a crisis and prevent an incident with
crisis potential from escalating into a crisis. It is supplemented by Crisis Scenario Plans
which detailed out the crisis handling for specific scenarios.

Information System

All employees are required to strictly abide to and comply with the Group Information
Technology and Information Security Policy and Standard which establishes core
principles, responsibilities, tasks and organisational framework for IT and Information
Security, in order to facilitate the fulfilment of internal and regulatory requirements.

Following the issuance of Risk Management in Technology Policy Document (“RMiT

Policy”) by BNM, the Company is committed to remedy the gaps to meet the
expectations and requirements prescribed under the RMiT Policy. Accordingly, the
Company has implemented two new frameworks were implemented, namely the
Technology Risk Management Framework and Cyber Resilience Framework. The
Technology Risk Management Framework formalises the technology risk
management approach across the Company, and the Cyber Resilience Framework
provides guidance on situational awareness of the cyber threats it may be exposed to.

The IT & Digital Steering Committee (“ITDSC”) is responsible for the overall strategic
deployment of IT and digital assets in tandem with the business objectives, which
including matters related to Internet Insurance, IT Outsourcing and Cloud Utilisation.
Other duties and responsibilities of ITDSC include, establishing effective IT and digital
plans, formulation and implementation of technology risks management program,
recommending to the RMC and Board (whichever applicable) for approval on IT-
related expenditure, material deviation from technology-related policies and matters
related to Internet Insurance, as well as monitoring the progress of approved IT and
digital programs/projects.
 37
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

B. Internal control framework (continued)

B3. Other Key Internal Control Process (continued)

Data Management Framework

The Group Data Management Framework (“DMF”) has been in place to establish and
maintain a sound data and information management system framework. The
objective of the DMF is to manage data and disseminate information effectively,
efficiently and to maximise the value of data assets. In addition, the DMF aims to ensure
the integrity of data assets by preventing unauthorised or inappropriate use of data
and information.

Data Privacy

The Allianz Privacy Standard (“APS”), contains the global minimum requirements
applicable within the Allianz SE Group for the processing and transfer of personal data
within the Allianz SE Group. The APS takes into account the requirements of the
European Union privacy law, the General Data Protection Regulation to facilitate cross-
border transfers of personal data originating from or processed in the European
Economic Area within the Allianz SE Group. Under the APS, there are functional rules
specifying data privacy and protection requirements, which include conducting
Privacy Impact Assessment to record processing activities that involve handling of
personal data and to comply with the Personal Data Breach Incident Workflow.
Compliance with the APS adopted by the Company ensures compliance with the
Malaysian Personal Data Protection Act, 2010 and is in line with the Code of Practice
on Personal Data Protection for Insurance and Takaful in Malaysia.

Human Resources Policies and Procedures

The Company has established proper policies and procedures on human resource
management, including recruitment, learning and development, talent development,
performance management and employee benefits. These policies and procedures are
reviewed as and when the need arises and changes effected are communicated to
relevant employees via-email. The policies and procedures are also made available via
the Group’s staff e-portal for easy access by the employees.

C. Remuneration

The remuneration policy and practices of the Company (“Policy”) are established,
implemented and maintained in line with the Company’s business and risk
management strategy, its risk profile, objectives, risk management practices and the
long-term interests and performance. This Policy forms a key component of the
governance and incentive structure through which the Board and Senior Management
drive performance, convey acceptable risk taking behaviour and reinforce the
Company’s corporate and risk culture.
 38
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

C. Remuneration (continued)

The remuneration components of employees are fixed and variable

compensation. Base salary is the fixed remuneration component and rewards the role
and responsibilities taking account of market conditions and providing for a stable
source of income. The fixed component is dependent on position responsibility as well
as the experience and qualification of incumbent.

Variable Compensation components aim to reward performance and shall not provide
incentives for risks which might be incompatible with the risk profile of the Company,
including risk limits. Therefore, Variable Compensation components may not be paid,
or payment may be restricted in the case of a breach of risk limits or a compliance
breach.

The volume and relative weighting of the variable component shall depend on the level
of seniority and the position. Variable components typically consist of annual bonus
(short term incentive) and mid-/long-term incentives.

Variable Compensation is determined by a combination of assessment of the

individual’s performance and his business unit as well as overall performance of the
Company.

The Company measures performance in an annual process which includes the key
steps of agreed priorities, regular feedback, and a mid-year and year-end performance
assessment. Personal priorities or targets are agreed for each evaluated employee and
reflects financial and non-financial ambitions. The assessment of individual
performance is holistic in nature and considers relativity against peers.

The remuneration of KRPs of the Company is not only determined by performance

against business objectives but include other factors such as prudent risk-taking and
actions affecting the long-term interests of the Company. Remuneration of KRPs is
adjusted each year to account for all types of risk and breaches, determined by both
quantitative measures and qualitative judgement.

Employees in control functions are measured on the achievement of control function

objectives which determine their remuneration. Similar to all employees, actual
payout is subject to overall size of bonus pool.

A portion of the Variable Compensation for CEO and KRPs contains a deferred
component. The deferral period shall be aligned with the nature of the business, its
risks, and the activities of the incumbent in question, and adopt a multi-year framework
to reflect the time horizon of risks.
 39
Registration No. 198301008983 (104248-X)

Corporate governance disclosures (continued)

Ultimate holding company

The Directors regard Allianz SE, a public listed company incorporated and domiciled in
Germany as the Company’s ultimate holding company.

Immediate holding company

The immediate holding company is AMB, a public limited company incorporated in Malaysia
and listed on the Main Market of Bursa Malaysia Securities Berhad.

Auditors
The auditors, PricewaterhouseCoopers PLT (LLP0014401-LCA & AF 1146) have expressed
their willingness to accept re-appointment as auditors.

The details of the auditors’ remuneration for the financial year are as follows:-

2022
RM’000

Statutory audit fees 394

Other audit related fees1 1,191
1,585

Note:
1 The amount is driven by the fees associated with MFRS 17 proactive assurance.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

………………………………………………………
Goh Ching Yin
Director

………………………………………………………
Ong Eng Chow
Director

Kuala Lumpur
Date: 23 February 2023
 40
Registration No. 198301008983 (104248-X)

Allianz Life Insurance Malaysia Berhad

Registration No. 198301008983 (104248-X)
(Incorporated in Malaysia)

Statement of financial position as at 31 December 2022

2022 2021
Note RM’000 RM’000

Assets
Property, plant and equipment 3 30,432 27,977
Right-of-use assets 4 15,204 18,645
Intangible assets 5 94,072 18,173
Investments 6 14,991,145 14,473,879
Derivative financial assets 15 18,996 45,516
Reinsurance assets 7 120,677 119,680
Insurance receivables 8 70,214 65,369
Other receivables, deposits and
prepayments 9 74,098 67,613
Cash and cash equivalents 10 1,662,899 1,109,416
Total assets 17,077,737 15,946,268

Equity, policyholders’ funds and

liabilities
Share capital 11 236,600 236,600
Fair value reserve 12 (1,960) 1,476
Revaluation reserve 12 2,891 2,891
Retained earnings 12 1,458,252 1,349,965
Total equity 1,695,783 1,590,932

Insurance contract liabilities 13 14,213,542 13,259,460

Deferred tax liabilities 14 383,315 380,654
Derivative financial liabilities 15 1,293 1,641
Lease liabilities 16 5,576 9,113
Insurance payables 17 327,699 317,159
Other payables and accruals 18 441,091 373,765
Current tax liabilities 9,438 13,544
Total liabilities 15,381,954 14,355,336

Total equity, policyholders’ funds

and liabilities 17,077,737 15,946,268

The accompanying notes form an integral part of these financial statements.

 41
Registration No. 198301008983 (104248-X)

Allianz Life Insurance Malaysia Berhad

Registration No. 198301008983 (104248-X)
(Incorporated in Malaysia)

Statement of profit or loss for the year ended

31 December 2022
2022 2021
Note RM’000 RM’000

Operating revenue 19 4,012,322 3,833,500

Gross earned premiums 3,366,877 3,259,007

Premiums ceded to reinsurers (104,801) (142,309)
Net earned premiums 20 3,262,076 3,116,698

Investment income 21 645,445 574,493

Realised gains and losses 22 51,721 54,988
Fair value gains and losses 23 (378,736) (430,757)
Fee and commission income 184 12,030
Other operating income 72,972 42,132
Investment and other income 391,586 252,886

Gross benefits and claims paid (1,763,851) (1,382,828)

Claims ceded to reinsurers 82,613 110,298
Gross change in contract liabilities (870,285) (1,088,455)
Change in contract liabilities ceded to
reinsurers 8,088 13,784
Net benefits and claims 24 (2,543,435) (2,347,201)

Fee and commission expense (496,937) (506,422)

Management expenses 25 (286,730) (272,048)
Interest expenses 26 (252) (423)
Other operating expenses (76,586) (46,324)
Other expenses (860,505) (825,217)

Profit before tax 249,722 197,166

Tax expense 27 (74,004) (47,717)
Net profit for the year 175,718 149,449

The accompanying notes form an integral part of these financial statements.

 42
Registration No. 198301008983 (104248-X)

Allianz Life Insurance Malaysia Berhad

Registration No. 198301008983 (104248-X)
(Incorporated in Malaysia)

Statement of profit or loss and other comprehensive income

for the year ended 31 December 2022
2022 2021
Note RM’000 RM’000

Net profit for the year 175,718 149,449

Other comprehensive income, net of tax

Items that may be reclassified
subsequently to profit or loss
Fair value of available-for-sale (“AFS”)
financial assets
- Net losses arising during the financial year (50,569) (100,496)
- Net realised gains transferred to profit or
loss (44,035) (41,580)
Losses on cash flow hedge (7,837) (9,039)
Tax effects thereon 8,911 13,646
Change in insurance contract liabilities
arising from net fair value change on
- AFS financial assets 13 90,091 132,303
- Cash flow hedge reserve 13 7,837 9,039
Tax effects thereon 13 (7,834) (11,307)

Total other comprehensive loss for the

year, net of tax (3,436) (7,434)
Total comprehensive income for the year
attributable to owner of the Company 172,282 142,015

The accompanying notes form an integral part of these financial statements.

 43

Allianz Life Insurance Malaysia Berhad

Registration No. 198301008983 (104248-X)
(Incorporated in Malaysia)

Statement of changes in equity for the year ended 31 December 2022

Attributable to owner of the Company
Non-distributable Distributable
Retained earnings-
Share Fair value Revaluation Non-participating Retained Total
capital reserve reserve fund surplus* earnings equity
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2021 236,600 8,910 2,891 1,137,320 63,196 1,448,917

Total other comprehensive income for the year - (7,434) - - - (7,434)
Profit for the year - - - 104,198 45,251 149,449
Total comprehensive income for the year - (7,434) - 104,198 45,251 142,015
At 31 December 2021 236,600 1,476 2,891 1,241,518 108,447 1,590,932
Note 11 Note 12 Note 12 Note 12
 44

Registration No. 198301008983 (104248-X)

Allianz Life Insurance Malaysia Berhad
Registration No. 198301008983 (104248-X)
(Incorporated in Malaysia)

Statement of changes in equity for the year ended 31 December 2022 (continued)
Attributable to owner of the Company
Non-distributable Distributable
Retained earnings-
Share Fair value Revaluation Non-participating Retained Total
capital reserve reserve fund surplus* earnings equity
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2022 236,600 1,476 2,891 1,241,518 108,447 1,590,932

Total other comprehensive income for the year - (3,436) - - - (3,436)
Profit for the year - - - 123,711 52,007 175,718
Total comprehensive income for the year - (3,436) - 123,711 52,007 172,282
Dividends to owner of the Company (Note 28) - - - - (67,431) (67,431)
At 31 December 2022 236,600 (1,960) 2,891 1,365,229 93,023 1,695,783
Note 11 Note 12 Note 12 Note 12

* Non-distributable retained earnings comprise Non-Participating fund surplus, net of deferred tax, which is wholly attributable to the shareholders. This
amount is only distributable upon the actual transfer of surplus from the Life Non-Participating fund to the Shareholder’s fund as recommended by the
Company’s Appointed Actuary and approved by the Board of Directors of the Company.

The accompanying notes form an integral part of these financial statements.

 45
Registration No. 198301008983 (104248-X)

Allianz Life Insurance Malaysia Berhad

Registration No. 198301008983 (104248-X)
(Incorporated in Malaysia)

Statement of cash flows for the year ended

31 December 2022
2022 2021
RM’000 RM’000
Cash flows from operating activities
Profit before tax 249,722 197,166
Adjustments for:
Investment income (645,445) (574,493)
Interest income (648) (416)
Interest expense 252 423
Realised gain recorded in profit or loss (51,721) (54,988)
Fair value losses on investments recorded in profit or loss 348,917 389,623
Purchase of available-for-sale (“AFS”) financial investments (295,439) (473,476)
Maturity of AFS financial investments 32,000 20,000
Proceeds from sale of AFS financial investments 327,722 432,120
Purchase of held for trading (“HFT”) financial investments (2,089,518) (2,919,836)
Maturity of HFT financial investments 246,000 293,901
Proceeds from sale of HFT financial investments 1,053,109 1,333,619
Purchase of designated upon initial recognition (“DUIR”)
financial investments (781,949) (1,096,462)
Maturity of DUIR financial investments 322,000 406,259
Proceeds from sale of DUIR financial investments 56,274 116,738
Change in loans and receivables 228,703 442,925
Impairment loss on receivables 655 1,249
Amortisation of intangible assets 10,128 7,984
Depreciation of property, plant and equipment 5,659 4,938
Loss on disposal of property, plant and equipment 2 -
Property, plant and equipment written off 183 657
Unrealised foreign exchange gains (21,781) (4,850)
Impairment loss on AFS financial investments 29,819 41,134
Depreciation of right-of-use assets 5,531 5,527
Operating loss before changes in working capital (969,825) (1,430,258)
 46
Registration No. 198301008983 (104248-X)

Allianz Life Insurance Malaysia Berhad

Registration No. 198301008983 (104248-X)
(Incorporated in Malaysia)

Statement of cash flows for the year ended

31 December 2022 (continued)
2022 2021
RM’000 RM’000
Changes in working capital:
Change in reinsurance assets (997) (51,560)
Change in insurance receivables (5,500) (8,238)
Change in other receivables, deposits and prepayments (5,834) 633
Change in insurance contract liabilities 1,044,176 1,237,018
Change in insurance payables 10,540 64,638
Change in other payables and accruals 8,982 (46,085)
Cash from/(used in) operations 81,542 (233,852)
Tax paid (66,538) (50,756)
Dividends received 127,840 102,833
Interest income received 519,931 490,777
Interest paid on lease liabilities (252) (423)
Net cash from operating activities 662,523 308,579

Cash flows from investing activities

Proceeds from disposal of property, plant and equipment 1 -
Acquisition of property, plant and equipment (10,454) (11,224)
Acquisition of intangible assets (92,960) (658)
Net cash used in investing activities (103,413) (11,882)

Cash flows from financing activities

Repayment of lease liabilities (5,627) (5,460)
Net cash used in financing activities (5,627) (5,460)

Net increase in cash and cash equivalents 553,483 291,237

Cash and cash equivalents at 1 January 1,109,416 818,179
Cash and cash equivalents at 31 December 1,662,899 1,109,416

Cash and cash equivalents comprise:

Fixed and call deposits with licensed financial institutions
(with maturity three months or less) 1,538,190 1,054,595
Cash and bank balances 124,709 54,821
1,662,899 1,109,416
 47
Registration No. 198301008983 (104248-X)

Allianz Life Insurance Malaysia Berhad

Registration No. 198301008983 (104248-X)
(Incorporated in Malaysia)

Statement of cash flows for the year ended

31 December 2022 (continued)
The Company classifies the cash flows from the acquisition and disposal of financial assets as
operating cash flow, as the purchases are funded from the cash flows associated with the
origination of insurance contracts, net of cash flows for payments of claims incurred for insurance
contracts, which are respectively treated under operating activities.

Reconciliation of liabilities arising from financing activities:

Lease liabilities Total

RM’000 RM’000

At 1 January 2021 15,125 15,125

Cash flows (5,883) (5,883)
Interest charged 423 423
Lease additions - -
Modification/termination of leases (552) (552)
At 31 December 2021 9,113 9,113

At 1 January 2022 9,113 9,113

Cash flows (5,879) (5,879)
Interest charged 252 252
Lease additions 1,944 1,944
Modification/termination of leases 146 146
At 31 December 2022 5,576 5,576
(Note 16)

The accompanying notes form an integral part of these financial statements.

 48

Allianz Life Insurance Malaysia Berhad

Registration No. 198301008983 (104248-X)
(Incorporated in Malaysia)

Notes to the financial statements

Corporate information
Allianz Life Insurance Malaysia Berhad is a public limited liability company incorporated and
domiciled in Malaysia. The address of the principal place of business and registered office of
the Company is as follows:

Level 29, Menara Allianz Sentral,

203, Jalan Tun Sambanthan,
Kuala Lumpur Sentral,
50470 Kuala Lumpur, Malaysia

The Company is principally engaged in the underwriting of life insurance and investment-
linked business.

The ultimate holding company is Allianz SE, a public listed company incorporated and
domiciled in Germany. The immediate holding company is Allianz Malaysia Berhad, a public
limited liability company, incorporated and domiciled in Malaysia and listed on the Main
Market of Bursa Malaysia Securities Berhad.

These financial statements were approved by the Board of Directors on 23 February 2023.

1. Basis of preparation
1.1 Statement of compliance

The financial statements of the Company have been prepared in accordance with
Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting
Standards and the requirements of the Companies Act 2016 in Malaysia.

The following are amendments to standards and interpretations that have been issued
by Malaysian Accounting Standards Board (“MASB”) for the financial year beginning on
or after 1 January 2022 and adopted by the Company:
 49
Registration No. 198301008983 (104248-X)

1. Basis of preparation (continued)

1.1 Statement of compliance (continued)

MFRSs, Interpretations and amendments effective for annual periods beginning on

or after 1 January 2022

• Amendments to MFRS 16, COVID-19 Related Rent Concessions beyond 30 June 2021
• Amendments to MFRS 116, Proceeds before Intended Use
• Amendments to MFRS 3, Reference to Conceptual Framework
• Amendments to MFRS 137, Onerous Contracts – Cost of Fulfilling a Contract
• Annual Improvements to MFRS 1, Subsidiary as First-time Adopter
• Annual Improvements to Illustrative Example accompanying MFRS 16 Leases:
Lease Incentives
• Annual Improvements to MFRS 141, Taxation in Fair Value Measurements
• Annual Improvements to MFRS 9, Fees in the '10 percent' test for Derecognition of
Financial Liabilities

The following are accounting standards, amendments to standards and interpretations

that have been issued by MASB but not yet effective and have not been early adopted
by the Company:

MFRSs, Interpretations and amendments effective for annual periods beginning on

or after 1 January 2023

• Amendments to MFRS101, Classification of liabilities and current or non-current

• Amendments to MFRS 101, MFRS Practice Statement 2 and MFRS 108 on
Disclosure of Accounting Policies and Definition of Accounting Estimate
• Amendments to MFRS 112, Deferred tax related to Assets and Liabilities arising
from Single Transaction
• MFRS 17, Insurance Contracts
 50
Registration No. 198301008983 (104248-X)

1. Basis of preparation (continued)

1.1 Statement of compliance (continued)

MFRS 17, Insurance Contracts

MFRS 17 replaces the guidance in MFRS 4, Insurance Contracts.

MFRS 17 establishes principles for the recognition, measurement, presentation and

disclosure of insurance contracts and supersedes MFRS 4.

MFRS 17 provides comprehensive guidance on accounting for insurance contracts

issued, reinsurance contracts held, and investment contracts with discretionary
participation features. It introduces three new measurement models, reflecting a
different extent of policyholder participation in investment performance or overall
insurance entity performance. The general measurement model, also known as the
building block approach, consists of the fulfillment cash flows and the contractual
service margin. The fulfillment cash flows represent the risk-adjusted present value of
an entity’s rights and obligations to the policyholders, comprising estimates of expected
cash flows, discounting and an explicit risk adjustment for non-financial risk. The
contractual service margin represents the unearned profit from in-force contracts that
an entity will recognise as it provides services over the coverage period.

At inception, the contractual service margin cannot be negative. If the fulfillment cash
flows lead to a negative contractual service margin at inception, it will be set to zero and
the negative amount will be recorded immediately in the statement of profit or loss. At
the end of a reporting period, the carrying amount of a group of insurance contracts is
the sum of the liability for remaining coverage and the liability of incurred claims. The
liability for remaining coverage consists of the fulfillment cash flows related to future
services and the contractual service margin, while the liability for incurred claims
consists of the fulfillment cash flows related to past services. The contractual service
margin gets adjusted for changes in cash flows related to future services and for the
interest accretion at interest rates locked-in at initial recognition of the group of
contracts. A release from the contractual service margin is recognised in profit or loss
each period to reflect the services provided in that period based on “coverage units”.
 51
Registration No. 198301008983 (104248-X)

1. Basis of preparation (continued)

1.1 Statement of compliance (continued)

MFRS 17, Insurance Contracts (continued)

MFRS 17 only provides principle-based guidance on how to determine these coverage

units. The Company has defined the account value for the reflection of investment
services and the sum at risk for insurance services as the default approach to determine
the coverage units. If multiple services are provided in one contract, a weighting is
applied. The variable fee approach is a mandatory modification of the general
measurement model regarding the treatment of the contractual service margin in order
to accommodate direct participating contracts. An insurance contract has a direct
participation feature if the following three requirements are met:

(a) the contractual terms specify that the policyholder participates in a share of a clearly
identified pool of underlying items;
(b) the entity expects to pay to the policyholder an amount equal to a substantial share
of the fair value returns on the underlying items; and
(c) the entity expects a substantial proportion of any change in the amounts to be paid
to the policyholder to vary with the change in fair value of the underlying items.

The assessment of whether an insurance contract meets these three criteria is made at
inception of the contract and not revised subsequently, except in case of a substantial
modification of the contract. For contracts with direct participation features, the
contractual service margin is adjusted for changes in the amount of the entity’s share of
the fair value of the underlying items. No explicit interest accretion is required since the
contractual service margin is effectively remeasured when it is adjusted for changes in
financial risks.

The premium allocation approach is a simplified approach for the measurement of the
liability of remaining coverage an entity may choose to use when the premium
allocation approach provides a measurement which is not materially different from that
under the general measurement model or if the coverage period of each contract in the
group of insurance contracts is one year or less. Under the premium allocation
approach, the liability for remaining coverage is measured as the amount of premiums
received net of acquisition cash flows paid, less the net amount of premiums and
acquisition cash flows that have been recognised in profit or loss over the expired
portion of the coverage period based on the passage of time. The measurement of the
liability for incurred claims is identical under all three measurement models, apart from
the determination of locked-in interest rates used for discounting.
 52
Registration No. 198301008983 (104248-X)

1. Basis of preparation (continued)

1.1 Statement of compliance (continued)

MFRS 17, Insurance Contracts (continued)

MFRS 17 requires the separation of embedded derivatives, investment components,

and performance obligations to provide non-insurance goods and services, if certain
conditions are met. The separated components need to be accounted for separately
according to MFRS 9 (embedded derivatives, investment components) or MFRS 15
(non-insurance goods and services). Measurement is not carried out at the level of
individual contracts, but on the basis of groups of contracts. To allocate individual
insurance contracts to groups of contracts, an entity first needs to define portfolios
which include contracts with similar risks that are managed together.

In the statement of financial position, insurance related receivables will no longer be

presented separately but as part of the insurance liabilities. This change in presentation
will lead to a reduction in total assets, offset by a reduction in total liabilities. The
amounts presented in the statement of financial performance need to be disaggregated
into an insurance service result, consisting of the insurance revenue and the insurance
service expenses, and insurance finance income and expenses. Income or expenses
from reinsurance contracts held need to be presented separately from the expenses or
income from insurance contracts issued.

For long-duration life insurance contracts, MFRS 17 is expected to have a significant

impact on actuarial modeling, as more granular cash flow projections and regular
updates of all assumptions will be required, either impacting profit or loss or the
contractual service margin. The Company expects that direct participating business,
where the rules on profit sharing are defined by legal/contractual rights, will qualify for
the variable fee approach eligibility. Indirect participating business, where the
payments to the policyholder depend on the investment performance but there are no
fixed rules on how the performance is passed on to the policyholders, as well as non-
participating business, i.e. business without policyholder participation, including
savings and risk business, will be accounted for under the general measurement model.

The Company will continue to have unit-linked insurance contracts, which are contracts
with significant insurance risk, e.g. via death or other insurance riders. The Company
expects unit-linked insurance contracts to be eligible for the variable fee approach. In
the statement of financial position, the Company expects an increase of the insurance
liabilities as these will be discounted with current rates and will contain an explicit
future profit margin with the contractual service margin. Shareholder’s share of
unrealised capital gains will be part of the insurance liabilities accounted for under the
variable fee approach.
 53
Registration No. 198301008983 (104248-X)

1. Basis of preparation (continued)

1.1 Statement of compliance (continued)

MFRS 17, Insurance Contracts (continued)

In the income statement, the release of the contractual service margin and the risk
adjustment for non-financial risk will become the main components for the profit
before tax of the life insurance and investment-linked business. Besides the qualitative
impacts described above, the Company is currently assessing the quantitative impact of
the application of MFRS 17. The final figures will also depend on the application of the
transition approaches. MFRS 17 has to be applied retrospectively unless this is
impracticable. Fulfillment cash flows are determined prospectively at every reporting
date, including the date of initial application. However, the contractual service margin
is rolled-forward over time, a split of profits between equity (“earned profits”) and
contractual service margin (“unearned profits”) is required, but is often very
challenging due to the long-term nature of some life insurance contracts. If a full
retrospective application is impracticable, an entity can choose between a modified
retrospective approach or a fair value approach.

The objective of the modified retrospective approach is to use reasonable and

supportable information available without undue cost or effort to achieve the closest
possible outcome to full retrospective application. To the extent a retrospective
determination is not possible, certain modifications are allowed. Under the fair value
approach, the contractual service margin of a group of contracts at transition is
determined as the difference between the fair value of this group at transition
determined in accordance with MFRS 13 and the corresponding MFRS 17 fulfillment
cash flows measures at transition. Besides the determination of the contractual service
margin, another crucial topic at transition is the determination of historic interest rates.

After making reasonable efforts to gather necessary historical information, the

Company has determined that for certain groups of contracts, information such as the
expectation of the contract’s profitability at initial recognition, historical interest rates
and historical cash flows were not available or not available in a form that would enable
it to be used without undue cost and effort. It was therefore impracticable to apply the
full retrospective approach, and the Company has adopted the modified retrospective
approach for these groups.

For insurance contracts issued, the Company intends to adopt the standard using the
full retrospective approach for all currently modelled products in annual cohorts 2014
or later. For modelled products in annual cohorts prior to 2014, the modified
retrospective approach will be applied. For unmodelled products, the Company will
continue not be modelled under MFRS 17 on the basis of insignificant.

In respect of reinsurance contract held, the modified retrospective approach will be

applied to the reinsurance contracts held in annual cohorts prior to 2021 while the full
retrospective approach will be applied to reinsurance contracts held in annual cohorts
2021 or later. The preparation of the 2022 comparative and 1 January 2023 results
under the new standard is progressing as planned.
 54
Registration No. 198301008983 (104248-X)

1. Basis of preparation (continued)

1.1 Statement of compliance (continued)

MFRS 17, Insurance Contracts (continued)

The combined effect on the Company’s statement of financial position on transition to

MFRS 17 as at 1 January 2022 is to improve total equity measured under MFRS 17 by
approximately 18%. The preparation of the 2022 comparative and the 1 January 2023
results under the new standard is progressing as planned.

MFRS 9, Financial Instruments

MFRS 9 ‘Financial Instruments’ will replace MFRS 139 ‘Financial Instruments:

Recognition and Measurement’.

Classification and measurements

MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and
establishes three primary measurement categories for financial assets: amortised cost,
fair value through profit or loss ("FVTPL") and fair value through other comprehensive
income ("FVOCI"). The basis of classification depends on the entity's business model and
the cash flow characteristics of the financial asset. Investments in equity instruments
are always measured at fair value through profit or loss with an irrevocable option at
inception to present changes in fair value in other comprehensive income (“OCI”)
(provided the instrument is not held for trading). A debt instrument is measured at
amortised cost only if the entity is holding it to collect contractual cash flows and the
cash flows represent principal and interest.

For liabilities, the standard retains most of the MFRS 139 requirements. These include
amortised cost accounting for most financial liabilities, with bifurcation of embedded
derivatives. The main change is:

• For financial liabilities classified as FVTPL, the fair value changes due to own credit
risk should be recognised directly to OCI. There is no subsequent recycling to profit
or loss.

The Company has classified and measured equity instruments and bond investments
that are not held for trading at FVOCI. The financial assets of the Company are for the
purpose of backing insurance liabilities, hence the hold and sell business model is
adopted with FVOCI as a relevant measurement approach.

There will be no significant changes to the Company’s accounting for financial liabilities
as it largely retains the MFRS 139 requirements.
 55
Registration No. 198301008983 (104248-X)

1. Basis of preparation (continued)

1.1 Statement of compliance (continued)

MFRS 9, Financial Instruments

Impairment of financial assets

MFRS 9 introduces an expected credit loss model on impairment that replaces the
incurred loss impairment model used in MFRS 139. The expected credit loss model is
forward-looking and eliminates the need for a trigger event to have occurred before
credit losses are recognised.

The new impairment model requires the recognition of impairment allowances based
on expected credit losses ("ECL") rather than only incurred credit losses as is the case
under MFRS 139. It applies to financial assets classified at amortised cost, debt
instruments measured at FVOCI, lease receivables, loan commitments, financial
guarantee contracts and other loan commitments.

Under MFRS 9, impairment will be measured on each reporting date according to a

three-stage ECL impairment model:

Stage 1 – from initial recognition of a financial assets to the date on which the credit risk
of the asset has increased significantly relative to its initial recognition, a loss allowance
is recognised equal to the credit losses expected to result from defaults occurring over
the next 12 months (12-month ECL).

Stage 2 – following a significant increase in credit risk relative to the initial recognition
of the financial assets, a loss allowance is recognised equal to the credit losses expected
over the remaining life of the financial asset (Lifetime ECL).

Stage 3 – When a financial asset is considered to be credit-impaired, a loss allowance

equal to full lifetime expected credit losses is to be recognised (Lifetime ECL).

As all financial assets within the scope of MFRS 9 impairment model will be assessed for
at least 12-month ECL, the total allowance for credit losses is expected to increase under
MFRS 9 relative to the allowance for credit losses under MFRS 139.

In addition, changes in the required credit loss allowance, including the impact of
movements between Stage 1 (12-month ECL) and Stage 2 (lifetime ECL) and the
application of forward looking information, will be recorded in profit or loss, allowance
for credit losses will be more volatile under MFRS 9.

The assessment of credit risk and the estimation of ECL are required to be unbiased,
probability-weighted and should incorporate all available information which is relevant
to the assessment, including information about past events, current conditions and
reasonable and supportable forecasts of future events and economic conditions at the
reporting date. In addition, the estimation of ECL should also take into account the time
value of money.
 56
Registration No. 198301008983 (104248-X)

1. Basis of preparation (continued)

1.1 Statement of compliance (continued)

MFRS 9, Financial Instruments

Hedge accounting

Under MFRS 9, the general hedge accounting requirements have been simplified for
hedge effectiveness testing and permit hedge accounting to be applied to a greater
variety of hedging instruments and risks. The Company do not expect a significant
impact arising from the changes in the hedge accounting requirements.

Disclosure

The new standard also introduces expanded disclosure requirements and changes in
presentation. These are expected to change the nature and extent of the Company's
disclosures about its financial instruments particularly in the year of the adoption of the
new standard.

The Company will apply the new rules retrospectively from 1 January 2023, with the
practical expedients permitted under the standard. Comparatives for 2022 will not be
restated. The Company is still in the midst of finalising the financial impact in relation to
the adoption of MFRS 9.

The Company has applied the temporary exemption under Amendments to MFRS 4 -
Applying MFRS 9, Financial Instruments with MFRS 4, Insurance Contracts (“the
Amendments”) which enables eligible entities to defer the implementation date of
MFRS 9 to annual periods beginning before 1 January 2023 at the latest (see Note 37).
 57
Registration No. 198301008983 (104248-X)

1. Basis of preparation (continued)

1.2 Basis of measurement

The financial statements have been prepared on the historical cost basis other than as
disclosed in Note 2.

1.3 Functional and presentation currency

Items included in the financial statements of the Company are measured using the
currency of the primary economic environment in which the Company operates (the
“functional currency”). The financial statements are presented in Ringgit Malaysia
(“RM”), which is the Company’s functional currency. All financial information is
presented in RM and has been rounded to the nearest thousand, unless otherwise
stated.

1.4 Use of estimates and judgements

The preparation of the financial statements in conformity with MFRSs requires

management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets, liabilities, and
disclosure of contingent assets and liabilities at the date of financial statement, and the
reported amount of income and expenses during the year. Actual results may differ
from these estimates.

Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to

accounting estimates are recognised in the period in which the estimates are revised
and in any future periods affected.

There are no significant areas of estimation uncertainty and critical judgements in

applying accounting policies that have significant effect on the amounts recognised in
the financial statements other than those disclosed in the following notes:

• Note 2 (u)(i) – valuation of life actuarial liabilities.

2. Significant accounting policies

The accounting policies set out below have been applied consistently to the periods
presented in these financial statements, unless otherwise stated.
 58
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(a) Foreign currency transactions and balances

Transactions in foreign currencies are translated to the functional currency of the

Company at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the
reporting period are retranslated to the functional currency at the exchange rate
at that date.

Non-monetary assets and liabilities denominated in foreign currencies are not

retranslated at the end of the reporting date, except for those that are measured
at fair value are retranslated to the functional currency at the exchange rate at the
date that the fair value was determined.

Foreign currency differences arising from settlement of foreign currency

transactions and from retranslation of monetary assets and liabilities are
recognised in profit or loss, except for differences arising on the retranslation of
available-for-sale equity instruments or a financial instrument designated as a
hedge of currency risk, which are recognised in other comprehensive income.

(b) Property, plant and equipment

(i) Recognition and measurement

All items of property, plant and equipment except for work-in-progress are
measured at cost/valuation less any accumulated depreciation and any
accumulated impairment losses. Work-in-progress is stated at cost less
accumulated impairment.

The Company revalues its properties comprising land and buildings every
five years and at shorter intervals whenever the fair value of the revalued
assets are expected to differ materially from their carrying value.

Any accumulated depreciation at the date of revaluation is eliminated

against the gross carrying amount of the asset, and the net amount is
restated to the revalued amount of the asset.

The revalued amounts of property are determined by using the Comparison

Method. The Comparison Method entails critical analysis of recent evidence
of values of comparable properties in the neighbourhood and making
adjustment for differences such as differences in location, size and shape of
land, age and condition of building, tenure, title restrictions if any and other
relevant characteristics.

Valuation of the properties involves a degree of judgement before arriving at

the respective property’s revalued amount. As such, the revalued amount of
the properties may be different from its actual market price.
 59
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(b) Property, plant and equipment (continued)

(i) Recognition and measurement (continued)

Surpluses arising from revaluation are credited to revaluation reserve

account via the statement of other comprehensive income. Any deficit
arising is offset against the revaluation reserve to the extent of a previous
increase for the same property. In all other cases, a decrease in carrying
amount is recognised in profit or loss.

Costs include expenditures that are directly attributable to the acquisition of

the asset and any other costs directly attributable to bringing the asset to
working condition for its intended use, and the costs of dismantling and
removing the items and restoring the site on which they are located.

Purchased software that is integral to the functionality of the related

equipment is capitalised as part of that equipment.

When significant parts of an item of property, plant and equipment have

different useful lives, they are accounted for as separate items (major
components) of property, plant and equipment.

The gain or loss on disposal of an item of property, plant and equipment is

determined by comparing the proceeds from disposal with the carrying
amount of property, plant and equipment and is recognised on a net basis
within “realised gains and losses” in profit or loss. When revalued assets are
sold, the amounts included in the revaluation reserve are transferred to
retained earnings.

(ii) Subsequent costs

The cost of replacing a component of an item of property, plant and

equipment is recognised in the carrying amount of the item if it is probable
that the future economic benefits embodied within the component will flow
to the Company, and its cost can be measured reliably. The carrying amount
of the replaced component is derecognised to profit or loss. The costs of the
day-to-day servicing of property, plant and equipment are recognised in
profit or loss as incurred.
 60
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(b) Property, plant and equipment (continued)

(iii) Depreciation

Depreciation is based on the cost of an asset less its residual value.

Significant components of individual assets are assessed, and if a
component has a useful life that is different from the remainder of that
asset, then that component is depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the

estimated useful lives of each component of an item of property, plant and
equipment from the date that they are available for use. Freehold land is not
depreciated. Work-in-progress are not depreciated until the assets are
ready for their intended use.

The estimated useful lives for the current and comparative periods are as
follows:

• Buildings 50 years
• Office equipment, furniture and fittings 2 -10 years
• Computers 5 years
• Motor vehicles 5 years
• Office renovation and partitions 10 years

Depreciation methods, useful lives and residual values are reviewed at the
end of the reporting period, and adjusted as appropriate.

Leased assets (including leasehold land) are presented as a separate line

item in statement of financial position. See accounting policy Note 2(d)(i)
on right-of-use assets for these assets.
 61
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(c) Intangible assets

(i) Development costs

Expenditure incurred on software development is capitalised, only if

development costs can be measured reliably, the product or process is
technically and commercially feasible, future economic benefits are
probable and the Company intends to and has sufficient resources to
complete development and to use the asset.

The expenditure capitalised includes the cost of materials, direct labour and
overhead costs that are directly attributable to preparing the asset for its
intended use. Other development expenditure is recognised in profit or loss
as an expense as incurred. Capitalised development expenditure is
measured at cost less any accumulated amortisation and any accumulated
impairment losses.

(ii) Other intangible assets

Other intangible assets that are acquired by the Company, which have finite
useful lives, are measured at cost less any accumulated amortisation and any
accumulated impairment losses.
 62
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(c) Intangible assets (continued)

(iii) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future

economic benefits embodied in the specific asset to which it relates. All
other expenditure is recognised in profit or loss as incurred.

(iv) Amortisation

Amortisation is based on the cost of an asset less its residual value. Intangible
assets with finite useful lives are amortised from the date that they are
available for use. Amortisation is recognised in profit or loss on a straight-
line basis over the estimated useful lives of intangible assets from the date
they are available for use.

The estimated useful lives for the current and comparative periods are as
follows:

• Capitalised software development costs 3-5 years

• Other intangible assets 15 years

Amortisation methods, useful lives and residual values are reviewed at the
end of each reporting period and adjusted, if appropriate.

(d) Leases

(i) Accounting by lessee

Leases are recognised as right-of-use (‘ROU’) asset and a corresponding

liability at the date on which the leased asset is available for use by the
Company (i.e. the commencement date).

Contracts may contain both lease and non-lease components. The Company
allocates the consideration in the contract to the lease and non-lease
components based on their relative stand-alone prices. However, for leases
of properties for which the Company is a lessee, it has elected the practical
expedient provided in MFRS 16 not to separate lease and non-lease
components. Both components are accounted for as a single lease
component and payments for both components are included in the
measurement of lease liability.
 63
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(d) Leases (continued)

(i) Accounting by lessee (continued)

Lease term

In determining the lease term, the Company considers all facts and
circumstances that create an economic incentive to exercise an extension
option, or not to exercise a termination option. Extension options (or
periods after termination options) are only included in the lease term if the
lease is reasonably certain to be extended (or not to be terminated).

The Company reassess the lease term upon the occurrence of a significant
event or change in circumstances that is within the control of the Company
and affects whether the Company is reasonably certain to exercise an option
not previously included in the determination of lease term, or not to exercise
an option previously included in the determination of lease term. A revision
in lease term results in remeasurement of the lease liabilities.

ROU assets

ROU assets are initially measured at cost comprising the following:

• The amount of the initial measurement of lease liability;
• Any lease payments made at or before the commencement date less
any lease incentive received;
• Any initial direct costs; and
• Decommissioning or restoration costs.

ROU assets are generally depreciated over the shorter of the asset’s useful
life and the lease term on a straight-line basis. In addition, the ROU assets
are adjusted for certain remeasurement of the lease liabilities.
 64
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(d) Leases (continued)

(i) Accounting by lessee (continued)

Lease liabilities

Lease liabilities are initially measured at the present value of the lease
payments that are not paid at that date. The lease payments include fixed
payments (including in-substance fixed payments), less any lease incentive
receivable.

Lease payments are discounted using the interest rate implicit in the lease.
If that rate cannot be readily determined, which is generally the case for
leases in the Company, the lessee’s incremental borrowing is used. This is
the rate that the individual lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value to the ROU in a similar
economic environment with similar term, security and conditions.

Lease payments are allocated between principal and finance cost. The
finance cost is charged to profit or loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of the liability
for each period.

The Company presents the lease liabilities as a separate line item in the
statement of financial position. Interest expense on the lease liability is
presented within the interest expenses in profit or loss in the statement of
profit or loss.

Short term leases and leases of low value assets

Short-term leases are leases with a lease term of 12 months or less. Low-
value assets comprise photocopiers. Payments associated with short-term
leases of equipment and all leases of low-value assets are recognised on a
straight-line basis as an expense in profit or loss.
 65
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(d) Leases (continued)

(ii) Accounting by lessor

As a lessor, the Company determines at lease inception whether each lease

is a finance lease or an operating lease. To classify each lease, the Company
makes an overall assessment of whether the lease transfers substantially all
of the risks and rewards incidental to ownership of the underlying asset to
the lessee. As part of this assessment, the Company considers certain
indicators such as whether the lease is for the major part of the economic
life of the asset.

Operating lease

The Company classifies a lease as an operating lease if the lease does not
transfer substantially all the risks and rewards incidental to ownership of an
underlying asset to the lessee.

The Company recognises lease payments received under operating lease as

lease income on a straight-line basis over the lease term.

When assets are leased out under an operating lease, the asset is included in
the statement of financial position based on the nature of the asset. Initial
direct costs incurred in obtaining an operating lease are added to the
carrying amount of underlying asset and recognised as an expense over the
lease term on the same basis as lease income.

Sublease classification

When the Company is an intermediate lessor, it assesses the lease

classification of a sublease with reference to the ROU asset arising from the
head lease, not with reference to the underlying asset.

(e) Financial instruments

(i) Initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of

financial position when, and only when, the Company becomes a party to
the contractual provisions of the instrument.
 66
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(e) Financial instruments (continued)

(i) Initial recognition and measurement (continued)

A financial instrument is recognised initially, at its fair value plus, in the case
of a financial instrument not at fair value through profit or loss, transaction
costs that are directly attributable to the acquisition or issue of the financial
instrument.

An embedded derivative is recognised separately from the host contract and

accounted for as a derivative if, and only if, it is not closely related to the
economic characteristics and risks of the host contract and the host contract
is not categorised at fair value through profit or loss. The host contract, in the
event an embedded derivative is recognised separately, is accounted for in
accordance with policy applicable to the nature of the host contract.

(ii) Financial instrument categories and subsequent measurement

The Company categorises and measures financial instruments as follows:

Financial assets

(1) Financial assets at fair value through profit or loss

Fair value through profit or loss category comprises financial assets that
are held for trading, including derivatives (except for a derivative that
is a financial guarantee contract or a designated and effective hedging
instrument) or financial assets that are specifically designated into this
category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of

unquoted equity instruments whose fair values cannot be reliably
measured are measured at cost.

Financial assets categorised as fair value through profit or loss are

subsequently measured at their fair values with the gain or loss
recognised in profit or loss.

(2) Loans and receivables, excluding insurance receivables

Loans and receivables category comprises debt instruments that are

not quoted in an active market and include other receivables, deposits
and cash and cash equivalents.

Financial assets categorised as loans and receivables are subsequently

measured at amortised cost using the effective interest method.
 67
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(e) Financial instruments (continued)

(ii) Financial instrument categories and subsequent measurement

(continued)

Financial assets (continued)

(3) Available-for-sale financial assets

Available-for-sale category comprises investment in equity and debt

securities instruments that are not held for trading.

Investments in equity instruments that do not have a quoted market

price in an active market and whose fair value cannot be reliably
measured are measured at cost. Other financial assets categorised as
available-for-sale are subsequently measured at their fair values with
the gain or loss recognised in other comprehensive income, except for
impairment losses, foreign exchange gains and losses arising from
monetary items and gains and losses of hedged items attributable to
hedge risks of fair value hedges which are recognised in profit or loss.
On derecognition, the cumulative gain or loss recognised in other
comprehensive income is reclassified from equity into profit or loss.
Interest calculated for a debt instrument using the effective interest
method is recognised in profit or loss.

(4) Insurance receivables

Insurance receivables are recognised when due and measured on

initial recognition at the fair value of the consideration received or
receivable. Subsequent to initial recognition, insurance receivables are
measured at amortised cost, using the effective interest method.

If there is objective evidence that the insurance receivable is impaired,

the Company reduces the carrying amount of the insurance receivable
accordingly and recognises that impairment loss in profit or loss. The
Company gathers the objective evidence that an insurance receivable
is impaired using the same process adopted for financial assets carried
at amortised cost. The impairment loss is calculated under the same
method used for these financial assets. These processes are described
in Note 2(f)(ii).

Insurance receivables are derecognised when the derecognition

criteria for financial assets, as described in Note 2(e)(v), have been
met.

All financial assets, except for those measured at fair value through profit or
loss, are subject to review for impairment (see Note 2(f)(i)).
 68
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(e) Financial instruments (continued)

(ii) Financial instrument categories and subsequent measurement

(continued)

Financial liabilities

All financial liabilities are initially measured at fair value and subsequently
measured at amortised cost other than those categorised as fair value
through profit or loss.

Fair value through profit or loss category comprises financial liabilities that
are held for trading, derivatives (except for a derivative that is a financial
guarantee contract or a designated and effective hedging instrument) or
financial liabilities that are specifically designated into this category upon
initial recognition.

Derivatives that are linked to and must be settled by delivery of equity

instruments that do not have quoted price in an active market for identical
instruments whose fair values otherwise cannot be reliably measured are
measured at cost.

Financial liabilities categorised as fair value through profit or loss are

subsequently measured at their fair values with the gain or loss recognised
in profit or loss.

(iii) Regular way purchase or sale of financial assets

A regular way purchase or sale is a purchase or sale of a financial asset under

a contract whose terms require delivery of the asset within the time frame
established generally by regulation or convention in the marketplace
concerned.

A regular way purchase or sale of financial assets is recognised and

derecognised, as applicable, using trade date accounting. Trade date
accounting refers to:

(a) the recognition of an asset to be received and the liability to pay for it on
the trade date, and

(b) derecognition of an asset that is sold, recognition of any gain or loss on

disposal and the recognition of a receivable from the buyer for payment
on the trade date.
 69
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(e) Financial instruments (continued)

(iv) Hedge accounting

Cash flow hedge

A cash flow hedge is a hedge of the exposure to variability in cash flows that
is attributable to a particular risk associated with a recognised asset or
liability or a highly probable forecast transaction and could affect the profit
or loss. In a cash flow hedge, the portion of the gain or loss on the hedging
instrument that is determined to be an effective hedge is recognised in other
comprehensive income and the ineffective portion is recognised in profit or
loss.

Subsequently, the cumulative gain or loss recognised in other

comprehensive income is reclassified from equity into profit or loss in the
same period or periods during which the hedged forecast cash flows affect
profit or loss. If the hedge item is a non-financial asset or liability, the
associated gain or loss recognised in other comprehensive income is
removed from equity and included in the initial amount of the asset or
liability. However, loss recognised in other comprehensive income that will
not be recovered in one or more future periods is reclassified from equity
into profit or loss.

Cash flow hedge accounting is discontinued prospectively when the

hedging instrument expires or is sold, terminated or exercised, the hedge is
no longer highly effective, the forecast transaction is no longer expected to
occur or the hedge designation is revoked. If the hedge is for a forecast
transaction, the cumulative gain or loss on the hedging instrument remains
in equity until the forecast transaction occurs. When the forecast transaction
is no longer expected to occur, any related cumulative gain or loss
recognised in other comprehensive income on the hedging instrument is
reclassified from equity into profit or loss.

The Company enters into forward purchase agreements as cash flow

hedging instruments to hedge against variability in future cash flows arising
from movements in interest rates of debt securities.
 70
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(e) Financial instruments (continued)

(v) Derecognition

A financial asset or part of it is derecognised when, and only when, the

contractual rights to the cash flows from the financial asset expire or control
of the asset is not retained or substantially all of the risks and rewards of
ownership of the financial asset are transferred to another party. On
derecognition of a financial asset, the difference between the carrying
amount and the sum of the consideration received (including any new asset
obtained less any new liability assumed) and any cumulative gain or loss that
had been recognised in the equity is recognised in profit or loss.

A financial liability or a part of it is derecognised when, and only when, the

obligation specified in the contract is discharged, cancelled or expires. On
derecognition of a financial liability, the difference between the carrying
amount of the financial liability extinguished or transferred to another party
and the consideration paid, including any non-cash assets transferred or
liabilities assumed, is recognised in profit or loss.

(f) Impairment

(i) Financial assets, excluding insurance receivables

All financial assets (except for financial assets categorised as fair value
through profit or loss) are assessed at each reporting date whether there is
any objective evidence of impairment as a result of one or more events
having an impact on the estimated future cash flows of the asset. Losses
expected as a result of future events, no matter how likely, are not
recognised. For an investment in an equity instrument, a significant or
prolonged decline in the fair value below its cost is an objective evidence of
impairment. If any such objective evidence exists, then the impairment loss
of the financial asset is estimated.

An impairment loss in respect of loans and receivables (excluding insurance

receivables as set out in Note 2(f)(ii) below) is recognised in profit or loss
and is measured as the difference between the asset’s carrying amount and
the present value of estimated future cash flows discounted at the asset’s
original effective interest rate. The carrying amount of the asset is reduced
through the use of an allowance account.
 71
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(f) Impairment (continued)

(i) Financial assets, excluding insurance receivables (continued)

An impairment loss in respect of available-for-sale financial assets is

recognised in profit or loss and is measured as the difference between the
asset’s acquisition cost (net of any principal repayment and amortisation)
and the asset’s current fair value, less any impairment loss previously
recognised. Where a decline in the fair value of an available-for-sale financial
asset has been recognised in other comprehensive income, the cumulative
loss in other comprehensive income is reclassified from equity to profit or
loss.

An impairment loss in respect of unquoted equity instrument that is carried

at cost is recognised in profit or loss and is measured as the difference
between the financial asset’s carrying amount and the present value of
estimated future cash flows discounted at the current market rate of return
for a similar financial asset.

Impairment losses recognised in profit or loss for an investment in an equity

instrument classified as available-for-sale are not reversed through profit or
loss.

If, in a subsequent period, the fair value of a debt instrument increases and
the increase can be objectively related to an event occurring after the
impairment loss was recognised in profit or loss, the impairment loss is
reversed, to the extent that the asset’s carrying amount does not exceed
what the carrying amount would have been had the impairment not been
recognised at the date the impairment is reversed. The amount of the
reversal is recognised in profit or loss.

(ii) Insurance receivables

Insurance receivables are assessed at each reporting date whether there is

any objective evidence of impairment as a result of one or more events
having an impact on the estimated future cash flows of the asset. Losses
expected as a result of future events, no matter how likely, are not
recognised. An objective evidence of impairment is deemed to exist where
the principal or interest or both for insurance receivables is past due for more
than 90 days or 3 months for those individually assessed, as prescribed in the
Guidelines on Financial Reporting for Insurers issued by Bank Negara
Malaysia (“BNM”).
 72
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(f) Impairment (continued)

(ii) Insurance receivables (continued)

An impairment loss in respect of insurance receivables is recognised in profit

or loss and is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows discounted at
the asset’s original effective interest rate. The carrying amount of the asset is
reduced through the use of an allowance account.

If, in a subsequent period, the fair value of insurance receivables increases

and the increase can be objectively related to an event occurring after the
impairment loss was recognised in profit or loss, the impairment loss is
reversed, to the extent that the insurance receivable’s carrying amount does
not exceed what the carrying amount would have been had the impairment
not been recognised at the date the impairment is reversed. The amount of
the reversal is recognised in profit or loss.

(iii) Other assets

The carrying amounts of other assets (except for investment properties

measured at fair value and deferred tax assets) are reviewed at the end of
each reporting period to determine whether there is any indication of
impairment. If any such indication exists, then the asset’s recoverable
amount is estimated.

For the purpose of impairment testing, assets are grouped together into the
smallest group of assets that generates cash inflows from continuing use that
are largely independent of the cash inflows of other assets or cash-generating
units.

The recoverable amount of an asset or cash-generating unit is the greater of

its value in use and its fair value less costs of disposal. In assessing value in
use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset or cash-generating
unit.

An impairment loss is recognised if the carrying amount of an asset or its

related cash-generating unit exceeds its estimated recoverable amount.

Impairment losses are recognised in profit or loss. Impairment losses

recognised in respect of cash-generating units are allocated to reduce the
carrying amounts of the assets in the cash-generating unit (groups of cash-
generating units) on a pro rata basis.
 73
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(f) Impairment (continued)

(iii) Other assets (continued)

Impairment losses recognised in prior periods are assessed at the end of each
reporting period for any indications that the loss has decreased or no longer
exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount since the last
impairment loss was recognised. An impairment loss is reversed only to the
extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised. Reversals of impairment losses are
credited to profit or loss in the financial year in which the reversals are
recognised.

(g) Equity instruments

Instruments classified as equity are measured at cost on initial recognition and are
not remeasured subsequently.

(i) Ordinary shares

Ordinary shares are classified as equity.

(ii) Dividends on ordinary shares

Dividends on ordinary shares are recognised as a liability and accounted for

in the equity as an appropriation of retained earnings when they are
approved for payment.

Dividends for the year that are approved after the end of the reporting period
are dealt with as a subsequent event.

(h) Product classification

The Company issues insurance contracts that transfer significant insurance risk.
These contracts may also transfer financial risk.

Financial risk is the risk of a possible future change in interest rate, financial
instrument price, commodity price, foreign exchange rate, index of price or rate,
credit rating or credit index or other variable, provided in the case of a non-financial
variable that the variable is not specific to a party to the contract. Insurance risk is
the risk other than financial risk.
 74
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(h) Product classification (continued)

Insurance contracts are those contracts that transfer significant insurance risk. An
insurance contract is a contract under which the Company (the insurer) has
accepted significant insurance risk from another party (the policyholders) by
agreeing to compensate the policyholders if a specified uncertain future event (the
insured event) adversely affects the policyholders. As a general guideline, the
Company determines whether it has significant insurance risk, by comparing
benefits paid with benefits payable if the insured event did not occur.

Investment contracts are those contracts that do not transfer significant insurance
risk.

Once a contract has been classified as an insurance contract, it remains as an

insurance contract for the remainder of its life-time, even if the insurance risk
reduces significantly during this period, unless all rights and obligations are
extinguished or expired. Investment contracts can, however, be reclassified as
insurance contracts after inception if insurance risk becomes significant.

Insurance and investment contracts (if any) are further classified as being either
with or without discretionary participation features (“DPF”). DPF is a contractual
right to receive, as a supplement to guaranteed benefits, additional benefits that
are:

• likely to be a significant portion of the total contractual benefits;

• whose amount or timing is contractually at the discretion of the issuer; and
• that are contractually based on the:-
o performance of a specified pool of contracts or a specified type of contract;
o realised and/or unrealised investment returns on a specified pool of assets
held by the issuer; or
o profit or loss of the Company, fund or other entity that issues the contract.

Under the terms of the contracts, surpluses in the DPF funds can be distributed on
discretion over the amount and timing of the distribution of these surpluses to
policyholders. All DPF liabilities, including unallocated surpluses, both guaranteed
and discretionary, at the end of the reporting period are held within insurance or
investment contract liabilities, as appropriate.

For financial options and guarantees which are not closely related to the host
insurance contract and/or investment contract with DPF, bifurcation and
unbundling is required to measure these embedded derivatives separately at fair
value through profit or loss. However, bifurcation is not required if the embedded
derivative is itself an insurance contract and/or investment contract with DPF, or
if the host insurance contract and/or investment contract itself is measured at fair
value through profit or loss.
 75
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(h) Product classification (continued)

When insurance contracts contain both a financial risk component and a

significant insurance risk component and the cash flows from the two
components are distinct and can be measured reliably, the underlying amounts
are unbundled. Any premiums relating to the insurance risk component are
accounted for on the same basis as insurance contracts and the remaining
element is accounted for as a deposit through the statement of financial position
similar to investment contracts.

(i) Reinsurance

The Company cedes insurance risk in the normal course of business for all of its
businesses. Reinsurance assets represent balances due from reinsurance
companies. Amounts recoverable from reinsurers are estimated in a manner
consistent with the outstanding claims provision or settled claims associated with
the reinsurer’s policies and are in accordance with the related reinsurance
contracts.

Ceded reinsurance arrangements do not relieve the Company from its obligations
to policyholders. Premiums ceded and claims reimbursed/recoveries are
recognised in the same accounting period as the original policy/contract in which
the reinsurance relates, and are presented on a gross basis for both ceded and
assumed reinsurance in the statement of profit or loss and statement of financial
position.

Reinsurance assets are reviewed for impairment at each reporting date or more
frequently when an indication of impairment arises during the reporting period.
Impairment occurs when there is objective evidence as a result of an event that
occurred after initial recognition of the reinsurance asset that the Company may
not receive all outstanding amounts due under the terms of the contract and the
event has a reliably measurable impact on the amounts that the Company will
receive from the reinsurer. The impairment loss is recorded in profit or loss.

Premiums and claims on assumed reinsurance are recognised as revenue or

expenses in the same manner as they would be if the reinsurance were considered
direct business, taking into account the product classification of the reinsured
business. Reinsurance liabilities represent balances due to reinsurance companies.
Amounts payable are estimated in a manner consistent with the related
reinsurance contract.

Reinsurance assets or liabilities are derecognised when the contractual rights are
extinguished or expired or when the contract is transferred to another party.
 76
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(i) Reinsurance (continued)

Reinsurance contracts that do not transfer significant insurance risk are accounted
for directly through the statement of financial position. These are deposit assets or
financial liabilities that are recognised based on the consideration paid or received
less any explicit identified premiums or fees to be retained by the reinsured.
Investment income on these contracts is accounted for using the effective interest
method when accrued.

(j) Life insurance underwriting results

Surplus of Life Fund

The surplus transferable from the Life fund to profit or loss of Shareholders’ fund
is based on the surplus determined by an annual actuarial valuation of the
liabilities to policyholders, made in accordance with the provisions of the Financial
Services Act, 2013 by the Company’s Appointed Actuary.

Gross premiums

Gross premiums are recognised as soon as the amount of the premiums can be
reliably measured. First premium is recognised from inception date and
subsequent premium is recognised when it is due.

At the end of the financial year, all due premiums are accounted for to the extent
that they can be reliably measured. Premiums not received on due dates are
recognised as revenue in profit or loss and reported as outstanding premiums in
the statement of financial position.

Reinsurance premiums

Gross reinsurance premiums on ceded reinsurance are recognised as an expense

when payable or on the date on which the policy is effective.

Benefits, claims and expenses

Benefits and claims that are incurred during the financial year are recognised
when a claimable event occurs and/or the insurer is notified.
 77
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(j) Life insurance underwriting results (continued)

Benefits, claims and expenses (continued)

Benefits and claims, including settlement costs, are accounted for using the case-
by-case method and for this purpose, the amounts payable under a policy are
recognised as follows:

• maturity and other policy benefit payments due on specified dates are
treated as claims payable on the due dates;
• death, surrender and other benefits without due dates are treated as claims
payable, on the date of receipt of intimation of death of the assured or
occurrence of contingency covered; and
• bonus on DPF policy upon its declaration.

Reinsurance claims are recognised when the related gross insurance claim is
recognised according to the terms of the relevant contracts.

Commission and agency expenses

Gross commission and agency expenses, which are costs directly incurred in
securing premium on insurance policies, are charged to profit or loss in the period
in which they are incurred.

Policy administration and investment management service income

Insurance contract policyholders are charged for policy administration services,

investment management services, surrenders and other contract fees. These fees
are recognised as income over the period in which the related services are
performed.

Management fee income earned from the investment-linked business is

recognised on an accrued basis based on the net asset value of the investment-
linked funds.
 78
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(k) Life insurance contract liabilities

i) Actuarial liabilities

Life actuarial liabilities are recognised when contracts are entered into and
premiums are charged.

These liabilities are measured by using a prospective actuarial valuation

method (see Note 2(u)(i)). The liability is determined as the sum of the
present value of future guaranteed benefits and, in the case of the
participating life policy, appropriate level of non-guaranteed benefits, and
the expected future management and distribution expenses, less the
present value of future gross considerations arising from the policy
discounted at the appropriate risk discount rate. The liability is based on best
estimate assumptions and with due regard to significant recent experience.
An appropriate allowance for provision of risk margin for adverse deviation
from expected experience is made in the valuation of non-participating life
policies, the guaranteed benefits liabilities of participating life policies, and
non-unit liabilities of investment-linked policies.

The liability in respect of policies of a participating insurance contract is

taken as the higher of the guaranteed benefit liabilities or the total benefit
liabilities at the insurance fund level derived as stated above.

In the case of a life policy where a part of, or the whole of the premiums are
accumulated in a fund, the accumulated amount, as declared to the policy
owners, are set as the liabilities if the accumulated amount is higher than the
figure as calculated using the prospective actuarial valuation method.

For non-unit liability of investment-linked policy, the liability is valued by

projecting future cash flows to ensure that all future outflows can be met
without recourse to additional finance or capital support at any future time
during the duration of the investment-linked policy.

In the case of a 1-year life policy or a 1-year extension to a life policy covering
contingencies other than death or survival, the liability for such life insurance
contracts comprises the provision for unearned premiums or unexpired
risks, as well as for claims outstanding, which includes an estimate of the
incurred claims that have not yet been reported to the Company.

Adjustments to the liabilities at each reporting date are recorded in profit or

loss. Profits originated from margins of adverse deviations on run-off
contracts, are recognised in profit or loss over the life of the contract.

The liability is derecognised when the contract expires, is discharged or is

cancelled.
 79
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(k) Life insurance contract liabilities (continued)

ii) Benefit and claims liabilities

Benefit and claims liabilities represent the amounts payable under a life
insurance policy in respect of claims and benefits including settlement costs,
and are accounted for using the case by-case method as set out above under
benefits and claims expenses (Note 2(j)).

iii) Unallocated surplus

Surpluses of contracts with DPF are distributable to policyholders and

shareholders in accordance with the relevant terms under the insurance
contracts. The Company, however, has the discretion over the amount and
timing of the distribution of these surpluses to both the policyholders and
shareholders. The amount and timing of the distribution of these surpluses
are subject to the recommendation of the Company's Appointed Actuary
and are determined by an actuarial valuation of the long term liabilities to
policyholders at the date of the statements of financial position and are
made in accordance with the provision of the Financial Services Act, 2013
and related regulations.

Unallocated surplus of contracts with DPF, where the amounts are yet to be
allocated or distributed to either policyholders or shareholders by the end of
the financial period, are held within the insurance contract liabilities.

iv) Available-for-sale fair value reserve

Where unrealised gains or losses arise on AFS financial assets of the life
participating fund, the adjustment to the insurance contract liabilities, which
equals to the effect that the realisation of those gains or losses at the end of
the reporting years would have on those liabilities, is recognised directly in
the other comprehensive income.

v) Hedging reserve

Where unrealised gains or losses arise on cash flow hedge of the life
participating fund, the adjustment to the insurance contract liabilities, which
equals to the effect that the realisation of those gains or losses at the end of
the reporting years would have on those liabilities, is recognised directly in
other comprehensive income.

vi) Asset revaluation reserve

Where asset revaluation reserve arises on the self-occupied properties of the

DPF fund, the adjustment to the life insurance liabilities equal to the effect
that the realisation of those surpluses at the end of the reporting period
would have on those liabilities is recognised directly in other comprehensive
income.
 80
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(k) Life insurance contract liabilities (continued)

vii) Net asset value attributable to unitholders

The unit liability of investment-linked policy is equal to the net asset value of
the investment-linked funds, which represents net premium received and
investment returns credited to the policy less deduction for mortality and
morbidity costs and expense charges.

(l) Other revenue recognition

(i) Rental income

Rental income from investment properties is recognised in profit or loss on

a straight-line basis over the term of the lease. Lease incentives granted are
recognised as an integral part of the total rental income, over the term of the
lease.

(ii) Interest income

Interest income is recognised as it accrues using the effective interest

method in profit or loss.

(iii) Dividend income

Dividend income is recognised in profit or loss on the date that the

Company’s right to receive payment is established, which in the case of
quoted securities is the ex-dividend date.

(iv) Realised gains and losses on investments

Realised gains and losses recorded in profit or loss on investments include

gains and losses on disposal of financial assets. Gains and losses arising on
disposal of investments are calculated as the difference between net sales
proceeds and the original or amortised cost and are recorded on occurrence
of the sale transaction.

(m) Income tax

Income tax expense comprises current and deferred tax. Current tax and deferred
tax are recognised in profit or loss except to the extent that it relates to a business
combination or items recognised directly in equity, insurance contract liabilities or
other comprehensive income.
 81
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(m) Income tax (continued)

Current tax is the expected tax payable or receivable on the taxable income or loss
for the year, using tax rates enacted or substantively enacted by the end of the
reporting period, and any adjustment to tax payable in respect of previous
financial years.

Deferred tax is recognised using the liability method, providing for temporary
differences between the carrying amounts of assets and liabilities in the statement
of financial position and their tax bases. Deferred tax is not recognised for
temporary difference arising from the initial recognition of assets or liabilities in a
transaction that is not a business combination and that affects neither accounting
nor taxable profit or loss. Deferred tax is measured at the tax rates that are
expected to be applied to the temporary differences when they reverse, based on
the laws that have been enacted or substantively enacted by the end of reporting
period.

A deferred tax asset is recognised to the extent that it is probable that future
taxable profits will be available against which temporary difference can be
utilised. Deferred tax assets are reviewed at the end of each reporting period and
are reduced to the extent that it is no longer probable that the related tax benefit
will be realised.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to
offset current tax assets and liabilities, and they relate to income taxes levied by
the same tax authority on the same taxable entity, or on different tax entities, but
they intend to settle current tax assets and liabilities on a net basis or their assets
and liabilities will be realised simultaneously.
 82
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(n) Provisions

A provision is recognised if, as a result of a past event, the Company has a present
legal or constructive obligation that can be estimated reliably, and it is probable
that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-
tax rate that reflects current market assessments of the time value of money and
the risks specific to the liability. The unwinding of the discount is recognised as
finance cost.

(o) Contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or

the amount cannot be estimated reliably, the obligation is not recognised in the
statement of financial position and is disclosed as a contingent liability, unless the
probability of outflow of economic benefits is remote. Possible obligations, whose
existence will only be confirmed by the occurrence or non-occurrence of one or
more future events, are also disclosed as contingent liabilities unless the
probability of outflow of economic benefits is remote. Contingent liabilities do not
include liabilities arising from contracts of insurance underwritten in the ordinary
course of business of the Company.

(p) Short-term employee benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses,

paid annual leave and sick leave are measured on an undiscounted basis and are
expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash
bonus or profit-sharing plans if the Company has a present legal or constructive
obligation to pay this amount as a result of past service provided by the employee
and the obligation can be estimated reliably.

The Company’s contributions to statutory pension funds are charged to profit or

loss in the financial year to which they relate. Once the contributions have been
paid, the Company has no further payment obligations. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a reduction in future
payments is available.
 83
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(q) Provision for agent’s retirement benefits

Provision for agent’s retirement benefits is calculated accordance with the terms
and conditions in the respective agent’s agreements. The scheme is not separately
funded. The Company pays fixed contributions into the Agency Provident Fund.

Provision for agent’s retirement benefits is charged to profit or loss in the period
in which it relates.

(r) Other financial liabilities and insurance payables

Other financial liabilities and insurance payables are recognised when due and
measured on initial recognition at the fair value of the consideration received less
directly attributable transaction costs. Subsequent to initial recognition, they are
measured at amortised cost using the effective interest method.

(s) Cash and cash equivalents and placements with financial institutions

Cash and cash equivalents consist of cash on hand, balances and deposits held at
call with financial institutions and highly liquid investments which have an
insignificant risk of changes in fair value with original maturities of three months
or less, and are used by the Company in the management of their short term
commitments.

(t) Investment in subsidiaries

Subsidiaries are all entities (including structured entities) over which the
Company has control. The Company controls an entity when the Company is
exposed to, or has rights to variable returns from its involvement with the entity
and has the ability to affect those returns through its power over the entity. A
structured entity is an entity that has been designed so that voting or similar rights
are not the dominant factor in deciding who controls the entity, such as when any
voting rights relate to administrative tasks only, and the relevant activities are
directed by means of contractual arrangements. The Company has determined
that the investment in structured securities, such as unit trust investment that the
Company has an interest in are structured entities.

When the Company ceased to have control, any retained interest in the subsidiary
is re-measured to its fair value at the date when control is lost with change in
carrying amount recognised in profit or loss. The fair value is the initial carrying
amount for the purpose of subsequently accounting for the retained interest as
an associate, joint venture or financial asset. In addition, any amounts previously
recognised in other comprehensive income in respect of that entity are
accounted for as if the Company had directly disposed of the related assets or
liabilities. This may mean that amounts previously recognised in other
comprehensive income are reclassified to profit or loss.
 84
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(t) Investment in subsidiaries (continued)

In the Company’s financial statements, investments in structured entities are

initially recognised at fair value and subsequently measured at fair value in
accordance with MFRS 139 “Financial Instruments: Recognition and
Measurement”. On disposal of investment in structured entities, the difference
between the disposal proceeds and the carrying amounts of the investment is
recognised in profit or loss.

The Company is exempted from presenting consolidated financial statements

based on the criteria set out in paragraph 4 of MFRS 10 “Consolidated Financial
Statements”.

The immediate holding company, Allianz Malaysia Berhad, prepares consolidated

financial statements in accordance with MFRS in Malaysia, which are available for
inspection at the registered office of the immediate holding company.
 85
Registration No. 198301008983 (104248-X)

2. Significant accounting policies (continued)

(u) Significant accounting judgements, estimates and assumptions

(i) Valuation of life actuarial liabilities

The actuarial valuation of life insurance contract liabilities is based on the

Risk-Based Capital Framework for Insurers, issued by BNM. The actuarial
valuation of the insurance liability arising from policy benefits made under
life insurance contracts is the Company’s most critical accounting estimate.

An appropriate allowance for provision of risk margin for adverse deviation

from expected experience is included in the valuation of non-participating
life policies, the guaranteed benefits liabilities of participating life policies,
and non-unit actuarial liabilities of investment-linked policies.

The risk-free discount rate is used for all cash flows to determine the liability
of a non-participating life policy, non-unit actuarial liability of an investment-
linked policy and guaranteed benefits insurance liability of participating
policy. A discount rate based on the historical yield and future investment
outlook of the participating fund, net of tax on investment income of the Life
fund is used for all cash flows to determine the total benefit liability of
participating policies.

There are several sources of uncertainty in the estimation of these liabilities,

including future mortality and morbidity rates, expenses, persistency and
discount rates. These key assumptions used are based on past experiences,
current internal data, external market indices and benchmarks which reflect
current observable market prices and other published information.

Such assumptions require judgement and therefore, actual experience may

differ from the assumptions made by the Company. Actual experience is
monitored to assess whether the assumptions remain appropriate and
assumptions are changed as warranted. Any movement in the key
assumptions will have an effect in determining the actuarial liabilities
recognised in life insurance contract liabilities.

The key assumptions used and the sensitivity analysis on the key assumptions
are disclosed in Note 33.
 86
Registration No. 198301008983 (104248-X)

3. Property, plant and equipment

Office
equipment,
computers, Office
furniture renovation
and Motor and Work-in-
Land Buildings fittings vehicles partitions progress Total
Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cost/Valuation
At 1 January 2021 2,300 8,250 39,234 971 14,679 6,153 71,587
Additions - - 4,098 227 432 6,467 11,224
Disposals - - (5) - - - (5)
Written off - - (43) - - (657) (700)
Reclassification # 5 - - 383 - 1,613 (8,385) (6,389)
At 31 December 2021/
1 January 2022 2,300 8,250 43,667 1,198 16,724 3,578 75,717
Additions - - 3,296 566 - 6,592 10,454
Disposals - - (11) - - - (11)
Written off - - (376) (342) (928) (178) (1,824)
Reclassification # 5 - - 927 - 1,253 (4,334) (2,154)
At 31 December 2022 2,300 8,250 47,503 1,422 17,049 5,658 82,182

# Certain work-in-progress were reclassified as software development costs (intangible assets) respectively. See Note 5.
 87
Registration No. 198301008983 (104248-X)

3. Property, plant and equipment (continued)

Office
equipment,
computers, Office
furniture renovation
and Motor and Work-in-
Land Buildings fittings vehicles partitions progress Total
Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Depreciation
At 1 January 2021 - 502 31,848 554 9,946 - 42,850
Depreciation for the year 25 - 198 3,408 149 1,183 - 4,938
Disposals - - (5) - - - (5)
Written off - - (43) - - - (43)
At 31 December 2021/
1 January 2022 - 700 35,208 703 11,129 - 47,740
Depreciation for the year 25 - 198 3,797 317 1,347 - 5,659
Disposals - - (8) - - - (8)
Written off - - (372) (342) (927) - (1,641)
At 31 December 2022 - 898 38,625 678 11,549 - 51,750

Carrying amounts
At 31 December 2021 2,300 7,550 8,459 495 5,595 3,578 27,977
At 31 December 2022 2,300 7,352 8,878 744 5,500 5,658 30,432

Included in property, plant and equipment are fully depreciated assets which are still in use costing RM50,150,000 (2021: RM41,553,000).
 88
Registration No. 198301008983 (104248-X)

3. Property, plant and equipment (continued)

3.1 Property, plant and equipment under the revaluation model

The land and buildings were last revalued in October 2020 by Hartamas Valuation &
Consultancy Sdn Bhd, an external independent qualified valuer using the Comparison
Approach. This approach considers the sales of similar or substitute properties and
related market data, and establishes a value estimate by adjustments made for
differences in factors that affect value. In general, the land and buildings are compared
with sales of similar properties that have been transacted in the open market. Listings
and offers may also be considered.

Had the land and buildings been carried at historical cost less accumulated
depreciation, their carrying amounts would have been as follows:

2022 2021
RM’000 RM’000

Land 1,420 1,420

Buildings 5,298 5,382
6,718 6,802

3.2 Fair value information

Fair value of land and buildings are categorised as follows:

2022
Level 1 Level 2 Level 3 Total
RM’000 RM’000 RM’000 RM’000
Land - - 2,300 2,300
Buildings - - 7,352 7,352
- - 9,652 9,652

2021
Level 1 Level 2 Level 3 Total
RM’000 RM’000 RM’000 RM’000
Land - - 2,300 2,300
Buildings - - 7,550 7,550
- - 9,850 9,850
 89
Registration No. 198301008983 (104248-X)

3. Property, plant and equipment (continued)

3.2 Fair value information (continued)

Level 3 fair value

The Level 3 unobservable input used in the valuation of land and buildings is the price
per square foot (“psf”) which is derived from the selling price of comparable land and
building, adjusted for differences in location, property size, shape and terrain of land,
any title restrictions, availability of infrastructure, age and condition of building, finishes
and services and other relevant characteristics.

The estimated fair value would increase/(decrease) if the price per square foot were
higher or lower and the historical sales transaction value were higher or lower.

The following table shows the valuation technique used in the determination of fair
values within Level 3, as well as the significant unobservable input used in the valuation
model.

Land and buildings

2022 2022 2021 2021
Valuation Fair Value Adjusted psf Fair Value Adjusted psf
technique used RM’000 RM/psf RM’000 RM/psf
Comparison
Approach 9,652 223 - 911 9,850 223 - 911

4. Right-of-use assets
Leasehold
land Buildings Total
RM’000 RM’000 RM’000
Valuation/Cost
1 January 2021 10,480 23,424 33,904
Additions - - -
Modification/termination of leases - (3,268) (3,268)
At 31 December 2021/1 January 2022 10,480 20,156 30,636
Additions - 1,944 1,944
Modification/termination of leases - (3,377) (3,377)
At 31 December 2022 10,480 18,723 29,203

Depreciation

1 January 2021 370 8,809 9,179

Depreciation for the year (Note 25) 159 5,368 5,527
Modification/termination of leases - (2,715) (2,715)
At 31 December 2021/1 January 2022 529 11,462 11,991
Depreciation for the year (Note 25) 158 5,373 5,531
Modification/termination of leases - (3,523) (3,523)
At 31 December 2022 687 13,312 13,999
 90
Registration No. 198301008983 (104248-X)

4. Right-of-use assets (continued)

Leasehold
land Buildings Total
RM’000 RM’000 RM’000
Carrying amounts
At 31 December 2021 9,951 8,694 18,645
At 31 December 2022 9,793 5,411 15,204

The Company leases a number of buildings for its office space and branches. The leases
typically run for a period of 1 to 5 years, with options to renew the lease after that date.
The lease agreements do not impose any covenants.

The total cash outflow for leases amounts to RM6,083,000 (2021: RM6,393,000) and
income from subleasing of right-of-use assets amounts to RM671,000 (2021:
RM640,000).

4.1 Right-of-use assets under the revaluation model

The leasehold land was last revalued in October 2020 by Hartamas Valuation &
Consultancy Sdn Bhd, an external independent qualified valuer using the Comparison
Approach. This approach considers the sales of similar or substitute properties and
related market data, and establishes a value estimate by adjustments made for
differences in factors that affect value. In general, the leasehold land is compared with
sales of similar properties that have been transacted in the open market. Listings and
offers may also be considered.

Had the leasehold land been carried at historical cost less accumulated amortisation,
the carrying amounts would have been RM3,583,000 (2021: RM3,639,000).

4.2 Fair value information

Fair value of leasehold land is categorised as Level 3 of the fair value hierarchy.

Level 3 fair value

The Level 3 unobservable input used in the valuation of leasehold land is the price per
square foot (“psf”) which is derived from the selling price of comparable land, adjusted
for differences in location, shape and terrain of land, any title restrictions, availability of
infrastructure, age and condition of building erected thereon and other relevant
characteristics.

The estimated fair value would increase/(decrease) if the price per square foot were
higher or lower and the historical sales transaction value were higher or lower.
 91
Registration No. 198301008983 (104248-X)

4. Right-of-use assets (continued)

4.2 Fair value information (continued)

The following table shows the valuation technique used in the determination of fair
values within Level 3, as well as the significant unobservable input used in the valuation
model.

Leasehold land
2022 2022 2021 2021
Valuation Fair Value Adjusted psf Fair Value Adjusted psf
technique used RM’000 RM/psf RM’000 RM/psf
Comparison
Approach 9,793 777 – 1,034 9,951 777 – 1,034

5. Intangible assets
Software Other
development intangible
costs assets Total
Note RM’000 RM’000 RM’000
Cost
At 1 January 2021 17,497 50,495 67,992
Additions 658 - 658
Reclassification 3 6,389 - 6,389
At 31 December 2021 24,544 50,495 75,039
Additions 580 92,380 92,960
Written Off - (50,495) (50,495)
Reclassification 3 2,154 - 2,154
At 31 December 2022 27,278 92,380 119,658

Amortisation
At 1 January 2021 12,019 36,863 48,882
Amortisation for the year 25 3,439 4,545 7,984
At 31 December 2021 15,458 41,408 56,866
Amortisation for the year 25 3,969 6,159 10,128
Written Off - (41,408) (41,408)
At 31 December 2022 19,427 6,159 25,586

Carrying amounts
At 31 December 2021 9,086 9,087 18,173
At 31 December 2022 7,851 86,221 94,072
Note 5.1 Note 5.2
 92
Registration No. 198301008983 (104248-X)

5. Intangible assets (continued)

5.1 Software development costs

The software development costs are in relation to the internal development

expenditure incurred for digital application and Open Product Underwriting
System (“OPUS”), the on-going integrated system to improve the efficiency of
the business activity of the Company. These costs of developed software are
amortised over a period of three to five years.

5.2 Other intangible assets

Other intangible assets are in relation to the exclusive Bancassurance

Agreement which provides the Company with an exclusive right to the use of
the bancassurance network of a local commercial bank (“the bank”) to sell,
market and promote conventional life product. In June 2022, the Company and
the Bank entered into a renewal partnership agreement to extend the Exclusive
Bancassurance Agreement for 15 years. The upfront fee for this renewal was set
off against the carrying amount of the legacy upfront fee and other payable to
the Bank before payment was made.

The fee for this exclusive right is amortised over its useful life of 15 years using
the straight-line method. In the impairment assessment conducted by the
Company, the future economic benefits that are attributable to the
bancassurance agreement were valued at the present value of projected future
cash flows to be derived from the remaining tenure of the agreement of 14
years using the discounted cash flow model.

The following key assumptions have been used in cash flow projections in
respect of bancassurance agreement:
Key assumptions 2022 2021
Bancassurance average annualised new
premium growth rate 11.8% 11.6%
Discount rate - pre tax 11.1% 10.9%

5.2.1 Sensitivity to changes in key assumptions

Management considers that it is not reasonably possible for the

abovementioned key assumptions to change so significantly that would result
in impairment.
 93
Registration No. 198301008983 (104248-X)

6. Investments
2022 2021
RM’000 RM’000

Malaysian government securities 5,215,132 4,694,823

Malaysian government guaranteed bonds 2,496,078 2,441,652
Quoted equity securities of corporations in Malaysia 2,558,921 2,823,578
Quoted equity securities of corporations outside
Malaysia 155,513 49,850
Unquoted equity securities of corporations in
Malaysia 2,147 2,147
Unquoted bonds of corporations in Malaysia 4,046,938 3,778,262
Unquoted bonds of corporations outside Malaysia 100,446 104,561
Quoted unit trusts in Malaysia 6.1 70,463 61,032
Unquoted unit trusts in Malaysia 6.1 40,760 39,216
Unquoted unit trusts outside Malaysia 6.1 226,104 170,520
Fixed and call deposits with licensed financial
institutions 1,400 223,980
14,913,902 14,389,621
Policy loans 6,325 7,691
Automatic premium loans 70,918 76,567
14,991,145 14,473,879

6.1 Interest in structured entities

The Company has determined that its investment in quoted and unquoted unit trusts as
disclosed in Note 6 to the financial statements to be investment in unconsolidated
structured entities (“investee funds”). The funds aim to provide investors with steady
income over the medium-term to long-term investment horizon. The investee funds
finance their operations through the creation of investee fund units which entitle the
holder to variable returns and fair values in the respective investee fund’s net assets.

The investee funds are classified as available-for-sale and held for trading investment
securities. The changes in fair value of the investee funds are included in the statement of
financial position and statement of profit or loss and comprehensive income of the
Company.

The Company’s maximum exposure to loss arising from its interests in these
unconsolidated structured entities is limited to the carrying amount of the assets.
Dividend income are received during the reporting period from these interests in
unconsolidated structured entities.
 94
Registration No. 198301008983 (104248-X)

6. Investments (continued)
6.1 Interest in structured entities (continued)

The Company’s exposure to investments in the investee funds is disclosed below:

2022 2021
RM’000 RM’000

Available-for-sale financial assets

Quoted unit trusts in Malaysia 40,107 31,900
Unquoted unit trusts in Malaysia
- Affin Hwang Income Fund 5* 21,246 21,046
- Others 1,190 1,227

Held for trading

Quoted unit trusts in Malaysia 30,356 29,132
Unquoted unit trusts in Malaysia 18,324 16,943
Unquoted unit trusts outside Malaysia 226,104 170,520

*The Company holds 3.6% (2021:3.6%) of the Affin Hwang Income Fund 5, a wholesale
unit trust fund established in Malaysia. The remaining investment of 96.4%
(2021:96.4%) is by virtue of the shareholding through the Company’s related entity,
Allianz General Insurance Company (Malaysia) Berhad. The wholesale fund is
consolidated by the Company’s immediate holding company, Allianz Malaysia Berhad,
who prepares consolidated financial statements in accordance with MFRS in Malaysia.
 95
Registration No. 198301008983 (104248-X)

6. Investments (continued)
The Company’s financial investments are summarised by categories as follows:

Current Non-current Total

2022 2021 2022 2021 2022 2021
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Available-for-sale financial assets (“AFS”) 2,835,080 2,979,682 - - 2,835,080 2,979,682

Loans and receivables (“LAR”) 78,643 308,238 - - 78,643 308,238
Fair value through profit or loss (“FVTPL”)
- Held for trading (“HFT”) 7,340,525 6,742,924 - - 7,340,525 6,742,924
- Designated upon initial recognition (“DUIR”) 4,736,897 4,443,035 - - 4,736,897 4,443,035
14,991,145 14,473,879 - - 14,991,145 14,473,879
 96
Registration No. 198301008983 (104248-X)

6. Investments (continued)

Fair value
2022 2021
RM’000 RM’000
Available-for-sale
Malaysian government securities 1,011,841 1,053,490
Malaysian government guaranteed bonds 1,046,213 1,023,701
Quoted equity securities of corporations in Malaysia 631,554 750,880
Unquoted bonds of corporations in Malaysia 80,782 95,291
Quoted unit trusts in Malaysia 40,107 31,900
Unquoted unit trusts in Malaysia 22,436 22,273
2,832,933 2,977,535

Cost
2022 2021
RM’000 RM’000
Unquoted equity securities of corporations in Malaysia 2,147 2,147

Total available-for-sale financial investments 2,835,080 2,979,682

 97
Registration No. 198301008983 (104248-X)

6. Investments (continued)

2022 2021
Amortised Fair Amortised Fair
cost value cost value
RM’000 RM’000 RM’000 RM’000
Loans and receivables
Policy loans 6,325 6,325 7,691 7,691
Automatic premium loans 70,918 70,918 76,567 76,567
Fixed and call deposits with licensed financial institutions 1,400 1,400 223,980 223,980
78,643 78,643 308,238 308,238
 98
Registration No. 198301008983 (104248-X)

6. Investments (continued)

Fair value
2022 2021
Fair value through profit or loss RM’000 RM’000
Held for trading
Malaysian government securities 2,165,629 1,926,849
Malaysian government guaranteed bonds 920,625 879,597
Quoted equity securities of corporations in Malaysia 1,927,367 2,072,698
Quoted equity securities of corporations outside Malaysia 155,513 49,850
Unquoted bonds of corporations in Malaysia 1,896,607 1,597,335
Quoted unit trusts in Malaysia 30,356 29,132
Unquoted unit trusts in Malaysia 18,324 16,943
Unquoted unit trusts outside Malaysia 226,104 170,520
7,340,525 6,742,924
 99
Registration No. 198301008983 (104248-X)

6. Investments (continued)

Fair value
2022 2021
Fair value through profit or loss RM’000 RM’000
Designated upon initial recognition
Malaysian government securities 2,037,662 1,714,484
Malaysian government guaranteed bonds 529,240 538,354
Unquoted bonds of corporations in Malaysia 2,069,549 2,085,636
Unquoted bonds of corporations outside Malaysia 100,446 104,561
4,736,897 4,443,035

Total fair value through profit or loss financial investments 12,077,422 11,185,959
 100
Registration No. 198301008983 (104248-X)

6. Investments (continued)
Movements in carrying values of financial instruments

AFS LAR HFT DUIR Total

Note RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2021 3,100,681 766,457 5,621,189 4,044,927 13,533,254

Purchases/Placements 473,476 53,721,053 2,919,836 1,096,462 58,210,827
Maturities (20,000) (54,163,978) (293,901) (406,259) (54,884,138)
Disposals (390,540) - (1,315,585) (121,364) (1,827,489)
Fair value losses recorded in:
Profit or loss
- Unrealised losses 23 - - (187,209) (173,729) (360,938)
- Movement in impairment allowance 23 (41,134) - - - (41,134)
Insurance contract liabilities 13 (132,303) - - - (132,303)
Other comprehensive income (9,773) - - - (9,773)
Amortisation of premiums 21 (1,303) - (4,648) (8,846) (14,797)
Accretion of discounts 21 769 - 1,423 1,166 3,358
Unrealised foreign exchange gains - - 44 4,646 4,690
Movement in income due and accrued (191) (15,294) 1,775 6,032 (7,678)
At 31 December 2021 2,979,682 308,238 6,742,924 4,443,035 14,473,879
 101
Registration No. 198301008983 (104248-X)

6. Investments (continued)
Movements in carrying values of financial instruments (continued)

AFS LAR HFT DUIR Total

Note RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2022 2,979,682 308,238 6,742,924 4,443,035 14,473,879

Purchases/Placements 295,439 25,827,769 2,089,518 781,949 28,994,675
Maturities (32,000) (26,056,472) (246,000) (322,000) (26,656,472)
Disposals (283,687) - (1,046,693) (55,002) (1,385,382)
Fair value losses recorded in:
Profit or loss
- Unrealised losses 23 - - (212,872) (117,205) (330,077)
- Movement in impairment allowance 23 (29,819) - - - (29,819)
Insurance contract liabilities 13 (90,091) - - - (90,091)
Other comprehensive income (4,513) - - - (4,513)
Amortisation of premiums 21 (1,184) - (5,769) (10,660) (17,613)
Accretion of discounts 21 874 - 1,507 800 3,181
Unrealised foreign exchange gains - - 15,768 5,991 21,759
Movement in income due and accrued 379 (892) 2,142 9,989 11,618
At 31 December 2022 2,835,080 78,643 7,340,525 4,736,897 14,991,145
 102
Registration No. 198301008983 (104248-X)

7. Reinsurance assets
2022 2021
Note RM’000 RM’000
Non-current
Actuarial liabilities 60,927 52,841

Current
Actuarial liabilities 33 31
Recoverable on claims liabilities from
reinsurers 59,717 66,808
59,750 66,839

13 120,677 119,680

8. Insurance receivables
2022 2021
Note RM’000 RM’000
Current
Due premium including agents,
brokers balances 54,043 45,429
Due from reinsurers and cedants 10,159 14,628
Group claims receivable 520 1,101
Due from related companies 8.1 9,049 7,113
73,771 68,271
Less: Allowance for impairment 34.1(ii) (3,557) (2,902)
70,214 65,369

8.1 Amount due from related companies

The amount due from related company is unsecured and receivable in
accordance with normal trade terms.

8.2 Financial assets

There is no netting off of gross amount of recognised financial assets against

the gross amount of financial liabilities in the statement of financial position.

There are no financial assets that are subject to enforceable master netting
arrangement or similar arrangement to financial instruments received as
collateral or any cash collateral pledged or received (2021: Nil).
 103
Registration No. 198301008983 (104248-X)

9. Other receivables, deposits and prepayments

2022 2021
Note RM’000 RM’000

Non-current
Other loans 20,593 26,751
Mortgage loans 833 924
Other secured loans 86 151
Other receivables 17,802 20,534
39,314 48,360
Current
Mortgage loans 107 119
Other secured loans 62 48
Prepayments 355 -
Sundry deposits 1,855 2,147
Other receivables 33,201 14,911
Less: Allowance for impairment 34.1(ii) (796) (796)
34,784 16,429
Due from related companies 9.1 - 2,598
Due from immediate holding
company 9.1 - 226
34,784 19,253

74,098 67,613

9.1 Amounts due from related companies and immediate holding company
The amounts due from related companies and immediate holding company
are unsecured, interest free and repayable on demand.

10. Cash and cash equivalents

2022 2021
RM’000 RM’000
Cash and cash equivalents comprise:
Fixed and call deposits with licensed financial
institutions (with maturity three months or less) 1,538,190 1,054,595
Cash and bank balances 124,709 54,821
1,662,899 1,109,416
 104
Registration No. 198301008983 (104248-X)

11. Share capital

2022 2021
Number of Number of
shares Amount shares Amount
’000 RM’000 ’000 RM’000

Issued and fully paid up:

Ordinary shares
On issue at 1 January/31
December 236,600 236,600 236,600 236,600

Ordinary shares

The holders of ordinary shares are entitled to receive dividends as declared from time to
time, and are entitled to one vote per share at meetings of the Company.

12. Reserves
Fair value reserve

The fair value reserve comprises the cumulative net change in the fair value of available-
for-sale financial assets until the investments are derecognised or impaired.

Revaluation reserve

The revaluation reserve represents the surplus on revaluation of land and buildings.

Retained earnings

Restriction on payment of dividends

Pursuant to the RBC Framework for Insurers, the Company shall not pay dividends if its
Capital Adequacy Ratio position is less than the Company’s internal target capital level or
if the payment of dividend would impair its Capital Adequacy Ratio position to below its
internal target capital level.

Pursuant to Section 51(1) of the FSA, the Company is required to obtain BNM’s written
approval prior to declaring or paying any dividend on its shares.
 105
Registration No. 198301008983 (104248-X)

13. Insurance contract liabilities

2022 2021

Gross Reinsurance Net Gross Reinsurance Net

Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Actuarial liabilities 33 9,858,009 (60,960) 9,797,049 9,523,989 (52,872) 9,471,117

Benefits and claims liabilities 990,677 (59,717) 930,960 816,786 (66,808) 749,978
Unallocated deficit (2,071) - (2,071) (56,637) - (56,637)
Hedging reserve - - - 7,210 - 7,210
Available-for-sale fair value reserve 155,584 - 155,584 238,468 - 238,468
Revaluation reserve 6,992 - 6,992 6,992 - 6,992
Net asset value attributable to
unitholders 36 3,204,351 - 3,204,351 2,722,652 - 2,722,652
14,213,542 (120,677) 14,092,865 13,259,460 (119,680) 13,139,780
Note 7 Note 7
 106
Registration No. 198301008983 (104248-X)

13. Insurance contract liabilities (continued)

Gross Reinsurance
With DPF Without DPF Total With DPF Without DPF Total Net
Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2022 4,081,552 9,177,908 13,259,460 (2,795) (116,885) (119,680) 13,139,780

Premiums received 20 85,022 3,281,855 3,366,877 (4,947) (99,854) (104,801) 3,262,076
Liabilities paid for death, maturities,
surrenders, benefits and claims (362,422) (1,395,816) (1,758,238) 2,770 79,843 82,613 (1,675,625)
Movements in benefits and claims
liabilities 47,352 126,539 173,891 274 6,817 7,091 180,982
Benefits and claims experience
variation 32,040 (157,991) (125,951) 2,145 14,185 16,330 (109,621)
Fees deducted (9,878) (753,659) (763,537) - 184 184 (763,353)
Expected interest on reserve/net
investment income attributable to
Universal Life Fund 134,677 89,988 224,665 (75) (592) (667) 223,998
Adjustments due to changes in
assumptions
- Discount rate (345) (24,682) (25,027) - 651 651 (24,376)
- Expenses (58) (1,382) (1,440) - - - (1,440)
- Asset share (88,760) - (88,760) - - - (88,760)
- Mortality/Morbidity (745) 3,054 2,309 - (2,211) (2,211) 98
- Critical illness - (688) (688) - - - (688)
- Lapse/Surrender (14,744) (2,865) (17,609) - - - (17,609)
- Others 174 1,414 1,588 - (187) (187) 1,401
Net asset value attributable to
unitholders 36 - 1,530 1,530 - - - 1,530
 107
Registration No. 198301008983 (104248-X)

13. Insurance contract liabilities (continued)

Gross Reinsurance
Without Without
With DPF DPF Total With DPF DPF Total Net
Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Hedging reserve (7,837) - (7,837) - - - (7,837)

Available-for-sale fair value 6
reserve (90,091) - (90,091) - - - (90,091)
Revaluation reserve - - - - - - -
Unallocated surplus 54,566 - 54,566 - - - 54,566
Deferred tax effects:
- Hedging reserve 27 627 - 627 - - - 627
- Available-for-sale fair value
reserve 27 7,207 - 7,207 - - - 7,207
At 31 December 2022 3,868,337 10,345,205 14,213,542 (2,628) (118,049) (120,677) 14,092,865
 108
Registration No. 198301008983 (104248-X)

13. Insurance contract liabilities (continued)

Gross Reinsurance
With DPF Without DPF Total With DPF Without DPF Total Net
Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2021 4,259,603 7,892,873 12,152,476 (1,013) (67,107) (68,120) 12,084,356

Premiums received 20 94,073 3,164,934 3,259,007 (6,810) (135,499) (142,309) 3,116,698
Liabilities paid for death, maturities,
surrenders, benefits and claims (264,785) (1,117,804) (1,382,589) 4,227 106,071 110,298 (1,272,291)
Movements in benefits and claims
liabilities 40,063 108,500 148,563 (387) (37,389) (37,776) 110,787
Benefits and claims experience
variation 10,464 (107,562) (97,098) (3,630) 2,681 (949) (98,047)
Fees deducted (9,837) (739,479) (749,316) 4,828 7,202 12,030 (737,286)
Expected interest on reserve/net
investment income attributable to
Universal Life Fund 138,944 15,136 154,080 (10) (303) (313) 153,767
Adjustments due to changes in
assumptions
- Discount rate (2,583) (68,348) (70,931) - 1,238 1,238 (69,693)
- Expenses 1,074 414 1,488 - - - 1,488
- Asset share (102,951) - (102,951) - - - (102,951)
- Mortality/Morbidity (8,107) (20,263) (28,370) - 6,341 6,341 (22,029)
- Critical illness - (182) (182) - - - (182)
- Lapse/Surrender (12) 120 108 - - - 108
- Others 2,554 2,124 4,678 - (120) (120) 4,558
Net asset value attributable to
unitholders 36 - 47,445 47,445 - - - 47,445
 109
Registration No. 198301008983 (104248-X)

13. Insurance contract liabilities (continued)

Gross Reinsurance
Without Without
With DPF DPF Total With DPF DPF Total Net
Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Hedging reserve (9,039) - (9,039) - - - (9,039)

Available-for-sale fair value reserve 6 (132,303) - (132,303) - - - (132,303)
Revaluation reserve - - - - - - -
Unallocated surplus 53,086 - 53,086 - - - 53,086
Deferred tax effects:
- Hedging reserve 27 723 - 723 - - - 723
- Available-for-sale fair value
reserve 27 10,585 - 10,585 - - - 10,585
At 31 December 2021 4,081,552 9,177,908 13,259,460 (2,795) (116,885) (119,680) 13,139,780
 110
Registration No. 198301008983 (104248-X)

14. Deferred tax assets/(liabilities)

14.1 Recognised deferred tax assets and liabilities are attributable to the following:

Asset Liabilities Net

2022 2021 2022 2021 2022 2021
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Property, plant and equipment - - (543) (479) (543) (479)

Unallocated surplus - - (396,625) (360,160) (396,625) (360,160)
Hedging reserve - - - (627) - (627)
Available-for-sale fair value reserve - - (12,871) (21,155) (12,871) (21,155)
Fair value movement
recognised in profit or loss 25,151 1,435 - - 25,151 1,435
Revaluation reserve - - (776) (776) (776) (776)
Net amortisation 2,349 1,108 - - 2,349 1,108
Net liabilities 27,500 2,543 (410,815) (383,197) (383,315) (380,654)
 111
Registration No. 198301008983 (104248-X)

14. Deferred tax assets/(liabilities) (continued)

14.2 Movement in temporary differences during the year

Recognised Recognised
in other Recognised in other Recognised
compre- in insurance At 31 compre- in insurance
Recognised hensive contract December Recognised hensive contract
At in profit or income liabilities 2021/ in profit or income liabilities At 31
1 January loss (“OCI”) through OCI 1 January loss (“OCI”) through OCI December
2021 (Note 27) (Note 27) (Note 13) 2022 (Note 27) (Note 27) (Note 13) 2022
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Property, plant and
equipment (296) (183) - - (479) (64) - - (543)
Unallocated surplus (337,048) (23,112) - - (360,160) (36,465) - - (396,625)
Hedging reserve (1,350) - - 723 (627) - - 627 -
Available-for-sale
fair value reserve (34,079) - 2,339 10,585 (21,155) - 1,077 7,207 (12,871)
Fair value
movement
recognised in
profit or loss (29,159) 30,594 - - 1,435 23,716 - - 25,151
Revaluation reserve (776) - - - (776) - - - (776)
Net (accretion)
/amortisation (762) 1,870 - - 1,108 1,241 - - 2,349
Net tax (liabilities)/
assets (403,470) 9,169 2,339 11,308 (380,654) (11,572) 1,077 7,834 (383,315)
 112
Registration No. 198301008983 (104248-X)

15. Derivative financial assets/(liabilities)

Nominal
value Assets Liabilities
RM’000 RM’000 RM’000
2022
Derivatives held for trading at fair value
through profit or loss
- Collateralised interest rate swap 400,000 16,590 -
- Cross currency swap 98,740 2,406 (1,293)

Derivatives used for hedging

- Forward purchase agreements - - -
498,740 18,996 (1,293)

2021
Derivatives held for trading at fair value
through profit or loss
- Collateralised interest rate swap 400,000 35,642 -
- Cross currency swap 98,740 2,037 (1,641)

Derivatives used for hedging

- Forward purchase agreements 60,000 7,837 -
558,740 45,516 (1,641)

The Company uses interest rate swap and cross currency swap to mitigate the changes
in fair value of local and foreign currency-denominated debt securities due to
movements in interest rates or foreign exchange rates.

The Company enters into forward purchase agreements as cash flow hedging
instruments to hedge against variability in future cash flows arising from movements in
interest rates of debt securities.

Table below shows the periods when the hedged cash flows are expected to occur:

>6 to 12 >1 to 5
months years
RM’000 RM’000
As at 31.12.2022
Cash inflows (assets) - -
Cash outflows (liabilities) - -
- -
As at 31.12.2021
Cash inflows (assets) - -
Cash outflows (liabilities) 56,824 -
56,824 -
 113
Registration No. 198301008983 (104248-X)

16. Lease liabilities

2022 2021
RM’000 RM’000

Non-current 1,627 4,376

Current 3,949 4,737
5,576 9,113

17. Insurance payables

2022 2021
Note RM’000 RM’000

Current
Due to reinsurers and cedants 107,391 144,319
Due to agents, brokers and
co-insurers balances 182,750 146,723
Due to a related company 17.1 37,558 26,117
327,699 317,159

17.1 Amounts due to a related company

The amounts due to a related company is unsecured and payable in accordance
with normal trade terms.

17.2 Financial liabilities

There is no netting off of gross amount of recognised financial liabilities against

the gross amount of financial assets in the statement of financial position.

There are no financial liabilities that are subject to enforceable master netting
arrangement or similar arrangement to financial instruments received as
collateral or any cash collateral pledged or received (2021: Nil).
 114
Registration No. 198301008983 (104248-X)

18. Other payables and accruals

2022 2021
Note RM’000 RM’000

Current
Premium received in advance 121,244 123,222
Premium deposits 50,237 53,172
Cash collateral payables 11,198 40,191
Outstanding purchase of investment
securities 6,188 10,347
Other payables and accrued expenses 166,713 132,226
Due to immediate holding company 18.1 70,251 1,715
Due to related companies 18.1 15,260 12,892
441,091 373,765

18.1 Amounts due to immediate holding company and related companies

The amounts due to immediate holding company and related companies are
unsecured, interest free and repayable on demand. Included in the amount due
to immediate holding company mainly due to dividend declared by the Company,
refer Note 28.

19. Operating revenue

2022 2021
Note RM’000 RM’000

Gross earned premiums 20 3,366,877 3,259,007

Investment income 21 645,445 574,493
4,012,322 3,833,500

20. Net earned premiums

2022 2021
Note RM’000 RM’000

Gross earned premiums 19 3,366,877 3,259,007

Premiums ceded to reinsurers 13 (104,801) (142,309)
Net earned premiums 3,262,076 3,116,698
 115
Registration No. 198301008983 (104248-X)

21. Investment income

2022 2021
Note RM’000 RM’000

Available-for-sale financial assets

Interest income from:
- Malaysian government securities 46,026 45,651
- Malaysian government guaranteed bonds 48,113 46,581
- Unquoted bonds of corporations in Malaysia 7,159 5,084
Dividend income from:
- Quoted equity securities of corporations in
Malaysia 31,489 30,481
- Unquoted equity securities of corporations in
Malaysia 1,244 292
- Unquoted unit trusts in Malaysia 504 317
Accretion of discounts 6 874 769
Amortisation of premiums 6 (1,184) (1,303)
Loans and receivables
Interest income from:
- Policy loans 477 594
- Automatic premium loans 4,883 5,295
Interest income from licensed financial institutions:
- Fixed and call deposits 28,645 25,232
 116
Registration No. 198301008983 (104248-X)

21. Investment income (continued)

2022 2021
Note RM’000 RM’000
Fair value through profit or loss – Held for trading
Interest income from:
- Malaysian government securities 83,456 34,704
- Malaysian government guaranteed bonds 37,621 67,801
- Unquoted bonds of corporations in Malaysia 77,053 67,709
Dividend income from:
- Quoted equity securities of corporations in
Malaysia 86,619 71,085
- Quoted equity securities outside Malaysia 1,461 74
- Quoted unit trusts in Malaysia 6,523 584
Interest expense to financial institutions
- Cash collateral (357) (889)
Accretion of discounts 6 1,507 1,423
Amortisation of premiums 6 (5,769) (4,648)
Fair value through profit or loss – Designated
upon initial recognition financial assets
Interest income from:
- Malaysian government securities 71,758 21,136
- Malaysian government guaranteed bonds 21,502 60,282
- Unquoted bonds of corporations in Malaysia 91,479 87,128
- Unquoted bonds of corporations outside
Malaysia 4,041 4,213
Interest income from licensed financial institutions:
- Structured deposits - 51
- Cross currency swap 850 1,408
- Collateralised forward starting interest rate swap 9,331 11,119
Accretion of discounts 6 800 1,166
Amortisation of premiums 6 (10,660) (8,846)
645,445 574,493
Note 19 Note 19
 117
Registration No. 198301008983 (104248-X)

22. Realised gains and losses

2022 2021
RM’000 RM’000

Realised loss on disposal of property, plant and

equipment (2) -

Realised gains on disposal of investments in

debt and equity securities:
Malaysian government securities 344 721
Malaysian government guaranteed bonds - 5,593
Quoted equity securities of corporations in Malaysia 134,654 191,092
Quoted equity securities of corporations outside Malaysia 13,606 8,631
Quoted unit trusts in Malaysia 65 566
Unquoted unit trusts outside Malaysia 41 227
Unquoted bonds of corporations in Malaysia 1,288 2,550

Realised losses on disposal of investments in debt and

equity securities:
Malaysian government securities (1,486) -
Malaysian government guaranteed bonds - (8,409)
Quoted equity securities of corporations in Malaysia (91,720) (142,548)
Quoted equity securities of corporations outside Malaysia (4,434) (3,301)
Quoted unit trust in Malaysia - (119)
Unquoted unit trusts outside Malaysia (627) (15)
Unquoted bonds of corporations in Malaysia (8) -
51,723 54,988
Total net realised gains 51,721 54,988
 118
Registration No. 198301008983 (104248-X)

23. Fair value gains and losses

2022 2021
Note RM’000 RM’000

Held for trading financial assets 6 (212,872) (187,209)

Designated upon initial recognition
financial assets 6 (117,205) (173,729)
Derivatives (18,840) (28,685)
Total fair value loss on financial assets at
FVTPL (348,917) (389,623)
Impairment loss on AFS financial assets 6 (29,819) (41,134)
Total fair value net loss (378,736) (430,757)

24. Net benefits and claims

2022 2021
RM’000 RM’000

Gross benefits and claims paid (1,763,851) (1,382,828)

Claims ceded to reinsurers 82,613 110,298
Net claims paid (1,681,238) (1,272,530)
Gross change in contract liabilities (870,285) (1,088,455)
Change in contract liabilities ceded to reinsurers 8,088 13,784
(2,543,435) (2,347,201)
 119
Registration No. 198301008983 (104248-X)

25. Management expenses

2022 2021
Note RM’000 RM’000

Advertising and marketing expenses 15,195 13,162

Impairment loss on receivables 655 1,249
Amortisation of intangible assets 5 10,128 7,984
Auditors’ remuneration:
- statutory audit fees 394 354
- other audit related fees 1,191 91
Bank charges 15,158 16,066
Depreciation on property, plant and
equipment 3 5,659 4,938
Depreciation of right-of-use assets 4 5,531 5,527
Employee benefits expense 25(a) 128,838 124,726
Executive director’s remuneration 25(b) 1,772 -
Non-executive directors’ fee and other
emoluments 25(b) 643 635
Lease expense on low-value assets 194 102
Short-term lease expenses 31 -
Other expenses 101,341 97,214
286,730 272,048

2022 2021
RM’000 RM’000

(a) Employee benefits expense

Wages and salaries 70,146 63,339
Social security contributions 570 519
Contributions to Employees’ Provident
Fund 13,066 12,773
Other benefits 45,056 48,095
128,838 124,726
 120
Registration No. 198301008983 (104248-X)

25. Management expenses (continued)

(b) Key management personnel compensation

2022 2021
RM’000 RM’000

Executive director/Chief Executive Officer:

Salaries and other emoluments 878 -
Bonus 894 -
1,772 -
Estimated monetary value of benefits-in-kind 96
1,868 -

Non-executive directors:
Fees 442 430
Other emoluments 201 205
643 635

Other key management personnel:

Short-term employee benefits 7,077 7,100

Other key management personnel comprise persons other than the Directors of the
Company, having authority and responsibility for planning, directing and controlling
the activities of the entity either directly or indirectly.

The remuneration of CEO of the Company who is also the Executive Director of the
Company, including benefits-in-kind, amounted to RM1,868,000 (2021: nil).

(c) The details of remuneration received by the CEO during the year are as follows:

2022 2021
RM’000 RM’000

Salaries 1,205 993

Bonus 1,104 1,161
Contribution to Employee's Provident Fund 166 -
Estimated monetary value of benefits-in-kind 118 310
Other emoluments 658 1,647
3,251 4,111

Amount included in employee benefits expense 3,133 3,801

 121
Registration No. 198301008983 (104248-X)

25. Management expenses (continued)

(d) The total remuneration (including benefits-in-kind) of the Chief Executive Officer and Directors are as follows:
Other Benefits-in-
Salaries Bonus Fees emoluments kind Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2022
Chief Executive Officer
Ong Eng Chow 945 210 - 206 22 1,383

Executive Director/Chief Executive Officer

Joseph Kumar Gross 260 894 - 618 96 1,868

Non-Executive Directors of the Company

Goh Ching Yin - - 120 162 - 282
Peter Ho Kok Wai - - 120 15 - 135
Lim Fen Nee - - 120 15 - 135
Foo Chee It - - 20 3 - 23
Dato’ Dr. Kantha A/L Rasalingam - - 62 6 - 68
Total Non-Executive Directors of the Company - - 442 201 - 643

Total remuneration of Directors of the Company 260 894 442 819 96 2,511
 122
Registration No. 198301008983 (104248-X)

25. Management expenses (continued)

(d) The total remuneration (including benefits-in-kind) of the Chief Executive Officers and Directors are as follows (continued):
Other Benefits-in-
Salaries Bonus Fees emoluments kind Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2021
Chief Executive Officer
Joseph Kumar Gross 993 1,161 - 1,647 310 4,111

Non-Executive Directors of the Company

Goh Ching Yin - - 120 162 - 282
Peter Ho Kok Wai - - 120 17 - 137
Lim Fen Nee - - 70 9 - 79
Dato’ Dr. Kantha A/L Rasalingam - - 120 17 - 137
Total remuneration of Directors of the Company - - 430 205 - 635
 123
Registration No. 198301008983 (104248-X)

26. Interest expense

2022 2021
RM’000 RM’000
Interest expense on:
Lease liabilities 252 423
252 423

27. Tax expense

2022 2021
RM’000 RM’000
(a) Recognised in profit or loss

Current tax expense

Current year 64,320 55,673
(Over)/under provision in prior years (1,888) 1,213
62,432 56,886

Deferred tax expense/(benefit)

Origination and reversal of temporary
differences 11,572 (9,169)
Total tax expense 74,004 47,717

Tax expenses attributable to shareholders 62,831 40,874

Tax expenses attributable to participating
fund and unitholders 11,173 6,843
74,004 47,717

The income tax provided for in the Life fund for the current and previous financial years
is in respect of investment income which is taxed at a tax rate of 8% (2021: 8%)
applicable for life insurance business and 24% (2021: 24%) on income other than
investment income which is taxed under Section 60(8) of the Income Tax Act, 1967.

For the Shareholders’ fund, the corporate tax rate is at 24% (2021: 24%). Consequently,
deferred tax assets and liabilities of Shareholders’ fund are measured using this tax rate.
The tax expense of respective funds are disclosed in Note 36 – Insurance funds.
 124
Registration No. 198301008983 (104248-X)

27. Tax expense (continued)

(b) Reconciliation of tax expense
2022 2021
RM’000 RM’000

Profit before tax 249,722 197,166

Tax at Malaysian tax rate of 24 % (2021: 24%) 59,933 47,320

Tax rate differential of 16 % (2021: 16%) in
respect of Life fund 10,757 1,774
Tax rate differential due to Cukai Makmur
(Note 27(e)) 1,023 -
Section 110B tax set off (5,675) (3,583)
Income not subject to tax (269,837) (264,111)
Non-deductible expenses 279,691 265,104
(Over)/under provision in prior years (1,888) 1,213
Total tax expense 74,004 47,717

(c) Deferred tax recognised directly in other comprehensive income

2022 2021
RM’000 RM’000
Available-for-sale fair value reserve
At 1 January 417 2,756
Net loss arising from change in fair value (1,077) (2,339)
At 31 December (660) 417

Revaluation reserve
At 1 January 223 223
Net gain arising from revaluation - -
At 31 December 223 223
 125
Registration No. 198301008983 (104248-X)

27. Tax expense (continued)

(d) Deferred tax recognised in insurance contract liabilities

2022 2021
Note RM’000 RM’000

Available-for-sale fair value reserve

At 1 January 20,738 31,323
Net loss arising from change in fair value 13 (7,207) (10,585)
At 31 December 13,531 20,738

Revaluation reserve
At 1 January 553 553
Net gain arising from revaluation 13 - -
At 31 December 553 553

Hedging reserve
At 1 January 627 1,350
Net loss arising from change in fair value 13 (627) (723)
At 31 December - 627

(e) Changes in taxation

Cukai Makmur (“Prosperity tax”)

In December 2021, the government enacted a change in the national income tax
rate for year of assessment (“YA”) 2022 via the introduction of “Cukai Makmur” - a
special one-off tax to be imposed on non-Micro, Small and Medium Enterprises
(non-MSMEs) companies which generate high profits during the pandemic.

Accordingly, the applicable tax rates of the Company for YA 2022 are as follows:
• Chargeable income for the first RM100 million: 24%;
• Portion of chargeable income in excess of RM100 million: 33%
 126
Registration No. 198301008983 (104248-X)

28. Dividends

Dividend declared by the Company as appropriation of profits is as follows:

Sen per share Total amount Date of payment

(single tier) RM’000

2022
Interim 2022 ordinary 28.5 67,431 19 January 2023

29. Operating leases

Leases as lessor

The future undiscounted lease payments to be received are as follows:

2022 2021
RM’000 RM’000

Less than one year 802 203

Between 1 and 2 years 442 181
Between 2 and 3 years 33 50
1,277 434

30. Capital commitments

2022 2021
RM’000 RM’000

Property, plant and equipment

Contracted but not provided for 6,161 2,567

Software development
Contracted but not provided for 1,515 238
 127
Registration No. 198301008983 (104248-X)

31. Related parties

Identity of related parties

For the purposes of these financial statements, parties are considered to be related to
the Company if the Company has the ability, directly or indirectly, to control or jointly
control the party or exercise significant influence over the party in making financial and
operating decisions, or vice versa, or where the Company and the party are subject to
common control. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons
having authority and responsibility for planning, directing and controlling the activities
of the Company either directly or indirectly and entity that provides key management
personnel services to the Company. The key management personnel include all the
Directors of the Company, and certain members of Senior Management Committee of
the Company. There were no significant transactions with the Company during the
financial year other than key management personnel compensation as disclosed in Note
25.

The related parties of, and their relationship with the Company are as follows:

Related Parties Relationship

Allianz SE, Munich ("Allianz SE") Ultimate holding company

Allianz Malaysia Berhad (“AMB”) Immediate holding company
Allianz General Insurance Company
(Malaysia) Berhad Related company of ALIM
Allianz SE Insurance Management Asia
Pacific Related company of ALIM
Allianz Technology SE Related company of ALIM
Allianz Investment Management SE Related company of ALIM
Allianz Investment Management
Singapore Pte Ltd Related company of ALIM
Allianz Global Investors Singapore Limited Related company of ALIM
Allianz Global Investors Asia Pacific Limited Related company of ALIM
PT Asuransi Allianz Life Indonesia Related company of ALIM
Allianz Digital Health GMBH Related company of ALIM
Allianz Technology (Thailand) Corporation
Limited Related company of ALIM
Rapidpro Consulting Sdn Bhd Company connected to the Director of
AMB
 128
Registration No. 198301008983 (104248-X)

31. Related parties (continued)

Significant related party transactions

Related party transactions have been entered into in the normal course of business under
normal trade terms. The significant related party transactions of the Company, other
than key management personnel compensation (see Note 25), are as follows:
Amount Amount
transacted for transacted for
the year the year
ended ended
31 December 31 December
2022 2021
Transactions RM’000 RM’000
Ultimate holding company
Payment of reinsurance premium ceded, net of
commission income (4,214) (3,049)
Payment of personnel expenses (795) (1,266)
Payment of business building and regional investment
costs (1,822) (2,666)
Payment of global marketing expenses (1,770) (1,301)
Reversal/(Payment) of fees for sharing of Global
Procurement (excluding IT) services and support 9 (129)
Reversal/(Payment) of personnel expenses 1,522 (4,198)
(Payment)/Reversal for support of design and
development of Global Digital Factory (42) 1
Reversal/(Payment) for the development of Allianz One
Finance Programme 3 (96)
Reversal/(Payment) for IT security services 3 (267)
Reversal/(Payment) of fee for cyber insurance services 34 (35)
Payment of fee for HRT run services (615) (195)
Payment for Employee Share Participation Programs
related admin costs (26) (17)
Payment of fees for implementation of Azeus Convene
Meeting Management Software (39) -
Payment of GHR IT Licenses & Maintenance (22) -
Payment of usage of finance application & workplace
devices by COC (112) -
Payment of sharing of cost of the implementation of
SAP Success Factors system (368) -
Payment of sharing of cost to support Group Data
Analytics (128) -
Payment of support the development and
improvement of Technical Excellence (194) -
Payment of services of Strategic Workforce Planning
project (28) -
Payment of HR IT Licenses & Maintenance (10) -
 129
Registration No. 198301008983 (104248-X)

31. Related parties (continued)

Significant related party transactions (continued)
Amount Amount
transacted for transacted for
the year the year
ended ended
31 December 31 December
2022 2021
Immediate holding company RM’000 RM’000
Rental income 104 104
Sharing of personnel costs and department
expenses (10,037) (10,904)
Payment for life actuarial modeling services (373) (356)
Payment of fees for SAP Master Data Management
support services (44) (24)
Related companies*
Payment of reinsurance premium ceded, net of
commission income (87,877) (116,569)
Payment of insurance premium (266) (229)
Payment of motor insurance premium (238) (239)
Payment of investment and redemption of funds
(including fund management fees) (98,028) (143,653)
Investment advisory fees (1,533) (2,047)
Payment of performance attribution analysis
expenses (44) -
Payment of other expenses (1,228) (231)
Rental expenses (1,404) (2,423)
Rental income 537 545
Reversal of intranet portal network cost - 68
Reimbursement of sharing of common expenses 1,264 5,968
Payment of asset and investment manager database
expenses (412) (789)
Payment of expenses of HR database platform and
recruitment solution (81) (28)
Payment of annual maintenance and support fees
for software system (4,190) (558)
Reversal for Actuarial support centre services - 102
Payment of IT security services (88) (8)
Payment of Allianz Virtual Client, Windows
Distributor File System and Data Center
Consolidation (2,366) (1,823)
Payment of fee to develop a suite of digital health
tools (1,280) (1,188)
Payment of fee for sharing of Group Intranet Access - (492)
Payment of fee for sharing of Group Directory
International - (568)
Payment for purchasing of various software licences (32) (83)
Payment of fees for IT system application services - (4,938)
 130
Registration No. 198301008983 (104248-X)

31. Related parties (continued)

Significant related party transactions (continued)

Amount Amount
transacted for transacted for
the year the year
ended ended
31 December 31December
2022 2022
Related companies* (continued) RM’000 RM’000
Payment of fees for the implementation of a
software intelligence platform (327) -
Payment of fees for usage of Google Analytics (574) -
Payment of fees for the purchase of ServiceNow
implementation services (158) -
Payment of fees by for the usage of Public Cloud
Service (445) -
Payment of OneMarketing set up cost (15) -
Payment of Hybrid Cloud Services (494) -
Payment for Allianz Virtual Client for shared remote
app and license pack base (65) -

Related party – Company connected with CEO of

the immediate holding company
Payment of training and other fees (233) (318)
* Related companies are companies within the Allianz SE group.

Significant related party balances related to the above transactions are disclosed in
Notes 8, 9, 17 and 18.
 131
Registration No. 198301008983 (104248-X)

32. Risk management framework

As a provider of insurance services, the Company considers risk management to be one
of its core competencies. It is an integral part of the Company’s business process. In order
to protect its assets, the Company has established a risk management framework to
promote a strong risk management culture supported by a robust risk governance
structure.

This framework ensures that risks are properly identified, analysed and evaluated. Risk
appetite is defined by the Company’s risk strategy and limit structure. Close monitoring
and reporting allows the Company to detect deviations from its risk tolerance limit at an
early stage.

The Allianz risk management covers the following key areas:

(a) Risk underwriting and identification

A sound risk underwriting and identification framework including risk assessment,
risk standards, and clear targets form the foundation for adequate risk taking and
management decisions such as individual transaction approval, new product
approval, strategic or tactical asset allocation.

(b) Risk reporting and monitoring

The Company’s qualitative and quantitative risk reporting and controlling
framework provides transparency and risk indicators to senior management with
regards to its overall risk profile and whether the profile is within the delegated
limits and authorities.

(c) Risk strategy and risk appetite

The Company’s risk strategy clearly defines its risk appetite. It ensures that returns
are appropriate for the risks taken and that the delegated authorities are in line
with the Company’s overall risk bearing capacity. The risk-return profile is
managed through integration of risk appetite and capital needs indecision making
processes. This also keeps risk strategy and business objectives consistent with
each other and allows the Company to take opportunities within its risk appetite.

(d) Communication and transparency

Finally, a transparent and robust risk disclosure provides a basis for communicating
this strategy to the Company’s internal and external stakeholders, ensuring a
sustainable positive impact on valuation and financing.
 132
Registration No. 198301008983 (104248-X)

32. Risk management framework (continued)

Risk governance structure

The Board assumes ultimate responsibility over the effectiveness of the Company’s risk
management and internal control systems by establishing and supervising the operation
of the risk management framework. The Board has delegated the responsibility to
establish and supervise the operation of the risk management framework to the Risk
Management Committee (“RMC”) to discharge their oversight function effectively.

RMC bears the overall responsibility for effective risk identification, measurement,
monitoring and control functions of the Company. RMC also oversees the Senior
Management’s activities in managing the key risk areas of the Company and to ensure
that the risk management process is in place and functioning effectively. The RMC is
responsible for driving the risk management framework of AMB Group of companies
(“AMB Group”) and to report to the Board on its recommendations and/or decisions.
Through structured reporting from the Risk Management Working Committee
(“RMWC”), RMC will consolidate the status of the risks and present them to the Board
for consideration.

RMWC serves and as a platform for two way communications between the management
and the RMC on matters of the AMB Group’s risk management framework and its
strategies. RMWC is responsible in formulating risk management strategies, policies and
risk tolerance for RMC review and onward transmission of recommendation to the
Board. RMWC determines the allocation of risks by cascading and/or escalating to the
relevant owners. RMWC also oversees the compliance of all risk management process
by all departments of the Company and provides pre-emptive recommendations to
ensure timely action is taken in managing and mitigating the identified risks.

Risk Governance in Asset and Liability Management (“ALM”)

The Investment Committee (“IC”) has been tasked to manage business practices so that
decisions and actions taken with respect to assets and liabilities are coordinated. It
involves various management activities and responsibilities, including the formulation of
long-term strategic goals and the management of various risks including liquidity risk,
interest rate risk and market risk.
 133
Registration No. 198301008983 (104248-X)

32. Risk management framework (continued)

Risk Governance in Asset and Liability Management (“ALM”) (continued)

The Asset Liability Management (“ALM”) process is subjected to external and internal
constraints.

• External constraints include supervisory and legislative requirements, market

condition, as well as the interests and expectations of policyholders and other
stakeholders. For instance, one of the major constraints is the liquidity of the assets
and liabilities which may compromise the ability to price, measure and hedge
exposures.
• Internal constraints include asset allocation and environmental, social and
governance (“ESG”) integration framework, which limits reflect the Company’s
management philosophy and professional judgement (although this may also be
influenced by external constraints).

Governance and regulatory framework

The Company is required to comply with the requirements of the Financial Services Act,
2013, relevant regulations and guidelines imposed by BNM, as well as including the
relevant guidelines from Life Insurance Association of Malaysia (“LIAM”).

The Company is also required to comply with all Allianz SE Group’s policies and standards.
If there is any conflict with the local laws or regulations, the local laws or regulations have
priority while the stricter will apply where possible.

33. Insurance risk

Insurance risk (also known as underwriting risk) includes the risk of incurring higher
claims costs than expected owing to the random nature of claims and their frequency
and severity and the risk of change in the legal or economic conditions of insurance or
reinsurance cover. This may result in the insurer having either received too little
premium for the risks it has agreed to underwrite and hence has not enough funds to
invest and pay claims, or that claims are in excess of those expected.

The Company seeks to minimise insurance risk through a formalised reinsurance

arrangement with an appropriate mix and spread of business based on its overall
strategy. This is complemented by observing formalised underwriting guidelines and
limits and standards applied to the security of reinsurers.
 134
Registration No. 198301008983 (104248-X)

33. Insurance risk (continued)

The insurance risk of life insurance contracts consists of mortality/longevity/morbidity and calamity risks. Mortality/longevity/morbidity risk
represents the risk of loss attributable to positive or negative changes in the assumed medical prognosis for life expectancy, occupational disability,
illness and the need for long-term care as well as underestimation of these probabilities. Calamity risk represents the risk of loss because of strong
short-term fluctuation in the mortality rate, for example as a result of war or epidemics. Insurance risks for insurance contracts are reflected in the
actuarial liabilities.

The table below shows the actuarial liabilities by type of contract (with and without DPF).

Gross Reinsurance
With DPF Without DPF Total With DPF Without DPF Total Net
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2022
Whole life 2,157,546 1,836,090 3,993,636 - 795 795 3,994,431
Endowment 483,222 3,616,205 4,099,427 - - - 4,099,427
Mortgage - 43,646 43,646 - (21,536) (21,536) 22,110
Riders and others 730,053 991,247 1,721,300 (1,743) (38,476) (40,219) 1,681,081
Total 3,370,821 6,487,188 9,858,009 (1,743) (59,217) (60,960) 9,797,049
Note 13 Note 13 Note 13
2021
Whole life 2,299,116 1,726,619 4,025,735 - 907 907 4,026,642
Endowment 576,595 3,279,774 3,856,369 - - - 3,856,369
Mortgage - 46,147 46,147 - (23,474) (23,474) 22,673
Riders and others 720,151 875,587 1,595,738 (1,635) (28,670) (30,305) 1,565,433
Total 3,595,862 5,928,127 9,523,989 (1,635) (51,237) (52,872) 9,471,117
Note 13 Note 13 Note 13

As all of the business is derived from Malaysia, the entire actuarial liabilities are in Malaysia. There is no insurance contract issued by the Company
during the current and previous financial years.
 135
Registration No. 198301008983 (104248-X)

33. Insurance risk (continued)

Key assumptions

Significant judgement is required in determining the liabilities and in the choice of

assumptions. Assumptions in use are based on past experiences, current internal data,
external market indices and benchmarks which reflect current observable market prices
and other published information. Assumptions and prudent estimates are determined at
the date of valuation. They are further evaluated on a continuous basis in order to ensure
realistic and reasonable valuations.

The key assumptions to which the estimation of liabilities is particularly sensitive are as
follows:

• Mortality and morbidity rates

Experience study on mortality and morbidity rates is carried out on annual basis. The
actual claim experience is compared against industrial mortality table and
reinsurers’ mortality and morbidity risk charges. Mortality and morbidity
assumptions vary by product type and underwriting procedures.

The Company can adjust the mortality/morbidity risk charges in future years in line
with emerging experience for investment-linked and universal life contracts.

An appropriate allowance for provision of risk margin for adverse deviation from
expected experience is made in the valuation of non-participating life policies, the
guaranteed benefits insurance liabilities of participating life policies, and non-unit
actuarial liabilities of investment-linked policies.

• Expenses

Expense assumption was set during initial pricing stage. Expense assumption is
reviewed annually to reflect inflation due to higher cost of underwriting, issuing and
maintaining the policies. Expense assumption varies by premium term, distribution
channel, policy duration and underwriting procedures. The expense assumption is
compared to actual expense that the Company incurred.

An appropriate allowance for provision of risk margin for adverse deviation from
expected experience is made in the valuation of non-participating life policies, the
guaranteed benefits insurance liabilities of participating life policies, and non-unit
actuarial liabilities of investment-linked policies.
 136
Registration No. 198301008983 (104248-X)

33. Insurance risk (continued)

Key assumptions (continued)

The key assumptions to which the estimation of liabilities is particularly sensitive are as
follows (continued):

• Persistency

Experience study on persistency (lapse, surrender, premium holiday, partial

withdrawal) is carried out on annual basis using statistical method. Persistency
assumptions vary by product type, distribution channel and policy duration.

An appropriate allowance for provision of risk margin for adverse deviation from
expected experience is made in the valuation of non-participating life policies, the
guaranteed benefits insurance liabilities of participating life policies, and non-unit
actuarial liabilities of investment-linked policies.

• Discount rate

In the valuation of the total benefits insurance liabilities of participating life policies,
the Company has assumed a long term gross rate of return of 4.00% - 6.00% per
annum (2021: 3.75% - 5.75% per annum). The long term gross rate of return is
derived based on a basket of strategic asset allocations. The Company calculates
long term gross rate by assuming each asset class will earn the targeted yield. The
strategic asset allocation and targeted yield are reviewed annually in accordance
with the Company’s framework.

Malaysian Government Securities (“MGS”) spot rate is used in the valuation of non-
participating life policies, the guaranteed benefits insurance liabilities of
participating life policies, and non-unit actuarial liabilities of investment-linked
policies.

Risk-free discount rate for durations of less than 15 years is based on zero-coupon
spot yields of MGS with matching duration. Risk-free discount rate for durations of
15 years or more is based on zero-coupon spot yields of MGS with 15 years term to
maturity. Duration in this context is referring to the term to maturity of each future
cash flow. The MGS zero-coupon spot yields are obtained from a recognised bond
pricing agency in Malaysia.

The valuation of actuarial liabilities as at 31 December 2022 has taken into account the
COVID-19 impact.
 137
Registration No. 198301008983 (104248-X)

33. Insurance risk (continued)

Key assumptions (continued)

The assumptions that have significant effects on the gross actuarial liabilities and reinsurance assets are listed below.

Mortality and morbidity Lapse and surrender

rates rates Discount rate
2022(2) 2021(1) 2022 2021 2022 2021
% % % % % %
Type of business

With fixed and guaranteed terms

and with DPF contracts
Life insurance 60-100 60-100 3.0-20 3.0-20 4.00-6.00 3.75-5.75

Without DPF contracts MGS spot MGS spot

Life insurance 70-130 70-130 3.0-70 3.0-70 yield yield

(1) Industry mortality and morbidity experience tables that were observed in Malaysia between year 1999 and 2003 or the
respective reinsurance risk rates.
(2) Industry mortality and morbidity experience tables that were observed in Malaysia between year 2011 and 2015 or the

respective reinsurance risk rates.

 138
Registration No. 198301008983 (104248-X)

33. Insurance risk (continued)

Sensitivities

The analysis below is performed for possible movements in key assumptions with all other assumptions held constant, showing the impact on gross
and net liabilities and profit after tax. Sensitivities testing on individual assumptions are meaningful to analyse the magnitude of reserve changes for
each assumption. However, it should be studied with care as it does not capture the possible correlation effect when all assumptions are being stressed
simultaneously. It should be noted that movements in these assumptions are non-linear. Sensitivity information will also vary according to the current
economic assumptions.

Impact on Profit Impact on Gross Impact on Net

Change in assumptions after tax liabilities* liabilities*
RM’000 RM’000 RM’000
Life insurance contracts
2022
Mortality and morbidity rates +5% (2,996) 6,912 5,500
Discount rate -0.5% (12,019) 57,834 57,291
Expenses +10% (5,629) 9,358 9,358
Lapse and surrender rates -10% 1,088 3,583 3,687

2021
Mortality and morbidity rates +5% (2,337) 6,847 5,333
Discount rate -0.5% (10,667) 65,774 65,180
Expenses +10% (4,618) 9,763 9,763
Lapse and surrender rates -10% 831 5,843 5,977

The method used and key assumptions made for deriving sensitivity information did not change from the previous year.
 139
Registration No. 198301008983 (104248-X)

33. Insurance risk (continued)

Sensitivities (continued)

The above illustration is only prepared for “what if” adverse scenario, with the key
assumptions applied towards unfavourable direction. In the sensitivity analysis above,
changes in assumptions for life non-participating business would impact the profit after
tax and insurance contract liabilities. In respect of life participating insurance business,
it would only impact the insurance contract liabilities.

* The impact on gross and net liabilities only reflects the changes in the prescribed
assumptions above without adjustment to policyholders’ bonuses for the life
participating business. Impact on insurance contract liabilities also reflects
adjustments for tax, where applicable.

34. Financial risks

Exposure to credit, liquidity and market (currency risk, interest rate risk, equity price
risk) arises in the normal course of the Company’s business. The Company is guided by
its risk management framework as well as policies and guidelines from the ultimate
holding company, Allianz SE which sets out its general risk management philosophy.
Through financial risk management, business strategies are evaluated to ensure
alignment with the Company’s risk appetite and tolerance.

34.1 Credit risk

Credit risk is the risk of a financial loss to the Company if a counterparty to a

financial instrument fails to meet its contractual obligations or due to the non-
performance of instruments (i.e. payment overdue). The Company’s exposure to
credit risk arises principally from the reinsurance, insurance receivables and the
investment/placement in fixed income instruments and bank balances. Financial
loss may materialise when the counterparty failed to meet payment obligations
for various reasons.

The Company has credit policies in place to mitigate the credit risk from
underwriting of insurance business and it is monitored on an on-going basis.
Reinsurance is mainly to local or offshore reinsurers, and if the Company has to
place overseas, only counterparties that have a credit rating that is acceptable
based on Allianz Guidelines for Reinsurance Security are used.

The Company’s Investment Mandate imposes limits by issuer/counterparty and

by credit ratings for investments in corporate fixed income securities (all
securities that entails credit risks, e.g. credit facilities, bank deposits of longer
than 1-year, certificates of deposits, notes, etc.); and these limits are reviewed at
least on annual basis. Active monitoring of the exposure against those limits are
in place and reporting to RMWC, RMC and IC on a quarterly basis.
 140
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.1 Credit risk (continued)

Credit exposure

The table below shows the maximum exposure to credit risk for the financial assets on the statement of financial position.

Insurance and Investment-

Shareholders’ funds linked funds Total
RM’000 RM’000 RM’000
2022
LAR
Other loans 77,243 - 77,243
Fixed and call deposits 525 875 1,400
AFS financial investments
Malaysian government securities 1,011,841 - 1,011,841
Malaysian government guaranteed bonds 1,046,213 - 1,046,213
Unquoted bonds of corporations in Malaysia 80,782 - 80,782
FVTPL - HFT financial investments
Malaysian government securities 1,887,383 278,246 2,165,629
Malaysian government guaranteed bonds 901,117 19,508 920,625
Unquoted bonds of corporations in Malaysia 1,342,456 554,151 1,896,607
 141
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.1 Credit risk (continued)

Credit exposure (continued)

The table below shows the maximum exposure to credit risk for the financial assets on the statement of financial position (continued).

Insurance and
Shareholders’ Investment-
funds linked funds Total
RM’000 RM’000 RM’000
2022 (continued)
FVTPL - DUIR financial investments
Malaysian government securities 2,037,662 - 2,037,662
Malaysian government guaranteed bonds 529,240 - 529,240
Unquoted bonds of corporations in Malaysia 2,069,549 - 2,069,549
Unquoted bonds of corporations outside Malaysia 100,446 - 100,446
 142
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.1 Credit risk (continued)

Credit exposure (continued)

The table below shows the maximum exposure to credit risk for the financial assets on the statement of financial position (continued).

Insurance and Investment-

Shareholders’ funds linked funds Total
2022 (continued) RM’000 RM’000 RM’000
Derivatives financial assets
Collateralised interest rate swap 16,590 - 16,590
Forward purchase agreements - - -
Cross currency swap 2,406 - 2,406
Reinsurance assets 120,677 - 120,677
Insurance receivables 70,214 - 70,214
Other receivables and deposits 33,138 40,960 74,098
Cash and cash equivalents 1,054,148 608,751 1,662,899
12,381,630 1,502,491 13,884,121
 143
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.1 Credit risk (continued)

Credit exposure (continued)

The table below shows the maximum exposure to credit risk for the financial assets on the statement of financial position (continued).

Insurance and Investment-

Shareholders’ funds linked funds Total
RM’000 RM’000 RM’000
2021
LAR
Other loans 84,258 - 84,258
Fixed and call deposits 156,801 67,179 223,980
AFS financial investments
Malaysian government securities 1,053,490 - 1,053,490
Malaysian government guaranteed bonds 1,023,701 - 1,023,701
Unquoted bonds of corporations in Malaysia 95,291 - 95,291
FVTPL - HFT financial investments
Malaysian government securities 1,707,880 218,969 1,926,849
Malaysian government guaranteed bonds 859,553 20,044 879,597
Unquoted bonds of corporations in Malaysia 1,088,030 509,305 1,597,335
 144
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.1 Credit risk (continued)

Credit exposure (continued)

The table below shows the maximum exposure to credit risk for the financial assets on the statement of financial position (continued).

Insurance and
Shareholders’ Investment-
funds linked funds Total
RM’000 RM’000 RM’000
2021 (continued)
FVTPL - DUIR financial investments
Malaysian government securities 1,714,484 - 1,714,484
Malaysian government guaranteed bonds 538,354 - 538,354
Unquoted bonds of corporations in Malaysia 2,085,636 - 2,085,636
Unquoted bonds of corporations outside Malaysia 104,561 - 104,561
 145
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.1 Credit risk (continued)

Credit exposure (continued)

The table below shows the maximum exposure to credit risk for the financial assets on the statement of financial position (continued).

Insurance and Investment-

Shareholders’ funds linked funds Total
2021 (continued) RM’000 RM’000 RM’000
Derivatives financial assets
Collateralised interest rate swap 35,642 - 35,642
Forward purchase agreements 7,837 - 7,837
Cross currency swap 2,037 - 2,037
Reinsurance assets 119,680 - 119,680
Insurance receivables 65,369 - 65,369
Other receivables and deposits 58,416 9,197 67,613
Cash and cash equivalents 846,290 263,126 1,109,416
11,647,310 1,087,820 12,735,130
 146
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.1 Credit risk (continued)

Credit exposure by credit rating

The table below provides information regarding the credit risk exposure of the Company by classifying financial assets according to the credit
rating agencies’ credit ratings of counterparties. AAA is the highest possible rating. Financial assets that fall outside the range of AAA to BBB are
classified as non-investment grade. Assets which are not rated by rating agencies are classified as non-rated.

Neither past-due nor impaired

Non- Investment- Past-due
investment Non- linked but not
AAA AA A BBB grade rated funds impaired Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2022
LAR
Other loans - - - - - 77,243 - - 77,243
Fixed and call deposits 328 197 - - - - 875 - 1,400
AFS financial investments
Malaysian government securities - - - - - 1,011,841 - - 1,011,841
Malaysian government guaranteed
bonds - - - - - 1,046,213 - - 1,046,213
Unquoted bonds of corporations in
Malaysia 36,643 44,139 - - - - - - 80,782
 147
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.1 Credit risk (continued)

Credit exposure by credit rating (continued)

Neither past-due nor impaired

Non- Investment- Past-due
investment Non- linked but not
AAA AA A BBB grade rated funds impaired Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2022
FVTPL – HFT financial investments
Malaysian government securities - - - - - 1,887,383 278,246 - 2,165,629
Malaysian government guaranteed
bonds - - - - - 901,117 19,508 - 920,625
Unquoted bonds of corporations in
Malaysia 711,976 630,480 - - - - 554,151 - 1,896,607
 148
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.1 Credit risk (continued)

Credit exposure by credit rating (continued)

Neither past-due nor impaired

Non- Investment- Past-due
investment Non- linked but not
AAA AA A BBB grade rated funds impaired Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2022 (continued)
FVTPL - DUIR financial investments
Malaysian government securities - - - - - 2,037,662 - - 2,037,662
Malaysian government guaranteed
bonds - - - - - 529,240 - - 529,240
Unquoted bonds of corporations in
Malaysia 1,096,702 967,630 - - - 5,217 - - 2,069,549
Unquoted bonds of corporations
outside Malaysia - - 7,671 51,645 - 41,130 - - 100,446
 149
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.1 Credit risk (continued)

Credit exposure by credit rating (continued)

Neither past-due nor impaired

Non- Investment- Past-due
investment Non- linked but not
AAA AA A BBB grade rated funds impaired Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2022 (continued)
Derivatives financial assets
Collateralised interest rate swap 16,590 - - - - - - - 16,590
Forward purchase agreements - - - - - - - - -
Cross currency swap 2,406 - - - - - - - 2,406
Reinsurance assets - 113,209 2,428 - - 5,040 - - 120,677
Insurance receivable - - - - - 61,239 - 8,975 70,214
Other receivables and deposits - - - - - 33,138 40,960 - 74,098
Cash and cash equivalents 674,987 372,342 6,612 - - 207 608,751 - 1,662,899
2,539,632 2,127,997 16,711 51,645 - 7,636,670 1,502,491 8,975 13,884,121

# Net of balances which are past due and impaired of RM3,557,000 which has been fully provided for (See Note 34.1 (ii)).
 150
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.1 Credit risk (continued)

Credit exposure by credit rating (continued)

Neither past-due nor impaired

Non- Investment- Past-due
investment Non- linked but not
AAA AA A BBB grade rated funds impaired Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2021
LAR
Other loans - - - - - 84,258 - - 84,258
Fixed and call deposits 53 156,748 - - - - 67,179 - 223,980
AFS financial investments
Malaysian government securities - - - - - 1,053,490 - - 1,053,490
Malaysian government guaranteed
bonds - - - - - 1,023,701 - - 1,023,701
Unquoted bonds of corporations in
Malaysia 44,877 50,414 - - - - - - 95,291
 151
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.1 Credit risk (continued)

Credit exposure by credit rating (continued)

Neither past-due nor impaired

Non- Investment- Past-due
investment Non- linked but not
AAA AA A BBB grade rated funds impaired Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2021
FVTPL – HFT financial investments
Malaysian government securities - - - - - 1,707,880 218,969 - 1,926,849
Malaysian government guaranteed
bonds - - - - - 859,553 20,044 - 879,597
Unquoted bonds of corporations in
Malaysia 557,187 528,814 - - - 2,029 509,305 - 1,597,335
 152
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.1 Credit risk (continued)

Credit exposure by credit rating (continued)

Neither past-due nor impaired

Non- Investment- Past-due
investment Non- linked but not
AAA AA A BBB grade rated funds impaired Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2021 (continued)
FVTPL - DUIR financial investments
Malaysian government securities - - - - - 1,714,484 - - 1,714,484
Malaysian government guaranteed
bonds - - - - - 538,354 - - 538,354
Unquoted bonds of corporations in
Malaysia 1,045,362 985,158 - 5,182 - 49,934 - - 2,085,636
Unquoted bonds of corporations
outside Malaysia - - 7,891 54,756 - 41,914 - - 104,561
 153
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.1 Credit risk (continued)

Credit exposure by credit rating (continued)

Neither past-due nor impaired

Non- Investment- Past-due
investment Non- linked but not
AAA AA A BBB grade rated funds impaired Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2021 (continued)
Derivatives financial assets
Collateralised interest rate swap 35,642 - - - - - - - 35,642
Forward purchase agreements 7,837 - - - - - - - 7,837
Cross currency swap 2,037 - - - - - - - 2,037
Reinsurance assets - 112,333 2,629 - - 4,718 - - 119,680
Insurance receivable - - - - - 59,747 - 5,622# 65,369
Other receivables and deposits - - - - - 58,416 9,197 - 67,613
Cash and cash equivalents 394,129 450,069 1,704 - - 388 263,126 - 1,109,416
2,087,124 2,283,536 12,224 59,938 - 7,198,866 1,087,820 5,622 12,735,130

# Net of balances which are past due and impaired of RM2,902,000 which has been fully provided for (See Note 34.1 (ii)).
 154
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.1 Credit risk (continued)

Credit risk analysis on the financial assets are not provided for the investment-linked funds. This is due to the fact that, in investment-linked
funds, the liability to policyholders is linked to the performance and value of the assets that back those liabilities and the shareholders have no
direct exposure to any credit risk in those assets.

(i) Past-due but not impaired financial assets

Ageing analysis of financial assets past-due but not impaired

The Company maintains an ageing analysis in respect of insurance receivables only. The ageing of insurance receivables that are past-due
as at the reporting date but not impaired is as follows:

Insurance receivables
Investment-
1 to 90 days 91 to 180 days linked funds Total
RM’000 RM’000 RM’000 RM’000

2022 8,975 - - 8,975

2021 5,622 - - 5,622

 155
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.1 Credit risk (continued)

(ii) Past-due and impaired financial assets

At 31 December 2022, based on combination of collective and individual assessment of receivables, there are impaired insurance
receivables amounting to RM3,557,000 (2021: RM2,902,000) and other receivables of RM796,000 (2021: RM796,000). No collateral is
held as security for any past-due or impaired financial assets. The Company records impairment allowance for insurance receivables and
other receivables in separate allowance for impairment accounts. A reconciliation of the allowance for impairment loss for the aforesaid
insurance receivables and other receivables are as follows:

Insurance receivables Other receivables

2022 2021 2022 2021
RM’000 RM’000 RM’000 RM’000

At 1 January 2,902 2,449 796 -

Impairment loss recognised 655 453 - 796
At 31 December 3,557 2,902 796 796
Note 8 Note 8 Note 9 Note 9
 156
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.2 Liquidity risk

Liquidity risk is the risk of loss resulting from the danger that short-term current or future payment obligations cannot be met or can only be
met on the basis of altered conditions, along with the risk that in the case of a liquidity crisis of the Company, refinancing is only possible at
higher interest rates or that assets may have to be liquidated at a discount.

Besides monitoring the liquidity position of the Company on a daily basis, the investment strategies particularly focus on the quality of
investments and ensure a sufficient portion of liquid assets in the portfolio. Some other tools used by the Company include to ensure that its
assets and liabilities are adequately matched and drawing down of funds to meet claim payments should the claim events exceed a certain
amount as provided for in the reinsurance contracts.

Maturity profiles

The table below summarises the maturity profile of the Company’s financial liabilities as at the end of the reporting period based on remaining
undiscounted contractual obligations, including interest/profit payable.

For insurance contract liabilities, maturity profiles are determined based on estimated timing of net cash outflows from the recognised
insurance liabilities.

Investment-linked liabilities are repayable or transferable on demand and are included in the “up to a year” column. Repayments which are
subject to notice are treated as if notice were to be given immediately.
 157
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.2 Liquidity risk (continued)

Maturity profiles (continued)

Non-derivative financial liabilities
No
Carrying Up to a 5-15 Over 15 maturity
value year 1-3 years 3-5 years years years date Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2022
Insurance contract liabilities
With DPF 3,868,337 1,490,246 488,125 343,521 1,377,072 2,381,398 6,992 6,087,354
Without DPF 10,345,205 10,023,918 49,597 46,769 227,563 102,378 - 10,450,225
Lease liabilities 5,576 3,651 1,097 - - - - 4,748
Insurance payables 327,699 327,699 - - - - - 327,699
Other payables and accruals* 319,847 319,847 - - - - - 319,847
Total liabilities 14,866,664 12,165,361 538,819 390,290 1,604,635 2,483,776 6,992 17,189,873

* Other payables and accruals exclude premium received in advance (see Note 18).
 158
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.2 Liquidity risk (continued)

Maturity profiles (continued)

Derivative financial liabilities

The table below analyses the Company's trading derivative financial liabilities and hedging derivative financial liabilities that will be settled on
a gross basis.
No
1-3 5-15 Over 15 maturity
Up to a year years 3-5 years years years date Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2022
Derivatives held for trading
Cross currency swaps - - (1,293) - - - (1,293)

Derivatives used for hedging

Forward purchase agreements
- Cash inflows - - - - - - -
- Cash outflows - - - - - - -
Net cash outflows - - (1,293) - - - (1,293)
 159
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.2 Liquidity risk (continued)

Maturity profiles (continued)

Non-derivative financial liabilities (continued)

No
Carrying Up to a 5-15 Over 15 maturity
value year 1-3 years 3-5 years years years date Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2021
Insurance contract liabilities
With DPF 4,081,552 1,407,309 591,460 377,676 1,448,111 2,721,852 6,992 6,553,400
Without DPF 9,177,908 8,832,358 76,045 45,502 215,082 115,296 - 9,284,283
Lease liabilities 9,113 4,964 4,458 - - - - 9,422
Insurance payables 317,159 317,159 - - - - - 317,159
Other payables and accruals* 250,543 250,543 - - - - - 250,543
Total liabilities 13,836,275 10,812,333 671,963 423,178 1,663,193 2,837,148 6,992 16,414,807

* Other payables and accruals exclude premium received in advance (see Note 18).
 160
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.2 Liquidity risk (continued)

Maturity profiles (continued)

Derivative financial liabilities (continued)

The table below analyses the Company's trading derivative financial liabilities and hedging derivative financial liabilities that will be settled on
a gross basis.

No
1-3 5-15 Over 15 maturity
Up to a year years 3-5 years years years date Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2021
Derivatives held for trading
Cross currency swaps - - (1,641) - - - (1,641)

Derivatives used for hedging

Forward purchase agreements
- Cash inflows - - - - - -
- Cash outflows (56,824) - - - - - (56,824)
Net cash outflows (56,824) - (1,641) - - - (58,465)
 161
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.3 Market risk

Market risk is the risk of loss arising due to changes in market prices or parameters influencing market prices, and in particular the resultant
interest rate guarantee risks from asset liability management or from changes to the participations. This includes changes in market prices
due to a worsening of market liquidity. Market risk comprises currency risk, interest rate risk and equity price risk.

The following risk mitigation actions are in place to control and monitor such risk:
• Investment Committee actively monitors the investment activities undertaken by the Company.
• Investment Committee would make recommendations after balancing competing and legitimate objective of various stakeholders.
• The Investment Policy and Mandate which formulated the single counterparty limits, company limits and sector limits are in place.
Compliance to such limits is monitored monthly and reported to RMWC, RMC and IC on a quarterly basis.
• Stress testing is performed as and when needed.
• Stop loss policy is in place.

The Company also issues investment-linked policies in a number of products. In the investment-linked business, the policyholders bear the
investment risk on the assets held in the investment-linked funds as the policy benefits are directly linked to the value of the assets in the funds.
The Company’s exposure to market risk on this business is limited to the extent that income arising from fund management charges is based
on the value of the assets in the funds.
 162
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.3 Market risk (continued)

34.3.1 Currency risk

Currency risk is the risk arising from the fluctuation of foreign exchange rates.

The Company’s primary transactions are carried out in Ringgit Malaysia (RM),
and its exposure to foreign exchange risk arises principally with respect to the
funds invested in foreign financial instruments, involving US Dollar (USD),
Singapore Dollar (SGD), Thai Baht (THB) and Indonesian Rupiah (IDR). As the
Company’s business is conducted primarily in Malaysia, the Company’s
financial assets are also primarily maintained in Malaysia as required under the
Financial Services Act, 2013 and hence, primarily denominated in the same
currency (RM) as its insurance contract liabilities. Thus the main foreign
exchange risk from recognised assets and liabilities arises from transactions
other than those in which insurance contract liabilities are expected to be
settled.

As the Company’s main foreign exchange risk from recognised assets and
liabilities arises from reinsurance transactions for which the balances are
expected to be settled and realised in less than a year, the impact arising from
sensitivity in foreign exchange rates is deemed minimal as the Company has
no significant concentration of foreign currency risk. All currency risk in
investment-linked funds is borne by policyholders.

Exposure to foreign currency risk

The Company’s exposure to foreign currency risk, based on carrying amounts

as at the end of the reporting period was:

2022 Investment-linked
Financial assets Life fund funds
RM’000 RM’000
Denominated in
USD 98,980 207,539
SGD - 148,631
THB - 6,107
IDR - 19,340
 163
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.3 Market risk (continued)

34.3.1 Currency risk (continued)

Exposure to foreign currency risk (continued)

2021 Investment-linked
Financial assets Life fund funds
RM’000 RM’000
Denominated in
USD 102,924 149,714
SGD - 20,903
THB - 11,963
IDR - 37,789

Currency risk sensitivity analysis

It is estimated that a 10% (2021:10%) strengthening of the Ringgit Malaysia

(RM) against the following currencies at the end of the reporting period would
have decreased the insurance contract liabilities by the amounts shown
below. This analysis assumes that all other variables, in particular interest
rates, remained constant and ignores any impact of forecasted income and
expenses.

Impact on insurance Impact on insurance

contract liabilities contract liabilities
2022 2021
RM’000 RM’000
Denominated in
USD (30,652) (25,264)
SGD (14,863) (2,090)
THB (611) (1,196)
IDR (1,934) (3,779)

It is estimated that a 10% (2021:10%) weakening of the Ringgit Malaysia (RM)

against the above currencies at the end of the reporting period would have
equal but opposite effect on the above currencies to the amount shown above,
on the basis that all variables remained constant.

The method used for deriving sensitivity information and significant variables
did not change from previous year.

Only Life Participating fund and investment-linked funds invested in foreign

financial instruments.
 164
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.3 Market risk (continued)

34.3.2 Interest rate risk

The Company is affected by changes in market interest rate due to the change in interest rates that will affect the value of mark to market
fixed income investments and also the valuation of the liabilities, resulting in the risk of not being able to meet product guarantees.

Besides the uncertainty of the cash flows of the insurance funds and scarcity of the longer dated instruments, it is not possible to hold assets
that will perfectly match the policy liabilities.

Interest rate risk sensitivity analysis

The analysis below is performed for assumed movements of 100 bps in interest rate with all other variables held constant, showing the
impact on the profit after tax, equity and insurance contract liabilities.
Impact on
Change in Impact on profit Impact on insurance contract
variables after tax equity* liabilities**
RM’000 RM’000 RM’000
2022
Interest rate +100 basis points (143,432) (113,736) (497,047)
Interest rate -100 basis points 153,898 121,962 559,486

2021
Interest rate +100 basis points (137,492) (110,432) (508,565)
Interest rate -100 basis points 148,227 118,972 577,224
 165
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.3 Market risk (continued)

34.3.2 Interest rate risk (continued)

Interest rate risk sensitivity analysis (continued)

The impact on profit after tax would be dependent on whether the interest rate risk resides in Shareholders’ fund, Life Non-
Participating insurance fund, Life Participating insurance fund or investment-linked funds. Where the interest rate risk resides in
Shareholders’ fund and Life Non-Participating fund, the profit after tax and equity of the Company will be impacted. In respect of
Life Participating fund and investment-linked funds, impact arising from changes in interest rate risk will affect the insurance
contract liabilities. It should be noted that movements in these variables are non-linear.

* The impact on equity reflects adjustments for tax, where applicable.

** The impact on insurance contract liabilities only reflects the changes in the prescribed assumptions above without any
adjustments to policyholders’ bonuses for the participating insurance business. Impact on insurance contract liabilities also
reflects adjustments for tax, where applicable.

The method used for deriving sensitivity information and significant variables did not change from the previous year.
 166
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.3 Market risk (continued)

34.3.3 Equity price risk

Equity price risk is the risk that fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices
(other than those arising from interest rate or currency risk), whether those changes are caused by factors specific to the i ndividual
financial instrument of its issuer or factors affecting similar financial instruments traded in the market.

The Company’s equity price risk exposures relate to financial assets and financial liabilities whose values will fluctuate as a result of
changes in market prices, principally with respect to investment securities not held for the account of the investment-linked business.

The Company’s equity price risk policy requires it to prioritise capital preservation besides setting limits on overall portfolio, single
security and sector holdings. The Company complies with BNM stipulated limits during the financial year and has no significant
concentration of equity price risk.

Equity price risk sensitivity analysis

The analysis below is performed for reasonable possible movements in key variables with all other variables held constant, showing the
impact on profit after tax, equity and insurance contract liabilities. The correlation of variables will have a significant effect in
determining the ultimate impact on equity price risk, but to demonstrate the impact due to changes in variables, variables had to be
changed on an individual basis. It should be noted that movements in these variables are non-linear.

2022 2021
Impact on Impact on
Impact on insurance Impact on insurance
Changes in profit after Impact on contract profit after Impact on contract
variable tax# equity* liabilities** tax# equity* liabilities**
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Market indices
Market value -10% - - (256,211) - - (269,970)
Market value +10% - - 256,211 - - 269,970
 167
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.3 Market risk (continued)

34.3.3 Equity price risk (continued)

Equity price risk sensitivity analysis (continued)
# The impact on profit after tax would be dependent on whether the equity price risk resides in Shareholders’ fund, Life Non-
Participating insurance fund, Life Participating insurance fund or investment-linked funds. Where the equity price risk resides in
Shareholders’ fund and Life Non-Participating fund, the profit after tax and equity of the Company will be impacted. In respect of life
participating fund and investment-linked funds, impact arising from changes in equity price risk will affect the insurance contract
liabilities.

* The impact on equity reflects adjustments for tax, where applicable.

** The impact on insurance contract liabilities only reflects the changes in the prescribed assumptions above without any adjustments
to policyholders’ bonuses for the participating insurance business. Impact on insurance contract liabilities also reflects adjustments
for tax, where applicable.

The method used for deriving sensitivity information and significant variables did not change from the previous year.

Only Life Participating fund, universal life fund and investment-linked funds invested in equity securities.
 168
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.4 Fair value of financial instruments

The Company’s basis in estimation of fair values for financial instruments is as

follows:

- The fair values of collateralised interest rate swap, forward purchase

agreements and cross currency swap are based on the indicative market
prices from the issuing banks;

- The fair values of quoted equity securities of corporations in and outside

Malaysia and quoted unit trusts in Malaysia are based on quoted market bid
price as at the end of the reporting period;

- The unquoted equity securities of corporations in Malaysia are stated at

cost. Where in the opinion of the Directors, there is a decline other than
temporary in value of unquoted equity securities, the allowance for
impairment is recognised as an expense in the financial year in which the
decline is identified;

- The fair values of Malaysian government securities, Malaysian government

guaranteed bonds, unquoted bonds of corporations in and outside Malaysia
are based on the indicative market prices provided by its custodian bank;

- The fair values of unquoted unit trusts in and outside Malaysia are based on
the net asset values of the unit trusts as at the date of the statements of
assets and liabilities obtained from fund managers;

- The carrying amount of policy loans, mortgage loans, automatic premium

loans, fixed and call deposits approximate their fair values; and
 169
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.4 Fair value of financial instruments (continued)

- The carrying amounts of cash and cash equivalents, insurance receivables,

other receivables and deposits (current), insurance payables and other
payables (current) and accruals reasonably approximate their fair values due
to the relatively short term nature of these financial instruments.

Estimation of the fair values of Malaysian government securities, Malaysian

government guaranteed bonds, unquoted bonds of corporations in and outside
Malaysia are based on the indicative market prices provided by its custodian bank
which involve projections of the market yields based on past transactions. There
are elements of uncertainty in projecting the expected market yields and these
uncertainties arise from changes in underlying risk and overall economic
conditions. As such, the projected market yields may be different from the actual
market yields in future.

It was not practicable to estimate the fair value of the Company’s investment in
unquoted equity securities of corporations in Malaysia due to lack of comparable
quoted market prices and inability to estimate fair value without incurring
excessive costs.
 170
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.4 Fair value of financial instruments (continued)
34.4.1 Fair value information
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.

Fair value of financial instruments

carried at fair value Carrying
Level 1 Level 2 Level 3 Total Total fair value amount
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2022
Financial assets
Malaysian government securities - 5,215,132 - 5,215,132 5,215,132 5,215,132
Malaysian government guaranteed bonds - 2,496,078 - 2,496,078 2,496,078 2,496,078
Quoted equity securities of corporations in Malaysia 2,558,921 - - 2,558,921 2,558,921 2,558,921
Quoted equity securities of corporations outside Malaysia 155,513 - - 155,513 155,513 155,513
Unquoted bonds of corporations in Malaysia - 4,046,938 - 4,046,938 4,046,938 4,046,938
 171
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.4 Fair value of financial instruments (continued)

34.4.1 Fair value information (continued)

Fair value of financial instruments

carried at fair value
Level 1 Level 2 Level 3 Total Total fair value Carrying amount
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2022
Financial assets (continued)
Unquoted bonds of corporations outside Malaysia - 100,446 - 100,446 100,446 100,446
Quoted unit trusts in Malaysia 70,463 - - 70,463 70,463 70,463
Unquoted unit trusts in Malaysia - 40,760 - 40,760 40,760 40,760
Unquoted unit trusts outside Malaysia - 226,104 - 226,104 226,104 226,104
Collateralised interest rate swap - 16,590 - 16,590 16,590 16,590
Cross currency swap - 2,406 - 2,406 2,406 2,406
2,784,897 12,144,454 - 14,929,351 14,929,351 14,929,351
 172
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.4 Fair value of financial instruments (continued)
34.4.1 Fair value information (continued)

Fair value of financial instruments

carried at fair value Carrying
Level 1 Level 2 Level 3 Total Total fair value amount
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2022
Financial liabilities
Cross currency swap - 1,293 - 1,293 - 1,293
Lease liabilities - - - - 5,576 5,576
- 1,293 - 1,293 5,576 6,869
 173
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.4 Fair value of financial instruments (continued)

34.4.1 Fair value information (continued)

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 (continued).

Fair value of financial instruments

carried at fair value Carrying
Level 1 Level 2 Level 3 Total Total fair value amount
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2021
Financial assets
Malaysian government securities - 4,694,823 - 4,694,823 4,694,823 4,694,823
Malaysian government guaranteed bonds - 2,441,652 - 2,441,652 2,441,652 2,441,652
Quoted equity securities of corporations in Malaysia 2,823,578 - - 2,823,578 2,823,578 2,823,578
Quoted equity securities of corporations outside Malaysia 49,850 - - 49,850 49,850 49,850
Unquoted bonds of corporations in Malaysia - 3,778,262 - 3,778,262 3,778,262 3,778,262
 174
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.4 Fair value of financial instruments (continued)

34.4.1 Fair value information (continued)

Fair value of financial instruments

carried at fair value
Level 1 Level 2 Level 3 Total Total fair value Carrying amount
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2021
Financial assets (continued)
Unquoted bonds of corporations outside Malaysia - 104,561 - 104,561 104,561 104,561
Quoted unit trusts in Malaysia 61,032 - - 61,032 61,032 61,032
Unquoted unit trusts in Malaysia - 39,216 - 39,216 39,216 39,216
Unquoted unit trusts outside Malaysia - 170,520 - 170,520 170,520 170,520
Collateralised interest rate swap - 35,642 - 35,642 35,642 35,642
Forward purchase agreements - 7,837 - 7,837 7,837 7,837
Cross currency swap - 2,037 - 2,037 2,037 2,037
2,934,460 11,274,550 - 14,209,010 14,209,010 14,209,010
 175
Registration No. 198301008983 (104248-X)

34. Financial risks (continued)

34.4 Fair value of financial instruments (continued)
34.4.1 Fair value information (continued)

Fair value of financial instruments

carried at fair value Carrying
Level 1 Level 2 Level 3 Total Total fair value amount
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2021
Financial liabilities
Cross currency swap - 1,641 - 1,641 1,641 1,641
Lease liabilities - - - - 9,113 9,113
- 1,641 - 1,641 10,754 10,754
 176
Registration No. 198301008983 (104248-X)

35. Capital management

Regulatory capital requirements

Under Risk-Based Capital Framework for Insurers (“RBC Framework”) issued by BNM,
insurance companies need to maintain a capital adequacy level that commensurate
with their risk profiles. All insurance companies are required to maintain a minimum
Capital Adequacy Ratio (“CAR”) of 130% and an internal target capital level required by
BNM or level determined under the Internal Capital Adequacy Assessment Process. The
internal target will include additional capacity to absorb unexpected losses beyond
those that are covered under the minimum required CAR.

The Company has been in compliance with the said requirement by maintaining a CAR
that is in excess of minimum requirement.

The total capital available of the Company as at 31 December 2022, as prescribed under
the RBC Framework is provided below:

2022 2021
Note RM’000 RM’000
Tier 1 Capital
Paid up share capital 11 236,600 236,600
Reserves, including retained earnings 2,269,362 2,097,600
2,505,962 2,334,200
Tier 2 Capital
Revaluation reserve 9,883 9,883
Available-for-sale reserve 153,624 239,944
Other reserve - 7,211
163,507 257,038

Amount deducted from capital (122,148) (41,442)

Total capital available 2,547,321 2,549,796

 177
Registration No. 198301008983 (104248-X)

36. Insurance funds

The Company’s activities are organised by funds and segregated into Life and Shareholders’ funds in accordance with the Financial Services Act,
2013.
The Company’s statement of financial position and statement of profit or loss have been further analysed by funds.
The life insurance business offers a wide range of participating and non-participating Whole life, Term assurance, Endowment, as well as
investment-linked products.

Statement of financial position by funds

as at 31 December

Shareholders’ fund Life fund Total

2022 2021 2022 2021 2022 2021
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Assets
Property, plant and equipment - - 30,432 27,977 30,432 27,977
Right-of-use assets - - 15,204 18,645 15,204 18,645
Intangible assets 86,226 9,089 7,846 9,084 94,072 18,173
Investments 183,181 225,445 14,807,964 14,248,434 14,991,145 14,473,879
Derivative financial assets - - 18,996 45,516 18,996 45,516
Reinsurance assets - - 120,677 119,680 120,677 119,680
Insurance receivables - - 70,214 65,369 70,214 65,369
Other receivables, deposits and
prepayments* 126,828 111,038 54,125 41,482 74,098 67,613
Current tax assets - - - - - -
Cash and cash equivalents 69,212 59,005 1,593,687 1,050,411 1,662,899 1,109,416
465,447 404,577 16,719,145 15,626,598 17,077,737 15,946,268
 178
Registration No. 198301008983 (104248-X)

36. Insurance funds (continued)

Statement of financial position by funds
as at 31 December (continued)

Shareholders’ fund Life fund Total

2022 2021 2022 2021 2022 2021
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Total equity 327,489 346,314 1,368,294 1,244,618 1,695,783 1,590,932

Total policyholders’ funds and liabilities

Insurance contract liabilities - - 14,213,542 13,259,460 14,213,542 13,259,460
Deferred tax liabilities (871) 3,033 384,186 377,621 383,315 380,654
Derivative financial liabilities - - 1,293 1,641 1,293 1,641
Lease liabilities - - 5,576 9,113 5,576 9,113
Insurance payables 27,964 26,082 299,735 291,077 327,699 317,159
Other payables and accruals* 87,180 12,283 460,766 446,389 441,091 373,765
Current tax liabilities 23,685 16,865 (14,247) (3,321) 9,438 13,544
137,958 58,263 15,350,851 14,381,980 15,381,954 14,355,336

Total equity, policyholders’ funds and

liabilities 465,447 404,577 16,719,145 15,626,598 17,077,737 15,946,268

* Included herein are inter-fund balances that are eliminated in presenting the Company's total balances.
 179
Registration No. 198301008983 (104248-X)

36. Insurance funds (continued)

Statement of profit or loss by funds
for the year ended 31 December
Shareholders’ fund Life fund Total
2022 2021 2022 2021 2022 2021
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Operating revenue 11,427 10,216 4,000,895 3,823,284 4,012,322 3,833,500

Gross earned premiums - - 3,366,877 3,259,007 3,366,877 3,259,007

Premiums ceded to reinsurers - - (104,801) (142,309) (104,801) (142,309)
Net earned premiums - - 3,262,076 3,116,698 3,262,076 3,116,698
Investment income 11,427 10,216 634,018 564,277 645,445 574,493
Realised gains and losses (1,443) (532) 53,164 55,520 51,721 54,988
Fair value gains and losses (284) - (378,452) (430,757) (378,736) (430,757)
Fee and commission income - - 184 12,030 184 12,030
Other operating income 1,616 1,361 71,356 40,771 72,972 42,132
Other income 11,316 11,045 380,270 241,841 391,586 252,886
Gross benefits and claims paid (5,613) (239) (1,758,238) (1,382,589) (1,763,851) (1,382,828)
Claims ceded to reinsurers - - 82,613 110,298 82,613 110,298
Gross change in contract liabilities - - (870,285) (1,088,455) (870,285) (1,088,455)
Change in contract liabilities ceded to reinsurers - - 8,088 13,784 8,088 13,784
Net benefits and claims (5,613) (239) (2,537,822) (2,346,962) (2,543,435) (2,347,201)

Fee and commission expense (7,919) (11,656) (489,018) (494,766) (496,937) (506,422)
Management expenses (12,211) (17,498) (274,519) (254,550) (286,730) (272,048)
Interest expenses - - (252) (423) (252) (423)
Other operating expenses (20,482) (2,677) (56,104) (43,647) (76,586) (46,324)
Other expenses (40,612) (31,831) (819,893) (793,386) (860,505) (825,217)
 180
Registration No. 198301008983 (104248-X)

36. Insurance funds (continued)

Statement of profit or loss by funds
for the year ended 31 December (continued)
Shareholders’ fund Life fund Total
2022 2021 2022 2021 2022 2021
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Transfer 106,901 84,836 (106,901) (84,836) - -

Profit/Surplus before tax 71,992 63,811 177,730 133,355 249,722 197,166
Tax expense (Note 27) (19,985) (18,560) (54,019) (29,157) (74,004) (47,717)
Net profit after tax 52,007 42,251 123,711 104,198 175,718 149,449

Information on cash flows by funds

for the year ended 31 December

Shareholders’ fund Life fund Total

2022 2021 2022 2021 2022 2021
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cash flows from/(used in):
Operating activities 102,592 23,555 559,931 285,023 662,523 308,578
Investing activities (92,385) - (11,028) (11,881) (103,413) (11,881)
Financing activities - - (5,627) (5,460) (5,627) (5,460)
Net increase in cash and cash equivalents 10,207 23,555 543,276 267,682 553,483 291,237
At beginning of year 59,005 35,450 1,050,411 782,729 1,109,416 818,179
At end of year 69,212 59,005 1,593,687 1,050,411 1,662,899 1,109,416
 181
Registration No. 198301008983 (104248-X)

36. Insurance funds (continued)

Investment-linked funds statement of assets and liabilities
as at 31 December

2022 2021
RM’000 RM’000

Assets
Financial investments 2,555,445 2,456,268
Other receivables 40,960 9,197
Cash and cash equivalents 608,751 263,126
Total assets 3,205,156 2,728,591

Liabilities
Deferred tax assets (8,552) (1,042)
Other payables 5,322 3,176
Benefits and claims liabilities 4,035 3,805
Current tax liabilities - -
Total liabilities 805 5,939

Net asset value of funds (Note 13) 3,204,351 2,722,652

 182
Registration No. 198301008983 (104248-X)

36. Insurance funds (continued)

Investment-linked funds statement of income and expenditure
for the year ended 31 December

2022 2021
Note RM’000 RM’000

Investment income 110,674 81,224

Realised gains 17,338 29,854
Fair value losses (108,559) (30,646)
Other operating income 21,099 1,662
40,552 82,094
Management expenses - -
Other operating expenses (41,034) (32,920)
(Loss)/profit before tax (482) 49,174
Tax income/(expense) 2,012 (1,729)
Net profit for the year 13 1,530 47,445
 183
Registration No. 198301008983 (104248-X)

37. Amendments to MFRS 4 - Applying MFRS 9, Financial

Instruments with MFRS 4, Insurance Contracts
MFRS 9 replaces the guidance in MFRS 139, Financial Instruments: Recognition and
Measurement on the classification and measurement of financial assets and financial
liabilities and on hedge accounting, effective for annual periods beginning on or after 1
January 2018.

The Company has applied the temporary exemption under Amendments to MFRS 4 -
Applying MFRS 9, Financial Instruments with MFRS 4, Insurance Contracts (“the
Amendments”) which enables eligible entities to defer the implementation date of
MFRS 9 to annual periods beginning before 1 January 2023 at the latest. Hence, the
Company has not adopted MFRS 9 for the financial year beginning on or after 1 January
2018.

The Amendments allow entities to avoid temporary volatility in profit or loss that might
result from adopting MFRS 9, Financial Instruments before the forthcoming new
insurance contracts standard.

The Amendments provide 2 different approaches for the Company:

(i) temporary exemption from MFRS 9 for entities that meet specific requirements;
and
(ii) the overlay approach. Both approaches are optional

The temporary exemption enables eligible entities to defer the implementation date of
MFRS 9 to annual periods beginning before 1 January 2023 at the latest. An entity may
apply the temporary exemption from MFRS 9 if its activities are predominantly
connected with insurance whilst the overlay approach allows an entity to adjust profit or
loss for eligible financial assets by removing any accounting volatility to other
comprehensive income that may arise from applying MFRS 9.

The Company’s business activity is predominantly insurance as the liabilities connected

with the Company’s insurance businesses made up of more than 90% of the Company’s
total liabilities. Hence, the Company qualifies for the temporary exemption from
applying MFRS 9 and will defer and adopt MFRS 9 together with MFRS 17, Insurance
Contracts for the financial year beginning on or after 1 January 2023.
 184
Registration No. 198301008983 (104248-X)

37. Amendments to MFRS 4 - Applying MFRS 9, Financial

Instruments with MFRS 4, Insurance Contracts (continued)
The following additional disclosures, required by Amendments to MFRS 4 for entity
qualified and elected the temporary exemption from applying MFRS 9, present the
Company’s financial assets by their contractual cash flows characteristics, which indicate
if they are solely payments of principal and interest on the principal outstanding
(“SPPI”):

Financial
assets with All other
SPPI cash financial
flows assets Total*
Fair value as at 31 December 2022 RM’000 RM’000 RM'000

Investments (Note 6) 2,140,236 12,773,666 14,913,902

Malaysian government securities and
government guaranteed bonds 2,058,054 5,653,156 7,711,210
Unquoted bonds of corporations 80,782 4,066,602 4,147,384
Quoted equity securities and unit
trusts - 2,784,897 2,784,897
Unquoted equity securities and unit
trusts - 269,011 269,011
Fixed and call deposits with licensed
banks 1,400 - 1,400
Derivative financial assets - 18,996 18,996
Other receivables and deposits 74,098 - 74,098
Cash and cash equivalents 1,662,899 - 1,662,899
Total financial assets 3,877,233 12,792,662 16,669,895
 185
Registration No. 198301008983 (104248-X)

37. Amendments to MFRS 4 - Applying MFRS 9, Financial

Instruments with MFRS 4, Insurance Contracts (continued)
Financial
assets with All other
SPPI cash financial
flows assets Total*
Fair value as at 31 December 2021 RM’000 RM’000 RM'000

Investments (Note 6) 2,396,462 11,993,159 14,389,621

Malaysian government securities and
government guaranteed bonds 2,077,191 5,059,284 7,136,475
Unquoted bonds of corporations 95,291 3,787,532 3,882,823
Quoted equity securities and unit
trusts - 2,934,460 2,934,460
Unquoted equity securities and unit
trusts - 211,883 211,883
Fixed and call deposits with licensed
banks 223,980 - 223,980
Derivative financial assets - 45,516 45,516
Other receivables and deposits 67,613 - 67,613
Cash and cash equivalents 1,109,416 - 1,109,416
Total financial assets 3,573,491 12,038,675 15,612,166

* Insurance receivables, reinsurance assets, policy loans and automatic premium

loans have been excluded from the above assessment as they will be under the scope
of MFRS 17, Insurance Contracts. Other than the financial assets listed in the table
above and the assets that are within the scope of MFRS 17, Insurance Contracts, all
other assets in the statement of financial position are non-financial assets.
 186
Registration No. 198301008983 (104248-X)

37. Amendments to MFRS 4 - Applying MFRS 9, Financial

Instruments with MFRS 4, Insurance Contracts (continued)
Financial
assets with All other
SPPI cash financial
flows assets Total
Changes in fair value during the year RM’000 RM’000 RM'000

2022
Investments
Malaysian government securities and
government guaranteed bonds (60,710) (127,126) (187,836)
Unquoted bonds of corporations (2,380) (115,072) (117,452)
Quoted equity securities and unit trusts - (63,973) (63,973)
Unquoted equity securities and unit
trusts - (55,420) (55,420)
Government guaranteed loans - - -
Fixed and call deposits with licensed
banks - - -
Derivative financial assets - (26,677) (26,677)
Other receivables and deposits - - -
Cash and cash equivalents - - -
Total financial assets (63,090) (388,268) (451,358)

2021
Investments
Malaysian government securities and
government guaranteed bonds (134,998) (228,152) (363,150)
Unquoted bonds of corporations (4,218) (146,200) (150,418)
Quoted equity securities and unit trusts - 14,428 14,428
Unquoted equity securities and uni
trusts - (4,596) (4,596)
Structured deposits - 722 722
Government guaranteed loans - - -
Fixed and call deposits with licensed
banks - - -
Derivative financial assets - (37,724) (37,724)
Other receivables and deposits - - -
Cash and cash equivalents - - -
Total financial assets (139,216) (401,522) (540,738)
 187
Registration No. 198301008983 (104248-X)

37. Amendments to MFRS 4 - Applying MFRS 9, Financial Instruments with MFRS 4, Insurance
Contracts (continued)
Financial assets with SPPI cash flows *
Non- Investment-
investment Non- linked
Gross carrying amounts under AAA AA A BBB grade rated funds Total
MFRS 139 by credit risk rating grades RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2022
Investments
Malaysian government securities and
government guaranteed bonds - - - - - 2,058,054 - 2,058,054
Unquoted bonds of corporations 36,643 44,139 - - - - - 80,782
Government guaranteed loans - - - - - - - -
Mortgage loans - - - - - - - -
Fixed and call deposits with
licensed banks 328 197 - - - - 875 1,400
Other receivables and deposits - - - - - 33,138 40,960 74,098
Cash and cash equivalents 674,987 372,342 6,612 - - 207 608,751 1,662,899
711,958 416,678 6,612 - - 2,091,399 650,586 3,877,233
 188
Registration No. 198301008983 (104248-X)

37. Amendments to MFRS 4 - Applying MFRS 9, Financial Instruments with MFRS 4, Insurance
Contracts (continued)
Financial assets with SPPI cash flows *
Non- Investment-
investment Non- linked
Gross carrying amounts under AAA AA A BBB grade rated funds Total
MFRS 139 by credit risk rating grades RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2021
Investments
Malaysian government securities and
government guaranteed bonds - - - - - 2,077,191 - 2,077,191
Unquoted bonds of corporations 44,878 50,413 - - - - - 95,291
Government guaranteed loans - - - - - - - -
Mortgage loans - - - - - - - -
Fixed and call deposits with
licensed banks 54 156,747 - - - - 67,179 223,980
Other receivables and deposits - - - - - 58,416 9,197 67,613
Cash and cash equivalents 394,129 450,069 1,704 - - 388 263,126 1,109,416
439,061 657,229 1,704 - - 2,135,995 339,502 3,573,491

* Credit risk of these financial assets is considered low for the purpose of MFRS 9.
 189
Registration No. 198301008983 (104248-X)

Allianz Life Insurance Malaysia Berhad

Registration No. 198301008983 (104248-X)
(Incorporated in Malaysia)

Statement by Directors pursuant to

Section 251(2) of the Companies Act 2016

In the opinion of the Directors, the financial statements set out on pages 40 to 188 are drawn

up in accordance with Malaysian Financial Reporting Standards, International Financial

Reporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give

a true and fair view of the financial position of the Company as of 31 December 2022 and of

its financial performance and cash flows for the financial year then ended.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

………………………….……………….……………..
Goh Ching Yin
Director

………………………….……………….……………..
Ong Eng Chow
Director

Kuala Lumpur

Date: 23 February 2023

 190
Registration No. 198301008983 (104248-X)

Allianz Life Insurance Malaysia Berhad

Registration No. 198301008983 (104248-X)
(Incorporated in Malaysia)

Statutory declaration pursuant to

Section 251(1)(b) of the Companies Act 2016

I, Giulio Slavich, the officer primarily responsible for the financial management of Allianz Life

Insurance Malaysia Berhad, do solemnly and sincerely declare that the financial statements set

out on pages 40 to 188 are, to the best of my knowledge and belief, correct and I make this

solemn declaration conscientiously believing the declaration to be true, and by virtue of the

Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed Giulio Slavich, at Kuala Lumpur in the

Federal Territory on 23 February 2023.

Giulio Slavich

Before me:

Commissioner for Oaths

INDEPENDENT AUDITORS' REPORT
TO THE MEMBER OF ALLIANZ LIFE INSURANCE MALAYSIA BERHAD
(Incorporated in Malaysia)
Registration No. 198301008983 (104248-X)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Our opinion

In our opinion, the financial statements of Allianz Life Insurance Malaysia Berhad (“the Company”) give
a true and fair view of the financial position of the Company as at 31 December 2022, and of its financial
performance and its cash flows for the financial year then ended in accordance with Malaysian Financial
Reporting Standards, International Financial Reporting Standards and the requirements of the
Companies Act 2016 in Malaysia.

What we have audited

We have audited the financial statements of the Company, which comprise the statement of financial
position as at 31 December 2022, and the statement of profit or loss, statement of profit or loss and other
comprehensive income, statement of changes in equity and statement of cash flows for the financial year
then ended, and notes to the financial statements, including a summary of significant accounting
policies, as set out on pages 40 to 188.

Basis for opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and
International Standards on Auditing. Our responsibilities under those standards are further described
in the “Auditors’ responsibilities for the audit of the financial statements” section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.

Independence and other ethical responsibilities

We are independent of the Company in accordance with the By-Laws (on Professional Ethics, Conduct
and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics
Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including
International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical
responsibilities in accordance with the By-Laws and the IESBA Code.

Information other than the financial statements and auditors’ report thereon

The Directors of the Company are responsible for the other information. The other information
comprises the Directors' Report, but does not include the financial statements of the Company and our
auditors’ report thereon.

PricewaterhouseCoopers PLT (LLP0014401-LCA & AF 1146), Chartered Accountants, Level 10, Menara TH 1
Sentral, Jalan Rakyat, Kuala Lumpur Sentral, P.O. Box 10192, 50706 Kuala Lumpur, Malaysia
T: +60 (3) 2173 1188, F: +60 (3) 2173 1288, www.pwc.com/my

191
INDEPENDENT AUDITORS' REPORT
TO THE MEMBER OF ALLIANZ LIFE INSURANCE MALAYSIA BERHAD
(CONTINUED)
(Incorporated in Malaysia)
Registration No. 198301008983 (104248-X)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)

Our opinion on the financial statements of the Company does not cover the other information and we
do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Company, our responsibility is to read
the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements of the Company or our knowledge obtained in the audit or otherwise
appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the financial statements

The Directors of the Company are responsible for the preparation of the financial statements of the
Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards,
International Financial Reporting Standards and the requirements of the Companies Act 2016 in
Malaysia. The Directors are also responsible for such internal control as the Directors determine is
necessary to enable the preparation of financial statements of the Company that are free from material
misstatement, whether due to fraud or error.

In preparing the financial statements of the Company, the Directors are responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to liquidate
the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the
Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and
International Standards on Auditing will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.

192
INDEPENDENT AUDITORS' REPORT
TO THE MEMBER OF ALLIANZ LIFE INSURANCE MALAYSIA BERHAD
(CONTINUED)
(Incorporated in Malaysia)
Registration No. 198301008983 (104248-X)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)

As part of an audit in accordance with approved standards on auditing in Malaysia and International
Standards on Auditing, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:

(a) Identify and assess the risks of material misstatement of the financial statements of the
Company, whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.

(b) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control.

(c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors.

(d) Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditors’ report to the related disclosures in the financial statements of the
Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditors’ report. However, future
events or conditions may cause the Company to cease to continue as a going concern.

(e) Evaluate the overall presentation, structure and content of the financial statements of the
Company, including the disclosures, and whether the financial statements of the Company
represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the Directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.

193
INDEPENDENT AUDITORS' REPORT
TO THE MEMBER OF ALLIANZ LIFE INSURANCE MALAYSIA BERHAD
(CONTINUED)
(Incorporated in Malaysia)
Registration No. 198301008983 (104248-X)

OTHER MATTERS

This report is made solely to the member of the Company, as a body, in accordance with Section 266 of
the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any
other person for the content of this report.

PRICEWATERHOUSECOOPERS PLT WONG HUI CHERN

LLP0014401-LCA & AF 1146 03252/05/2024 J
Chartered Accountants Chartered Accountant

Kuala Lumpur
23 February 2023

194