INDEPE - Philippines First · 2018-09-13 · PHILIPPINES FIRST INSURANCE COMPANY, INC. STATEMENTS OF FINANCIAL POSITION December 31 January 1 2017 2016 (As restated Notes 2 and 30)

A member firm of Ernst & Young Global Limited

SyCip Gorres Velayo & Co. Tel: (632) 891 0307 BOA/PRC Reg. No. 0001, 6760 Ayala Avenue Fax: (632) 819 0872 December 14, 2015, valid until December 31, 2018 1226 Makati City ey.com/ph SEC Accreditation No. 0012-FR-4 (Group A), Philippines November 10, 2015, valid until November 9, 2018

INDEPENDENT AUDITOR’S REPORT

The Board of Directors and Stockholders

Philippines First Insurance Company, Inc.

Report on the Audit of the Financial Statements

Qualified Opinion

We have audited the financial statements of Philippines First Insurance Company, Inc. (the Company),

which comprise the statements of financial position as at December 31, 2017 and 2016, and the

statements of income, statements of comprehensive income, statements of changes in equity and

statements of cash flows for the years then ended, and notes to the financial statements, including a

summary of significant accounting policies.

In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of

our report, the financial statements present fairly, in all material respects, the financial position of

Philippines First Insurance Company, Inc. as at December 31, 2017 and 2016, and its financial

performance and its cash flows for the years then ended in accordance with accounting principles

generally accepted in the Philippines as described in Note 2 to the financial statements.

Basis for Qualified Opinion

The Company’s commission expense is accounted for on a cash basis. Management has not accrued

unpaid commissions and deferred commissions that pertain to the unexpired portion of the related

insurance policies as at December 31, 2017 and 2016, as required by accounting principles generally

accepted in the Philippines. The Company’s records indicate that had management accrued unpaid

commissions and deferred the unexpired portion of commissions, P=18,079,459 and P=33,311,413 would

have been set-up as commission payable and deferred acquisition costs, respectively, as at December 31,

2017; and P=34,672,885 and =P31,892,899 would have been set-up as commission payable and deferred

acquisition costs, respectively, as at December 31, 2016. Accordingly, commission expense would have

decreased by =P8,103,151 and increased by P=7,087,718 in 2017 and 2016, respectively, and net income

would have been increased by =P5,672,206 and reduced by P=4,961,403 in 2017 and 2016, respectively.

The Company’s insurance receivables and loans and receivables have not been subjected to impairment testing as at December 31, 2017 and 2016. We were unable to obtain sufficient appropriate audit evidence about the carrying amounts of insurance receivables and loans and receivables as at

December 31, 2017 and 2016. Consequently, we were unable to determine whether any adjustments to

these accounts were necessary.

We conducted our audits in accordance with Philippine Standards on Auditing (PSAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics) together with the ethical requirements that are relevant to our audit of the financial statements in the Philippines, and we have fulfilled our ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.


Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in

accordance with accounting principles generally accepted in the Philippines as described in Note 2 to the

financial statements, and for such internal control as management determines is necessary to enable the

preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is 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 management either intends to liquidate the Company or to cease

operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are

free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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 PSAs 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.

As part of an audit in accordance with PSAs, we exercise professional judgment and maintain professional

skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, 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.

• 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.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s 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 auditor’s

report to the related disclosures in the financial statements 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 auditor’s report. However, future events or conditions may cause the Company to cease to

continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and events

in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Group to express an opinion on the consolidated financial statements.

We are responsible for the direction, supervision and performance of the audit. We remain solely

responsible for our audit opinion.

We communicate with those charged with governance 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.

Report on the Supplementary Information Required Under Revenue Regulations No. 15-2010

Our audits were conducted for the purpose of forming an opinion on the financial statements taken as a

whole. The supplementary information required under Revenue Regulations 15-2010 in Note 32 is

presented for purposes of filing with the Bureau of Internal Revenue and is not a required part of the basic

financial statements. Such information is the responsibility of the management of Philippines First

Insurance Company, Inc. The information has been subjected to the auditing procedures applied in our

audit of the basic financial statements. In our opinion, the information is fairly stated, in all material

respects, in relation to the basic financial statements taken as a whole.

SYCIP GORRES VELAYO & CO.

Lucy L. Chan

Partner

CPA Certificate No. 88118

SEC Accreditation No. 0114-AR-4 (Group A),

January 7, 2016, valid until January 6, 2019

Tax Identification No. 152-884-511

BIR Accreditation No. 08-001998-46-2018,

February 26, 2018, valid until February 25, 2021

PTR No. 6621239, January 9, 2018, Makati City

June 29, 2018

PHILIPPINES FIRST INSURANCE COMPANY, INC.

STATEMENTS OF FINANCIAL POSITION December 31 January 1

2017

2016 (As restated Notes

2 and 30)

2016 (As restated

Notes 2 and 30)

ASSETS Cash and cash equivalents (Notes 4 and 28) ₱86,727,213 ₱67,719,992 ₱50,557,413 Short-term investments (Notes 4 and 28) 5,684,781 3,040,631 1,752,865 Insurance receivables - net (Notes 5, 20 and 28) 199,134,406 213,666,161 268,342,091 Financial assets (Notes 6, 20 and 28)

Financial assets at fair value through profit or loss 126,722,232 111,894,441 107,517,030 Available-for-sale financial assets 933,669,891 798,837,955 967,668,068 Held-to-maturity investments 187,663,653 188,633,510 65,289,018 Loans and receivables 76,230,429 71,103,277 56,774,628

Accrued income (Notes 7 and 28) 7,341,240 5,870,423 5,527,055 Investment in an associate (Note 8) 1,033,955,000 1,185,341,202 1,216,108,335 Reinsurance assets (Notes 10, 14 and 28) 71,511,712 98,128,211 158,520,428 Investment properties (Note 11) 203,628,486 183,163,032 167,736,977 Property and equipment - net (Note 12) 45,310,828 49,201,602 28,862,755 Other assets (Note 13) 7,737,122 3,757,038 5,001,433

₱2,985,316,993 ₱2,980,357,475 ₱3,099,658,096

LIABILITIES AND EQUITY Liabilities Insurance contract liabilities (Notes 14, 20 and 28) ₱339,137,842 ₱307,147,024 ₱297,212,225 Insurance payables (Notes 15, 21 and 28) 31,047,458 60,554,029 89,566,440 Stock subscription payable (Note 8) − − 34,995,200 Deferred tax liability (Note 26) 43,879,963 37,740,327 33,112,510 Accounts payable and accrued expenses (Notes 16 and 28) 88,564,064 80,457,268 140,280,815 Deferred reinsurance commissions (Note 9) 6,457,226 4,764,609 11,949,663 Net pension obligation (Note 17) 35,919,196 37,192,306 36,621,828 Other liabilities (Notes 18 and 28) 18,996,051 5,575,690 10,024,143

564,001,800 533,431,253 653,762,824

Equity Capital stock - =P100 par value

Authorized - 10,000,000 shares Issued - 6,500,000 shares (Note 19) 650,000,000 650,000,000 437,500,000

Revaluation reserves on available-for-sale financial assets

(Note 6) 414,504,894 359,963,849 378,272,039 Remeasurements on defined benefit plan (Note 17) (10,984,206) (10,000,957) (10,232,240) Share in associate’s other comprehensive income (Note

8) 102,755,277 (94,187,603) (58,945,035) Share in associate’s equity reserve (Note 8) 737,024 728,525 728,525 Retained earnings (Note 19) 1,272,996,346 1,549,116,550 1,707,266,125 Treasury stocks (Note 19) (8,694,142) (8,694,142) (8,694,142)

2,421,315,193 2,446,926,222 2,445,895,272

₱2,985,316,993 ₱2,980,357,475 ₱3,099,658,096

See accompanying Notes to Financial Statements.


STATEMENTS OF INCOME Years Ended December 31

2016

(As restated -

2017 Notes 2 and 30)

Gross premiums earned ₱369,728,807 ₱313,680,070

Reinsurers’ share of gross premiums earned 118,193,627 127,196,727

Net premiums earned (Notes 14, 20 and 21) 251,535,180 186,483,343

Investment income (Note 22) 72,078,367 56,550,642

Commission income (Note 9) 13,307,958 21,661,539

Fair value gain on investment properties (Note 11) 20,465,454 15,426,055

Share in associate’s net income (Note 8) – 21,973,035

Other income (Note 23) 7,947,092 9,513,569

Other income 113,798,871 125,124,840

Total income 365,334,051 311,608,183

Gross insurance contract benefits and claims paid 85,652,577 81,235,643

Reinsurers’ share of insurance contract benefits and claims

paid (19,271,364) (30,097,429)

Gross change in insurance contract benefits and claims

liabilities 851,740 6,880,074

Reinsurers’ share of change in insurance contract benefits

and claims liabilities 31,074,583 30,721,703

Net insurance contract benefits and claims (Notes 14 and 24) 98,307,536 88,739,991

Share in associate’s net loss (Note 8) 348,337,581 –

Commission expense 79,022,081 70,568,810

General expenses (Note 25) 95,250,565 73,533,494

Taxes and licenses 5,588,949 4,547,965

Interest expense – 352,167

Other expenses 528,199,176 149,002,436

Total insurance contract benefits, claims and other expenses 626,506,712 237,742,427

INCOME (LOSS) BEFORE INCOME TAX (261,172,661) 73,865,756

PROVISION FOR INCOME TAX (Note 26) 14,947,543 12,015,331

NET INCOME (LOSS) (Note 30) (₱276,120,204) ₱61,850,425



STATEMENTS OF COMPREHENSIVE INCOME

Years Ended December 31

2016

(As restated -


NET INCOME (LOSS) (Note 30) (₱276,120,204) ₱61,850,425

OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) that will be reclassified to profit or

loss in subsequent periods:

Share in associate’s net changes in the revaluation reserves on

available-for-sale financial assets (Note 8) 193,530,191 (58,930,446)

Net changes in the revaluation reserves on available-for-sale

financial assets (Note 6) 54,541,045 (18,308,190)

Share in associate’s remeasurement on life insurance reserve

(Note 8) 3,320,245 1,304,776

Other comprehensive income (loss) that will not be reclassified to

profit or loss in subsequent periods:

Remeasurement gain on defined benefit plan, net of tax effect

(Note 17) (983,249) 231,283

Share in associate’s remeasurement gain on defined benefit

plan (Note 8) 92,444 22,383,102

Total other comprehensive income (loss) 250,500,676 (53,319,475)

TOTAL COMPREHENSIVE INCOME (LOSS) (₱25,619,528) ₱8,530,950



STATEMENTS OF CHANGES IN EQUITY

Revaluation Reserves on Share in Available-for-sale Remeasurements Associate’s Other Share in

Capital Stock

(Note 19)

Financial Assets

(Note 6)

on Defined Benefit Comprehensive Associate’s Equity Plan Income Reserve (Note 17) (Note 8) (Note 8)

Retained Earnings (Note 19)

Treasury Stocks

(Note 19) Total

For the year ended December 31, 2017

At January 1, 2017, as previously reported ₱650,000,000 ₱359,963,849 (₱10,000,957) (₱100,902,754) ₱728,525 ₱1,474,627,330 (₱8,694,142) ₱2,365,721,851 Prior period adjustments (Notes 2 and 30) – – – 6,715,151 – 74,489,220 – 81,204,371 At January 1, 2017, as restated 650,000,000 359,963,849 (10,000,957) (94,187,603) 728,525 1,549,116,550 (8,694,142) 2,446,926,222 Net income for the year – – – – – (276,120,204) – (276,120,204) Other comprehensive income (loss) – 54,541,045 (983,249) 196,942,880 – – – 250,500,676 Total comprehensive income for the year – 54,541,045 (983,249) 196,942,880 – (276,120,204) – (25,619,528) Equity reserve – – – – 8,499 – – 8,499 At December 31, 2017 ₱650,000,000 ₱414,504,894 (₱10,984,206) ₱102,755,277 ₱737,024 ₱1,272,996,346 (₱8,694,142) ₱2,421,315,193

For the year ended December 31, 2016

At January 1, 2016, as previously reported ₱437,500,000 ₱378,272,039 (₱10,232,240) (₱50,571,842) ₱728,525 ₱1,662,003,616 (₱8,694,142) ₱2,409,005,956 Prior period adjustments (Notes 2 and 30) – – – (8,373,193) – 45,262,509 – 36,889,316 At January 1, 2016, as restated 437,500,000 378,272,039 (10,232,240) (58,945,035) 728,525 1,707,266,125 (8,694,142) 2,445,895,272 Net income for the year – – – – – 61,850,425 – 61,850,425 Other comprehensive income (loss) – (18,308,190) 231,283 (35,242,568) – – – (53,319,475) Total comprehensive income for the year – (18,308,190) 231,283 (35,242,568) – 61,850,425 – 8,530,950 Issuance of shares of stocks 212,500,000 – – – – – – 212,500,000 Cash dividends declaration – – – – – (220,000,000) – (220,000,000) At December 31, 2016, as restated ₱650,000,000 ₱359,963,849 (₱10,000,957) (₱94,187,603) ₱728,525 ₱1,549,116,550 (₱8,694,142) ₱2,446,926,222



STATEMENTS OF CASH FLOWS


2016

(As restated -


CASH FLOWS FROM OPERATING ACTIVITIES

Income (loss) before income tax (₱261,172,661) ₱73,865,756

Adjustments for:

Share in associate’s net loss (income) (Note 8) 348,337,581 (21,973,035)

Depreciation (Notes 12 and 25) 8,590,976 5,058,576

Pension benefit expense (Notes 17 and 25) 3,620,052 3,176,874

Interest expense (Note 15) – 352,167

Fair value gains on financial assets at FVPL (Notes

6 and 22) (14,505,765) (10,226,134)

Fair value gains on investment property (Note 11) (20,465,454) (15,426,055)

Dividend income (Note 22) (23,206,990) (12,665,358)

Interest income (Note 22) (34,228,573) (33,659,150)

Gain on sale of AFS financial assets (Note 6) (137,039) –

Operating loss before working capital changes 6,832,127 (11,496,359)

Decrease (increase) in:

Insurance receivables 14,531,755 54,675,930

Loans and receivables (948,844) (10,388,425)

Accrued income (655,446) 580,296

Reinsurance assets 26,616,499 60,392,217

Other assets (2,690,112) 1,475,233

Increase (decrease) in:

Insurance contract liabilities 31,990,818 9,934,799

Insurance payables (29,506,571) (29,012,411)

Accounts payable and accrued expenses 8,106,796 (59,823,547)

Deferred reinsurance commissions 1,692,617 (7,185,054)

Other liabilities 13,420,362 (4,448,453)

Net cash generated from operations 69,390,001 4,704,226

Interest paid – (352,167)

Pension benefits paid (6,297,805) (2,275,991)

Income tax paid (including creditable withholding taxes and prepaid

taxes) (9,676,486) (7,717,474)

Net cash provided by (used in) operating activities 53,415,710 (5,641,406)

(Forward)


2016

(As restated -

2017 Note 2)

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received ₱33,823,957 ₱33,804,673

Dividends received 23,311,401 12,560,947

Stock subscription paid (Note 8) – (17,497,600)

Acquisitions of:

Short-term investments (5,684,781) (3,040,631)

Available-for-sale financial assets (Note 6) (84,835,138) (6,500,000)

Financial assets at fair value through profit or loss (Note 6) (648,228) –

Held-to-maturity investments (Note 6) – (32,645,576)

Investment in fund (Notes 6 and 17) (5,918,044) (5,269,613)

Property and equipment (Note 12) (5,467,068) (25,397,423)

Proceeds from disposals and maturities of: Short-term

investments 3,040,631 1,752,865

Financial assets at fair value through profit or loss (Note 6) 326,202 5,848,723

Available-for-sale financial assets (Note 6) 5,135,977 46,858,231

Held-to-maturity investments (Note 6) – 18,500,000

Loans receivables (Notes 6 and 17) 1,739,736 1,329,389

Property and equipment (Note 12) 766,866 –

Net cash provided by (used in) investing activities (34,408,489) 30,303,985

CASH FLOWS FROM FINANCING ACTIVITIES

Additional stock subscriptions (Note 19) – 212,500,000

Dividends paid (Note 19) – (220,000,000)

Net cash used in financing activities – (7,500,000)

NET INCREASE IN CASH AND CASH EQUIVALENTS 19,007,221 17,162,579

CASH AND CASH EQUIVALENTS, AT BEGINNING

OF YEAR 67,719,992 50,557,413

CASH AND CASH EQUIVALENTS

AT END OF YEAR (Note 4) ₱86,727,213 ₱67,719,992



NOTES TO FINANCIAL STATEMENTS

1. Corporate Information

Philippines First Insurance Company, Inc. (the Company) was incorporated in the Philippines to engage

in the business and operation of all kinds of insurance, reinsurance, insurance on buildings,

automobiles, cars and/or other motor vehicles, goods and merchandise goods in transit, goods in

storage, fire insurance, earthquakes, insurance against accidents and all other forms of undertaking to

indemnify any person against loss, damage or liability arising from unknown or contingent events,

except life insurance.

The Company was registered with the Securities and Exchange Commission (SEC) on February 24,

1954. On January 9, 2004, it was approved by at least a majority of the Board of Directors (BOD) and

the stockholders owning and representing at least two-thirds (2/3) of the outstanding capital stock that

the Articles of Incorporation will be amended to extend the existence of the Company to another fifty

(50) years from its original expiry date. The Philippine SEC approved the amended Articles of

Incorporation on May 21, 2004.

The registered office address of the Company is 7th Floor, STI Holdings Center, 6764 Ayala Avenue,

Makati City.

The accompanying financial statements were approved and authorized for issue by the BOD of the

Company on June 29, 2018.

2. Summary of Significant Accounting Policies

Basis of Preparation

The accompanying financial statements of the Company have been prepared in compliance with

accounting principles generally accepted in the Philippines (PGAAP), except for the commission

expense which has been accounted for using the cash basis of accounting. PGAAP includes all

applicable Philippine Financial Reporting Standards (“PFRS”) including Philippine Accounting

Standards and Philippine Interpretations from the International Financial Reporting Interpretations

Committee (“IFRIC”) issued by the Philippine Financial Reporting Standards Council (“FRSC”), the

accounting standards set forth in the Pre-Need Rule 31, As Amended: Accounting Standards for

PreNeed Plans and Pre-Need Uniform Chart of Accounts (“PNUCA”), and applicable Insurance

Commission (IC) Circular Letter and accounting requirements for Philplans First, Inc., one of the

subsidiaries of Maestro Holdings, Inc.

The financial statements have been prepared using the historical cost basis, except for financial assets at fair value through profit or loss (FVPL), available-for-sale (AFS) financial assets and investment properties which have been measured at fair value.

The accompanying financial statements are presented in Philippine Peso (P=), which is also the Company’s functional currency. All amounts are rounded to the nearest peso values, unless otherwise indicated.

The financial statements provide comparative information in respect of the previous period. In addition,

the Company presents an additional statement of financial position at the beginning of the earliest

period presented when there is a retrospective application of an accounting policy, a retrospective

restatement, or a reclassification of items in the financial statements. An additional

statement of financial position as at January 1, 2016 is presented in these financial statements due to

retrospective adjustments as disclosed in Note 30.

Changes in Accounting Policies and Disclosures

The accounting policies adopted are consistent with those of the previous financial year, except as

discussed below.

The Company reassessed its accounting for investment property with respect to measurement after initial recognition. The Company had previously measured all investment property using the cost model whereby, after initial recognition of the asset classified as investment property, the asset was carried at cost less accumulated depreciation and accumulated impairment losses.

In 2017, the Company voluntarily changed its accounting policy on the subsequent measurement of its

investment properties from cost model to fair value model where the fair values are determined by an

independent firm of appraisers. Gains or losses arising from changes in the fair values of investment

properties are included in the profit or loss for the period in which they arise, including the

corresponding tax effect. The Company believes that the change will result in providing reliable and

more relevant information about the effects of transactions, other events or conditions on the

Company's financial position, financial performance and cash flows.

Circular Letter (CL) 2016-67, Valuation Standards for Non-life Insurance Policy Reserves

The circular prescribes the new valuation methodology for the non-life insurance companies. As

required by circular, provision for IBNR claims shall be valued based from actuarial projection

techniques and calculate its unearned premium reserves for marine cargo using 24th method. In

addition to the unearned premium reserves, the concept of unexpired risk reserves is also included in

the calculation of the premium liability. The incurred but not reported (IBNR) reserves will now be

computed using actuarial projection techniques such as but not limited to the chain ladder method,

expected loss ratio method and Bornheutter-Ferguson method.

A margin for adverse deviation is estimated based on standard projection techniques or combination of

such techniques, such as but not limited to the Mack Method, Bootstrapping Method, Stochastic Chain

Ladder Method to bring the actuarial estimate of the Policy Liabilities at the 75th percentile level of

sufficiency. Discount rates to be used shall be current risk-free rates. The rates shall exactly match the

duration of the policy and the currency of the cash flows and shall be prescribed by the Insurance

Commission.

The changes in accounting policies have been applied retrospectively. The impact of the adjustments

for each financial statement line item affected are disclosed in Note 30.

In addition, the Company has adopted the following new accounting pronouncements starting January 1, 2017. Adoption of these pronouncements did not have any significant impact on the Company’s financial position or performance unless otherwise indicated.

• Amendment to PFRS 12, Clarification of the Scope of the Standard (Part of Annual Improvements

to PFRSs 2014 - 2016 Cycle)

The amendments clarify that the disclosure requirements in PFRS 12, other than those relating to summarized financial information, apply to an entity’s interest in a subsidiary, a joint venture or an associate (or a portion of its interest in a joint venture or an associate) that is classified (or included in a disposal group that is classified) as held for sale.

The amendments did not have any impact on the Company’s financial position and results of

operation.

• Amendments to PAS 7, Statement of Cash Flows, Disclosure Initiative

The amendments to PAS 7 require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses). On initial application of the amendments, entities are not required to provide comparative information for preceding periods. Early application of the amendments is permitted.

The amendments did not have any impact since the Company does not have non-cash financing

activities.

• Amendments to PAS 12, Income Taxes, Recognition of Deferred Tax Assets for Unrealized Losses

The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of that deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.

Entities are required to apply the amendments retrospectively. However, on initial application of

the amendments, the change in the opening equity of the earliest comparative period may be

recognized in opening retained earnings (or in another component of equity, as appropriate),

without allocating the change between opening retained earnings and other components of equity.

Entities applying this relief must disclose that fact. Early application of the amendments is

permitted.

The amendments did not have any impact on the Company’s financial position and results of

operation.

Future Changes in Accounting Policies

Pronouncements issued but not yet effective are listed below. Unless otherwise indicated, the Company

does not expect that the future adoption of the said pronouncements to have a significant impact on its

financial statements. The Company intends to adopt the following pronouncements when they become

effective.

Effective beginning on or after January 1, 2018

• Amendments to PFRS 2, Share-based Payment, Classification and Measurement of Share-based

Payment Transactions

The amendments to PFRS 2 address three main areas: the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction; the classification of a share-based payment transaction with net settlement features for withholding tax obligations; and the accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash settled to equity settled.

On adoption, entities are required to apply the amendments without restating prior periods, but

retrospective application is permitted if elected for all three amendments and if other criteria are

met. Early application of the amendments is permitted.

These amendments are not expected to have any impact on the Company’s financial statements.

• Amendments to PFRS 4, Insurance Contracts, Applying PFRS 9, Financial Instruments, with PFRS

4

The amendments address concerns arising from implementing PFRS 9, the new financial

instruments standard before implementing the forthcoming insurance contracts standard. They

allow entities to choose between the overlay approach and the deferral approach to deal with the

transitional challenges. The overlay approach gives all entities that issue insurance contracts the

option to recognize in other comprehensive income, rather than profit or loss, the volatility that

could arise when PFRS 9 is applied before the new insurance contracts standard is issued. On the

other hand, the deferral approach gives entities whose activities are predominantly connected with

insurance an optional temporary exemption from applying PFRS 9 until the earlier of application

of the forthcoming insurance contracts standard or January 1, 2021.

The overlay approach and the deferral approach will only be available to an entity if it has not

previously applied PFRS 9.

The Company did not qualify for deferral approach and therefore, will adopt PFRS 9 in 2018.

The Company is currently assessing the impact of adopting this standard.

• PFRS 15, Revenue from Contracts with Customers

PFRS 15 establishes a new five-step model that will apply to revenue arising from contracts with customers. Under PFRS 15, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in PFRS 15 provide a more structured approach to measuring and recognizing revenue.

The new revenue standard is applicable to all entities and will supersede all current revenue

recognition requirements under PFRSs. Either a full or modified retrospective application is

required for annual periods beginning on or after January 1, 2018.


• PFRS 9, Financial Instruments

PFRS 9 reflects all phases of the financial instruments project and replaces PAS 39, Financial

Instruments: Recognition and Measurement, and all previous versions of PFRS 9. The standard

introduces new requirements for classification and measurement, impairment, and hedge

accounting. PFRS 9 is effective for annual periods beginning on or after January 1, 2018, with

early application permitted. Retrospective application is required, but providing comparative

information is not compulsory. For hedge accounting, the requirements are generally applied

prospectively, with some limited exceptions.

The adoption of PFRS 9 will have an effect on the classification and measurement of the Company’s financial assets and impairment methodology for financial assets, but will have no impact on the classification and measurement of the Company’s financial liabilities. The adoption will also have an effect on the amount of its credit losses. The Company is currently assessing the impact of adopting this standard.

• Amendments to PAS 28, Measuring an Associate or Joint Venture at Fair Value (Part of Annual

Improvements to PFRSs 2014 - 2016 Cycle)

The amendments clarify that an entity that is a venture capital organization, or other qualifying

entity, may elect, at initial recognition on an investment-by-investment basis, to measure its

investments in associates and joint ventures at fair value through profit or loss. They also clarify

that if an entity that is not itself an investment entity has an interest in an associate or joint venture

that is an investment entity, the entity may, when applying the equity method, elect to retain the

fair value measurement applied by that investment entity associate or joint venture to the

investment entity associate’s or joint venture’s interests in subsidiaries. This election is made

separately for each investment entity associate or joint venture, at the later of the date on which (a)

the investment entity associate or joint venture is initially recognized; (b) the associate or joint

venture becomes an investment entity; and (c) the investment entity associate or joint venture first

becomes a parent. The amendments should be applied retrospectively, with earlier application

permitted.

These amendments are not expected to have any impact to the Company.

• Amendments to PAS 40, Investment Property, Transfers of Investment Property

The amendments clarify when an entity should transfer property, including property under

construction or development into, or out of investment property. The amendments state that a

change in use occurs when the property meets, or ceases to meet, the definition of investment

property and there is evidence of the change in use. A mere change in management’s intentions for

the use of a property does not provide evidence of a change in use. The amendments should be

applied prospectively to changes in use that occur on or after the beginning of the annual reporting

period in which the entity first applies the amendments. Retrospective application is only permitted

if this is possible without the use of hindsight.


• Philippine Interpretation IFRIC-22, Foreign Currency Transactions and Advance Consideration

The interpretation clarifies that in determining the spot exchange rate to use on initial recognition

of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset

or non-monetary liability relating to advance consideration, the date of the transaction is the date

on which an entity initially recognizes the nonmonetary asset or non-monetary liability arising

from the advance consideration. If there are multiple payments or receipts in advance, then the

entity must determine a date of the transactions for each payment or receipt of advance

consideration. The interpretation may be applied on a fully retrospective basis. Entities may apply

the interpretation prospectively to all assets, expenses and income in its scope that are initially

recognized on or after the beginning of the reporting period in which the entity first applies the

interpretation or the beginning of a prior reporting period presented as comparative information in

the financial statements of the reporting period in which the entity first applies the interpretation.

These amendments are not expected to have any impact on the Company.

Effective beginning on or after January 1, 2019

• Amendments to PFRS 9, Prepayment Features with Negative Compensation

The amendments to PFRS 9 allow debt instruments with negative compensation prepayment features to be measured at amortized cost or fair value through other comprehensive income. An entity shall apply these amendments for annual reporting periods beginning on or after January 1, 2019. Earlier application is permitted.

The Company is currently assessing the impact of adopting this interpretation.

• PFRS 16, Leases

Under the new standard, lessees will no longer classify their leases as either operating or finance

leases in accordance with PAS 17, Leases. Rather, lessees will apply the single-asset model. Under

this model, lessees will recognize the assets and related liabilities for most leases on their balance

sheets, and subsequently, will depreciate the lease assets and recognize interest on the lease

liabilities in their profit or loss. Leases with a term of 12 months or less or for which the underlying

asset is of low value are exempted from these requirements.

The accounting by lessors is substantially unchanged as the new standard carries forward the principles of lessor accounting under PAS 17. Lessors, however, will be required to disclose more information in their financial statements, particularly on the risk exposure to residual value.

Entities may early adopt PFRS 16 but only if they have also adopted PFRS 15. When adopting PFRS 16, an entity is permitted to use either a full retrospective or a modified retrospective approach, with options to use certain transition reliefs.

The Company is currently assessing the impact of adopting PFRS 16.

• Philippine Interpretation IFRIC-23, Uncertainty over Income Tax Treatments

The interpretation addresses the accounting for income taxes when tax treatments involve

uncertainty that affects the application of PAS 12 and does not apply to taxes or levies outside the

scope of PAS 12, nor does it specifically include requirements relating to interest and penalties

associated with uncertain tax treatments.

The interpretation specifically addresses the following:

o Whether an entity considers uncertain tax treatments separately

o The assumptions an entity makes about the examination of tax treatments by taxation

authorities

o How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax

credits and tax rates

o How an entity considers changes in facts and circumstances

An entity must determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The approach that better predicts the resolution of the uncertainty should be followed.

20. Related Party Transactions

Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise

significant influence over the other party in making financial and operating decisions and the parties

are subject to common control or common significant influence. Related parties may be individual or

corporate entities. In considering each possible related entity relationship, attention is directed to the

substance of the relationship and not merely the legal form.

The balances resulting from the transactions described above are carried in the following accounts in

the statement of financial position and statement of income as follows:

2017 2016

_________________________________________________________________________________

Due from brokers and agents (note 5) ₱22,614,461 ₱12,722,885

Advances (Note 6) 40,862,200 40,622,200

Accounts receivables (Note 6) 687,857 354,200

Dividends received (paid) - (130,019,196)

Insurance contract liabilities (Notes 14 and 28) (2,033,986) ( 1,864,388)

Customers’ deposit (Note 18) - ( 331,327)

2017 2016

Gross premiums written (Note 21) ₱63,285,850 ₱44,457,259

Gross insurance contract benefits and claims paid

(Note 24) ( 2,993,764) ( 2,199,211)

Dividend income (Note 22) 3,853,881 3,843,915

General expenses ( 4,065,609) ( 3,977,196)

The outstanding balances from the related parties are to be settled in cash.

Management of Capital, Insurance and Financial Risks

Regulatory Framework

Regulators are interested in protecting the rights of the policyholders and maintain close vigil to ensure

that the Company is satisfactorily managing affairs for their benefit. At the time, the regulators are also

interested in ensuring that the Company maintains appropriate solvency position to meet liabilities

arising from claims and that the risk levels are at acceptable levels.

The operations of the Company are subject to the regulatory requirements of the IC. Such regulations

not only prescribe approval and monitoring of activities but also impose certain restrictive provisions

(e.g. minimum statutory net worth and risk-based capital requirements).

Capital Management Framework

The Company maintains a certain level of capital to ensure sufficient solvency margins and to

adequately protect the policyholders.

The Company reviews the capital requirements by monitoring the minimum statutory and the RBC which

is regularly communicated to the major stockholders. With this procedure, shareholders are forewarned in

anticipation of the IC requirements of additional capital infusion. Shareholders are well updated with these

externally imposed capital requirements since these are being discussed during the annual BOD meeting.

Minimum Statutory

On August 15, 2013, the President of the Philippines approved Republic Act No. 10607 to be known as the

“New Insurance Code” which provides the new capitalization requirements for all existing insurance

companies based on net worth on a staggered basis starting June 30, 2013 up to December 31, 2022.

On January 13, 2015, the IC issued the Circular Letter (CL) No. 2015-02-A which provides for the

clarification of minimum capital requirements under Sections 194, 197, 200 and 289 of the New Insurance

Code. The said circular supersedes the Department Order Nos. 27-06 and 15-2012 and CL Nos. 22-2008

and 26-2008.

The following presents the amount of required and the schedule of compliance per Amended Insurance

Code.

Compliance Date

₱ 250,000.00 June 30, 2013

550,.000.00 December 31, 2016

900,000.00 December 31, 2019

1,300,000.00 December 31, 2022

Based on its latest synopsis issued by the Insurance Commission as of December 31, 2016, the audited

statutory of the Company amounted to P1,971,197,660.

Solvency Requirement

Under the revised Insurance Code (RA 10607), an insurance company doing business in the Philippines

shall at all times maintain paid-up capital, and net worth requirements as prescribed by the Commissioner.

Such solvency requirements shall be based on internationally accepted solvency frameworks and accepted

only after due consultation with the insurance industry association.

The amounts of estimated non-admitted assets, as defined in the Code, are as follows:

2017

(Estimated) 2016 (Actual)

Premium Receivables ₱47,178,765 ₱36,750,036

Property and equipment and investment properties 13,543,630 7,520,163

Accounts receivables - 71,103,277

Other Investments - 122,825,009

Cash on hand - 3,096,976

Investments - 1,606,450

Reinsurance assets - 9,465,822

Other assets 60,626,408 31,694,543

₱121,348,803 ₱284,062,276

If an insurance company failed to meet the minimum required capital, the Insurance Commission is

authorized to suspend or revoke all certificates of authority granted to such companies, its officers and

agents, and no new business shall be done by and for such company until its authority is restored by the

Insurance Commission.

The final amount of the networth as of December 31, 2017 can be determined only after the accounts of

the Company have been examined by the Insurance Commission, specifically as to admitted and non-

admitted assets as defined under the Code.

Risk-based Capital Requirements

In 2006, the IC issued Memorandum Circular (IMC) No. 7-2006 adopting a risk-based capital

framework to establish the required amounts of capital to be maintained by non-life insurance

companies in relation to their investment and insurance risks. The RBC ratio of a company shall be

calculated as Net worth divided by the RBC requirement. Net worth shall include the Company’s paid-

up capital, contributed and contingency surplus and unassigned surplus. Revaluation and fluctuation

reserve accounts shall form part of net worth only to the extent authorized by the Insurance

Commissioner.

In 2016, the IC issued Circular Letter No. 2016-68, Amended Risk-Based Capital (RBC2) Framework,

pursuant to Section 437 of the Amended Insurance Code. The RBC ratio shall be calculated as Total

Available Capital (TAC) divided by the RBC requirement. TAC is the aggregate of Tier 1 and Tier 2

capital minus deductions, subject to applicable limits and determinations. Tier 1 Capital represents

capital that is fully available to cover losses of the insurer at all times on a going concern and winding

up basis (e.g. Capital Stock, Statutory Deposit, Capital Stock Subscribed, Contributed Surplus, etc.).

Tier 2 Capital does not have the same high-quality characteristics of Tier 1 capital, but can provide an

additional buffer to the insurer [e.g. Reserve for Appraisal Increment – Property and Equipment,

Remeasurement Gains (Losses) on Retirement Pension Asset (Obligation), etc. Tier 2 Capital shall not

exceed 50% of Tier 1 Capital.

The minimum RBC ratio is set at 100%. All insurance companies are required to maintain the

minimum RBC ratio and not fail the Trend Test.

The following table shows how the RBC ratio as of December 31, 2017 and 2016 was determined

by the Company:

2017 2016

(Estimated) (Actual)

Insurance Risk

The risk under an insurance contract is the possibility of occurrence of the insured event and uncertainty

of the amount and timing of the resulting claim. The principal risk the Company faces under such

contracts is that the actual claims and benefit payments will exceed the carrying amount of insurance

liabilities. This is influenced by the frequency of claims, severity of claims and actual benefits paid are

greater than originally estimated.

P = 2,377,765,281 P = 1,971,197,660

RBC requirement 648,086,464 387,427,080

RBC Ratio 3 67 % 509 %

The variability of risks is improved by diversification of risk of loss to a large portfolio of insurance

contracts as a more diversified portfolio is less likely to be affected across the board by change in any

subset of the portfolio. The variability of risks can also be improved by careful selection and

implementation of underwriting strategy and guidelines.

The majority of reinsurance business ceded is placed on a quota share basis with retention limits.

Amounts recoverable from reinsurers are estimated in a manner consistent with the assumptions used

for ascertaining the underlying policy benefits and are presented in the statement of financial position

as reinsurance assets.

Although the Company has reinsurance agreements, it is not relieved of its direct obligations to its

policyholders and thus a credit exposure exists with respect to reinsurance ceded, to the extent that any

reinsurer is unable to meet the obligations assumed under such reinsurance agreements.

The Company’s placement of reinsurance is diversified such that it is neither dependent on a single

reinsurer nor are the operations of the Company substantially dependent upon any single reinsurance

contract.

The business of the Company mainly comprises of short-term nonlife insurance contract.

The Company principally issued the following types of general insurance contracts: fire, engineering,

marine, motor car, personal accident and miscellaneous casualty.

The Company also enforces a policy of actively managing and promptly pursuing claims, in order to

reduce its exposure to unpredictable future developments that can negatively impact the Company.

The Company also has limited its exposure level by imposing maximum claim amounts on certain

contracts as well as the use of reinsurance arrangements in order to limit exposure to catastrophic

events. The purpose of these underwriting and reinsurance strategies is to limit exposure to

catastrophes to a predetermined maximum amount based on the Company’s risk appetite as decided by

management.

Assumptions

The principal assumption underlying the estimates is the Company’s past claims development

experience. This includes assumptions in respect of average claim cost, claims handling costs, claims

inflation factors and claim numbers for each accident year. Judgment is used to assess the extent to

which external factors such as judicial decisions and government legislation affect the estimates.

Other key assumptions include variation in interest, delays in settlement and changes in foreign

currency rates.

Sensitivities

In insurance, as a rule, there may be claims filed in the current year that would attach policies issued in

the previous years. This in effect makes claims provision highly sensitive as represented by the table

below. Other unpredictable circumstances like legislative uncertainties make it impossible to quantify

claims. Also, due to delays arising between occurrence of claims and their subsequent reporting to and

settlement by the Company, the outstanding claim provisions cannot be ascertained with confidence at

the end of the reporting period.

As a result, the final liabilities will change as a result of succeeding developments. Differences from

recomputation of the final liabilities are taken up in subsequent financial statements.

Financial Risk

The Company is exposed to financial risk through its financial assets and financial liabilities. In

particular, the key financial risk is that the proceeds from its financial assets are not sufficient to fund

the obligations arising from its insurance contracts. The most important components of this financial

risk are credit risk, liquidity risk and market risk.

These risks arise from open in interest rate, currency and equity products, all of which are exposed to

general and specific market movements. The risk that the Company primarily faces due to the nature

of its investments and liabilities is interest rate and equity price risks.

Credit risk

Credit risk is a risk that one party to a financial instrument will fail to discharge an obligation and cause

the party to incur a financial loss.

Prior to extending credit, the Company manages its credit risk by assessing the credit quality of its

counterparty. Another method by which the Company manages its credit risk exposure is through

credit analysis. This is a process of assessing the credit quality of a counterparty which is a process

that entails judgment.

The credit policy group reviews all information about the counterparty which may include the

counterparty’s statement of financial position, statement of income and other market information. The

nature of the obligation is likewise considered. Based upon this analysis, the credit analyst assigns the

counterparty a credit rating to determine whether or not credit may be provided.

Credit risk limit is also used to manage credit exposure which specifies exposures limits for each

intermediary depending on the size of its portfolio and its ability to meet its obligation based on past

experience.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet commitments

associated with financial instruments. Liquidity risk may result from either the inability to sell financial

assets quickly at their fair values; or counterparty failing on repayment of a contractual obligation; or

insurance liability falling due to payment earlier than expected; or inability to generate cash inflows as

anticipated. The major liquidity risk confronting the Company is the daily calls on its available cash

resources in respect of claims arising from insurance contracts.

The Company manages liquidity through a liquidity risk policy which determines what constitutes

liquidity risk for the Company; specifies minimum proportion of funds to meet emergency calls; set up

to contingency funding plans; specifies the source of funding and the events that would trigger the plan;

determines concentration of funding sources; reports liquidity risk exposures and breaches; monitoring

compliance with liquidity risk policy and reviews liquidity risk policy for pertinence and changing

environment.

Market risk

Market risk is the risk of change in fair value of financial instruments from fluctuations in foreign

exchange rates (currency risk), market interest rates (interest rate risk) and market prices (price risk),

whether such change in price is caused by factors specific to the individual instrument or its issuer or

factors affecting all instruments traded in the market.

The Company structures levels of market risk it accepts through a market risk policy that determines

what constitutes market risk for the Company; the basis used to fair value financial assets and liabilities;

assets allocation and portfolio limit structure; diversification benchmarks by type of instrument; the net

exposure limits by each counterparty or group of counterparties, industry segments and market risk

exposures; compliance with market risk policy and review of market risk policy for pertinence and

changing environment.

Currency risk

The Company’s principal transactions are carried out in Philippine peso and its exposure to foreign

exchange risk arises primarily with respect to the US Dollar and Euros as it deals with foreign reinsurers

in settlement of its obligations and receipt of any claim reimbursements.

The following table demonstrates the sensitivity to a reasonably possible change in the foreign

exchange rates, with all other variable held constant, of the Company’s income before tax.

2017

Impact

Before tax

Currency Change in exchange rate Increase (decrease)

US Dollar +9% ₱2,158,532

-9% ( 2,158,532)

Euro +8% 172,260

-8% ( 172,260)

2016

Impact

Before tax

Currency Change in exchange rate Increase (decrease)

US Dollar +4% ₱1,007,192

-4% ( 1,007,192)

Euro +9% 2,810

-9% ( 2,810)

The sensitivity analysis has been determined assuming that the change in foreign currency exchange

rates has occurred at the reporting date and has been applied to the Company’s exposure to currency

risk for financial instruments in existence at that date, and all other variables, interest rates in particular,

remain constant.

The stated changes represent management’s assessment of reasonable possible changes in foreign

exchange rates over the period until the next annual reporting date. Results of the analysis as presented

in the above table represent the effects on the Company’s income before tax measured in US dollars

and Euro using the closing foreign exchange rate at the reporting date.

There is no other impact on the Company’s equity other than those already affecting the statement of

income.

Interest rate risk

Interest rate risk is the risk that the value/future cash flows of a financial instrument will fluctuate

because of changes in market interest rates.

Floating rate instruments expose the Company to cash flow interest risk, whereas fixed interest rate

instruments expose the Company to fair value risk. The Company’s AFS debt securities in particular

is exposed to fair value risk.

The Company’s market risk policy requires it to manage interest rate risk by maintaining appropriate

mix of fixed and variable rate instruments. The policy also requires it to manage the maturities of

interest bearing financial assets and interest bearing financial liabilities.

Price risk

The Company’s price risk exposure at year end relates to financial assets and liabilities whose value

will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or

currency risk), principally, its AFS equity financial assets.

Such investment securities are subject to price risk due to changes in market values of instruments

arising either from factors specific to individual instruments or their issuers or factors affecting all

instruments traded in the market.

The Company’s market risk policy requires it to manage such risks by setting and monitoring objectives

and constrains; diversification plan; limits on investment in each sector and market.

Financial Risk

The Company is exposed to financial risk through its financial assets and financial liabilities. In particular, the key financial risk is that the proceeds from its financial assets are not sufficient to fund the obligations arising from its insurance contracts. The most important components of this financial risk are credit risk, liquidity risk and market risk.

These risks arise from open positions in interest rate, currency and equity products, all of which are

exposed to general and specific market movements. The risk that the Company primarily faces due to

the nature of its investments and liabilities is interest rate and equity price risks.

Credit risk

Credit risk is a risk that one party to a financial instrument will fail to discharge an obligation and cause

the other party to incur a financial loss.

Prior to extending credit, the Company manages its credit risk by assessing the credit quality of its

counterparty. Another method by which the Company manages its credit risk exposure is through credit

analysis. This is a process of assessing the credit quality of a counterparty which is a process that

entails judgment.

The credit policy group reviews all information about the counterparty which may include the

counterparty’s statement of financial position, statements of income and other market information. The

nature of the obligation is likewise considered. Based upon this analysis, the credit analyst assigns the

counterparty a credit rating to determine whether or not credit may be provided.

Credit risk limit is also used to manage credit exposure which specifies exposure limits for each

intermediary depending on the size of its portfolio and its ability to meet its obligation based on past

experience.

Market risk

Market risk is the risk of change in fair value of financial instruments from fluctuations in foreign

exchange rates (currency risk), market interest rates (interest rate risk) and market prices (price risk),

whether such change in price is caused by factors specific to the individual instrument or its issuer or

factors affecting all instruments traded in the market.

The Company structures levels of market risk it accepts through a market risk policy that determines

what constitutes market risk for the Company; the basis used to fair value financial assets and liabilities;

asset allocation and portfolio limit structure; diversification benchmarks by type of instrument; the net

exposure limits by each counterparty or group of counterparties, industry segments and market risk

exposures; compliance with market risk policy and review of market risk policy for pertinence and

changing environment.

Currency risk

a. The Company’s principal transactions are carried out in Philippine peso and its exposure to foreign

exchange risk arises primarily with respect to the US Dollar and Euros as it deals with foreign

reinsurers in its settlement of its obligations and receipt of any claim reimbursements.

b. Investment Properties

As discussed in Note 2, the Company voluntarily changed its accounting policy on the subsequent measurement of investment properties from cost model to fair value model which has been applied retrospectively.

Documents

INDEPE - Philippines First · 2018-09-13 · PHILIPPINES FIRST INSURANCE COMPANY, INC. STATEMENTS OF FINANCIAL POSITION December 31 January 1 2017 2016 (As restated Notes 2 and 30)