Syarikat Takaful Malaysia Am Berhad...Syarikat Takaful Malaysia Am Berhad 2 (Company no. 201701032316 (1246486-D)) (Incorporated in Malaysia) Condensed statement of profit or loss

Syarikat Takaful Malaysia Am Berhad(Company No. 201701032316 (1246486-D))

(Incorporated in Malaysia)

Condensed Interim Financial Statements - unaudited

for the financial period from

1 January 2020 to 30 June 2020

1

Syarikat Takaful Malaysia Am Berhad(Company no. 201701032316 (1246486-D))


Condensed statement of financial position as at 30 June 2020 - unaudited

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

ASSETS

Property and equipment 4,198 - 5,658 4,556 - 6,016

Right-of-use assets - - 6,960 - - 6,960

Investment properties - 10,620 2,200 - 10,620 2,200

Intangible assets 40 - 40 45 - 45

Other investments 2 139,344 367,426 506,770 141,569 371,947 513,516

Retakaful assets 3 - 455,063 455,063 - 386,272 386,272

Deferred tax assets 38,375 - 38,375 37,746 - 37,746

Current tax assets 5,524 - 5,524 7,846 - 7,846

Loans and receivables,

excluding takaful receivables 4 313,355 433,976 720,961 223,391 358,766 562,641

Takaful receivables - 60,530 60,530 - 113,717 113,717

Cash and cash equivalents 5 23,174 42,889 66,063 37,427 52,534 89,961

TOTAL ASSETS 524,010 1,370,504 1,868,144 452,580 1,293,856 1,726,920

EQUITY AND LIABILITIES

Share capital 100,000 - 100,000 100,000 - 100,000

Reserves 211,331 - 211,331 148,886 - 148,886

Total equity attributable to

owners of the Company 311,331 - 311,331 248,886 - 248,886

LIABILITIES

Takaful contract liabilities 6 - 1,225,053 1,225,053 - 1,115,115 1,115,115

Expense reserves 165,319 - 165,319 157,092 - 157,092

Takaful payables 10,159 65,748 75,907 10,092 85,700 95,792

Other payables 37,201 74,708 85,539 36,510 86,719 103,713

Current tax liabilities - 4,995 4,995 - 6,322 6,322

TOTAL LIABILITIES 212,679 1,370,504 1,556,813 203,694 1,293,856 1,478,034

TOTAL EQUITY AND LIABILITIES 524,010 1,370,504 1,868,144 452,580 1,293,856 1,726,920

The notes on pages 7 to 32 are an integral part of these financial statements.

Company

Takaful

Operator

General

Takaful

Takaful

Operator

General

Takaful Company

2Syarikat Takaful Malaysia Am Berhad(Company no. 201701032316 (1246486-D))


Condensed statement of profit or loss and other comprehensive income

for the period ended 30 June 2020 - unaudited


Operating revenue 7 7,727 397,967 405,694 6,181 383,593 389,774

Takaful operator income 183,219 - - 167,937 - -

Gross earned contributions 8(i) - 364,791 364,791 - 370,442 370,442

Contributions ceded to retakaful 8(ii) - (150,324) (150,324) - (138,386) (138,386)

Net earned contributions 8(iii) - 214,467 214,467 - 232,056 232,056

Administrative income - 40,549 40,549 - 31,198 31,198

Investment income on financial assets

not measured at fair value through

profit or loss 7,252 15,399 22,651 5,651 14,551 20,202

Investment income - others 475 537 1,012 530 1,153 1,683

Realised gains and losses - - - 135 1,489 1,624

Fair value gains and losses 103 (127) (24) 837 993 1,830

Other operating income 4 96 100 48 53 101

Other income 7,834 56,454 64,288 7,201 49,437 56,638

Gross benefits and claims paid 9 - (105,768) (105,768) - (147,807) (147,807)

Claims ceded to retakaful 9 - 40,087 40,087 - 62,541 62,541

Gross change to contract liabilities 9 - (83,368) (83,368) - (33,493) (33,493)

Change to contract liabilities ceded

to retakaful 9 - 68,613 68,613 - 20,460 20,460

Net benefits and claims 9 - (80,436) (80,436) - (98,299) (98,299)

Wakalah fee expense - (160,194) - - (167,937) -

Administrative fees (36,501) - (36,501) (35,014) - (35,014)

Expense reserves (8,227) - (8,227) (15,018) - (15,018)

Management expenses (58,521) - (58,521) (60,538) - (60,538)

Impairment losses on financial instruments - (16) (16) (62) (2,371) (2,433)

Other operating expenses (6,088) (382) (6,470) (3,148) (19) (3,167)

Other expenses (109,337) (160,592) (109,735) (113,780) (170,327) (116,170)

Total profit for the period 81,716 29,893 88,584 61,358 12,867 74,225

Profit attributable to the

Takaful Operator/participants - (29,893) (6,868) - (12,867) (12,867)

Profit before zakat and taxation 81,716 - 81,716 61,358 - 61,358

Zakat (300) - (300) (300) - (300)

Tax expense 10 (20,659) - (20,659) (14,987) - (14,987)

Profit for the year 60,757 - 60,757 46,071 - 46,071

Takaful

Operator

General

Takaful Company

Takaful

Operator

General

Takaful Company

3 Company No. 201701032316 (1246486-D)

Condensed statement of profit or loss and other comprehensive income

for the period ended 30 June 2020 (continued) - unaudited

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Profit for the year 60,757 - 60,757 46,071 - 46,071

Other comprehensive income,

net of tax

Items that may be reclassified

subsequently to profit or loss

Debt investments measured at

fair value through other

comprehensive income (FVOCI)

- net change in fair value 1,688 6,217 7,905 3,718 11,504 15,222

Other comprehensive income

attributable to participants - (6,217) (6,217) - (11,504) (11,504)

Total other comprehensive income

for the year 1,688 - 1,688 3,718 - 3,718

Total comprehensive income

for the year 62,445 - 62,445 49,789 - 49,789


Takaful

Operator

General

Takaful Company

Takaful

Operator

General

Takaful Company



30 June 2020 - unaudited

Distributable

Share Fair value Retained Total

capital reserve earnings equity

Company RM’000 RM’000 RM’000 RM’000

At 1 January 2019 100,000 855 53,607 154,462

Fair value of debt investments

measured at FVOCI - 4,690 - 4,690


for the period - 4,690 - 4,690

Profit for the period - - 89,734 89,734


for the period - 4,690 89,734 94,424

At 31 December 2019 / 1 January 2020 100,000 5,545 143,341 248,886

Fair value of debt investments

measured at FVOCI - 1,688 - 1,688


for the period - 1,688 - 1,688

Profit for the period - - 60,757 60,757


for the period - 1,688 60,757 62,445

At 30 June 2020 100,000 7,233 204,098 311,331


Condensed statements of changes in equity for the period ended



Condensed statements of cash flows for the period ended

30 June 2020 - unaudited

6 months 6 months

period period

ended ended

30.06.2020 30.06.2019

RM’000 RM’000

Cash flows from operating activities

Profit before zakat and taxation 81,716 61,358

Adjustments for:

Depreciation 935 1,247

Amortisation of intangible assets 5 -

Fair value change of fair value through profit or loss financial assets 24 (1,830)

Profit from Islamic debt securities and investment accounts (23,588) (20,578)

Dividend income from Shariah approved shares - (1,159)

Amortisation of premiums, net of accretion of discounts 476 630

Profit from Malaysian Government Islamic papers (354) (736)

Operating profit before changes in working capital 59,214 38,932

Profit received from Islamic debt securities, investment accounts

and Malaysian Government Islamic papers 22,038 19,704

Dividend income from Shariah approved shares - 1,159

Purchase of investments - (88,738)

Proceeds from sale of investments 1,580 53,285

Maturity of other investments 15,000 23,000

Increase in retakaful assets (68,791) (10,536)

Increase in receivables (105,141) (113,083)

Increase in Takaful contract liabilities 102,394 37,918

Decrease in payables (30,116) (10,438)

(3,822) (48,797)

Income taxes paid (19,500) (16,000)

Net cash used in operating activities (23,322) (64,797)

Cash flows from investing activity

Purchase of property and equipment (576) (509)

Net cash used in investing activity (576) (509)

6

Condensed statements of cash flows for the period ended

30 June 2020 (continued) - unaudited

6 months 6 months

period period

ended ended

30.06.2020 30.06.2019

RM’000 RM’000

Net decrease in cash and cash equivalents (23,898) (65,306)

Cash and cash equivalents at 1 January 89,961 192,000

Cash and cash equivalents at 30 June 66,063 126,694


Company No. 201701032316 (1246486-D)

7

Syarikat Takaful Malaysia Am Berhad(Company no. 201701032316 (1246486-D))


Notes to the condensed interim financial statements

1. Basis of preparation

(a) Statement of compliance

• Amendments to MFRS 9, Financial Instruments, MFRS 139, Financial Instruments:

Recognition and Measurement and MFRS 7, Financial Instruments: Disclosures

– Interest Rate Benchmark Reform

• Amendments to MFRS 3, Business Combination – Definition of a Business

• Amendments to MFRS 101, Presentation of Financial Statements and MFRS 108,

Accounting Policies, Changes in Accounting Estimates and Errors – Definition of Material

A Takaful Operator is required to present consolidated financial statements for itself and the

Takaful fund it manages and controls in accordance with the requirements of MFRS 10,

Consolidated Financial Statements. The statement of financial position and the statement of

profit or loss and other comprehensive income of the Takaful Operator and General Takaful

Fund are supplementary financial information presented in accordance with the requirements

of BNM and Islamic Financial Services Act 2013 in Malaysia to segregate assets, liabilities,

income and expenses of Takaful funds from its own. The statement of financial position and

the statement of profit or loss and other comprehensive income of the Takaful Operator

include only assets, liabilities, income and expenses of the Takaful Operator, excluding the

Takaful fund managed by it. The statement of financial position and the statement ofprofit or

loss and other comprehensive income of the General Takaful Fund include only the assets,

liabilities, income and expenses of the General Takaful Fund that is set up, managed and

controlled by the Takaful Operator.

The condensed interim financial statements of the Company are unaudited and have been

prepared in accordance with MFRS 134: Interim Financial Reporting issued by the

Malaysian Accounting Standard Board ("MASB"), IAS 34 Interim Financial Reporting

issued by International Accounting Standards Board and Guidelines / Circulars issued by

Bank Negara Malaysia (“BNM”) and Shariah rulings and precepts. They do not include all

of the information required for full annual financial statements, and should be read in

conjunction with the Company’s annual financial statements for the year ended 31 December

2019.

MFRSs, Interpretations and amendments effective for annual periods beginning on or

after 1 January 2020

The accounting policies and presentation adopted by the Company for the condensed interim

financial statements are consistent with those adopted in the Company's audited financial

statements for the financial year ended 31 December 2019, except for the adoption of the

following:

8

1. Basis of preparation (continued)

(a) Statement of compliance (continued)

2. Other investments30.06.2020 31.12.2019

Note RM’000 RM’000

Takaful Operator

Fair value through profit or loss ("FVTPL") (a) 16,959 16,856

Fair value through other comprehensive income ("FVOCI") (b) 122,385 124,713

139,344 141,569

General Takaful



367,426 371,947

Company



506,770 513,516

MFRSs, Interpretations and amendments effective for annual periods beginning on or after

1 January 2020 (continued)

The initial application of the abovementioned standards, amendments and interpretations do not

have any material impacts to the financial statements of the Company.

Company No. 201701032316 (1246486-D)

9

2. Other investments (continued)

(a) FVTPL financial assets

30.06.2020 31.12.2019

At fair value RM’000 RM’000

Takaful Operator

Islamic debt securities

- Unquoted in Malaysia 16,959 16,856

16,959 16,856

General Takaful



5,058 15,199

Company



22,017 32,055

Company No. 201701032316 (1246486-D)

10


(b) FVOCI financial assets

30.06.2020 31.12.2019

At fair value RM’000 RM’000

Takaful Operator



Institutional Trust Account 22,645 22,090

Malaysian Government Islamic papers 11,444 11,087

122,385 124,713

General Takaful





362,368 356,748

Company





484,753 481,461

Company No. 201701032316 (1246486-D)

11


(c) Carrying values of financial instruments

FVTPL FVOCI Company

RM’000 RM’000 RM’000

At 1 January 2019 52,956 483,143 536,099

Purchases 27,738 78,198 105,936

Maturities (49,200) (26,600) (75,800)

Disposals (1,272) (75,361) (76,633)

Dividend capitalised - 3,437 3,437

Fair value gains recorded in:

Profit or loss 1,904 - 1,904

Other comprehensive income - 6,089 6,089

Participants’ fund - 13,728 13,728

Amortisation of premiums,

net of accretion of discounts (71) (1,173) (1,244)

At 31 December 2019 / 1 January 2020 32,055 481,461 513,516

Maturities (10,000) (5,000) (15,000)

Disposals - (1,580) (1,580)

Dividend capitalised - 1,904 1,904

Fair value gains / (losses) recorded in:

Profit or loss (24) - (24)

Other comprehensive income - 2,220 2,220

Participants’ fund - 6,210 6,210

Amortisation of premiums,

net of accretion of discounts (14) (462) (476)

At 30 June 2020 22,017 484,753 506,770

(d) Fair values of financial instruments

Quoted market prices category are financial instruments that are measured in whole or in part by

reference to published quotes in an active market. A financial instrument is regarded as quoted

in an active market if quoted prices are readily and regularly available from an exchange and

published market price from print medias.

Market observable financial instruments are measured using a valuation technique based on

assumptions that are supported by prices from observable current market transactions and are

instruments for which pricing is obtained from Bond Pricing Agency Malaysia and regulatory

agency. The fair value of investments in structured products are obtained via investments

bankers and / or fund managers.

Company No. 201701032316 (1246486-D)

12


(d) Fair values of financial instruments (continued)

(e) Maturity of other investments

The following investments mature after 12 months:

30.06.2020 31.12.2019

RM’000 RM’000

Takaful Operator

FVTPL financial assets 16,959 16,856

FVOCI financial assets 105,922 114,650

General Takaful

FVTPL financial assets 5,058 -


Company

FVTPL financial assets 22,017 16,856


3. Retakaful assets30.06.2020 31.12.2019


General Takaful / Company

Claims liabilities 6(a) 364,251 295,638

Contribution liabilities 6(b) 90,812 90,634

455,063 386,272

Non-market observable inputs means that fair values are determined in whole or in part using a

valuation technique based on assumptions that are neither supported by prices from observable

current market transactions in the same instrument nor are they based on available market data.

The main asset class in this category is Institutional Trust Account.

Company No. 201701032316 (1246486-D)

13

4. Loans and receivables, excluding takaful receivables

30.06.2020 31.12.2019

RM’000 RM’000

Takaful Operator

Fixed and call deposits with licensed financial institutions

with maturity more than three months

Licensed banks in Malaysia 269,266 189,160

269,266 189,160

Other receivables

Investment receivable 5,278 3,345

Due from General Takaful 26,370 19,516

Prepayment 1,473 371

Sundry receivables 10,968 10,999

44,089 34,231

313,355 223,391

General Takaful

Financing receivables

Secured financing - 5,292

Allowance for impairment - (381)

- 4,911




422,889 343,347

Other receivables


Prepayment 23 37

Sundry deposits 1,217 1,130

Sundry receivables 225 116

Due from immediate holding company - 1,685

11,087 10,508

433,976 358,766

Company No. 201701032316 (1246486-D)

14

4. Loans and receivables, excluding takaful receivables (continued)

30.06.2020 31.12.2019

RM’000 RM’000

Company

Financing receivables

Secured financing - 5,292

Allowance for impairment - (381)

- 4,911




692,155 532,507

Other receivables


Prepayment 1,496 408

Sundry deposits 1,217 1,130

Sundry receivables 11,193 11,115

Due from immediate holding company - 1,685

28,806 25,223

720,961 562,641

The following loans and receivables, excluding takaful receivables mature after 12 months:

30.06.2020 31.12.2019

RM’000 RM’000

General Takaful

Fixed and call deposits with licensed financial institutions 12,245 -

Other receivables 1,217 1,130

13,462 1,130

Company

Fixed and call deposits with licensed financial institutions 12,245 -

Other receivables 1,217 1,130

13,462 1,130

Offsetting of financial assets and financial liabilities

Company No. 201701032316 (1246486-D)

No financial assets and liabilities have been set off for presentation purposes.

15

5. Cash and cash equivalents30.06.2020 31.12.2019

RM’000 RM’000

Takaful Operator

Cash and bank balances 2,737 3,094

Fixed and call deposits with licensed financial

institutions with maturity less than three months


23,174 37,427

General Takaful





42,889 52,534

Company





66,063 89,961

6. Takaful contract liabilities

The takaful contract liabilities comprise the following:

30.06.2020 31.12.2019



Provision for outstanding claims (a) 614,092 530,724

Provision for unearned contributions (b) 411,580 394,340

Participants’ fund (c) 199,381 190,051

1,225,053 1,115,115

Company No. 201701032316 (1246486-D)

16

6. Takaful contract liabilities (continued)

(a) Provision for outstanding claims

Gross Retakaful Net Gross Retakaful Net



Provision for claims reported by participants 343,006 (228,635) 114,371 302,067 (190,182) 111,885

Provision for IBNR 271,086 (135,616) 135,470 228,657 (105,456) 123,201

Provision for outstanding claims 614,092 (364,251) 249,841 530,724 (295,638) 235,086

Movement of provision for outstanding claims:

At 1 January 9 530,724 (295,638) 235,086 467,984 (258,030) 209,954

Claims incurred during the period 161,726 (94,388) 67,338 378,916 (192,966) 185,950

Adjustment to claims incurred in prior

accident years (15,019) 15,848 829 (25,540) 27,126 1,586

Claims paid during the period 9 (105,768) 40,087 (65,681) (318,603) 141,496 (177,107)

Movement in IBNR 42,429 (30,160) 12,269 27,967 (13,264) 14,703

At 30 June / 31 December 9 614,092 (364,251) 249,841 530,724 (295,638) 235,086

Company No. 201701032316 (1246486-D)

17


(b) Provision for unearned contributions


RM’000 RM’000 RM’000 RM’000 RM’000 RM’000


Provision for unearned contributions 411,580 (90,812) 320,768 394,340 (90,634) 303,706

Movement of provision for unearned contributions:

At 1 January 394,340 (90,634) 303,706 376,971 (76,884) 300,087

Contributions written during the period 8 382,031 (150,502) 231,529 723,567 (290,365) 433,202

Contributions earned during the period 8 (364,791) 150,324 (214,467) (706,198) 276,615 (429,583)

At 30 June / 31 December 411,580 (90,812) 320,768 394,340 (90,634) 303,706

(c) Participants’ fund


RM’000 RM’000 RM’000 RM’000 RM’000 RM’000


Unallocated surplus / accumulated surplus 177,075 - 177,075 173,962 - 173,962

Fair value reserves 22,306 - 22,306 16,089 - 16,089

199,381 - 199,381 190,051 - 190,051

Company No. 201701032316 (1246486-D)

18


(c) Participants’ fund (continued)

The participants’ fund movements are analysed as follows:


RM’000 RM’000 RM’000 RM’000 RM’000 RM’000


At 1 January 190,051 - 190,051 171,129 - 171,129

Net earned contributions 214,467 - 214,467 429,583 - 429,583

Investment income on financial assets not

measured at FVTPL 15,399 15,399 29,341 - 29,341

Investment income - others 537 - 537 1,882 - 1,882

Realised gains and losses - - - 2,697 - 2,697

Fair value gains and losses (127) - (127) 791 - 791

Reversal of impairment losses on financial instruments - - 642 - 642

Other operating income 96 - 96 224 - 224

Net benefits and claims (80,436) - (80,436) (202,239) - (202,239)

Fees deducted (net) (119,645) - (119,645) (245,632) - (245,632)

Other operating expenses (398) - (398) (44) - (44)

Profit paid to participants (4,541) - (4,541) (7,802) - (7,802)

Profit attributable to the Takaful Operator (23,025) - (23,025) - - -

Net change in fair value on debt investments at FVOCI 6,218 - 6,218 13,831 - 13,831

Tax expense 1,327 - 1,327 (3,329) - (3,329)

Withholding tax paid (542) - (542) (1,023) - (1,023)

At 30 June / 31 December 199,381 - 199,381 190,051 - 190,051

Company No. 201701032316 (1246486-D)

19

7. Operating revenue

30.06.2020 30.06.2019


Takaful Operator

Investment income on financial assets not measured at FVTPL 7,252 5,651

Investment income - others 475 530

7,727 6,181

General Takaful

Gross contributions 8 382,031 367,889


Investment income - others 537 1,153

397,967 383,593

Company

Gross contributions 8 382,031 367,889


Investment income - others 1,012 1,683

405,694 389,774

8. Net earned contributions

30.06.2020 30.06.2019



(i) Gross contributions 6(b),7 382,031 367,889

Change in unearned contributions reserves (17,240) 2,553

Gross earned contributions 6(b) 364,791 370,442

(ii) Retakaful 6(b) (150,502) (128,462)

Change in unearned contributions reserves 178 (9,924)

Contributions ceded to retakaful 6(b) (150,324) (138,386)

(iii) Net earned contributions 214,467 232,056

Company No. 201701032316 (1246486-D)

6 months period ended


20

9. Net benefits and claims

30.06.2020 30.06.2019



Gross benefits / claims paid 6(a) (105,768) (147,807)

Retakaful recoveries 6(a) 40,087 62,541

Net benefits / claims paid (65,681) (85,266)

Gross change in contract liabilities:

At 30 June 6(a) (614,092) (501,477)

Less:

At 1 January 6(a) (530,724) (467,984)

(83,368) (33,493)

Change in contract liabilities

ceded to retakaful companies:

At 30 June 6(a) 364,251 278,490

Less:

At 1 January 6(a) 295,638 258,030

68,613 20,460

(80,436) (98,299)

Company No. 201701032316 (1246486-D)


21

10. Tax expense

30.06.2020 30.06.2019

Takaful Operator / Company RM’000 RM’000

Recognised in profit or loss

Current tax expense

Current year 21,821 18,639

Deferred tax benefits

Deferred tax recognised in profit or loss (1,162) (3,652)

Total tax expense 20,659 14,987

Reconciliation of tax expense

Profit before zakat and taxation 81,716 61,358

Income tax using Malaysian tax rate of 24% 19,612 14,726

Items not subject to tax (247) (2,365)

Non-deductible expenses 1,294 2,626

Tax expense 20,659 14,987

Recognised directly in equity

Deferred tax

FVOCI financial assets 533 1,174

Company No. 201701032316 (1246486-D)


22

11. Financial instruments

11.1 Fair value information

Fair value of financial instruments Fair value of financial instruments Total Carrying

carried at fair value not carried at fair value fair value amount

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

30 June 2020 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Takaful Operator

Financial assets

Institutional Trust

Account - - 22,645 22,645 - - - - 22,645 22,645

Islamic debt securities - 105,255 - 105,255 - - - - 105,255 105,255

Malaysian Government

Islamic papers - 11,444 - 11,444 - - - - 11,444 11,444

- 116,699 22,645 139,344 - - - - 139,344 139,344

The table below analyses financial instruments carried at fair value and those not carried at fair value for which fair value is disclosed, together with their

fair values and carrying amounts shown in the statement of financial position.

Company No. 201701032316 (1246486-D)

23

11. Financial instruments (continued)

11.1 Fair value information (continued)





General Takaful

Financial assets

Institutional Trust

Account - - 58,393 58,393 - - - - 58,393 58,393



Islamic papers - 5,757 - 5,757 - - - - 5,757 5,757

- 309,033 58,393 367,426 - - - - 367,426 367,426

Company No. 201701032316 (1246486-D)

24







Company

Financial assets

Institutional Trust

Account - - 81,038 81,038 - - - - 81,038 81,038



Islamic papers - 17,201 - 17,201 - - - - 17,201 17,201

- 425,732 81,038 506,770 - - - - 506,770 506,770

Company No. 201701032316 (1246486-D)

25


11.1 Fair value information




31 December 2019 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Takaful Operator

Financial assets

Institutional Trust

Account - - 22,090 22,090 - - - - 22,090 22,090



Islamic papers - 11,087 - 11,087 - - - - 11,087 11,087

- 119,479 22,090 141,569 - - - - 141,569 141,569

The table below analyses financial instruments carried at fair value and those not carried at fair value for which fair value is disclosed, together with

their fair values and carrying amounts shown in the statement of financial position.

Company No. 201701032316 (1246486-D)

26







General Takaful

Financial assets

Institutional Trust

Account - - 57,053 57,053 - - - - 57,053 57,053



Islamic papers - 5,521 - 5,521 - - - - 5,521 5,521

- 314,894 57,053 371,947 - - - - 371,947 371,947

Company No. 201701032316 (1246486-D)

27







Company

Financial assets

Institutional Trust

Account - - 79,143 79,143 - - - - 79,143 79,143



Islamic papers - 16,608 - 16,608 - - - - 16,608 16,608

- 434,373 79,143 513,516 - - - - 513,516 513,516

Company No. 201701032316 (1246486-D)

28



Policy on transfer between levels

Level 1 fair value

Level 2 fair value

Non-derivative financial liabilities

Transfer between Level 1 and 2 fair values

Level 3 fair value

Level 1 fair value is derived from quoted price (unadjusted) in active markets for identical

financial assets or liabilities that the entity can access at the measurement date.

Level 2 fair value is estimated using inputs other than quoted prices included within Level 1

that are observable for the identical financial assets or liabilities, either directly or indirectly.

There has been no transfer between Level 1 and 2 fair values during the financial period.

(31.12.2019 : No transfer in either direction).

Fair value, which is determined for disclosure purposes, is calculated based on the present

value of future principal and profit cash flows, discounted at the market rate of profit at the

end of the reporting period.

The fair value of an asset to be transferred between levels is determined as of the date of the

event or change in circumstances that caused the transfer.

Level 3 fair value is estimated using unobservable inputs for the financial assets and

liabilities.

Company No. 201701032316 (1246486-D)

29



Level 3 fair value (continued)

30.06.2020 31.12.2019

Institutional Trust Account RM’000 RM’000

Takaful Operator

Balance at 1 January 22,090 -

Addition - 21,000

Gains and losses recognised in profit or loss

Investment income - realised 539 681

Gains and losses recognised in other comprehensive income

Net change in fair value (unrealised) 16 409

Balance at 30 June / 31 December 22,645 22,090

General Takaful

Balance at 1 January 57,053 42,603

Addition - 12,000


Investment income - realised 1,364 2,397


Net change in fair value (unrealised) (24) 53


Company

Balance at 1 January 79,143 42,603

Addition - 33,000


Investment income - realised 1,903 3,078


Net change in fair value (unrealised) (8) 462


The following table shows a reconciliation of Level 3 fair values:

Company No. 201701032316 (1246486-D)

30



Level 3 fair value (continued)

Financial instruments carried at fair value

Inter-relationship

Significant between significant

unobservable unobservable inputs and

Type Valuation technique inputs fair value measurement

Institutional Trust Discounted cash flows Discount rate The estimated fair value

Account using market interest of 4.58% would increase (decrease)

rates for a similar if the discount rate were

instrument at the (lower) higher.

measurement date.

Sensitivity analysis for Level 3

Impact on Impact on Impact on

Change in profit Impact on operating participants’

variables after tax equity* surplus fund

RM’000 RM’000 RM’000 RM’000

30 June 2020

Takaful Operator

Discount rate +1% - (597) - -

Discount rate -1% - 624 - -

General Takaful

Discount rate +1% - - (810) (810)

Discount rate -1% - - 842 842

Company

Discount rate +1% - (597) (810) (810)

Discount rate -1% - 624 842 842

* impact on equity reflects adjustments for tax, when applicable.

The following table shows the valuation technique used in the determination of fair values

within Level 3, as well as the key unobservable inputs used in the valuation models.

Company No. 201701032316 (1246486-D)

31



Sensitivity analysis for Level 3 (continued)

Impact on Impact on Impact on

Change in profit Impact on operating participants’

variables after tax equity* surplus fund

RM’000 RM’000 RM’000 RM’000

31 December 2019

Takaful Operator

Discount rate +1% - (659) - -

Discount rate -1% - 692 - -

General Takaful

Discount rate +1% - - (1,057) (1,057)

Discount rate -1% - - 1,100 1,100

Company

Discount rate +1% - (659) (1,057) (1,057)

Discount rate -1% - 692 1,100 1,100

* impact on equity reflects adjustments for tax, when applicable.

Valuation processes applied by the Company for Level 3 fair value

The Company has an established control framework in respect to the measurement of fair

values of financial instruments. This includes a valuation team that has overall responsibility

for overseeing all significant fair value measurements, including Level 3 fair values, which

reports directly to the Chief Investment Officer and Chief Financial Officer. The valuation

team regularly reviews significant unobservable inputs and valuation adjustments.

Company No. 201701032316 (1246486-D)

32

12. Regulatory capital requirements

30.06.2020 31.12.2019

RM’000 RM’000

Tier 1 capital 411,271 347,960

Tier 2 capital 29,539 21,634

Amount deducted from capital (38,415) (37,790)

Total capital available 402,395 331,804

Company No. 201701032316 (1246486-D)

The Company’s capital management policy is to optimise the efficient and effective use of

resources to maximise the return on equity and provide an appropriate level of capital to protect

participants and meet regulatory requirements.

The Company is required to comply with the regulatory capital requirement prescribed in the Risk

Based Capital for Takaful (RBCT) Framework issued by Bank Negara Malaysia where Takaful

operators are required to satisfy a minimum capital adequacy ratio of 130%. As at period end, the

Company has a capital adequacy ratio in excess of the minimum requirement.

The capital structure of the Company as at 30 June 2020, as prescribed under the RBCT

Framework is provided below:

Documents

Syarikat Takaful Malaysia Am Berhad...Syarikat Takaful Malaysia Am Berhad 2 (Company no. 201701032316 (1246486-D)) (Incorporated in Malaysia) Condensed statement of profit or loss