2020 annual report - ktaxa.cdn.axa-contento-118412.eu

2020Annual

Report

One AXA

Courage

Integrity

Customer First

4 Core Values

2 Krungthai-AXA Life Annual Report 2020

Contents

4 Core Values 2Contents 3Awards 4Message from the Chairman 6Company’s Information 7Registered Shareholders 7Corperate Governance 8Composition of the Board of Directors 9KTAXA Executive & Management Committee 10Independent Auditor’s Report 11 Statutory Financial Statement 12

3Krungthai-AXA Life Annual Report 2020

Awards

Brand & Digital

Prime Minister Insurance Award• Outstanding Development

Insurance Asia Awards • Marketing initiative of the Year • Digital Initiative of the Year

International Finance Awards• Most Innovative Marketing Campaign in the Sector – Know You Can Insurance Asia News Award: Awards for Excellence• Digital Insurer of the Year

Corporate Responsibility & Diversity

The Global Good Governance Awards• Best CSR Initiatives• 3G Diversity

The Global Economics Award • Best CSR Insurance Company in Thailand

International Business Magazine Award• Best CSR Initiative Thailand


Service & Health

International Finance Awards• Best Customer Service Life Insurance

The Global Economics Award• Most Customer-Centric Life Insurance Company

International Business Magazine Award• Health Insurance Provider Thailand

Insurance Asia News: Awards for Excellence • Health Insurance of the Year

Google Cloud• G Suit Customer Appreciation Award

Business+ Product of the Year • Saving Insurance• Health Service

HR

Kincentric• Thailand Best Employer

HR Asia• Best Company to Work for in Asia

The Asia Corporate Excellence & Sustainability Awards • Top Workplace in Asia

LOMA• LOMA Excellent in Education Award (EIE)• LOMA Educational Achievement Award (EAA)

People with Disability Employment Award

5Krungthai-AXA Life Annual Report 2020 5

While 2020 was certainly challenging in many ways, it also showed how strong we are as a company – even in the toughest of times.

Despite such challenging circumstances, I am proud of our collective efforts in executing our strategies and delivering results. Throughout 2020, we continued to invest in future growth by further improving our services to customers, especially in digital Health & Protection. Through the launch of Telehealth, our customers can now access expert medical care online and also avail of our prescription delivery service from the comfort of their own homes. Furthermore, KTAXA expanded its Care Coordination program to provide clients with a more effective and cost-efficient health service and to help improve their overall wellbeing.

KTAXA’s commitment to its customer-first approach is reflected in its number one customer NPS score in the market, and winning over 20 award programmes, including ‘Health Insurance Service of the Year’ at the Business+ Magazine 2020 awards, ‘Best Customer Service Life Insurance Company’ at the International Finance Awards 2020, ‘Best CSR Insurance Company’ at Global Business Outlook Awards 2020 and ‘Thailand Best Employers 2020’ from Kincentric.

The role of KTAXA is not restricted to just our relationship with our clients. It goes further to our effective participation in numerous climate change projects and our active contribution to local communities and philanthropic activities. KTAXA as Green Insurer has strong moral compass and commitment to the environment has also helped launch an ambitious ‘Go Green’ climate change strategy that aims to support a more sustainable company and cleaner environment by 2022.

Finally, I’d like to thank our over 2 million customers for their trust and continued loyalty. I must also thank our Shareholder, Shareholder’s team, Chief Executive, and all our executive management teams. In a year filled with challenge it is a testament to their professionalism, their resilience and commitment that KTAXA has adapted and achieved so much, always focused on our core purpose ‘to act for human progress by protecting what matters. I know their positive attitude and commitment will continue to ensure the company’s growth and success through 2021 and beyond.

Message from the Chairman

Mr. Somchai BoonnamsiriChairman of Krungthai-AXA Life Insurance Public Company Limited


Company Name Krungthai-AXA Life Insurance Public Company Limited

Registrar No. 0107555000376

Address 9, G Tower Grand Rama 9 Floor 1,20-27, Rama 9 Road, Huai Khwang, Huai Khwang, Bangkok 10310

Contact Tel. 0-2044-4000 Fax 0-244-4032

Business Type Life Insurance

Establishment Date 12 June 1997

Registered Capital 1,355,000,000 Baht

The Paid-up Capital 1,355,000,000 Baht

Type of Share Ordinary share

Par Value 10 Baht per share

Registered Shareholders as at 31 March 2020

Name of Registered Shareholders No. of Shares %of Shares Held

1. Krung Thai Bank Public Company Limited 67,750,000 50%

2. National Mutual International Pty. Ltd. 60,974,996 45%

3. Tri Rattana Chart Company Limited 6,774,999 5%

4. Mr. Phisud Dejakaisaya 2 0%

5. Mr. Puangsan Xumsai Na Ayudhya 1 0%

6. Mr. Somkid Arayaskul 1 0%

7. Mr. Anuwat Kosol 1 0%

Company’s Information


Number of directors Gender gap pay

Nationality Diversity Directors’ average age

4 nationalities are represented on the Board

4 50.92

Years old

13 0/0Male and female members

received the equal pay

Corperate Governance

Board Diversity


Name and Nationality Position within the Board of Directors Directors’ fee paid for 2020

Bonus for 2020

First appointment/Term of office

Mr. Somchai BoonnamsiriThai Nationality

• Chairman of the Board of Directors• Chairman of the Audit and Compliance

Committee• Chairman of the Nomination and Remuneration

Committee

740,000 142,200 April 2019 Annual General Meeting/ 2022 Annual General Meeting

Ms. Ratchada PiyatassikulThai Nationality

• Director of the Board of Directors• Member of the Risk Management Committee


Mr. Rawin BoonyanusasnaThai Nationality

• Director of the Board of Directors• Chairman of the Investment Committee

420,000 150,100 April 2017 Annual General Meeting/2023 Annual General Meeting

Mr. Pichit JongsaliswangThai Nationality

• Director of the Board of Directors 140,000 - March 2020 Board of Directors Meeting / 2022 Annual General Meeting

Professor Dr Kriengsak ChareonwongsakThai Nationality

• Director of the Board of Directors• Chairman of the Risk Management Committee• Member of the Audit and Compliance

Committee• Member of the Investment Committee• Member of the Nomination and Remuneration

Committee


Ms. Wimol ChatameenaThai Nationality

• Director of the Board of Directors 200,000 - January 2020 Board of Directors Meeting / 2022 Annual General Meeting

Mr. Akarat Na RanongThai Nationality

• Director of the Board of Directors• Member of the Investment Committee• Member of the Nomination and Remuneration

Committee


Mrs. Sally Joy O’Hara*Australian Nationality

• Director of the Board of Directors• Member of the Risk Management Committee

- - April 2019 Annual General Meeting/ 2022 Annual General Meeting

Ms. Bubphawadee Owararinth*Thai Nationality

• Director of the Board of Directors - - February 2018 Board of Directors Meeting /2023 Annual General Meeting

Mr. Laurent Julien Cholvy*French Nationality

• Director of the Board of Directors• Member of the Risk Management Committee• Member of the Investment Committee

- - July 2019 Board of Directors Meeting / 2021 Annual General Meeting

Mrs. Sen Hang Cindy Tong*Canadian Nationality

• Director of the Board of Directors• Member of the Audit and Compliance

Committee• Member of the Nomination and Remuneration

Committee

- - February 2018 Board of Directors Meeting /2023 Annual General Meeting/

Mr. Sirote SwasdipanichThai Nationality

• Chairman of the Board of Directors• Chairman of the Audit and Compliance

Committee• Chairman of the Nomination and Remuneration

Committee

- 165,900 Retire by rotation in 2019 Annual General Meeting

Mr. Chainarong Eursithichai*Thai Nationality

• Director of the Board of Directors - - Resigned on 24 January 2020

Mr. Chanvit RungruangladaThai Nationality

• Director of the Board of Directors 60,000 47,400 Resigned on 24 March 2020

Mr. Chinavais SarasasThai Nationality

• Director of the Board of Directors 90,000 47,400 Retire by rotation in 2020 Annual General Meeting

* The Company has no policy to pay the remuneration of directors to the directors who are employees of the Company or AXA group.

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To the Shareholders of Krungthai-AXA Life Insurance Public Company Limited

My opinionIn my opinion, the financial statements present fairly, in all material respects, the financial position of Krungthai-AXA Life Insurance Public Company Limited (the “Company”) as at 31 December 2020, and its financial performance and its cash flows for the year then ended in accordance with Thai Financial Reporting Standards (“TFRS”).

What I have auditedThe Company’s financial statements comprise:

• the statement of financial position as at 31 December 2020;• the statement of comprehensive income for the year then ended;• the statement of changes in equity for the year then ended;• the statement of cash flows for the year then ended; and• the notes to the financial statements, which include significant

accounting policies and other explanatory information.

Basis for opinion

I conducted my audit in accordance with Thai Standards on Auditing (TSAs). My responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of my report. I am independent of the Company in accordance with the Code of Ethics for Professional Accountants issued by the Federation of Accounting Professions together with the ethical requirements that are relevant to my audit of the financial statements, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Responsibilities of management for the financial statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with TFRS, 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 usingthe 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.

The audit committee assists the management in discharging their responsibilities for overseeing the Company’s financial reporting process.

Auditor’s responsibilities for the audit of the financial statements My 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 my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with TSAs 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 TSAs, I exercise professional judgment and maintain professional scepticism throughout the audit. I 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 my 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 I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my 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.

I communicate with the audit committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

I also provide the audit committee with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards.

PricewaterhouseCoopers ABAS Ltd.

Anothai LeekitwattanaCertified Public Accountant (Thailand) No. 3442Bangkok3 March 2021

Independent Auditor’s Report


KRUNGTHAI-AXA LIFE INSURANCE PUBLIC COMPANY LIMITED

STATUTORY FINANCIAL STATEMENTS31 DECEMBER 2020

Krungthai-AXA Life Insurance Public Company Limited Statement of Financial PositionAs at 31 December 2020

2020 2019Notes Thousand Baht Thousand Baht

Assets

Cash and cash equivalents 9, 33 3,669,030 3,866,059Premium receivable 10 1,585,630 1,654,581Accrued investment income 33 1,584,571 1,900,651Amounts due from reinsurance 11 109,600 141,811Derivative assets 12 3,124,560 4,403,329Investments

Investments in securities 13, 33, 34 304,951,619 297,329,292Loans and accrued interest receivables 14 13,974,164 12,693,240

Assets held to cover linked liabilities 15 10,827,714 10,281,684Leasehold improvements and equipment 16 332,938 341,487Right-of-use assets 17 640,348 -Intangible assets 18 319,656 382,629Agency security fund 870,408 790,469Accounts receivable - Investments 111,073 153,932Other assets 19, 33 148,912 212,795

Total assets 342,250,223 334,151,959

………………………..………………………………………… Directors

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


Krungthai-AXA Life Insurance Public Company Limited Statement of Financial PositionAs at 31 December 2020


Assets

Cash and cash equivalents 9, 33 3,669,030 3,866,059Premium receivable 10 1,585,630 1,654,581Accrued investment income 33 1,584,571 1,900,651Amounts due from reinsurance 11 109,600 141,811Derivative assets 12 3,124,560 4,403,329Investments

Investments in securities 13, 33, 34 304,951,619 297,329,292Loans and accrued interest receivables 14 13,974,164 12,693,240

Assets held to cover linked liabilities 15 10,827,714 10,281,684Leasehold improvements and equipment 16 332,938 341,487Right-of-use assets 17 640,348 -Intangible assets 18 319,656 382,629Agency security fund 870,408 790,469Accounts receivable - Investments 111,073 153,932Other assets 19, 33 148,912 212,795

Total assets 342,250,223 334,151,959

………………………..………………………………………… Directors



Krungthai-AXA Life Insurance Public Company Limited Statement of Financial Position (Cont’d)As at 31 December 2020


Liabilities and equity

Liabilities

Insurance contract liabilities 20 269,338,052 255,621,493Investment contract liabilities 21 10,833,090 10,289,230Amount due to reinsurance 22, 33 203,367 186,629Derivative liabilities 12 529,550 182,364Income tax payable 71,954 4,057Employee benefits obligation 23 181,963 139,237Deferred tax liabilities 24 6,824,689 8,348,724Lease liabilities 25 697,743 -Agency security fund 870,408 790,469Accrued expenses 33 2,098,557 2,281,542Accounts payable - Investments 90,541 300,587Other liabilities 26, 33 2,877,193 4,682,028

Total liabilities 294,617,107 282,826,360

Equity

Share capitalRegistered

135,500,000 ordinary shares of Baht 10 per share 1,355,000 1,355,000

Issued and fully paid-up135,500,000 ordinary shares of

Baht 10 per share 1,355,000 1,355,000Retained earnings

Appropriated - legal reserve 135,500 135,500Unappropriated 18,883,313 17,340,389

27,259,303 32,494,710

Total equity 47,633,116 51,325,599

Total liabilities and equity 342,250,223 334,151,959


Other component of equity

Krungthai-AXA Life Insurance Public Company Limited Statement of Comprehensive IncomeFor the year ended 31 December 2020


Revenues

Gross written premium 53,103,546 58,105,092Less Ceded premium 33 (314,148) (319,593)

Net written premium 52,789,398 57,785,499(Less) Net change in unearned premium reserve (309,163) (240,213)

Net earned premium 52,480,235 57,545,286Fee and commission income 33 353,112 340,041Investment income 33 10,078,705 9,748,955Gains on investments 2,180,602 1,531,659Fair value losses (220,220) (90,817)Other income 47,979 56,933

Total revenues 64,920,413 69,132,057

Expenses

Change in long-term technical reserve 13,481,247 20,304,634Gross benefits and claims paid 37,782,600 34,045,149

33 (170,662) (354,123)

Net benefits and claims paid 37,611,938 33,691,026Commissions and brokerages 7,092,315 8,262,519Other underwriting expenses 510,567 708,284Operating expenses 28, 33 3,989,939 3,736,973Finance cost 25 22,034 -Expected credit loss 36 132,405 -Other expenses 1,477 543

Total expenses 62,841,922 66,703,979

Profit before income tax 2,078,491 2,428,078Income tax expense 30 360,149 546,952

Net profit 1,718,342 1,881,126


(Less) Benefits and claims paid recovered from reinsurers


Krungthai-AXA Life Insurance Public Company Limited Statement of Financial Position (Cont’d)As at 31 December 2020



Liabilities

Insurance contract liabilities 20 269,338,052 255,621,493Investment contract liabilities 21 10,833,090 10,289,230Amount due to reinsurance 22, 33 203,367 186,629Derivative liabilities 12 529,550 182,364Income tax payable 71,954 4,057Employee benefits obligation 23 181,963 139,237Deferred tax liabilities 24 6,824,689 8,348,724Lease liabilities 25 697,743 -Agency security fund 870,408 790,469Accrued expenses 33 2,098,557 2,281,542Accounts payable - Investments 90,541 300,587Other liabilities 26, 33 2,877,193 4,682,028

Total liabilities 294,617,107 282,826,360

Equity

Share capitalRegistered

135,500,000 ordinary shares of Baht 10 per share 1,355,000 1,355,000

Issued and fully paid-up135,500,000 ordinary shares of

Baht 10 per share 1,355,000 1,355,000Retained earnings

Appropriated - legal reserve 135,500 135,500Unappropriated 18,883,313 17,340,389

27,259,303 32,494,710

Total equity 47,633,116 51,325,599

Total liabilities and equity 342,250,223 334,151,959


Other component of equity

Krungthai-AXA Life Insurance Public Company Limited Statement of Comprehensive IncomeFor the year ended 31 December 2020


Revenues

Gross written premium 53,103,546 58,105,092Less Ceded premium 33 (314,148) (319,593)

Net written premium 52,789,398 57,785,499(Less) Net change in unearned premium reserve (309,163) (240,213)

Net earned premium 52,480,235 57,545,286Fee and commission income 33 353,112 340,041Investment income 33 10,078,705 9,748,955Gains on investments 2,180,602 1,531,659Fair value losses (220,220) (90,817)Other income 47,979 56,933

Total revenues 64,920,413 69,132,057

Expenses

Change in long-term technical reserve 13,481,247 20,304,634Gross benefits and claims paid 37,782,600 34,045,149

33 (170,662) (354,123)

Net benefits and claims paid 37,611,938 33,691,026Commissions and brokerages 7,092,315 8,262,519Other underwriting expenses 510,567 708,284Operating expenses 28, 33 3,989,939 3,736,973Finance cost 25 22,034 -Expected credit loss 36 132,405 -Other expenses 1,477 543

Total expenses 62,841,922 66,703,979

Profit before income tax 2,078,491 2,428,078Income tax expense 30 360,149 546,952

Net profit 1,718,342 1,881,126


(Less) Benefits and claims paid recovered from reinsurers


Krungthai-AXA Life Insurance Public Company Limited Statement of Comprehensive Income (Cont’d)For the year ended 31 December 2020

2020 2019Note Thousand Baht Thousand Baht

Other comprehensive income (loss)Items that will be reclassified subsequently to profit or lossGains (losses) from change in value of investments measured at fair value through other comprehensive income (3,356,118) 31,853,139Gains (losses) on cash flow hedges (1,206,189) 1,676,051Losses on deferred cost of hedging (128,177) -Items in other comprehensive income transferred

to profit or loss (2,060,864) (1,531,659)Income tax on item that will be reclassified subsequently

to profit or loss 1,350,270 (6,399,506)

Total items that will be reclassified subsequentlyto profit or loss (5,401,078) 25,598,025

Items that will not be reclassified subsequently to profit or lossActuarial loss on employee benefits obligation (16,772) (10,793)Income tax on item that will not be reclassified subsequently

to profit or loss 7,025 -

Total items that will not be reclassified subsequentlyto profit or loss (9,747) (10,793)

Other comprehensive income (loss) for the year, net of tax (5,410,825) 25,587,232

Total comprehensive income (loss) for the year (3,692,483) 27,468,358

Basic earnings per share (Baht) 32

Basic earning per share 12.68 13.88


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Krungthai-AXA Life Insurance Public Company LimitedStatement of Cash FlowsFor the year ended 31 December 2020

2020 2019Thousand Baht Thousand Baht

Cash flows provided by (used in) operating activitiesWritten premium from direct insurance 52,600,677 57,828,625Cash received from investment contract liabilities 1,630,445 932,648Cash paid for investment contract liabilities (540,747) (569,461)Amount paid from reinsurance (333,433) (201,262)Interest income 9,085,260 9,088,473Dividend income 957,413 859,513Other income 69,719 108,941Gross benefits and claims paid from direct insurance (37,702,762) (33,040,661)Commissions and brokerages from direct insurance (7,337,109) (7,901,894)Other underwriting expenses (594,882) (708,284)Operating expenses (3,301,102) (3,512,499)Other expenses (1,475) (488)Income tax expense (458,993) (185,781)Cash received from sales investment in securities 118,057,633 127,337,625Cash paid to purchase investment in securities (131,224,115) (149,046,765)Loans (709,104) (977,079)Deposits at banks 223 249

Net cash provided by operating activities 197,648 11,900

Cash flows provided by (used in) investing activitiesCash inflows :

Leasehold improvements and equipment - 68

Net cash provided by investing activities - 68

Cash outflows :Leasehold improvements and equipment (138,041) (24,700)Computer software (93,026) (75,042)

Net cash used in investing activities (231,067) (99,742)

Net cash flows used in investing activities (231,067) (99,674)




Cash flows provided by (used in) financing activitiesCash outflows :

Cash paid for lease liabilities (163,610) -

Net cash used in financing activities (163,610) -


Net decrease in cash and cash equivalents (197,029) (87,774)Cash and cash equivalents at beginning of the year 3,866,059 3,953,833

Cash and cash equivalents at end of the year 3,669,030 3,866,059

Non-cash transactions

The Company had the significant non-cash transactions as follows:

Payable from purchase of leasehold improvementsand computer software 33,492 36,387





Cash flows provided by (used in) operating activitiesWritten premium from direct insurance 52,600,677 57,828,625Cash received from investment contract liabilities 1,630,445 932,648Cash paid for investment contract liabilities (540,747) (569,461)Amount paid from reinsurance (333,433) (201,262)Interest income 9,085,260 9,088,473Dividend income 957,413 859,513Other income 69,719 108,941Gross benefits and claims paid from direct insurance (37,702,762) (33,040,661)Commissions and brokerages from direct insurance (7,337,109) (7,901,894)Other underwriting expenses (594,882) (708,284)Operating expenses (3,301,102) (3,512,499)Other expenses (1,475) (488)Income tax expense (458,993) (185,781)Cash received from sales investment in securities 118,057,633 127,337,625Cash paid to purchase investment in securities (131,224,115) (149,046,765)Loans (709,104) (977,079)Deposits at banks 223 249

Net cash provided by operating activities 197,648 11,900

Cash flows provided by (used in) investing activitiesCash inflows :

Leasehold improvements and equipment - 68

Net cash provided by investing activities - 68

Cash outflows :Leasehold improvements and equipment (138,041) (24,700)Computer software (93,026) (75,042)

Net cash used in investing activities (231,067) (99,742)

Net cash flows used in investing activities (231,067) (99,674)




Cash flows provided by (used in) financing activitiesCash outflows :

Cash paid for lease liabilities (163,610) -



Net decrease in cash and cash equivalents (197,029) (87,774)Cash and cash equivalents at beginning of the year 3,866,059 3,953,833

Cash and cash equivalents at end of the year 3,669,030 3,866,059

Non-cash transactions

The Company had the significant non-cash transactions as follows:

Payable from purchase of leasehold improvementsand computer software 33,492 36,387



Krungthai-AXA Life Insurance Public Company LimitedNotes to Financial StatementsFor the year ended 31 December 2020

1 General information

Krungthai-AXA Life Insurance Public Company Limited (“the Company”) was registered as a limited company under the law of Thailand on 12 June 1997. The Company has changed to public company limited on 1 October 2012. The address of its registered office is as follows:

9, G Tower Grand Rama 9, Floor 1, 20-27, Rama 9 Road, Huai Khwang, Huai Khwang, Bangkok 10310.

The principal business operation of the Company is to provide life insurance including reinsurance services in Thailand.

The major shareholders of the Company are Krungthai Bank Public Company Limited and National Mutual International Pty. Ltd.

The financial statements have been approved by the Company’s management on 3 March 2021.

2 Basis of preparation

These financial statements are prepared in accordance with Thai Generally Accepted Accounting Principles under the Accounting Act B.E. 2543, being those Thai Financial Reporting Standards (TFRS) issued under the Accounting Profession Act B.E. 2547. In addition, the financial statements presentation are based on the formats of life insurance financial statements attached in an Office of Insurance Commission’s notification “Principle, methodology, condition and timing for preparation,submission and reporting of financial statements and operation performance for life insurance company (No.2) B.E. 2562” dated on 4 April 2019 (‘OIC Notification’).

The financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below.

The preparation of financial statements in conformity with Thai Generally Accepted Accounting Principles requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 8.

An English version of the financial statements has been prepared from the financial statements that are in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai language financial statements shall prevail.


3 New and amended financial reporting standards

3.1 New and amended financial reporting standards that are effective for accounting period beginning on or after 1 January 2020 and are relevant to the Company

a) Financial instruments

The new financial standards related to financial instruments are as follows

TAS 32 Financial instruments: PresentationTFRS 7 Financial instruments: DisclosuresTFRS 9 Financial instrumentsTFRIC 16 Hedges of a net investment in a foreign operationTFRIC 19 Extinguishing financial liabilities with equity instrumentsThe Accounting

GuidanceFinancial instruments and disclosures for insurance companies’

accounting guidance

The new financial reporting standards related to financial instruments and TFAC Accounting Guidance introduce new classification and measurement requirements for financial instruments as well as provide derecognition guidance on financial assets and financial liabilities. The new guidance also provides an option for the Company to apply hedge accounting to reduce accounting mismatch between hedged item and hedging instrument. In addition, the new rule provides detailed guidance on financial instruments issued by the Company whether it is a liability or an equity. Among other things, they require extensive disclosure on financial instruments and related risks.

The new classification requirements of financial assets under TFRS9 require the Company to assess both i) business model for holding the financial assets; and ii) cash flow characteristics of the asset whether the contractual cash flows represent solely payments of principal and interest (SPPI). The classification affects the financial assets’ measurement. The new standard requires assessment of impairment of financial assets as well as contract assets and recognition of expected credit loss from initial recognition.

On 1 January 2020, the Company passes criteria of temporarily exemption from TFRS 9 Financial Instruments and TFRS 7 Financial Instruments: Disclosures under TFRS 4 (revised 2018) Insurance Contracts. The Company is eligible to apply the Accounting Guidance in relation to financial instruments and disclosure for insurance companies (‘The Accounting Guidance’) as the Company has not previously applied TFRS 9 Financial Instrument and the Company’s activities are predominantly connected with insurance business, based on the eligibility assessment that the total carrying amount of liabilities connected with insurance within the scope of TFRS 4 of Baht 210,741.8 million as at 1 January 2018 is greater than 90% of the total carrying amount of all its liabilities. Certain liabilities connected with insurance included investment contract liabilities measured at fair value through profit or loss of Baht 2,672.5 million and certain deferred tax liabilities of Baht 3,094.7 million.



3 New and amended financial reporting standards


a) Financial instruments

The new financial standards related to financial instruments are as follows

TAS 32 Financial instruments: PresentationTFRS 7 Financial instruments: DisclosuresTFRS 9 Financial instrumentsTFRIC 16 Hedges of a net investment in a foreign operationTFRIC 19 Extinguishing financial liabilities with equity instrumentsThe Accounting

GuidanceFinancial instruments and disclosures for insurance companies’

accounting guidance

The new financial reporting standards related to financial instruments and TFAC Accounting Guidance introduce new classification and measurement requirements for financial instruments as well as provide derecognition guidance on financial assets and financial liabilities. The new guidance also provides an option for the Company to apply hedge accounting to reduce accounting mismatch between hedged item and hedging instrument. In addition, the new rule provides detailed guidance on financial instruments issued by the Company whether it is a liability or an equity. Among other things, they require extensive disclosure on financial instruments and related risks.

The new classification requirements of financial assets under TFRS9 require the Company to assess both i) business model for holding the financial assets; and ii) cash flow characteristics of the asset whether the contractual cash flows represent solely payments of principal and interest (SPPI). The classification affects the financial assets’ measurement. The new standard requires assessment of impairment of financial assets as well as contract assets and recognition of expected credit loss from initial recognition.

On 1 January 2020, the Company passes criteria of temporarily exemption from TFRS 9 Financial Instruments and TFRS 7 Financial Instruments: Disclosures under TFRS 4 (revised 2018) Insurance Contracts. The Company is eligible to apply the Accounting Guidance in relation to financial instruments and disclosure for insurance companies (‘The Accounting Guidance’) as the Company has not previously applied TFRS 9 Financial Instrument and the Company’s activities are predominantly connected with insurance business, based on the eligibility assessment that the total carrying amount of liabilities connected with insurance within the scope of TFRS 4 of Baht 210,741.8 million as at 1 January 2018 is greater than 90% of the total carrying amount of all its liabilities. Certain liabilities connected with insurance included investment contract liabilities measured at fair value through profit or loss of Baht 2,672.5 million and certain deferred tax liabilities of Baht 3,094.7 million.



3 New and amended financial reporting standards (Cont’d)

3.1 New and amended financial reporting standards that are effective for accounting period beginning on or after 1 January 2020 and are relevant to the Company (Cont’d)

a) Financial instruments (Cont’d)

After the date of eligibility assessment, there has been no change in the Company’sactivities that requires a reassessment of the eligibility assessment.

Additional information on financial assets in relation to the election of the temporaryoption is illustrated per below:

Financial assets of the Company are separated into (i) financial assets withcontractual terms that give rise to cash flows that are solely payments of principaland interest on the principal amount outstanding (SPPI) in accordance with TFRS 9and are not held for trading or managed on fair value basis and (ii) all financial assetsother than those specified in (i).

The following table shows the fair value and change in fair value of these two groupsof financial assets:

Unit: Thousand Baht

Fair value as at 31 December 2020Change in fair value for the year ended

31 December 2020Financial assets

that met SPPI criteria and not held for trading or managed on fair value basis Others Total

Financial assets that met SPPI

criteria and not held for trading or managed on fair value basis Others Total

Debt securities 285,650,986 4,794,216 290,445,202 15,973,953 (1,364,692) 14,609,261 Equity and Derivatives - 17,639,182 17,639,182 - (8,257,497) (8,257,497)Other financial assets 5,513,586 870,408 6,383,994 (619,851) 79,939 (539,912)

Total 291,164,572 23,303,806 314,468,378 15,354,102 (9,542,250) 5,811,852

As of 31 December 2020, majority of other financial assets qualifying as SPPI includescash and cash equivalents and accrued investment income whereas the other is agency security fund.

Certain financial assets included within the financial statements, including policy loans under loans and accrued interest receivables, amount due from reinsurance,premium receivable and assets held to cover linked liabilities amounting to Baht 26,497 million are not included above since they are accounted for under TFRS 4.

The financial assets presented above that met SPPI criteria and not held for trading or managed on fair value basis are primarily debt securities.

There is a minor difference between the Accounting Guidance and TFRS 9 in terms of classification and measurement, impairment of equity securities and hybrid contracts. The classification is dependent on the purpose for which the investments were acquired; hence, there is no need to assess business model and cash flow characteristics. An impairment should be assessed not only debt securities but also equity securities. An embedded derivative shall be separated from the host and accounted for as a derivative.

The impact from the first-time adoption has been disclosed in Note 4.




b) TFRS 16, Leases clarified where the Company is a lessee, certain standard willresult in almost all leases being recognised on the balance sheet as the distinctionbetween operating and finance leases is removed. A right-of-use asset and a leaseliability will be recognised, with exception on short-term and low-value leases.

On 1 January 2020, the Company has adopted the new lease standard in itsfinancial statements. The impact from the first-time adoption has been disclosed inNote 4.

c) Amendment to TAS 12, Income tax clarified that the income tax consequences ofdividends of financial instruments classified as equity should be recognisedaccording to where the past transactions or events that generated distributableprofits were recognised.

d) Amendment to TAS 19, Employee benefits (plan amendment, curtailment orsettlement) - clarified accounting for defined benefit plan amendments, curtailmentsand settlements that the updated assumptions on the date of change are applied todetermine current service cost and net interest for the remainder of the reportingperiod after the plan amendment, curtailment or settlement.

e) Amendment to TFRS 3, Business combinations clarified that obtaining control ofa business that is a joint operation is a business combination achieved in stages.The previously held interest is therefore re-measured.

f) TFRIC 23, Uncertainty over income tax treatments explained how to recogniseand measure deferred and current income tax assets and liabilities where there isuncertainty over a tax treatment. In particular, it discusses:

- that the Company should assume a tax authority will examine the uncertain taxtreatments and have full knowledge of all related information, i.e. that detectionrisk should be ignored.

- that the Company should reflect the effect of the uncertainty in its income taxaccounting when it is not probable that the tax authorities will accept the treatment.

- that the judgements and estimates made must be reassessed whenevercircumstances have changed or there is new information that affects the judgements.





b) TFRS 16, Leases clarified where the Company is a lessee, certain standard willresult in almost all leases being recognised on the balance sheet as the distinctionbetween operating and finance leases is removed. A right-of-use asset and a leaseliability will be recognised, with exception on short-term and low-value leases.

On 1 January 2020, the Company has adopted the new lease standard in itsfinancial statements. The impact from the first-time adoption has been disclosed inNote 4.

c) Amendment to TAS 12, Income tax clarified that the income tax consequences ofdividends of financial instruments classified as equity should be recognisedaccording to where the past transactions or events that generated distributableprofits were recognised.

d) Amendment to TAS 19, Employee benefits (plan amendment, curtailment orsettlement) - clarified accounting for defined benefit plan amendments, curtailmentsand settlements that the updated assumptions on the date of change are applied todetermine current service cost and net interest for the remainder of the reportingperiod after the plan amendment, curtailment or settlement.

e) Amendment to TFRS 3, Business combinations clarified that obtaining control ofa business that is a joint operation is a business combination achieved in stages.The previously held interest is therefore re-measured.

f) TFRIC 23, Uncertainty over income tax treatments explained how to recogniseand measure deferred and current income tax assets and liabilities where there isuncertainty over a tax treatment. In particular, it discusses:

- that the Company should assume a tax authority will examine the uncertain taxtreatments and have full knowledge of all related information, i.e. that detectionrisk should be ignored.

- that the Company should reflect the effect of the uncertainty in its income taxaccounting when it is not probable that the tax authorities will accept the treatment.

- that the judgements and estimates made must be reassessed whenevercircumstances have changed or there is new information that affects the judgements.





Certain amended financial reporting standards have been issued that are not mandatory for current reporting period and have not been early adopted by the Company.

a) Revised Conceptual Framework for Financial Reporting added the following keyprincipals and guidance:

- Measurement basis, including factors in considering difference measurementbasis

- Presentation and disclosure, including classification of income and expenses inother comprehensive income

- Definition of a reporting entity, which maybe a legal entity, or a portion of an entity- Derecognition of assets and liabilities

The amendment also includes the revision to the definition of an asset and liability in the financial statements, and clarification to the prominence of stewardship in the objective of financial reporting.

b) Amendment to TFRS 3, Business combinations amended the definition ofa business which requires an acquisition to include an input and a substantiveprocess that together significantly contribute to the ability to create outputs. Thedefinition of the term ‘outputs’ is amended to focus on goods and services providedto customers and to exclude returns in the form of lower costs and other economicbenefits.

c) Amendment to TFRS 9, Financial instruments and TFRS 7, Financialinstruments amended to provide relief from applying specific hedge accountingrequirements to the uncertainty arising from interest rate benchmark reform such asIBOR. The amendment also requires disclosure of hedging relationships directlyaffected by the uncertainty.

d) Amendment to TAS 1, Presentation of financial statements and TAS 8,Accounting policies, changes in accounting estimates and errors amended thedefinition of materiality. The amendment allows for a consistent definition ofmateriality throughout the Thai Financial Reporting Standards and the ConceptualFramework for Financial Reporting. It also clarified when information is material andincorporates some of the guidance in TAS 1 about immaterial information.


4 Impacts from initial application of the new and revised financial reporting standards

This note explains the impact of the adoption of the financial reporting standards relate to financial instruments (TAS32 and the Accounting Guidance) and leases standard (TFRS 16) on the Company’s financial statements. The new accounting policies applied from 1 January 2020 were disclosed in Note 3.1.

The Company has adopted those accounting policies from 1 January 2020 by applying the modified retrospective approach. The comparative figures have not been restated. The reclassifications and the adjustments arising from the changes in accounting policies were therefore recognised in the statement of financial position as of 1 January 2020.

The impact of first-time adoption of new financial reporting standards on statements of financial position are as follows:

As at 31 December 2019

Previously reported

TAS 32 and The Accounting Guidance

Reclassifications and adjustments

TFRS 16Adjustments

As at 1 January 2020

RestatedNotes Thousand Baht Thousand Baht Thousand Baht Thousand Baht

AssetsAccrued investment income C 1,900,651 (352,113) - 1,548,538Loans and accrued interest

receivables C 12,693,240 352,113 - 13,045,353Right-of-use assets D - - 788,077 788,077Other assets D 212,795 - (1,392) 211,403

Total assets 14,806,686 - 786,685 15,593,371


LiabilitiesLease liabilities D - - 829,401 829,401Other liabilities D 4,682,028 - (42,716) 4,639,312

Total liabilities 4,682,028 - 786,685 5,468,713

EquityUnrealised gains on changes

in value of investments measured at fair value throughother comprehensive income A 30,919,073 182,211 - 31,101,284

Gain (loss) on cash flow hedge B 1,593,989 (187,504) - 1,406,485Gain (loss) on deferred cost of

hedge B - 180,711 - 180,711Retained earnings A, B 17,475,889 (175,418) - 17,300,471

Total equity 49,988,951 - - 49,988,951

Total liabilities and equity 54,670,979 - 786,685 55,457,664

Note:A) Adjustments on impairment of financial assets (Note 4.1)B) Impacts from changes in classification of financial assets and cost of hedge reserve (Note 4.1)C) Change in presentation of accrued interest receivable on loans (Note 4.1)D) Recognition of right of use assets and lease liabilities under TFRS 16 (Note 4.2)



4 Impacts from initial application of the new and revised financial reporting standards

This note explains the impact of the adoption of the financial reporting standards relate to financial instruments (TAS32 and the Accounting Guidance) and leases standard (TFRS 16) on the Company’s financial statements. The new accounting policies applied from 1 January 2020 were disclosed in Note 3.1.

The Company has adopted those accounting policies from 1 January 2020 by applying the modified retrospective approach. The comparative figures have not been restated. The reclassifications and the adjustments arising from the changes in accounting policies were therefore recognised in the statement of financial position as of 1 January 2020.

The impact of first-time adoption of new financial reporting standards on statements of financial position are as follows:

As at 31 December 2019

Previously reported

TAS 32 and The Accounting Guidance

Reclassifications and adjustments

TFRS 16Adjustments

As at 1 January 2020

RestatedNotes Thousand Baht Thousand Baht Thousand Baht Thousand Baht

AssetsAccrued investment income C 1,900,651 (352,113) - 1,548,538Loans and accrued interest

receivables C 12,693,240 352,113 - 13,045,353Right-of-use assets D - - 788,077 788,077Other assets D 212,795 - (1,392) 211,403

Total assets 14,806,686 - 786,685 15,593,371


LiabilitiesLease liabilities D - - 829,401 829,401Other liabilities D 4,682,028 - (42,716) 4,639,312

Total liabilities 4,682,028 - 786,685 5,468,713

EquityUnrealised gains on changes

in value of investments measured at fair value throughother comprehensive income A 30,919,073 182,211 - 31,101,284

Gain (loss) on cash flow hedge B 1,593,989 (187,504) - 1,406,485Gain (loss) on deferred cost of

hedge B - 180,711 - 180,711Retained earnings A, B 17,475,889 (175,418) - 17,300,471

Total equity 49,988,951 - - 49,988,951

Total liabilities and equity 54,670,979 - 786,685 55,457,664

Note:A) Adjustments on impairment of financial assets (Note 4.1)B) Impacts from changes in classification of financial assets and cost of hedge reserve (Note 4.1)C) Change in presentation of accrued interest receivable on loans (Note 4.1)D) Recognition of right of use assets and lease liabilities under TFRS 16 (Note 4.2)



4 Impacts from initial application of the new and revised financial reporting standards (Cont’d)

4.1 Financial instruments

The total impact on the Company’s unappropriated retained earnings as of 1 January 2020 are as follows:

Notes Thousand Baht

Unappropriated retained earnings as of 31 December 2019 (as previously reported) 17,475,889

Adjustments in relation to expected credit loss A (182,211)Adjustments on application of cost of hedge reserve B 6,793

Total adjustments to opening unappropriated retained earnings from adoption of TAS 32 and The Accounting Guidance (175,418)

Unappropriated retained earnings as of 1 January 2020 after reflecting TAS 32 and The Accounting Guidance 17,300,471

The impact of these changes on the Company’s equity as of 1 January 2020 are as follows:

Notes

Available-for-sale

reservesThousand

Baht

FVOCIreserve

Thousand Baht

Effect onretainedearnings

Thousand Baht

Balance as of 31 December 2019(Previously reported) 30,919,073 - 17,475,889

Reclassify equity investments from available-for-sale to FVOCI B (2,785,613) 2,785,613 -

Reclassify debt securities from available-for-sale to FVOCI B (28,133,460) 28,133,460 -

Reclassify general investments to FVOCI B - - -Total adjustments to opening retained earnings from

adoption of TAS 32 and The Accounting Guidance A, B - 182,211 (175,418)

Total impact (30,919,073) 31,101,284 (175,418)

Opening balance as of 1 January 2020 - TAS 32 and The Accounting Guidance adoption - 31,101,284 17,300,471



4.1 Financial instruments (Cont’d)

On 1 January 2020, the management has assessed and classified its financial instrumentsas follows:

Notes

Accrued income on

investmentsThousand

Baht

Available-for-sale

securitiesThousand

Baht

General investments

ThousandBaht

Investments measured at

FVOCIThousand

Baht

Loans and accrued interest

receivablesThousand

Baht

Cash flowhedge

reserveThousand

Baht

Cost of hedge

reserveThousand

BahtFinancial assetsBalance as at 31 December 2019 (Previously reported) 1,900,651 297,329,292 - - 12,693,240 1,593,989 -Adjustments in relation

to expected credit loss A - - - 182,211 - - -Reclassify cash flow

hedge reserve to cost of hedge reserve B - - - - - (187,504) 180,711

Reclassify equity investments from available-for-sale to FVOCI B - (26,594,563) - 26,594,563 - - -

Reclassify debt securitiesfrom available-for-sale

to FVOCI B - (270,734,729) - 270,734,729 - - -Reclassify general

investments to FVOCI B - - - - - - -Change in presentation

of accrued interest receivable C (352,113) - - - 352,113 - -

Opening balance 1 January 2020 –TAS 32 and the Accounting Guidance adoption 1,548,538 - - 297,511,503 13,045,353 1,406,485 180,711

The initial application of the new and revised financial reporting standards does not impact the classification of financial liabilities.

(a) Impairment of financial assets

The Company have following financial assets that are subject to the expected credit loss model:

• cash and cash equivalents• investment account receivables• other assets; and• debt investments carried at FVOCI.

The Company was required to revise its impairment methodology under The Accounting Guidance. The impact of the change in impairment methodology on the Company’s retained earnings at 1 January 2020 were Baht 182.2 million.

While i) cash and cash equivalents ii) investment account receivables and iii) other assets are subject to the new impairment requirement, management has considered that the identified impact was immaterial.





On 1 January 2020, the management has assessed and classified its financial instrumentsas follows:

Notes

Accrued income on

investmentsThousand

Baht

Available-for-sale

securitiesThousand

Baht

General investments

ThousandBaht

Investments measured at

FVOCIThousand

Baht

Loans and accrued interest

receivablesThousand

Baht

Cash flowhedge

reserveThousand

Baht

Cost of hedge

reserveThousand

BahtFinancial assetsBalance as at 31 December 2019 (Previously reported) 1,900,651 297,329,292 - - 12,693,240 1,593,989 -Adjustments in relation

to expected credit loss A - - - 182,211 - - -Reclassify cash flow

hedge reserve to cost of hedge reserve B - - - - - (187,504) 180,711

Reclassify equity investments from available-for-sale to FVOCI B - (26,594,563) - 26,594,563 - - -

Reclassify debt securitiesfrom available-for-sale

to FVOCI B - (270,734,729) - 270,734,729 - - -Reclassify general

investments to FVOCI B - - - - - - -Change in presentation

of accrued interest receivable C (352,113) - - - 352,113 - -

Opening balance 1 January 2020 –TAS 32 and the Accounting Guidance adoption 1,548,538 - - 297,511,503 13,045,353 1,406,485 180,711

The initial application of the new and revised financial reporting standards does not impact the classification of financial liabilities.

(a) Impairment of financial assets

The Company have following financial assets that are subject to the expected credit loss model:

• cash and cash equivalents• investment account receivables• other assets; and• debt investments carried at FVOCI.

The Company was required to revise its impairment methodology under The Accounting Guidance. The impact of the change in impairment methodology on the Company’s retained earnings at 1 January 2020 were Baht 182.2 million.

While i) cash and cash equivalents ii) investment account receivables and iii) other assets are subject to the new impairment requirement, management has considered that the identified impact was immaterial.





(b) Derivatives and hedging activities

Before 1 January 2020 the Company recognised derivatives financial instrumentsin the financial statements at fair value and applied hedge accounting with certaincross currency interest swap contracts and entire bond forward contracts as cashflow hedges.

On 1 January 2020, when cross currency swap contracts are used to hedge interestrate risk and foreign exchange risk, the Company chooses to exclude the foreigncurrency basis spread from the designation of the derivatives as hedginginstruments. The change in foreign currency basis spread of the swap contract thatrelates to the hedged item is recognised within other comprehensive income in thecosts of hedging reserve within equity of Baht 39.9 million.

In addition, when bond forward contracts are used to hedge bond price, the Companychooses to exclude the forward element from the designation of the derivatives ashedging instruments. The change in forward element of the bond forward contract thatrelates to the hedged item is recognised within other comprehensive income in the costsof hedging reserve within equity of Baht 140.8 million.

(c) Available-for-sale investments classified as FVOCI

As of 1 January 2020, the Company elected to present in OCI changes in the fairvalue of all its equity investments and debt instruments previously classified asavailable-for-sale, because these investments are held as long-term strategicinvestments or as short to medium term investments. As a result, the Company’sassets with a fair value of Baht 297,329 million was reclassified from available-for-sale financial assets to financial assets at FVOCI and fair value gains of Baht 30,919million was reclassified from available-for-sale reserve to the FVOCI reserve on1 January 2020.

(d) Change in presentation of accrued interest receivable on loans

The Company changed presentation of accrued interest receivable on loans fromaccrued income on investments to loans and accrued interest receivables amounting toBaht 352.1 million.



4.2 Leases

On adoption of TFRS 16, the Company recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of TAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 January 2020. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 January 2020 was ranged between 1.93% and 3.31%.

Thousand Baht

Operating lease commitments disclosed as at 31 December 2019 432,717(Less): discounted using the lessee’s incremental borrowing rate at the date of initial application (72,788)(Less): short-term leases recognised on a straight-line basis as expense (11,617)(Less): contracts reassessed as service agreements /

service portion included in leases (39,008)Add: adjustments as a result of a different treatment of extension

and termination options 520,097

Lease liability recognised as at 1 January 2020 829,401

The associated right-of-use assets for property leases were measured on a retrospective basis as if the new rules had always been applied. The right-of use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepayment relating to that lease recognised in the statement of financial position as at 31 December 2019. There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.

The recognised right-of-use assets relate to the following types of assets:

1 January 2020

Thousand Baht

Buildings and improvements 741,164Others 46,913

Total right-of-use assets 788,077

Practical expedients applied

In applying TFRS 16 for the first time, the Company has used the following practical expedients permitted by the standard:

- the use of a single discount rate to a portfolio of leases with reasonably similar characteristics- reliance on previous assessments on whether leases are onerous- the accounting for operating leases with a remaining lease term of less than 12 months as

at 1 January 2020 as short-term leases- the exclusion of initial direct costs for the measurement of the right-of-use asset at the date

of initial application- the use of hindsight in determining the lease term where the contract contains options to

extend or terminate the lease, and- elect not to reassess whether a contract is, or contains a lease as defined under TFRS 16

at the date of initial application but relied on its assessment made applying TAS 17 and TFRIC 4 Determining whether an Arrangement contains a Lease.




4.2 Leases

On adoption of TFRS 16, the Company recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of TAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 January 2020. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 January 2020 was ranged between 1.93% and 3.31%.

Thousand Baht

Operating lease commitments disclosed as at 31 December 2019 432,717(Less): discounted using the lessee’s incremental borrowing rate at the date of initial application (72,788)(Less): short-term leases recognised on a straight-line basis as expense (11,617)(Less): contracts reassessed as service agreements /

service portion included in leases (39,008)Add: adjustments as a result of a different treatment of extension

and termination options 520,097

Lease liability recognised as at 1 January 2020 829,401

The associated right-of-use assets for property leases were measured on a retrospective basis as if the new rules had always been applied. The right-of use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepayment relating to that lease recognised in the statement of financial position as at 31 December 2019. There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.

The recognised right-of-use assets relate to the following types of assets:

1 January 2020

Thousand Baht

Buildings and improvements 741,164Others 46,913

Total right-of-use assets 788,077

Practical expedients applied

In applying TFRS 16 for the first time, the Company has used the following practical expedients permitted by the standard:

- the use of a single discount rate to a portfolio of leases with reasonably similar characteristics- reliance on previous assessments on whether leases are onerous- the accounting for operating leases with a remaining lease term of less than 12 months as

at 1 January 2020 as short-term leases- the exclusion of initial direct costs for the measurement of the right-of-use asset at the date

of initial application- the use of hindsight in determining the lease term where the contract contains options to

extend or terminate the lease, and- elect not to reassess whether a contract is, or contains a lease as defined under TFRS 16

at the date of initial application but relied on its assessment made applying TAS 17 and TFRIC 4 Determining whether an Arrangement contains a Lease.



5 Accounting policies

5.1 Business Combination

The Company applies the acquisition method to account for business combinations with an exception on business combination under common control. The consideration transferred for the acquisition comprises:

- fair value of the assets transferred,- liabilities incurred to the former owners of the acquiree

Identifiable assets and liabilities acquired and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

The excess of the consideration transferred over the fair value of the identifiable net assets acquired is recorded as goodwill. In the case of a bargain purchase, the difference is recognised directly in profit or loss.

Acquisition-related cost

Acquisition-related cost are recognised as expenses in the financial statements.

Step-up acquisition

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measured are recognised in profit or loss.

Changes in fair value of contingent consideration paid/received

Subsequent changes to the fair value of the contingent consideration that is an asset or liability is recognised in profit or loss. Contingent consideration that is classified as equity is not re-measured.

5.2 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements are measured using the currency of theprimary economic environment in which the Company operates (‘the functional currency’).The financial statements are presented in Thai Baht, which is the Company’s functionalcurrency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using theexchange rates prevailing at the dates of the transactions or valuation where items arere-measured. Foreign exchange gains and losses resulting from the settlement of suchtransactions and from the translation of monetary assets and liabilities denominated inforeign currencies are recognised in the profit or loss.

When a gain or loss on a non-monetary item is recognised in other comprehensive income,any exchange component of that gain or loss is recognised in other comprehensiveincome. Conversely, when a gain or loss on a non-monetary item is recognised in profitand loss, any exchange component of that gain or loss is recognised in profit or loss.


5 Accounting policies (Cont’d)

5.3 Cash and cash equivalents

Cash and cash equivalents consist of cash in hand, deposits held at call with banks and all highly liquid investments with maturity of three months or less from acquisition date.

5.4 Premium receivable and allowance for doubtful accounts

Premium receivable is carried at anticipated realisable value. The allowance for doubtful accounts is determined for insurance premiums that are supposed to be lapsed and past due collection for renewal and group insurance premium that are supposed to be past due collection. The Company provided the estimated collection losses on premium due and uncollected at the end of the year. Such estimated losses are based on the Company’scollection experience.

5.5 Investments in securities

For the year ended 31 December 2020

a) Classification

From 1 January 2020, the Company classifies its financial assets as follows:- Investments measured at fair value through profit or loss (FVPL)- Investments measured at fair value through other comprehensive income (FVOCI)- Investments measured at amortised cost- Investments designated at fair value through profit or loss

On the adoption of TAS 32 and the Accounting Guidance, the Company shall classify financial instruments as equity instruments or debt instruments.

b) Recognition and derecognition

Regular way purchases, acquires and sales of financial assets are recognised on trade-date, the date on which the Company commits to purchase or sell the asset. Financialassets are derecognised when the rights to receive cash flows from the financial assetshave expired or have been transferred and the Company has transferred substantially allthe risks and rewards of ownership.

c) Measurement

The Company initially recognises a financial asset at its fair value plus transaction coststhat are directly attributable to the acquisition of the financial asset.

Financial instruments with embedded derivatives are derivatives embedded within othernon-derivatives host financial instruments to create hybrid instruments. Under theAccounting Guidance, the Company elects to designate certain hybrid contracts entirely asfair value through profit or loss. For certain hybrid instruments where the economiccharacteristics and risks of the embedded derivatives are not closely related to theeconomic characteristics and risks of the host instruments and where the hybrid instrumentis not measured at fair value through profit or loss, the embedded derivatives is bifurcatedand carried at fair value as a derivative.




5.3 Cash and cash equivalents

Cash and cash equivalents consist of cash in hand, deposits held at call with banks and all highly liquid investments with maturity of three months or less from acquisition date.

5.4 Premium receivable and allowance for doubtful accounts

Premium receivable is carried at anticipated realisable value. The allowance for doubtful accounts is determined for insurance premiums that are supposed to be lapsed and past due collection for renewal and group insurance premium that are supposed to be past due collection. The Company provided the estimated collection losses on premium due and uncollected at the end of the year. Such estimated losses are based on the Company’scollection experience.

5.5 Investments in securities


a) Classification

From 1 January 2020, the Company classifies its financial assets as follows:- Investments measured at fair value through profit or loss (FVPL)- Investments measured at fair value through other comprehensive income (FVOCI)- Investments measured at amortised cost- Investments designated at fair value through profit or loss

On the adoption of TAS 32 and the Accounting Guidance, the Company shall classify financial instruments as equity instruments or debt instruments.

b) Recognition and derecognition

Regular way purchases, acquires and sales of financial assets are recognised on trade-date, the date on which the Company commits to purchase or sell the asset. Financialassets are derecognised when the rights to receive cash flows from the financial assetshave expired or have been transferred and the Company has transferred substantially allthe risks and rewards of ownership.

c) Measurement

The Company initially recognises a financial asset at its fair value plus transaction coststhat are directly attributable to the acquisition of the financial asset.

Financial instruments with embedded derivatives are derivatives embedded within othernon-derivatives host financial instruments to create hybrid instruments. Under theAccounting Guidance, the Company elects to designate certain hybrid contracts entirely asfair value through profit or loss. For certain hybrid instruments where the economiccharacteristics and risks of the embedded derivatives are not closely related to theeconomic characteristics and risks of the host instruments and where the hybrid instrumentis not measured at fair value through profit or loss, the embedded derivatives is bifurcatedand carried at fair value as a derivative.




5.5 Investments in securities (Cont’d)

For the year ended 31 December 2020 (Cont’d)

d) Debt instruments (Cont’d)

Subsequent measurement of debt instruments depends on the Company’s classification ofthe financial assets. There are four measurement categories into which the Companyclassifies its debt instruments:

• FVPL: Financial assets that are acquired principally for the purpose of generatinga profit from short-term fluctuations in price, includes those do not meet the criteriafor amortised cost or FVOCI, are measured at FVPL. A gain or loss on investmentsthat is subsequently measured at FVPL is recognised in profit or loss andpresented net within fair value gains (losses) in the period in which it arises.

• FVOCI: Financial assets intended to be held for an indefinite period of time, whichmay be sold in response to liquidity needs or changes in interest rates. Movementsin the carrying amount are taken through other comprehensive income (OCI),except for the recognition of impairment gains or losses, interest income using theeffective interest method, and foreign exchange gains and losses which arerecognised in profit or loss. When the financial assets are derecognised, thecumulative gain or loss previously recognised in OCI is reclassified from equity toprofit or loss and recognised in gains (losses) on investments. Interest income isincluded in investment income. Impairment expenses are presented separately inthe statement of comprehensive income.

• AMC: Financial assets with fixed maturity that the management has the intentionand ability to hold to maturity. Interest income from these financial assets isincluded in investment income using the effective interest rate method. Any gainor loss arising on derecognition is recognised directly in profit or loss andpresented in gains (losses) on investments together with foreign exchange gainsand losses. Impairment losses are presented as a separate line item in thestatement of comprehensive income.

• FVO: Financial assets irrevocably designated at fair value through profit or loss inorder to eliminate or significantly reduce a measurement or recognitioninconsistency that would arise from measuring assets or liabilities or recognisingthe gains or losses on them on different bases. A gain or loss on these investmentsis recognised in profit or loss and presented net within fair value gains (losses) inthe period in which it arises.

The classification is dependent on the purpose for which the investments were acquired. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis.





e) Equity instruments

The Company measures all equity investments at fair value where the Company haselected to present fair value gains and losses on equity instruments in OCI. Dividendsfrom such investments continue to be recognised in profit or loss as investment incomewhen the right to receive payments is established.

The Company presents its investments in Real Estate Investment Trust (REIT), InfrastructureTrust, and Property Fund established and registered in Thailand as equity investments andmeasures them at FVOCI following the TFAC’s clarification, “Interpretation of investmentsin Property Fund unit trusts, Real Estate Investment Trust units, Infrastructure Fund units,and Infrastructure Trust units established and registered in Thailand” dated 25 June 2020.The funds and trusts are required to distribute benefits of not less than 90% of its adjustednet profit.

f) Impairment

Debt instruments

From 1 January 2020, the Company assesses expected credit loss on a forward-lookingbasis for its investment in debt securities carried at FVOCI. The impairment methodologyapplied depends on whether there has been a significant increase in credit risk since theinitial recognition.

The Company always accounts for expected credit losses which involves a three-stageexpected credit loss impairment model. The stage dictates how the entity measuresimpairment losses and applies the effective interest rate method. In which, the three-stageexpected credit loss impairment will be as the following stages:

- Stage 1 - from initial recognition of a financial assets to the date on which the credit riskof the asset has not increased significantly relative to its initial recognition, a lossallowance is recognised equal to the credit losses expected to result from defaultsoccurring over the next 12 months.

- Stage 2 - following a significant increase in credit risk relative to the initial recognitionof the financial assets, a loss allowance is recognised equal to the credit lossesexpected over the remaining life of the asset.

- Stage 3 - when a financial asset is considered to be credit-impaired, a loss allowanceequal to full lifetime expected credit losses is to be recognised.

The significant increase in credit risk (from initial recognition) assessment is performed at the end of each reporting period by comparing i) expected risk of default as of the reporting date and ii) estimated risk of default on the date of initial recognition.

When measuring expected credit losses, the Company reflects the following:

- probability-weighted estimated uncollectible amounts- time value of money; and- supportable and reasonable information as of the reporting date about past

experience, current conditions and forecasts of future situations.

The expected credit loss will be recognised in profit or loss as a separate line item.






e) Equity instruments

The Company measures all equity investments at fair value where the Company haselected to present fair value gains and losses on equity instruments in OCI. Dividendsfrom such investments continue to be recognised in profit or loss as investment incomewhen the right to receive payments is established.

The Company presents its investments in Real Estate Investment Trust (REIT), InfrastructureTrust, and Property Fund established and registered in Thailand as equity investments andmeasures them at FVOCI following the TFAC’s clarification, “Interpretation of investmentsin Property Fund unit trusts, Real Estate Investment Trust units, Infrastructure Fund units,and Infrastructure Trust units established and registered in Thailand” dated 25 June 2020.The funds and trusts are required to distribute benefits of not less than 90% of its adjustednet profit.

f) Impairment

Debt instruments

From 1 January 2020, the Company assesses expected credit loss on a forward-lookingbasis for its investment in debt securities carried at FVOCI. The impairment methodologyapplied depends on whether there has been a significant increase in credit risk since theinitial recognition.

The Company always accounts for expected credit losses which involves a three-stageexpected credit loss impairment model. The stage dictates how the entity measuresimpairment losses and applies the effective interest rate method. In which, the three-stageexpected credit loss impairment will be as the following stages:

- Stage 1 - from initial recognition of a financial assets to the date on which the credit riskof the asset has not increased significantly relative to its initial recognition, a lossallowance is recognised equal to the credit losses expected to result from defaultsoccurring over the next 12 months.

- Stage 2 - following a significant increase in credit risk relative to the initial recognitionof the financial assets, a loss allowance is recognised equal to the credit lossesexpected over the remaining life of the asset.

- Stage 3 - when a financial asset is considered to be credit-impaired, a loss allowanceequal to full lifetime expected credit losses is to be recognised.

The significant increase in credit risk (from initial recognition) assessment is performed at the end of each reporting period by comparing i) expected risk of default as of the reporting date and ii) estimated risk of default on the date of initial recognition.

When measuring expected credit losses, the Company reflects the following:

- probability-weighted estimated uncollectible amounts- time value of money; and- supportable and reasonable information as of the reporting date about past

experience, current conditions and forecasts of future situations.

The expected credit loss will be recognised in profit or loss as a separate line item.






f) Impairment (Cont’d)

Equity instruments

A test for impairment of equity instruments is carried out quarterly or when there isa factor indicating that an investment might be impaired. If the carrying value of theinvestment is higher than its recoverable amount, impairment loss is charged to profitor loss.


a) Classification

Available-for-sale securities are marketable securities which are held principally forother than trading purpose. However, the Company will readily sell the securities ifopportunities arise.

b) Carrying value of investments

Available-for-sale securities comprising debt and equity securities are carried at fairvalues. Fair value of debt securities is determined based on the required rate of returnor the yield rate quoted by reference to the Thai Bond Market Association andBloomberg. Fair value of marketable equity securities is based on the latest bid priceof the last working day of the year as quoted on the Stock Exchange of Thailand andBloomberg.

Unrealised gains or losses resulting from changes in fair value of available-for-salesecurities are included in shareholders’ equity.

Unrealised gains or losses from revaluation of foreign exchange rate in investments indebt securities are classified as net investment income.

Realised gains or losses from revaluation of foreign exchange rate in investments indebt securities are classified as gains (losses) from investment.

A test for impairment is carried out when there is a factor indicating that such investmentmight be impaired. If the carrying value of the investment is higher than its recoverableamount, impairment loss is charged to the statement of comprehensive income.

On disposal of an investment, the difference between the net disposal proceeds andthe carrying amount, calculated on weighted average method, is charged or credited tothe statement of comprehensive income.



5.6 Derivative financial instruments

a) Embedded derivative

Embedded derivatives are derivatives embedded within other non-derivative hostfinancial instruments to create hybrid instruments. Where the economic characteristics andrisks of the embedded derivatives are not closely related to the economiccharacteristics and risks of the host instrument, and where the hybrid instrument is notmeasured at fair value with changes in fair value recognised in profit or loss, theembedded derivative is bifurcated and carried at fair value as a derivative disclosed inNote 5.6 (b).

b) Derivative financial instruments and hedging activities

Derivative financial instruments are initially recognised at fair values on the datea derivative contract is entered into and are subsequently re-measured to their fairvalue at the end of each reporting period. The method of recognising the resulting gainor loss depends on whether or not the derivative is applied hedge accounting, and ifso, the nature of the item being hedged.

Derivative financial instruments that are not applied hedge accounting instrument is re-measured at fair values which are obtained from quoted market price, or other widely usedmethods. Gain or loss on such agreements and changes in related fair values as at periodend are reflected in profit or loss.

When derivatives financial instruments are applied hedge accounting, the Companymeasures derivatives classified as hedging transactions according to the natures of itemsbeing hedged. The Company designates certain derivatives as either:

(1) Fair value hedges: Hedges of the fair value of i) recognised assets or liabilitiesor ii) unrecognised firm commitments

Changes in the fair value of derivatives that are designated and qualified as fairvalue hedges are recorded in profit and loss, together with any changes in thefair value of the hedged items that are attributable to the hedged risk.

(2) Cash flow hedges: Hedges of a particular risk associated with the cash flows ofi) recognised assets and liabilities and ii) highly probable forecast transactions

The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedge is recognised in the gain (loss) on cash flow hedges within equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, within fair value gain/loss.

When cross currency swap contracts are used to hedge interest rate risk and foreign exchange risk, the Company chooses to exclude the foreign currency basis spread from the designation of the derivatives as hedging instruments. Gains or losses relating to the effective portion of the change in fair value of cross currency swap contracts excluding foreign currency basis spread are recognised in the gain (loss) on cash flow hedges within equity. The change in foreign currency basis spread of the swap contract that relates to the hedged item is recognised within other comprehensive income in the costs of hedging reserve within equity.




5.6 Derivative financial instruments

a) Embedded derivative

Embedded derivatives are derivatives embedded within other non-derivative hostfinancial instruments to create hybrid instruments. Where the economic characteristics andrisks of the embedded derivatives are not closely related to the economiccharacteristics and risks of the host instrument, and where the hybrid instrument is notmeasured at fair value with changes in fair value recognised in profit or loss, theembedded derivative is bifurcated and carried at fair value as a derivative disclosed inNote 5.6 (b).

b) Derivative financial instruments and hedging activities

Derivative financial instruments are initially recognised at fair values on the datea derivative contract is entered into and are subsequently re-measured to their fairvalue at the end of each reporting period. The method of recognising the resulting gainor loss depends on whether or not the derivative is applied hedge accounting, and ifso, the nature of the item being hedged.

Derivative financial instruments that are not applied hedge accounting instrument is re-measured at fair values which are obtained from quoted market price, or other widely usedmethods. Gain or loss on such agreements and changes in related fair values as at periodend are reflected in profit or loss.

When derivatives financial instruments are applied hedge accounting, the Companymeasures derivatives classified as hedging transactions according to the natures of itemsbeing hedged. The Company designates certain derivatives as either:

(1) Fair value hedges: Hedges of the fair value of i) recognised assets or liabilitiesor ii) unrecognised firm commitments

Changes in the fair value of derivatives that are designated and qualified as fairvalue hedges are recorded in profit and loss, together with any changes in thefair value of the hedged items that are attributable to the hedged risk.

(2) Cash flow hedges: Hedges of a particular risk associated with the cash flows ofi) recognised assets and liabilities and ii) highly probable forecast transactions

The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedge is recognised in the gain (loss) on cash flow hedges within equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, within fair value gain/loss.

When cross currency swap contracts are used to hedge interest rate risk and foreign exchange risk, the Company chooses to exclude the foreign currency basis spread from the designation of the derivatives as hedging instruments. Gains or losses relating to the effective portion of the change in fair value of cross currency swap contracts excluding foreign currency basis spread are recognised in the gain (loss) on cash flow hedges within equity. The change in foreign currency basis spread of the swap contract that relates to the hedged item is recognised within other comprehensive income in the costs of hedging reserve within equity.




5.6 Derivative financial instruments (Cont’d)

b) Derivative financial instruments and hedging activities (Cont’d)

(2) Cash flow hedges: Hedges of a particular risk associated with the cash flows ofi) recognised assets and liabilities and ii) highly probable forecast transactions(Cont’d)

In addition, when bond forward contracts are used to hedge bond price, the Company chooses to exclude the forward element from the designation of the derivatives as hedging instruments. Gains or losses relating to the effective portion of the change in fair value of bond forward contracts excluding forward element are recognised in the gain (loss) on cash flow hedges within equity. The change in forward element of the bond forward contract that relates to the hedged item is recognised within other comprehensive income in the deferred cost of hedging reserve within equity.

Amounts accumulated in equity are transferred to profit or loss in the periods when the hedged item affects profit or loss. When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until the forecast transaction occurs. When the forecast transaction is no longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately reclassified to profit or loss.

(3) Net investment hedges: Hedges of a net investment in a foreign operation

Hedge of net investment in foreign operations are accounted for similarly to cashflow hedge.

Any gain or loss on the hedging instrument relating to the effective portion of thehedge is recognised in other comprehensive income and accumulated inreserves in equity. The gain or loss relating to the ineffective portion isrecognised immediately in profit or loss within fair value gains (losses). Gainsand losses accumulated in equity are reclassified to profit or loss when theforeign operation is entirely or partially disposed of or sold.

At the inception of the hedge, the Company documents i) the relationship between hedged items and hedging instruments including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items and ii) its risk management objective and strategy for undertaking its hedge transactions. The Company also assesses the hedge effectiveness in offsetting changes in fair values or cash flows of hedged items on an ongoing basis both at the hedge inception and every financial reporting date.

5.7 Policy loans

Policy loans are stated at principal amounts.

Policy loans have cash surrender value as collateral. In case of cash surrender value less than the policy loan amount, the Company has a right to offset loan balance with cash surrender value automatically.



5.8 Assets held to cover linked liabilities

Assets held to cover linked liabilities are invested assets held for policies issued that policyholders take risks and rewards of changes in value of those assets such as unit-linked. They are initially recognised at cost which is equal to the fair value of consideration paid plus transaction costs and subsequently measured at fair value. Unrealised gain (loss) arising from changes in fair value are recorded in profit or loss in the year in which they arise.

5.9 Leasehold improvements and equipment

Leasehold improvements and equipment are recorded at cost. Cost is measured by the cash or cash equivalent price of obtaining the asset and bringing it to the location and condition necessary for its intended use, including an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, when the entity has the obligation to do so. Leasehold improvements and equipment are presented in the statement of financial position at cost less accumulated depreciation.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Depreciation is calculated using the straight-line method over the estimated useful lives as follows:

Computer equipments and hardware 3 yearsLeasehold improvements 5 yearsFurniture and equipment 5 yearsMotor vehicles 5 years

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

When asset is disposed, the Company will write-off both the asset accounts and its related accumulated depreciation, and recognised any gain or loss from disposal of the asset in the statements of comprehensive income.

The cost of leasehold improvements under operating lease is capitalised and depreciated as an operating expense over the remaining life of the lease or the useful life of the improvement,whichever is shorter.

5.10 Computer Software

Computer software is stated at cost less accumulated amortisation and is amortised using straight-line method over the estimated useful life of 5 years.




5.8 Assets held to cover linked liabilities

Assets held to cover linked liabilities are invested assets held for policies issued that policyholders take risks and rewards of changes in value of those assets such as unit-linked. They are initially recognised at cost which is equal to the fair value of consideration paid plus transaction costs and subsequently measured at fair value. Unrealised gain (loss) arising from changes in fair value are recorded in profit or loss in the year in which they arise.

5.9 Leasehold improvements and equipment

Leasehold improvements and equipment are recorded at cost. Cost is measured by the cash or cash equivalent price of obtaining the asset and bringing it to the location and condition necessary for its intended use, including an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, when the entity has the obligation to do so. Leasehold improvements and equipment are presented in the statement of financial position at cost less accumulated depreciation.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Depreciation is calculated using the straight-line method over the estimated useful lives as follows:

Computer equipments and hardware 3 yearsLeasehold improvements 5 yearsFurniture and equipment 5 yearsMotor vehicles 5 years

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

When asset is disposed, the Company will write-off both the asset accounts and its related accumulated depreciation, and recognised any gain or loss from disposal of the asset in the statements of comprehensive income.

The cost of leasehold improvements under operating lease is capitalised and depreciated as an operating expense over the remaining life of the lease or the useful life of the improvement,whichever is shorter.

5.10 Computer Software

Computer software is stated at cost less accumulated amortisation and is amortised using straight-line method over the estimated useful life of 5 years.




5.11 Leases


Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Company. Each lease payment is allocated between the liability 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 right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. Right-of-use assets are recorded as “Right-of-use assets” in the statement of financial positions.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

- fixed payments, less any lease incentives receivable- variable lease payment that are based on an index or a rate- amounts expected to be payable by the lessee under residual value guarantees- the exercise price of a purchase option if the lessee is reasonably certain to exercise that

option, and- payments of penalties for terminating the lease, if the lease term reflects the lessee

exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

Right-of-use assets are measured at cost comprising the following:

- the amount of the initial measurement of lease liability- any lease prepayments made at or before the commencement date less any lease

incentives received- any initial direct costs, and- restoration cost.

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less, comprising of car rental agreements and service fee from outsource.There are no low-value leases.



5.11 Leases (Cont’d)


Leases not transferring a significant portion of the risks and rewards of ownership to the lessee are classified as operating leases. Payments made under operating leases are charged to the statements of comprehensive income on a straight-line basis over the period of the leases.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

Leases of assets which transfer substantially all the risks and rewards of ownership to lessee are classified as finance leases. Finance leases are capitalised at the lower to the fair value of the leased property or the present value of the minimum lease payments. The outstanding rental obligations, net of finance charges, are included in other long-term payable, while the interest element is charged to the statement of comprehensive income over the lease period. Assets acquired under finance lease is depreciated over the shorter of the useful life of the asset and the lease term.

5.12 Insurance and investment contract

5.12.1 Product classification

The Company classifies its contracts written as either insurance contracts or investmentcontracts, depending on the level of insurance risk.

Insurance contracts are those contracts that transfer significant insurance risk, while investment contracts are those contracts without significant insurance risk. In the event that a scenario (other than those lacking commercial substance) exists in which an insured event would require the Company to pay significant additional benefits to its customers, the contract is accounted for as an insurance contract. Some insurance and investment contracts, referred to as participating business, have discretionary participation features, “DPF”, which may entitle the customer to receive, as a supplement to guaranteed benefits, additional non-guaranteed benefits,such as policyholder dividends or bonuses. The Company applies the same accountingpolicies for the recognition and measurement of obligations arising from investment contracts with DPF as it does for insurance contracts.

TFRS 4 permits the continued use of previously applied accounting policies for insurancecontracts and investment contracts with DPF, and this basis has been adopted by the Company in accounting for such contracts. Once a contract has been classified as an insurance or investment contract, no reclassification is subsequently performedunless the terms of the agreement are later amended.

For investment contracts that do not contain DPF, the Company has applied accounting policies for measurement and recognition of financial liabilities, and, if the contract includes an investment management element, relevant accounting standard is applied.




5.11 Leases (Cont’d)


Leases not transferring a significant portion of the risks and rewards of ownership to the lessee are classified as operating leases. Payments made under operating leases are charged to the statements of comprehensive income on a straight-line basis over the period of the leases.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

Leases of assets which transfer substantially all the risks and rewards of ownership to lessee are classified as finance leases. Finance leases are capitalised at the lower to the fair value of the leased property or the present value of the minimum lease payments. The outstanding rental obligations, net of finance charges, are included in other long-term payable, while the interest element is charged to the statement of comprehensive income over the lease period. Assets acquired under finance lease is depreciated over the shorter of the useful life of the asset and the lease term.

5.12 Insurance and investment contract

5.12.1 Product classification

The Company classifies its contracts written as either insurance contracts or investmentcontracts, depending on the level of insurance risk.

Insurance contracts are those contracts that transfer significant insurance risk, while investment contracts are those contracts without significant insurance risk. In the event that a scenario (other than those lacking commercial substance) exists in which an insured event would require the Company to pay significant additional benefits to its customers, the contract is accounted for as an insurance contract. Some insurance and investment contracts, referred to as participating business, have discretionary participation features, “DPF”, which may entitle the customer to receive, as a supplement to guaranteed benefits, additional non-guaranteed benefits,such as policyholder dividends or bonuses. The Company applies the same accountingpolicies for the recognition and measurement of obligations arising from investment contracts with DPF as it does for insurance contracts.

TFRS 4 permits the continued use of previously applied accounting policies for insurancecontracts and investment contracts with DPF, and this basis has been adopted by the Company in accounting for such contracts. Once a contract has been classified as an insurance or investment contract, no reclassification is subsequently performedunless the terms of the agreement are later amended.

For investment contracts that do not contain DPF, the Company has applied accounting policies for measurement and recognition of financial liabilities, and, if the contract includes an investment management element, relevant accounting standard is applied.




5.12 Insurance and investment contract (Cont’d)

5.12.2 Liability adequacy testing

The adequacy of insurance contract liabilities is assessed by portfolio of contracts, in accordance with the Company’s manner of acquiring, servicing and measuring the profitability of its insurance contracts. The insurance contract liabilities are compared to the gross premium valuation calculated on a best estimate basis, as of the valuation date. If there is a deficiency, the liabilities are increased by the amount of the deficiency and recognised directly in profit or loss.

5.12.3 Long term and short term insurance contracts

Long term insurance contracts are insurance contracts which the term of contract is more than 1 year or the contract which have automatic approve of renewal which the Company cannot terminate and cannot increase or decrease premium, includingchanges in other benefit throughout the contract term.

Short term insurance contracts are insurance contracts which do not have terms and conditions as long term insurance contracts.

The mentioned classification of long term and short term insurance contracts is in consistent with approach for Risk-Based Capital report.

5.12.4 Measurement of insurance contracts and investment contracts with DPF

Long-term technical reserves

Long-term technical reserves represent the accumulated total liability of estimation reserve for policies inforce by Net Premium Valuation method as according to actuarial principles on the date of statement of financial position. Such reserves are established in the amounts adequate to meet the estimated future obligations of all life insurance policies inforce.

Claim liabilities

Reported claims and claims incurred but not reported represent the estimated cost of all claims notified but not settled less reinsurance recoveries based on data available as at statement of the financial position date. Differences between the balance of outstanding claims at the statement of financial position date and subsequent revisions and settlements are included in profit or loss in later years.

Premium liabilities: Unearned premium reserves

Unearned premium reserves (UPR) for group insurance and short-term riders are calculated on a pro-rata basis incorporating the outstanding duration of each policy.

Premium liabilities: Unexpired risk reserve

Unexpired risk reserve (URR) represents the future cost of insurance coverage from the statement of financial position date to the subsequent dates of expiry of the policies for all policies inforce at the statement of financial position date. The Company recognises the variance in profit or loss in case that the URR is higher than UPR.




5.12.4 Measurement of insurance contracts and investment contracts with DPF (Cont’d)

Unpaid policy benefits

Unpaid policy benefits are benefits payment under condition specified within policy which are unpaid to policyholders such as maturities, surrenders and dividends. Maturities and surrenders are accrued when due. Dividend benefits are accrued in anticipation of declarations.

Due to insured

Due to insured reflects premium received in advanced and others payable to policyholders other than policy benefits specified in policies. Premium received in advanced is recognised in liabilities when cash is received. Others payable to policyholders are accrued when the Company has obligation to pay.

Universal life

The reserve for account value of the universal life policies represents 100% of the account value and is presented as insurance contract liabilities in statement of financial position.

Unit linked product

The reserve for account value of unit linked product represents 100% of the account value which measured at fair value through profit or loss and is presented as investment contract liabilities in statement of financial position.

5.12.5 Reinsurance

The Company cedes reinsurance in the normal course of business, with retentions varying by type of insurance products. Premium ceded and claim reimbursed are presented on a gross basis in statement of comprehensive income and net basis by reinsurer in statement of financial position.

Amount due from reinsurance includes receivables from reinsurers both domestic and overseas which consists of claim recovery receivables, commission income receivables and other receivables.

If amount due from reinsurance is impaired, the Company reduces the carrying amount accordingly and recognises that impairment loss in the statement of comprehensive income. Amount due from reinsurance is impaired if there is objective evidence, as a result of an event that occurred after initial recognition, that the Company may not receive all amounts due to it under the terms of the contract, and the impact on the amounts that the Company will receive from the reinsurer can be reliably measured.





5.12.4 Measurement of insurance contracts and investment contracts with DPF (Cont’d)

Unpaid policy benefits

Unpaid policy benefits are benefits payment under condition specified within policy which are unpaid to policyholders such as maturities, surrenders and dividends. Maturities and surrenders are accrued when due. Dividend benefits are accrued in anticipation of declarations.

Due to insured

Due to insured reflects premium received in advanced and others payable to policyholders other than policy benefits specified in policies. Premium received in advanced is recognised in liabilities when cash is received. Others payable to policyholders are accrued when the Company has obligation to pay.

Universal life

The reserve for account value of the universal life policies represents 100% of the account value and is presented as insurance contract liabilities in statement of financial position.

Unit linked product

The reserve for account value of unit linked product represents 100% of the account value which measured at fair value through profit or loss and is presented as investment contract liabilities in statement of financial position.

5.12.5 Reinsurance

The Company cedes reinsurance in the normal course of business, with retentions varying by type of insurance products. Premium ceded and claim reimbursed are presented on a gross basis in statement of comprehensive income and net basis by reinsurer in statement of financial position.

Amount due from reinsurance includes receivables from reinsurers both domestic and overseas which consists of claim recovery receivables, commission income receivables and other receivables.

If amount due from reinsurance is impaired, the Company reduces the carrying amount accordingly and recognises that impairment loss in the statement of comprehensive income. Amount due from reinsurance is impaired if there is objective evidence, as a result of an event that occurred after initial recognition, that the Company may not receive all amounts due to it under the terms of the contract, and the impact on the amounts that the Company will receive from the reinsurer can be reliably measured.




5.13 Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Company expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

5.14 Employee benefits

The Company has retirement benefits both defined benefit and defined contribution plans. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate fund. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

a) Defined benefit plans

Retirement benefits

Under Labour Laws applicable in Thailand and Company’s employment policy, allemployees completing 120 days of service are entitled to severance pay on terminationor retrenchment without cause or upon retirement age of 60. The severance pay will beat the rate according to number of years of service as stipulated in the Labor Law whichis currently at a maximum rate of 400 days of final salary.

The liability recognised in the statement of financial position in respect of definedbenefit pension plans is the present value of the defined benefit obligation at the endof the reporting period less the fair value of plan assets, together with adjustments forunrecognised past-service costs. The defined benefit obligation is calculated annuallyby independent actuaries using the projected unit credit method. The present value ofthe defined benefit obligation is determined by discounting the estimated future cashoutflows using market yield of government bonds that are denominated in the currencyin which the benefits will be paid, and that have terms to maturity approximating to theterms of the related pension liability.

Actuarial gains or losses arising from experience adjustments and changes in actuarialassumptions are charged or credited to equity in other comprehensive income in the periodin which they arise. They are presented as separate items in statements of changes inequity.

Past-service costs are recognised immediately in profit or loss.

The management assesses the appropriate estimation of such provision on a regular basis.



5.14 Employee benefits (Cont’d)

b) Defined contribution plans

Provident fund

The Company established a contributory registered provident fund in accordance withthe Provident Fund Act B.E. 2530, being a defined contribution plan. The registeredprovident fund plan was approved by the Ministry of Finance on 25 March 1998. Theprovident fund is funded by payments from employees and by contribution from theCompany. The assets for which are held in a separate fund and managed by a qualifiedfund manager in accordance with the terms and conditions as prescribed in the MinisterialRegulations under Provident Fund Act B.E. 2530. The Company’s contributions to theprovident fund are charged to the statements of comprehensive income in the years towhich they relate.

Share-based compensation

AXA SA France, which is one of the parent companies of the Company, launched share-based compensation plans for the Company’s employee, under which the Companyreceives services from the employees, as consideration for the shares of AXA SA France.The condition of the plans is set by AXA SA France.

The fair value of the employee services received in exchange for the grant of shares isrecognised as an expense over the vesting period. The obligation from share-basedpayment is presented under liabilities.

5.15 Agency security fund

The Company has an agency security fund for life insurance agents of the Company, which is managed by an asset management company. The Company’s contributions are recordedas an asset and liability in the statement of financial position.

5.16 Financial assets and financial liabilities

Significant financial assets carried on the statement of financial position include cash and cash equivalents, accrued investment income, derivative assets, investments in securities, assets held to cover linked liabilities, accounts receivable-investments and cash collateral paid to derivative contracts. Significant financial liabilities include investment contract liabilities, derivative liabilities, amounts payable-investments and cash collateral received from derivative contracts. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.




5.14 Employee benefits (Cont’d)

b) Defined contribution plans

Provident fund

The Company established a contributory registered provident fund in accordance withthe Provident Fund Act B.E. 2530, being a defined contribution plan. The registeredprovident fund plan was approved by the Ministry of Finance on 25 March 1998. Theprovident fund is funded by payments from employees and by contribution from theCompany. The assets for which are held in a separate fund and managed by a qualifiedfund manager in accordance with the terms and conditions as prescribed in the MinisterialRegulations under Provident Fund Act B.E. 2530. The Company’s contributions to theprovident fund are charged to the statements of comprehensive income in the years towhich they relate.

Share-based compensation

AXA SA France, which is one of the parent companies of the Company, launched share-based compensation plans for the Company’s employee, under which the Companyreceives services from the employees, as consideration for the shares of AXA SA France.The condition of the plans is set by AXA SA France.

The fair value of the employee services received in exchange for the grant of shares isrecognised as an expense over the vesting period. The obligation from share-basedpayment is presented under liabilities.

5.15 Agency security fund

The Company has an agency security fund for life insurance agents of the Company, which is managed by an asset management company. The Company’s contributions are recordedas an asset and liability in the statement of financial position.

5.16 Financial assets and financial liabilities

Significant financial assets carried on the statement of financial position include cash and cash equivalents, accrued investment income, derivative assets, investments in securities, assets held to cover linked liabilities, accounts receivable-investments and cash collateral paid to derivative contracts. Significant financial liabilities include investment contract liabilities, derivative liabilities, amounts payable-investments and cash collateral received from derivative contracts. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.




5.17 Collateral

Cash received and pledged as a collateral to a counter party occur in respect to derivative transactions in order to reduce the credit risk of these transactions. The cash received is recognised at its fair value as an asset with a corresponding liability for the repayment. The cash pledged is recognised at its fair value as an asset and the cash pledged will not be derecognised from the statement of financial position.

5.18 Basic earnings per share

Basic earnings per share is computed by dividing the net profit for the year by the weighted average number of ordinary shares in issue during the year.

5.19 Related parties

Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Company and close members of the family of these individuals and companies associated with these individuals also constitute related parties.

In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form.

5.20 Share capital

Ordinary shares are classified as equity. Incremental external costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

5.21 Legal reserve

Under the Public Company Law B.E.2535, the Company is required to set aside a statutory reserve at least 5 percent of its net profit for the year less outstanding deficits (if any) until the reserve is equal to 10 percent of the Company’s registered share capital. The legal reserve is non-distributable.

5.22 Dividends payment

Dividends are recorded in the financial statements in the period in which they are approved by the shareholders and the Office of Insurance Commission.



5.23 Current and deferred income taxes

The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in shareholders’ equity. In this case the tax is also recognised in other comprehensive income or directly in shareholders’ equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised, using the liability method, on temporary differences arising from differences between the tax base of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax assets and liabilities are offset with when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities related to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities when this is an intention to settle the balances on net basis.

5.24 Recognition of revenues and expenses

a) Premiums

Premiums from life insurance contracts include participating policies and annuitypolicies with contingent benefits insurance. For first year policies, life premium incomeis recognised as revenue when the first premium installment is fully received and thepolicy is effective. Renewal premium is recognised as revenue when premium is due.Short-term products’ premium is recognised as revenue on the effective date of theinsurance policy. The movement in unearned premium reserve is presented under“Net change in unearned premium reserve”.

Ceded premium is recognised when the insurance risk is transferred to another reinsurer.

Amounts collected as premiums from universal life products, which are insurancecontracts with investment features but with sufficient insurance risk to be consideredinsurance contracts is recognised as premiums. Revenue from these contracts consistsof policy fee for administration fee received from policyholder presented as fee andcommission income in statement of comprehensive income, and fee charged forsurrenders received from policyholder presented as fee and commission income instatement of comprehensive income during the year.




5.23 Current and deferred income taxes

The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in shareholders’ equity. In this case the tax is also recognised in other comprehensive income or directly in shareholders’ equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised, using the liability method, on temporary differences arising from differences between the tax base of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred income tax assets and liabilities are offset with when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities related to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities when this is an intention to settle the balances on net basis.

5.24 Recognition of revenues and expenses

a) Premiums

Premiums from life insurance contracts include participating policies and annuitypolicies with contingent benefits insurance. For first year policies, life premium incomeis recognised as revenue when the first premium installment is fully received and thepolicy is effective. Renewal premium is recognised as revenue when premium is due.Short-term products’ premium is recognised as revenue on the effective date of theinsurance policy. The movement in unearned premium reserve is presented under“Net change in unearned premium reserve”.

Ceded premium is recognised when the insurance risk is transferred to another reinsurer.

Amounts collected as premiums from universal life products, which are insurancecontracts with investment features but with sufficient insurance risk to be consideredinsurance contracts is recognised as premiums. Revenue from these contracts consistsof policy fee for administration fee received from policyholder presented as fee andcommission income in statement of comprehensive income, and fee charged forsurrenders received from policyholder presented as fee and commission income instatement of comprehensive income during the year.




5.24 Recognition of revenues and expenses (Cont’d)

a) Premiums (Cont’d)

Amounts collected as premiums on investment component from unit-linked contractsare recognised as deposits presented as investment liabilities in statement of financialposition. Revenue from these contracts consists of policy fees for the cost of insurancepresented as gross written premium in statement of comprehensive income, policy feefor administration fee received from policyholder presented as fee and commissionincome in statement of comprehensive income, and fee charged for surrendersreceived from policyholder presented as fee and commission income in statement ofcomprehensive income during the year.

Upfront fees are recognised over the estimated life of the contracts to which they relate.Policy benefits and claims that are charged to expenses include benefit claims incurredin the period in excess of related policyholder contract deposits and interest credited topolicyholder deposits.

b) Policy benefits and claims

Insurance contract benefits reflect the cost of all maturities, surrenders, withdrawalsand claims arising during the year, policyholder dividends accrued in anticipation ofdividend declarations, as well as claims handling costs including internal and externalcosts incurred in connection with the negotiation and settlement of claims.

Accident and health claims include all losses occurred during the year, related handlingcosts, a reduction for recoveries, and any adjustments to claims outstanding fromprevious years.

Benefit payments to policyholders are recorded when the notice of a claim is received orthe policyholder requests to surrender the policy. Other benefits are recognised when dueor on maturity.

c) Policy acquisition cost

Policy acquisition cost i.e. commissions and brokerages are recognised when incurred.

d) Universal life products

The change in account value of universal life products are presented in “change in long-term technical reserve”.

e) Investment income

Interest income is recognised on a time proportion basis, taking account of the principaloutstanding and the effective yield rate over the period to maturity.

Dividends on securities are recognised on the dividend declaration date.

f) Other income and expenses

Other income and expenses are recognised on an accrual basis.


6 Risk management

The Company risk management framework is consistent with the AXA’s Group that to effectively manage the risks the Company faces.

As an insurer, the Company is exposed to a range of insurance and financial risks. The Companyapplies a consistent risk management policy that is embedded in management processes and controls such that both existing and emerging risks are considered and addressed. In addition, the Company has established the enterprise risk management function for managing and monitoring the enterprise wide risks and also has established sub-committee among the Company to manage specific risks which is Local Risk Management Committee.

There are sub-committees established in the Company to manage specific risks such as Local Product Management Committee, Local Management Investment Committee, Local Assumption Committee and Local Management Audit and Compliance Committee.

The following section summarises the Company’s insurance and financial risk management.

6.1 Insurance risk

6.1.1 Concentration

The Company may be expose to concentration risk which the management considers in various perspectives. Concentration risk also includes the risk from natural catastrophe or single events that could result in significant claim losses.

The Company mitigates the risks by diversifying business portfolio across multiple lines of business and through reinsurance including catastrophic reinsurance coverage. The Company offers a wide range of well-diversified insurance products such as health, retirement, investment unit-linked and savings to various customer segments in Thailand.

6.1.2 Lapse

The Company annually reviews the lapse assumptions under annual assumption review study where the lapse rates are set according to the experience of the Company. The actual lapse experience is analysed by product, distribution channels, and by duration since inception. The lapse rates for new products are set according to the lapse experience on similar products, or according to industry experience, with suitable adjustments for the specific features of the product.

6.1.3 Expenses

The Company annually reviews the expense assumptions under annual assumption review study, which are set based on actual expenses incurred in the previous financial year, excluding one-off costs that are not expected to recur. The total expenses incurred are broken down by sales channel into acquisition and maintenance expenses and split by product lines. The expenses are then unitized through appropriate drivers such as a fixed amount per policy or as a percentage of premium.



6 Risk management

The Company risk management framework is consistent with the AXA’s Group that to effectively manage the risks the Company faces.

As an insurer, the Company is exposed to a range of insurance and financial risks. The Companyapplies a consistent risk management policy that is embedded in management processes and controls such that both existing and emerging risks are considered and addressed. In addition, the Company has established the enterprise risk management function for managing and monitoring the enterprise wide risks and also has established sub-committee among the Company to manage specific risks which is Local Risk Management Committee.

There are sub-committees established in the Company to manage specific risks such as Local Product Management Committee, Local Management Investment Committee, Local Assumption Committee and Local Management Audit and Compliance Committee.

The following section summarises the Company’s insurance and financial risk management.

6.1 Insurance risk

6.1.1 Concentration

The Company may be expose to concentration risk which the management considers in various perspectives. Concentration risk also includes the risk from natural catastrophe or single events that could result in significant claim losses.

The Company mitigates the risks by diversifying business portfolio across multiple lines of business and through reinsurance including catastrophic reinsurance coverage. The Company offers a wide range of well-diversified insurance products such as health, retirement, investment unit-linked and savings to various customer segments in Thailand.

6.1.2 Lapse

The Company annually reviews the lapse assumptions under annual assumption review study where the lapse rates are set according to the experience of the Company. The actual lapse experience is analysed by product, distribution channels, and by duration since inception. The lapse rates for new products are set according to the lapse experience on similar products, or according to industry experience, with suitable adjustments for the specific features of the product.

6.1.3 Expenses

The Company annually reviews the expense assumptions under annual assumption review study, which are set based on actual expenses incurred in the previous financial year, excluding one-off costs that are not expected to recur. The total expenses incurred are broken down by sales channel into acquisition and maintenance expenses and split by product lines. The expenses are then unitized through appropriate drivers such as a fixed amount per policy or as a percentage of premium.



6 Risk management (Cont’d)

6.1 Insurance risk (Cont’d)

6.1.4 Mortality and Morbidity

The Company annually reviews the mortality and morbidity assumptions under annual assumption review study, which are set according to the most recent experience of theCompany. On new products lines where own experience is not available the Company uses other industry data, including the rates from international reinsurance companies to set the assumptions. Where the Company expects the future experience to be differentfrom historical experience, an appropriate adjustment is made. The Company utilises reinsurance coverage to reduce insurance risk and provide adequate protection against adverse claims experience.

6.2 Financial risk

The Company is exposed to financial risk through its financial assets, financial liabilities and insurance liabilities. In particular, the key financial risk that the proceeds from its financial assets are not sufficient to fund the obligations arising from its financial and insurance liabilities. The most important components of financial risk are liquidity risk, credit risk and market risks, which include interest rate risk, equity price risk and currency risk.

These risks arise from open positions in interest rate, currency and equity products, all of which are expose to general and specific market movements. The risks that the Company primarily faces due to the nature of its investments and liabilities are interest rate risk and equity price risk.

The Company manages these positions within an Asset-Liability Management (“ALM”) framework that has been developed to achieve long-term investment returns in excess of its obligations under insurance and investment contracts.

The Company uses derivative financial instruments to hedge certain exposures, where all relevant criteria are met, hedge accounting is applied to remove the accounting mismatch between the hedging instrument and the hedged item.

The Company has a Local Investment Management Committee (“LMIC”) that determines the investment strategy within the limits and guidelines approved by the Risk Committee.

6.2.1 Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in market prices. Market risk consists of three types of risks: foreign exchange risk, interest rate risk and price risk.



6.2 Financial risk (Cont’d)

6.2.1 Market risk (Cont’d)

a) Foreign exchange risk

Exposure

The Company’s exposure to foreign currency risk as of 31 December 2020,expressed in Baht are as follows:

2020U.S. Dollar Euro SGD MYR HKDThousand

Baht Thousand

Baht Thousand

Baht Thousand

Baht Thousand

Baht

Foreign debt securities 16,202,208 5,335,071 - 1,078,902 -Mutual fund 1,764,984 - 1,933,167 - 107,016Accounts receivable -

Investments 7,325 - - - -Other assets 12,626 52Other liabilities 238,981 11,457 - - -

Total 18,226,124 5,346,580 1,933,167 1,078,902 107,016

Effects of hedge accounting on the financial position and performance

As of 31 December 2020, foreign currency-related hedging relationship of the Company is entirely designated as cash flow hedge. The Company has no foreign currency-related hedging instruments that designate neither as fair value hedge nor net investment in foreign operation.

The effects of hedges on the Company’s financial position and performance are disclosed in Note 12.1.






a) Foreign exchange risk

Exposure

The Company’s exposure to foreign currency risk as of 31 December 2020,expressed in Baht are as follows:

2020U.S. Dollar Euro SGD MYR HKDThousand

Baht Thousand

Baht Thousand

Baht Thousand

Baht Thousand

Baht

Foreign debt securities 16,202,208 5,335,071 - 1,078,902 -Mutual fund 1,764,984 - 1,933,167 - 107,016Accounts receivable -

Investments 7,325 - - - -Other assets 12,626 52Other liabilities 238,981 11,457 - - -

Total 18,226,124 5,346,580 1,933,167 1,078,902 107,016


As of 31 December 2020, foreign currency-related hedging relationship of the Company is entirely designated as cash flow hedge. The Company has no foreign currency-related hedging instruments that designate neither as fair value hedge nor net investment in foreign operation.

The effects of hedges on the Company’s financial position and performance are disclosed in Note 12.1.



6. Risk management (Cont’d)



a) Foreign exchange risk (Cont’d)

Sensitivity

The sensitivity of profit or loss to changes in the exchange rates arises mainlyfrom financial assets and financial liabilities denominated in US Dollar and Euro.Other components of equity changes as a result of cross-currency swap contractthat is designated as cash flow hedge.

The table below shows the exchange rates sensitivity for the financial assets andfinancial liabilities held as at reporting date.

2020

Impact to net profitincrease (decrease)

Impact to other components of

equityincrease (decrease)

Thousand ThousandBaht Baht

Foreign exchange increase 1%US Dollar 45,952 (48,651)Euro 38,399 (40,526)Singapore Dollar 174 -Malaysian Ringgit (1,178) -Hong Kong Dollar 38 -

Foreign exchange decrease 1%US Dollar (45,952) 48,651 Euro (38,399) 40,526 Singapore Dollar (174) -Malaysian Ringgit 1,178 -Hong Kong Dollar (38) -

* Holding all other variables constant

b) Interest rate risk

The Company’s exposure to interest rate risk relates primarily to investments indebt securities and deposit at financial institutions. The majority of theCompany’s financial assets and liabilities bear fixed interest rates and are longterm and therefore, their value may fluctuate due to changes in market interestrates.

These exposures are managed partly by using natural hedges that arise fromoffsetting interest rate sensitive assets and liabilities, and partly through fixedrate interest and the use of derivative financial instruments such as interest rateswaps. The Company monitors interest rate exposure on a monthly basis bycurrency and business unit, taking into consideration proposed financing andhedging arrangements.





b) Interest rate risk (Cont’d)

The Company uses a bond forwards to hedge its exposure to interest rate risk.Under the Company’s policy, the critical terms of the forward contracts must alignwith the hedged items.

The Company only designates the spot element of bond forwards in hedgerelationships. The spot element is determined with reference to relevant spotmarket exchange rates. The differential between the contracted forward rate andthe spot market exchange rate is defined as the forward points. It is discounted,where material.

The changes in the forward element of the bond forwards that relate to hedgeditems are deferred in the costs of hedging reserve.

Significant financial assets and liabilities as at 31 December 2020 and 2019classified by type of interest rates are summarised in the table below, with thosefinancial assets and liabilities that carry fixed interest rates further classified basedon the maturity date, or the repricing date if this occurs before the maturity date.

2020Fixed interest rates

Floating Non- InterestWithin 1-5 Over interest interest rate

Unit: million Baht 1 year years 5 years rate bearing Total (% p.a.)

Financial assetsCash and cash

equivalents - - - 3,669 - 3,669 0.00 - 0.80 Derivative assets 863 768 1,142 250 102 3,125 1.33 - 7.73 Investments 26,595 59,771 200,262 - 18,324 304,952 0.00 - 7.88 Policy loans 13,590 - - - - 13,590 4.30 - 8.00

41,048 60,539 201,404 3,919 18,426 325,336Financial liabilities

Derivative liabilities - 50 10 425 45 530 1.00 - 4.39Cash collateral

received fromderivative contracts - - - 2,400 - 2,400 0.40 - 1.25

- 50 10 2,825 45 2,930 -




Financial assetsCash and cash - - - 3,866 - 3,866 0.00 - 0.75

equivalentsDerivative assets 1,007 1,552 1,536 258 50 4,403 1.42 - 7.73Investments 13,840 71,420 185,475 - 26,594 297,329 0.00 - 7.88Policy loans 12,693 - - - - 12,693 4.30 - 8.00

27,540 72,972 187,011 4,124 26,644 318,291Financial liabilitiesDerivative liabilities 8 5 1 157 11 182 1.41Cash collateral


8 5 1 4,329 11 4,354







The Company uses a bond forwards to hedge its exposure to interest rate risk.Under the Company’s policy, the critical terms of the forward contracts must alignwith the hedged items.

The Company only designates the spot element of bond forwards in hedgerelationships. The spot element is determined with reference to relevant spotmarket exchange rates. The differential between the contracted forward rate andthe spot market exchange rate is defined as the forward points. It is discounted,where material.

The changes in the forward element of the bond forwards that relate to hedgeditems are deferred in the costs of hedging reserve.

Significant financial assets and liabilities as at 31 December 2020 and 2019classified by type of interest rates are summarised in the table below, with thosefinancial assets and liabilities that carry fixed interest rates further classified basedon the maturity date, or the repricing date if this occurs before the maturity date.




Financial assetsCash and cash

equivalents - - - 3,669 - 3,669 0.00 - 0.80 Derivative assets 863 768 1,142 250 102 3,125 1.33 - 7.73 Investments 26,595 59,771 200,262 - 18,324 304,952 0.00 - 7.88 Policy loans 13,590 - - - - 13,590 4.30 - 8.00

41,048 60,539 201,404 3,919 18,426 325,336Financial liabilities

Derivative liabilities - 50 10 425 45 530 1.00 - 4.39Cash collateral


- 50 10 2,825 45 2,930 -




Financial assetsCash and cash - - - 3,866 - 3,866 0.00 - 0.75

equivalentsDerivative assets 1,007 1,552 1,536 258 50 4,403 1.42 - 7.73Investments 13,840 71,420 185,475 - 26,594 297,329 0.00 - 7.88Policy loans 12,693 - - - - 12,693 4.30 - 8.00

27,540 72,972 187,011 4,124 26,644 318,291Financial liabilitiesDerivative liabilities 8 5 1 157 11 182 1.41Cash collateral


8 5 1 4,329 11 4,354








As of 31 December 2020, interest rate-related hedging relationship of theCompany is entirely designated as cash flow hedge. The Company has no interestrate-related hedging instruments that designate neither as fair value hedge nornet investment in foreign operation.

The effects of hedges on the Company’s financial position and performance aredisclosed in Note 12.1.

Sensitivity

Profit or loss is sensitive to higher or lower interest income from investments indebt securities and derivatives as a result of changes in interest rates. Othercomponents of equity changes as a result of an increase or decrease in the fairvalue of the cash flow hedges of investment in securities and the fair value ofinvestment in securities measured at fair value through other comprehensiveincome.

The table below shows the interest sensitivity for the financial assets andfinancial liabilities held as at reporting date.

2020

Impact to net profitincrease (decrease)

Impact to other components of

equityincrease (decrease)


Interest rate increase 1% (34,273) (30,560,784)Interest rate decrease 1% 34,273 30,560,784* Holding all other variables constant





c) Equity price risk

Equity price risk refers to the loss affecting income and/or equity froma movement in equity price. The Company’s exposure to equity securities pricerisk arises from investments held by the Company which are classified eitheras at fair value through other comprehensive income (FVOCI).

To manage its equity price risk arising from investments in equity securities,the Company diversifies its portfolio, which is done accordance with the limitsset by the Company.

Equity price risk sensitivity analysis

The table below summarises the impact of increase/decrease of these equityindices on the Company’s other components of equity and net profit for theyear. The analysis is based on the assumption that the equity price hadincreased by 1% or decreased by 1%, respectively

2020Impact to other

components of equityincrease (decrease)

ThousandBaht

Thailand Stock ExchangeEquity prices increase 1% 145,183Equity prices decrease 1% (145,183)

US Stock ExchangeEquity prices increase 1% 5,606Equity prices decrease 1% (5,606)

Hong Kong Stock ExchangeEquity prices increase 1% 1,070Equity prices decrease 1% (1,070)

Singapore Stock ExchangeEquity prices increase 1% 19,782Equity prices decrease 1% (19,782)

* Holding all other variables constant and all the Company’s equityinstruments moved in line with the index

As of 31 December 2020, entire equity portfolio of the Company is classified as investment FVOCI, equity price risk does not impact post-tax profit. Other components of equity would increase or decrease as a result of gains/losses on equity securities.






c) Equity price risk

Equity price risk refers to the loss affecting income and/or equity froma movement in equity price. The Company’s exposure to equity securities pricerisk arises from investments held by the Company which are classified eitheras at fair value through other comprehensive income (FVOCI).

To manage its equity price risk arising from investments in equity securities,the Company diversifies its portfolio, which is done accordance with the limitsset by the Company.

Equity price risk sensitivity analysis

The table below summarises the impact of increase/decrease of these equityindices on the Company’s other components of equity and net profit for theyear. The analysis is based on the assumption that the equity price hadincreased by 1% or decreased by 1%, respectively

2020Impact to other

components of equityincrease (decrease)

ThousandBaht

Thailand Stock ExchangeEquity prices increase 1% 145,183Equity prices decrease 1% (145,183)

US Stock ExchangeEquity prices increase 1% 5,606Equity prices decrease 1% (5,606)

Hong Kong Stock ExchangeEquity prices increase 1% 1,070Equity prices decrease 1% (1,070)

Singapore Stock ExchangeEquity prices increase 1% 19,782Equity prices decrease 1% (19,782)

* Holding all other variables constant and all the Company’s equityinstruments moved in line with the index

As of 31 December 2020, entire equity portfolio of the Company is classified as investment FVOCI, equity price risk does not impact post-tax profit. Other components of equity would increase or decrease as a result of gains/losses on equity securities.





6.2.2 Credit risk

The Company has exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due, thus causing financial loss to the Company. Key areas where the Company is exposed to credit risk are:

• Reinsurers share of insurance liabilities• Amounts due from reinsurers in respect of claims already paid• Amounts due from insurance contract holders• Amounts due from insurance intermediaries• Investments in corporate debt securities• Counterparty risk with respect to derivatives transactions• Bank balances

a) Risk management

The Company has credit risk management policy and takes Thailand’s Risk-based Capital framework into consideration to oversight exposure of credit riskand concentration of credit risk.

The Company manages the risk by credit rating framework on investments indebt instrument portfolio and adopting appropriate credit control policies andprocedures for premium due and uncollected.

The Company structures the levels of credit risk it accepts by placing limits on itsexposure to a single counterparty, or groups of counterparties. Such risks aresubject to an annual or more frequent review. Limits on the level of credit risk aresubject to approval from the Local Management Investment Committee.

The monitoring of credit risk on corporate debt instruments is an ongoing processand its monitored on regular basis under Local Management Investment Committee.

b) Impairment of financial assets

The Company has 4 types of financial assets that are subject to the expectedcredit loss model:

• cash and cash equivalents• investment account receivables• other assets; and• debt investments measured at FVOCI.

While cash and cash equivalents and investment account receivables are also subject to the impairment requirements of the Accounting Guidance, the identified impairment loss was immaterial.




6.2.2 Credit risk (Cont’d)

b) Impairment of financial assets (Cont’d)

Other assets

To measure the expected credit losses, the Company applies simplified method basedon the historical recovery rate that the Company able to collect from debtors with 100%probability of default as the Company is certain on its future uncollectability.

On that basis, the loss allowance at gross carrying amount as at 31 December 2020was determined as follows for other assets:

2020Thousand

Baht

Not yet due -Up to 3 months -3 - 6 months -6 - 12 months 11,211Over 12 months 41,921

Total loss allowance 53,132

The reconciliations of loss allowances for other assets for the year ended 31 December 2020 are as follows:

2020Thousand

Baht

As of 31 December 2019 - calculated under TAS 101 -Increase in loss allowance recognised in profit or loss

during the year 53,132Written off during the year as uncollectible -

As at 31 December 2020 53,132







Other assets

To measure the expected credit losses, the Company applies simplified method basedon the historical recovery rate that the Company able to collect from debtors with 100%probability of default as the Company is certain on its future uncollectability.

On that basis, the loss allowance at gross carrying amount as at 31 December 2020was determined as follows for other assets:

2020Thousand

Baht

Not yet due -Up to 3 months -3 - 6 months -6 - 12 months 11,211Over 12 months 41,921

Total loss allowance 53,132

The reconciliations of loss allowances for other assets for the year ended 31 December 2020 are as follows:

2020Thousand

Baht

As of 31 December 2019 - calculated under TAS 101 -Increase in loss allowance recognised in profit or loss

during the year 53,132Written off during the year as uncollectible -

As at 31 December 2020 53,132







Debt investments measured at fair value through other comprehensiveincome

The Company considers that certain debt investments measured at FVOCI havelow credit risk, and the loss allowance recognised during the year was 12 monthsexpected losses. Management consider ‘low credit risk’ for bonds to be aninvestment grade credit rating with at least one major rating agency. Otherinstruments are considered to be low credit risk when they have a low risk ofdefault and the issuer has a strong capacity to meet its contractual cash flowobligations.

In some case, certain debt investments measured at FVOCI have high credit risk,a loss allowance is recognised equal to the credit losses expected over theremaining life of the asset following a significant increase in credit risk relative tothe initial recognition of the financial assets,

Debt investments measured at fair value through other comprehensive income(FVOCI) include listed and unlisted debt securities. The loss allowance is recognisedin profit or loss and reduces the fair value loss otherwise recognised in OCI.

The reconciliation of loss allowances and the allowance of expected credit lossby stage of risk for investment in debt investments measured at FVOCI as at 31December 2020 are disclosed in Note 13.




6.2.3 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting its obligations associated with its financial liabilities due to shortage of liquid funds. In particular, the risk that the Company’s financial assets are insufficient to fund the guaranteed benefit payments required under its insurance contracts when they fall due.

The Company manages the liquidity risk by holding sufficient liquid assets such as cash and short-term deposits. The underlying investments backing the liabilities that are traded in an active market and are readily disposed of can also meet the requirement of benefit payments as needed.

Management monitors rolling forecasts of the Company’s liquidity by projecting cash and cash equivalents on the basis of expected cash flows. The Company has adopted a liquidity risk framework to make sure that cash outflows can be met over a 12 months horizon.

a) Financing arrangements

The Company has access to the following undrawn credit facilities as at31 December as follows:

2020Thousand

BahtFloating rateExpiring within one year- Bank overdraft 2,500

Total 2,500





6.2.3 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting its obligations associated with its financial liabilities due to shortage of liquid funds. In particular, the risk that the Company’s financial assets are insufficient to fund the guaranteed benefit payments required under its insurance contracts when they fall due.

The Company manages the liquidity risk by holding sufficient liquid assets such as cash and short-term deposits. The underlying investments backing the liabilities that are traded in an active market and are readily disposed of can also meet the requirement of benefit payments as needed.

Management monitors rolling forecasts of the Company’s liquidity by projecting cash and cash equivalents on the basis of expected cash flows. The Company has adopted a liquidity risk framework to make sure that cash outflows can be met over a 12 months horizon.

a) Financing arrangements

The Company has access to the following undrawn credit facilities as at31 December as follows:

2020Thousand

BahtFloating rateExpiring within one year- Bank overdraft 2,500

Total 2,500


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e fo

reig

n ex

chan

ge ri

skC

ross

cur

renc

y sw

aps

(US

Dol

lar)

Not

iona

l val

ue-

--

-1,

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130

1,11

1,13

0Av

erag

e fo

reig

n ex

chan

ge ra

te-

--

-31

.35

Cro

ss c

urre

ncy

swap

s (E

uro)

Not

iona

l val

ue-

--

1,74

8,55

0-

1,74

8,55

0Av

erag

e fo

reig

n ex

chan

ge ra

te-

--

34.8

9-

Der

ivat

ive

hedg

e in

tere

st ra

te ri

skB

ond

forw

ards

Not

iona

l val

ue-

--

572,

000

-57

2,00

0Av

erag

e pr

ice

--

-(0

.01)

-

Tota

l der

ivat

ive

finan

cial

in

stru

men

ts a

pplie

dhe

dge

acco

untin

g-

--

2,32

0,55

0 1,

111,

130

3,43

1,68

0

Tota

l der

ivat

ives

1,39

7,79

7 1,

219,

425

152,

178

2,46

9,25

0 1,

111,

130

6,34

9,78

0

Tota

l2,

800,

232

1,77

2,63

9 78

2,46

53,

198,

701

4,48

1,22

1 13

,035

,258




6.2.3 Liquidity risk (Cont’d)

c) Maturity of hedged items

The tables below analyse the maturity of hedging relationship.

Within 1 month

Thousand Baht

1 - 3 months

Thousand Baht

3 months - 1 year

Thousand Baht

1 - 5 years Thousand

Baht

Over 5 years

Thousand Baht

Total Thousand

Baht

As at 31 December 2020Cross-currency swap

Cash inflow - - - 3,249,573 3,775,628 7,025,201Cash outflow - - - (3,249,573) (3,775,628) (7,025,201)

Net cash flow - - - - - -

Bond ForwardSettlement price 1,002,143 1,248,423 6,307,020 4,448,623 - 13,006,209

6.3 Capital management

6.3.1 Risk management

The Company’s objectives when managing capital are to safeguard the ability to continue as a going concern and to comply with capital requirements specified by the Office of Insurance Commission under the Risk-Based Capital framework (under Life Insurance Act B.E 2535 and amended by Life Insurance Act No.2 B.E 2551, No.3 B.E 2558 and No.4 B.E 2562), so that it can continue to provide returns for shareholdersand benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may vary the amount of dividends paid to shareholders or return capital to shareholders.


Kru

ngth

ai-A

XA L

ife In

sura

nce

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ic C

ompa

ny L

imite

dN

otes

to F

inan

cial

Sta

tem

ents

Fort

he y

ear e

nded

31

Dec

embe

r 202

0

7Fa

ir va

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7.1

Fair

valu

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timat

ion

The

follo

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show

s fa

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car

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fina

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litie

s by

cat

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yat

31

Dec

embe

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0.

Fair

valu

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VPL)

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valu

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(FVO

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ortis

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valu

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at 3

1 D

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ber 2

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Ass

ets

Fina

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l ass

ets

mea

sure

d at

fair

valu

e (F

V)

Der

ivat

ive

asse

ts1,

830,

454

1,29

4,10

6-

3,12

4,56

03,

124,

560

Inve

stm

ent i

n se

curit

ies

Inve

stm

ents

mea

sure

d at

fair

valu

e th

roug

h ot

her

com

preh

ensi

ve in

com

eD

epos

it at

fina

ncia

l ins

titut

ions

with

orig

inal

mat

urity

m

ore

than

3 m

onth

s-

36,8

51-

36,8

5136

,851

G

over

nmen

t bon

ds a

nd s

tate

-ow

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en

terp

rise

bond

s-

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For

eign

gov

ernm

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onds

and

sta

te-o

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d

ente

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,823

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,823

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rivat

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For

eign

deb

t sec

uriti

es-

24,9

56,6

6524

,956

,665

24,9

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65Eq

uity

sec

uriti

es-

4,77

4,81

8-

4,77

4,81

84,

774,

818

Uni

t Tru

st-

10,9

02,7

60-

10,9

02,7

6010

,902

,760

ETF

-2,

645,

885

-2,

645,

885

2,64

5,88

5N

egot

iabl

e ce

rtific

ate

of d

epos

it-

1,83

7,17

3-

1,83

7,17

31,

837,

173

Asse

ts h

eld

to c

over

linke

d lia

bilit

ies

10,8

27,7

14-

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,827

,714

10,8

27,7

14

Tota

l12

,658

,168

306,

245,

725

-31

8,90

3,89

331

8,90

3,89

3


Kru

ngth

ai-A

XA L

ife In

sura

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Publ

ic C

ompa

ny L

imite

dN

otes

to F

inan

cial

Sta

tem

ents

Fort

he y

ear e

nded

31

Dec

embe

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0

7Fa

ir va

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7.1

Fair

valu

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timat

ion

The

follo

win

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show

s fa

ir va

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and

car

ryin

g am

ount

s of

fina

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l ass

ets

and

liabi

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s by

cat

egor

yat

31

Dec

embe

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0.

Fair

valu

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VPL)

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com

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(FVO

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Am

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Tota

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ount

Fair

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As

at 3

1 D

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Ass

ets

Fina

ncia

l ass

ets

mea

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d at

fair

valu

e (F

V)

Der

ivat

ive

asse

ts1,

830,

454

1,29

4,10

6-

3,12

4,56

03,

124,

560

Inve

stm

ent i

n se

curit

ies

Inve

stm

ents

mea

sure

d at

fair

valu

e th

roug

h ot

her

com

preh

ensi

ve in

com

eD

epos

it at

fina

ncia

l ins

titut

ions

with

orig

inal

mat

urity

m

ore

than

3 m

onth

s-

36,8

51-

36,8

5136

,851

G

over

nmen

t bon

ds a

nd s

tate

-ow

ned

en

terp

rise

bond

s-

186,

953,

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-18

6,95

3,84

718

6,95

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7

For

eign

gov

ernm

ent b

onds

and

sta

te-o

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d

ente

rpris

e bo

nds

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,823

57,8

2357

,823

P

rivat

e en

terp

rises

sec

uriti

es-

72,7

85,7

9772

,785

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72,7

85,7

97

For

eign

deb

t sec

uriti

es-

24,9

56,6

6524

,956

,665

24,9

56,6

65Eq

uity

sec

uriti

es-

4,77

4,81

8-

4,77

4,81

84,

774,

818

Uni

t Tru

st-

10,9

02,7

60-

10,9

02,7

6010

,902

,760

ETF

-2,

645,

885

-2,

645,

885

2,64

5,88

5N

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iabl

e ce

rtific

ate

of d

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ts h

eld

to c

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linke

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ies

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-10

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10,8

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14

Tota

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,168

306,

245,

725

-31

8,90

3,89

331

8,90

3,89

3

Kru

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7Fa

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(Con

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7.1

Fair

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(Con

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31

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ont’d

)

Fair

valu

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ofit

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L)

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inco

me

(FVO

CI)

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ed

cost

Tota

l car

ryin

g am

ount

Fair

valu

eTh

ousa

nd B

aht

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sand

Bah

t Th

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nd B

aht

Thou

sand

Bah

t Th

ousa

nd B

aht

As

at 3

1 D

ecem

ber 2

020

(Con

t’d)

Ass

ets

(Con

t’d)

Fina

ncia

l ass

ets

not m

easu

red

at fa

ir va

lue

Cas

h an

d ca

sh e

quiv

alen

ts-

-3,

669,

030

3,66

9,03

03,

669,

030

Accr

ued

inve

stm

ent i

ncom

e-

-1,

584,

571

1,58

4,57

11,

584,

571

Rig

ht-o

f-use

ass

ets

--

640,

348

640,

348

640,

348

Agen

cy s

ecur

ity fu

nd-

-87

0,40

887

0,40

887

0,40

8Ac

coun

t rec

eiva

ble

-Inv

estm

ents

--

111,

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111,

073

111,

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Oth

er a

sset

s-

-14

8,91

214

8,91

214

8,91

2

Tota

l ass

ets

12,6

66,3

7430

6,24

5,72

57,

024,

342

325,

936,

441

325,

936,

441

Liab

ilitie

sFi

nanc

ial l

iabi

litie

s m

easu

red

at fa

ir va

lue

Inve

stm

entc

ontra

ctlia

bilit

ies

10,8

33,0

90-

-10

,833

,090

10,8

33,0

90D

eriv

ativ

e lia

bilit

ies

472,

232

57,3

18-

529,

550

529,

550

Fina

ncia

l lia

bilit

ies

not m

easu

red

at fa

ir va

lue

Leas

e lia

bilit

ies

--

697,

743

697,

743

697,

743

Agen

cy s

ecur

ity fu

nd-

-87

0,40

887

0,40

887

0,40

8Ac

crue

d ex

pens

es-

-2,

124,

362

2,12

4,36

22,

124,

362

Acco

unt p

ayab

le -

Inve

stm

ents

--

90,5

4190

,541

90,5

41O

ther

liab

ilitie

s-

-2,

851,

387

2,85

1,38

72,

851,

387

Tota

l lia

bilit

ies

11,3

05,3

2257

,318

6,63

4,44

117

,997

,081

17

,997

,081



7 Fair values (Cont’d)

7.1 Fair value estimation (Cont’d)

Proportion of the financial instruments’ contract value grouped by counterparties are as follows:

2020%

Financial institutions 21Other parties 79

Total 100

The following table presents financial assets and liabilities measured at fair value by their fair value hierarchy at 31 December 2020 and 2019.

Level 1 Level 2 Level 3 TotalThousand Thousand Thousand Thousand

Baht Baht Baht Baht

As at 31 December 2020AssetsFinancial assets at fair value through

profit or loss (FVPL)Derivative assets - 1,830,454 - 1,830,454Assets held to cover linked liabilities 10,827,714 - - 10,827,714

Financial assets at fair value through other comprehensive income (FVOCI)

Derivative assets - 1,294,106 - 1,294,106Investments measured at fair value through

other comprehensive incomeDeposit at financial institutions with

original maturity more than 3 months 36,851 - - 36,851 Government bonds and state-owned

enterprise bonds - 186,953,847 - 186,953,847 Foreign government bonds and state-owned

enterprise bonds - 57,823 - 57,823 Private enterprises securities - 72,785,797 - 72,785,797 Foreign debt securities - 24,956,665 - 24,956,665

Equity securities 4,774,818 - - 4,774,818Unit Trust 10,902,760 - - 10,902,760ETF 2,645,885 - - 2,645,885Negotiable certificate of deposit - 1,837,173 - 1,837,173

Total assets 29,188,028 289,715,865 - 318,903,893




The following table presents financial assets and liabilities measured at fair value by their fair value hierarchy at 31 December 2020 and 2019. (Cont’d)


Baht Baht Baht Baht

As at 31 December 2020 (Cont’d)LiabilitiesFinancial liabilities at fair value through profit

or loss (FVPL)Investment contract liabilities - 10,833,090 - 10,833,090Derivatives liabilities - 472,232 - 472,232

Financial liabilities at fair value through other comprehensive income (FVOCI)

Derivatives liabilities - 57,318 - 57,318

Total liabilities - 11,362,640 - 11,362,640

As at 31 December 2019AssetsDerivatives - 4,403,329 - 4,403,329Assets held to cover linked liabilities 10,281,684 - - 10,281,684Available-for-sale investments

Deposit at financial institutions with original maturity more than 3 months 36,628 - - 36,628

Debt securities - 268,617,093 - 268,617,093Equity securities 9,168,258 - - 9,168,258Unit Trust 13,105,840 - - 13,105,840ETF 4,320,465 - - 4,320,465Other securities - 2,081,008 - 2,081,008

Total Available-for sale financial assets 26,631,191 270,698,101 - 297,329,292

Total assets 36,912,875 275,101,430 - 312,014,305

LiabilitiesInvestment contract liabilities - 10,289,230 - 10,289,230Derivatives liabilities - 182,364 - 182,364


There was no transfer between levels during the year.

The Company has no non-financial assets that are measured at fair value.

7.2 Valuation techniques used to derive Level 1 fair values

The fair value of financial instruments traded in active markets is based on quoted market prices at the statement of financial position date. The quoted market price used for financial assets held by the Company is obtained from exchange markets and asset management companies. These instruments are included in Level 1.





The following table presents financial assets and liabilities measured at fair value by their fair value hierarchy at 31 December 2020 and 2019. (Cont’d)


Baht Baht Baht Baht

As at 31 December 2020 (Cont’d)LiabilitiesFinancial liabilities at fair value through profit

or loss (FVPL)Investment contract liabilities - 10,833,090 - 10,833,090Derivatives liabilities - 472,232 - 472,232

Financial liabilities at fair value through other comprehensive income (FVOCI)

Derivatives liabilities - 57,318 - 57,318


As at 31 December 2019AssetsDerivatives - 4,403,329 - 4,403,329Assets held to cover linked liabilities 10,281,684 - - 10,281,684Available-for-sale investments

Deposit at financial institutions with original maturity more than 3 months 36,628 - - 36,628

Debt securities - 268,617,093 - 268,617,093Equity securities 9,168,258 - - 9,168,258Unit Trust 13,105,840 - - 13,105,840ETF 4,320,465 - - 4,320,465Other securities - 2,081,008 - 2,081,008

Total Available-for sale financial assets 26,631,191 270,698,101 - 297,329,292

Total assets 36,912,875 275,101,430 - 312,014,305

LiabilitiesInvestment contract liabilities - 10,289,230 - 10,289,230Derivatives liabilities - 182,364 - 182,364


There was no transfer between levels during the year.

The Company has no non-financial assets that are measured at fair value.


The fair value of financial instruments traded in active markets is based on quoted market prices at the statement of financial position date. The quoted market price used for financial assets held by the Company is obtained from exchange markets and asset management companies. These instruments are included in Level 1.





Level 2 debt investments of marketable securities are fair valued based on quoted last bid price or the yield rate quoted by reference to the Thai Bond Market Association and Bloombergat the close of business on the statements of financial position date.

Level 2 other securities and derivatives instruments are measured based on inputs that are observable for the types of instruments such as interest rates, yield curve and foreign exchange rates that are observable at commonly quoted in publicly available source on the last working day of the statements of financial position date.

7.4 Fair value for assets and liabilities not measured at fair value for which the fair value shall be disclosed

Fair value of policy loans is determined by using amortised cost discounted by effective interest rate. The significant balance of loans is fixed interest rate bearing which management has assessed that the effective interest rate approximates to market rate. The carrying value amount is a reasonable approximation of fair value.

Other financial instruments not carried at fair value are typically short-term. They are not sensitive to external market factors. Accordingly, their carrying value amount is a reasonable approximation of fair value. This includes cash and cash equivalents, accrued investment income, agency security fund, accounts receivable - investment and other receivables, accrued expense, accounts payable - investment and other payables.

Management has assessed that the fair value of financial assets and liabilities does not significantly differ from their carrying values.

8 Critical accounting estimates, assumptions and judgements

Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

8.1 Product classification

The Company issues contracts that transfer insurance risk or financial risk or both. Insurancecontracts are those contracts that transfer significant insurance risk, while investment contracts are those contracts without significant insurance risk. The Company exercises significant judgement to determine whether there is a scenario (other than those lacking commercial substance) in which an insured event would require the Company to pay significant additional benefits to its customers.

In the event the Company has to pay significant additional benefits to its customers, the contract is accounted for as an insurance contract. The judgements exercised in determiningthe level of insurance risk in product classification affect the amounts recognised in the financial statements as insurance and investment contract liabilities. The accounting policy on product classification is described in note 5.12.1.


8 Critical accounting estimates, assumptions and judgements (Cont’d)

8.2 Insurance contract liabilities

The Company calculates the insurance contract liabilities for traditional life insurance using a net level premium valuation method, whereby the liability represents the present value of estimated future policy benefits to be paid, less the present value of estimated future net premiums to be collected from policyholders. This method uses best estimate assumptions at inception for mortality, morbidity, expected investment yields, policyholder dividends (for other participating business), surrenders and expenses set at the policy inception date.

These assumptions remain locked in thereafter, unless a deficiency arises on liability adequacy testing. Interest rate assumptions can vary by year of issuance and product. Mortality, surrender and expense assumptions are based on actual experience modified to allow for variations in policy form. The Company exercises significant judgement in making appropriate assumptions.

For contracts with an explicit account balance, such as universal life, insurance contract liabilities represent the accumulation value, which represents premiums received and investment returns credited to the policy less deductions for mortality and morbidity costs and expense charges. Significant judgement is exercised in making appropriate estimates of gross profits which are based on historical and anticipated future experiences, these estimates are regularly reviewed by the Company.

The Company accounts for insurance contract liabilities for participating business written by establishing a liability for the present value of guaranteed benefits less estimated future net premiums to be collected from policyholders. Establishing these liabilities requires the exercise of significant judgement. In addition, the assumption that all relevant performance is declared as a policyholder dividend may not be borne out in practice. The Company accounts for insurance product with guarantee dividend by establishing a liability for the present value of guaranteed benefits and non-guaranteed participation, less estimated future net premiums to be collected from policyholders.

The judgements exercised in the valuation of insurance contract liabilities affect the amounts recognised in the financial statements as insurance contract benefits and insurance contract liabilities. Further details of the related accounting policy, key risk and variables, and the sensitivities of assumptions to the key variables in respect of insurance contract liabilities are provided in note 20.3.3.

8.3 Liabilities adequacy testing

The Company evaluates the adequacy of its insurance and investment contract liabilities with DPF quarterly. Significant judgement is exercised in determining the level of aggregation at which liability adequacy testing is performed and in selecting best estimate assumptions. Liability adequacy is assessed by portfolio of contracts in accordance with the Company’s manner of acquiring, servicing and measuring the profitability of its insurancecontracts. The Company performs liability adequacy testing at company level.

8.4 Fair value of derivatives and other non-marketable financial instruments.

The fair value of financial instruments that are not traded in an active market such as over-the-counter derivatives and other non-marketable financial instruments are determined by using valuation techniques. The Company uses its judgement to select a variety of methods and make assumptions that are mainly based on market condition existing at the end of each reporting period.




8.2 Insurance contract liabilities

The Company calculates the insurance contract liabilities for traditional life insurance using a net level premium valuation method, whereby the liability represents the present value of estimated future policy benefits to be paid, less the present value of estimated future net premiums to be collected from policyholders. This method uses best estimate assumptions at inception for mortality, morbidity, expected investment yields, policyholder dividends (for other participating business), surrenders and expenses set at the policy inception date.

These assumptions remain locked in thereafter, unless a deficiency arises on liability adequacy testing. Interest rate assumptions can vary by year of issuance and product. Mortality, surrender and expense assumptions are based on actual experience modified to allow for variations in policy form. The Company exercises significant judgement in making appropriate assumptions.

For contracts with an explicit account balance, such as universal life, insurance contract liabilities represent the accumulation value, which represents premiums received and investment returns credited to the policy less deductions for mortality and morbidity costs and expense charges. Significant judgement is exercised in making appropriate estimates of gross profits which are based on historical and anticipated future experiences, these estimates are regularly reviewed by the Company.

The Company accounts for insurance contract liabilities for participating business written by establishing a liability for the present value of guaranteed benefits less estimated future net premiums to be collected from policyholders. Establishing these liabilities requires the exercise of significant judgement. In addition, the assumption that all relevant performance is declared as a policyholder dividend may not be borne out in practice. The Company accounts for insurance product with guarantee dividend by establishing a liability for the present value of guaranteed benefits and non-guaranteed participation, less estimated future net premiums to be collected from policyholders.

The judgements exercised in the valuation of insurance contract liabilities affect the amounts recognised in the financial statements as insurance contract benefits and insurance contract liabilities. Further details of the related accounting policy, key risk and variables, and the sensitivities of assumptions to the key variables in respect of insurance contract liabilities are provided in note 20.3.3.

8.3 Liabilities adequacy testing

The Company evaluates the adequacy of its insurance and investment contract liabilities with DPF quarterly. Significant judgement is exercised in determining the level of aggregation at which liability adequacy testing is performed and in selecting best estimate assumptions. Liability adequacy is assessed by portfolio of contracts in accordance with the Company’s manner of acquiring, servicing and measuring the profitability of its insurancecontracts. The Company performs liability adequacy testing at company level.

8.4 Fair value of derivatives and other non-marketable financial instruments.

The fair value of financial instruments that are not traded in an active market such as over-the-counter derivatives and other non-marketable financial instruments are determined by using valuation techniques. The Company uses its judgement to select a variety of methods and make assumptions that are mainly based on market condition existing at the end of each reporting period.




8.5 Impairment of premium receivable, other receivables and financial assets

The Company maintains an allowance for doubtful accounts to reflect impairment of premium receivable and other receivables relating to estimated losses that may be incurred in collection of the premium due. The allowance for doubtful accounts is based on collection experience and a review of current status of the premium due as at the date of statement of financial position.

Financial assets classified as available-for-sale and carried at cost/amortised cost are assessed for impairment regularly. This requires the exercise of significant judgement. The Company assess at each reporting date whether there is objective evidence that a financial assets is impaired.

8.6 Determination of lease terms

Critical judgement in determining the lease term, the Company considers all facts and circumstances that create an economic incentive to exercise an extension option, or not 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 terminated).

For leases of properties, the most relevant factors are historical lease durations, the costs and conditions of leased assets.

Most extension options on buidings and improvements lease has been included in the lease liability, because the Company considers i) the underlying asset condition and/or ii) insignificant cost to replace the leased assets.

The lease term is reassessed if an option is actually exercised (or not exercised) or the Company becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstance affecting this assessment occur, and that it is within the control of the Company.

8.7 Determination of discount rate applied to leases

The Company determines the incremental borrowing rate as follows:

• Where possible, use recent third-party financing received by the individual lessee asa starting point, adjusting to reflect changes in its financing conditions.

• Make adjustments specific to the lease, e.g. term, country, currency and security.



8.8 Deferred income taxes

Deferred tax liabilities are provided in full on all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. The Company considers future taxable income and ongoing prudent and feasible tax planning strategies in assessing whether to recognise deferred tax assets. The Company’s assumptions regarding the future profitability and the anticipated timing of utilisation of deductible temporary differences and significant changes in these assumptions from period to period may have a material impact on the Company’s reported financial position and results of operations.


The present value of the employee benefits obligation depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions will have an impact on the carrying amount of employee benefits obligation.

The Company determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the employee benefits obligation. In determining the appropriate discount rate, the Company considers market yield of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related employee benefit liability.

Other key assumptions for employee benefits obligation are based in part on current market conditions. Additional information is disclosed in Note 23.

9 Cash and cash equivalents

2020 2019Thousand

BahtThousand

Baht

Cash on hand 355 474Deposits at banks without fixed maturity date 3,668,675 3,865,585

Cash and cash equivalents 3,669,030 3,866,059

As at 31 December 2020, deposits with banks included deposits for Universal Life policies amounting to Baht 1.6 million (2019: Baht 1.8 million).

As at 31 December 2020, there were cash collaterals which financial institutions pledged under derivative contracts with the Company amounting to Baht 2,399.7 million (2019: Baht 4,171.8 million).




8.8 Deferred income taxes

Deferred tax liabilities are provided in full on all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. The Company considers future taxable income and ongoing prudent and feasible tax planning strategies in assessing whether to recognise deferred tax assets. The Company’s assumptions regarding the future profitability and the anticipated timing of utilisation of deductible temporary differences and significant changes in these assumptions from period to period may have a material impact on the Company’s reported financial position and results of operations.


The present value of the employee benefits obligation depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate. Any changes in these assumptions will have an impact on the carrying amount of employee benefits obligation.

The Company determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the employee benefits obligation. In determining the appropriate discount rate, the Company considers market yield of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related employee benefit liability.

Other key assumptions for employee benefits obligation are based in part on current market conditions. Additional information is disclosed in Note 23.

9 Cash and cash equivalents

2020 2019Thousand

BahtThousand

Baht

Cash on hand 355 474Deposits at banks without fixed maturity date 3,668,675 3,865,585

Cash and cash equivalents 3,669,030 3,866,059

As at 31 December 2020, deposits with banks included deposits for Universal Life policies amounting to Baht 1.6 million (2019: Baht 1.8 million).

As at 31 December 2020, there were cash collaterals which financial institutions pledged under derivative contracts with the Company amounting to Baht 2,399.7 million (2019: Baht 4,171.8 million).



10 Premium receivable

The balances of premium receivable as at 31 December 2020 and 2019 were aged as follows:

From direct insurance2020 2019

ThousandBaht

ThousandBaht

Not yet due 1,553,650 1,621,094Overdue under 30 days 9,494 883Overdue over 30 days to 60 days 1,898 12,729Overdue over 60 days to 90 days 6,799 2,678Overdue over 90 days 13,789 17,197

Total premium receivables 1,585,630 1,654,581Less Allowance for doubtful accounts - -

Premiums receivable 1,585,630 1,654,581

11 Amounts due from reinsurance

2020 2019Thousand

BahtThousand

Baht

Amounts due from reinsurer - current 109,600 141,811

12 Derivative assets and liabilities

The table below presents derivatives including embedded derivatives separately from main contracts that meet the definition in accounting policy as disclosed in Note 5.6, by objective for holding as following:

2020 2019Fair value Fair value

Assets Liabilities Assets LiabilitiesThousand Thousand Thousand Thousand

Baht Baht Baht Baht

Held for hedge derivatives- Applied hedge accounting 1,294,106 (57,318) 2,583,742 (12,588)- Not applied hedge accounting 1,830,454 (472,232) 1,819,587 (169,776)

Total derivatives 3,124,560 (529,550) 4,403,329 (182,364)


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12 Derivative assets and liabilities (Cont’d)

As at 31 December 2019, the Company has derivative financial instruments as below:2019

Fair valueNotional Assets Liabilities Net

Thousand Thousand Thousand ThousandType Objective Baht Baht Baht Baht

Cross currency Manage currency risk interest swap of bonds denominated

in foreign currency 20,246,554 2,594,603 (157,698) 2,436,905Bond forward Manage interest rate

(for cash flow hedge) risk of bond 9,015,000 1,748,835 (12,588) 1,736,247Foreign exchange Manage currency risk

forward of ETF and foreign unittrust denominatedin foreign currency 5,751,220 50,013 (11,345) 38,668

Foreign exchange Manage currency riskforward of accounts payable

denominated inforeign currency 28,565 - (733) (733)

Credit default swaps Manage credit risk 690,000 9,878 - 9,878

Total derivative instruments 35,731,339 4,403,329 (182,364) 4,220,965



12.1 Effects of hedge accounting on the financial position and performance

Effects of hedging instruments2020

Foreign exchange risk Interest rate risk

Cross-currencyinterest rate swaps Bond forwards


Carrying amount (asset) 348,793 945,313Notional amount 5,200,460 12,120,000Change in fair value of the hedging

instrument used as the basis for recognising hedge ineffectiveness for the year - -

Hedging gains (losses) recognised in other comprehensive income (328,887) (790,933)

Hedge ineffectiveness recognised in profit or loss - -

Reclassification adjustment from cash flow hedge reserve into profit or loss 174,342 -

Reclassification adjustment from cost of hedge reserve into profit or loss (1,065) -

Carrying amount (liability) 50,153 7,165Notional amount 2,859,680 572,000Change in fair value of the hedging





Reclassification adjustment from cost of hedge reserve into profit or loss - -

The Company separately presents certain hedging instrument according to its position at the end of the reporting year, either as derivative assets or derivative liabilities. While, the hedge ineffectiveness and reclassification adjustment is recognised as fair value gain/loss.




12.1 Effects of hedge accounting on the financial position and performance

Effects of hedging instruments2020


Cross-currencyinterest rate swaps Bond forwards


Carrying amount (asset) 348,793 945,313Notional amount 5,200,460 12,120,000Change in fair value of the hedging





Reclassification adjustment from cost of hedge reserve into profit or loss (1,065) -

Carrying amount (liability) 50,153 7,165Notional amount 2,859,680 572,000Change in fair value of the hedging





Reclassification adjustment from cost of hedge reserve into profit or loss - -

The Company separately presents certain hedging instrument according to its position at the end of the reporting year, either as derivative assets or derivative liabilities. While, the hedge ineffectiveness and reclassification adjustment is recognised as fair value gain/loss.




12.1 Effects of hedge accounting on the financial position and performance (Cont’d)

Effects from hedged item2020

Foreign exchange risk Interest rate riskInvestment in

debt securitiesInvestment in

debt securitiesThousand Thousand

Baht BahtChange in value of the hedged item

used as the basis for recognising hedge ineffectiveness for the year 171,998 -

Remaining cash flow hedge reserve and the cost of hedge reserve for continuing hedges 36,677 938,149

Remaining cash flow hedge reserve and the cost of hedge reserve from any hedging relationships for which hedge accounting is no longer applied - -

Effects of cash flow hedge and cost of hedge2020


Time-period related hedged

items

Transaction related hedged

itemsThousand Thousand

Baht BahtCash flow hedge reserveBeginning balance 197,866 1,560,240Hedging gains (losses) recognised in other

comprehensive income during the year (483,572) (722,617)Reclassification adjustment to profit or loss

during the year 326,263 -

Closing balance 40,557 837,623

Cost of hedge reserveBeginning balance 49,881 176,007Hedging gains (losses) recognised in other

comprehensive income during the year (52,696) (75,481)Reclassification adjustment to profit or loss

during the year (1,065) -

Closing balance (3,880) 100,526

As of 31 December 2020, entire cash flow hedge and cost of hedge of the Company associated with the cross-currency interest rate swaps that hedge time-period related hedged items.While, entire cash flow hedge and cost of hedge of the Company associated with the bond forwards that hedge transaction related hedged items.


13 Investments in securities

Investment in securities are as follows:2020

Cost/ Amortised cost Fair value

ThousandBaht

ThousandBaht

Investments measured at fair value through other comprehensive income

Deposit at financial institutions with original maturitymore than 3 months 36,851 36,851

Government bonds and state-owned enterprise bonds 160,228,339 186,953,847Foreign government bonds and state-owned enterprise bonds 59,000 57,823Private enterprises securities 68,695,349 72,785,797Foreign debt securities 23,321,424 24,956,665Equity securities 4,802,230 4,774,818Unit Trust 10,657,253 10,902,760ETF 2,550,459 2,645,885Negotiable certificate of deposit 1,800,000 1,837,173General investment 714 -

Total 272,151,619 304,951,619Add Unrealised gains on changes in value of investments 32,800,000 -

Total investments measured at fair value through othercomprehensive income 304,951,619 304,951,619

Total investment in securities 304,951,619 304,951,619

2019Cost/

Amortised cost Fair value Thousand

Baht Thousand

Baht

Available-for-sale securitiesGovernment bonds and state-owned enterprise bonds 143,239,904 173,616,961Foreign government bonds and state-owned enterprise bonds 235,000 237,585Private enterprises securities 68,528,729 72,148,619Foreign debt securities 21,572,580 22,613,928Equity securities 8,740,666 9,168,258Mutual funds 14,371,881 17,426,305Others 2,036,629 2,117,636


Total available-for-sale securities 297,329,292 297,329,292

General investmentsStocks 714Less Impairment charge (714)

Total general investments -

Total investment in securities 297,329,292



13 Investments in securities

Investment in securities are as follows:2020

Cost/ Amortised cost Fair value

ThousandBaht

ThousandBaht

Investments measured at fair value through other comprehensive income

Deposit at financial institutions with original maturitymore than 3 months 36,851 36,851

Government bonds and state-owned enterprise bonds 160,228,339 186,953,847Foreign government bonds and state-owned enterprise bonds 59,000 57,823Private enterprises securities 68,695,349 72,785,797Foreign debt securities 23,321,424 24,956,665Equity securities 4,802,230 4,774,818Unit Trust 10,657,253 10,902,760ETF 2,550,459 2,645,885Negotiable certificate of deposit 1,800,000 1,837,173General investment 714 -


Total investments measured at fair value through othercomprehensive income 304,951,619 304,951,619

Total investment in securities 304,951,619 304,951,619

2019Cost/

Amortised cost Fair value Thousand

Baht Thousand

Baht

Available-for-sale securitiesGovernment bonds and state-owned enterprise bonds 143,239,904 173,616,961Foreign government bonds and state-owned enterprise bonds 235,000 237,585Private enterprises securities 68,528,729 72,148,619Foreign debt securities 21,572,580 22,613,928Equity securities 8,740,666 9,168,258Mutual funds 14,371,881 17,426,305Others 2,036,629 2,117,636


Total available-for-sale securities 297,329,292 297,329,292

General investmentsStocks 714Less Impairment charge (714)

Total general investments -

Total investment in securities 297,329,292



13 Investments in securities (Cont’d)

13.1 Amounts recognised in profit or loss from investments measured at fair value through profit or loss

During the year, interest income from debt instruments at FVPL of Baht 4.25 million was recognised in profit or loss.

13.2 Investments measured at fair value through other comprehensive income

13.2.1 Amounts recognised in profit or loss and other comprehensive income

The following gains/(losses) were recognised in profit or loss and other comprehensive income during the year as follows:

2020Thousand

Baht

Gains/(losses) recognised in other comprehensive income (3,356,118)Gains/(losses) reclassified from other comprehensive income

to profit or loss on the sale of investments measured at FVOCI 2,386,061Interests from debt investments at FVOCI recognised in

profit or loss 8,596,322Dividends from equity investments at FVOCI recognised in

profit or loss 936,453Expected credit losses for debt investments at FVOCI

recognised in profit or loss (79,273)

Total 8,483,445

For the year ended 31 December 2019, the Company has recorded interest income and dividend income amounting to Baht 8,885 million and Baht 864 million, respectively. The amount of which has been recorded as part of net investment income in statements of comprehensive income.



13.2 Investments measured at fair value through other comprehensive income (Cont’d)

13.2.2 Debt securities that are measured at fair value through other comprehensive income

2020Expected credit lossrecognised in other

Fair valuecomprehensive

incomeThousand Baht Thousand Baht

Investments in debt securities which credit risk has not significantly

increased (Stage 1) 285,740,942 222,275Investment in debt securities whichcredit risk has significantly increased

(Stage 2) 850,363 84,762

Total 286,591,305 307,037

The reconciliations of expected credit loss for debt securities that are measured at fair value through other comprehensive income for the year ended 31 December 2020 are as follows:

Expected credit loss measured at amount equal to12 months

expected credit losses

Lifetime expected credit

losses TotalThousand Baht Thousand Baht Thousand Baht

31 December 2019 -calculated under TAS 101

Amounts restated through opening retained earnings 227,764 - 227,764

Opening loss allowance as at 1 January 2020 -calculated under the Accounting Guidance 227,764 - 227,764

Increase in loss allowancerecognised in profit or loss

during the year 25,549 117,236 142,785Written off during the year (31,038) (32,474) (63,512)

As of 31 December 2020 222,275 84,762 307,037




13.2 Investments measured at fair value through other comprehensive income (Cont’d)

13.2.2 Debt securities that are measured at fair value through other comprehensive income

2020Expected credit lossrecognised in other

Fair valuecomprehensive

incomeThousand Baht Thousand Baht

Investments in debt securities which credit risk has not significantly

increased (Stage 1) 285,740,942 222,275Investment in debt securities whichcredit risk has significantly increased

(Stage 2) 850,363 84,762

Total 286,591,305 307,037

The reconciliations of expected credit loss for debt securities that are measured at fair value through other comprehensive income for the year ended 31 December 2020 are as follows:

Expected credit loss measured at amount equal to12 months

expected credit losses

Lifetime expected credit

losses TotalThousand Baht Thousand Baht Thousand Baht

31 December 2019 -calculated under TAS 101

Amounts restated through opening retained earnings 227,764 - 227,764

Opening loss allowance as at 1 January 2020 -calculated under the Accounting Guidance 227,764 - 227,764

Increase in loss allowancerecognised in profit or loss

during the year 25,549 117,236 142,785Written off during the year (31,038) (32,474) (63,512)

As of 31 December 2020 222,275 84,762 307,037


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14 Loans and accrued interest receivables

As at 31 December 2020 and 2019, the balance of loans and accrued interest are aged as follows:

2020 2019Accrued Accruedinterest interest

Principal income Total Principal income TotalOutstanding Thousand Thousand Thousand Thousand Thousand Thousand

Period Baht Baht Baht Baht Baht Baht

Not yet due 13,590,493 383,671 13,974,164 12,693,240 352,113 13,045,353

Loans 13,590,493 383,671 13,974,164 12,693,240 352,113 13,045,353

Cash values of insurance policies are used as collateral of the policy loans.

15 Assets held to cover linked liabilities

As at 31 December 2020 and 2019, the Company has assets held to cover linked liabilities measured at FVPL. The details are as follows:

2020 2019Thousand Thousand

Baht Baht

Investment in mutual funds classified as debt securitiesthat are measured at fair value through profit or loss 10,827,714 10,281,684

Total 10,827,714 10,281,684

Reconciliation of change in balance of assets held to cover linked liabilities as follow:


Baht Baht

Beginning balance of the year 10,281,684 9,863,813Additions 2,996,428 989,532Disposals (2,383,779) (891,755)Unrealised gain (loss) in profit or loss (66,619) 320,094

Ending balance of the year 10,827,714 10,281,684


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14 Loans and accrued interest receivables

As at 31 December 2020 and 2019, the balance of loans and accrued interest are aged as follows:

2020 2019Accrued Accruedinterest interest

Principal income Total Principal income TotalOutstanding Thousand Thousand Thousand Thousand Thousand Thousand

Period Baht Baht Baht Baht Baht Baht

Not yet due 13,590,493 383,671 13,974,164 12,693,240 352,113 13,045,353

Loans 13,590,493 383,671 13,974,164 12,693,240 352,113 13,045,353

Cash values of insurance policies are used as collateral of the policy loans.

15 Assets held to cover linked liabilities

As at 31 December 2020 and 2019, the Company has assets held to cover linked liabilities measured at FVPL. The details are as follows:


Baht Baht

Investment in mutual funds classified as debt securitiesthat are measured at fair value through profit or loss 10,827,714 10,281,684

Total 10,827,714 10,281,684

Reconciliation of change in balance of assets held to cover linked liabilities as follow:


Baht Baht

Beginning balance of the year 10,281,684 9,863,813Additions 2,996,428 989,532Disposals (2,383,779) (891,755)Unrealised gain (loss) in profit or loss (66,619) 320,094



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19 Other assets

The details of other assets as at 31 December 2020 and 2019 are as follows:


Baht Baht

Other debtors 6,158 6,225Security and deposits 42,226 41,684Prepaid expenses 49,856 68,094Others 103,804 96,792

Total 202,044 212,795Less expected credit loss (Note 36) (53,132) -

Total other assets 148,912 212,795

20 Insurance contract liabilities


Baht Baht

Long-term technical reserves 256,693,293 243,227,361

Short-term technical reservesClaim liabilities

- Reported claims 743,876 517,109- Claims incurred but not reported 216,030 224,185

Total Claim liabilities 959,906 741,294Premium liabilities

- Unearned premium reserves 2,368,249 2,082,158Unpaid policy benefits 8,380,273 8,690,915Due to insured 936,331 879,765

Total 269,338,052 255,621,493

The Company has recorded benefits payment to life policies and insurance claims recovered from reinsurers for paid claim only.


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0 Krungthai-AXA Life Insurance Public Company LimitedNotes to Financial StatementsFor the year ended 31 December 2020

20 Insurance contract liabilities (Cont’d)

20.2 Long-term technical reserves


Baht Baht

Beginning balance of the year 243,227,361 222,886,928Policy reserve increase for

new policies and inforce policies 41,447,274 44,099,748Policy reserve decrease from benefits paid to

life policyholders for lapse, cancel, etc (27,981,342) (23,759,315)


The assumptions used in actuarial estimation are as follows:

2020 2019

Mortality, Morbidity, and Survival rate 100% of TMO86, TMO97, TMO08,

TMO17, Annuity table 2009

100% of TMO86, TMO97, TMO08,


Discount rate 1.5%-6% 2% - 6%Benefit paid to insured 100% of guarantee

benefit100% of guarantee

benefit

Aging of undiscounted insurance contract liabilities’ repayment is as follows:


Baht Baht

Expected repayment within 1 year 49,133,346 34,187,210Expected repayment between 1-5 years 172,986,588 164,424,628Expected repayment over 5 years 385,573,947 293,296,443

Total 607,693,881 491,908,281


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3,69

0 Krungthai-AXA Life Insurance Public Company LimitedNotes to Financial StatementsFor the year ended 31 December 2020


20.2 Long-term technical reserves


Baht Baht

Beginning balance of the year 243,227,361 222,886,928Policy reserve increase for

new policies and inforce policies 41,447,274 44,099,748Policy reserve decrease from benefits paid to

life policyholders for lapse, cancel, etc (27,981,342) (23,759,315)


The assumptions used in actuarial estimation are as follows:

2020 2019

Mortality, Morbidity, and Survival rate 100% of TMO86, TMO97, TMO08,


100% of TMO86, TMO97, TMO08,


Discount rate 1.5%-6% 2% - 6%Benefit paid to insured 100% of guarantee

benefit100% of guarantee

benefit

Aging of undiscounted insurance contract liabilities’ repayment is as follows:


Baht Baht

Expected repayment within 1 year 49,133,346 34,187,210Expected repayment between 1-5 years 172,986,588 164,424,628Expected repayment over 5 years 385,573,947 293,296,443

Total 607,693,881 491,908,281




20.3 Short-term technical reserves

20.3.1 Claim liabilities

The movement details are belows:


Baht Baht

Beginning balance of the year 741,294 717,330Claim incurred for the year 4,173,716 4,577,494Changes in claim reserves

assumptions for the year (8,155) (38,338)Claim paid for the year (3,946,949) (4,515,192)

Ending balance of the year 959,906 741,294

20.3.2 Aging of claim liabilities’ repayment


Baht Baht

Expected repayment within 1 year 959,906 741,294

Total 959,906 741,294

20.3.3 The sensitivities of assumptions to the key variables in respect of insurancecontract liabilities

Impact onclaim reserve

and unallocatedloss adjustment Impact on Impact on

expense profit or loss equity

Change inincrease

(decrease)increase

(decrease)increase

(decrease)Assumptions

%Thousand

BahtThousand

BahtThousand

Baht

Expected loss ratio +10% 18,306 (18,306) (18,306)-10% (18,306) 18,306 18,306

20.3.4 Unearned premium reserve


Baht Baht

Beginning balance of the year 2,082,158 1,864,731Premium written in the year 7,940,693 7,542,151Earned premium in the year (7,654,602) (7,324,724)




20.4 Unpaid policy benefits


Baht Baht

Death benefits 262,604 494,202Maturity benefits 7,854 8,072Surrender 21,522 111,825Dividends 8,080,086 8,072,525Annuities 8,207 4,291

Total 8,380,273 8,690,915

21 Investment contract liabilities


Baht Baht

Beginning balance for the year 10,289,230 9,865,011Deposit during the year 1,630,353 932,648Withdrawal during the year (540,747) (569,461)Fee charged (318,211) (241,056)Change in fair value (236,189) 313,180Others 8,654 (11,092)

Closing balance at the end of year 10,833,090 10,289,230

22 Amount due to reinsurance


Baht Baht

Amount withheld on reinsurance treaties 18,547 18,570Reinsurance payables 184,820 168,059

Total amounts due to reinsurers 203,367 186,629




20.4 Unpaid policy benefits


Baht Baht

Death benefits 262,604 494,202Maturity benefits 7,854 8,072Surrender 21,522 111,825Dividends 8,080,086 8,072,525Annuities 8,207 4,291

Total 8,380,273 8,690,915

21 Investment contract liabilities


Baht Baht

Beginning balance for the year 10,289,230 9,865,011Deposit during the year 1,630,353 932,648Withdrawal during the year (540,747) (569,461)Fee charged (318,211) (241,056)Change in fair value (236,189) 313,180Others 8,654 (11,092)

Closing balance at the end of year 10,833,090 10,289,230

22 Amount due to reinsurance


Baht Baht

Amount withheld on reinsurance treaties 18,547 18,570Reinsurance payables 184,820 168,059

Total amounts due to reinsurers 203,367 186,629



23 Employee benefits

23.1 Employee benefits obligation

The amounts recognised in profit or loss are as follows:


Baht Baht

Defined benefits obligationCurrent service costs 28,512 25,277Past service costs - 20,276Interest cost 3,231 3,470

Total expenses 31,743 49,023

Commitment from defined benefit plansPresent value of employee benefits obligations 181,963 139,237

Changes in the present value of employee benefits As at 1 January 139,237 97,163Current service costs 28,512 25,277Past service costs - 20,276Interest cost 3,231 3,470Less Benefits paid (6,343) (14,512)Loss on actuarial remeasurement 16,772 10,793Other adjustment 554 (3,230)

As at 31 December 181,963 139,237

Significant assumptions used in the actuarial calculation are summarised as follows:

2020 2019

Discount rate 0.45% - 2.91% 1.76% - 4.16%Salary increase rate 6.0% - 9.0% 6.0% - 10.0%Retirement ages 60 years old 60 years oldTurnover rate 10% - 12% 10% - 15%

Sensitivity analysis on key assumptions changes are as follows:

Impact on employee benefits obligationChange in

assumptionsIncrease in assumption

Decrease in assumption

2020 2019 2020 2019 2020 2019

Discount rate 1% 1% -11% -12% +14% +14%Salary increase rate 1% 1% +13% +15% -11% -13%Turnover rate 20% 20% -18% -19% +24% +26%

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period has been applied as when calculating the pension liability recognised within the statement of financial position.


23 Employee benefits (Cont’d)

23.1 Employee benefits obligation (Cont’d)

2020 2019

Weighted average duration of the defined benefitobligation (years) 16 14

Maturity analysis of undiscounted benefits expected to be paid (Thousand Baht)Benefits expected to be paid within 1 year 7,215 2,694 Benefits expected to be paid between 1 - 5 years 31,586 47,541Benefits expected to be paid more than 5 years 748,789 734,983

23.2 Share-based compensation

As at 31 December 2020, the Company has share-based compensation in accordance with AXA Group policy using the share of AXA SA, a listed company in Euronext Paris CompartimentA, which is one of the ultimate parent companies.

During the year 2020 there is a share-based compensation plan to employee. The details are as below:

The plan will give eligible employees the right to acquire AXA SA free ordinary shares, after the respective vesting period and under the specified conditions. This period will be a 4-yearacquisition. The number of AXA SA free ordinary shares at the end of the acquisition period will be calculated depending on the achievement of performance objectives of the company during specified financial periods.

Performance criteria are set by the Board of Directors and will measure the performance of the Company.

2020 2019Number of Number of

shares shares

As at 1 January 216,934 188,246Granted/Transferred in 121,099 99,670Exercised (32,485) (22,148)Forfeited/Transferred out (33,670) (48,834)

As at 31 December 271,878 216,934

The total recognised compensation in other employee benefits amounting to Baht 58 million (2019: Baht 44 million) and in other liabilities amounting to Baht 121 million (2019: Baht 98 million). The Company uses projected cash flow technique to calculate the fair value of this share-based payment plan. The key assumptions for valuations are expected share price and employee turn-over rate.



23 Employee benefits (Cont’d)

23.1 Employee benefits obligation (Cont’d)

2020 2019

Weighted average duration of the defined benefitobligation (years) 16 14

Maturity analysis of undiscounted benefits expected to be paid (Thousand Baht)Benefits expected to be paid within 1 year 7,215 2,694 Benefits expected to be paid between 1 - 5 years 31,586 47,541Benefits expected to be paid more than 5 years 748,789 734,983

23.2 Share-based compensation

As at 31 December 2020, the Company has share-based compensation in accordance with AXA Group policy using the share of AXA SA, a listed company in Euronext Paris CompartimentA, which is one of the ultimate parent companies.

During the year 2020 there is a share-based compensation plan to employee. The details are as below:

The plan will give eligible employees the right to acquire AXA SA free ordinary shares, after the respective vesting period and under the specified conditions. This period will be a 4-yearacquisition. The number of AXA SA free ordinary shares at the end of the acquisition period will be calculated depending on the achievement of performance objectives of the company during specified financial periods.

Performance criteria are set by the Board of Directors and will measure the performance of the Company.

2020 2019Number of Number of

shares shares

As at 1 January 216,934 188,246Granted/Transferred in 121,099 99,670Exercised (32,485) (22,148)Forfeited/Transferred out (33,670) (48,834)

As at 31 December 271,878 216,934

The total recognised compensation in other employee benefits amounting to Baht 58 million (2019: Baht 44 million) and in other liabilities amounting to Baht 121 million (2019: Baht 98 million). The Company uses projected cash flow technique to calculate the fair value of this share-based payment plan. The key assumptions for valuations are expected share price and employee turn-over rate.


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25 Lease liabilities

The maturity analysis of lease liabilities are aged as follows:

2020Thousand

Maturing Baht

Within 1 year 134,707Between 1 to 2 years 143,436Between 2 to 3 years 152,253Between 3 to 4 years 142,072Between 4 to 5 years 109,434Later than 5 years 15,841

Total 697,743

Including: - Principal 748,780- Interest (51,037)

For the year ended 31 December 2020, interest expense on lease liabilities amounted to Baht 22million is recorded as “Finance cost” in the statement of comprehensive income.

26 Other liabilities


Baht Baht

Cash collateral received from derivative contracts 2,399,700 4,171,800Other liabilities from related parties (Note 33) 250,438 195,037Others 227,055 315,191

Total 2,877,193 4,682,028

Cash collateral received from derivative contracts are cash collateral that the financial institutionspledged with the Company under derivative contracts.

27 Dividends

Dividends payable are not accounted for until they have been approved at the Annual General Meeting and the Office of Insurance Commission. At the Annual General Meeting held on 3 July 2020, the shareholders approved the dividend payment regarding the 2019 operating results amounting to Baht 300 million. While, the Office of Insurance Commission approved certain payment in January 2021. As a result, there is no dividend payment in 2020. (2019: the shareholders approved the non-payment of dividend regarding the 2018 operating results).


28 Operating expenses


Baht BahtEmployee expenses not relating to underwriting

expenses and loss adjustment expenses 1,571,687 1,339,482Property and equipment expenses not relating to

underwriting expenses 614,272 610,767Tax and duty (5,603) 9,895Reversal on bad debt and doubtful accounts 10,863 -Selling and marketing expenses 223,501 297,933Service fees 785,309 655,585Other operating expenses 789,910 823,311

Total operating expenses 3,989,939 3,736,973

29 Employee expenses


Baht Baht

Salary and wages 1,784,980 1,652,505Social securities 17,676 17,395Provident fund 70,141 65,459Other employee benefits 258,298 357,161

Total employee expenses 2,131,095 2,092,520

The Company established a provident fund in accordance with the Provident Fund Act B.E. 2530. Both employees and the Company contribute to the fund monthly at the rate of 3%-10% of basic salary. The Company appointed a fund manager to manage the fund in accordance with terms and conditions as prescribed in the Ministerial Regulations.



28 Operating expenses


Baht BahtEmployee expenses not relating to underwriting

expenses and loss adjustment expenses 1,571,687 1,339,482Property and equipment expenses not relating to

underwriting expenses 614,272 610,767Tax and duty (5,603) 9,895Reversal on bad debt and doubtful accounts 10,863 -Selling and marketing expenses 223,501 297,933Service fees 785,309 655,585Other operating expenses 789,910 823,311

Total operating expenses 3,989,939 3,736,973

29 Employee expenses


Baht Baht

Salary and wages 1,784,980 1,652,505Social securities 17,676 17,395Provident fund 70,141 65,459Other employee benefits 258,298 357,161

Total employee expenses 2,131,095 2,092,520

The Company established a provident fund in accordance with the Provident Fund Act B.E. 2530. Both employees and the Company contribute to the fund monthly at the rate of 3%-10% of basic salary. The Company appointed a fund manager to manage the fund in accordance with terms and conditions as prescribed in the Ministerial Regulations.



30 Income tax expense


Baht Baht

Current tax on profit for the year 526,890 189,837(Increase) Decrease in deferred tax (Note 24) (166,741) 357,115

Income taxes for the year 360,149 546,952

The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the Thailand basic tax rate as follows:


Baht Baht

Profit before tax 2,078,491 2,428,078Income tax rate 20% 20%

Tax calculated at tax rate 415,698 485,616The impact of income not subject to tax/non-deductible

expense for tax purpose (55,549) (53,166)Re-measurement of deferred tax - 114,502

Income taxes for the year 360,149 546,952

The effective tax rate for 2020 is 17% (2019: 23%). Significant transaction being income not subject to tax is dividend income (2019: Nil). There was no significant transaction being expenses not deductible for tax purpose.

The additional information related to deferred tax are provided in Note 24.


31 Tax effect from other comprehensive income

2020 2019Before Tax benefit Before Tax benefit

taxThousand

Baht

(expense) Thousand

Baht

Net of tax Thousand

Baht

taxThousand

Baht

(expense) Thousand

Baht

Net of tax Thousand

Baht

Unrealised gain (loss) in value ofinvestments measured at fair value through other comprehensive income (3,356,118) 671,224 (2,684,894) 31,853,139 (6,370,628) 25,482,511

Actuarial loss on employee benefits obligation (16,772) 7,025 (9,747) (10,793) - (10,793)

Gain (loss) on cash flow hedges (1,206,189) 241,238 (964,951) 1,676,051 (335,210) 1,340,841Gain (loss) on deferred cost of

hedging (128,177) 25,635 (102,542) - - -Items in other comprehensive

income transferredto profit or loss (2,060,864) 412,173 (1,648,691) (1,531,659) 306,332 (1,225,327)

Total (6,768,120) 1,357,295 (5,410,825) 31,986,738 (6,399,506) 25,587,232

32 Basic earnings per share

Basic earnings per share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year.

2020 2019

Net profit for the year attributable to ordinary shareholders (Thousand Baht) 1,718,342 1,881,126

Weighted average number of ordinary sharesin issue during the year (Thousand Shares) 135,500 135,500

Basic profit per share (Baht) 12.68 13.88

These are no potential dilutive ordinary shares in issue for the years ended 31 December 2020and 2019.



31 Tax effect from other comprehensive income

2020 2019Before Tax benefit Before Tax benefit

taxThousand

Baht

(expense) Thousand

Baht

Net of tax Thousand

Baht

taxThousand

Baht

(expense) Thousand

Baht

Net of tax Thousand

Baht

Unrealised gain (loss) in value ofinvestments measured at fair value through other comprehensive income (3,356,118) 671,224 (2,684,894) 31,853,139 (6,370,628) 25,482,511

Actuarial loss on employee benefits obligation (16,772) 7,025 (9,747) (10,793) - (10,793)

Gain (loss) on cash flow hedges (1,206,189) 241,238 (964,951) 1,676,051 (335,210) 1,340,841Gain (loss) on deferred cost of

hedging (128,177) 25,635 (102,542) - - -Items in other comprehensive

income transferredto profit or loss (2,060,864) 412,173 (1,648,691) (1,531,659) 306,332 (1,225,327)

Total (6,768,120) 1,357,295 (5,410,825) 31,986,738 (6,399,506) 25,587,232

32 Basic earnings per share

Basic earnings per share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year.

2020 2019

Net profit for the year attributable to ordinary shareholders (Thousand Baht) 1,718,342 1,881,126

Weighted average number of ordinary sharesin issue during the year (Thousand Shares) 135,500 135,500

Basic profit per share (Baht) 12.68 13.88

These are no potential dilutive ordinary shares in issue for the years ended 31 December 2020and 2019.



33 Related party transactions

Transactions with its major shareholders and related companies are mainly as follows:

Balances with related companies as at 31 December 2020 and 2019:


Relationship Baht Baht

Krungthai Bank Public Company Limited ShareholderBank deposits 2,089,112 2,880,852Investment in equity security 34,513 132,280Corporate bond 635,118 622,160Bill of exchange 3,229,426 4,113,925Accrued interest - Bond 1,941 1,948Accrued interest - Notes 6,733 25,569Accrued service fees expense 199,747 249,936Other receivable 696 -

Krungthai Card Public Company Limited Common shareholders

Investment in equity security 98,348 75,011

Inter Partner Assistance Company Limited Common shareholders

Accrued service fees expense 28,852 73,084Other receivable 640 -

AXA Asia Limited Common shareholders

Other receivable - 1,449Other payable 2,252 12,067

Krungthai Asset Management PublicCompany Limited

Common shareholders

Accrued management fee 482 579

AXA Group Operations Hong Kong Limited(formerly AXA Technology Services Asia(HK) Limited)

Common shareholders

Other receivable 8,857 3,935Other payable 236,729 158,534

AXA SA Common shareholders

Other receivable 2,272 4,381

AXA Insurance Public Company Limited Common shareholders

Other receivable - 2,358

Architas Asia Limited Common shareholders

Other receivable 972 -


33 Related party transactions (Cont’d)

Transactions with its major shareholders and related companies are mainly as follows: (Cont’d)

Balances with related companies as at 31 December 2020 and 2019: (Cont’d)



GIE AXA SUCURSAL EN ESPAÑA Common shareholders


AXA Global Move SA Common shareholders

Other payable 10,643 10,601

GIE AXA Common shareholders

Other payable 396 62

AXA Group Operations Malaysia Sdn. Bhd. (formerly AXA Share service center Malaysia )

Common shareholders

Other payable - 13,835

AXA Group Operations SAS Common shareholders

Other payable 418 -

National Mutual International Pty. Ltd. ShareholderOther receivable 111 112

AXA BELGIUM Common shareholders


AXA France VIE Common shareholders

Amounts due to reinsurer - Net 50,231 76,494

AXA China Region Insurance CompanyLimited

Common shareholders






Balances with related companies as at 31 December 2020 and 2019: (Cont’d)



GIE AXA SUCURSAL EN ESPAÑA Common shareholders


AXA Global Move SA Common shareholders

Other payable 10,643 10,601

GIE AXA Common shareholders

Other payable 396 62

AXA Group Operations Malaysia Sdn. Bhd. (formerly AXA Share service center Malaysia )

Common shareholders

Other payable - 13,835

AXA Group Operations SAS Common shareholders

Other payable 418 -

National Mutual International Pty. Ltd. ShareholderOther receivable 111 112

AXA BELGIUM Common shareholders


AXA France VIE Common shareholders


AXA China Region Insurance CompanyLimited

Common shareholders






Transactions with related companies for the year ended 31 December 2020 and 2019:



Krungthai Bank Public Company Limited Shareholder

Income Interest received 33,927 88,708Dividend income 6,074 6,361

40,001 95,069

ExpensesBank charge 57,193 65,491Credit card fees 112,422 99,772Service fees 2,016,007 2,163,851

2,185,622 1,970,857

AXA France VIE CommonIncome shareholdersPremiums ceded to reinsurer (54,476) (57,590)Fee and commission income 3,610 3,405

(50,866) (54,185)

ExpensesClaim recovered from reinsurer (24,136) (30,684)

AXA China Region Insurance Company Limited

Commonshareholders

IncomePremiums ceded to reinsurer (15,974) (6,668)

ExpensesClaim recovered from reinsurer (9,237) (1,172)Service fee - 39

(9,237) (1,133)

AXA Global Re Income Commonshareholders

Premiums ceded to reinsurer - (6,249)

AXA Investment Manager Asia Ltd.

Commonshareholders

Management fees 24,071 20,714

Krungthai Card PublicCompany Limited

Commonshareholders

Credit card fees 98,715 156,139




Transactions with related companies for the year ended 31 December 2020 and 2019:(Cont’d)



Inter Partner AssistanceCompany Limited

CommonShareholder

Service fees 94,021 126,388

AXA Group Operations Hong Kong Limited (formerly AXATechnology ServicesAsia (HK) Limited)

CommonShareholder

Service fees 601,569 505,812

AXA Asia Limited CommonShareholder

Service fees 119,566 122,472

AXA Global Move SA CommonShareholder


AXA Group SolutionsAsia Limited

Common Shareholder

Service fees - 2,684

AXA Services SAS CommonShareholder


AXA Group OperationsMalaysia Sdn. Bhd.(formerly AXA ShareService center Malaysia)

CommonShareholder


AXA Group Solutions AsiaLimited

CommonShareholder

Service fees - 920

AXA EB Partners CommonShareholder


AXA Group Operations SAS CommonShareholder

Service fees 26,072 33








Inter Partner AssistanceCompany Limited

CommonShareholder


AXA Group Operations Hong Kong Limited (formerly AXATechnology ServicesAsia (HK) Limited)

CommonShareholder

Service fees 601,569 505,812

AXA Asia Limited CommonShareholder

Service fees 119,566 122,472

AXA Global Move SA CommonShareholder


AXA Group SolutionsAsia Limited

Common Shareholder


AXA Services SAS CommonShareholder


AXA Group OperationsMalaysia Sdn. Bhd.(formerly AXA ShareService center Malaysia)

CommonShareholder


AXA Group Solutions AsiaLimited

CommonShareholder

Service fees - 920

AXA EB Partners CommonShareholder


AXA Group Operations SAS CommonShareholder

Service fees 26,072 33








AXA SA CommonShareholder

Service fees - 623

GIE AXA CommonShareholder


GIE AXA Universite CommonShareholder

Service fees - 905

AXA Group Operations Spain CommonShareholder

Service fees 1,823 -

Krungthai Asset ManagementPublic Company Limited

Management fees

CommonShareholder

8,186 13,509

The Company is offered the same interest rate and condition as the bank offers to other customers.

The rate and conditions of bank charges are the same as the bank offers to other customers.

The rates and conditions of credit card fees, service fees and management fees are as specified in the agreement between the Company and the related companies.

Key management compensations

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company. The Company has recorded salaries, bonuses, post-employment benefits and other expenses relating to key management personnel for the years ended 31 December 2020 and 2019, amounting to Baht 208 million and Baht 254 million,respectively. The amount of which has been recorded as part of operating expense in statements of comprehensive income.


34 Securities placed with the Registrar and securities reserved with the Registrar

34.1 Securities placed with the Registrar


Baht Baht

Government bonds 31,071 30,562

34.2 Securities reserved with the Registrar


Baht Baht

Government bonds 70,177,898 71,158,955

35 Contingent liabilities and commitments

35.1 As indicated in Note 4, the Company has adopted TFRS 16 retrospectively from 1 January 2020, but has not restated comparatives for the 2019 reporting period as permitted under the specific transition provisions in the standard. Prior to the adoption of TFRS 16, the Company had future aggregate minimum lease payments under non-cancellable service agreement and short-term leases as follows:


Baht Baht

Due within 1 year 17,948 190,328Due more than 1 year but no later than 5 years 7,145 242,389

Total 25,093 432,717

35.2 As at 31 December 2020, the Company has commitments with a bank in Thailand from bond forward contracts as follows:


Maturity year Baht Baht

2020 - 5,871,4932021 8,557,586 3,106,2052022 2,196,353 526,5912023 1,009,655 -2024 838,941 -2025 403,674 -

Total 13,006,209 9,504,289



34 Securities placed with the Registrar and securities reserved with the Registrar

34.1 Securities placed with the Registrar


Baht Baht

Government bonds 31,071 30,562

34.2 Securities reserved with the Registrar


Baht Baht

Government bonds 70,177,898 71,158,955

35 Contingent liabilities and commitments

35.1 As indicated in Note 4, the Company has adopted TFRS 16 retrospectively from 1 January 2020, but has not restated comparatives for the 2019 reporting period as permitted under the specific transition provisions in the standard. Prior to the adoption of TFRS 16, the Company had future aggregate minimum lease payments under non-cancellable service agreement and short-term leases as follows:


Baht Baht

Due within 1 year 17,948 190,328Due more than 1 year but no later than 5 years 7,145 242,389

Total 25,093 432,717

35.2 As at 31 December 2020, the Company has commitments with a bank in Thailand from bond forward contracts as follows:


Maturity year Baht Baht

2020 - 5,871,4932021 8,557,586 3,106,2052022 2,196,353 526,5912023 1,009,655 -2024 838,941 -2025 403,674 -

Total 13,006,209 9,504,289



36 Expected credit loss

2020Thousand

Baht

Investment in securities 79,273Other assets 53,132

Total expected credit loss 132,405

37 Business combination

On 1 April 2020, the Company has entered into an agreement to acquire staffs, related liabilities and certain assets from a related company for a total consideration of Baht 3.6 million which met the criteria of business acquisition under the Thai Financial Reporting Standard No. 3 Business Combinations. As a result of the acquisition, the Company expects to reduce costs through combining a highly skilled workforce and obtaining economies of scale.

The excess of the consideration transferred over the fair value of the net identifiable assets and liabilities of the acquired business undertaking at the date of acquisition is amounting to Baht 2.2million which is considered to be immaterial and is recognised immediately to profit or loss.

As at acquisition dateThousand

Baht

Consideration paid 3,599Net assets (liabilities) acquired 1,413

Excess of the consideration transferred over the fair valueof the net identifiable assets and liabilities 2,186

Fair value of identifiable assets acquired and liabilities assumed on the acquisition date are as follow.

As at acquisition dateThousand

Baht

Intangible assets 3,599Employee benefit obligations (2,732)Net deferred tax assets 546

Net assets acquired 1,413

38 Events occurring after the reporting period

The Company has got approval for dividend payment for the 2019 operating results amounting to Baht 300 million from the Office of Insurance Commission in January 2021. Certain dividend is paid to shareholders in January 2021.


2020 annual report - ktaxa.cdn.axa-contento-118412.eu

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