leveraging on synergies - mnrb · 2016-08-08 · leveraging on synergies ... 06 20 04...

MNRB HOLDINGS BERHAD

2016ANNuAL REpORt

SYNERGIES

LEvERAGING ON

MNRB HOLDINGS BERHAD MALAYSIAN REINSURANCE BERHAD TAKAFUL IKHLAS BERHAD MNRB RETAKAFUL BERHAD MALAYSIAN RE (DUBAI) LTD. MMIP SERVICES SDN. BHD.

At MNRB we leverage on the synergies amongst the Group to increase effectiveness of

our business operations through the sharing of perceptions and experiences, insights

and knowledge. We also bring together the reinsurance, retakaful and takaful businesses

under one roof to realise synergies along the entire value chain. We adopt a prospective,

prudent and responsible approach to risk management and continuously create value over

the long term by assuming a wide variety of risks. The result of which ultimately benefits

shareholders, stakeholders and our people.

LEVERAGING ON SYNERGIES

Navigation icons in the reportFor more information

Please scan the QR code to redirect to the official website: www.mnrb.com.my.

Tells you where you can find more information online at www.mnrb.com.my.

Tells you where you can find more information in the Annual Report.


2016ANNuAL REpORt

SYNERGIES

LEvERAGING ON

MNRB HOLDINGS BERHAD MALAYSIAN REINSURANCE BERHAD TAKAFUL IKHLAS BERHAD MNRB RETAKAFUL BERHAD MALAYSIAN RE (DUBAI) LTD. MMIP SERVICES SDN. BHD.


Corporate Profile

Corporate Milestones

Notice of 43rd Annual General Meeting

Statement Accompanying Notice of Annual General Meeting

Corporate Information

Group Structure

Chairman’s Statement

Board of Directors

Directors’ Profile

Group Shariah Committee

Senior Management Team

Senior Management Team’s Profile

Event Highlights

Five-Year Financial Highlights

Financial Calendar 2016

MNRB’s Growth

Investors’ Information

Sustainability Report

Statement on Corporate Governance

Audit Committee Report

Statement on Risk Management and Internal Control

Statement of Directors’ Responsibility in Relation to the Financial Statements

Additional Compliance Information

Financial Statements

Analysis of Shareholdings

List of Properties

Proxy Form

2

3

4

10

13

14

15

16

22

24

28

31

32

34

38

40

41

42

43

49

61

63

66

67

88

213

216

•

MALAYSIAN REINSURANCE BERHAD

Corporate Profile


Corporate Activities and Services

Malaysian Re’s Portfolio of Business

68

69

70

72

74

TAKAFUL IKHLAS BERHAD

Corporate Profile


Takaful IKHLAS’ Portfolio of Business

75

76

77

79

MNRB RETAKAFUL BERHAD

Corporate Profile


MRT’s Portfolio of Business

80

81

82

83

MALAYSIAN RE (DUBAI) LTD.

Corporate Profile


84

85

86

MMIP SERVICES SDN. BHD.

Corporate Profile


87

87

87

Inside This Report

3

43

69

pg

pg

pg

Strong FoundationBy remaining resilient amidst industry challenges, MNRB has reinforced its reputation in the many markets we operate in. The strong foundations we have laid and long-term partnerships we have fostered continue to hold us in good stead. As we build upon these, we are extending our reach and opening up new avenues of opportunity.


3MNRB HOLDINGS BERHAD ANNUAL REPORT 2016


Corporate Profile

In 2005, as a result of a restructuring exercise within the MNRB Group, the Company’s reinsurance license, business and assets were transferred to its subsidiary company, Malaysian Reinsurance Berhad. Pursuant to the restructuring, Malaysian National Reinsurance Berhad became an investment holding company and changed its name to MNRB Holdings Berhad (MNRB). Today, MNRB is listed on the Malaysian Bourse (Bursa Malaysia). Its market capitalisation stood at RM524.15 million as at 1 July 2016.

The MNRB Group comprises leading wholesale providers of reinsurance and retakaful as well as a takaful operator. Its reinsurance subsidiary

Malaysian National

Reinsurance Berhad,

the country’s national

reinsurer was set up

in 1972 to limit the

outflow of reinsurance

premiums overseas.

The company

commenced operations

on 9 February 1973.

Authorised Capital of

RM500 milPaid-up Capital of

RM213 mil

stands tall among the top reinsurers in the region, writing lines of general businesses locally and abroad. In Malaysia, its takaful operator vies with the leaders in the provision of Islamic financial protection services based on the takaful system.

CAPITAL STRUCTURE

The Company has an Authorised Capital of RM500 million, divided into 500 million ordinary shares of RM1.00 each and a Paid-up Capital of RM213 million, divided into 213 million ordinary shares of RM1.00 each.

Corporate Profile

MNRB HOLDINGS BERHAD ANNUAL REPORT 2016 4




Malaysian National Reinsurance Berhad commenced operations on 19 February 1973.

Voluntary Cessions (VC) to Malaysian National Reinsurance Berhad commenced four (4) months later.

Began to offer Excess of Loss Treaties to local insurance companies.

19791981

until

19851987

until

1 2 3

Began to write Local Facultative business and non-reciprocal inwards overseas business.

4

Retrocede part of the VC cessions to the local insurance companies for their net account.

Sponsored the 1st Kuala Lumpur Insurance Seminar, attended by over four hundred (400) delegates.

1 2

Commenced writing ten percent (10%) Quota Share of the Miscellaneous Accidents and Motor businesses.

Increased level of retrocessions from twenty-five percent (25%) to thirty percent (30%) for Fire and Personal Accident businesses.

Increased paid-up capital from RM5,200,002 to RM6,240,003.

Commenced reciprocal exchange with overseas companies.

Paid-up capital increased to RM8,216,004.

Perbadanan Nasional Berhad’s (PERNAS) fifty percent (50%) share in Malaysian National Reinsurance Berhad was transferred to Permodalan Nasional Berhad (PNB).

Published the 1st edition of the Malaysian Insurance Directory.

Introduced Common Account Excess of Loss for retrocessionaires.

Formation of the following:-

Technical Services Department To conduct fire surveys including advisory services on risk management with the cost mostly borne by Malaysian National Reinsurance Berhad.

Inspection Department To ensure companies’ adherence to the various Inter-Company Agreements.

1

13

3

2 2

3 4

Rating Committee To determine special rate under the Fire Tariff for Fire and Industrial All Risks Insurances.

19821984

19731975

until

19761978

until

until




Increased level of retrocession from fifty percent (50%) to fifty-five percent (55%) to shareholding companies of Malaysian National Reinsurance Berhad.

Implementation of automatic cessions on Facultative and Treaty business.

Bank Negara Malaysia (BNM) appointed Malaysian National Reinsurance Berhad to manage the Scheme for Insurance of Large and Specialised Risks.

MIIL, now known as Labuan Re, ceased to be a wholly owned subsidiary of Malaysian National Reinsurance Berhad with the equity interest being diluted to twenty percent (20%).

Commencement of Overseas Facultative business.

Implementation of Stage I – new levels of VC, Retrocessions and other market reinsurance arrangements.

Appointed as the Administration Manager of MMIP.

Appointed as Manager for the Malaysian Energy Risks Consortium.

Appointed as Manager of the Malaysian Aviation Pool.

Launching of Malaysian National Reinsurance Berhad Homepage (http://www.malaysian-re.com.my).

Began to organise Annual Golf Tournaments and Outward Bound School for the insurance industry.

Malaysian-Re International Insurance (L) Ltd. (MIIL) was set up as a wholly owned subsidiary.

Launching of the Central Administration Bureau.

Malaysian National Reinsurance Berhad was listed on the Main Board of the Kuala Lumpur Stock Exchange (now known as Bursa Malaysia Securities Berhad).

Implementation of Stage II – new levels of VC, Retrocessions and other market reinsurance arrangements.

Implementation of Stage III – new levels of VC, Retrocessions and other market reinsurance arrangements.

Malaysian National Reinsurance Berhad and Malaysia National Insurance Berhad (MNI) jointly hosted and organised the 13th General Meeting of the Federation of Afro – Asian Insurers and Reinsurers (F.A.I.R.) attended by over three hundred fifty (350) international and local participants.

1

1

5 1

1 2

2

6543

7

2 3 4

2 3

19911993

until

19971999

until

1988

1994

1990

1996

until

until



20002001

until


2002

2003

2005

2006

2004

Implementation of new levels of VC, Retrocessions and other market reinsurance arrangements.

Awarded the MS ISO 9002:1994 certification.

Arrangement of terrorism insurance via the Malaysian Terrorism Facility.

Commenced the restructuring exercise of the Group.

The Group’s restructuring exercise was completed on 1 April 2005 and here on Malaysian National Reinsurance Berhad became MNRB. The new holding company is an investment holding company that focuses on business expansion to broaden the Group’s income base and further strengthen its financial position. The reinsurance business was then transferred to a newly incorporated one hundred percent (100%) subsidiary of MNRB, Malaysian Reinsurance Berhad (Malaysian Re). The takaful business continues to be undertaken by Takaful IKHLAS, a wholly owned subsidiary of MNRB. Labuan Re became an associate company of Malaysian Re.

BNM approved the registration of Takaful IKHLAS on 21 April 2003 and it commenced operations on 2 July 2003.

MSSB was formed to oversee the administration of Malaysian Motor Insurance Pool (MMIP), a pool established by the insurance industry to provide insurance coverage for vehicle owners who find difficulty in obtaining coverage.

Appointed as Account Manager for the Sihat Malaysia Scheme.

Received approval in principle from BNM to set up a takaful operation.

MNRB was granted the approval on certification to the new ISO Standard, MS ISO 9001:2000.

MNRB obtained BNM’s approval to establish a retakaful operation under the then Takaful Act, 1984 to conduct both General and Family Retakaful businesses. The wholly owned subsidiary company of MNRB is known as MRT.

Launching of MNRB Scholarship Fund of RM1 million.

Injected additional RM1 million to the MNRB Scholarship Fund.

Implementation of new levels of VC, Retrocession to the industry ceased with effect from 1 January 2003.

Malaysian National Reinsurance Berhad moved to its own building, Bangunan Malaysian Re.

3

2 3 1

1 2 3

2

1 1

1 2

4 5 1




MRDL, a wholly owned subsidiary of Malaysian Re was incorporated.

Malaysian Re won the prestigious Reinsurance Industry Contribution Award given by the Asia Insurance Review and the Review Magazine.

MRT was assigned an IFS rating of ‘BBB+’ with Stable outlook by Fitch Ratings.

MRT’s IFS rating of ‘BBB+’ with Stable outlook was reaffirmed by Fitch Ratings.

Takaful IKHLAS won The BrandLaureate – SMEs Chapter Award 2008, “Best Brands in Product Branding – Consumer Healthcare Insurance”.

Malaysian Re was assigned a Financial Strength Rating (FSR) of ‘A-’ (Excellent) and an Issuer Credit Rating (ICR) of ‘a-’ by A.M. Best.

MRT was awarded “The Most Outstanding Retakaful Operator 2008” at the KL Islamic Finance Forum 2008 (KLIFF 2008).

Malaysian Re’s FSR of ‘A-’ (Excellent) and ICR of ‘a-’ was reaffirmed by A.M. Best.

IKHLAS Medic Assist Takaful (IMAT) won the “Most Innovative Product Award” by KLIFF 2008.

Malaysian Re was assigned an ‘A-’ Insurer Financial Strength (IFS) rating with Stable outlook by Fitch Ratings.

2007

2008

2009

Malaysian Re’s FSR of ‘A-’ (Excellent) and ICR of ‘a-’ was reaffirmed by A.M. Best.

MRDL was officially launched on 18 March 2008.

Malaysian Re’s IFS rating of ‘A-’ with Stable outlook was reaffirmed by Fitch Ratings.

MRDL was wholly transferred from Malaysian Re to MNRB.

Malaysian Re’s MS ISO 9001:2000 Quality Management Systems certification which was issued in 2003, was reaffirmed.

Malaysian Re’s IFS rating of ‘A-’ with Stable outlook was reaffirmed by Fitch Ratings.

MRT commenced operations in August 2007 as the first retakaful operator in Malaysia.

MRT was officially launched on 11 August 2008.

Takaful IKHLAS was awarded “Best Takaful/Retakaful Provider 2008” by Islamic Finance News (IFN).

Following the certification audit conducted by SIRIM, Malaysian Re’s MS ISO 9001:2000 Quality Management Systems certification was reaffirmed.

3

1

1

1 2 3 4

6 7 8 9

2 3 4 5

2 3

4 5 6




Takaful IKHLAS and MRT won the Best Islamic Takaful Provider and Best Re-Takaful Provider awards, respectively, at the Islamic Finance News (IFN) Service Providers Poll 2011 Awards.

Takaful IKHLAS was named the “Best Takaful Provider” at the Euromoney Islamic Finance Awards 2010 organised by financial magazine, Euromoney.

Malaysian Re’s FSR of ‘A-’ (Excellent) and ICR of ‘a-’ was reaffirmed by A.M. Best, with Stable outlook for both ratings.

Malaysian Re’s FSR of ‘A-’ (Excellent) and ICR of ‘a-’ was reaffirmed by A.M. Best, with Stable outlook for both ratings.

Takaful IKHLAS won the Best Islamic Takaful Provider at the Euromoney Islamic Finance Awards 2012.

Malaysian Re and Labuan Re jointly hosted and organised the 21st F.A.I.R. Conference, attended by over six hundred (600) delegates including leaders and experts in the insurance industry.

Takaful IKHLAS won “Best Takaful/Retakaful Provider” for the second time at the Islamic Finance News Polls Awards 2009.

IKHLAS Medical Assistance Takaful won “Best Takaful Product” by International Takaful Awards 2010.

Takaful IKHLAS was named Best Takaful/Retakaful Provider by Islamic Finance News Polls Awards 2010 (third consecutive year).

Malaysian Re’s IFS rating of ‘A’ was reaffirmed by Fitch Ratings, with Stable outlook.

2010

2012

2013

2011

Takaful IKHLAS won The BrandLaureate – SMEs Chapter Award 2009, “Best Brands in Product Branding”

Takaful IKHLAS moved to its new corporate office, IKHLAS Point, in Bangsar South, Kuala Lumpur.

Takaful IKHLAS was awarded for its excellence in Branding by “The BrandLaureate – SMEs Chapter Awards 2010” in the categories of The Best Brands in Corporate Branding – Islamic Financial Protection Services and The Best Brands in Product Branding – Health Insurance Services.

MRT’s IFS rating of ‘BBB+’ was reaffirmed by Fitch Ratings, with Stable outlook.

• ConsumerHealthcareInsurance&TheBrandLaureate–SMEsChapter Award 2009, Corporate Branding – Best Brands in Services – Islamic Protection Services.

5

1

1

5 14

2 3

1 2

2 3

6 7

Fitch Ratings upgraded Malaysian Re’s IFS rating from ‘A-’ to ‘A’ with Stable outlook.

3



Malaysian Re’s Financial Strength Rating of ‘A-’ (Excellent) and Issuer Credit Rating of ‘a-’ was reaffirmed by A.M. Best, with Positive outlook for both ratings.

Malaysian Re’s IFS rating of ‘A’ was reaffirmed by Fitch Ratings, with Stable outlook.

MRT’s IFS rating of ‘BBB+’ was reaffirmed by Fitch Ratings, with Stable outlook.

Takaful IKHLAS won the Best Takaful Provider – Euromoney Islamic Finance Awards 2013.

Fitch Ratings reaffirmed Malaysian Re’s IFS rating of ‘A’ with Stable outlook.

Takaful IKHLAS was named Takaful Company of the Year (Malaysia) at theEuropeanGlobalBanking&FinanceAwards 2016 by The European Magazine.

Malaysian Re received the licence granted by the Minister of Finance to carry on General retakaful business and Family retakaful business effective from 13 April 2016.

2014

2016

2015

A.M. Best revised Malaysian Re’s outlook to Positive from Stable and reaffirmed the FSR of ‘A-’ (Excellent) and ICR of ‘a-’.


2

2

1

43

3 4 1

MRT’s IFS rating of ‘BBB+’ was reaffirmed by Fitch Ratings,with Stable outlook.

3

Takaful IKHLAS was named “Best Takaful House” in the 2014 Islamic Finance Awards by Euromoney.

Takaful IKHLAS won Malaysian Best Takaful Operator 2013 – Global Banking&FinanceReview.

4 5

Malaysian Re had been granted an approval from Bank Negara Malaysia to conduct General and Family retakaful business under Section 10 of the Islamic Financial Services Act 2013 (IFSA) via the establishment of a retakaful division.

3

Takaful IKHLAS was named Malaysian Best Takaful Operator 2015 attheGlobalBanking&Finance Review Awards.

4

Malaysian Re’s RM250 million Subordinated Medium-Term Note Programme (2015/2030) won the “Market Pioneer Award 2015” at the 13th Annual RAM League Awards for being the 1st Malaysian Reinsurer to issue RM-Sukuk.

5

Malaysian Re’s Insurer Financial Strength rating of ‘A’ was reaffirmed by Fitch Ratings, with Stable outlook.

2

Malaysian Re’s Insurer Financial Strength rating of ‘A’ was reaffirmed by Fitch Ratings, with Stable Outlook.

1

Takaful IKHLAS won Best Takaful Operator at the Global Islamic Finance Awards 2015.

5

Malaysian Re’s Financial Strength Rating of ‘A-‘ (Excellent) and Issuer Credit Rating of ‘a-‘ was reaffirmed by A.M. Best, with Positive outlook for both ratings.

2





NOTICE IS HEREBY given that the Forty-Third Annual General Meeting of the Company will be held at the Auditorium, 3rd Floor, Bangunan

Malaysian Re, No. 17, Lorong Dungun, Damansara Heights, 50490 Kuala Lumpur on Thursday, 25 August 2016 at 10.00 a.m. for the following

purposes:-

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 31 March 2016 together with the Reports of the Directors and Auditors thereon.

2. To re-elect the following Directors retiring pursuant to Article 86 of the Company’s Articles of Association:-

(i) Sharkawi Alis (ii) Mohd Din Merican

3. To re-elect Mustaffa Ahmad, retiring pursuant to Article 92 of the Company’s Articles of Association, as Director of the Company.

4. To approve Directors’ fees amounting to RM752,000 for the financial year ended 31 March 2016 (2015: RM804,000).

5. Tore-appointMessrsErnst&YoungasAuditorsandtoauthorisetheDirectorstofixtheirremuneration.

6. Continuing in Office as Independent Non-Executive Director.

“THAT approval be and is hereby given to the following Directors who have served as Independent Non-Executive Directors of the Company for a cumulative term of more than nine (9) years, to continue to serve as Independent Non-Executive Directors of the Company, in accordance with the Malaysian Code on Corporate Governance 2012”.

(i) Yusoff Yaacob (ii) Megat Dziauddin Megat Mahmud

AS SPECIAL BUSINESS

To consider and if thought fit, to pass the following Ordinary Resolution:-

7. Re-appointment of a Director retiring in accordance with Section 129 of the Companies Act, 1965:-

“THAT Megat Dziauddin Megat Mahmud, retiring in accordance with Section 129 of the Companies Act, 1965 be and is hereby re-appointed as Director of the Company to hold office until the conclusion of the next Annual General Meeting”.

8. To transact any other business which may properly be transacted at the Annual General Meeting.

By Order of the Board

NORAZMAN HASHIM (MIA 5817)LENA ABD LATIF (LS 8766)Company SecretariesKuala Lumpur29 July 2016

Please refer toExplanatory Note (i)

(Ordinary Resolution 1)(Ordinary Resolution 2)

(Ordinary Resolution 3)



(Ordinary Resolution 6)(Ordinary Resolution 7)




NOTE:-

1. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy to attend and vote on a poll on his behalf. A proxy need not be a member of the Company.

2. A member may appoint not more than two (2) proxies to attend the meeting. Where a member appoints two (2) proxies, the member shall specify in each proxy form the proportion of the member’s shareholdings to be represented by each proxy.

3. Where a member is an exempt authorized nominee, which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorized nominee may appoint in respect of each omnibus account it holds.

4. An Instrument appointing a proxy (ies) shall be in writing, and in the case of an individual shall be signed by the appointer or by his attorney duly authorized in writing, and in the case of a Corporation shall be either given under its common seal or signed on its behalf by its attorney or an officer of the Corporation so authorised.

5. An Instrument appointing a proxy (ies) must be deposited at the office of the Share Registrar of the Company, Symphony Share Registrars Sdn. Bhd., Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor, not less than forty-eight (48) hours before the time set for the Annual General Meeting or any adjournment thereof.

6. Only members registered in the Record of Depositors as at 19 August 2016 shall be eligible to attend the Annual General Meeting or appoint proxy (ies) to attend and vote on his/her behalf.

7. Explanatory Notes

(i) Item 1 of the Agenda

This item on the Agenda is meant for discussion only. The provision of Section 169(1) of the Companies Act, 1965 requires that the Audited Financial Statements be laid before the Company at its Annual General Meeting and do not require a formal approval of the shareholders. As such, this Agenda item is not a business which requires a resolution to be put to vote by shareholders.

(ii) Ordinary Resolutions 6 and 7 – Continuing in Office as Independent Non-Executive Director

The proposed Ordinary Resolutions 6 and 7 are to seek the shareholders’ approval to retain Yusoff Yaacob and Megat Dziauddin Megat Mahmud who have served on the Board for a cumulative term of more than nine (9) years, as Independent Non-Executive Directors of the Company. The Board has via the Nomination Committee, assessed the Independence of Yusoff Yaacob and Megat Dziauddin Megat Mahmud and recommended them to continue to serve as Independent Non-Executive Directors based on the following justifications:-

Ordinary Resolution 6: Yusoff Yaacob

(a) Yusoff Yaacob has been an Independent Non-Executive Director for more than ten (10) years.

(b) Notwithstanding the long tenure, Yusoff Yaacob is considered to still fulfill the criteria under the definition of “Independent Director” as stated in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

(c) Yusoff Yaacob has performed his duties diligently and in the best interest of the Company without being subject to influence of the management.





(d) Yusoff Yaacob has devoted sufficient time in attending Board meetings and has participated in Board discussions.

(e) Yusoff Yaacob who is the Chairman of the Risk Management Committee and the Nomination Committee, has the relevant industry background and experience which enables him to provide constructive advice, expertise and independent judgment.

(f ) This assessment is based on the Directors’ Evaluation exercise that was performed yearly amongst Board members.

Ordinary Resolution 7: Megat Dziauddin Megat Mahmud

(a) Megat Dziauddin Megat Mahmud has been an Independent Non-Executive Director for almost ten (10) years.

(b) Notwithstanding the long tenure, Megat Dziauddin Megat Mahmud is considered to still fulfill the criteria under the definition of “Independent Director” as stated in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

(c) Megat Dziauddin Megat Mahmud has performed his duties diligently and in the best interest of the Company without being subject to influence of the management.

(d) Megat Dziauddin Megat Mahmud has devoted sufficient time in attending Board meetings and has participated in Board discussions.

(e) Megat Dziauddin Megat Mahmud who is the Chairman of the Audit Committee and the Remuneration Committee, has the relevant industry background and experience which enables him to provide constructive advice, expertise and independent judgment.

(f ) This assessment is based on the Directors’ Evaluation exercise that was performed yearly amongst Board members.

(iii) Ordinary Resolution 8 – Re-appointment of Director pursuant to Section 129 of the Companies Act, 1965

Ordinary Resolution 8: Megat Dziauddin Megat Mahmud

Megat Dziauddin Megat Mahmud, who is over the age of seventy (70) years, shall retire pursuant to Section 129 of the Companies Act, 1965 at the conclusion of the forthcoming 43rd Annual General Meeting. The proposed re-appointment of Megat Dziauddin Megat Mahmud will require a resolution passed by a majority of not less than three-fourths (3/4) of members of the Company who are entitled to vote at the forthcoming Annual General Meeting. The proposed resolution will enable Megat Dziauddin Megat Mahmud, to hold office until the conclusion of the next Annual General Meeting of the Company.



Statement Accompanying Notice of Annual General Meeting

Directors standing for re-election and re-appointment at the Forty-Third Annual General Meeting

The following are Directors retiring pursuant to Article 86 of the Company’s Articles of Association:-

1. Sharkawi Alis 2. Mohd Din Merican

The following is the Director retiring pursuant to Article 92 of the Company’s Articles of Association – Retirement after appointment to fill casual vacancy:-

1. Mustaffa Ahmad

The following is the Director retiring pursuant to Section 129 of the Companies Act, 1965:-

1. Megat Dziauddin Megat Mahmud

The respective profile of the above Directors is set out in the Profile of Directors’ section of the Annual Report from pages 24 to 27.

Statement Accompanying Notice of Annual General Meeting Pursuant to Paragraph 8.27(2) of the Bursa Malaysia Main Market Listing Requirements



Board of Directors

Sharkawi Alis NON-INDEPENDENT NON-EXECUTIVE CHAIRMAN

Mohd Din Merican PRESIDENT & GROUP CHIEF EXECUTIVE OFFICER

NON-INDEPENDENT EXECUTIVE DIRECTOR

Megat Dziauddin Megat MahmudSENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR

Yusoff Yaacob INDEPENDENT NON-EXECUTIVE DIRECTOR

Paisol Ahmad NON-INDEPENDENT NON-EXECUTIVE DIRECTOR

Hijah Arifakh Othman NON-INDEPENDENT NON-EXECUTIVE DIRECTOR

Mustaffa Ahmad INDEPENDENT NON-EXECUTIVE DIRECTOR



AuditorsERNST & YOUNG (AF: 0039)

Chartered AccountantsLevel 23A, Menara Millenium

Jalan DamanlelaPusat Bandar Damansara

Damansara Heights50490 Kuala Lumpur, Malaysia

Tel : +603-7495 8000Fax : +603-2095 5332

Company SecretariesNorazman Hashim (MIA 5817)

Lena Abd Latif (LS 8766)

Share RegistrarSYMPHONY SHARE

REGISTRARS SDN. BHD.Level 6, Symphony HousePusat Dagangan Dana 1

Jalan PJU 1A/4647301 Petaling Jaya

Selangor Darul Ehsan Tel : +603-7841 8000 Fax : +603-7841 8008

Principal BankersStandard Chartered Bank Malaysia Berhad

Malayan Banking BerhadCIMB Bank Berhad

Audit CommitteeMegat Dziauddin Megat Mahmud (Chairman)

Yusoff YaacobMustaffa Ahmad

Nomination CommitteeYusoff Yaacob (Chairman)

Sharkawi AlisMegat Dziauddin Megat Mahmud

Mustaffa AhmadPaisol Ahmad

Remuneration CommitteeMegat Dziauddin Megat Mahmud (Chairman)

Yusoff YaacobPaisol Ahmad

Risk Management CommitteeYusoff Yaacob (Chairman)

Hijah Arifakh OthmanMustaffa Ahmad

Investment CommitteeHijah Arifakh Othman (Chairman)Megat Dziauddin Megat Mahmud

Paisol AhmadMohd Din Merican

Registered Office12th Floor,

Bangunan Malaysian ReNo. 17, Lorong Dungun

Damansara Heights50490 Kuala Lumpur

Tel : +603-2096 8000 Fax : +603-2096 7000

E-mail: [email protected]: www.mnrb.com.my

Stock Exchange ListingBursa Malaysia

Securities Berhad– Main Market



Group Structure

Group Structure

(13487-A)

Takaful Ikhlas Berhad

MNRB Retakaful Berhad

Malaysian Re (Dubai) Ltd.

MMIP Services Sdn. Bhd.

* Motordata Research Consortium Sdn. Bhd.

* Labuan Reinsurance (L) Ltd.Malaysian Reinsurance Berhad

* Associate Company

100%

100%

100%

100%

100%

40%

20%



SHARKAWI ALISChairman

CHALLENGING MARKET ENVIRONMENT

The FY2016 was a testing year for the Group as our performance was largely impacted by a difficult operating landscape. The challenges we faced during this financial year came from a combination of several factors which ultimately affected the results of the Group.

The global economic growth in 2015 was recorded lower at 2.4% as compared to 2.6% in 2014. Not only was there lower growth, negative interest rates seem to become the “new normal” in the major economies. Subdued GDP growth was largely driven by a significant decline in oil prices, weakening emerging market currencies, economic slowdown in China and escalating geopolitical risks. Slowing global economy coupled with excess capacity sent the global non-life insurance premium growth lower to 2.5% (2014:2.8%) while life premium also recorded a slower growth rate of 3.3% (2014:4.7%).

The Malaysian economy expanded by 5.0% in 2015, lower than 6.0% growth registered in 2014 as rising living costs and tight financial conditions dented consumer confidence. Meanwhile, in reaction to the sharp decline in oil prices, the government had to recalibrate its budget for 2016, translating into lower allocation for expenditures but such a move was essential in maneuvering the economy during this tough period and also to sustain the national sovereign credit rating.


DEAR VALUED SHAREHOLDERS,

On behalf of the Board of Directors, it is my pleasure to present to you the Annual Report of the MNRB Group for the financial year ended 31 March 2016 (FY2016).




2.4

7.11

6.48

15'

15'

2.5

16'

16'

Group Revenue(RM billion)

Group Total Assets(RM billion)

5.8%

9.7%

Given the slower growth momentum in the economy, the general insurance and takaful Gross Written Premium (GWP) grew at a slower rate of 2.7% in 2015 to RM19.8 billion as compared to 6.6% in the year before and this was the industry’s slowest growth pace in more than a decade. The life and family industry also shared the same sentiment as premiums from new business grew at a slower rate of 2.5% to RM12.8 billion as compared to 6.1% growth registered in the previous year.

Weakening of the Ringgit against the US dollar coupled with lower oil prices sent the financial market volatility to unprecedented levels in 2015 with a net outflow being the case in the domestic equity market. This unfavourable financial market condition limits the opportunity for the Group to realize capital gains from its investments and had also resulted in higher impairment in the value of our investment in equities.

The introduction of China Risk Oriented Solvency System (C-ROSS) and regulatory changes in Indonesia requiring Indonesian insurers to optimise local retention as mentioned in my statement last year have been implemented. In addition, excess reinsurance capacity pushes reinsurance rates lower due to stiff competition. In this new era, competition for business would not just be among reinsurers alone but also with capital markets. Moreover, regulatory changes that are taking place also add more challenges to grow the business.

GROUP RESULTS

Amid this difficult operating environment, the Group’s revenue increased by 5.8% from RM2.4 billion in FY2015 to RM2.5 billion in FY2016. Meanwhile, the Group recorded net investment income of RM195.1 million, about 4.0% lower than RM203.2 million registered in the previous financial year. As of the end of FY2016, total assets amounted to RM7.11 billion, 9.7% higher than RM6.48 billion in the year before.

Guided by capital preservation in adopting our investment risk appetite, 95% of invested assets are in the form of bonds and deposits. Moreover, majority of corporate bond holdings are of high investment grade. The effect to Group’s results would have been more acute if not for our cautious investment approach and prudent capital management practices given the financial market volatility during the financial year.

On the reinsurance front, abnormally higher claims from the overseas business and the exceptionally higher number of large domestic claims had impacted our results. In addition, the results of the takaful business included one-off adjustments made during the period. Confronted with severe economic challenges and these profound difficulties, the Group registered a net loss of RM38.8 million for FY2016 as compared to a net profit of RM139.1 million in FY2015. This is the first time that the Group registered a net loss since the 1998 Asian Financial Crisis.

The Group has taken steps to better position itself in the current market landscape via prudently exploring

new business opportunities, including expansion into

other territories for our overseas reinsurance business.




MNRB Retakaful Berhad (MRT)

As highlighted last year, MRT had ceased writing any new business and therefore saw its gross contribution for FY2016 declining from RM63.9 million to RM23.0 million. The general retakaful business accounted for 47.4% of the total business while the remaining 52.6% was generated from the family retakaful business. MRT registered a net loss of RM0.5 million in FY2016 as compared to a net loss of RM17.7 million in FY2015. Moving forward, the retakaful business of the MNRB Group will be offered via the retakaful division at Malaysian Re. MRT would continue to manage its outstanding business portfolio until such time deemed appropriate for it to surrender its operating license to Bank Negara Malaysia (BNM).

Takaful Ikhlas Berhad (Takaful IKHLAS)

Takaful IKHLAS’s gross contributions grew by 9.6% to RM905.0 million with family takaful business making up 68.0% of total gross contribution. The family takaful increased by 11.0% to RM615.1 million while the general takaful grew by 6.8% to RM293.9 million in FY2016. This compared favourably to industry growth where the family takaful registered 3.9% growth and the general takaful grew 6.0% in 2015. The ongoing transformation of the business at Takaful IKHLAS led to higher growth in its family takaful business while slower motor vehicle sales was the main factor that lowered the growth in general takaful business.

On the operational front, the result of the Group’s takaful business was affected by one-off adjustments which were made during the period. These adjustments include the reclassification of direct expenses previously charged to takaful funds to the shareholder’s fund, the transfer of previous year’s hibah from the shareholder’s fund to the general takaful fund and the reallocation of gross contributions between the shareholder’s fund and family takaful funds.

Due to the one-off adjustments mentioned, the company recorded a net loss of RM34.8 million as compared to net profit of RM19.4 million in the preceding year.

Malaysian Re’s GWP increased by 4.5% to RM1.37 billion in FY2016 despite the competitive business landscape. The growth in premium was higher than 2.3% that the general insurance industry in Malaysia had achieved in 2015. Its overseas business now makes about 43.5% of total revenue compared to 41.1% in the previous year.

Several large claims and risk events that occurred in FY2016 had dampened Malaysian Re’s profitability in spite of the growth in revenue. The company suffered significantly high claims from explosions at Port of Tianjin in China which was the largest insured-loss event of the year as well as the biggest risk loss event in Asia’s insurance history with the industry’s loss estimated to be in the range of USD2.5-3.5 billion. Further to this, the company also suffered losses from the Taiwan Earthquake and South Indian floods. The South Indian floods witnessed rains which virtually broke a 100-year record with one day’s rainfall covering a whole month’s average. While insurance losses are not geographically correlated, FY 2016 was an exception as the number of large domestic claims was also significantly high, impacting Malaysian Re’s overall underwriting results.

In addition, the sharp decline in the ringgit during the financial year had inflated our overseas claims payments during the year. Furthermore, our overseas claims reserves had to be adjusted upwards to reflect the prevailing exchange rates.

Given all these challenges, the company recorded a net profit of RM2.5 million in FY2016 in comparison to a net profit of RM152.1 million registered a year earlier.

Malaysian Reinsurance Berhad (Malaysian Re)






MALAYSIAN RE RETAKAFUL DIVISION

Malaysian Re has been granted a license by the Ministry of Finance to underwrite general and family retakaful business with effect from 13 April 2016. This will enable the Group to utilize the higher Insurer Financial Strength Rating (IFS) ratings of ‘A’ (Fitch) and ‘A-’ (A.M. Best) from Malaysian Re to gain access to businesses which otherwise would not have been accessible due to the lower rating of ‘BBB+’ (Fitch) assigned to MRT in the past. This new retakaful division will be leveraging on the proven technical expertise and combined resources at Malaysian Re, thereby providing better economies of scale. Besides, the retakaful business will be able to reach into the Middle East and North African (MENA) region through our subsidiary, Malaysian Re (Dubai) Ltd. (MRDL).

FINANCIAL STRENGTH RATING

During the year, Malaysian Re had its ratings reaffirmed by two credit ratings agencies. Fitch Ratings reaffirmed Malaysian Re’s IFS of ‘A’ with a stable outlook while A.M. Best also reaffirmed Malaysian Re’s IFS rating of ‘A-’ (Excellent) with positive outlook.

GOVERNANCE AND RISK MANAGEMENT PRACTICES

The Board of Directors remains fully committed in upholding high standards of corporate governance throughout the Group. We shall strive to continuously improve the effective application of the principles and best practices as laid down by the regulators including BNM, Securities Commission Malaysia (SC) and Bursa Malaysia Securities Berhad (Bursa).

MNRB’s policy is to implement these principles and best practices as well as to uphold high standard of business integrity in all activities undertaken by the Group. This includes a

commitment to emulate good industry examples and to comply with the respective guidelines and recommendations in the conduct of business activities of the Group.

As a financial holding company licensed under the Financial Services Act, 2013 (FSA) and also a public listed entity, MNRB is responsible to oversee the implementation of the Group’s risk management and internal control systems and review its effectiveness, adequacy and integrity. It recognizes that risk management is a continuous process, designed to manage the risk of failure to achieve business objectives.

SHAREHOLDER VALUE

Enhancing shareholders’ values and capital preservation continue to be the core thrust of our operations. As I have explained at the beginning of this statement, 2015 was indeed a very challenging year for the global economy due to divergence in monetary policy, significant drop in oil prices and volatile foreign exchange market.

As for our Group, the unfavourable effect to operating performance was not limited to these factors alone. Unprecedented claims during FY2016 affected the results of our reinsurance subsidiary, an anomaly in the context of the Group’s historical performance. In addition, the one-off adjustments related to the operational matters at the takaful subsidiary as mentioned earlier also contributed in pushing the Group into a net loss position.

The MNRB Group believes in delivering shareholder value while exercising appropriate stewardship over its resources. With all these challenges which had adversely impacted the Group, the Board of Directors is not recommending the payment of a dividend in respect of the financial year ended 31 March 2016. Nevertheless, we look forward to your continuous and unwavering support to the Group as we strive to improve our financial position in the forthcoming year.




NAVIGATING DURING THE TOUGH TIMES

The business landscape would continue to be surrounded by external challenges brought about by financial market volatility, severity and frequency of claims as well as catastrophe events, economic impediments and other relevant risks. These factors could affect the Group’s operating performance as what we experienced in FY2016. However, they are not unique to the Group alone as this is the nature of our industry.

The Group has taken steps to better position itself in the current market landscape via prudently exploring new business opportunities overseas. However, forex risk management continues to be a challenge as we expand into other territories.

As for takaful business, the Agency Transformation Programme will continue as we seek to improve operating efficiency. In addition, strengthening of product offerings remains in our agenda to further enhance market competitiveness. In anticipation of market de-tariffication for fire and motor businesses, the Group is putting in place adequate resources and appropriate strategies to face the added challenge from this liberalisation.

We realise that our business requires strong technical skills and as such, we will continue to invest in people development to ensure a continuous supply of talent in the Group as well as the cultivation of a pool of dynamic insurance and takaful professionals.

THE OUTLOOK AHEAD

The global economy is not expected to rebound in 2016 with global GDP growth forecast at around 2.4%, replicating the growth in 2015. Among the developed economies, only the United States is looking relatively sturdy while the economies of the Eurozone and Japan are still struggling in spite of negative interest rate policy imposed. Major emerging economies are also facing a few setbacks with China continuing to experience tapering GDP growth while Russia and Brazil had fallen into recession. In addition, other economic challenges in the form of lower oil prices, volatile fund flows, geopolitical risks and monetary policy divergence are to be expected.

The insurance market has been beset with difficulties such as low interest rates which is affecting investment income while uncertain economic environment poses threats to

business growth. Furthermore, the global insurance market would continue to be faced with excess capacity while capital market’s interest in Insurance Linked Securities will continue to grow as yields offered by traditional debt capital market instruments remain low.

The Malaysian economy is expected to grow in the range of 4.0%-4.5% in 2016, lower than 5.0% recorded in 2015. The economy is facing the prospect of further slowdown in the banking sector while lower consumer confidence would limit the upside potentials in domestic demand. However, proactive measures taken by the government in navigating the economy during this tough period had ensured that fiscal metrics remain intact, a crucial move in sustaining our national sovereign credit rating.

On the domestic insurance industry, the operating environment is not expected to improve significantly as current uncertainties are likely to prevail given our moderate GDP outlook for this year. The general insurance/takaful industry will continue to be largely driven by major infrastructure projects and the automotive sector’s performance while on the life insurance/family takaful segment, consumers’ purchasing power will be the key driver. Pressure on purchasing power affects consumer behavior where adjustments to spending pattern would lower their allocation for life insurance/family takaful products.

Phased de-tariffication of both fire and motor classes is taking place this year and after a certain period, motor premiums will move away from standard tariff rates to risk-based premiums i.e. consumers will be charged different premium rates subject to their risk profile. As for the fire insurance, there will be a gradual adjustment to tariff rates for identified risk groups. The de-tariffication would also encourage more product innovation and price differentiation, giving customers more choice




offerings based on price and risk factors. Risk-based pricing model will also give opportunity for companies to manage their business portfolio more effectively as pricing will be reflective of underwritten risks.

The Islamic Financial Services Act 2013 (IFSA) requires a composite takaful operator to split its family and general businesses under separate licenses by July 2018. Takaful IKHLAS which holds a composite license is currently carrying out the necessary steps and is on track to comply with the requirement. With two separate entities carrying out general and family business, it is expected that there will be improved focus on the respective business segments which will result in better shareholder values.

Despite the challenging landscape, I am confident that with the measures and actions that are taking place, the Group’s performance will improve in the next financial year.

ACCOLADES

I am pleased to inform that Malaysian Re won the 2015 Market Pioneer Award in conjunction with the 13th RAM Ratings League Award for its RM250 million Subordinated Medium Term Notes Programme. This is the first RM-Sukuk issued by any Malaysian reinsurer. This financing programme signifies Malaysian Re’s role in enhancing the depth of Malaysian debt capital market.

In addition, Takaful IKHLAS received an international level recognition by winning the European Global Banking and Finance Awards 2016 Takaful Company of the Year (Malaysia) from the European Magazine and with this award it is the only Malaysian company being conferred with the accolade for the Takaful Category. This award marks the recognition of our takaful subsidiary by the international business community.

ACKNOWLEDGEMENTS

On behalf of the Board of Directors, I would like to express my heartfelt appreciation to the many parties who had given MNRB Group their utmost support. Our deepest gratitude is to our valued shareholders for their continued faith and confidence in us all these years. My sincere thanks also to our customers, business partners, ceding companies and intermediaries, as well as BNM and the insurance and takaful associations, for their steadfast support and cooperation.

As management strive to face a challenging marketplace and economic uncertainties, our Board continues to uphold strong governance and keeps a robust oversight at all times. The Group had appointed four new board members. They are Datuk Nik Moustpha Nik Hassan, Puan Rosinah Mohd Salleh, Datin Zaimah Zakaria and Encik Arul Sothy Mylvaganam. Both Datuk Nik Moustpha and Puan Rosinah were appointed to the Board of Takaful IKHLAS whilst Datin Zaimah Zakaria and Encik Arul Sothy Mylvaganam were appointed to the Board of Malaysian Re. Further to these new additions, Encik Mustaffa Ahmad and Encik Md Adnan Md Zain who currently are on the Board of Malaysian Re have been appointed to the Boards of MNRB and Takaful IKHLAS respectively. These new Directors added diversity and experience to our boards.

I would like to thank Encik P. Raveenderen who resigned from the Boards of MNRB and Malaysian Re on 1 July 2016. Encik P. Raveenderen has served the Group as a Director for more than 22 years with full commitment, and his departure will be deeply felt by us. My appreciation also goes to Dato’ Othman Hashim and Tuan Haji Halim Din, both of whom resigned from the Board of

Takaful IKHLAS on 15 February 2016 and to Encik Yahaya Besah and Dr. Syed Musa Syed Jaafar Alhabshi who resigned from the Board of Takaful IKHLAS on 19 August 2015. We sincerely thank them for their guidance, dedication and contribution to the Group. My heartfelt thanks also go to my other colleagues on the Board for their dedication and contributions.

Last but not least, my sincere gratitude goes to our loyal management team and employees for their unrelenting commitment and dedication to the Group.

We look to all our stakeholders to lend us their continuous support as we leverage on all opportunities and overcome all challenges to ensure a strong and sustainable future for all.

On behalf of the Board

Sharkawi AlisChairman5 July 2016




Board of Directors

Board of Directors

SHARKAWI ALIS

Non-Independent Non-Executive Chairman

MOHD DIN MERICAN

President& Group Chief Executive Officer/Non-Independent Executive Director

MEGAT DZIAUDDIN MEGAT MAHMUD

Senior Independent Non-Executive Director

The Board of MNRB

is responsible

for the proper

stewardship of the

Group’s resources,

the achievement

of the Group’s

objectives and

good corporate

citizenship.



Board of Directors

YUSOFF YAACOB HIJAH ARIFAKH OTHMAN

Independent Non-Executive Director

Non-Independent Non-Executive Director

MUSTAFFA AHMAD


PAISOL AHMAD






SHARKAWI ALIS, aged sixty-nine (69), male, Malaysian. Non-Independent Non-Executive Director since 7 January 2005 and was subsequently appointed as Non-Independent Non-Executive Chairman on 3 September 2007. Member of the Nomination Committee. He is a Barrister-at-Law from Middle Temple, London where he was called in 1971. He served in the Malaysian Judicial and Legal Service in various capacities for eleven (11) years before he was appointed as Group Legal Adviser of Malaysia Mining Corporation Berhad in August 1982. In January 1997, he joined the Securities Commission, Malaysia as Director of Market Supervision and subsequently as Director of Corporate Resources Division till March 2003. Also Chairman of Malaysian Re, Takaful IKHLAS, MRT, Labuan Re and MRDL, a Director of MIDF Property Berhad, Permodalan Satok Berhad and Motordata Research Consortium Sdn. Bhd. He is also a trustee for Yayasan Hartanah Bumiputera Sarawak. Not related to any Director and/or major shareholder of MNRB except by virtue of being a nominee Director of PNB. Does not have any conflict of interest with MNRB and has never been convicted for any offences, public sanction or penalty imposed by the relevant regulatory bodies within the past five (5) years. Attended all the nine (9) Board Meetings held in the financial year.

SHARKAWI ALIS

Non-Independent Non-Executive Chairman

Committees:

A B I N R

COMMITTEE MEMBER KEY

BOARD COMPOSITION

A Audit Committee

B Risk Management Committee

I Investment Committee

N Nomination Committee

R Remuneration Committee

Chairman of Committee

Member of Committee

Executive Director (also the GCEO)

1 out of 714.2%

Independent Non-Executive Directors

3 out of 742.9%

Non-Independent Non-Executive Directors (including the Chairman)

3 out of 742.9%




MEGAT DZIAUDDIN MEGAT MAHMUD, aged seventy (70), male, Malaysian. Independent Non-Executive Director since 24 August 2006 and re-designated as Senior Independent Non-Executive Director on 19 July 2011. Chairman of the Remuneration Committee as well as the Audit Committee. Member of the Investment Committee and the Nomination Committee. He obtained a Bachelor of Science (Econs.) (Hons.) degree from the Queen’s University of Belfast, Northern Ireland and is a Fellow of the Institute of Chartered Accountants in Ireland as well as a Chartered Accountant with the Malaysian Institute of Accountants. He had served Golden Hope Plantations Berhad as Group Director, Finance, Arab-Malaysian Merchant Bank, first as General Manager - Operations and later as General Manager - Investment, Bank Simpanan Nasional as Finance Manager and the Accountant-General’s Department as Treasury Accountant. Also the Chairman of Alliance Islamic Bank Berhad and a Director of Malaysian Re, MRT, Takaful IKHLAS and several other private limited companies. Not related to any Director and/or shareholder of MNRB. Does not have any conflict of interest with MNRB and has never been convicted for any offences, public sanction or penalty imposed by the relevant regulatory bodies within the past five (5) years. Attended all the nine (9) Board Meetings held in the financial year.

MEGAT DZIAUDDIN MEGAT MAHMUD

Committees:

A B I N R

Senior Independent Non-Executive Director

MOHD DIN MERICAN, aged fifty-four (54), male, Malaysian, Non-Independent Executive Director with effect from 9January2012andPresident&GroupChiefExecutiveOfficerofthe Company. Member of the Investment Committee. Obtained a Bachelor of Commerce (Honours) degree from Carleton University, Ottawa, Canada. He is an Associate of The Malaysian Insurance Institute (AMII) since 1991. He has thirty (30) years’ experience in the insurance industry and has held key management positions in various insurance, insurance broking and reinsurance firms includingbeingthePrincipalOfficer&GeneralManagerofSCORSwitzerland Ltd (Converium Ltd), Labuan Branch. Prior to joining MNRB, he was the Chief Operating Officer of Mayban Ageas Holdings Berhad and the Chief Executive Officer of Etiqa Insurance Berhad. Formerly a member of Management Committee of Persatuan Insurans Am Malaysia, National Insurance Association of Malaysia and President of Life Insurance Association of Malaysia. Also a Director of Malaysian Re, MRT, Takaful IKHLAS, Labuan Re, MRDL and Motordata Research Consortium Sdn. Bhd. Not related to any Director and/or major shareholder of MNRB. Does not have any conflict of interest with MNRB and has never been convicted for any offences, public sanction or penalty imposed by the relevant regulatory bodies within the past five (5) years. Attended all the nine (9) Board Meetings held in the financial year.

MOHD DIN MERICAN

Committees:

A B I N R

Non-Independent Executive Director




PAISOL AHMAD, aged sixty-two (62), male, Malaysian. Non-Independent Non-Executive Director since 11 April 2008. Member of the Investment Committee, the Nomination Committee and the Remuneration Committee. Obtained a Diploma in Accountancy from Universiti Teknologi MARA and thereafter became a Fellow of the Association of Chartered Certified Accountants, United Kingdom. Also a Chartered Accountant with the Malaysian Institute of Accountants, a Fellow of the Financial Services Institute of Australasia and a Certified Financial Planner with the Financial Planning Association of Malaysia. He was the Senior Accountant of Pernas Charter Management Sdn. Bhd. He then held various positions in Amanah Saham Nasional Berhad before being appointed as its Executive Director/Senior Vice President II. He was subsequently transferred to PNB and is currently the Senior Vice President, Internal Assurance Division. Also a Director of Takaful IKHLAS, KAF Investment Bank Berhad and two (2) other private limited companies. Not related to any Director and/or major shareholder of MNRB except by virtue of being a Nominee Director and employee of PNB. Does not have any conflict of interest with MNRB and has never been convicted for any offences, public sanction or penalty imposed by the relevant regulatory bodies within the past five (5) years. Attended all the nine (9) Board Meetings held in the financial year.

PAISOL AHMAD

Committees:

A B I N R


YUSOFF YAACOB, aged sixty-eight (68), male, Malaysian. Appointed as a Director on 10 November 2004 and re-designated as an Independent Non-Executive Director on 23 March 2006. Chairman of the Risk Management Committee and the Nomination Committee, member of the Audit Committee and Remuneration Committee. Obtained a Diploma in Insurance Studies & Insurance Management from the University ofNottingham, United Kingdom. A Chartered Insurance Practitioner and a Fellow of the Chartered Insurance Institute, United Kingdom. Started his career as an Insurance Trainee with Malaysia National Insurance Sdn. Bhd. in 1970 and held the position of Marine Manager until 1979. Joined Petroliam Nasional Berhad (PETRONAS) in 1979 and was the General Manager (Insurance Division) until his retirement in 2003. Also a Director of Malaysian Re. Not related to any Director and/or major shareholder of MNRB. Does not have any conflict of interest with MNRB and has never been convicted for any offences, public sanction or penalty imposed by the relevant regulatory bodies within the past five (5) years. Attended all the nine (9) Board Meetings held in the financial year.

YUSOFF YAACOB


Committees:

A B I N R




HIJAH ARIFAKH OTHMAN, aged fifty-six (56), female, Malaysian. Non-Independent Non-Executive Director since 1 June 2015. Chairman of the Investment Committee and member of the Risk Management Committee. She obtained a Degree in Mathematics and Computer Science from City University of London. She began her career in Bank Negara Malaysia (BNM) in 1984 where she served in various divisions including in senior positions as the Managers/Head of Fixed Income Portfolio Management of the External Reserves and Assistant General Manager/Head of Treasury of Danamodal from 1989 to 2000. She had also served as the Director/Head of Asian Fixed Income in Standard Chartered Bank Malaysia and subsequently as the Executive Vice President/Head of Group Treasury Business in Malayan Banking Berhad from 2006 to 2009. She was appointed as the Managing Director/Chief Executive Officer of Hong Leong Islamic Bank from 2009 to 2011. She had been a Director of KAF Investment Bank Berhad since 2012. Not related to any Director and/or major shareholder of MNRB except by virtue of being a Nominee Director of PNB. Does not have any conflict of interest with MNRB and has never been convicted for any offences, public sanction or penalty imposed by the relevant regulatory bodies within the past five (5) years. Attended eight (8) Board Meetings held in the financial year.

HIJAH ARIFAKH OTHMAN

Committees:

A B I N R


MUSTAFFA AHMAD, aged sixty (60), male, Malaysian. Independent Non-Executive Director since 1 April 2016. Member of Audit Committee, the Risk Management Committee and the Nomination Committee. He graduated with a Bachelor of Science (Honours) degree in Statistics from the Heriot-Watt University, Edinburgh, Scotland in 1978. He has worked for several insurance companies since 1978 and then joined Malaysian National Reinsurance Berhad as Senior Manager in 1989. He assumed various other roles whilst he was in Malaysian National Reinsurance Berhad. Following MNRB Group restructuring exercise in 2005, he was transferred to Malaysian Re and was appointed as the Chief Operating Officer until 2010. Also a Director of Malaysian Reinsurance Berhad, MIDF Amanah Investment Bank Berhad and Amanah International Finance Sdn Bhd. Not related to any Director and/or major shareholder of MNRB. Does not have any conflict of interest with MNRB and has never been convicted for any offences, public sanction or penalty imposed by the relevant regulatory bodies within the past five (5) years.

MUSTAFFA AHMAD

Committees:

A B I N R






PROF. DATO’ DR. AHMAD HIDAYAT BUANG, aged fifty-four (54). Appointed as the Group Shariah Committee Chairman on 2 November 2015. Shariah Committee member for Takaful IKHLAS since 2002 and was subsequently appointed as the Shariah Committee Chairman for Takaful IKHLAS since 2013 until its dissolution on 2 November 2015.

IR. DR. MUHAMAD FUAD ABDULLAH, aged sixty-three (63). Appointed as the Group Shariah Committee member on 2 November 2015. Shariah Committee member for MRT since 1 June 2011. Shariah Committee Chairman for MRT since his appointment on 28 October 2011 until its dissolution on 2 November 2015.

Obtained his Bachelor Degree in Electrical Engineering from Southampton University in 1977. In 1982, he obtained Masters Degree in Electrical Engineering from the same university and in 1994, he obtained his Bachelor Degree in Shariah from Jordan University. In 1996, he completed his Ph.D. in Muslim Civilisation from Aberdeen University in Scotland.

Professor of the Academy of Islamic Studies at University of Malaya. Previously, he was a Director for the Academy of Islamic Studies from October 2006 until February 2011. Holds a Bachelor in Shariah from the University of Malaya. Completed his Master in Law and Doctorate from University of London (specialising in Islamic Contracts). Former member of OCBC Al-Amin Bank Berhad and CIMB Islamic Bank Berhad’s Shariah Council. A Shariah Committee member of Bank Islam Malaysia Berhad since 2011.

He is the Chairman of the Shariah Committee of MIDF Group of Companies in addition to being a Shariah Advisory Committee member of BIMB Securities Sdn. Bhd. He is a registered Shariah Adviser with the Securities Commission (SC) which qualifies him to advice on Shariah-compliant products and services regulated by the SC. He is a registered Shariah lawyer with Majlis Agama Islam Perak since 2007 and was a member of the Board of Studies of the BA (Fiqh and Usul Fiqh) Programme of the International Islamic University of Malaysia (IIUM) in 2007-2010. He is a member of the Majlis Agama Islam Wilayah Persekutuan (MAIWP) and sits on the boards of Malaysian Industrial Development Finance (MIDF) Berhad, MIDF Property Berhad, Mesiniaga Berhad, Sime Darby Berhad, and Sime Darby Property Berhad. He also serves as a Board member of Institute of Islamic Understanding Malaysia (IKIM).

PROF. DATO’ DR. AHMAD HIDAYAT BUANG Group Shariah Committee Chairman

IR. DR. MUHAMAD FUAD ABDULLAH Group Shariah Committee Member




ASSOC. PROF. DR. SAID BOUHERAOUA, aged forty-nine (49). Appointed as the Group Shariah Committee member on 2 November 2015. Shariah Committee member for MRT since 1 April 2011 until its dissolution on 2 November 2015.

Holds a Bachelor Degree in Fiqh and Usul Al-Fiqh from University of Algiers in 1991. In 1998, he obtained his Masters Degree in Quran and Sunnah from the IIUM and in 2002, he completed his Ph.D from the Department of Fiqh and Usul al-Fiqh of the same university.

He started his career with University Sains Islam Malaysia (USIM) as a Lecturer in 2003. After two (2) years, he became an Assistant Professor Dr. & Associate Professor Dr. at the Ahmad IbrahimKulliyyah of Laws in IIUM, from year 2004 to 2009. He then resumed his career path as a Senior Researcher at the International Shariah Research Academy (ISRA) for Islamic Finance. He is also a member of the Shariah Committee of Affin Islamic Bank since March

2008. He is also a member of Shariah Committee of ISRA Consultancy institute, since April 2011 and a registered Shariah Adviser with Securities Commission Malaysia since March 2012.

Dr. Said is the editor-in-chief of ISRA International Journal of Islamic Finance. He has published four (4) books, six (6) chapters in books and several articles in refereed journals. He has also presented several papers in international conferences including the International Fiqh Academy of the OIC and Islamic Fiqh Academy of Muslim World League. He developed the curricula in Islamic law for four (4) courses at IIUM and conducted several training sessions in Islamic law Islamic banking and finance in Malaysia and abroad.

Prior to his achievements and contributions towards the industry, he had won the Lamya al-Faruqi Award for Academic Excellence in 1999, organised by International Institute of Islamic Thought and IIUM.

ASSOC. PROF. DR. SAID BOUHERAOUA Group Shariah Committee Member

DR. SYED MUSA SYED JAAFAR ALHABSHI, aged fifty-six (56). Appointed as the Group Shariah Committee member on 2 November 2015. Shariah Committee member for MRT since 1 June 2011 until its dissolution on 2 November 2015. Shariah Committee member for Takaful IKHLAS since September 2012 until August 2015.

He is also a Director of MRT. He currently sits on the Shariah Committee of Bank of Tokyo – Mitsubishi UFJ (Malaysia) Berhad.

Obtained his Diploma in Business Studies from Ngee Ann Polytechnic, Singapore in 1984, a Bachelor of Business Administration (Hons.). Degree from the IIUM in 1989 and a Doctorate in Business Administration majoring in Accounting and Finance from University of Strathclyde, Glaslow, United Kingdom in 1994.

He began his career with Coopers & Lybrand,Singapore as an Audit Assistant in 1984. From 1989 until 1994, he joined IIUM as an Assistant Lecturer and upon completion of his doctorate he became an Assistant Professor and held various academic administrative positions in IIUM till 2000. He joined Universiti Tun Abdul Razak in 2000 as an Associate Professor and became Head of Centre for Graduate Studies. He later served as Dean of Faculty of Business in 2004. In 2006, he joined Amanie Business Solutions Sdn Bhd as a Principal Consultant until 2009 and as a Fellow Consultant from 2010 to 2012. In 2009, he resumed his academic career as Associate Professor with Universiti Tun Abdul Razak and appointed Dean of Graduate School of Business in 2010. Since October 2012, he is the Associate Professor of Institute of Islamic Banking and Finance (IIiBF). Currently, he is Dean of IIiBF, IIUM.

DR. SYED MUSA SYED JAAFAR ALHABSHI Group Shariah Committee Member



DATUK NIK MOUSTPHA NIK HASSAN, aged sixty-three (63). Appointed as the Group Shariah Committee member on 2 November 2015. Shariah Committee member for Takaful IKHLAS since December 2002 and also Shariah Committee member for MRT since April 2012 until its dissolution on 2 November 2015.

He studied Business and Economics at Ohio University, United States of America.

DR. MUHAMMAD NAIM OMAR, aged forty-eight (48). Appointed as the Group Shariah Committee member on 2 November 2015. Shariah Committee member of Takaful IKHLAS since April 2009 until its dissolution on 2 November 2015.

He is an Assistant Professor of Islamic Law at Ahmad Ibrahim Kulliyyah of Laws, International Islamic University of Malaysia and also OCBC Al- Amin Bank Berhad Shariah Committee Member.

He was the Director General of IKIM from August 2009 until August 2015. Prior to joining IKIM, he was the Dean of Kulliyyah Economics at the International Islamic University of Malaysia. In 1989, he used to serve as visiting Scholar at Oxford Centre for Islamic Studies, United Kingdom for one (1) academic year.

He is also a Director of Takaful IKHLAS.

DR. MOHAMED FAIROOZ ABDUL KHIR, aged forty (40). Appointed as the Group Shariah Committee member on 2 November 2015. Shariah Committee member for MRT since April 2013 and also Shariah Committee member of Takaful IKHLAS since April 2014 until its dissolution on 2 November 2015.

Holds a B.A in Islamic Revealed Knowledge and Human Sciences (Fiqh & Usul Fiqh) from IIUM in2000. Obtained his M.A in Shariah from University of Malaya, Kuala Lumpur, Malaysia in 2005 and completed his Ph.D in Islamic Finance from the same university in 2011.

He started his career with IIUM Centre for Foundation Studies since 2002 as a lecturer in the department of Islamic Revealed Knowledge and Human Sciences. After eight (8) years in services, he resumed his career path as a Researcher at the International Shariah Research Academy for Islamic Finance (ISRA). He is a member of the Shariah Committee for Maybank Islamic Berhad since July 2013. He is also a member of the Shariah Committee for AGRO Bank since August 2012. Actively involved in research works, writing books, and presentation of research papers at various local and international conferences and forums. He had been conferred an Excellence Award by University of Malaya for early completion of his Ph.D study.

Graduated with a degree in Shariah Law from Al-Azhar University in 1992. In 1999, he received his Masters Degree from Cairo University in Shariah Law and later received Ph.D from the University of Wales, Lampeter, in 2006.

DR. MOHAMED FAIROOZ ABDUL KHIR

DATUK NIK MOUSTPHA NIK HASSAN Group Shariah Committee Member

Group Shariah Committee Member

DR. MUHAMMAD NAIM OMAR Group Shariah Committee Member






1

Norazman HashimMohd Din Merican

2

Ahkter Abdul Manan

3

Azlan A. Azizee

4

Ahmad Ruhaizad Hashim

6

Sharmini Perampalam

10

Nazzahatol Azura Aziz

5

Raja Zalman Tuah Raja Izzaham

7

Lena Abd Latif

8

Iszatul Mashani Ishak

9

Tung Chee Lim

ThePresident&GroupChiefExecutiveOfficer



International Merchant Bankers Berhad (MIMB) in 1987 as an Investment Analyst. In 1991, he was promoted to Manager, Head of IVS and in 1995 to Assistant General Manager. He was subsequently promoted to General Manager of IVS in 1997. He was then seconded to MIDF Aberdeen Asset Management Sdn. Bhd. (MIDF Aberdeen), which he set up in 1998. In January 2001, he was appointed the Chief Executive Officer and Executive Director of MIDF Aberdeen. He joined Asia Unit Trust Berhad (AUTB) in September 2004 as Chief Executive Officer following the transfer of the business of MIDF Aberdeen to Amanah SSCM Asset Management Berhad. He left AUTB in July 2007 to join MNRB on 17 July 2007. In total, he brings to the Company more than twenty-nine (29) years of experience in the Asset Management industry. Not a Director in any public companies or listed issuer. Not related to any Director and/or major shareholders of MNRB. Does not have any conflict of interest with MNRB and has never been convicted for any offences within the past five (5) years.

Name: Norazman Hashim Age: Fifty-four (54)Gender: MaleNationality: MalaysianPosition: Executive Vice President & GroupChief Financial Officer/Company Secretary Qualification: Masters degree in Business Administration from the Cranfield School of Management, United Kingdom; Fellow member of the Association of Chartered Certified Accountants (ACCA), United Kingdom and a member of the Malaysian Institute of Accountants (MIA).Skills and experience: Norazman Hashim joined the then Malaysian National Reinsurance Berhad in 1985 and was appointed as its Financial Controller and Company Secretary in 1994. He was subsequently transferred to Malaysian Re in April 2005 and promoted to General Manager of the Corporate Services Division in June 2005 where he oversaw the Administration, Legal & Secretarial, CorporateCommunications, Human Capital Management and Finance Departments. On 1 April 2008, he was transferred to MNRB where he assumed his current position. Norazman Hashim is also a Director of MSSB and the Company Secretary of Malaysian Re, MRT, MRDL and Takaful IKHLAS. Not a Director in any public companies or listed issuer. Not related to any Director and/or major shareholders of MNRB. Does not have any conflict of interest with MNRB and has never been convicted for any offences within the past five (5) years.

1

Name: Ahkter Abdul Manan Age: Fifty-three (53)Gender: MaleNationality: MalaysianPosition: Senior Vice President &GroupChiefInvestment Officer Qualification: Bachelor of Social Science (Honours) degree majoring in Management with a minor in Economics, University of Science, Malaysia.Skills and experience: Ahkter Abdul Manan is responsible for the overall investment, property and administrative functions of the MNRB Group. He started his career in the Investment and Securities Department (IVS) of Malaysian

2

Name: Azlan A. Azizee Age: Fifty-five (55)Gender: MaleNationality: MalaysianPosition: Senior Vice President &GroupChiefInformation Officer Qualification: Bachelor of Science in Computer Science from the University of Wisconsin, Green Bay, USA; Masters of Science in Information Systems Technology from The George Washington University, Washington D.C., USA.Skills and experience: Azlan A. Azizee joined the then Malaysian National Reinsurance Berhad as an IT Executive in 1987. He held positions of increasing responsibility in the ensuing years at the Company and was involved in the implementation of IT initiatives for the insurance industry. Having assumed his current position on 1 April 2005, he is today responsible for directing the Company’s information technology strategy, management and operations. Not a Director in any public companies or listed issuer. Not related to any Director and/or major shareholders of MNRB. Does not have any conflict of interest with MNRB and has never been convicted for any offences within the past five (5) years.

3

Name: Ahmad Ruhaizad Hashim Age: Forty-eight (48)Gender: MaleNationality: MalaysianPosition: Senior Vice President &GroupChiefStrategy Officer Qualification: Bachelor of Economics and Accounting from the University of Leeds, England; Member of the Malaysian Institute of Certified Public Accountants (MICPA) since 1995 as well as a member of the MIA.Skills and experience: Ahmad Ruhaizad Hashim began his career in 1991 when he joined Arthur Andersen as an auditor. He served Arthur Andersen for more than five (5) years until 1996 when he left to join KUB Malaysia Berhad. He then re-joined Arthur Andersen in 1999 to head its Kuala Terengganu branch operation. In 2002, he joined Putrajaya Holdings Sdn. Bhd. as the Head of the Corporate Planning Department. After six (6) years with the property development company,he then joined MNRB on 2 January 2008. In addition to his current role, heisalsothePresident&CEOofMRT,awhollyowned subsidiary of MNRB. Not a Director in any public companies or listed issuer. Not related to any Director and/or major shareholders of MNRB. Does not have any conflict of interest with MNRB and has never been convicted for any offences within the past five (5) years.

4

Name: Raja Zalman Tuah Raja Izzaham Age: Forty-three (43)Gender: MaleNationality: MalaysianPosition: Senior Vice President &GroupChiefInternal Auditor Qualification: Fellow member of the ACCA, United Kingdom and a member of the MIA.Skills and experience: Raja Zalman Tuah Raja Izzaham joined MNRB in 2006 as an Executive in the Internal Audit Department. He held positions of increasing responsibility in the ensuing years at the Company before being promoted as the Deputy Group Chief Internal Auditor in 2011. He was then transferred to the Risk Management & Compliance Divisionin 2014 to take up the role as the Group Chief Risk Management and Compliance Officer. He assumed his present position in June 2016

5





Name: Iszatul Mashani Ishak Age: Forty-two (42) Gender: FemaleNationality: MalaysianPosition: Senior Vice President & Head ofHuman Capital Management Qualification: Degree in Information Technology from the University of Queensland, Australia.Skills and experience: Iszatul Mashani Ishak began her career as an Analyst Programmer with Mayban Life Assurance Berhad (now known as Etiqa Insurance Berhad). In 2006, she decided on a career change and embarked on her Human Resource journey as a Recruitment Specialist with Scicom (MSC) Berhad. As a self-learner, she obtained more experience as a Human Resource Generalist and a manager over the next few years with Accenture and Labuan Financial Services Authority. Prior to joining MNRB, she was the Section Head, Talent Management &Staff Engagement with RHB Banking Group specialising predominantly in Performance Management, Talent Development, Succession Planning and Employee Engagement. She joined MNRB on 2 September 2014 as Vice President, Learning & Development and waspromoted to her current position on 1 January 2015. Not a Director in any public companies or listed issuer. Not related to any Director and/or major shareholders of MNRB. Does not have any conflict of interest with MNRB and has never been convicted for any offences within the past five (5) years.

8

Name: Sharmini Perampalam Age: Forty-eight (48)Gender: FemaleNationality: MalaysianPosition: Senior Vice President & Head ofFinance Qualification: Honours degree in Accountancy from Universiti Putra Malaysia and is a member of the MIA.Skills and experience: Sharmini Perampalam joined the then Malaysian National Reinsurance Berhad in 1995 as an Internal Audit Executive and moved up the ranks to Manager before being transferred to the Finance Department. She was promoted to her current position as SeniorVicePresident&HeadofFinancein2011.Having been with the MNRB Group for more than twenty-one (21) years, she brings to the table a wealth of experience from financial and audit procedures to corporate and operations management. Not a Director in any public companies or listed issuer. Not related to any Director and/or major shareholders of MNRB. Does not have any conflict of interest with MNRB and has never been convicted for any offences within the past five (5) years.

6

Name: Lena Abd Latif Age: Forty-nine (49)Gender: FemaleNationality: MalaysianPosition: SeniorVicePresident,HeadofLegal&Secretarial and the Company Secretary Qualification: Bachelor of Laws (Honours) degree from the International Islamic University, Malaysia and has been called to the Malaysian Bar.Skills and experience: Lena Abd Latif has over twenty-two (22) years of working experience in both legal practice and corporate firms. She was employed by Utusan Melayu (Malaysia) Berhad as its legal advisor in 1991 and thereafter, as the General Manager, Corporate Affairs/Group Company Secretary at Land & GeneralBerhad between 1993 and 2000. She joined the then Malaysian National Reinsurance Berhadin2003asManager,Legal&Secretarial

7

Name: Tung Chee Lim Age: Thirty-three (33)Gender: MaleNationality: MalaysianPosition: SeniorVicePresident&HeadofGroupActuarial Services Qualification: Bachelor of Science with Honours (Actuarial Science) from the National University of Malaysia; Fellowship qualification from the Casualty Actuarial Society of the United States; Fellow of the Actuarial Society of Malaysia. Skills and experience: Tung Chee Lim commenced his career as an actuarial analyst at CIMB Aviva Assurance Berhad, and subsequently advanced his career in the takaful industry. He was the Signing Actuary/Appointed Actuary for HSBC Amanah Takaful (Malaysia) Berhad General takaful business. He joined MNRB in 2015. Not a Director in any public companies or listed issuer. Not related to any Director and/or major shareholders of MNRB. Does not have any conflict of interest with MNRB and has never been convicted for any offences within the past five (5) years.

9

Name: Nazzahatol Azura Aziz Age: Forty-four (44)Gender: FemaleNationality: MalaysianPosition: VicePresident&GroupChiefRiskOfficerQualification: Bachelor of Science in Management (minor in Statistics) from the Case Western Reserve University, Cleveland, Ohio, USA.Skills and experience: Nazzahatol Azura Aziz began her career as an auditor with Arthur Andersen in 1995, where she served in the Services Group of Audit Division. She joined the then Malaysian National Reinsurance Berhad in 2000 as an Executive in the Compliance Department. During her sixteen (16) years at the Company, she held various roles of increasing responsibility, including Assistant Vice President at Finance Department, Head of Corporate Finance and Vice President at Corporate Services Division. In 2013, she was appointed as the Head of Business Process Improvement prior to assuming her current position on 15 June 2016. Not a Director in any public companies or listed issuer. Not related to any Director and/or major shareholders of MNRB. Does not have any conflict of interest with MNRB and has never been convicted for any offences within the past five (5) years.

10

and has over sixteen (16) years of working experience. Not a Director in any public companies or listed issuer. Not related to any Director and/or major shareholders of MNRB. Does not have any conflict of interest with MNRB and has never been convicted for any offences within the past five (5) years.


and was appointed as its Company Secretary in February 2004. She was promoted to her current position as Senior Vice President &HeadofLegal&Secretarial in2011.Sheisalsothe Company Secretary of Malaysian Re, MRT, Takaful IKHLAS and MSSB. Not a Director in any public companies or listed issuer. Not related to any Director and/or major shareholders of MNRB. Does not have any conflict of interest with MNRB and has never been convicted for any offences within the past five (5) years.



Event Highlights

Event Highlights

5MNRB SCHOLARSHIP PRESENTATION CEREMONY

15 JUNE 2015

Forty-three (43) deserving Malaysians were awarded scholarships from the MNRB Scholarship Fund to pursue their studies in various insurance related courses.

1MINGGU SAHAM AMANAH MALAYSIA, SIBU, SARAWAK

19 - 27 APRIL 2015

MNRB and Takaful IKHLAS participated in the Permodalan Nasional Berhad’s (PNB) 16th Minggu Saham Amanah (MSAM) exhibition held in Sibu, Sarawak. MNRB was once again a ‘Rakan Utama’ for the exhibition, while Takaful IKHLAS was the ‘Rakan Program Kemasyarakatan’.

2TAKAFUL IKHLAS LAUNCHES TAKAFUL PORTAL FOR THE STAFF OF PERMODALAN NASIONAL BERHAD GROUP OF COMPANIES

20 APRIL 2015

Takaful IKHLAS launched a General Takaful portal for the staff of PNB group of companies in conjunction with MSAM 2015. Takaful IKHLAS offered staff of PNB group a maximum rebate for their products such as Motor Takaful, Houseowner Takaful, Householder Takaful, Personal Accident Takaful, IKHLAS Kembara Personal Accident Takaful and IKHLAS Personal Accident Permata Takaful and many more.

3PROFESSIONAL GOLF OF MALAYSIA (PGM) MNRB SARAWAK CHAMPIONSHIP @ KELAB GOLF SARAWAK

13 - 16 MAY 2015

The 13th leg on the 2015 PGM schedule, the PGM MNRB Sarawak Championship was held at Kelab Golf Sarawak (KGS) and offered World Ranking Points to the Top-6 contenders and ties as it is co-sanctioned with the Asian Development Tour.

4TAKAFUL IKHLAS RECEIVES PRESTIGIOUS AWARD FROM GLOBAL BANKING & FINANCE REVIEW FOR THE SECOND TIME

25 MAY 2015

Takaful IKHLAS achieved another accolade recently by winning the recognition as the Best Takaful Operator Malaysia 2015 from Global Banking & Finance Review for thesecond time.

7MNRB ANALYSTS’ BRIEFING

31 JULY 2015

MNRB held an analysts’ briefing to brief analysts on MNRB’s Audited Financial Results as at 31 March 2015.

6MAJLIS RUMAH TERBUKA HARI RAYA AIDILFITRI KUMPULAN MNRB

29 JULY 2015

MNRB hosted a Hari Raya Open House for all its staff and business partners. This occasion provided the opportunity to get-together and at the same time allowed MNRB to show its appreciation to business partners for their constant support.

8TAKAFUL IKHLAS ORGANIZES IKHLAS-YOUNG ENTREPRENEUR PROGRAMME TO EDUCATE SCHOOL CHILDREN ON FINANCIAL LITERACY HABITS

16 AUGUST 2015

Takaful IKHLAS together with MoneyTree Malaysia, organized IKHLAS–YOUNG ENTREPRENEUR financial literacy programme which aims to increase the level of financial literacy among students in Malaysia. The programme was participated by primary school children from ten (10) selected schools around Kuala Lumpur and Selangor.

9MNRB’s 42nd ANNUAL GENERAL MEETING

30 SEPTEMBER 2015

At the 42nd Annual General Meeting, shareholders were informed on MNRB’s financial performance for the Financial Year Ended 31 March 2015 (FYE2015).



Event Highlights

2

4

3 5

1

6

7

8 9



Event Highlights

10 11

14

17

15

16



Event Highlights

10TAKAFUL IKHLAS ACCLAIMED AS THE BEST TAKAFUL OPERATOR DURING GIFA 2015

2 OCTOBER 2015

Takaful IKHLAS received an international recognition by winning the Best Takaful Operator Award in conjunction with the 2015 Global Islamic Finance Awards (GIFA) which took place in Manama, Bahrain.

11PERODUA DETARIFFICATION & RENEWAL RETENTION WORKSHOP

14 - 16 NOVEMBER 2015

Takaful IKHLAS conducted the Detariffication &RenewalWorkshopforPERODUAtoprovidebriefing about the future of vehicle takaful (motor takaful) business when detariffication is imposed by the central bank.

12A.M. BEST AFFIRMS MALAYSIAN RE’S POSITIVE OUTLOOK

10 DECEMBER 2015

A.M. Best affirmed Malaysian Re’s Financial Strength Rating of ‘A-’ (Excellent) and the Issuer Credit Rating of ‘a-’. A.M. Best also confirmed that the outlooks for both ratings are positive.

13FITCH RATINGS AFFIRMS ‘A’ RATINGS OF MALAYSIAN REINSURANCE BERHAD

8 JANUARY 2016

Fitch Ratings affirmed Malaysian Re’s Insurer Financial Strength rating (IFS) at ‘A’. Fitch Ratings also confirmed the Outlook is Stable.

14MALAYSIAN RE’S 26TH ANNUAL GOLF TOURNAMENT

27 JANUARY 2016

Malaysian Re organized its 26th Annual Golf Tournament for clients and business partners at Glenmarie Golf & Country Resort. A totalof ninety-one (91) golfers participated in this tournament.

15LAUNCHING OF “PROGRAM LESTARI CEMERLANG MNRB” (ADOPT A SCHOOL PROGRAMME)

27 FEBRUARY 2016

MNRB launched the third series of “Program Lestari Cemerlang MNRB”, MNRB’s adopt-a-school programme which aims to improve the academic achievement of schools in rural areas at SK Kuala Krau, Temerloh, Pahang. A ‘gotong-royong’ activity was also carried out at the school involving thirty-five (35) volunteers from the MNRB Group to spruce up the look and ambience of the school.

16TAKAFUL IKHLAS WINS THE EUROPEAN GLOBAL BANKING AND FINANCE AWARDS 2016 - TAKAFUL COMPANY OF THE YEAR (MALAYSIA) FROM THE EUROPEAN MAGAZINE

9 MARCH 2016

Takaful IKHLAS received another international recognition as it was named Takaful Company of the Year (Malaysia) from the European Global Banking&FinanceAwards2016.

17MNRB GROUP HEALTH WEEK

22 - 30 MARCH 2016

MNRB held its annual MNRB Group Health Week which comprises of various activities to encourage staff of MNRB Group to improve their overall health and to adapt to a healthier lifestyle. Among the activities under MNRB Group Health Week include Health Screening by Heart Foundation of Malaysia (YJM) and MNRB Healthy Heart Run 2016.





2016 2015 2014 2013 2012

RM’000 RM’000 RM’000 RM’000 RM’000

Revenue 2,522,951 2,383,957 2,381,378 2,293,382 1,870,326

(Loss)/profit before zakat and tax (31,048) 190,705 214,728 159,332 188,212

(Loss)/profit after zakat and tax (38,829) 139,148 155,986 112,665 89,369

Technical reserves 4,350,338 3,784,625 3,612,476 3,204,985 2,793,864

Total assets 7,107,720 6,477,236 6,136,512 5,642,265 5,048,449

Shareholders’ fund 1,330,180 1,349,474 1,223,469 1,131,944 1,058,488

Paid-up capital 213,070 213,070 213,070 213,070 213,070

(Loss)/earnings per share (sen) (18.2) 65.3 73.2 52.9 41.9

Net assets per share (RM) 6.24 6.33 5.74 5.31 4.97

(Loss)/profit before zakat and tax to Shareholders’ fund (%) -2.3 14.1 17.6 14.1 18.4

(Loss)/profit after zakat and tax to Shareholders’ fund (%) -2.9 10.3 12.8 10.0 13.8

Gross dividends per share (sen) - - - (1) 32.0 17.0

Net dividends per share (sen) - - 16.5 (1) 24.0 13.0

Note:(1) Single-tier dividend




Revenue(RM’000)

(Loss)/Profit Before Zakat and Tax(RM’000)

Total Assets(RM’000)

Shareholders’ Fund(RM’000)

(Loss)/Earnings Per Share(Sen)

Net Assets Per Share(RM)

01 04

02 05

03 06

2016 / 2,522,951 2016 / (31,048)

2016 / 7,107,720 2016 / 1,330,180

2016 / (18.2) 2016 / 6.24

2015 / 2,383,957 2015 / 190,705

2015 / 6,477,236 2015 / 1,349,474

2015 / 65.3 2015 / 6.33

2014 / 2,381,378 2014 / 214,728

2014 / 6,136,512 2014 / 1,223,469

2014 / 73.2 2014 / 5.74

2013 / 2,293,382 2013 / 159,332

2013 / 5,642,265 2013 / 1,131,944

2013 / 52.9 2013 / 5.31

2012 / 1,870,326 2012 / 188,212

2012 / 5,048,449 2012 / 1,058,488

2012 / 41.9 2012 / 4.97





20162015 2017

MAY JUN JUL AUG SEPT OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC

1st Quarter ResultsReported as at 30 June 2015

1st Quarter ResultsAnnouncement date 26 August 2015

2nd Quarter ResultsReported as at 30 September 2015

2nd Quarter ResultsAnnouncement date 26 November 2015

3rd Quarter ResultsReported as at31 December 2015

3rd Quarter ResultsAnnouncement date 25 February 2016

4th Quarter ResultsReported as at 31 March 2016

4th Quarter ResultsAnnouncement date 31 May 2016

43rd Annual General MeetingDate of Notice of AGM 29 July 2016

43rd Annual General MeetingAnnual General Meeting date 25 August 2016

Q1

Q2

Q3

Q4



MNRB’s Growth

MNRB’s Growth

2002

500

0

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

20032004

20052006

20072008

20092010

20112012

20132014

20152016

Year Shareholders’ Fund(RM’000)

Total Assets (RM’000)

2002 506,313 1,329,716

2003 564,609 1,427,390

2004 617,010 1,476,021

2005 677,039 1,607,197

2006 747,803 1,772,311

2007 808,477 1,963,036

2008 893,919 2,576,247

2009 835,646 3,378,919

2010 892,513 3,845,983

2011 998,715 4,467,967

2012 1,058,488 5,048,449

2013 1,131,944 5,642,265

2014 1,223,469 6,136,512

2015 1,349,474 6,477,236

2016 1,330,180 7,107,720

Total Assets Shareholders’ Fund

RM Million





1/4/15-31/3/16 1/4/14-31/3/15 1/4/13-31/3/14 1/4/12-31/3/13 1/4/11-31/3/12

Closing Price (RM) 2.86 3.58 3.72 2.94 2.62

Highest Price (RM) 4.18 4.90 4.24 3.39 3.42

Lowest Price (RM) 2.82 3.53 2.81 2.81 2.33

Total Volume Traded (’000) 20,247 31,178 63,856 59,886 57,903

Gross Dividend Yield (%) 0.00 0.00 4.44 10.88 6.49

Price Earning Ratio (x) - 5.93 5.08 5.56 6.25

Source: Bloomberg @ 18/04/2016

Share Prices and Volume Traded (January 2014 - March 2016)

Performance of Shares (January 2014 - March 2016)

MNRB HOLDINGS BERHAD Performance of Share

5.00

5.00

12,500.00

1,900.00

4.50

4.50

10,500.00

1,850.00

9,500.00

7,500.00

5,500.00

3,500.00

1,500.00

11,500.00

4.00

4.00

8,500.00

1,800.00

3.50

3.50

6,500.00

1,750.00

3.00

3.00

4,500.00

1,700.00

2.50

2.50

2,500.00

1,650.00

2.00

2.00

500.00

1,600.00

Jan-14

Jan-15

Feb-14

Feb-15

Mar-14

Mar-15

Apr-14

Apr-15

May-14

May-15

Jun-14

Jun-15

Jul-1

4Ju

l-15

Aug-14

Aug-15

Sep-14

Sep-15

Oct-14

Oct-15

Nov-14

Nov-15

Dec-14

Dec-15

Jan-16

Feb-16

Mar-16

Jan-14

Jan-15

Feb-14

Feb-15

Mar-14

Mar-15

Apr-14

Apr-15

May-14

May-15

Jun-14

Jun-15

Jul-1

4Ju

l-15

Aug-14

Aug-15

Sep-14

Sep-15

Oct-14

Oct-15

Nov-14

Nov-15

Dec-14

Dec-15

Jan-16

Feb-16

Mar-16

Closing Price (RM)

Closing Price (RM) Volume Traded (’000)

Closing Price (RM)

Volume Traded (’000)

Kuala Lumpur Composite Index

Closing Price (RM) Kuala Lumpur Composite Index





Being a conscientious corporate citizen and a key player in the reinsurance, takaful and retakaful sectors, MNRB is committed in embedding responsible and sustainable practices into our total business operations within the areas of Workplace, Marketplace, Community and Environment. While it is our main focus to set strong growth for our business, we also make it a priority to go beyond mere profit and invest in various sustainable activities with specific emphasis on education, knowledge building and human capital development. This is aimed at building a sustainable pool of talent in the Group, the industry as well as the cultivation of dynamic insurance and takaful professionals.

With this being implemented, we are not only helping develop the local insurance and takaful industries but most importantly, we are also contributing towards our nation’s growth.

OUR COMMITMENT TO SUSTAINABLE PRACTICES

MNRB is committed in embedding responsible and sustainable practices into our total business operations within the areas of the Workplace, Marketplace, Community and Environment.

Our workforce is our greatest strategic asset and we endeavour to ensure that our employees grow and succeed under our core.

We understand the highly competitive and changing demands of the marketplace.

Our sustainable efforts extend to undertaking initiatives that seek to educate various target audiences about environmental conservation.

We believe in creating value and empowering the communities around us to elevate lives and ensure a better future for all.

Page 48 Page 47

Page 44

Long-term sustainable

value

Work

place

Community

Marketplace

Environment




STRENGTHENING OUR WORKPLACE

Our workforce is our greatest strategic asset and we endeavour to ensure that our employees grow and succeed under our core. For this purpose, we continue to implement sustainable workplace initiatives to further strengthen the knowledge and the development of our employees and the overall performance of the Company as well as to ensure we keep our competitive edge.

In our bid to strengthen our employees, we direct our energy towards developing, prioritizing and implementing human capital initiatives that are complementary to the business strategies. These initiatives revolve around talent recruitment, talent management, development, performance review, reward and other touch-points of the employee life-cycle. Training and Development Opportunities

To enhance the capabilities of our employees, ensure that they keep abreast of industry trends and perform to the best of their abilities, we provide them with a variety of training opportunities.

Through various development initiatives, we introduce our employees to the fundamentals of the Company’s business, the insurance and takaful industries, the legal and regulatory environment, as well as technical and soft skills training.

Our employees participate in workshops, seminars and conferences, both locally and overseas. All these initiatives help them to be the best they can be, as well as bolstering their career pathways and lending to their personal growth.

In continuation of our customized in-house leadership programmes, conducted since 2014, namely LEAP (Leadership Enhancement & Alignment Programme), HIGH (High Impact Group Leadership) and FLY (Future Leader in You), our leaders continue to be developed and exposed to a large variety of leadership development programmes conducted by top executive-education providers. These leadership development programmes address our leadership competencies and will expose the leaders to the latest industry developments as well as best practices. Participating in recognized programmes will also provide them the networking opportunities by accessing other regional leaders.

As part of our reinforcement phase, we have this year, organized the iLEAP (intergrated Leadership Enhancement & Alignment Programme) Talk Series, which is aimed at integrating leadership development by learning from others. We have so far been fortunate to have a few prominent corporate figures to share their experience and leadership journeys.

< WORKPLACE

An important element of our development framework, the Education Assistance Programme (EAP) which was introduced in 2014 forms a large portion of our overall development investment. This programme is a testament to the Company’s commitment to strengthen and upskill our employees and continues to be a popular programme amongst our employees. A number of our employees are currently undergoing the Diploma of the Malaysian Insurance Institute (MII) (DMII) and Associateship of the MII (AMII) certifications as part of their professional development.



In addition to the above mentioned, MNRB, in its efforts to gain the strength of its diverse workforce, has also undertaken the following initiatives:-

• Providesfairandequitableemploymenttermsregardlessofgender,ethnicity or age;

• Givesequalopportunitiesforcareeradvancementbasedonmerit.This is supported by a well-developed performance appraisal system which is linked to rewards; and

• Representationofwomeninmanagementandseniormanagementpositions.

For Takaful IKHLAS’ agents, a variety of training programmes continue to be rolled out to ensure that our agents are of a high calibre, continue to conduct themselves in a professional manner, and have the necessary knowledge to serve our customers effectively.

Employee Health Initiatives

Employees’ health matters continue to be an important agenda in the Company. We continue to implement initiatives throughout the organisation to encourage a healthy and balanced lifestyle.

The one-week long MNRB Group Health Week campaign emphasises on the importance of preserving a work-life balance and educates employees on all aspects of health especially pertaining to the heart disease. MNRB Group Health Week comprises of free health screening packages, eye check-up, breast examination, Health Talk and food demonstration and nutrition counselling.


< MARKETPLACE

ELEVATING THE MARKETPLACE

As one of the players in the reinsurance, takaful and retakaful industries, we understand the highly competitive and changing demands of the marketplace. With this in mind, we are committed to instil a higher degree of professionalism in the marketplace by helping develop more industry professionals to support the rapidly evolving industry landscape.

We are also focused in enriching the knowledge of the underwriters by according them with a flood risk analysis tool to mitigate exposure of their portfolios.

The Malaysian Flood Model (Re.Banjir)

Flooding is one of the most significant natural perils in Malaysia in terms of frequency and severity, extent and insured and economic damage. Knowing this, Malaysian Re has developed a Malaysian flood risk analysis tool, named Re.Banjir, for use by members of Persatuan Insurans Am Malaysia (PIAM) and the Malaysian Takaful Association (MTA).

MNRB also held its first ever MNRB Healthy Heart Run to further encourage employees to adapt to a healthy lifestyle. The event took place at Perdana Botanical Garden, Kuala Lumpur and had attracted more than three-hundred (300) employees and family members of MNRB.

attracted more than

300 employees and family members of MNRB



Re.Banjir is based on a software developed using the most detailed data and methodology available. It includes rainfall and river gauge data spanning many years. This data had been processed and developed using state-of-the-art hydrological solutions and programming tools. Re.Banjir is able to simulate a range of potential insurance losses from mild local flooding to floods in excess of the 1-in-250-years return period.

Re.Banjir would allow Malaysian insurance and takaful companies to estimate flood exposure of their own portfolios. In addition, it would also allow them to better understand the effects of flooding on their portfolios, derive the Probable Maximum Loss (PML) to their portfolios for different return periods, quantify the financial implications and enable them to make informed decisions in relation to their reinsurance programming.

Stage 1 of the Flood Model, which covers the Klang Valley, was launched on 23 September 2013. Stage 2 of the Flood Model which covers the whole of Peninsular Malaysia was later launched on 14 September 2015. The necessary work for Stage 3 of the Flood Model which will cover East Malaysia is expected to commence soon.

In September 2015, the 21st Programme for Insurance Executive Development (PIED) was organised for our domestic and international clients in Kuala Lumpur. The 2015 PIED covered four (4) classes of insurance, namely Fire,MarineHull&Cargo, Engineering and Liability.PIED is designed for executives with at least two (2) years’ working experience in the insurance industry and who are well versed with theoretical knowledge of insurance in these four classes of insurance. The programme adopts a highly interactive approach, including illustrated case studies, to enable the participants to appreciate the practical application of what they have learnt.


Stage 1

Flood Model

Stage 2 Stage 3 October 2015 saw the successful kick-off to a pilot programme especially designed for young aspiring managers within our industry – The Young Emergent Leadership Showcase (YouLead!). This 5-day leadership showcase, focuses on effective leadership fundamentals, deciphering key industry issues and regulatory updates in the insurance industry. It also aims to provide a networking platform amongst peers to support their individual career growth within the insurance/takaful industry. Market Training Programmes

Over the years, MNRB had implemented various training programmes on insurance/reinsurance and takaful/retakaful for staff of insurance/takaful companies to enhance their professionalism within the industry. These programmes serve as platforms for participants to exchange ideas and update themselves with the latest industry developments.

We annually conduct the Technical Courses in Fire Risk Assessment and Special/Self Rating for underwriting and marketing staff of insurance companies. At the end of the training, these staff would be expected to know how to conduct risk surveys and determine fire premium rates for certain types of risks.

covers theKlang Valley

covers thewhole of Peninsular

Malaysia

coversEast Malaysia




ENRICHING COMMUNITIES

We believe in creating value and empowering the communities around us to elevate lives and ensure a better future for all. In doing so, we lay a solid foundation for the younger generation to attain greater heights and to inspire them to become leaders of tomorrow through various community efforts which include scholarship programmes, seminars, workshops, study camps and sponsorships.

MNRB Scholarship Programme

The MNRB Scholarship Programme aims to encourage and promote education in the fields of insurance/takaful, Actuarial Science and Risk Management. By promoting these fields of study, MNRB is able to contribute to the increase of qualified and well-trained professionals in the Malaysian insurance and takaful industries in the long run.

The MNRB Scholarship Fund (the Fund) was established in 1998 with an initial start-up fund of RM1 million. Since its establishment, more than RM10 million has been contributed to the Fund and a total of 438 Malaysians have benefitted from the scholarship awards to further their undergraduate studies in both public and private institutions of higher learning.

As part of our efforts and commitment to develop young talent within the insurance/takaful industry, the Fund collaborated with the MII in 2007 to extend its scholarship programme to working adults within the insurance and takaful industries.

< COMMUNITY

These scholarships are offered to staff of insurance and takaful companies who are keen to pursue professional insurance qualifications, namely the AMII and DMII, on a part-time basis.

Since the onset of our partnership with MII, the Fund has offered a total of 217 scholarships to young working adults. The knowledge that our scholarships are helping to produce more competent and qualified professionals in the Malaysian insurance and takaful industries shows our emphasis on education and human capital development. It reflects our unwavering commitment towards the continuous growth of not only our people, but also all those within the industry.



< ENVIRONMENTProgram Lestari Cemerlang MNRB

The Company’s adopt-a-school programme, Program Lestari Cemerlang MNRB was created in 2011 to show support to our local education system. This programme is a two-year partnership with selected schools aimed at improving the students’ academic achievement through extra educational activities and learning facilities. The selected schools are typically secondary schools located in rural areas with the majority of students coming from lower-income families.

CONSERVING OUR ENVIRONMENT

Our sustainable efforts extend to undertaking initiatives that seek to educate various target audiences about environmental conservation as well as mitigating the impact of our business activities on the environment.

MNRB Ringgit Savvy Programme

A supplement to the MSAM exhibition, the MNRB Ringgit Savvy Programme, which was commenced in 2012, educates primary and secondary school students on money management and encourages them to be creative when undertaking money management activities. A new activity was introduced under MNRB Ringgit Savvy Programme called Eco Challenge. Through this activity, students were taught to create musical instruments out of waste products as a way of saving money. Students then competed to recreate the musical instruments using their own set of waste products and recycled materials.

MOVING FORWARD

As MNRB continues to set its sights on growing profitably in a responsible manner, we will strive to identify a more impactful and tangible sustainable activities that looks into Economics, Environment and Social aspects.

Only then can we hope to truly create sustainable value for MNRB in a holistic manner, reinforce our ties with all stakeholders and stand out as a model for responsible corporate behaviour.

Minggu Saham Amanah Malaysia (MSAM)

MSAM is an integrated investment education programme organised annually by Permodalan Nasional Berhad (PNB) since year 2000 to educate Malaysians on investment and financial planning.

MNRB has been a firm supporter of MSAM activities and PNB’s initiative in educating the Malaysian public on making smart investments. MNRB is also proud to be involved in MSAM activities and will continue to support PNB’s noble cause.

In addition to this, MSAM is also an avenue for MNRB to share with the investors and public, on its subsidiaries, businesses and products. This helps to promote and enhance MNRB’s image and presence as a public listed company.


A total of RM60,000 is allocated every two (2) years to cover various activities that benefit the students such as tuition classes, motivational talks, study camps, upgrade of school library and contribution of computers.





The Board of Directors (“Board”) of MNRB remains committed towards maintaining high standards of corporate governance throughout the Group and strives to continuously improve the effective application of the principles and best practices as laid down in the following:-

BOARD OF DIRECTORS

The Board of MNRB is responsible for the proper stewardship of the Group’s resources, the achievement of the Group’s objectives and good corporate citizenship. It discharges this responsibility by complying with all the relevant Acts and Regulations, including adopting the principles and best practices of the MCCG 2012 and the Listing Requirements.

The Board retains full and effective control over the Group’s affairs. This includes the responsibility to determine the Group’s development and overall strategic direction. Key matters such as the approval of quarterly and annual results, major acquisitions and disposals, major capital expenditures, budgets, business plans and succession planning for top management, are reserved for the Board or its appointed committees to deal with.

The meetings of the Board are chaired by the Non-Executive Chairman, whoseroleisclearlyseparatedfromtheroleofthePresident&GroupChief Executive Officer (“GCEO”), who ensures that Board policies and decisions are implemented accordingly.

BOARD COMPOSITION

The Board comprises members with relevant expertise and experience drawn from business, financial and technical fronts which strengthened leadership and management. The Board currently comprises seven (7) members of whom six (6) members are Non-Executive Directors, including the Chairman. Three (3) of these members are Independent Non-Executive Directors, three (3) are Non-Independent Non-Executive Directors and one (1) is a Non-Independent Executive Director (the GCEO).

As at the date of this report, the percentage of the Board composition is as follows:-

Executive Director (also the GCEO)

1 out of 7 14.2%

Independent Non-Executive Directors

3 out of 742.9%

Non-Independent Non-Executive Directors (including the Chairman)

3 out of 742.9%

• The Malaysian Code on Corporate Governance 2012 (“the Code” or “MCCG 2012”); and

• Bursa Malaysia Securities Berhad’s Main Market Listing Requirements (“Listing Requirements”).

MNRB’s policy is to implement these principles and best practices and to uphold high standards of business integrity in all activities undertaken by the Group. This shall include a commitment to emulate good industry examples and to comply with guidelines and recommendations in the conduct of business activities within the Group.

Set out below is a statement on how MNRB has applied the principles and complied with the Best Practices as prescribed under the MCCG 2012 and the Listing Requirements during the financial year ended 31 March 2016.



By virtue of this composition, the Company is in compliance with Paragraph 15.02 of the Listing Requirements which requires at least two (2) Directors or one-third (1/3) of the Board, whichever is the higher, to be independent.

The Board takes cognizance of the recommendation to ensure that the majority of its Directors are Independent Directors as well as to have diversity in terms of gender, ethnicity and age in the Board. The Board is currently assessing potential candidates fitting these requirements.

Under the Company’s Articles of Association, the number of Directors shall not be more than ten (10) and the Board currently comprises seven (7) Directors.

Following the retirement of Dato’ Syed Ariff Fadzillah Syed Awalluddin, Independent Non–Executive Director on 1 October 2015, the Board had appointed a new Independent Director on 1 April 2016 i.e. Mustaffa Ahmad. The Company is in the midst of appointing suitable additional candidates as its Independent Non-Executive Director.

The Directors bring to the Board, a wide range of knowledge and experience in relevant fields such as insurance and reinsurance, accounting and finance, legal, economic, investment, international business, banking and business operations. Therefore, all Directors have the necessary depth to bring experience and judgment to bear on issues of strategy, performance, resources and ethical standards. The Board is of the opinion that its current composition and size constitute an effective Board for the Company.

The profiles of the Directors are provided on pages 24 to 27 of this Annual Report.

BOARD CHARTER

The Board had formalised a Board Charter setting out the duties, responsibilities and functions of the Board in accordance with the principles of good corporate governance set by the regulatory authorities. This Board Charter, if necessary, will be periodically reviewed, to incorporate updates and enhancements to the existing rules and regulations as and when necessary.

The Board Charter is available on the Company’s website at www.mnrb.com.my.

DIRECTORS’ CODE OF ETHICS

The Directors observe a code of ethics in accordance with the code of conduct expected of Directors of a holding company of financial service providers.

The Chairman is primarily responsible for the effective conduct and workings of the Board. The Chairman leads the Board in the oversight of the Management and in setting strategic business plans, goal and key policies for the Group to ensure the sustainability of long-term returns.

STRATEGIES PROMOTING SUSTAINABILITY

The Board is committed to implementing responsible and sustainable corporate practices. MNRB, as a conscientious corporate citizen, has embraced good corporate responsibility practices in the areas of stakeholder engagement, the community, workplace, marketplace and environment. Every business decision the Group makes pertaining to growth and profitability is consistent with its social and environmental goals for sustainability. The corporate responsibility initiatives undertaken by MNRB for the financial year ended 31 March 2016 are disclosed in the Sustainability Report of this Annual Report. A summary of the Corporate Responsibility Activities is also available on the Company’s website at www.mnrb.com.my.

DIRECTORS’ INDEPENDENCE AND INDEPENDENT NON-EXECUTIVE DIRECTORS

The Independent Directors play a pivotal role in corporate accountability and provide unbiased and independent views and judgment in relation to the Board’s deliberation and decision-making process. This is reflected in their membership of the various Board Committees and attendance at meetings.

All the Independent Directors have demonstrated to the Board that they have exercised impartial and independent judgment, protecting the interests of the Group and the minority shareholders.

The Non-Executive Directors do not participate in the day-to-day management of the Company and do not engage in any business dealing or other relationships with the Company (other than in situations permitted by the applicable regulations) in order that they remain truly capable of exercising independent judgment and act in the best interests of the Group and its shareholders. The Board is also satisfied that no individual or group of individuals dominate the decision making process of the Board to ensure a balanced and objective consideration of issues, thereby facilitating optimal decision-making.




DIRECTORS’ INDEPENDENCE POLICY

The Board has adopted a nine (9) years with maximum of twelve (12) years policy for the tenure of Independent Non-Executive Directors, which is implemented to ensure the continuous effective functioning of the Board. Due to the nature of the Group’s businesses that are considered specialised, the Board is of the view that the maximum of twelve (12) years is reasonable considering there are significant advantages to be gained from long-serving Directors who already possess tremendous insight and knowledge of the Group’s/Company’s business affairs.

The Board feels that the length of their service on the Board does not in any way interfere with their exercise of independent judgment and ability to act in the best interests of the Company.

In assessing independence, the Board evaluates the following criteria:-

• The ability to challenge the assumptions, beliefs or viewpoints of others with intelligent questioning, constructive and rigorous debating, and dispassionate decision for the good of MNRB;

• A willingness to stand-up and defend their own views, beliefs and opinions for the ultimate good of MNRB; and

• An understanding of MNRB’s business activities in order to appropriately provide responses on the various strategic and technical issues brought before the Board.

The Board considers that both Yusoff Yaacob and Megat Dziauddin Megat Mahmud who had served as Independent Directors for more than nine (9) years still meet the above-mentioned criteria and that their long tenure do not affect their assessment and responsibilities as Independent Directors.

SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR

In accordance with the best practices in corporate governance, Megat Dziauddin Megat Mahmud continues to be the Senior Independent Non-Executive Director of the Board to whom the concerns of shareholders and stakeholders may be conveyed. Megat Dziauddin Megat Mahmud is also the Chairman of the Audit Committee as well as the Remuneration Committee.

He can be contacted at his email address at [email protected].

APPOINTMENTS TO THE BOARD

The appointment of new Board members are considered and properly evaluated by the Nomination Committee. Upon completing this process, the Committee shall recommend the proposed appointment to the Board for its deliberation and approval. In making these recommendations, the Nomination Committee assesses the suitability of candidates, taking into account the required mix of skills, knowledge, expertise and experience, as well as professionalism, integrity including financial integrity, competencies and other qualities, before recommending them to the Board for appointment.

The Nomination Committee and Board will devote sufficient time to review, deliberate and finalise the selection of Directors. In this aspect, the Company Secretary will ensure that all the necessary information is obtained and relevant legal and regulatory requirements are complied with. In this aspect, the Board is also guided by the Group’s Fit and Proper Policy for Key Responsible Persons.

The Nomination Committee conducts a yearly assessment on the suitability of the present Directors under the abovementioned Fit and Proper Policy for Key Responsible Persons. The fit and proper assessment for the Directors includes self-declaration and vetting by the Company for the purpose of ensuring that they are suitable to continue serving as Directors of the Company. The following aspects would be considered by the Board in appointing/reappointing Directors:-

• Probity, personal integrity and reputation – the person must have key qualities such as honesty, independence of mind, integrity, diligence and fairness.

• Competence and capability – the person must have the necessary skills, ability and commitment to carry out the role.

• Financial integrity – the person must manage their debts and financial affairs prudently.

RE-APPOINTMENT AND RE-ELECTION OF DIRECTORS

In accordance with Article 86 the Company’s Articles of Association, one-third (1/3) of the Directors for the time being, or if their number is not a multiple of three (3), then the number nearest to one-third (1/3), shall retire from office at each Annual General Meeting (AGM). All retiring Directors can offer themselves for re-election.

Directors who are appointed by the Board during the financial period before the AGM are also required to retire from office and seek re-election by the shareholders at the first opportunity after their appointment.




The Company’s Articles of Association further provide that all Directors shall retire from office at least once every three (3) years but shall be eligible for re-election.

Pursuant to Section 129 of the Companies Act, 1965, the office of a Director of over the age of seventy (70) years becomes vacant at every AGM unless he is re-appointed by a resolution passed at such an AGM of which no shorter notice than that required for the AGM has been given, and the majority by which such resolution is passed is not less than three-fourths (3/4) of all members present and voting at such an AGM.

At the 43rd AGM, two (2) Directors are due for re-election pursuant to Article 86 and one (1) Director is due for re-election pursuant to Article 92 of the Articles of Association. In addition, one (1) other Director is due to retire pursuant to Section 129 of the Companies Act, 1965.

BOARD AND INDIVIDUAL DIRECTORS’ EFFECTIVENESS

The Board members undertake a formal and transparent process, upon completion of every financial year, to assess the effectiveness of their fellow Directors, the Board as a whole and the performance of the Executive Director.

The Board and Individual Directors Evaluation is based on answers to a detailed questionnaire. The evaluation form is distributed to all Board members and covers topics which include, among others, the responsibilities of the Board in relation to strategic plan, fiscal oversight, risk management, Board composition and training needs.

Other areas which are assessed include the contribution of each and every member of the Board at meetings as well as meeting arrangements.

The Nomination Committee, having deliberated the findings of the Board and Individual Directors Evaluation, will report to the Board the results and highlight those matters that require further discussion and direction by the Board.

The Board members’ directorship in companies other than the Company and the Group, are well within the restriction of not more than five (5) directorships in public listed companies as stated in the Listing Requirements.

ROLES AND RESPONSIBILITIES OF THE CHAIRMAN AND GCEO

The roles and responsibilities of the Chairman and the GCEO are separated with a clear division of responsibilities as defined in the Board Charter.

This distinction is to provide better understanding and distribution of jurisdictional responsibilities and accountabilities.

The Chairman leads the Board and is also responsible for its performance. Together with the rest of the Board members, the Chairman sets the policy framework and strategies to align the business activities driven by the Senior Management Team with the Group’s vision and mission.

The GCEO is mainly accountable for the day-to-day management to ensure the smooth and effective running of the Group. He is also responsible for the implementation of policies and Board decisions as well as coordinating the development and implementation of business corporate strategies.

The GCEO also ensures that the financial management practice is at the highest level of integrity and transparency for the benefit of the shareholders and the affairs of the Company be performed in an ethical manner.

BOARD MEETINGS

The Board meeting dates for the ensuing financial year are scheduled in advance before the end of the current financial year so that the Directors are able to plan ahead and schedule these dates into their respective meeting schedules.

The Board has scheduled meetings at least six (6) times a year, besides the AGM. For the financial year ended 31 March 2016, the Board held nine (9) meetings.

Technology and information technology are effectively used in Board meetings and communications with the Board. Board meeting materials are shared electronically and where required, Directors may participate in meetings via video conference.

All Directors have complied with the requirement to attend at least fifty percent (50%) of Board meetings held during the financial year ended 31 March 2016 pursuant to the Listing Requirements.




The details of attendance of the Directors at Board meetings held during the financial year are as follows:-

Name of Director No. of Meetings Attended

Percentage of Attendance

Sharkawi Alis 9/9 100%

Mohd Din Merican 9/9 100%

Megat Dziauddin Megat Mahmud

9/9 100%

Yusoff Yaacob 9/9 100%

Paisol Ahmad 9/9 100%

Hijah Arifakh Othman (Appointed with effect from 1 June 2015)

8/8 100%

Mustaffa Ahmad (Appointed with effect from 1 April 2016)

- -

P. Raveenderen (Resigned with effect from 1 July 2016)

9/9 100%

At each scheduled Board meeting, there is a report on the six (6) elements of responsibility of the Board under the MCCG 2012, namely:-

• Reviewing/adoption of strategic and business plans for the Group;

• Overseeing the conduct of the Group’s business to evaluate whether the business is being properly managed;

• Identifying principal risks and ensuring the implementation of appropriate systems to manage the risks;

• Succession planning, including appointing, training, fixing the compensation of and where appropriate, replacing key management;

• Developing and implementing an investor/shareholder relations programme or communication policy for the Group; and

• Reviewing the adequacy and integrity of the Group’s systems of internal control and of management information.

There is also a financial and business review and discussion of the Group’s quarterly performance including operating performance to date, against the annual budget and business plan previously approved by the Board for that year.

The respective Board Committee’s reports and recommendations are also presented and discussed at Board meetings. All proceedings of Board meetings are duly recorded in the minutes of each meeting and signed minutes of each Board meeting are properly retained by the Company Secretary. The Board delegates the day-to-day management of the Company’s business to the Senior Management Team, but reserves for its consideration significant matters such as the following:-

• Approval of financial results and quarterly announcements;

• Material acquisition and disposals of assets;

• Related party transactions of a material nature;

• Authority levels for core functions of the Company;

• Corporate policies on investments (including the use of derivatives) and risk management;

• Outsourcing of core business functions;

• Policies and Procedures;

• Annual Budget; and

• Capital Management Plan.

DIRECTORS’ REMUNERATION

Remuneration Policy and Procedure

The Remuneration Committee recommends to the Board the appropriate remuneration packages for the Directors as well as Executive Director and the key senior officers in order to attract, motivate and retain the Directors, Executive Director and the key senior officers of the necessary caliber and quality as required by the Group. The Group’s remuneration policy is to reward the Directors and the key senior officers competitively, taking into account performance, market comparisons and competitive pressures in the industry. Whilst not seeking to maintain a strict market position, the Committee takes into account comparable roles in similar organisations that may be the same in size, market sector or business complexity.

The Executive Director does not participate in any way in determining his individual remuneration.




All Non-Executive Directors are paid Directors’ fees, which are recommended by the Board and approved annually by the shareholders at the AGM.

The details of the total remuneration of each Director of the Company during the financial year ended 31 March 2016 is disclosed on page 131 of this Annual Report.

Indemnification of Directors and Officers

Directors and Officers are indemnified under a Directors’ and Officers’ Liability Insurance against any liability incurred by them in the discharge of their duties while holding office as Directors and Officers of the Company. The Directors and Officers shall not be indemnified where there is any negligence, fraud, breach of duty or breach of trust proven against them.

SUPPLY OF INFORMATION

All Directors have full and unrestricted access to all information pertaining to the Group’s business affairs, whether as a full Board or in their individual capacity, to enable them to discharge their duties.

Prior to Board meetings, every Director receives a notice of meeting, the agenda and Board papers. Sufficient time is given to the Directors to enable them to obtain further explanations, where necessary, so that there will be full participation by Directors at the meeting. The Board papers include the following:-

• Minutes of Board Committee meetings to keep the Board informed;

• Reports by the various Board Committees on issues deliberated at the respective Board Committee meetings;

• Financial Statements Report on the Group and subsidiaries’ performance; and

• Compliance reports.

Proper guidelines have been given by the Board pertaining to the content, presentation style and delivery of papers to the Board for each Board meeting to ensure adequate information is disseminated to the Directors.

All Directors have direct access to the members of the Senior Management Team and the services of the Company Secretary to enable them to discharge their duties effectively.

The Company Secretary attends and ensures that all Board meetings are properly convened, and that accurate and proper record of the proceedings and resolutions passed are taken and maintained in the statutory register at the registered office of the Company. The Company Secretary works closely with Management to ensure that there are timely and appropriate information flows within and to the Board and Board Committees, and between the Non-Executive Directors and Management.

The Company Secretary also serves notices to the Directors and all staff on the closed periods for trading in MNRB shares, in accordance with the black-out periods for dealing in the Company’s securities pursuant to Chapter 14 of the Listing Requirements.

The Directors may, if necessary, obtain independent professional advice from external consultants, at the Company’s expense.

Throughout their period in office, Directors are updated on the Group’s business, the competitive and regulatory environments in which it operates and other changes by way of written briefings and meetings with the Senior Management staff.

CONFLICT OF INTEREST

Directors are required to declare their respective shareholdings in the Company and related companies and their interests in any contracts with the Company or any of its related companies. Directors are also required to declare their directorships in other companies and shall abstain from any discussions and decision-making in relation to these companies.

DIRECTORS’ TRAINING

The Company acknowledges that continuous education is vital for the Board members to gain insight into the regulatory updates and market developments to enhance the Directors’ skills and knowledge in discharging their responsibilities.

All new Directors are required to undergo an induction programme whereby they receive information about the Group, the formal statement of the Board’s role, the powers that have been delegated to the Company’s Senior Management and Management committees as well as the latest financial information about the Group. This is to enable them to contribute effectively from the outset of their appointment.




With the repeal of Practice Note 15 on Continuing Education Programme by Bursa Malaysia, the continuous training needs of the Directors are now vested in the Board. During the financial year, all Directors attended various seminars and programmes to strengthen their skills set and knowledge in order to effectively discharge their responsibilities, as well as to acquire sound understanding of current issues and developments in the financial and business environment.

Pursuant to the requirements of Bursa Malaysia, a newly appointed Director is required to attend the Mandatory Accreditation Programme (“MAP”) and obtain a certificate from a programme organizer approved by Bursa Malaysia. Mustaffa Ahmad had attended MAP on 4 May 2016 and 5 May 2016. The Company Secretary facilitates the organization of internal training programmes and the Directors’ participation in external programmes. The Company Secretary keeps a complete record of the training received or attended by the Directors.

The following are some of the programmes and seminars attended by the Board members during the financial year:-

• CorporateGovernance

- Beyond Compliance to Growth – Board’s Strategy in Cultivating within a Conducive Governance Environment.

- Light & Shadow in the Boardroom: Reflections on BoardEvaluation and Development.

• Reinsurance/Insurance/Takafulbusiness

- 9th India Rendezvous – The New Realities in Reinsurance. - 13th Singapore International Reinsurance Conference –

Managing Risk in Uncertain World.- MFRS9&IFRS4PhaseII,IndustryOverview&Developments

on Takaful Business, Details of New OJK Proposal – Impact on the Local Market and How Can Malaysian Reinsurers Expand Its Portfolio Under OJK Regime.

- 2015 CPD Roadshow – The Tiger in the Room – How to Approach Decision Making in the Face of Strategic Risk.

- IIS 51st Annual Global Insurance Forum – Filling the Protection Gap.

• Economics,Finance,CapitalMarketandExchange

- Monetary Policy and Economic Analysis – How the Central Bank Provide Interest Rate and Forex Direction.

- The Shaking Foundations of Finance. - Financial Freedom – Growing Dreams.- Revisiting Islamic Philanthropy for Sustainable Opportunities

Finance.

DIRECTORS’ FEES

All Non-Executive Directors are paid Directors’ fees which have been approved by the shareholders at the AGM based on the Board’s recommendation.

The remuneration structure of Non-Executive Directors of the Company is as follows:-

• Fees for duties as Director and as member of the various committees of the Board as well as additional fees for undertaking responsibilities as Chairman of the Board and the various Board Committees.

• Meeting allowance for each meeting attended.

The fees for Non-Executive Directors are recommended by the Board to the shareholders after deliberating the recommendations by the Remuneration Committee. The meeting allowance for all Non-Executive Directors is also determined by the Board.

BOARD COMMITTEES

The Board has delegated specific responsibilities to six (6) Board Committees, as follows:-

• Audit Committee;

• Nomination Committee;

• Remuneration Committee;

• Risk Management Committee;

• Investment Committee; and

• Group Shariah Committee.

These Board Committees have their respective Terms of Reference, which clearly define their duties and obligations in assisting and supporting the Board. The ultimate responsibility for the final decision on all matters lies with the entire Board.




Audit Committee

The Audit Committee comprises three (3) members of whom all are Independent Non-Executive Directors. One (1) member of the Committee is a qualified Accountant and member of the Malaysian Institute of Accountants. The members of the Committee are:-

• MegatDziauddinMegatMahmud Chairman (Senior Independent Non-Executive Director)

• YusoffYaacob (Independent Non-Executive Director)

• MustaffaAhmad (Independent Non-Executive Director)

• P.Raveenderen (Non-Independent Non-Executive Director) (Resigned with effect from 1 July 2016)

The Committee’s Terms of Reference include the review and deliberation of the Financial Statements of the Company and the Group, findings of the External and Internal Auditors, any related party transactions and any conflict of interest situation within the Group, as well as making recommendations to the Board pertaining to the appointment/re-appointment of External Auditors. In order to encourage a greater exchange of free and honest views and opinions between the Audit Committee and External Auditors, meeting between them, without the Executive Board member and the Senior Management Team being present, was held during the year.

The Audit Committee’s duties, as spelt-out in the Audit Committee Report on pages 61 and 62 of this Annual Report, include primarily, the duties as spelt out in paragraph 15.12 of the Listing Requirements.

The Committee met five (5) times during the financial year.

Nomination Committee

The Nomination Committee comprises five (5) Non-Executive Directors, the majority of whom are independent. The Committee is chaired by an Independent Non-Executive Director in compliance with Paragraph 15.08 A (1) of the Listing Requirements.

The members of the Committee are:-

• YusoffYaacob Chairman (Independent Non-Executive Director)

• SharkawiAlis (Non-Independent Non-Executive Director)

• MegatDziauddinMegatMahmud (Senior Independent Non-Executive Director)

• PaisolAhmad (Non-Independent Non-Executive Director)


The Committee’s objectives are to establish a documented formal and transparent procedure for the appointment of Directors and key senior officers as well as to assess the effectiveness of Directors, the Board as a whole and the various Committees of the Board on an ongoing basis. The Committee regularly reviews the profile of the required mix of skills and attributes of the Directors and is satisfied that the Board has the appropriate balance of expertise and ability to discharge its responsibilities. All assessments and evaluations carried out by the Committee are properly documented and kept by the Company Secretary.

The Committee, following its recent annual assessment review, is satisfied that the size of the MNRB Board is optimum and that there is the appropriate mix of knowledge, skills, attributes and core competencies in the composition of the Board. The Committee is satisfied that all the members of the Board are suitably qualified to hold their positions as Directors of MNRB in view of their respective academic and professional qualifications, experience, knowledge and personal qualities.

The Directors are able to devote full commitment to their roles and responsibilities as Directors of the Company, as no Director holds more than five (5) directorships in other public listed companies.

The Committee met five (5) times during the financial year.

In accordance with prescribed Corporate Governance best practices, the Nomination Committee undertook these key activities during the financial year:-

• Assessed the performance of key Senior Management staff prior to the renewal of their contracts;

• Assessed and made recommendations on the re-election of Directors retiring by rotation at the 43rd AGM;




• Reviewed the results of the Annual Assessment on the Effectiveness of the Board and the Individual Board members, including the assessment on the independence of the Independent Directors;

• Assessed the training needs of the Directors and ensured that the necessary training was being provided by the Company;

• Assessed the Directors and key Senior Management compliance with the fit and proper criteria approved by the Board which are consistent with the Financial Services Act, 2013 and the Policy Document on Fit and Proper Criteria;

• Assessed and made recommendations on the appointment of new Director; and

• Training required by Board members.

Remuneration Committee

The Board has established a Remuneration Committee comprising three (3) Non-Executive Directors.


• MegatDziauddinMegatMahmud Chairman (Senior Independent Non-Executive Director)


• YusoffYaacob (Independent Non-Executive Director)

The Committee’s primary objective is to establish a formal and transparent procedure for developing a remuneration policy for Directors, Executive Directors and key senior officers and to ensure that their compensation is competitive and consistent with the Company’s culture, objectives and strategies. Additionally, the Committee is also responsible for recommending to the Board the specific remuneration packages for Directors, Executive Directors and key senior officers to ensure that they commensurate with the scope of responsibilities held, and as well as to review and recommend changes to the Board whenever necessary.

The Board as a whole will determine the remuneration of the Non-Executive Directors. Each individual Director will abstain from the Board discussion and decision on his own remuneration.

The Committee met two (2) times during the financial year.

During the year, the Remuneration Committee had reviewed and deliberated the following matters:-

• The performance of the Balanced Scorecard/KPI for the bonus and performance of staff for the financial year ended 31 March 2016;

• The proposed Balanced Scorecard/KPI and linkages to annual increment and bonus for financial year ending 31 March 2017;

• Directors’ Fees and Directors’ meeting allowance; and

• Renewal of Contract for Senior Management.

Risk Management Committee

The Board believes that an effective Risk Management Framework is essential for the Group in its quest to achieve its corporate objectives, continued profitability and enhancement of shareholders’ value in today’s rapidly changing market environment.

With this in mind, the Board had established a dedicated Board Committee known as the Risk Management Committee of the Board (“RMCB”) which oversees the implementation of an enterprise-wide risk management framework. The Committee comprises three (3) members and is chaired by an Independent Non-Executive Director.


• YusoffYaacob Chairman (Independent Non-Executive Director)

• HijahArifakhOthman (Non-Independent Non-Executive Director)


• P.Raveenderen (Non-Independent Non-Executive Director) (Resigned with effect from 1 July 2016)

The RMCB is responsible for:-

• Reviewing and recommending risk management strategies, policies and risk tolerance for the Board’s approval;

• Reviewing and assessing the adequacy of risk management policies and framework for identifying, measuring, monitoring and controlling risks as well as the extent to which these are operating effectively;




• Ensuring adequate infrastructure, resources and systems are in place for effective risk management i.e. ensuring that the staff responsible for implementing risk management systems perform those duties independently of the Group’s risk taking activities; and

• Reviewing the management’s periodic reports on risk exposure, risk portfolio composition and risk management activities.

The Committee met four (4) times during the financial year.

Investment Committee

The Investment Committee, comprising two (2) Non-Independent Non-Executive Directors, one (1) Independent Non-Executive Director and one (1) Non-Independent Executive Director, examines strategic investment proposals and makes decisions to optimise the Group’s returns on its investment activities. The members of the Committee are:-

• HijahArifakhOthman Chairman (Non-Independent Non-Executive Director)

• MegatDziauddinMegatMahmud (Senior Independent Non-Executive Director)


• MohdDinMerican (Non-Independent Executive Director)

The Committee met four (4) times during the financial year.

Group Shariah Committee (GSC)

The GSC was established to cater for the Group’s takaful and retakaful businesses. The GSC resides at MNRB and is leveraged by the Group. The GSC is tasked with the responsibility of ensuring that the Group’s takaful and retakaful business activities are in compliance with Shariah principles at all times. The GSC also provides comprehensive guidance to the Board and Management in discharging their duties on Shariah-related matters.

The Group’s Shariah Governance Framework is in compliance with Bank Negara Malaysia’s Shariah Governance Framework for Islamic Financial Institutions, the Guidelines on the Governance of Shariah Committee for Islamic Financial Institutions and the Islamic Financial Services Act, 2013.

Any non-compliance with Shariah matters is reported to the GSC and the Board. The Shariah Secretariat presents a periodic report on Shariah non-compliance matters and highlights action plans undertaken to address any non-compliance.

The members of the GSC are:-

• Prof. Dato’ Dr. Ahmad Hidayat Buang• Ir. Dr. Muhamad Fuad Abdullah• Assoc. Prof. Dr. Said Bouheraoua• Dr. Syed Musa Syed Jaafar Alhabshi• Datuk Nik Moustpha Nik Hassan• Dr. Mohamed Fairooz Abdul Khir• Dr. Muhammad Naim Omar

The GSC met four (4) times during the financial year.

WHISTLEBLOWING

The Group is committed to carrying out its business in accordance with the highest standards of professionalism, honesty, integrity and ethics. Accordingly, the Group has established a Whistleblowing Policy with the following objectives:-

• To help develop a culture of accountability and integrity within the Group;

• To provide a safe and confidential avenue for all employees, external parties and other stakeholders to raise concerns about any misconduct;

• To reassure whistleblowers that they will be protected from detrimental action or unfair treatment for disclosing concerns in good faith; and

• To deter wrongdoing and promote standards of good corporate practices.

This Policy governs the disclosures, reporting and investigation of misconduct within the Group as well as the protection offered to the persons making those disclosures (“whistleblowers”) from detrimental action in accordance with Act 711, Whistleblower Protection Act, 2010.

It is the Group’s policy to encourage its employees and external parties to disclose any misconduct, and to fully investigate reports and disclosures of such misconduct, as well as to provide the whistleblower protection in terms of confidentiality of information, and to safeguard the whistleblower from any act of interference that may be detrimental to the whistleblower. The Group assures whistleblowers that all reports will be treated with strict confidentiality and upon verification of genuine cases, prompt investigation will be carried out.




The official avenues for disclosure by the whistleblower are via any of the following recipients:-

• The Chairman;

• The Chairman of the Audit Committee of MNRB; or

• The GCEO.

The disclosure of misconduct or wrongdoing shall be made in writing via email to [email protected].

The Policy and relevant form can be accessed at the Company’s website www.mnrb.com.my.

EFFECTIVE COMMUNICATION WITH SHAREHOLDERS

The Group recognises the paramount importance of shareholder communication as it is a key component to upholding the principles and best practices of corporate governance for the Group.

In maintaining the commitment to communicate effectively with shareholders, the Group adopts the practice of comprehensive, timely and continuing disclosure of information to its shareholders as well as to the investing public. This practice of disclosure of information is not just established to comply with the requirements of the Listing Requirements pertaining to continuing disclosure, but to align with the best practices as recommended in the Code with regard to strengthening engagement and communication with shareholders.

The Group’s Annual Report is the main channel of communication between the Group and its stakeholders. The Annual Report communicates comprehensive information of the financial results and activities undertaken by the Group. As a listed corporation, the contents and disclosure requirements of the Annual Report are also governed by the Listing Requirements.

The Company disseminates its Annual Report to its shareholders either in hard copy or in CD ROM media. All information to shareholders is available electronically in the Company’s website (www.mnrb.com.my) as soon as it is announced or published.

The AGM is the principal forum for dialogue with shareholders. The Company’s AGM is normally well attended as it provides the shareholders direct access to the Board as well as give them an opportunity to participate effectively and to vote.

Notice of the AGM and the Annual Report are sent out to shareholders at least twenty-one (21) days before the date of the meeting.

Besides the normal agenda for the AGM, the Chairman of the Group presents a comprehensive and concise review of the Group’s financial performance and the value created for shareholders. This review is supported by the presentation of key points and key financial figures. The Chairman also presents the progress and performance of the Group in the Annual Report and provides opportunities for shareholders to raise questions pertaining to the business activities of the Group. All Directors are available to provide responses to questions from the shareholders during this meeting.

Each item of Special Business included in the notice of the meeting will be accompanied by an explanatory statement and/or Circular to Shareholders to facilitate full understanding and evaluation of the issues involved.

A summary of the key matters discussed at the AGM, will be published at the Company’s website after the conclusion of the AGM.

Apart from the abovementioned engagement with shareholders through annual reports and general meetings, the Group also makes announcements of its quarterly results and other announcements to Bursa Malaysia to provide stakeholders with key information that affects their decision-making, thus enhancing the level of transparency. To promote wider publicity and dissemination of information that is made public, the Group also issues press releases to the media on all significant corporate developments and business initiatives to keep the investment community and all stakeholders updated on the progress and strategic development of the business of the Group.

POLL VOTING

In accordance with Listing Requirements, MNRB must ensure that any resolution set out in the notice of any general meeting, or in any notice of resolution which may properly be moved and is intended to be moved at any general meeting, is voted by poll.

Poll voting will be conducted for all resolutions to be tabled at the forthcoming AGM.




INVESTOR RELATIONS

As part of the initiatives in developing and implementing an investor relations programme, regular briefings/meetings are held between the Group with analysts and investors.

Presentations based on permissible disclosures are made to explain the Group’s performance and major development programmes. Price-sensitive information about the Group is however, not disclosed at these briefings/meetings until after the prescribed announcement to Bursa Malaysia has been made.

MNRB also maintains a website, which shareholders and the public in general can access to gain information about the Group at www.mnrb.com.my.

ACCOUNTABILITY AND AUDIT

Financial Reporting

For financial reporting through interim quarterly reports to Bursa Malaysia and the Annual Report to shareholders, the Directors have a responsibility to present a fair assessment of the Group’s position and prospects. The Audit Committee assists the Board in scrutinising information for disclosure to ensure accuracy, adequacy and completeness. The Directors are responsible for ensuring that the accounting records are kept properly and that the Group’s financial statements are prepared in accordance with applicable approved accounting standards in Malaysia.

The Statement by Directors pursuant to Section 169 (15) of the Companies Act, 1965 is set out on page 92 of this Annual Report.

Internal Control and Risk Management

Information on the Group’s internal control and risk management is presented in the Group’s Statement on Risk Management and Internal Control as set out on pages 63 to 65 of this Annual Report.

Relationship with Auditors

Information on the role of the Audit Committee in relation to the External Auditors may be found in the Audit Committee Report set out on pages 61 and 62 of this Annual Report.

The Group has always maintained a close and transparent relationship with its Auditors in seeking professional advice and ensuring compliance with the approved accounting standards.

Management’s Accountability

The Group has an organisational structure showing all reporting lines as well as clearly documented job descriptions for all its Management and Executive employees and formal performance appraisals are done on a periodic basis.

Authority limits, as approved by the Board, are clearly established and made available to all employees.

STATEMENT ON COMPLIANCE WITH THE BEST PRACTICES OF THE CODE

The Group is committed to achieving high standards of corporate governance and the highest level of integrity and ethical standards in all its business dealings. The Board will continuously strive towards adopting all the Principles and Best Practices as set out in the MCCG 2012, the CG Guide and the Listing Requirements.

This Statement on Corporate Governance is made in accordance with the resolution of the Board of Directors dated 5 July 2016.






MEMBERS OF THE COMMITTEE

Megat Dziauddin Megat Mahmud(Chairman & Senior Independent Non-Executive Director)

Dato’ Syed Ariff Fadzillah Syed Awalluddin(Independent Non-Executive Director)(Retired with effect from 1 October 2015)

Yusoff Yaacob(Independent Non-Executive Director)

P. Raveenderen(Non-Independent Non-Executive Director)(Resigned with effect from 1 July 2016)

Paisol Ahmad(Non-Independent Non-Executive Director)(Resigned with effect from 29 October 2015)

Mustaffa Ahmad(Independent Non-Executive Director)(Appointed with effect from 1 June 2016)

MEMBERSHIP

The Committee shall be appointed by the Board and comprises at least three (3) members of whom all members must be Non-Executive Directors and the majority shall be Independent Directors. At least one (1) member of the Committee must be a member of the Malaysian Institute of Accountants or eligible for membership.

The members of the Committee must elect a Chairman among themselves who is an Independent Director.

The term of office shall be reviewed no less than once in every two (2) years.

AUTHORITY

The Committee is authorised by the Board to undertake any activity within its terms of reference and must have unlimited access to all information and documents relevant to its activities, to both the internal and external auditors, as well as to all employees of the Group. It must be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the listed issuer, whenever deemed necessary.

It must also have the authority to obtain independent legal or other professional advice as it considers necessary.

TERMS OF REFERENCE

The main duties of the Committee are:-

1. To review and approve the annual audit plan, audit charter, budget, scope of audit procedures, audit programmes and reports of the internal auditors including actions taken on internal audit recommendations;

2. To review the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work;

3. To review annually with the external auditors, the audit plan and the report including the coordination between the internal and external auditors to prevent duplication of effort;

4. To review the quarterly results and year-end financial statements before approval by the Board including the assistance given by the Company’s officers to the auditors;

5. To recommend to the Board the nomination of the external auditors after evaluating their performance and to consider the auditors’ remuneration and any questions of resignation or dismissal;

6. To review the external auditors’ management letter and Management’s response thereto;




7. To review the disclosure statements in the annual report to be in compliance with Bursa Malaysia requirements;

8. To review any related-party transactions and any conflict of interests situation that may arise within the Group; and

9. To review the allocation of options pursuant to the Company’s Employees’ Share Option Scheme.

MEETINGS

A quorum shall consist of at least two-thirds (2/3) of the members with independent directors forming the majority.

A minimum of four (4) meetings per year is planned. Additional meetings may be called at any time if so requested by any committee member, the Management, the internal or external auditors.

The Chairman of the Committee shall invite any person to be in attendance to assist the Committee in its deliberations.

The minutes of the meetings shall be circulated to the Board after confirmation.

The Secretary to the Committee shall be the Company Secretary.

For the financial year under review, a total of five (5) Committee meetings were held. The details of attendance of the Committee members were as follows:-

Name of Audit Committee Member No. of Meetings Attended

i. Megat Dziauddin Megat Mahmud 5/5

ii. Dato’ Syed Ariff Fadzillah Syed Awalluddin (Retired with effect from 1 October 2015)

3/3

iii. Yusoff Yaacob 5/5

iv. P. Raveenderen (Resigned with effect from 1 July 2016)

5/5

v. Paisol Ahmad (Resigned with effect from 29 October 2015)

3/3

vi. Mustaffa Ahmad (Appointed with effect from 1 June 2016)

N/A

The main activities that took place during the meetings were:-

1. Reviewed the quarterly results and year-end financial statements prior to approval by the Board;

2. Considered and recommended to the Board the nomination of the external auditors for the financial year ended March 31, 2016;

3. Reviewed the external auditors’ audit plan for the financial year ended March 31, 2016;

4. Reviewed the external auditors’ management letter and Management’s response thereto. Meetings without the presence of the Management were also held with the external auditors;

5. Reviewed the disclosure statements in the annual report to be in compliance with Bursa Malaysia requirements;

6. Reviewed the results of the internal audits carried out in the year and the adequacy of actions taken by Management; and

7. Reviewed the Internal Audit Department’s annual audit plan for the year ended March 31, 2016.

In respect of the Company’s Employees’ Share Option Scheme, there was no allocation of options in the year for the Committee to review.

INTERNAL AUDIT DEPARTMENT

The Internal Audit Department was set up in-house on January 2, 1991. It is independent of the activities or operations of the operating units. For the financial year ended March 31, 2016, the total costs incurred for the Group Internal Audit function were RM2,385,000.

A summary of its activities for the year is as follows:-

1. Conducted audits of the various business portfolios / departments of the Group;

2. Conducted follow-up audits on the implementation of the Audit Committees’ recommendations and Management’s actions taken to improve on issues identified during the audits; and

3. Prepared annual audit plans and budget for the Committees’ consideration.





RESPONSIBILITY

The Board of MNRB Holdings Berhad (“MNRB” or “the Company”) acknowledges that it is responsible to oversee the implementation of the Group’s risk management and internal control system and review its effectiveness, adequacy and integrity. It recognizes that risk management is a continuous process, designed to manage the risk of failure to achieve business objectives. In pursuing these objectives, internal control system can only provide reasonable and not absolute assurance against material misstatement or loss.

The Board has established a robust process for identifying, evaluating and managing the significant risks faced by the Company and its subsidiaries (i.e. the Enterprise Risk Management Framework or ERM). These processes have been in place for the whole of the financial year ended 31 March 2016 and have continued up to the date on which this Statement was approved. The Board is confident that these processes provide reasonable assurance on the effectiveness and efficiency of both the strategic, financial and operational aspects of the Company and its subsidiaries. The process is regularly reviewed by the Board.

RISK MANAGEMENT AND INTERNAL CONTROL STRUCTURE

The key features that the Board has established in reviewing the adequacy and effectiveness of the risk management and internal control system include the following:-

Enterprise Risk Management Framework

• The Board ofMNRB believes that an effective ERM Frameworkand strong internal control system is essential to the Group in its quest to achieve its business objectives, especially on the continued profitability and enhancement of shareholders’ value in today’s rapidly changing market environment.

• Dedicated Board Committees known as the Risk Management

Committee of the Board (“RMCB”) have been established at the Company and each of its subsidiaries to oversee the implementation of an enterprise-wide risk management framework in each company. As part of the risk governance process, Chairman of the respective RMCBs had provided their

confirmation to the Chairman of MNRB that the necessary risk management framework had been put in place and it is operating effectively to manage the risks of the company for the whole of the financial year ended 31 March 2016.

• TofurtherenhancetheERMFrameworkoftheGroup,dedicatedManagement Committees known as the Operational Risk Management Committee (“ORMC”) were also established at the Company and its subsidiaries to assist the RMCBs in implementing the risk management framework and ensuring inculcation of a proactive risk management culture on an enterprise-wide basis.

• TheAuditCommittee(“AC”)complementstheroleoftheBoardby providing an independent assessment of the adequacy and reliability of the risk management process, and compliance with the risk policies and regulatory guidelines. The AC is assisted by an independent Internal Audit Department in performing its role.

• The Group Chief Risk Officer (“GCRO”) oversees the riskgovernance across the Group. The risk governance structure is aligned across the subsidiaries of the Group through the adoption of the ERM Framework in order to embed and enhance the risk management& complianceculture. TheGCRO is supportedbytheRiskManagement&ComplianceDivision,whichwasformedto provide the necessary infrastructure to carry out the risk management and compliance functions.

• TheGroupadopts the Three LinesofDefencemodel,wherebyoperating units are the first line of defence, risk management and compliance oversight functions are the second line of defence, and an independent assurance is the third line. Within each entity, Heads of Divisions/Departments are responsible to manage risks and system of internal controls within their respective functions on a day-to-day basis, as well as escalate significant risks to the respective ORMCs via the risk management and compliance functions. The risk management and compliance functions assume overall responsibility for the implementation of the ERM Framework and its continued application in the respective entities. Internal Audit provides the AC with independent assurance on the adequacy and effectiveness of the Framework.




Internal Audit Function

• The internalaudit functionof theCompanyand itssubsidiaries(via outsourcing arrangements) is undertaken by the Internal Audit Department established at the holding company level. The department has a functional reporting line to the respective ACs set up at each company level.

• The Internal Audit Department performs regular reviews ofthe business processes of the Group in an effort to assess the adequacy and effectiveness of internal controls.

• Whereapplicable, itprovides recommendations to improveonthe effectiveness of risk management, control and governance processes. Management will accordingly follow through to ensure the resolution of recommendations agreed upon. Audit reviews are carried out on functions that are identified on a risk-based approach, in the context of the Group’s evolving business and its regulatory environment, while also taking into consideration inputs of Senior Management and the respective ACs.

• TheACsmeetsonaperiodicalbasistoreviewmattersidentifiedinreports prepared by the Internal Auditors, External Auditors, and Regulatory Authorities. It further evaluates the effectiveness and adequacy of the Group’s internal control system. The ACs have active oversight on the Internal Auditors’ independence, scope of work and resources. The activities undertaken by the ACs during the year are highlighted in the Audit Committee Reports of the Company and its subsidiaries.

Other Key Elements of Internal Control

• TheGrouphasawell-definedorganizationalstructurewithclearlines of responsibility and accountability.

• The Boardhas also adopted communicationpolicies to ensurethat all decisions made are communicated promptly to staff of all levels within the Group and vice versa where feedbacks and suggestions on improvements could be communicated to the Board and Management.

• The Underwriting Guidelines of the Reinsurance, Takaful andRetakaful subsidiary companies have been put in place to manage risks that are being underwritten.

• Reinsurance and retrotakaful programs exist where there is aspread of reinsurers with acceptable ratings from accredited agencies. The securities of these reinsurers and retakaful companies are reviewed on an annual basis.

• DepartmentalmanualsareavailablewithintheGroupandtheseset out policies and procedures for day-to-day operations and act as guidance to employees on the necessary steps to be taken in a given set of circumstances. The manuals enable tasks to be carried out with minimal supervision. It also specifies relevant authority limits to be complied with by each level of management within the Group.

• TheGroup’sfinancialsystemsrecordalltransactionstoproduceperformance reports that are submitted to the respective Management within internally stipulated timelines.

• AnnualbusinessplansaresubmittedtotherespectiveBoardsforapproval.

• A detailed budgeting process has been implemented in theGroup where the Company and its subsidiaries prepares a budget for the upcoming financial year for the approval of the respective Boards. The budgets are monitored and major variances are followed-up by the respective Management.

• TheGroupShariahCommitteehasbeenestablishedtoprovideoversight on Shariah related matters.

• EveryemployeeoftheGroupiscontractuallyboundtoobservethe prescribed standards of business ethics in their conduct at work and their relationships with external parties such as customers and suppliers. The Group expects each employee to conduct him/herself with integrity and objectivity and not to place him/herself in a position of conflict of interest. The competence of personnel is maintained through a structured recruitment process, a performance measurement and rewards system and a wide variety of training and development programmes.

• MNRB holds a 20% effective equity interest in its associatedcompany, Labuan Reinsurance (L) Limited (“Labuan Re”) through its subsidiary, Malaysian Reinsurance Berhad and is represented on the Board of Labuan Re by two (2) of its directors. It also has a 40% effective equity interest in another associated company, Motordata Research Consortium Sdn. Bhd. (“MRC”) and is similarly represented on the Board of MRC by two (2) of its directors.




Other Committees of the Board

Apart from the RMCBs and the ACs, other Board Committees have also been established at both the Company and subsidiary levels to assist the Board in performing its oversight function. They consist of the following:-

• Investment Committees, which are responsible for reviewingand approving investment proposals, as well as monitoring the investment portfolios of the Company and its subsidiaries to ensure conformity with overall business objectives and statutory requirements.

• NominationCommittees,whichare responsible to recommendto the respective Boards the appointment of directors, CEOs and Board appointees. The Nomination Committee is also responsible for the annual assessment of the effectiveness of the Board.

• RemunerationCommittees,whichareresponsibletorecommendthe appropriate remuneration for the directors, CEOs and Board appointees.

Assurance from Management

TheBoardhasalsoreceivedfullassurancefromthePresident&GroupChief Executive Officer (“GCEO”) and the Group Chief Financial Officer (“GCFO”) that the Group’s risk management and internal control system are operating adequately and effectively, in all material respects, based on the risk management framework adopted by the Group. To facilitate this process, the Group undertakes a risk assurance process to ensure that the risk management and internal control system are adequate and effective at all level of the organization.

Review of the Statement by External Auditors

As required by paragraph 15.23 of Bursa Malaysia Securities Berhad Main Market Listing Requirements, the external auditors have reviewed this Statement on Risk Management and Internal Control. Their review was performed in accordance with Recommended Practice Guide (“RPG”) 5 (Revised) issued by the Malaysian Institute of Accountants. Based on their review, the external auditors have reported to the Board that nothing has come to their attention that causes them to believe that this Statement intended to be included in the annual report is not prepared, in all material respects, in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, nor is the Statement factually inaccurate. The external auditors are not required by RPG 5 (Revised) to consider, whether this Statement covers all risks and controls, or to form an opinion on the effectiveness of the Group’s risk management and control procedures.



Statement of Directors’ Responsibility in Relation to the Financial StatementsPursuant to paragraph 15.26(a) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad

Statement of Directors’ Responsibility in Relation to the Financial Statements

The Directors are required to prepare financial statements, which give a true and fair view of the state of affairs of the Company and the Group as at the end of each financial year and of their results and their cash flows for that year then ended.

The Directors consider that in preparing the financial statements,

• theCompanyandtheGrouphaveusedappropriateaccountingpolicies,whichareconsistentlyapplied;• reasonableandprudentjudgementsandestimatesweremade;and• allapplicableapprovedaccountingstandardsinMalaysiahavebeenfollowed.

The Directors are responsible for ensuring that the Company and the Group maintain accounting records that disclose with reasonable accuracy the financial position of the Company and the Group, and which enable them to ensure that the financial statements are drawn up in accordance with the requirements of the applicable approved Financial Reporting Standards issued by the Malaysian Accounting Standards Board and the provisions of the Companies Act, 1965.

The Directors have general responsibilities for taking such steps that are reasonably available to them to safeguard the assets of the Company and the Group, in that context, to have proper regard to the establishment of appropriate systems of internal control with a view to prevent and detect fraud and other irregularities.

The Directors consider that they have pursued the actions necessary to meet their responsibilities as set out in this Statement.

This statement is made in accordance with the resolution of the Board of Directors dated 5 July 2016.





The information set out below is disclosed in compliance with Bursa Malaysia Securities Berhad’s Main Market Listing Requirements (Listing Requirements):-

(1) Utilisations of proceeds raised from corporate proposal On 1 September 2015, Malaysian Re issued a subordinated medium term notes (“MTN”) with a nominal value of RM1 million under its

RM250 million subordinated MTN programme. The MTN qualified as Tier 2 capital under the Risk Based Capital (“RBC”) framework and were utilized for its general working capital purposes.

(2) Share buy-back There was no proposal by the Company to carry out a share buy-back during the financial year ended 31 March 2016.

(3) Options or convertible securities No options or convertible securities were issued by the Company during the financial year ended 31 March 2016 and there are no options

or convertible securities outstanding and exercisable at the end of the financial year ended 31 March 2016.

(4) Depository receipt programme The Company did not sponsor any depository receipt programme during the financial year ended 31 March 2016.

(5) Sanctions and/or penalties There was no sanction and/or penalty imposed on the Company and its subsidiary companies, directors or management by the relevant

regulatory bodies during the financial year ended 31 March 2016.

(6) Non-audit fees The amount of non-audit fees paid to external auditors by the Group and the Company for the financial year ended 31 March 2016 amounted

to RM234,000 and RM33,000 respectively.

(7) Variation in results There were no significant variations between the audited results for the financial year ended 31 March 2016 and the unaudited results

previously announced.

There were no profit estimate, forecast or projection issued by the Company and its subsidiary companies during the financial year ended 31 March 2016.

(8) Profit guarantee There was no profit guarantee given by the Company and its subsidiary companies during the financial year ended 31 March 2016.

(9) Material contracts There were no material contracts entered into by the Company and its subsidiary companies involving directors’ and major shareholders’

interests, which subsisted at the end of the financial year ended 31 March 2016 or, if not then subsisting, entered into since the end of the previous financial year.

(10) Recurrent related party transaction of revenue or trading nature MNRB is not required to seek any mandate from its shareholders under Paragraph 10.09(2)(b), Part E of Chapter 10 of the Listing Requirements

as the recurrent related party transactions of a revenue or trading nature entered into by the MNRB Group qualified as exempted transactions as defined under Paragraph 10.08(11)(e), Part E of Chapter 10 of the Listing Requirements.



A Trusted PartnerOver the years, Malaysian Re has been a trusted partner to local insurance companies helping them enhance their competitiveness and efficiency particularly in the Fire, Engineering, Motor, Marine and Miscellaneous Accidents segments. Malaysian Re continues to leverage its breadth and depth of experience, strong fundamentals and proven track record to strengthen and grow its customer base domestically and abroad.


69


MNRB HOLDINGS BERHAD ANNUAL REPORT 2016 Corporate Profile

Corporate Profile

As the national reinsurer, Malaysian Re continues to enhance the competitiveness and efficiency of the local insurance companies in an increasingly globalised marketplace through its active involvement in leading and underwriting their reinsurance needs.

Leveraging on its breadth and depth of experience and expertise, strong fundamentals and proven record of accomplishment, Malaysian Re has grown in stature as an international player having established a strong market presence in Asia, the Middle East and Africa.

Malaysian

Reinsurance Berhad

(Malaysian Re) is

a wholly owned

subsidiary of MNRB

Holdings Berhad.


RM1 bilPaid-up Capital of

RM510 mil

CAPITAL STRUCTURE

The Company has an Authorised Capital of RM1 billion, divided into 1 billion ordinary shares of RM1.00 each and a Paid-up Capital of RM510 million, divided into 510 million ordinary shares of RM1.00 each.





Board of Directors


Zainudin Ishak PRESIDENT & CHIEF EXECUTIVE OFFICERNON-INDEPENDENT EXECUTIVE DIRECTOR

Yusoff YaacobINDEPENDENT NON-EXECUTIVE DIRECTOR

Megat Dziauddin Megat Mahmud INDEPENDENT NON-EXECUTIVE DIRECTOR

Mohd Din Merican NON-INDEPENDENT NON-EXECUTIVE DIRECTOR

Mustaffa Ahmad INDEPENDENT NON-EXECUTIVE DIRECTOR

Md Adnan Md Zain INDEPENDENT NON-EXECUTIVE DIRECTOR

Datin Zaimah Zakaria INDEPENDENT NON-EXECUTIVE DIRECTOR

Arul Sothy MylvaganamINDEPENDENT NON-EXECUTIVE DIRECTOR


Mustaffa AhmadDatin Zaimah Zakaria

Arul Sothy Mylvaganam

Nomination CommitteeMustaffa Ahmad (Chairman)

Sharkawi AlisYusoff Yaacob

Md Adnan Md ZainArul Sothy Mylvaganam

Remuneration CommitteeMegat Dziauddin Megat Mahmud (Chairman)

Yusoff YaacobMohd Din Merican

Risk Management CommitteeYusoff Yaacob (Chairman)

Mohd Din MericanMustaffa Ahmad

Datin Zaimah ZakariaMd Adnan Md Zain

Investment CommitteeMd Adnan Md Zain (Chairman)

Megat Dziauddin Megat MahmudMohd Din Merican

Datin Zaimah ZakariaZainudin Ishak

ZAINUDIN ISHAK, aged forty-nine (49), male, Malaysian. Non-Independent Executive Director since 1 April 2015. Member of the Investment Committee. An Associate member of Malaysian Insurance Institute (AMII) since 1994. He started his career as Executive at Trust International Insurance Sdn Bhd in 1989. He joined Commerce Assurance Berhad (now CIMB Aviva Takaful Berhad) in 1994 and appointedCEOin2006.In2009,hethenjoinedHSBCAmanahTakafulBerhadasExecutiveDirector&Chief Executive Officer. He served as Chairman of Malaysian Takaful Association until early 2015. Also a Director of Malaysian Re (Dubai) Ltd., Financial Park (Labuan) Sdn Bhd and MMIP Services Sdn Bhd.

President & Chief Executive OfficerZainudin Ishak

71


MNRB HOLDINGS BERHAD ANNUAL REPORT 2016 Corporate Information

Principal BankersStandard Chartered Bank Malaysia Berhad

Malayan Banking BerhadCIMB Bank Berhad





Tel : +603-7495 8000Fax : +603-2095 5332





Damansara Heights50490 Kuala LumpurTel : +603-2096 8000Fax : +603-2096 7000

E-mail : [email protected]: www.malaysian-re.com.my


Zainudin IshakPRESIDENT & CHIEF EXECUTIVE OFFICER

Rajinder MohanSENIOR VICE PRESIDENT & CHIEF UNDERWRITER OF BUSINESS REGION 1

Mili Mohd YusoffVICE PRESIDENT & HEAD OF RETAKAFUL DIVISION

Abdul Halim Anuar Sharif VICE PRESIDENT & HEAD OF MARKET SERVICES

Lua Tiong AikVICE PRESIDENT & CHIEF UNDERWRITER OF BUSINESS REGION 4

Noor Rezan Mat ZamVICE PRESIDENT & HEAD OF TREATY DATA POOL/FACULTATIVE ADMINISTRATION/TECHNICAL ACCOUNTS

Norfidah AbdullahVICE PRESIDENT & HEAD OF RETROCESSION

Foo Mei YuenVICE PRESIDENT & HEAD OF BUSINESS DEVELOPMENT & LEGACY MANAGEMENT

Lim Gek MoiASSISTANT VICE PRESIDENT & ACTING HEAD OF CLAIMS





MARKET SERVICES

Malaysian Re is currently involved in providing various services to the Malaysian insurance industry. The services amongst others include the following:-

A. MALAYSIAN MARKET POOLS

• MalaysianAviationPool

Malaysian Re assumed the role as Manager of the Malaysian Aviation Pool (MAP) effective 1 October 1996. Currently, its membership comprises four (4) local insurers and two (2) reinsurers with a total underwriting capacity of RM480 million. The underwriting of risks is by a Committee, nominated by participating companies. The business written by MAP is primarily Malaysian risks and Malaysian interests abroad.

• MalaysianEnergyRisksConsortium

Malaysian Energy Risks Consortium (MERIC) was established in March 1995 with the objective to optimize national retention, promote wider interest and develop underwriting skills in the specialised class of energy business. MERIC comprises ten (10) local insurers and two (2) reinsurers with Malaysian Re taking on the role of Secretariat. It has a capacity to underwrite up to a combined single limit of RM50 million for upstream and downstream risks. The underwriting of risks is by a Committee, nominated by participating companies. The primary portfolio of the business written by MERIC is Malaysian risks and Malaysian interests abroad.

B. CENTRAL ADMINISTRATION BUREAU

Malaysian Re initiated the establishment of the Central Administration Bureau (CAB) in 1995 to manage the centralised computerised and web-based system (CABFAC) for the administration and settlement of facultative reinsurance between CAB members i.e. insurers and reinsurers operating in Malaysia. The elimination of reconciliation problems and the efficient settlement of balances and claims recovery between members were the main drivers for the formation of CAB. The cost of development and operations of the system were then, and still are, being jointly funded by its members. Following the success of the CABFAC system, the members of Persatuan Insurans Am Malaysia (PIAM), in 2009 conceptualized the idea of developing a centralised coinsurance system (CABCO) which would function on the same operating model as the CABFAC. The CABCO was formally launched in August 2011 to cater for the coinsurance Business transactions between the local insurers. In May 2015, the GST module was successfully launched for both CABFAC &CABCO system.

C. TECHNICAL SERVICES

• SurveyingandAdvisoryServicesonRiskManagement

Malaysian Re provides Property and Engineering Risk Survey services to the local insurance industry for the purpose of special rating, underwriting and also loss estimation. Property Risk assessment and risk management services tailored to the insureds’ needs are also provided through their insurers when requested.

• Re.BanjirFloodModel

Malaysian Re has developed an insurance flood model or flood risk analysis tool for Malaysia known as “Re.Banjir” to be used by insurance companies and takaful operators. This tool will assist them in understanding the exposure of flooding on property portfolios, deriving flood loss estimations, quantifying the financial implications, managing flood risks and making decision on their reinsurance programme.

Malaysian Re has been actively involved in underwriting all classes of general reinsurance business from the Malaysian market. It has expanded its business internationally and is actively underwriting business from the Asian, Middle East and Africa markets. Malaysian Re will continue to provide prompt services and will ensure the existing products to be not only competitive but also meet the requirements of its customers.

73


MNRB HOLDINGS BERHAD ANNUAL REPORT 2016

D. SPECIAL RATING

Malaysian Re was appointed by PIAM to form a Rating Committee specifically for the purpose of determining special rates for Fire and Industrial All Risks (IAR) insurances, for risks which qualify for special rating under the Fire Tariff. This Committee comprises not less than six (6) qualified or experienced insurance underwriters or risk surveyors from among PIAM members of whom not more than three (3) shall be from Malaysian Re. The Chairman of the Rating Committee shall be a representative from Malaysian Re. By virtue of this appointment, Malaysian Re also acts as the Secretariat to this Committee as well as handles the day-to-day operations of all matters pertaining to special rating applications.

E. INSPECTION

Malaysian Re was given the mandate by PIAM to form an Inspection Task Force to conduct inspections or carry out investigations on the conduct and activities of its members in accordance with the terms and provisions of the various Inter-Company Agreements. With effect from 1 April 1992, the various Inter-Company Agreements had now been amalgamated into a single agreement called “Inter Company Agreement On General Insurance Business (ICAGIB)”.

Thus, the Inspection Department has been entrusted to provide practical, reliable and timely inspection on the General Insurance Companies’ compliance with provisions embodied in the “ICAGIB” on matters pertaining to:-

a. Dealing with Agents;b. Motor Tariff;c. Fire Tariff; andd. Bond Insurance.

F. MARKET TRAINING

Over the years, Malaysian Re has and will continue to organise various training courses and seminars on insurance/reinsurance related topics in addition to market updates for staff of insurance companies to instill higher degree of professionalism in the industry.

G. SCHEME FOR INSURANCE OF LARGE & SPECIALISED RISKS

TheSchemeforInsuranceofLarge&SpecialisedRisks(SILSR)wasimplemented on 1 January 1994 with Malaysian Re appointed as Scheme Manager by Bank Negara Malaysia (BNM). The SILSR was formed with the primary objective of developing and enhancing the level of technical expertise and professionalism within the Malaysian insurance fraternity. In addition to this, SILSR’s function is to facilitate the most favourable cover at internationally competitive terms for the Malaysian risk owners. To this end, SILSR’s crucial role is to promote the optimum retention of Malaysian risks with reinsurance placed to the best national advantage.





Class

2016 2015

RM’000 % RM’000 %

Fire 555,876 41 538,176 41

Marine 263,097 19 222,587 17

Motor 232,079 17 226,334 17

Miscellaneous Accident 319,547 23 323,906 25

Total 1,370,599 100 1,311,003 100

Marine

Fire

Motor

Miscellaneous Accident

555,876 538,176

2016 2015

263,097 222,587

232,079 226,334

319,547 323,906


75


MNRB HOLDINGS BERHAD ANNUAL REPORT 2016

Professional & Dignified

Takaful IKHLAS continues to cultivate sound partnerships through professional and innovative means. Whether it is through its ethical approach or customer-oriented service delivery, its agent-focussed training programmes or host of Shariah-related courses, Takaful IKHLAS continues to go all out to ensure its partners benefit in tangible ways from its efforts.




Corporate Profile

Corporate Profile

The Company is principally involved in the provision of Islamic Financial protection services, based on principles and rulings of Shariah. Takaful IKHLAS has established a strong presence in the provision of Islamic financial protection services based on the takaful system, which places an emphasis on a spirit of co-operation and joint responsibility among participants.

More than 2.0 million individuals and corporations have placed their trust in the Company and became its certificate holders (participants). Takaful IKHLAS’ commitment and adherence to Shariah values, coupled with the application of cutting-edge technology in conducting its business, have reinforced the Company’s reputation for its ethical approach and service delivery.

The Company offers individuals and commercial enterprises a comprehensive range of Individual

TAKAFUL IKHLAS

BERHAD (Takaful

IKHLAS) was

incorporated on

18 September 2002

and is a wholly owned

subsidiary of MNRB

Holdings Berhad.

Family, Group Family, General Retail and Commercial Takaful products. Its distribution channels comprise highly knowledgeable and well-trained people that number more than 5,000 agents, brokers, financial institutions, motor franchise holders, co-operatives and Islamic bodies.

Takaful IKHLAS has thirteen (13) regional offices in Kuala Lumpur, Kedah, Perak, Selangor, Putrajaya, Negeri Sembilan, Melaka, Johor, Pahang, Terengganu, Kelantan, Sabah and Sarawak.

Takaful IKHLAS is registered under the Islamic Financial Services Act, 2013 and regulated by Bank Negara Malaysia.

CAPITAL STRUCTURE

Takaful IKHLAS has an Authorised Capital of RM500 million and a Paid-up Capital of RM295 million.



RM295 mil






Board of Directors

Sharkawi AlisNON-INDEPENDENT NON-EXECUTIVE CHAIRMAN

Datuk Ab Latiff Abu BakarPRESIDENT & CHIEF EXECUTIVE OFFICERNON-INDEPENDENT EXECUTIVE DIRECTOR

Paisol AhmadNON-INDEPENDENT NON-EXECUTIVE DIRECTOR

Mohd Din MericanNON-INDEPENDENT NON-EXECUTIVE DIRECTOR

Megat Dziauddin Megat MahmudINDEPENDENT NON-EXECUTIVE DIRECTOR

Datuk Nik Moustpha Nik HassanINDEPENDENT NON-EXECUTIVE DIRECTOR

Rosinah Mohd SallehINDEPENDENT NON-EXECUTIVE DIRECTOR

Md Adnan Md ZainINDEPENDENT NON-EXECUTIVE DIRECTOR


Paisol AhmadDatuk Nik Moustpha Nik Hassan

Md Adnan Md Zain

Nomination Committee Datuk Nik Moustpha Nik Hassan (Chairman)

Sharkawi AlisMohd Din Merican

Rosinah Mohd SallehMd Adnan Md Zain

Remuneration CommitteeRosinah Mohd Salleh (Chairman)

Mohd Din MericanMegat Dziauddin Megat Mahmud

Risk Management CommitteeMd Adnan Md Zain (Chairman)

Paisol AhmadMohd Din Merican

Rosinah Mohd SallehDatuk Nik Moustpha Nik Hassan

Investment CommitteePaisol Ahmad (Chairman)

Mohd Din MericanMegat Dziauddin Megat Mahmud

Datuk Ab Latiff Abu Bakar

DATUK AB LATIFF ABU BAKAR , aged fifty-six (56), male, Malaysian. Non-Independent Executive Director since 7 January 2013. Member of the Investment Committee. He graduated with a Bachelor of Business Administration from the University of Portland, Oregon, USA. He has more than twenty-three (23) years’ experience in insurance and Takaful industry which began in 1989 when he joined Malaysian Assurance Alliance Bhd. Since then he has held senior and key management positions in various Insurance and takaful companies including being the Acting Chief Operating Officer of Takaful Nasional Sdn Bhd until June 2006. HewasappointedasExecutiveVicePresident/HeadofAgencyatEtiqaInsurance&TakafuluntilSeptember2008. In October 2008, he was appointed as Chief Executive Officer of Hong Leong Tokio Marine Takaful (now known as Hong Leong MSIG Takaful) until April 2011. Prior to joining Takaful IKHLAS, he was the Head of Takaful for Tokio Marine Asia Pte Ltd until 6 January 2013.

President & Chief Executive OfficerDatuk Ab Latiff Abu Bakar




Datuk Ab Latiff Abu BakarPRESIDENT & CHIEF EXECUTIVE OFFICER

Kau Kong HoiSENIOR VICE PRESIDENT & HEAD, ACTUARIAL SERVICES

Nazrul Hisham Abdul HamidSENIOR VICE PRESIDENT & CHIEF BUSINESS OPERATIONS OFFICER, FAMILY

Eddy Azly Abidin SENIOR VICE PRESIDENT & CHIEF BUSINESS OPERATIONS OFFICER, GENERAL

Fauziah Md HasanSENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER

Wan Rosli Shaharuddin Wan YaacobSENIOR VICE PRESIDENT & CHIEF COMMERCIAL OFFICER, FAMILY

Lee Kok SeongSENIOR VICE PRESIDENT & CHIEF INFORMATION OFFICER

Ahmad Fariman YunusSENIOR VICE PRESIDENT & HEAD, UNDERWRITING, GENERAL

Zarina Mohd SahimSENIOR VICE PRESIDENT & HEAD, GENERAL MARKETING






Tel : +603-7495 8000Fax : +603-2095 5332

Principal BankersMaybank Islamic Berhad

Bank Islam Malaysia BerhadCIMB Islamic Bank Berhad



Registered Office9th Floor, IKHLAS PointTower 11A, Avenue 5

Bangsar South, No. 8, Jalan Kerinchi

59200, Kuala LumpurTel : +603-2723 9999Fax : +603-2723 9998

E-mail : [email protected] : www.takaful-ikhlas.com.my





(B) FAMILY TAKAFUL

(A) GENERAL TAKAFUL

Class2016 2015

RM’000 % RM’000 %Fire 46,222 16 36,415 13Motor 200,504 68 192,646 70Personal Accident 24,397 8 26,435 10ContractorAllRisks&Engineering 5,809 2 7,120 3Others 16,983 6 12,638 5

Total 293,915 100 275,164 100

Class2016 2015

RM’000 % RM’000 %Individual 216,371 35 233,742 42Mortgage 171,972 28 128,976 23Group 154,883 25 138,160 25Investment-Linked 71,877 12 53,077 10

Total 615,103 100 553,955 100

Motor

Mortgage

Fire

Individual

Personal Accident

Group

Contractor All Risks &Engineering

Others

Investment-Linked

46,222

216,371

36,415

233,742

2016

2016

2015

2015

200,504

171,972

192,646

128,976

24,397

154,883

26,435

138,160

5,809

16,983

71,877

7,120

12,638

53,077

A Committed PartnerMRT serves as a second layer protection to takaful players through

its involvement in the Family and General retakaful businesses. The Company draws on the Group’s resources and expertise in providing support to its partners and remains committed in honouring all its outstanding business portfolio.




Corporate Profile

Corporate Profile

MRT was incorporated in December 2006 and registered by Bank Negara Malaysia as the first retakaful operator in Malaysia on 1 August 2007.

MNRB Retakaful

Berhad (MRT),

a wholly owned

subsidiary of MNRB

Holdings Berhad, is

involved in the Family

and General retakaful

businesses.



RM102 mil

CAPITAL STRUCTURE

MRT has an Authorised Capital of RM500 million and a Paid-up Capital of RM102 million.






Board of Directors


Megat Dziauddin Megat Mahmud INDEPENDENT NON-EXECUTIVE DIRECTOR

Yahaya Besah INDEPENDENT NON-EXECUTIVE DIRECTOR

Dr. Syed Musa Syed Jaafar Alhabshi INDEPENDENT NON-EXECUTIVE DIRECTOR

Mohd Din Merican NON-INDEPENDENT NON-EXECUTIVE DIRECTOR


Yahaya BesahDr. Syed Musa Syed Jaafar Alhabshi

Nomination CommitteeYahaya Besah (Chairman)

Sharkawi AlisDr. Syed Musa Syed Jaafar AlhabshiMegat Dziauddin Megat Mahmud

Mohd Din Merican

Risk Management CommitteeYahaya Besah (Chairman)

Dr. Syed Musa Syed Jaafar AlhabshiMohd Din Merican

Remuneration CommitteeDr. Syed Musa Syed Jaafar Alhabshi (Chairman)

Megat Dziauddin Megat MahmudYahaya Besah

Investment CommitteeMegat Dziauddin Megat Mahmud (Chairman)

Yahaya BesahMohd Din Merican

AHMAD RUHAIZAD HASHIM is the President & CEO and also theSeniorVicePresident&GroupChiefStrategyOfficerofMNRB.

Other information on Ahmad Ruhaizad Hashim is disclosed in the Senior Management Team’s Profile section of MNRB on page 32 of this Annual Report.

President & Chief Executive OfficerAhmad Ruhaizad Hashim



CorporateInformation&MRT’sPortfolioofBusiness







Tel : +603-7495 8000Fax : +603-2095 5332

Registered Office12th Floor, Bangunan Malaysian Re

No. 17, Lorong DungunDamansara Heights

50490 Kuala LumpurTel : +603-2096 7007Fax : +603-2096 8007

E-mail : [email protected] : www.mnrb-retakaful.com.my

Principal BankersStandard Chartered Saadiq Bank Berhad

Maybank Islamic BerhadCIMB Islamic Bank Berhad

(A) GENERAL RETAKAFUL

Class

2016 2015

RM’000 % RM’000 %

Fire 7,023 64 14,882 53

Marine 1,062 10 3,836 14

Motor 1,272 12 4,478 16

Miscellaneous Accident 1,538 14 4,956 17

Total 10,895 100 28,152 100

MRT’s Portfolio of Business

Marine

Fire

Motor

Miscellaneous Accident

7,023 14,882

2016 2015

1,062 3,836

1,272 4,478

1,538 4,956

2016 2015

RM’000 RM’000

Total 12,093 35,711

(B) FAMILY RETAKAFUL

Diversified PortfolioMRDL continues to make good headway in diversifying its business portfolio to clients in the Middle East and Africa (MEA) region, CommonwealthofIndependentStates(CIS)andCentral&EasternEuropeincluding Balkan countries (CEE) regions. Through the provision of high quality reinsurance services and underwriting support to its clientele in these regions. MRDL is developing solid relationships with them as well as paving the way for future growth in that part of the world.




Corporate Profile

Its office is situated within the strategic Dubai International Financial Centre (DIFC) and regulated by the Dubai Financial Services Authority (DFSA).

MRDL is engaged in developing business for its sister company, Malaysian Re in the Middle East and Africa (MEA), Commonwealth of Independent States (CIS) andCentral& EasternEurope including Balkan countries (CEE) regions. Its primary functions are to develop relationships with clients around these regions as well as provide services and underwriting support to them. Its close proximity to this target market gives MRDL an edge when servicing its clients.

Malaysian Re (Dubai)

Ltd. (MRDL), a wholly

owned subsidiary of

MNRB Holdings Berhad,

was incorporated on

7 December 2006 in

Dubai, the United Arab

Emirates.


USD5 milPaid-up Capital of

USD2 mil

All businesses of MRDL are fully underwritten by Malaysian Re, an ‘A-’ (Excellent) rated company by A.M. Best and ‘A’ by Fitch Ratings. MRDL will continue to expand its market presence and is committed to being at the forefront of the reinsurance segment within these regions.

CAPITAL STRUCTURE

MRDL has an Authorised Capital of USD5 million and a Paid-up Capital of USD2 million.

Corporate Profile






AuditorsMOORE STEPHENS

Chartered AccountantsSuite M5-A, Zalfa Building

Al Garhoud AreaP. O. Box 28817

Dubai, United Arab EmiratesTel : +971 4 2820811Fax : +971 4 2820812

Company SecretaryNorazman Hashim (MIA 5817)

Principal BankerStandard Chartered Bank

Business Centre, Khalid Bin Waleed RoadOpposite Burjuman Centre, Bur Dubai

P.O. Box 999, Dubai, UAETel : +971 4 5083612Fax : +971 4 4282502

Registered OfficeUnit 101, Level 1

Gate Village 4, The Gate District Dubai International Financial Centre

P. O. Box 506571Dubai, United Arab Emirates

Tel : +971 4 3230388Fax : +971 4 3230288

Website: www.mnrb.com.my/malaysianre-dubai

Board of Directors

Sharkawi AlisNON-INDEPENDENT NON-EXECUTIVE CHAIRMAN

Mohd Din MericanNON-INDEPENDENT NON-EXECUTIVE DIRECTOR

Zainudin IshakNON-INDEPENDENT NON-EXECUTIVE DIRECTOR

ZAINI ABDUL AZIZ, is the Senior Executive Officer of MRDL. Prior to this appointment, he served as Vice President, International Treaties Department of Malaysian Re, a sister company of MRDL. He has been with Malaysian Re for twenty-four (24) years, and comes to the role with extensive on the ground client-facing experience. He joined Malaysian Re as Risk Surveyor upon obtaining his Bachelor of Business Degree from Temple University, Philadelphia, in 1992. He has had a successful career with Malaysian Re in various departments where he gained his knowledge and experience in many aspects of reinsurance business.

Senior Executive OfficerZaini Abdul Aziz


MMIP SERVICES SDN. BHD. (MSSB)

CorporateProfile&CorporateInformation

Corporate Profile


Malaysian Re was then appointed as the Administration Manager for the pool.

MMIP Services Sdn. Bhd. (MSSB), a subsidiary of MNRB Holdings Berhad, was incorporated on 23 March 2006. Following its incorporation, the duties and functions of the Administration Manager were transferred from Malaysian Re to MSSB on 12 April 2006.

The duties and functions of MSSB, include inter alia, dealing with the overall administrative and financial functions of the MMIP as well as Bodily Injury claims administration.

The Malaysian Motor Insurance

Pool (MMIP) was collectively set

up in 1992 by the local insurance

companies to provide motor

insurance to vehicle owners who are

unable to obtain insurance protection

for their vehicles.

Principal BankerCIMB Bank Berhad

Company SecretaryLena Abd Latif (LS 8766)

Senior Vice PresidentS. Manogaran





Tel : +603-7495 8000Fax : +603-2095 5332



Damansara Heights50490 Kuala Lumpur

Tel : +603-2096 8006 Fax : +603-2096 7006

Board of Directors

Zainudin IshakDIRECTOR

Norazman HashimDIRECTOR


MMIP SERVICES SDN. BHD. (MSSB)

89Directors’ Report

92Statement by Directors

92Statutory Declaration

93Independent Auditors’ Report

95Income Statements

96Statements of Comprehensive Income

97Statements of Financial Position

98Statements of Changes in Equity

99Statements of Cash Flows

101Notes to the Financial Statements

FIN

AN

CIA

L ST

ATEM

ENTS


FINANcIAL StAtEMENtS

The Directors hereby present their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 March 2016.

Principal Activities

The Company is an investment holding company, principally engaged in the provision of management services to its subsidiaries.

The principal activities of the subsidiaries have been disclosed in Note 17 to the financial statements. There have been no significant changes in the nature of the principal activities of the Group and of the Company during the financial year.

Results

Group Company

RM’000 RM’000

Net (loss)/profit for the year (38,829) 79,971

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.

In the opinion of the Directors, the results of the operations of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature.

Dividend

The Directors do not recommend the payment of any dividend in respect of the current financial year.

Directors

The names of the Directors of the Company in office since the date of the last report and at the date of this report are:

Sharkawi bin AlisMohd Din bin Merican P. Raveenderen (Resigned with effect from 1 July 2016)Yusoff bin Yaacob Megat Dziauddin bin Megat MahmudPaisol bin AhmadHijah Arifakh binti OthmanMustaffa bin Ahmad (Appointed with effect from 1 April 2016)Dato’ Syed Ariff Fadzillah bin Syed Awalluddin (Retired with effect from 1 October 2015)

Directors’ Report

Directors’ Report



Directors (cont’d.)

In accordance with Article 86 of the Company’s Articles of Association, Sharkawi bin Alis and Mohd Din bin Merican will be retiring by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election. In accordance with Article 92 of the Company’s Articles of Association, Mustaffa bin Ahmad retires and being eligible, offers himself for re-election.

Megat Dziauddin bin Megat Mahmud who will be retiring pursuant to Section 129 of the Companies Act, 1965 at the forthcoming Annual General Meeting, offers himself for re-appointment as Director in accordance with Section 129 of the said Act to hold office until the conclusion of the next Annual General Meeting of the Company.

Directors’ Benefits

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the Directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate.

Since the end of the previous financial year, no Director has received or become entitled to receive any benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the Directors from the Company or the fixed salary and benefits receivable as a full-time employee of the Company as disclosed in Notes 9, 10 and 31 to the financial statements or benefits receivable from related corporations) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

Directors’ Interests

According to the register of Directors’ shareholdings, the interest of Directors in office at the end of the financial year in shares of the Company during the financial year are as follows:

Number of ordinary shares of RM1.00 each

As at 1 April 2015

Acquired Sold

As at 31 March 2016

Direct Interests:

P. Raveenderen (Resigned with effect from 1 July 2016) 10,000 - - 10,000

Other than as stated above, none of the Directors in office at the end of the financial year had any interest in shares of the Company or its related corporations during the financial year.

Other Statutory Information

(a) Before the income statements and statements of financial position of the Group and of the Company were made out, the Directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written-off and that adequate allowance had been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

Directors’ Report



Other Statutory Information (cont’d.)

(b) At the date of this report, the Directors are not aware of any circumstances which would render:

(i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; and

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

(c) At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

(d) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or in the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

(e) As at the date of this report, there does not exist:

(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year other than those arising in the normal course of business of the Group and of the Company.

(f ) In the opinion of the Directors:

(i) no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

For the purpose of paragraphs (e)(ii) and (f)(i) above, contingent or other liabilities do not include liabilities arising from reinsurance, takaful and retakaful contracts underwritten in the ordinary course of business of the reinsurance, takaful and retakaful subsidiaries and associate companies.

Auditors

The retiring auditors, Messrs. Ernst & Young, have expressed their willingness to accept re-appointment.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 5 July 2016.

Sharkawi bin Alis Mohd Din bin Merican

Kuala Lumpur, Malaysia

Directors’ Report



Statement by DirectorsPursuant to Section 169(15) of the Companies Act, 1965

Statutory DeclarationPursuant to Section 169(16) of the Companies Act, 1965

Statement by Directors

We, Sharkawi bin Alis and Mohd Din bin Merican, being two of the Directors of MNRB Holdings Berhad, do hereby state that, in the opinion of the Directors, the accompanying financial statements set out on pages 95 to 211 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia, so as to give a true and fair view of the financial position of the Group and of the Company as at 31 March 2016 and of the results and the cash flows of the Group and of the Company for the year then ended.

In the opinion of the Directors, the information set out in Note 40 and page 212 of the financial statements has been compiled in accordance with the Guidance On Special Matter No. 1 “Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements” issued by the Malaysian Institute of Accountants on 20 December 2010, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 5 July 2016.

Sharkawi bin Alis Mohd Din bin Merican

Kuala Lumpur, Malaysia

I, Norazman bin Hashim, being the officer primarily responsible for the financial management of MNRB Holdings Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 95 to 212 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )the abovenamed Norazman bin Hashim )at Kuala Lumpur in Wilayah Persekutuan )on 5 July 2016. ) Norazman bin Hashim

Before me,

Commissioner of Oaths



Independent Auditors’ Reportto the Members of MNRB Holdings Berhad (Incorporated in Malaysia)

Independent Auditors’ Report

Report on the financial statements

We have audited the financial statements of MNRB Holdings Berhad, which comprise the statements of financial position as at 31 March 2016 of the Group and of the Company, the income statements, the statements of comprehensive income, the statements of changes in equity and the statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 95 to 211.

Directors’ responsibility for the financial statements

The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 March 2016 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

Report on other legal and regulatory requirements

In accordance with the requirements of the Companies Act, 1965 (“the Act”) in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ report of the subsidiary of which we have not acted as auditors, which are indicated in Note 17 to the financial statements, being financial statements that have been included in the consolidated financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and, in respect of the subsidiaries incorporated in Malaysia, did not include any comment required to be made under Section 174(3) of the Act.



Other reporting responsibilities

The supplementary information set out in Note 40 on page 212 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young Dato’ Abdul Rauf bin RashidAF: 0039 No. 2305/05/18(J)Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia5 July 2016

Independent Auditors’ Report



Income Statementsfor the year ended 31 March 2016

Income Statements

Group Company Note 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000 Gross earned premiums/contributions 4(a) 2,266,874 2,191,597 - - Premiums/contributions ceded to

reinsurers/retakaful operators 4(b) (324,895) (244,266) - - Net earned premiums/contributions 1,941,979 1,947,331 - -

Investment income 5 212,115 199,507 102,842 62,164 Net realised gains/(losses) 6 8,223 9,733 (1) (85)Net fair value losses 7 (25,419) (5,839) - - Fee and commission income 8 42,234 35,737 30,844 33,868 Other operating revenue 11 13,633 10,471 115 101 Other revenue 250,786 249,609 133,800 96,048

Gross claims and benefits paid (1,229,755) (1,240,681) - - Claims ceded to reinsurers/retakaful operators 136,965 154,687 - - Gross change in contract liabilities (642,282) (147,847) - - Change in contract liabilities ceded to reinsurers/

retakaful operators 103,868 (36,130) - - Net claims and benefits (1,631,204) (1,269,971) - -

Fee and commission expenses 8 (443,022) (435,399) - - Management expenses 9 (213,205) (209,555) (36,087) (36,866)Finance costs (18,231) (18,123) (18,231) (18,123)Other operating expenses 11 (6,712) (7,680) (236) (30,330)Change in expense liabilities (6,979) (10,764) - - Tax borne by participants 12 (16,483) (13,265) - - Other expenses (704,632) (694,786) (54,554) (85,319)

Share of results of associates 12,615 4,157 - -

Operating (loss)/profit before deficit/(surplus) attributable to takaful participants, zakat and taxation (130,456) 236,340 79,246 10,729

Deficit/(surplus) attributable to takaful participants 22(a) 99,408 (45,635) - -

Operating (loss)/profit before zakat and taxation (31,048) 190,705 79,246 10,729Zakat - (960) - -Taxation 12 (7,781) (50,597) 725 810

Net (loss)/profit for the year attributable to equity holders of the Parent (38,829) 139,148 79,971 11,539

Basic and diluted (loss)/earnings per share attributable to equity holders of the Parent (sen) 28 (18.2) 65.3

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.



Statements of Comprehensive Incomefor the year ended 31 March 2016

Statements of Comprehensive Income

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Net (loss)/profit for the year (38,829) 139,148 79,971 11,539

Other comprehensive income

Other comprehensive income to be reclassified to income statement in subsequent periods:

Effects of post-acquisition foreign exchange translation reserve on investment in associate 5,587 9,689 - -

Effects of foreign exchange translation reserve on investment in subsidiary 142 1,101 - -

Net gains on Available-for-sale (“AFS”) financial assets:

Gains on fair value changes 21,863 44,155 - -

Realised gains transferred to income statement (Note 6) (7,050) (7,378) - -

Deferred tax relating to net gains on AFS financial assets (3,056) (3,389) - -

Other comprehensive gains attributable to participants (Note 22(b)) (2,418) (27,120) - -

Other comprehensive income not to be reclassified to income statement in subsequent periods:

Revaluation of land and buildings 16,366 8,032 - -

Deferred tax relating to revaluation of land and buildings (1,669) (937) - -

Other comprehensive income attributable to participants (Note 22(c)) (10,230) (2,140) - -

Total comprehensive (loss)/income for the year (19,294) 161,161 79,971 11,539




Statements of Financial Position as at 31 March 2016

Statements of Financial Position


Group Company

Note 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Assets

Property, plant and equipment 13 247,497 237,495 2,017 2,907

Investment property 14 7,400 7,100 - -

Intangible assets 15 14,824 14,632 3,241 3,797

Deferred tax assets 16 15,551 12,009 3,038 2,313

Investments in subsidiaries 17 - - 843,705 843,705

Investments in associates 18 128,521 110,567 1,957 1,957

Financial assets at fair value through profit or loss (“FVTPL”) 19(a) 129,096 137,934 - -

Held-to-maturity (“HTM”) investments 19(b) 701,430 722,356 1,000 -

AFS financial assets 19(c) 2,744,399 2,530,716 50 50

Loans and receivables (“LAR”) 19(d) 2,060,905 1,917,938 119,260 37,071

Reinsurance/retakaful assets 20 497,180 374,653 - -

Insurance/takaful receivables 21 357,012 303,918 - -

Tax recoverable 26,592 25,216 - -

Cash and bank balances 177,313 82,702 3,608 2,877

Total assets 7,107,720 6,477,236 977,876 894,677

Liabilities and Participants’ funds

Participants’ funds 22 201,186 286,726 - -

Borrowings 23 320,000 320,000 320,000 320,000

Insurance/takaful contract liabilities 20 4,847,518 4,159,278 - -

Insurance/takaful payables 24 199,285 169,424 - -

Other payables 25 194,004 170,807 12,530 9,203

Deferred tax liabilities 16 10,791 8,201 - -

Provision for taxation 4,614 12,455 1,984 2,083

Provision for zakat 142 871 - -

Total liabilities and participants’ funds 5,777,540 5,127,762 334,514 331,286

Equity

Share capital 26 213,070 213,070 213,070 213,070

Reserves 1,117,110 1,136,404 430,292 350,321

Total equity attributable to equity holders of the Parent 1,330,180 1,349,474 643,362 563,391

Total liabilities, participants’ funds and equity 7,107,720 6,477,236 977,876 894,677



Statements of Changes in Equityfor the year ended 31 March 2016

Statements of Changes in Equity

Attributable to equity holders of the Parent

Reserves

Non-distributable Distributable

Share capital

Share

premium

Foreign exchange

translation reserve

AFS reserve

Revaluation reserve

Retained profits Total

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

Group

At 1 April 2014 213,070 105,051 22,257 (12,080) 32,244 862,927 1,223,469

Net profit for the year - - - - - 139,148 139,148

Other comprehensive income for the year - - 10,790 6,268 4,955 - 22,013

Total comprehensive income for the year - - 10,790 6,268 4,955 139,148 161,161

Dividend paid during the year (Note 27) - - - - - (35,156) (35,156)

At 31 March 2015 213,070 105,051 33,047 (5,812) 37,199 966,919 1,349,474

Net loss for the year - - - - - (38,829) (38,829)

Other comprehensive income for the year - - 5,729 9,339 4,467 - 19,535

Total comprehensive income/(loss) for the year - - 5,729 9,339 4,467 (38,829) (19,294)

At 31 March 2016 213,070 105,051 38,776 3,527 41,666 928,090 1,330,180

Attributable to equity holders of the Company

Reserves

Non-

distributable Distributable

Share capital

Share premium

Retained profits Total

RM’000 RM’000 RM’000 RM’000

Company

At 1 April 2014 213,070 105,051 268,887 587,008

Net profit and total comprehensive income for the year - - 11,539 11,539

Dividend paid during the year (Note 27) - - (35,156) (35,156)

At 31 March 2015 213,070 105,051 245,270 563,391

Net profit and total comprehensive income for the year - - 79,971 79,971

At 31 March 2016 213,070 105,051 325,241 643,362




Statements of Cash Flowsfor the year ended 31 March 2016

Statements of Cash Flows

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities

(Loss)/profit before zakat and taxation (31,048) 190,705 79,246 10,729

Adjustments for:

Net fair value losses on financial assets at FVTPL 4,702 4,266 - -

Impairment losses on AFS financial assets 20,879 2,043 - -

Reversal of impairment losses on HTM investments (12) (54) - -

Revaluation deficits/(reversal of revaluation deficits) on properties 150 (216) - -

(Reversal of impairment loss)/impairment loss on other receivables (103) 32 - -

Impairment loss on insurance/takaful receivables 3,954 6,947 - -

Depreciation of property, plant and equipment 8,503 8,310 315 441

Amortisation of intangible assets 2,571 3,950 567 75

Fair value gains on investment properties (300) (200) - -

Net (gains)/losses on disposals of property, plant and equipment (5) 81 1 85

Increase/(decrease) in gross premium/contribution liabilities 38,979 (11,596) - -

Impairment loss on investment in subsidiary - - - 30,327

Interest/profit income (200,387) (184,589) (2,842) (1,164)

Dividend income (12,189) (15,122) (100,000) (61,000)

Rental income (5,885) (4,888) - -

Finance cost 18,231 18,123 18,231 18,123

Realised gains on disposals of investments (8,218) (9,761) - -

Realised gains on disposals of non-current assets held for sale - (53) - -

Net amortisation of premiums on investments 3,977 3,579 - -

Share of results of associates (12,615) (4,157) - -

(Loss)/profit from operations before changes in operating assets and liabilities (168,816) 7,400 (4,482) (2,384)

Increase in placements with licensed financial institutions, Islamic investment accounts and marketable securities (153,706) (147,007) (83,615) (9,657)

Net purchase of investments (191,081) (170,798) (1,000) -

Decrease/(increase) in staff loans 1,509 (1,294) 1,041 (135)

(Increase)/decrease in insurance/takaful receivables (57,048) 58,746 - -

Decrease/(increase) in other receivables 18,412 (7,413) (436) 388

Net change in balances with subsidiaries - - 3,027 (147)

Increase in gross claim liabilities, actuarial liabilities and unallocated surplus 642,282 147,847 - -



Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Cash flows from operating activities (cont’d.)

Increase in expense liabilities 6,979 10,764 - -

(Decrease)/increase in participants’ funds (99,408) 45,635 - -

(Increase)/decrease in reinsurance/retakaful assets (122,527) 25,134 - -

Increase/(decrease) in insurance/takaful payables 29,861 (441) - -

Increase/(decrease) in other payables 23,197 13,414 1,083 (288)

Taxes and zakat (paid)/refunded (20,178) (78,615) (99) 7,544

Interest/profit received 183,060 172,406 2,880 1,129

Hibah paid to participants (916) (848) - -

Dividends received 19,731 24,118 100,000 61,000

Rental received 6,591 4,175 - -

Net cash generated from operating activities 117,942 103,223 18,399 57,450

Cash flows from investing activities

Subscription of shares in subsidiary - - - (2,000)

Purchase of property, plant and equipment (2,162) (2,413) (1,813) (1,094)

Purchase of intangible assets (3,198) (3,503) (125) (1,375)

Proceeds from disposal of intangible assets 114 2 114 -

Proceeds from disposal of non-current assets held for sale - 1,749 - -

Proceeds from disposal of property, plant and equipment 146 279 110 271

Transfers of property, plant and equipment to subsidiary - - 2,277 -

Net cash (used in)/generated from investing activities (5,100) (3,886) 563 (4,198)

Cash flows from financing activities

Profit paid (18,231) (18,123) (18,231) (18,123)

Dividend paid - (35,156) - (35,156)

Net cash used in financing activities (18,231) (53,279) (18,231) (53,279)

Cash and bank balances

Net increase/(decrease) during the year 94,611 46,058 731 (27)

At beginning of the year 82,702 36,644 2,877 2,904

At end of the year 177,313 82,702 3,608 2,877

Statements of Cash Flows




Notes to the Financial Statements

Notes to the Financial Statements - 31 March 2016

1. CORPORATE INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at 12th Floor, Bangunan Malaysian Re, No. 17, Lorong Dungun, Damansara Heights, 50490 Kuala Lumpur, Malaysia.

The Company is an investment holding company, principally engaged in the provision of management services to its subsidiaries.

The principal activities of the subsidiaries have been disclosed in Note 17 to the financial statements. There have been no significant changes in the nature of the principal activities of the Group and of the Company during the financial year.

The number of employees in the Group and in the Company at the end of the financial year were 906 and 178 (2015: 893 and 193) respectively.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 5 July 2016.

2. SIGNIFICANT ACCOuNTING POLICIES

2.1 Basis of preparation

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the requirements of the Companies Act, 1965 in Malaysia.

The financial statements of the Group and of the Company have been prepared under the historical cost convention, unless otherwise stated in the accounting policies. The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated.

2.2 Accounting period

For the general reinsurance business, the Group adopts quarterly accounting periods ending on 31 March, 30 June, 30 September and 31 December, insofar as the underwriting income and outgo for Market Cessions business is concerned. This is to correspond with the ceding companies’ accounting periods.

Underwriting income and outgo in respect of other business classes and all other income and expenditure are for the 12 months ended 31 March 2016.

2.3 Subsidiaries, associates and basis of consolidation

(a) Subsidiaries

A subsidiary is an entity over which the Group has all the following:

(i) power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) exposure, or rights, to variable returns from its investment with the investee; and

(iii) the ability to use its power over the investee to affect its returns.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.




2. SIGNIFICANT ACCOuNTING POLICIES (CONT’D.)

2.3 Subsidiaries, associates and basis of consolidation (cont’d.)

(a) Subsidiaries (cont’d.)

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

(i) the contractual arrangement with the other vote holders of the investee;

(ii) rights arising from other contractual arrangements; and

(iii) the Group’s voting rights and potential voting rights.

In the Company’s separate financial statements, investments in subsidiaries are stated at cost less any accumulated impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in the income statement.

(b) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. In preparing the consolidated financial statements, intragroup balances, transactions and unrealised gains or losses resulting from intragroup transactions are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances.

Acquisitions of subsidiaries are accounted for using the acquisition method. The acquisition method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition.

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in the income statement.

(c) Takaful and retakaful operations and funds

Under the concept of takaful/retakaful, individuals/cedants make contributions to a pool which is managed by a third party with the overall aim of using the monies to aid fellow participants in times of need. Accordingly, the takaful and retakaful subsidiaries of the Company manage the general and family takaful and retakaful funds in line with the principles of Wakalah (agency), which is the main business model used by the takaful and retakaful subsidiaries. Under the Wakalah model, the takaful/retakaful operator is not a participant in the fund but manages the funds (including the relevant assets and liabilities) towards the purpose outlined above.

In accordance with the Islamic Financial Services Act (IFSA) 2013, the assets and liabilities of the takaful funds are segregated from those of the takaful operator: a concept known as segregation of funds. However, in compliance with MFRS 10 Consolidated Financial Statements, the assets, liabilities, income and expenses of the takaful and retakaful funds are consolidated with those of the takaful and retakaful subsidiaries to represent the control possessed by the takaful and retakaful operators over the respective funds.





2.3 Subsidiaries, associates and basis of consolidation (cont’d.)

(c) Takaful and retakaful operations and funds (cont’d.)

In preparing the Group financial statements, the balances and transactions of the shareholder’s funds of the takaful and retakaful subsidiaries were amalgamated and combined with those of the takaful and retakaful funds respectively. Interfund balances, transactions and unrealised gains or losses are eliminated in full during amalgamation and consolidation.

The takaful and retakaful funds of the takaful and retakaful subsidiaries are consolidated and amalgamated from the date of control and continue to be consolidated until the date such control ceases which will occur when the takaful and retakaful subsidiaries’ licences to manage takaful and retakaful businesses respectively are withdrawn or surrendered.

(d) Associates

Associates are entities in which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not in control or joint control over those policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting. Under the equity method, the investments in associates are carried in the consolidated statement of financial position at cost adjusted for post-acquisition changes in the Group’s share of net assets of the associates. The Group’s share of the net profit or loss of the associates is recognised in the consolidated income statement. Where there has been a change recognised directly in the equity of the associates, the Group recognises its share of such changes.

In applying the equity method, unrealised gains and losses on transactions between the Group and the associates are eliminated to the extent of the Group’s interest in the associates. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investments in the associates. The investments in associates are accounted for using the equity method from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associates or the investments become subsidiaries.

Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. Any excess of the Group’s share of the net fair value of the associates’ identifiable assets, liabilities and contingent liabilities over the cost of the investments is excluded from the carrying amount of the investments and is instead included as income in the determination of the Group’s share of the associates’ profit or loss in the period in which the investments are acquired.

When the Group’s share of losses in associates equal or exceed its interest in the associates, including any long-term interests that, in substance, form part of the Group’s net investments in the associates, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associates.

The most recent available audited financial statements of the associates are used by the Group in applying the equity method. Where the dates of the audited financial statements used are not co-terminous with those of the Group, the share of results is derived from the last audited financial statements available and management financial statements to the end of the accounting period. Uniform accounting polices are adopted for like transactions and events in similar circumstances.

In the Company’s separate financial statements, investments in associates are stated at cost less any accumulated impairment losses.

On disposal of such investments, the difference between net disposal proceeds and the carrying amount is included in the income statement.





2.4 General reinsurance, takaful and retakaful underwriting results

The general reinsurance, takaful and retakaful underwriting results are determined after taking into account premiums/contributions, reinsurance/retakaful/retrotakaful costs, commissions, movements in premium/contribution liabilities, net claims incurred and wakalah fees.

The general takaful and retakaful funds are maintained in accordance with the IFSA 2013 and consist of AFS reserves and the accumulated surplus/deficit in the funds. Any deficit will be made good by the shareholder’s fund via a loan or Qard.

In general takaful and retakaful funds, the surplus distributable to the participants is determined after deducting retakaful/retrotakaful costs, movements in contribution liabilities, commissions, net claims incurred, wakalah fees, expenses, taxation and surplus administration charges. The surplus may be distributed to the shareholder and participants in accordance with the terms and conditions of the respective contracts or as prescribed by the Group Shariah Committee.

(a) Premium and contribution recognition

Gross premiums/contributions are recognised in a financial period in respect of risks assumed during the particular financial period. Gross premiums/contributions include premium/contribution income in relation to direct general business, inwards facultative business, inwards proportional treaty reinsurance/retakaful and inwards non-proportional treaty reinsurance/retakaful.

Contributions from direct businesses are recognised as soon as the amount of contribution can be reliably measured in accordance with the principles of Shariah.

Inwards facultative premiums/contributions are recognised in the financial period in respect of the facultative risk assumed during the particular financial period following individual risks’ inception dates.

Inwards proportional treaty premiums/contributions are recognised on the basis of periodic advices received from cedants given that the periodic advices reflect the individual underlying risks being incepted and reinsured/covered at various inception dates of these risks and contractually accounted for under the terms of the proportional reinsurance/retakaful treaty.

Premium/contribution income on inwards non-proportional treaties, which cover losses occurring during a specified treaty period, are recognised based on the contractual premiums/contributions already established at the start of the treaty period under the terms and conditions of each contract.

(b) Premium and contribution liabilities

Premium/contribution liabilities represent the future obligations on insurance/takaful contracts as represented by premiums/contributions received for risks that have not yet expired. The movement in premium/contribution liabilities is released over the term of the insurance/takaful contracts and recognised as earned premium/contribution income.

Premium/contribution liabilities are reported at the higher of the aggregate of the unearned premium reserves (“UPR”)/unearned contribution reserves (“UCR”) respectively for all lines of business or the best estimate value of the unexpired risk reserves (“URR”) and a provision of risk margin for adverse deviation (“PRAD”) calculated at 75% confidence level at the end of the financial year.

(i) unexpired risk reserves

The URR is a prospective estimate of the expected future payments arising from future events insured or covered under policies or contracts in force as at the end of the financial year and also includes allowance for expenses, including overheads and costs of reinsurance/retakaful, expected to be incurred during the unexpired period in administering these policies or contracts and settling the relevant claims, and shall allow for expected future premium/contribution refunds.





2.4 General reinsurance, takaful and retakaful underwriting results (cont’d.)

(b) Premium and contribution liabilities (cont’d.)

(i) unexpired risk reserves (cont’d.)

URR is estimated via an actuarial valuation performed by qualified actuary, using a mathematical method of estimation similar to incurred but not reported (“IBNR”) claims.

(ii) unearned premium and contribution reserves

The UPR/UCR represents the portion of the net premiums/contributions of insurance/takaful contracts written that relate to the unexpired periods of the contracts at the end of the financial year. The UCR is computed on net contribution income with a further deduction for wakalah fee expenses to reflect the wakalah business principle. The methods of computation of UPR/UCR are as follows:

- For inwards proportional treaty reinsurance/retakaful business, UPR/UCR is computed on the 1/8th method commencing from the quarter corresponding to the reporting quarter of the treaty statement;

- For inwards non-proportional treaty reinsurance/retakaful business, UPR/UCR is computed at 1/2 of the last quarter Minimum Deposit Premiums/Contributions received;

- For inwards facultative reinsurance/retakaful business, UPR/UCR is computed on the 1/8th method commencing from the date of inception;

- Time apportionment method for all classes of general takaful business within Malaysia except Marine and Aviation Cargo; and

- 25% method for Marine and Aviation Cargo.

(c) Claim liabilities

The amount of outstanding claims is the best estimate value of claim liabilities, which include provision for claims reported, claims incurred but not enough reserved (“IBNER”) and IBNR claims together with related expenses less recoveries to settle the present obligation as well as a PRAD calculated at 75% confidence level at the end of the financial year. Liabilities for outstanding claims are recognised when a claimable event occurs and/or as advised/notified. IBNER and IBNR claims are based on an actuarial valuation by qualified actuary, using a mathematical method of estimation based on, amongst others, actual claims development patterns.

(d) Liability adequacy test

At each reporting date, the Group reviews all insurance/takaful contract liabilities to ensure that the carrying amount of the liabilities is sufficient or adequate to cover the obligations of the Group, contractual or otherwise, with respect to insurance/takaful contracts issued. In performing this review, the Group compares all contractual cash flows against the carrying value of insurance/takaful contract liabilities. Any deficiency is recognised in the income statement.

The estimation of claim liabilities and premium/contribution liabilities performed at the reporting date is part of the liability adequacy tests performed by the Group.





2.4 General reinsurance, takaful and retakaful underwriting results (cont’d.)

(e) Acquisition costs and commission expenses

The acquisition costs and commission expenses, which are costs directly incurred in acquiring and renewing reinsurance/takaful/retakaful business, are recognised as incurred and properly allocated to the periods in which it is probable they give rise to income.

2.5 Family takaful and retakaful underwriting results

The family takaful and retakaful underwriting results are determined after taking into account contributions, retakaful/retrotakaful costs, commissions, net benefits incurred and wakalah fees.

The family takaful and retakaful funds are maintained in accordance with the requirements of the IFSA 2013 and consist of AFS reserves and the accumulated surplus/deficit in the funds. The family takaful and retakaful funds surplus/deficit is determined by an annual actuarial valuation of the funds. Any actuarial deficit in the family takaful and retakaful funds will be made good by the shareholder’s fund via a loan or Qard.

In family takaful and retakaful funds, the surplus distributable to the participants is determined after deducting retakaful/retrotakaful costs, net benefits incurred, wakalah fees, expenses, taxation and surplus administration charges. The surplus may be distributed to the shareholder and participants in accordance with the terms and conditions of the respective contracts or as prescribed by the Group Shariah Committee.

(a) Contribution recognition

Takaful contribution is recognised as soon as the amount of contribution can be reliably measured in accordance with the principles of Shariah. First year contribution is recognised on the assumption of risks and subsequent takaful contributions are recognised on due dates. Takaful contributions outstanding at the reporting date are recognised as income for the period provided they are within the grace period allowed for payment and there are sufficient funds available in the participants’ accounts to cover such contributions due.

Retakaful contributions are recognised in respect of risks assumed during a particular financial period. Inward treaty retakaful contributions are recognised on the basis of statements received from ceding companies.

(b) Contract liabilities

Family takaful contract liabilities are recognised when contracts are in-force and contributions are charged. Liabilities of benefits payable of the family retakaful fund are recognised as advised by ceding companies.

For a one year family contract or a one year extension to a family contract covering contingencies other than life or survival, the liabilities for such family takaful contracts comprise contribution and claim liabilities with an appropriate allowance for PRAD from the expected experience.

Liabilities of family takaful business are determined in accordance with valuation guidelines for takaful operators issued by Bank Negara Malaysia (BNM). All family takaful liabilities are valued using a prospective actuarial valuation based on the sum of the present value of future benefits and expenses less future gross considerations arising from the contracts, discounted at the appropriate risk discount rate. This method is known as the gross contribution valuation method. In the case of a family contract where a part of, or the whole of, the contributions are accumulated in a fund, the accumulated amounts as declared to the participants are set as the liabilities. Zerorisation is applied at contract level and no contract is treated as an asset under the valuation method adopted.





2.5 Family takaful and retakaful underwriting results (cont’d.)

(b) Contract liabilities (cont’d.)

The family takaful contract liabilities are derecognised when the contracts expire, are discharged or are cancelled. At each reporting date, an assessment is made of whether the recognised family takaful contract liabilities are adequate by performing a liability adequacy test as disclosed in Note 2.5(d).

In respect of the family takaful and retakaful risk fund, the expected future cash flows of benefits are determined using best estimate assumptions with an appropriate allowance for PRAD from expected experience such that an overall level of sufficiency of contract reserves at a 75% confidence level is secured. For investment-linked business, the fund value is treated as liabilities.

Surplus arising from the difference between the value of the family fund and the liabilities, including retained surplus, will be distributed to the participants after deducting the surplus administration charge, if applicable.

If the difference between the value of the family fund and the liabilities results in a deficit, the deficit is made good via a Qard from the takaful subsidiary which will be repaid when the fund returns to a surplus position.

(c) Creation/cancellation of units of family takaful fund

Amounts received for units created represent contributions paid by participants or unitholders as payment for new contracts or subsequent payments to increase the amount of the contracts. Creation/cancellation of units are recognised in the financial statements at the next valuation date, after the request to purchase/sell units are received from the participants or unitholders.

(d) Liability adequacy test

At each reporting date, the Group reviews all takaful contract liabilities to ensure that the carrying amount of the liabilities is sufficient or adequate to cover the obligations of the Group, contractual or otherwise, with respect to takaful contracts issued. In performing this review, the Group compares all contractual cash flows against the carrying value of takaful contract liabilities. Any deficiency is recognised in the income statement.

2.6 Shareholder’s fund of takaful and retakaful subsidiaries

(a) Commission expenses

Commission expenses, which are costs directly incurred in securing contributions on takaful contracts, are recognised as incurred and properly allocated to the periods in which it is probable they give rise to income. Commission expenses are recognised in the income statement at an agreed percentage for each contract underwritten. This is in accordance with the principles of Wakalah as approved by the Group Shariah Committee and as agreed between the participants and the takaful subsidiary.

(b) Expense liabilities

The expense liabilities of the shareholder’s fund consist of expense liabilities relating to the management of the general takaful and retakaful funds and the family takaful and retakaful funds which are based on estimations performed by qualified actuaries. The movement in expense liabilities is released over the term of the takaful contracts and recognised in the income statement.





2.6 Shareholder’s fund of takaful and retakaful subsidiaries (cont’d.)

(b) Expense liabilities (cont’d.)

(i) Expense liabilities of general takaful and retakaful funds

The expense liabilities of the general takaful and retakaful funds are reported at the higher of the aggregate of the reserves for unearned wakalah fees (“UWF”) and the best estimate value of the provision for unexpired expense reserves (“UER”) and a PRAD at a 75% confidence level at the end of the financial year.

unexpired expense reserves

The UER is determined based on the expected future expenses payable by the shareholder’s funds in managing the general takaful and retakaful funds for the full contractual obligation of the takaful and retakaful contracts as at the end of the financial year, less any expected cash flows from future wakalah fee income, and any other income due to the shareholder’s funds that can be determined with reasonable certainty, including a PRAD calculated at a 75% confidence level. The method used to value the UER is consistent with the method used in estimating the URR as disclosed in Note 2.4(b)(i).

Reserves for unearned wakalah fees

The UWF represent the portion of wakalah fee income allocated for management expenses of general takaful and retakaful contracts that relate to the unexpired periods of contracts at the end of the financial year. The method used in computing UWF is consistent with the methods used in the calculation of the UCR as disclosed in Note 2.4(b)(ii).

(ii) Expense liabilities of family takaful and retakaful funds

The valuation of expense liabilities in relation to contracts of the family takaful and retakaful funds is conducted separately by the Appointed Actuaries. The method used to value expense liabilities is consistent with the method used to value takaful and retakaful liabilities of the corresponding family takaful and retakaful contracts. In valuing the expense liabilities, the present value of expected future expenses payable by the shareholder’s funds in managing the takaful and retakaful funds for the full contractual obligation of the takaful and retakaful contracts less any expected cash flows from future wakalah fee income, and any other income due to the shareholder’s funds that can be determined with reasonable certainty, are taken into consideration. The estimation includes a PRAD at a 75% confidence level.

(iii) Liability adequacy test

At each reporting date, the Group reviews the expense liabilities to ensure that the carrying amount is sufficient or adequate to cover the obligations of the Group for all managed takaful and retakaful contracts. In performing this review, the Group considers all contractual cash flows and compares this against the carrying value of expense liabilities. Any deficiency is recognised in the income statement.

2.7 Product classification

Financial risk is the risk of a possible future change in one or more of a specified interest/profit rate, financial instrument price, commodity price, foreign exchange rate, index of price or rate, credit rating or credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract. Insurance/underwriting risk is the risk other than financial risk.

An insurance/takaful contract is a contract under which the reinsurance, takaful and retakaful subsidiaries have accepted significant insurance/underwriting risk from another party by agreeing to compensate the party if a specified uncertain future event adversely affects the party. As a general guideline, the reinsurance, takaful and retakaful subsidiaries determine whether significant insurance/underwriting risk has been accepted by comparing claims/benefits payable on the occurrence of the event with claims/benefits payable if the event had not occurred.





2.7 Product classification (cont’d.)

Conversely, investment contracts are those contracts that transfer financial risk with no significant insurance/underwriting risk.

Once a contract has been classified as an insurance/takaful contract, it remains an insurance/takaful contract for the remainder of its life-time, even if the insurance/underwriting risk reduces significantly during the period, unless all rights and obligations expire or are extinguished.

2.8 Reinsurance and retakaful

The reinsurance, takaful and retakaful subsidiaries cede insurance/underwriting risk in the normal course of business. Ceded reinsurance and retakaful arrangements do not relieve the reinsurance, takaful and retakaful subsidiaries from their obligations to cedants/participants. For both ceded and assumed reinsurance and retakaful, premiums/contributions and claims/benefits are presented on a gross basis.

Reinsurance and retakaful arrangements entered into by the reinsurance, takaful and retakaful subsidiaries that meet the classification requirements of insurance/takaful contracts as described in Note 2.7 are accounted for as noted below. Arrangements that do not meet these classification requirements are accounted for as financial assets.

Reinsurance and retakaful assets represent amounts recoverable from reinsurers and retakaful operators for insurance and takaful contract liabilities which have yet to be settled at the reporting date. Amounts recoverable from reinsurers and retakaful operators are measured consistently with the amounts associated with the underlying insurance and takaful contracts and the terms of the relevant reinsurance and retakaful arrangement.

At each reporting date, the reinsurance, takaful and retakaful subsidiaries assess whether objective evidence exists that reinsurance and retakaful assets are impaired. Objective evidence of impairment for reinsurance and retakaful assets are similar to those noted for insurance and takaful receivables. If any such evidence exists, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest/profit rate. The impairment loss is recognised in the income statement. Reinsurance and retakaful assets are derecognised when the contractual rights expire or are extinguished or when the contract is transferred to another party.

2.9 Property, plant and equipment and depreciation

(a) Recognition and measurement

All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition, plant and equipment are stated at cost less accumulated depreciation and any impairment losses, whilst properties are stated at revalued amounts less subsequent accumulated depreciation and subsequent impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset.

In respect of freehold land and buildings, valuations are performed with sufficient frequency to ensure that the carrying amount does not differ materially from the fair value of the freehold land and buildings at the reporting date.

Any revaluation surplus is recognised in other comprehensive income and accumulated in equity under the asset revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in the income statement, in which case the increase is recognised in the income statement. A revaluation deficit is recognised in the income statement, except to the extent that it offsets an existing surplus on the same asset carried in the asset revaluation reserve.

Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. On disposal of property, plant and equipment, the difference between net proceeds and the carrying amount is recognised in the income statement and the unutilised portion of the revaluation surplus on that item is taken directly to retained profits.





2.9 Property, plant and equipment and depreciation (cont’d.)

(b) Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred.

(c) Depreciation

Freehold land has an unlimited useful life and therefore is not depreciated. Leased properties are depreciated over the shorter of the lease term and their useful lives.

Work in progress is also not depreciated as it is not available for use. When work in progress is completed and the asset is available for use, it is reclassified to the relevant category of property, plant and equipment and depreciation of the asset begins. During the period in which the asset is not yet available for use, it is tested for impairment annually.

Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over its estimated useful life, at the following annual rates:

Buildings 2% to 3%

Computer equipment 10% to 33.3%

Office equipment 10% to 33.3%

Furniture and fittings 10% to 15%

Motor vehicles 20%

The residual values, useful lives and depreciation method are reviewed at the end of each financial year to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

2.10 Investment properties

Investment properties are properties which are held either to earn rental income and/or for capital appreciation. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value.

Fair value is arrived at by reference to market evidence of transaction prices for similar properties and is performed by registered independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued.

Gains or losses arising from changes in the fair values of investment properties are recognised in the income statement in the year in which they arise.

Investment properties are derecognised when either they have been disposed of or when the investment properties are permanently withdrawn from use and no future economic benefit is expected from the disposals. Any gains or losses on the retirement or disposal of an investment property are recognised in the income statement in the year in which they arise.

Transfers are made to or from investment property only when there is a change in use. For a transfer from owner-occupied property to investment property, any excess of the property’s carrying value over its fair value is accounted for as a revaluation surplus which is recognised in other comprehensive income. Any deficit between the property’s carrying value and its fair value is recognised as an impairment loss in the income statement. Subsequent to the date of change in use, the property is measured similar to other investment properties. Any revaluation surplus previously recognised in other comprehensive income is transferred to the income statement only upon disposal of the property.





2.11 Intangible assets

All intangible assets are initially recorded at cost. Subsequent to recognition, intangible assets are stated at cost less any accumulated amortisation and any impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset.

On disposal of intangible assets, the difference between net proceeds and the carrying amount is recognised in the income statement.

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised on a straight-line basis over the estimated economic useful lives and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed annually at the end of each reporting period. Amortisation is charged to the income statement.

Intangible assets with indefinite useful lives are not amortised but tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. The useful life of an intangible asset with an indefinite life is also reviewed annually to determine whether the useful life assessment continues to be supportable.

(a) Software development in progress

Software development in progress represent development expenditure on software. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated impairment losses. When development is complete and the asset is available for use, it is reclassified to computer software and amortisation of the asset begins. It is amortised over the period of expected future use. During the period in which the asset is not yet available for use, it is tested for impairment annually.

(b) Computer software and licences

The useful lives of computer software and licences are considered to be finite because computer software and licences are susceptible to technological obsolescence.

The acquired computer software and licences are amortised using the straight-line method over their estimated useful lives. Impairment is assessed whenever there is an indication of impairment and the amortisation period and method are also reviewed annually at the end of each financial year.

2.12 Financial assets

(a) Initial recognition and measurement

Financial assets are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the instrument.

A financial asset is recognised initially, at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset.

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





2.12 Financial assets (cont’d.)

(b) Classification and subsequent measurement

The Group and the Company determine the classification of its financial assets at initial recognition and this depends on the purpose for which the investments were acquired or originated. The following classifications are used by the Group and the Company in categorising its financial assets:

(i) Financial assets at FVTPL

Financial assets are classified as financial assets at FVTPL if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at FVTPL are measured at fair value. Any gains or losses arising from changes in fair value are recognised in the income statement. Net gains or net losses on financial assets at FVTPL do not include exchange differences, interest/profit income and dividend income. Exchange differences, interest/profit income and dividend income on financial assets at FVTPL are recognised in the appropriate categories of income and expenses in the income statement.

(ii) HTM investments

Financial assets with fixed or determinable payments and fixed maturities are classified as HTM when the Group and the Company have the positive intention and ability to hold the investments to maturity.

Subsequent to initial recognition, HTM investments are measured at amortised cost using the effective interest/yield method less any accumulated impairment losses. Gains and losses are recognised in the income statement when the HTM investments are derecognised or impaired, and through the amortisation process.

(iii) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest/yield method. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, and through the amortisation process.

(iv) AFS financial assets

AFS financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.

After initial recognition, AFS financial assets are subsequently measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest/profit calculated using the effective interest/yield method are recognised in the income statement. The cumulative gain or loss previously recognised is reclassified from other comprehensive income to the income statement as a reclassification adjustment when the financial asset is derecognised. Interest/profit income calculated using the effective interest/yield method is recognised in the income statement.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less accumulated impairment losses.





2.12 Financial assets (cont’d.)

(c) Derecognition

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired or the Group and the Company have transferred their rights to receive cash flows from the asset or have assumed an obligation to pay the received cash flows in full. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in the income statement.

(d) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

2.13 Fair value measurement

The Group and the Company measure financial instruments, such as, financial assets at FVTPL, and non-financial assets such as investment properties and self-occupied properties, at fair value at each reporting date. Also, fair values of financial instruments measured at amortised cost are disclosed in Notes 19 and 39.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

(a) In the principal market for the asset or liability; or

(b) In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Group and the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 - Inputs that are based on observable market data, either directly or indirectly

Level 3 - Inputs that are not based on observable market data





2.13 Fair value measurement (cont’d.)

An annual valuation is performed to reflect the fair value of the Group’s self-occupied property and investment properties. At the end of each financial year, Management appoints accredited independent valuers having appropriate recognised professional qualification to perform the annual valuation. The valuation techniques used by the accredited independent valuers are verified by the Management to ensure that they are in accordance with the requirements of MFRS 13 Fair Value Measurement. The valuation results are then presented to the Board of Directors.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group and the Company determine whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. The fair value hierarchy of assets that are measured at fair value and/or for which fair value are disclosed is disclosed in Note 39.

2.14 Impairment of assets

(a) Financial assets

The Group and the Company assess at the end of each reporting period whether there is any objective evidence that a financial asset or a group of financial assets is impaired.

(i) Financial assets carried at amortised cost

The Group and the Company first assess whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. The impairment assessment is performed at the end of each reporting period.

If there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset’s original effective interest/yield rate. The carrying amount of the asset is reduced and the loss is recorded in the income statement.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in the income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

(ii) AFS financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as AFS financial assets are impaired.

If an AFS financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the income statement, is transferred from equity to the income statement.





2.14 Impairment of assets (cont’d.)

(a) Financial assets (cont’d.)

(ii) AFS financial assets (cont’d.)

Impairment losses on AFS equity investments are not reversed in the income statement in subsequent periods. Increases in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For AFS debt investments, impairment losses are subsequently reversed in the income statement if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in the income statement.

(b) Non-financial assets

The carrying amounts of non-financial assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.

Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of the other assets in the unit (or groups of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the losses have decreased or no longer exist.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to the income statement in the period in which the reversals are recognised.

2.15 Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary.

Immediately before classification as held for sale, the non-current assets are measured in accordance with applicable MFRSs. On initial classification as held for sale, non-current assets are then measured at the lower of its carrying amount and fair value less costs to sell. Any difference is included in the income statement. Non-current assets classified as held for sale are not depreciated.

2.16 Measurement and impairment of Qard

Any deficits in the takaful/retakaful funds are made good via a loan or Qard, granted by the shareholder’s funds to the takaful/retakaful funds. The Qard is stated at cost less any impairment losses in the shareholder’s funds. In the takaful/retakaful funds, the Qard is stated at cost.





2.16 Measurement and impairment of Qard (cont’d.)

The Qard shall be repaid from future surpluses of the takaful/retakaful funds.

The Qard is tested for impairment on an annual basis via an assessment of the estimated surpluses or cash flows from the takaful/retakaful funds to determine whether there is any objective evidence of impairment. If the Qard is impaired, an amount comprising the difference between its cost and its recoverable amount, less any impairment loss previously recognised, is recognised in the income statement.

Impairment losses are subsequently reversed in the income statement if objective evidence exists that the Qard is no longer impaired.

2.17 Share capital and dividend expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

2.18 Cash and cash equivalents

Cash and cash equivalents include cash in hand and at banks, excluding fixed and call deposits with licensed financial institutions, which have an insignificant risk of changes in value. The statement of cash flows has been prepared using the indirect method.

2.19 Insurance and takaful receivables

Insurance/takaful receivables are amounts receivable under the contractual terms of an insurance/takaful contract. On initial recognition, insurance/takaful receivables are measured at fair value based on the consideration receivable. Subsequent to initial recognition, insurance/takaful receivables are measured at amortised cost, using the effective interest/yield method.

Insurance/takaful receivables are assessed at each reporting date for objective evidence of impairment. If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the insurance/takaful receivable’s original effective interest/yield rate. The impairment loss is recognised in the income statement. The basis for recognition of such impairment loss is as described in Note 2.14(a)(i).

Insurance/takaful receivables are derecognised when the rights to receive cash flows from them have expired or when they have been transferred and the Group has also substantially transferred all risks and rewards of ownership.

2.20 Borrowings

All borrowings are classified as other financial liabilities and are recognised initially at fair value plus directly attributable transaction costs. The profits payable are recognised as finance costs in the income statement in the period in which they are incurred.

After initial recognition, profit-bearing borrowings are subsequently measured at amortised cost using the effective profit rate method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the effective profit rate method.





2.21 Leases

(a) Classification

A lease is recognised as a finance lease if it substantially transfers to the Group all the risks and rewards incidental to ownership. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets. The land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classification. All leases that do not substantially transfer all risks and rewards are classified as operating leases, with the following exceptions:

(i) Property held under operating leases that would otherwise meet the definition of an investment property is classified as an investment property on a case-by-case basis and, if classified as investment property, is accounted for as if held under a finance lease, as disclosed in Note 2.10; and

(ii) Land held for own use under an operating lease, the fair value of which cannot be measured separately from the fair value of a building situated thereon at the inception of the lease, is accounted for as being held under a finance lease, unless the building is also clearly held under an operating lease.

(b) Finance leases - the Group as lessee

Assets acquired by way of hire purchase or finance lease are stated at an amount equal to the lower of their fair value and the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation and impairment losses. The corresponding liability is included in the statement of financial position as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest/profit rate implicit in the lease, when it is impracticable to determine; otherwise, the Group and the Company’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets.

Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in the income statement over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

The depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment as described in Note 2.9(c).

(c) Operating leases - the Group as lessee

Operating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

In the case of a lease of land and buildings, the minimum lease payments or the upfront payments made are allocated, whenever necessary, between the land and the buildings elements in proportion to the relative fair values of leasehold interests in the land element and buildings element of the lease at the inception of the lease. The up-front payments represent prepaid lease payments and are amortised on a straight-line basis over the lease term.

(d) Operating leases - the Group as lessor

Assets leased out under operating leases are presented in the statement of financial position according to the nature of the assets. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease, as disclosed in Note 2.27(b). Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.





2.22 Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of MFRS 139 Financial Instruments: Recognition and Measurement, are recognised in the statement of financial position when, and only when, the Group and/or the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.

(a) Financial liabilities at FVTPL

Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in the income statement. Net gains or losses on derivatives include exchange differences.

The Group and the Company had not designated any financial liabilities as at FVTPL nor were there any financial liabilities held for trading during and at the end of the financial year.

(b) Other financial liabilities

The Group and the Company’s other financial liabilities include borrowings, insurance/takaful payables and other payables.

Insurance/takaful and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest/yield method.

For other financial liabilities, gains and losses are recognised in the income statement when the liabilities are derecognised, and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

2.23 Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of provision is the present value of the expenditure expected to be required to settle the obligation.

2.24 Income tax

Income tax on profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the end of the financial year.





2.24 Income tax (cont’d.)

Deferred tax is provided for, using the liability method, on temporary differences at the end of the financial year between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the end of the financial year. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in other comprehensive income, in which case the deferred tax is also charged or credited directly in other comprehensive income.

2.25 Employee benefits

(a) Short-term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated balances. Short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(b) Defined contribution plan

As required by law, the Group makes contributions to the national pension scheme, the Employees Provident Fund (“EPF”). The Group also makes additional contributions to the EPF for eligible employees by reference to their earnings. Such contributions are recognised as an expense in the income statement as incurred.

(c) Employees’ terminal benefits

As required by law in the United Arab Emirates, the Group makes provision for terminal benefits for employees of its Dubai subsidiary, based on the employees’ salaries and number of years of service. The terminal benefits are paid to the employees on termination or completion of their terms of employment.

2.26 Foreign currencies

(a) Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency.

(b) Foreign currency transactions

In preparing the financial statements, transactions in currencies other than the functional currency (“foreign currencies”) are recorded in the functional currency using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.





2.26 Foreign currencies (cont’d.)

(b) Foreign currency transactions (cont’d.)

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in income statement except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised intially in other comprehensive income and accumulated under the foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to the income statement of the Group on disposal of the foreign operation.

Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the income statement for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in other comprehensive income. Exchange differences arising from such non-monetary items are also recognised directly in other comprehensive income.

(c) Foreign operations

The results and financial position of foreign operations that have a functional currency different from the presentation currency of the consolidated financial statements are translated into RM as follows:

(i) Assets and liabilities for each statement of financial position presented are translated at the closing rate prevailing at the reporting date;

(ii) Income and expenses for each income statement are translated at average exchange rates for the year, which approximates the exchange rates at the dates of the transactions;

(iii) All resulting exchange differences are taken to the foreign currency translation reserve within equity; and

(iv) The results of an associate, Labuan Reinsurance (L) Limited, are translated at the closing rate prevailing at the reporting date with respect to the carrying amount of the investment in associate, and at the exchange rate at the date of the transactions with respect to the share of profits or losses. All resulting translation differences are included in the foreign exchange translation reserve in shareholders’ equity.

2.27 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits flow to the Group and the Company and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

(a) Interest and profit income Interest and profit income are recognised using the effective interest/yield method.

(b) Rental income Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to

lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.

(c) Dividend income Dividend income is recognised when the right to receive payment is established.

(d) Management fees Management fees are recognised when services are rendered.





2.27 Revenue recognition (cont’d.)

(e) Wakalah fees Wakalah fees are recognised as soon as the amount of contribution can be reliably measured in accordance with the principles

of Shariah.

(f) Premiums and contributions income Premiums/contributions are recognised in accordance with the policies stated in Notes 2.4(a) and 2.5(a).

2.28 Zakat

Zakat represents an obligatory amount payable by the takaful and retakaful subsidiaries to comply with the principles of Shariah. Zakat is computed using a method as recommended by the Group Shariah Committee (“GSC”) and approved by the Board. Only the zakat that is attributable to the individual and corporate Muslim shareholders of the holding company was provided for in the financial statements. The zakat computation is reviewed by the GSC. The Board has the discretion to pay additional quantum above the obligatory amount payable.

2.29 Changes in Accounting Policies

The accounting policies adopted by the Group and the Company are consistent with those of the previous financial year except for the following:

Adoption of amendments/improvements to MFRSs

At the beginning of the current financial year, the Group and the Company adopted the following amendments/improvements to MFRSs mandatory for annual periods beginning on or after 1 July 2014 as follows:

DescriptionEffective for annual periods

beginning on or after

Amendments to MFRS 119 Defined Benefit Plans: Employee Contributions 1 July 2014

Annual Improvements to MFRS 2010 - 2012 Cycle 1 July 2014

Annual Improvements to MFRS 2011 - 2013 Cycle 1 July 2014

The adoption of the above amendments/improvements to MFRSs did not have any significant effect on the disclosures or amounts recognised in the Group’s and the Company’s financial statements.





2.30 Standards and amendments/improvements to published standards that are issued but not yet effective

The standards and amendments/improvements to published standards that are issued but not yet effective up to the date of issuance of the Group’s and the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these standards and amendments/improvements to standards, if applicable, when they become effective:

DescriptionEffective for annual periods

beginning on or after

MFRS 14 Regulatory Deferral Accounts 1 January 2016

Amendments to MFRS 10, MFRS 12 and MFRS 128 Investment Entities: Applying the Consolidation Exception 1 January 2016

Amendments to MFRS 11 Accounting for Acquisitions of Interests in Joint Operations 1 January 2016

Amendments to MFRS 101 Disclosure Initiative 1 January 2016

Amendments to MFRS 116 and MFRS 138 Clarification of Acceptable Methods of Depreciation and Amortisation 1 January 2016

Amendments to MFRS 116 and MFRS 141 Agriculture: Bearer Plants 1 January 2016

Amendments to MFRS 127 Equity Method in Separate Financial Statements 1 January 2016

Annual Improvements to MFRS 2012 - 2014 Cycle 1 January 2016

Amendments to MFRS 107 Disclosure Initiative 1 January 2017

Amendments to MFRS 112 Recognition of Deferred Tax Assets for Unrealised Losses 1 January 2017

MFRS 9 Financial Instruments 1 January 2018

MFRS 15 Revenue from Contracts with Customers 1 January 2018

MFRS 16 Leases 1 January 2019

Amendments to MFRS 10 and MFRS 128 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture To be announced

The Directors are of the opinion that the adoption of the above standards and amendments/improvements to standards are not expected to have material impact on the financial statements in the period of initial application except as discussed below:

MFRS 9 Financial Instruments (“MFRS 9”)

In November 2014, MASB issued the final version of MFRS 9 which reflects all phases of the financial instruments project and replaces MFRS 139 and all previous versions of MFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. The adoption of MFRS 9 will have an effect on the classification and measurement of the Group and the Company’s financial assets, but no impact on the classification and measurement of the Group and the Company’s financial liabilities. The Directors are currently in the process of assessing the impacts of adopting MFRS 9 on the financial statements of the Group and of the Company.




3. SIGNIFICANT ACCOuNTING ESTIMATES AND juDGEMENTS

The preparation of the Group and the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amount of revenues, expenses, assets and liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

3.1 Critical judgements made in applying accounting policies

The following are the judgements made by management in the process of applying the Group’s accounting policies that have the most significant effect on the amounts recognised in the financial statements. Judgements are continually evaluated and are based on historical experiences and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Classification between investment properties and property, plant and equipment

The Group has developed certain criteria based on MFRS 140 Investment Property in making judgement whether a property qualifies as an investment property. Investment property is a property held to earn rentals and/or for capital appreciation. Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a finance lease), the Group would account for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes. Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as investment property.

Impairment of AFS financial assets

The Group reviews its debt securities classified as AFS financial assets at each reporting date to assess whether they are impaired. The Group also records impairment charges on AFS equity investments when there has been a significant or prolonged decline in the fair value below their cost.

The determination of what is “significant” or “prolonged” requires judgement. In making this judgement, the Group evaluates, among other factors, historical share price movements and the duration and extent to which the fair value of an investment is less than its cost.

3.2 Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Depreciation and amortisation

Depreciation and amortisation are based on management’s estimates of the future estimated average useful lives and residual values of property, plant and equipment and intangible assets respectively. Estimates may change due to technological developments, expected level of usage, competition, market conditions and other factors, and could impact the estimated average useful lives and the residual values of these assets and correspondingly, may result in future changes in depreciation or amortisation expenses.

Accordingly, at the end of each reporting period, the residual values and estimated useful lives of property, plant and equipment and intangible assets are assessed to determine that they continue to be consistent as disclosed in Notes 2.9(c) and 2.11, respectively.

As at the reporting date, management has determined that the estimated useful lives and residual values of property, plant and equipment and intangible assets of the Group and of the Company remain consistent.




3. SIGNIFICANT ACCOuNTING ESTIMATES AND juDGEMENTS (CONT’D.)

3.2 Key sources of estimation uncertainty (cont’d.)

(b) General reinsurance, takaful and retakaful businesses

The principal uncertainty in the general reinsurance, takaful and retakaful businesses arises from the technical provisions which include the estimation of premium/contribution and claim liabilities. Premium/contribution liabilities are recorded as the higher of UPR/UCR and URR while claim liabilities mainly comprise provision for claims reported and IBNER and IBNR claims.

Generally, claim liabilities are determined based upon previous claims experience, existing knowledge of events, the terms and conditions of the relevant policies and interpretation of circumstances. Particularly relevant is past experience with similar cases, historical claims development trends, legislative changes, judicial decisions and economic conditions. It is certain that actual future premium/contribution and claim liabilities will not exactly develop as projected and may vary from the projection.

The estimates of premium/contribution and claim liabilities are therefore sensitive to various factors and uncertainties. The establishment of technical provisions is an inherently uncertain process and, as a consequence of this uncertainty, the eventual settlement of premium/contribution and claim liabilities may vary from the initial estimates.

At each reporting date, the estimates of premium/contribution and claim liabilities are re-assessed for adequacy by appointed actuaries and changes will be reflected as adjustments to these liabilities. The appointment of the actuaries is approved by BNM.

(c) Family takaful and retakaful businesses

The estimation of the ultimate liability arising from claims made under the family takaful and retakaful businesses is a critical accounting estimate. There are several sources of uncertainty that need to be considered in the estimation of the liabilities that the family takaful and retakaful funds will ultimately be required to pay as claims/benefits.

For family takaful and retakaful contracts, estimates are made for future deaths, disabilities, maturities, investment returns, voluntary terminations and expenses in accordance with contractual and regulatory requirements. The family takaful and retakaful funds base the estimate of expected number of deaths on statutory mortality tables, adjusted where appropriate to reflect the funds’ unique risk exposures. The estimated number of deaths determines the value of possible future benefits to be paid out, which will be factored into ensuring sufficient cover by reserves, which in return is monitored against current and future contributions.

For those contracts that cover risks related to disability, estimates are made based on recent past experience and emerging trends. However, epidemics as well as wide ranging changes to lifestyle, could result in significant changes to the expected future exposures.

All of these will give rise to estimation uncertainties of the projected ultimate liabilities of the family takaful and retakaful funds.

At each reporting date, these estimates are re-assessed for adequacy and changes will be reflected as adjustments to the liabilities by appointed actuaries. The appoinment of the actuaries is approved by BNM.






(d) Impairment of non-financial assets

Assets are tested for impairment when indications of potential impairment exist. Indicators of impairment which could trigger an impairment review include evidence of obsolescence or physical damage, significant fall in market values, significant underperformance relative to historical or projected future operating results, significant changes in the use of assets or the strategy of the business and significant adverse industry or economic changes. Recoverable amounts of assets are based on management’s estimates and assumptions of the net realisable value, cash flows arising from the future operating performance and revenue generating capacity of the assets and CGUs, and future market conditions. Changes in circumstances may lead to changes in estimates and assumptions, and result in changes to the recoverable amounts of assets and impairment losses needed. As at the reporting date, management has determined that recognised cumulative impairment losses as at the reporting date are appropriate.

(e) Impairment of unquoted equity investments

The Group and the Company follow the guidance of the applicable MFRS in determining whether there is a decline other than temporary in the fair value of its investment in unquoted corporations. This determination requires significant judgement. In making this judgement, the Group and the Company evaluate the quantitative and qualitative factors affecting the market position of the investee including the regulatory support it receives and its longer term business outlook and financial standing. Appropriate considerations are given to the investee’s financial gestation period, financial projections, business prospects and the proprietary technology involved.

It is also recognised that an initial decline in fair value of investments in new start-up investee companies, which is deemed temporary, may arise due to development and operational losses in the initial years. Based on an assessment performed at the reporting date, the Board of Directors and Management of the Group and the Company are of the opinion that there is no further indication of impairment of the Group and the Company’s investment in unquoted corporations at this juncture.

(f) Impairment of insurance/takaful receivables and reinsurance/retakaful assets

The Group reviews its insurance/takaful receivables and reinsurance/retakaful assets on a regular basis to assess whether impairment losses should be recognised in the income statement. In particular, judgement by management is required in the estimation of the amount and timing of future cash flows when determining the level of impairment required. Such estimates are necessarily based on assumptions about the probability of default and probable losses in the event of default, the value of the underlying security, and realisation costs.

These estimates are revisited by management on a frequent basis, at least once a year, to determine if certain assumptions continue to be reasonable. As at the reporting date, the impairment losses recognised on insurance/takaful receivables and reinsurance/retakaful assets reflect the expected recoverable amounts of these assets.






(g) Deferred tax

Deferred tax liabilities are recognised for all taxable temporary differences.

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses to the extent that it is probable that taxable profits will be available against which the deductible temporary differences and unused tax losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based on the likely timing and level of future taxable profits together with future tax planning strategies.

Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. These depend on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required in the interpretation and application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statements of financial position and the amount of unrecognised tax losses and unrecognised temporary differences.

The judgements and assumptions used in the estimation of deferred tax liabilities/assets are re-assessed at least once a year to determine that they continue to be appropriate. The total carrying value of recognised temporary differences of the Group and unrecognised temporary deductible differences are disclosed in Note 16 to the financial statements.

As at the reporting date, recognised deferred tax assets represent a fair estimate of the Group’s deductible temporary differences and deferred tax liabilities reflect a fair estimate of the Group’s taxable temporary differences.




4. NET EARNED PREMIuMS/CONTRIBuTIONS

Group

2016 2015

RM’000 RM’000

(a) Gross earned premiums/contributions

Insurance and takaful contracts 2,305,853 2,180,001

Change in premium/contribution liabilities (38,979) 11,596

2,266,874 2,191,597

(b) Premiums/contributions ceded to reinsurers/retakaful operators

Insurance and takaful contracts (343,554) (255,262)

Change in premium/contribution liabilities 18,659 10,996

(324,895) (244,266)

Net earned premiums/contributions 1,941,979 1,947,331 5. INVESTMENT INCOME

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Financial assets at FVTPL

Dividend income:

- quoted shares in Malaysia 122 176 - -

- unit trust funds 1,837 4,410 - -

HTM investments

Interest/profit income 27,758 28,507 29 -

AFS financial assets

Interest/profit income 102,174 93,590 - -

Dividend income:

- quoted shares in Malaysia 10,056 9,554 - -

- unquoted shares in Malaysia 123 82 - -

Loans and receivables

Interest/profit income 70,455 62,492 2,813 1,164

Dividend income from institutional trust funds 51 900 - -

Dividend income from subsidiaries - - 100,000 61,000

Rental income 5,885 4,888 - -

Net amortisation of premiums on investments (3,977) (3,579) - -

Investment expenses (2,369) (1,513) - -

212,115 199,507 102,842 62,164




6. NET REALISED GAINS/(LOSSES)

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Property, plant and equipment

Net realised gains/(losses) 5 (81) (1) (85)


Quoted shares in Malaysia 36 (471) - -

Shariah approved unit trust funds 1,132 2,854 - -

Net realised gains 1,168 2,383 - -


Quoted shares in Malaysia 2,869 7,643 - -

Quoted shares outside Malaysia - (651) - -

Unquoted corporate debt securities 1,922 (225) - -

Government investment issues 308 611 - -

Unquoted Islamic private debt securities 1,951 - - -

Net realised gains 7,050 7,378 - -

Non-current assets held for sale

Realised gains - 53 - -

8,223 9,733 (1) (85) 7. NET FAIR VALuE LOSSES

Group

2016 2015

RM’000 RM’000

Fair value gains on investment property (Note 14) 300 200

Net fair value losses on financial assets at FVTPL (4,702) (4,266)

Reversal of impairment losses on HTM investments 12 54

(Revaluation deficits)/reversal of revaluation deficits on properties (150) 216

Impairment losses on AFS financial assets (20,879) (2,043)

(25,419) (5,839)




8. FEE AND COMMISSION INCOME/(ExPENSES)

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Fee and commission income

Management fees 4,983 4,449 30,844 33,868

Commission income 37,251 31,288 - -

42,234 35,737 30,844 33,868

Fee and commission expenses

Commission expenses (442,721) (434,627)

Brokerages (301) (772)

(443,022) (435,399) 9. MANAGEMENT ExPENSES

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Salaries, bonus and other related costs 82,784 88,368 22,325 22,317

Directors’ remuneration (Note 10) 7,532 9,181 3,131 4,179

Group Shariah Committee and Shariah Committee members’ remuneration 313 249 - -

Pension costs - EPF 11,042 12,076 2,976 2,983

Social security costs 514 489 103 110

Retirement benefits 271 577 135 317

Auditors’ remuneration:

Statutory auditors of the Group

- statutory audit 1,261 811 73 73

- audit-related 79 65 5 5

- other services 234 115 33 9

Component auditors of a foreign subsidiary 41 30 - -

Depreciation of property, plant and equipment 8,503 8,310 315 441

Amortisation of intangible assets 2,571 3,950 567 75

Property, plant and equipment written off 53 623 - -

Share of acquisition costs on quota share retakaful 256 945 - -

Agency expenses 7,132 6,360 - -

Marketing and promotional costs 15,543 15,519 705 770

Electronic data processing costs 11,540 17,748 - -

Office rental 4,161 4,188 1,612 1,623

Professional and legal fees 13,030 6,679 190 971

Contributions and donations 621 610 10 -

Other management expenses 45,724 32,662 3,907 2,993

213,205 209,555 36,087 36,866




10. DIRECTORS’ REMuNERATION

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Number of non-executive directors 16 12 8 7

Executive directors:

Salaries and bonus 2,888 3,805 1,088 1,648

Pension costs - EPF 491 623 185 280

Benefits-in-kind 201 184 136 57

Others 24 323 13 256

3,604 4,935 1,422 2,241

Non-executive directors:

Fees 2,533 2,729 760 804

Others 671 677 160 167


3,232 3,430 948 995

Director of a subsidiary *:

Salaries and bonus 736 810 736 810



Other allowances 68 83 68 83


1,025 1,079 1,025 1,079

Total directors’ remuneration 7,861 9,444 3,395 4,315

Total directors’ remuneration excluding benefits-in-kind 7,532 9,181 3,131 4,179

* Director of a subsidiary refers to management personnel who is employed by the holding company.




10. DIRECTORS’ REMuNERATION (CONT’D.)

The number of directors of the Company whose total remuneration, borne by the Company and Group, during the financial year fell within the following bands is analysed below.

Number of Directors

Group Company

2016 2015 2016 2015

Executive director:

RM1,400,001 to RM1,450,000 1 - 1 -

RM2,200,001 to RM2,250,000 - 1 - 1


RM50,001 to RM100,000 1 - - -

RM100,001 to RM150,000 1 - 5 5

RM150,001 to RM200,000 1 - 3 2

RM200,001 to RM250,000 - - - -

RM250,001 to RM300,000 2 3 - -

RM300,001 to RM350,000 1 1 - -

RM350,001 to RM400,000 - 1 - -

RM400,001 to RM450,000 1 - - -

RM450,001 to RM500,000 1 2 - -

Salary and bonus Fees

Pension costs

Benefits- in-kind

Others Total

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

Company

2016

Executive director:

Mohd Din bin Merican 1,088 - 185 136 13 1,422

1,088 - 185 136 13 1,422


Sharkawi bin Alis - 142 - 28 19 189

P. Raveenderen - 99 - - 23 122

Yusoff bin Yaacob - 130 - - 31 161

Megat Dziauddin bin Megat Mahmud - 131 - - 30 161

Paisol bin Ahmad - 101 - - 21 122

Hijah Arifakh binti Othman - 82 - - 18 100

Dato’ Syed Ariff Fadzillah bin Syed Awalluddin (Retired with effect from 1 October 2015) - 58 - - 14 72

Datuk Mohd Khalil bin Dato’ Mohd Noor (Resigned with effect from 1 June 2015) - 17 - - 4 21

- 760 - 28 160 948

The comparative figures are not disclosed as this disclosure by individual directors is applicable for financial year ended 31 March 2016 onwards.




11. OTHER OPERATING REVENuE/(ExPENSES)

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Other operating revenue

Gains on foreign exchange - 4,286 33 -

Reversal of impairment loss on other receivables 103 - - -

Non-operating interest income 365 728 18 -

Miscellaneous income 13,165 5,457 64 101

13,633 10,471 115 101

Other operating expenses

Losses on foreign exchange (1,601) - - (3)

Impairment losses on insurance/takaful receivables (3,954) (6,947) - -

Impairment loss on other receivables - (32) - -

Impairment loss on investment in subsidiary - - - (30,327)

Miscellaneous expenses (1,157) (701) (236) -

(6,712) (7,680) (236) (30,330) 12. TAxATION

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Malaysian income tax:

Tax expense for the year 9,164 54,074 - -

Under/(over) provision in prior years (i) 1,068 (10,180) - -

10,232 43,894 - -

Deferred tax:

Relating to origination and reversal of temporary differences (Note 16) (2,451) 6,703 (725) (810)

7,781 50,597 (725) (810)




12. TAxATION (CONT’D.) Domestic income tax for general business and shareholders’ fund is calculated at the Malaysian statutory tax rate of 24% (2015: 25%) of

the estimated assessable profit for the year. Income tax on the Group’s family takaful business is calculated at a preferential tax rate of 8% (2015: 8%). Income tax on the Group’s offshore insurance/takaful business is calculated at a tax rate of 5% (2015: 5%) of the estimated assessable profit on the Group’s offshore insurance/takaful business for the year. A reconciliation of income tax expenses applicable to (loss)/profit before zakat and tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

(Loss)/profit before zakat and tax (31,048) 190,705 79,246 10,729

Taxation at Malaysian statutory tax rate of 24% (2015: 25%) (7,452) 47,676 19,019 2,682

Effects of different tax rate in respect of offshore insurance (76) (3,541) - -

Income not subject to tax (39,200) (41,300) (24,000) (16,060)

Expenses not deductible for tax purposes 60,532 55,950 3,658 12,465

Unutilised current year business loss carried forward - 2,929 - -

Utilisation of current year losses of the general and family retakaful funds (4,661) - - -

Deferred tax assets not recognised 598 103 598 103

Under/(over) provision of tax in prior years (i) 1,068 (10,180) - -

Share of results of associates (3,028) (1,040) - -

Tax expense/(income) for the year 7,781 50,597 (725) (810)

(i) The tax expense from YA 2010 to YA 2014 of the takaful subsidiary, which represents the open tax periods on which the subsidiary is entitled to claim tax refunds under the Income Tax Act 1967, had been revised and the resultant changes had been recognised as an overprovision of tax in the previous financial year. The details are as described in Note 38.

Tax borne by participants

Group

2016 2015

RM’000 RM’000

Current year’s provision 17,831 13,533

Under/(over) provision of tax expense in prior years 1,878 (1,313)

Deferred tax relating to origination and reversal of temporary differences (3,226) 1,045

Tax expense for the year 16,483 13,265




13. PROPERTy, PLANT AND EQuIPMENT

Freehold land

Buildings Computer

equipment

Furniture, fittings

and office equipment

Motor vehicles

Capital work-in- progress Total

Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Valuation/Cost

At 1 April 2014 32,260 197,798 13,369 38,699 3,245 772 286,143

Additions - 8 304 1,929 100 72 2,413

Disposals - - (94) (502) (670) - (1,266)

Write-offs - (623) (890) (1,627) - - (3,140)

Reclassification - - - 303 - (303) -

Revaluation surplus 1,740 6,508 - - - - 8,248

Elimination of accumulated depreciation on revaluation - (9,900) - - - - (9,900)

Adjustments - - - - - (247) (247)

Transfer to intangible assets - - (562) - - - (562)

At 31 March 2015 34,000 193,791 12,127 38,802 2,675 294 281,689

Additions - 696 524 937 5 - 2,162

Disposals - - (1,561) (806) - - (2,367)

Write-offs - - - - - (53) (53)

Transfer from intangible assets - - 321 - - - 321

Reclassifications - - 66 175 - (241) -

Net revaluation surplus 2,000 14,216 - - - - 16,216


At 31 March 2016 36,000 203,151 11,477 39,108 2,680 - 292,416

Accumulated depreciation

At 1 April 2014 - 6,493 12,340 28,612 1,762 - 49,207

Depreciation charge for the year - 4,255 538 3,086 431 - 8,310

Disposals - - (96) (501) (309) - (906)

Write-offs - - (890) (1,627) - - (2,517)


At 31 March 2015 - 848 11,892 29,570 1,884 - 44,194

Depreciation charge for the year - 4,704 202 3,321 276 - 8,503

Disposals - - (1,577) (649) - - (2,226)


At 31 March 2016 - - 10,517 32,242 2,160 - 44,919

Net carrying amount

At 31 March 2016 36,000 203,151 960 6,866 520 - 247,497

At 31 March 2015 34,000 192,943 235 9,232 791 294 237,495




13. PROPERTy, PLANT AND EQuIPMENT (CONT’D.)

Revaluation of freehold land and buildings

Freehold land and buildings in Malaysia have been revalued based on valuations performed by accredited independent valuers having appropriate recognised professional qualification. The valuations are based on the income and comparison approaches and are effective on 31 March 2016.

The income approach entails the determination of the probable gross annual rental the property is capable of producing and deducting therefrom the outgoings to arrive at the annual net income.

The comparison approach entails critical analyses of recent sales and listing of comparable properties registered within the vicinity. The technique of the approach requires the establishment of a comparable property by reducing reasonable comparative sales and listing to a common denominator. This is done by adjusting the differences between the subject property and those regarded as comparable.

Description of the fair value hierarchy for freehold land and buildings and the significant inputs used in the valuation are provided in Note 39.

Freehold buildings outside Malaysia have been revalued based on their value-in-use and a discount rate of 7% (2015: 7%) is applied, being the prevailing rental yield in the country where the buildings are located. During the financial year, revaluation deficits on two of the buildings outside Malaysia were recognised. The fair values of these two buildings is RM2.894 million (2015: RM2.963 million).

If the freehold land and buildings were measured using the cost model, the carrying amounts would be as follows:

Freehold land Buildings Total

Group RM’000 RM’000 RM’000

Cost

At 1 April 2014 15,886 175,333 191,219

Additions - 8 8

Write-offs - (623) (623)

At 31 March 2015 15,886 174,718 190,604

Additions - 696 696

At 31 March 2016 15,886 175,414 191,300


At 1 April 2014 - 30,650 30,650

Depreciation charge for the year - 4,265 4,265

Reversal of impairment losses during the year - (216) (216)

At 31 March 2015 - 34,699 34,699

Depreciation charge for the year - 4,343 4,343

Impairment losses during the year - 150 150

At 31 March 2016 - 39,192 39,192

Net carrying amount

At 31 March 2016 15,886 136,222 152,108

At 31 March 2015 15,886 140,019 155,905




13. PROPERTy, PLANT AND EQuIPMENT (CONT’D.)

Computer equipment

Furniture, fittings

and office equipment

Motor vehicles Total

Company RM’000 RM’000 RM’000 RM’000

Cost

At 1 April 2014 4,320 3,592 1,808 9,720

Additions 79 1,010 5 1,094

Disposals - (149) (596) (745)

At 31 March 2015 4,399 4,453 1,217 10,069

Additions 485 1,323 5 1,813

Disposals (1,577) (370) - (1,947)

Transfers to subsidiary - (2,277) - (2,277)

At 31 March 2016 3,307 3,129 1,222 7,658


At 1 April 2014 4,104 1,921 1,085 7,110

Charge for the year 193 71 177 441

Disposals - (148) (241) (389)

At 31 March 2015 4,297 1,844 1,021 7,162

Charge for the year 49 231 35 315

Disposals (1,577) (259) - (1,836)

At 31 March 2016 2,769 1,816 1,056 5,641

Net carrying amount

At 31 March 2016 538 1,313 166 2,017

At 31 March 2015 102 2,609 196 2,907

14. INVESTMENT PROPERTy

Group

2016 2015

RM’000 RM’000

At beginning of the year 7,100 6,900

Fair value gains (Note 7) 300 200

At end of the year 7,400 7,100




14. INVESTMENT PROPERTy (CONT’D.)

The rental income and operating expenses in relation to the investment property are as disclosed below:

2016 2015

RM’000 RM’000

Rental income 286 300

Operating expenses (20) (32)

266 268

The investment property is stated at fair value as determined based on valuations performed by an accredited independent professional valuer with recent experience in the location and category of the property being valued. The valuation is based on the income approach and is effective on 31 March 2016. The fair value gains are recognised in the income statement. Description of the fair value hierarchy for investment property and the significant inputs used in the valuation are provided in Note 39.

15. INTANGIBLE ASSETS

Software development

in progress

Computer software

and licences Total

Group RM’000 RM’000 RM’000

Cost

At 1 April 2014 11,773 30,889 42,662

Additions 2,808 695 3,503

Disposal (2) - (2)

Transfer from property, plant and equipment 562 - 562

Reclassification (7,049) 7,049 -

At 31 March 2015 8,092 38,633 46,725

Additions 2,035 1,163 3,198

Disposal - (784) (784)

Transfer to property, plant and equipment (321) - (321)

Reclassification (6,448) 6,448 -

At 31 March 2016 3,358 45,460 48,818

Accumulated amortisation

At 1 April 2014 - 28,143 28,143

Amortisation for the year - 3,950 3,950

At 31 March 2015 - 32,093 32,093

Amortisation for the year - 2,571 2,571

Disposal - (670) (670)

At 31 March 2016 - 33,994 33,994

Net carrying amount

At 31 March 2016 3,358 11,466 14,824

At 31 March 2015 8,092 6,540 14,632




15. INTANGIBLE ASSETS (CONT’D.)

Software development

in progress

Computer software

and licences Total

Company RM’000 RM’000 RM’000

Cost

At 1 April 2014 2,047 7,184 9,231

Additions 772 603 1,375

At 31 March 2015 2,819 7,787 10,606

Additions - 125 125

Disposal - (784) (784)

Reclassification (867) 867 -

At 31 March 2016 1,952 7,995 9,947

Accumulated amortisation

At 1 April 2014 - 6,734 6,734

Amortisation for the year - 75 75

At 31 March 2015 - 6,809 6,809

Amortisation for the year - 567 567

Disposal - (670) (670)

At 31 March 2016 - 6,706 6,706

Net carrying amount

At 31 March 2016 1,952 1,289 3,241

At 31 March 2015 2,819 978 3,797

16. DEFERRED TAxATION

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

At beginning of year 3,808 15,882 2,313 1,503

Recognised in:

Income statement (Note 12) 2,451 (6,703) 725 810

Participants’ fund 2,068 (3,744) - -

Other comprehensive income (3,567) (1,627) - -

At end of year 4,760 3,808 3,038 2,313

These comprise the following:

- Deferred tax assets 15,551 12,009 3,038 2,313

- Deferred tax liabilities (10,791) (8,201) - -

4,760 3,808 3,038 2,313




16. DEFERRED TAxATION (CONT’D.) The components and movements of deferred tax assets/(liabilities) during the financial year are as follows:

Provisions and

payables

unabsorbed/ accelerated

capital allowances

Impairment losses on

receivables

Premium/ expense

liabilities

Impairment losses on

investments

AFS financial

assets

Revaluation of land and

buildings Others Total

Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2016

At 1 April 2015 1,105 525 1,101 2,721 1,899 2,135 (8,201) 2,523 3,808

Recognised in:

Income statement (Note 12) (633) (88) - (82) 1,568 - - 1,686 2,451

Participants’ fund - - 2,056 (8) - (268) (890) 1,178 2,068

Other comprehensive income - - - - - (2,788) (779) - (3,567)

At 31 March 2016 472 437 3,157 2,631 3,467 (921) (9,870) 5,387 4,760

2015

At 1 April 2014 3,211 (1,034) 1,175 9,814 1,544 5,524 (7,264) 2,912 15,882

Recognised in:

Income statement (Note 12) (2,106) 1,559 - (5,580) 355 - - (931) (6,703)

Participants’ fund - - (74) (1,513) - (2,513) (186) 542 (3,744)

Other comprehensive income - - - - - (876) (751) - (1,627)

At 31 March 2015 1,105 525 1,101 2,721 1,899 2,135 (8,201) 2,523 3,808

unabsorbed capital

allowances

Accelerated capital

allowances

Loans and

receivables Others Total

Company RM’000 RM’000 RM’000 RM’000 RM’000

2016

At 1 April 2015 687 140 4 1,482 2,313

Recognised in:

Income statement (Note 12) 163 426 - 136 725

At 31 March 2016 850 566 4 1,618 3,038

2015

At 1 April 2014 415 (399) 4 1,483 1,503

Recognised in:

Income statement (Note 12) 272 539 - (1) 810

At 31 March 2015 687 140 4 1,482 2,313




16. DEFERRED TAxATION (CONT’D.)

Deferred tax assets have not been recognised in respect of the following items of the Company and its retakaful subsidiary as the probability of recognition cannot be determined with certainty given the lack of assessable profits in current and prior years.

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Unutilised business losses 14,825 18,888 6,612 6,014

Other temporary differences:

- net contribution and expense liabilities 867 1,315 - -

- net accretion of discounts (75) (21) - -

- financial assets 188 157 - -

- others 214 125 - -

16,019 20,464 6,612 6,014

17. INVESTMENTS IN SuBSIDIARIES

Company

2016 2015

RM’000 RM’000

Unquoted shares, at cost:

In Malaysia 907,000 907,000

Less: Impairment loss (69,665) (69,665)

837,335 837,335

Outside Malaysia 6,370 6,370

843,705 843,705




17. INVESTMENTS IN SuBSIDIARIES (CONT’D.)

Details of the subsidiaries are as follows:

Name of subsidiaries

Country of incorporation

Principal activities

Effective

ownership interest

2016 2015

% %

Malaysian Reinsurance Berhad

Malaysia Underwriting of all classes of general reinsurance business

100 100

Takaful Ikhlas Berhad Malaysia Management of family, general and investment-linked takaful business

100 100

MNRB Retakaful Berhad Malaysia Management of family and general retakaful business

100 100

MMIP Services Sdn. Bhd. Malaysia Management of the Malaysian Motor Insurance Pool which provides motor insurance to vehicle owners who are unable to obtain insurance protection for their vehicles

100 100

Malaysian Re (Dubai) Ltd.* Dubai, United Arab Emirates

Marketing and promotional activities and servicing of clients on behalf of Malaysian Re

100 100

AmIslamic Cash 1 Malaysia Investment in Shariah compliant money market instruments and Sukuk

100 100

AmIslamic Cash 2 Malaysia Investment in Shariah compliant money market instruments and Sukuk

100 100

* Audited by a firm of chartered accountants other than Messrs. Ernst & Young.




18. INVESTMENTS IN ASSOCIATES

Group

2016 2015

RM’000 RM’000

Unquoted shares in Malaysia, at cost 77,615 77,615

Share of post-acquisition retained profits/(accumulated losses) 9,159 (3,456)

Share of post-acquisition AFS reserve 1,412 1,660

Post-acquisition foreign exchange translation reserve* 40,335 34,748

128,521 110,567

Represented by share of net assets 128,521 110,567

Company

2016 2015

RM’000 RM’000

Unquoted shares in Malaysia, at cost 1,957 1,957

* This is in respect of retranslation of the cost of the investment in Labuan Re at the rate of exchange prevailing at the reporting date.

Details of the associates which are all incorporated in Malaysia are as follows:

Name of associates

year end Principal activities

Proportion of ownership interest and voting power

2016 2015

% %

Held by the Company:

Motordata Research Consortium Sdn. Bhd.

31 December Development and provision of a centralised motor parts price database for the Malaysian insurance industry

40 40

Held by Malaysian Re:

Labuan Reinsurance (L) Ltd (“Labuan Re”)

31 December Underwriting of all classes of general reinsurance business

20 20

The financial statements of the above associates are not co-terminous with those of the Group. For the purpose of applying the equity method of accounting, the audited financial statements of the associates for the year ended 31 December 2015 and management financial statements to the end of the accounting period of 31 March 2016 have been used.




18. INVESTMENTS IN ASSOCIATES (CONT’D.)

The summarised financial information of the associates are as follows:

2016 2015

RM’000 RM’000

Assets and liabilities:

Current assets 2,087,554 1,883,386

Non-current assets 51,772 55,508

Total assets 2,139,326 1,938,894

Current liabilities 178,915 336,059

Non-current liabilities 1,342,544 1,057,867

Total liabilities 1,521,459 1,393,926

Equity 617,867 544,968

Results:

Revenue 657,954 892,255

Profit for the year 62,610 21,355

19. FINANCIAL ASSETS

The following table summarises the carrying values of financial assets of the Group and the Company:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

At carrying value:

Financial assets at FVTPL 129,096 137,934 - -

HTM investments 701,430 722,356 1,000 -

AFS financial assets 2,744,399 2,530,716 50 50

Loans and receivables 2,060,905 1,917,938 119,260 37,071

5,635,830 5,308,944 120,310 37,121

Malaysian government securities 128,852 128,212 - -

Government investment issues 908,672 731,967 - -

Debt securities 2,083,632 2,051,056 1,000 -

Equity securities 275,840 293,184 - -

Unquoted shares 44,796 44,796 50 50

Shariah approved unit trust funds 125,346 133,955 - -

Real estate investment trusts 7,787 7,836 - -

Fixed and call deposits 825,729 611,987 111,735 20,282

Islamic investment accounts 1,109,256 1,169,292 41 7,879

Other loans and receivables 125,920 136,659 7,484 8,910

5,635,830 5,308,944 120,310 37,121




19. FINANCIAL ASSETS (CONT’D.)

Group

2016 2015

RM’000 RM’000

(a) Financial assets at FVTPL

At fair value:

Quoted shares in Malaysia 3,689 3,951

Warrants 61 28

Shariah approved unit trust funds 125,346 133,955

129,096 137,934

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

(b) HTM investments

At amortised cost/cost:


Unquoted corporate debt securities 80,172 100,030 1,000 -


701,430 722,356 1,000 -

At fair value:


Unquoted corporate debt securities 81,003 100,578 1,007 -


703,045 716,236 1,007 -

(c) AFS financial assets

At cost:

Unquoted shares in Malaysia (i) 44,796 44,796 50 50

At fair value:


Unquoted corporate debt securities 2,003,460 1,951,026 - -

Quoted shares in Malaysia 271,753 289,064 - -

Warrants 337 141 - -

Real estate investment trusts 7,787 7,836 - -


2,744,399 2,530,716 50 50




19. FINANCIAL ASSETS (CONT’D.)

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

(d) Loans and receivables

At amortised cost/fair value:

Fixed and call deposits with licensed:

Commercial banks 326,715 190,482 9,027 8,373

Investment banks 499,014 421,505 102,708 11,909

Islamic investment accounts with licensed:

Co-operative bank 40,833 28,939 - -

Islamic banks 956,950 1,079,194 41 7,879

Investment banks 46,661 1,996 - -

Development bank 64,812 58,907 - -

Building society - 256 - -

Secured staff loans 10,987 12,496 2,420 3,461

Amounts due from subsidiaries (ii) - - 3,328 4,111

Income due and accrued 53,602 44,523 34 72

Amount due from Insurance

Pool accounts 13,698 26,290 - -

Other receivables and deposits 47,633 53,350 1,702 1,266

2,060,905 1,917,938 119,260 37,071

(i) The pertinent information of the investments in unquoted shares in Malaysia are as follows:

Group

2016 2015

RM’000 RM’000

- 27,500,000 ordinary shares of RM1.00 each of Financial Park (Labuan) Sdn. Bhd. (“FPL”), representing an equity shareholding of 9%. 28,283 28,283

Less: Impairment loss (4,759) (4,759)

23,524 23,524

20,000,000 redeemable preference shares of RM1.00 each of FPL 20,569 20,569

44,093 44,093

- 410,000 ordinary shares of Malaysian Rating

Corporation Berhad (“MARC”) of RM1.00 each, representing an equity shareholding of 4%. 410 410

- Others 293 293

44,796 44,796

(ii) These amounts are non-trade in nature, unsecured, not subject to any interest/profit elements and repayable on demand.




20. INSuRANCE/TAKAFuL CONTRACT LIABILITIES

2016 2015

Gross Reinsurance/

retakaful Net Gross Reinsurance/

retakaful Net

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

General reinsurance/takaful/retakaful funds (Note (a)) 2,503,079 (457,284) 2,045,795 2,184,154 (337,177) 1,846,977

Family takaful/retakaful funds (Note (b)) 2,265,713 (39,896) 2,225,817 1,921,784 (37,476) 1,884,308

Shareholder’s funds (Note (c)) 60,319 - 60,319 53,340 - 53,340

Unallocated surplus 18,407 - 18,407 - - -

Total 4,847,518 (497,180) 4,350,338 4,159,278 (374,653) 3,784,625

(a) General reinsurance/takaful/ retakaful funds

Claim liabilities (Note (i)) 2,078,963 (395,315) 1,683,648 1,799,017 (293,867) 1,505,150

Premium/contribution liabilities (Note (ii)) 424,116 (61,969) 362,147 385,137 (43,310) 341,827

2,503,079 (457,284) 2,045,795 2,184,154 (337,177) 1,846,977

(i) Claim liabilities

At beginning of the year 1,799,017 (293,867) 1,505,150 1,748,911 (221,047) 1,527,864

Claims incurred in the current underwriting/accident year 297,459 (75,460) 221,999 278,715 (76,270) 202,445

Adjustment to claims incurred in prior underwriting/accident years due to changes in IBNR and PRAD 58,772 (1,886) 56,886 (32,339) 23,092 (9,247)

Movements in claims incurred in prior underwriting/accident years 874,613 (144,778) 729,835 776,126 (126,647) 649,479

Claims paid during the year (950,898) 120,676 (830,222) (972,396) 107,005 (865,391)

At end of the year 2,078,963 (395,315) 1,683,648 1,799,017 (293,867) 1,505,150

(ii) Premium/contribution liabilities

At beginning of the year 385,137 (43,310) 341,827 396,733 (32,314) 364,419

Premiums/contributions written in the year 1,675,409 (263,521) 1,411,888 1,614,319 (228,497) 1,385,822

Premiums/contributions earned during the year (1,636,430) 244,862 (1,391,568) (1,625,915) 217,501 (1,408,414)

At end of the year 424,116 (61,969) 362,147 385,137 (43,310) 341,827




20. INSuRANCE/TAKAFuL CONTRACT LIABILITIES (CONT’D.)

2016 2015

Gross Reinsurance/

retakaful Net Gross Reinsurance/

retakaful Net RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

(b) Family takaful/retakaful funds

Provision for claims reported by contract holders 63,149 (3,468) 59,681 70,619 (20,720) 49,899

Participants’ Investment Fund (“PIF”) (i) 1,939,556 (6,798) 1,932,758 1,540,257 (7,260) 1,532,997

Participants’ Risk Fund (“PRF”) (i) 152,001 (29,630) 122,371 190,140 (9,496) 180,644

Net asset value attributable to unitholders 111,007 - 111,007 120,768 - 120,768

2,265,713 (39,896) 2,225,817 1,921,784 (37,476) 1,884,308

At beginning of the year 1,921,784 (37,476) 1,884,308 1,824,043 (146,426) 1,677,617

Net earned contributions 598,555 (63,278) 535,277 530,416 (39,205) 491,211

Net creation of units 16,548 - 16,548 23,539 - 23,539

Liabilities paid for death, maturities, surrenders, benefits and claims (278,857) 16,289 (262,568) (268,285) 47,682 (220,603)

Net cancellation of units (24,455) - (24,455) (24,231) - (24,231)

Benefits and claims experience variation (7,470) 17,252 9,782 33,471 (7,508) 25,963

Fees deducted (135,902) - (135,902) (143,299) - (143,299)

Other revenue and expenses (1,854) - (1,854) 2,782 - 2,782

Transfer to shareholder’s fund (11,908) - (11,908) (9,249) - (9,249)

Increase/(decrease) in reserve 189,272 27,317 216,589 (47,403) 107,981 60,578

At end of the year 2,265,713 (39,896) 2,225,817 1,921,784 (37,476) 1,884,308

Included in the above movement of family takaful fund liabilities is an interfund assignment of unallocated surplus from the PRF to the PIF amounting to RM25.0 million.

(i) During the financial year ended 31 March 2016, an adjustment was made to reclassify tabarru’ contribution from PRF to PIF of RM144.7 million so as to reflect the appropriate balance for both funds at the end of the current financial year following an exercise undertaken in the current financial year to reallocate the contributions.

2016 2015 Gross/net Gross/net

RM’000 RM’000 (c) Shareholder’s funds


General takaful and retakaful funds:

- Wakalah fee received during the year 85,643 88,326

- Wakalah fee earned during the year (85,522) (79,141)

- Movement in unearned wakalah fees 121 9,185

- Movement in provision for expense deficiency (2,444) (5,160)

Family takaful and retakaful funds:

- Movement in provision for UER 9,302 6,739





21. INSuRANCE/TAKAFuL RECEIVABLES

Group

2016 2015

RM’000 RM’000

Due contributions including agents’ balances 91,860 69,606

Amounts due from brokers and ceding companies 300,133 265,339

Less: Allowance for impairment (24,760) (31,027)

Less: Amount written off during the year (10,221) -

357,012 303,918

Offsetting insurance/takaful receivables and insurance/takaful payables

Gross amounts of recognised insurance/takaful receivables 652,444 670,687

Less: Gross amounts of recognised insurance/takaful payables set off in the statement of financial position (260,451) (335,742)

Net amounts of insurance/takaful receivables presented in the statement of financial position 391,993 334,945

Included in amounts due from brokers and ceding companies is an amount of RM1,931,932 (2015: RM764,512) due from an associate, Labuan Reinsurance (L) Ltd. The amount receivable is subject to settlement terms stipulated in the reinsurance contracts.

22. PARTICIPANTS’ FuNDS

Group

2016 2015

RM’000 RM’000

Participants’ funds comprise the following:

Accumulated surplus (Note (a)) 162,271 260,459

AFS reserves (Note (b)) 2,635 217

Revaluation surplus (Note (c)) 36,280 26,050

201,186 286,726

(a) Accumulated surplus


Net (deficit)/surplus of the general and family takaful funds (99,408) 45,635

Reversal of hibah payable/(hibah paid and payable) to participants during the year 1,220 (5,645)


(b) AFS reserves

At beginning of the year 217 (26,903)

Net gain on fair value changes 5,645 34,032

Realised gain transferred to income statement (3,495) (4,399)

Deferred tax on fair value changes 268 (2,513)

Net change in AFS reserves attributable to participants 2,418 27,120

At end of the year 2,635 217




22. PARTICIPANTS’ FuNDS (CONT’D.)

Group

2016 2015

RM’000 RM’000

(c) Revaluation surplus


Recognised in other comprehensive income 11,120 2,326

Deferred tax on revaluation surplus (890) (186)

Net change in revaluation surplus attributable to participants 10,230 2,140


23. BORROWINGS

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Islamic Revolving Credit Facility (“RC-i Facility”) 200,000 200,000 200,000 200,000

Sukuk Mudharabah Programme 120,000 120,000 120,000 120,000

320,000 320,000 320,000 320,000

The salient terms and conditions of the borrowings of the Group and the Company are as follows:

(a) Islamic Revolving Credit Facility (“RC-i Facility”)

On 10 December 2012, the Company utilised the Ringgit-denominated RC-i Facility from Standard Chartered Saadiq Berhad, amounting to RM200 million. On 6 June 2013, the RC-i Facility was converted to the Islamic Commodity Murabaha Financing facility (“Commodity Murabaha-i”) via a supplemental facility agreement. The conversion was to address the change in the method of financing from Bai’ Inah to Commodity Murabaha Financing-i whilst other terms and conditions remain the same. The Commodity Murabaha Financing-i is unsecured and carries a floating profit rate that is reviewed quarterly. This floating profit rate credit facility has a tenure of 5 years from the date it was obtained and is repayable on 16 May 2017. The profit rates for the financial year ended 31 March 2016 range from 5.45% to 5.85% per annum (2015: 5.45% to 5.71% per annum).

(b) Sukuk Mudharabah Programme

On 10 December 2012, the Company issued RM120 million of Sukuk under the Sukuk Mudharabah Programme to MIDF Amanah Investment Bank Berhad. The issued Sukuk carries a fixed profit rate of 5.4% per annum with a tenure of 5 years and has a final redemption date on 10 December 2017.




24. INSuRANCE/TAKAFuL PAyABLES

Group

2016 2015

RM’000 RM’000

Due to agents, brokers, retrocessionaires and retakaful operators 199,285 169,424

Offsetting insurance/takaful receivables and insurance/takaful payables

Gross amounts of recognised insurance/takaful payables 459,736 505,166

Less: Gross amounts of recognised insurance/takaful receivables set off in the statement of financial position (260,451) (335,742)

Net amounts of insurance/takaful payables presented in the statement of financial position 199,285 169,424

Included in amounts due to brokers and retrocessionaires as at 31 March 2015 is an amount of RM6,321 due to an associate, Labuan Reinsurance (L) Ltd. The amount payable is subject to settlement terms stipulated in the reinsurance contracts.

25. OTHER PAyABLES

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Deposit contributions 58,011 36,895 - -

Outstanding commissions 6,802 10,636 - -

Provisions 36,444 44,906 6,830 6,267

Amount due to subsidiaries(i) - - 3,343 1,099

Sundry payables and accruals 92,747 78,370 2,357 1,837

194,004 170,807 12,530 9,203

(i) These amounts are non-trade in nature, unsecured, not subject to any interest/profit elements and repayable on demand.

26. SHARE CAPITAL

Number of ordinary shares of RM1.00 each Amount

2016 2015 2016 2015

‘000 ‘000 RM’000 RM’000

Authorised 500,000 500,000 500,000 500,000

Issued and fully paid:

At beginning and end of the year 213,070 213,070 213,070 213,070




27. DIVIDEND

Amount Net dividend per share

2016 2015 2016 2015

RM’000 RM’000 Sen Sen

Recognised during the year:

Dividend paid in respect of the financial year ended 31 March 2014:

First and final dividend of 32% less 25% tax - 35,156 - 16.5

The Directors do not recommend the payment of any dividend in respect of the current financial year.

28. (LOSS)/EARNINGS PER SHARE

The basic and diluted (loss)/earnings per share is calculated by dividing the net (loss)/profit for the year by the number of ordinary shares in issue during the year.

Group Company

2016 2015 2016 2015

Net (loss)/profit for the year (RM’000) (38,829) 139,148 79,971 11,539

Number of ordinary shares in issue (‘000) 213,070 213,070 213,070 213,070

Basic and diluted (loss)/earnings per share (sen) (18.2) 65.3 37.5 5.4

29. OPERATING LEASE ARRANGEMENTS

(a) The Group as lessee

The Group has entered into non-cancellable operating lease agreements for the use of office premises. This lease is for a period of 5 years and subject to review every 2 years. There are no restrictions placed upon the Group by entering into this lease.

The future aggregate minimum lease payments under non-cancellable operating leases contracted for as at the reporting date but not recognised as liabilities, are as follows:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Future minimum rental payments:

Not later than 1 year 5,282 5,577 1,404 1,612

Later than 1 year and not later than 5 years 12,841 14,220 - 1,612

18,123 19,797 1,404 3,224




29. OPERATING LEASE ARRANGEMENTS (CONT’D.)

(b) The Group as lessor

The Group has entered into non-cancellable operating lease agreements on its portfolio of self-occupied properties and investment property. These leases have remaining non-cancellable lease terms of between 5 and 10 years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions and certain contracts include contingent rental arrangements computed based on sales achieved by tenants.

The future minimum lease payments receivable under non-cancellable operating leases contracted for as at the reporting date but not recognised as receivables, are as follows:

Group

2016 2015

RM’000 RM’000

Future minimum rental receipts:

Not later than 1 year 4,849 5,273

Later than 1 year and not later than 5 years 2,532 4,938

7,381 10,211

30. COMMITMENTS

The commitments of the Group and of the Company as at the financial year end are as follows:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Authorised and contracted for:

- Property, plant and equipment - 2,162 - 325

- Intangible assets* 5,174 8,372 337 125

5,174 10,534 337 450

Authorised but not contracted for:

- Property, plant and equipment 5,686 324

- Intangible assets* 8,417 4,409

14,103 4,733

* Relating to purchases and enhancement of the reinsurance and takaful subsidiaries’ computer systems.




31. RELATED PARTy DISCLOSuRES

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

Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Company either directly or indirectly. The key management personnel include all the Directors of the Group and the Company, and certain members of senior management of the Group and the Company.

(a) The significant transactions with related parties are as follows:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Income/(expenses):

Transactions with subsidiaries:

Management fees received - - 30,844 33,868

Net dividend received - - 100,000 61,000

Rental paid - - (1,612) (1,623)

Interest income - - 29 -

Transactions with takaful funds of a subsidiary:

Takaful contributions paid - - (927) (881)

Transactions with an associate, Labuan Reinsurance (L) Ltd:

Net reinsurance inwards 736 (229) - -

The directors are of the opinion that all the transactions above have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.

Outstanding balances arising from the transactions above as at the reporting date have been disclosed in Notes 19(d), 21, 24 and 25 of the financial statements as well as on the face of statements of financial position.




31. RELATED PARTy DISCLOSuRES (CONT’D.)

(b) The key management personnel compensations are as follows:

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000


Fees 2,533 2,729 760 804

Others 671 677 160 167


Executive directors:




Others 24 323 13 256

Director of a subsidiary:

Salaries and bonus 736 810 736 810



Other allowances 68 83 68 83


Group Shariah Committee and Shariah Committee member’ remuneration 313 249 - -

Other key management personnel’s remuneration:


Pension costs - EPF 1,699 1,463 885 688


Allowances 117 455 44 61

Benefits-in-kind 1,002 609 682 319

22,365 22,526 10,763 9,967




32. SEGMENT INFORMATION

Investment

holding Reinsurance

business Takaful

operator Retakaful operator

Adjustments and

eliminations Consolidated Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 2016

ResultsNet earned premiums/contributions - 1,206,505 721,916 14,485 (927) 1,941,979

Interest/profit income 14,104 83,615 99,502 5,028 (1,862) 200,387

Other revenue 130,958 36,574 31,017 719 (148,869) 50,399

Net claims - (896,363) (719,746) (15,095) - (1,631,204)

Other expenses (i) (35,853) (419,420) (256,113) (5,483) 41,542 (675,327)

Depreciation (315) (3,040) (5,125) (23) - (8,503)

Amortisation (567) (473) (1,438) (93) - (2,571)

Finance costs (18,231) (29) - - 29 (18,231)

Share of results of associates 185 12,430 - - - 12,615

Operating profit/(loss) before deficit attributable to takaful participants, zakat and taxation 90,281 19,799 (129,987) (462) (110,087) (130,456)

Deficit attributable to takaful participants - - 99,408 - - 99,408

Operating profit/(loss) before zakat and taxation (ii) 90,281 19,799 (30,579) (462) (110,087) (31,048)

Zakat - - - - - -

Taxation 725 (4,255) (4,251) - - (7,781)

Net profit/(loss) for the year 91,006 15,544 (34,830) (462) (110,087) (38,829)

2015

ResultsNet earned premiums/contributions - 1,213,056 683,640 51,516 (881) 1,947,331

Interest/profit income 9,827 79,667 88,234 5,345 1,516 184,589

Other revenue 94,884 48,066 37,811 884 (116,625) 65,020

Net claims - (744,156) (468,060) (57,755) - (1,269,971)

Other expenses (i) (66,680) (397,581) (259,259) (17,690) 76,807 (664,403)

Depreciation (441) (2,279) (5,577) (13) - (8,310)

Amortisation (75) (495) (3,348) (32) - (3,950)

Finance costs (18,123) - - - - (18,123)

Share of results of associates (228) 4,385 - - - 4,157

Operating profit/(loss) before surplus attributable to takaful participants, zakat and taxation 19,164 200,663 73,441 (17,745) (39,183) 236,340

Surplus attributable to takaful participants - - (45,635) - - (45,635)

Operating profit/(loss) before zakat and taxation 19,164 200,663 27,806 (17,745) (39,183) 190,705

Zakat - - (960) - - (960)

Taxation 810 (43,930) (7,477) - - (50,597)

Net profit/(loss) for the year 19,974 156,733 19,369 (17,745) (39,183) 139,148




32. SEGMENT INFORMATION (CONT’D.)

Investment

holding Reinsurance

business Takaful

operator Retakaful operator

Adjustments and

eliminations Consolidated

Group (cont’d.) RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2016

Assets

Segment assets (i) 1,270,511 3,250,015 3,417,615 179,496 (1,138,438) 6,979,199

Investments in associates 1,957 75,658 - - 50,906 128,521

1,272,468 3,325,673 3,417,615 179,496 (1,087,532) 7,107,720


Segment liabilities

Participants’ funds - - 201,186 - - 201,186

Borrowings 320,000 1,000 - - (1,000) 320,000

Insurance and takaful contract liabilities - 2,037,911 2,688,051 121,556 - 4,847,518

Other liabilities 14,652 127,396 240,562 26,266 (40) 408,836

334,652 2,166,307 3,129,799 147,822 (1,040) 5,777,540

Equities

Segment equities (i) 937,816 1,159,366 287,816 31,674 (1,086,492) 1,330,180

Total liabilities, participants’ funds and equity 1,272,468 3,325,673 3,417,615 179,496 (1,087,532) 7,107,720

2015

Assets

Segment assets (i) 1,188,195 3,024,712 3,103,548 194,865 (1,144,651) 6,366,669

Investments in associates 1,957 75,658 - - 32,952 110,567

1,190,152 3,100,370 3,103,548 194,865 (1,111,699) 6,477,236


Segment liabilities

Participants’ funds - - 286,726 - - 286,726

Borrowings 320,000 - - - - 320,000

Insurance and takaful contract liabilities - 1,739,442 2,276,856 142,980 - 4,159,278

Other liabilities 12,305 118,730 217,514 19,695 (6,486) 361,758

332,305 1,858,172 2,781,096 162,675 (6,486) 5,127,762

Equities

Segment equities (i) 857,847 1,242,198 322,452 32,190 (1,105,213) 1,349,474

Total liabilities, participants’ funds and equity 1,190,152 3,100,370 3,103,548 194,865 (1,111,699) 6,477,236




32. SEGMENT INFORMATION (CONT’D.)

(i) Included in segment assets is a Qard granted to the general and family retakaful funds by the shareholder’s fund of the retakaful subsidiary, amounting to RM100.2 million (2015: RM100.2 million). Qard represents a loan to the general and family retakaful funds to make good any underwriting deficit experienced during a financial period. These balances, including the impairment losses recognised thereon amounting to RM88.1 million (2015: RM88.1 million), have been eliminated in full upon consolidation.

(ii) The results of the Group included one-off adjustments that were made by the takaful subsidiary during the period, namely, the reclassification of direct expenses to shareholder’s fund which was previously charged to takaful funds amounting to RM19.5 million, the transfer of the previous year’s hibah from the shareholder’s fund to the general takaful fund amounting to RM18.8 million and the reallocation of gross contributions between the shareholder’s fund and the general and family takaful fund amounting to RM8.7 million and RM13.2 million respectively.

33. RISK MANAGEMENT FRAMEWORK

The Group’s Risk Management Framework is designed to determine the level of risk acceptable to the Group relating to its core operations by setting the appropriate Board approved limits for adherence by management after taking into account the risk parameters, the nature, the size and the mix and complexity of business and operations. An enterprise risk management process is adopted to identify and evaluate key business risks that may affect the organisation and to establish and implement an appropriate system of internal controls to manage these risks while ensuring full and effective control over significant strategic, financial, organisational and compliance matters.

The Risk Management Framework aims to serve as a guide for the effective management of risk throughout the Group. The Framework is intended to provide guidance to the Group in performing its risk management roles and responsibilities and ultimately aims to support the achievement of the Group’s strategic and financial objectives.

The key objectives of the risk management framework are to:

(i) provide information on risk governance and accountabilities;(ii) provide guidance on a standard approach to managing risks;(iii) create a risk aware and compliance culture; and(iv) enhance professionalism and increase profitability and value for shareholders.

In pursuit of the above objectives, it is the Group’s policy to implement good governance, risk management and compliance principles and best practices, and to uphold high standards of business practices in all the activities undertaken by the Group.

(a) Risk management governance

The Risk Management Governance structure is as follows:

(i) The Board had established a dedicated Board Committee known as the Risk Management Committee of the Board (“RMCB”) at MNRB Holdings Berhad level to oversee the implementation of an enterprise-wide risk management framework. This is also replicated at each of the subsidiary companies;

(ii) The Board had established a dedicated Investment Committee at MNRB Holdings Berhad level to further oversee risk associated with investments and assets allocation. This is also replicated at each of the subsidiary companies;

(iii) The Operational Risk Management Committee (“ORMC”) which comprises the President & Chief Executive Officer and senior management, implements the risk management processes, provides assurance to the Board that the processes have been carried out effectively and inculcates a risk management and compliance culture on an enterprise-wide basis;

(iv) The Group Chief Risk Management and Compliance Officer (“GCRMCO”) and Group Risk Management and Compliance Division establish the infrastructure and facilitate the risk management and compliance process in the Company and across the subsidiaries through the adoption of the Group’s risk management framework;




33. RISK MANAGEMENT FRAMEWORK (CONT’D.)

(a) Risk management governance (cont’d.)

(v) At the operational level, the implementation of risk management and compliance process in the day to day operations of the Group is consistent with the risk management framework; and

(vi) The Line Managers of each department within the Group are responsible for using the various components of the risk management framework as an integral part of the business processes and procedures.

(b) Capital management objectives, policies and approach

The Capital Management Plan (”CMP”) is designed and implemented at the subsidiary level to ensure an effective management of the subsidiaries’ capital. The CMP is expected to maximise the Group’s value by optimising capital structure and enhancing capital efficiency.

Under the CMP, the subsidiaries measure and monitor their respective capital position mainly via the Capital Adequacy Ratio (“CAR”).

The CMP identifies certain trigger points of the CAR position and further describes a set of corrective action plans that will be implemented towards maintaining an adequate level of capital. It is intended that capital will be utilised more efficiently in a controlled manner so that the subsidiaries will be able to manage their capital position above the respective internal target.

Capital management objectives

The main objective of capital management is to monitor and maintain, at all times, an appropriate level of capital which is commensurate with the subsidiaries’ business operations and the resultant risk profile. The key objective of the CMP is to trigger appropriate action plans to be taken by the relevant Board and the management of the subsidiaries in the event of internal capital levels falling below the internal target requirement. This includes remedial actions that must be undertaken by the subsidiaries’ Board and management to improve the capital position.

Capital management policies

The key capital management policies are as follows:

(i) Ensure the Group has adequate capital within a range that supports the stakeholders’ objectives; and

(ii) Establish responsibility of the subsidiaries’ Board and management in developing an internal capital adequacy assessment process and setting capital targets that are commensurate with its business operations and the resultant risk profile and control environment.

Approach to capital management

The reinsurance, takaful and retakaful subsidiaries conduct stress tests on their CAR in compliance with BNM/RH/GL 003-23: Guideline on Stress Testing for Insurers and BNM/RH/GL 004-16: Guideline on Stress Testing for Takaful Operators. The impact of the adverse scenarios on the capital position of the subsidiaries is assessed quarterly focusing on short to medium term views.

(c) Regulatory framework

The reinsurance, takaful and retakaful subsidiaries are required to comply with the Financial Services Act (“FSA”) 2013 and IFSA 2013, respectively, which are administered by BNM. BNM is primarily interested in protecting the rights of policyholders and participants and monitoring the subsidiaries closely to ensure prudent management of their business operations. At the same time, BNM is also interested in ensuring that the subsidiaries actively manage their capital adequacy by taking into account the potential impact on the subsidiaries business strategies, risk profile and the overall resilience of the companies.

In addition, the Company is required to comply with Bursa Malaysia Securities Berhad’s (“Bursa”) Risk Management and Internal Control System, the Listing Requirements of Bursa, Guidelines issued by the Securities Commission and the Capital Markets and Services Act 2007 as a result of its status as a listed company on the Main Market of Bursa Malaysia Securities Berhad.




34. uNDERWRITING RISK

(a) General reinsurance

(i) Nature of risk

The reinsurance subsidiary principally underwrites all classes of general reinsurance business. Risks under these contracts usually cover a twelve month duration other than some long term contracts which may cover up to 3 years or more. For general reinsurance, the most significant risk arises from adverse development of loss ratios and catastrophic loss events. These risks vary significantly in relation to economic conditions and territories from which the risks are underwritten.

The above risks are mitigated by diversification across a large portfolio of business to ensure a balanced mix and spread of business. Diversification through the implementation of underwriting strategies and claim management policies reduces the volatility of risks and improves the overall portfolio experience, and also ensures that its insurance contract liabilities are adequate.

The reinsurance subsidiary also manages its loss exposure through the use of retrocession programmes which are reviewed annually by the ORMC and RMCB, and subsequently approved by the Board. Prudent standards are applied in placement of the reinsurance subsidiary’s key retrocessionaires.

(ii) Concentration of risk by type of business

The table below measures the concentration of insurance contract liabilities by the main classes of business and by local and overseas risks:

Gross Retrocession Net

RM’000 RM’000 RM’000

2016

Fire 863,657 (98,494) 765,163

Motor 367,811 (8,500) 359,311

Marine 415,058 (161,928) 253,130

Miscellaneous 391,385 (36,699) 354,686

2,037,911 (305,621) 1,732,290

Local 1,294,096 (248,343) 1,045,753

Overseas 743,815 (57,278) 686,537

2,037,911 (305,621) 1,732,290

2015

Fire 725,095 (70,780) 654,315

Motor 364,964 (14,607) 350,357

Marine 262,311 (52,448) 209,863

Miscellaneous 387,072 (58,842) 328,230

1,739,442 (196,677) 1,542,765

Local 1,187,892 (186,920) 1,000,972

Overseas 551,550 (9,757) 541,793

1,739,442 (196,677) 1,542,765




34. uNDERWRITING RISK (CONT’D.)

(a) General reinsurance (cont’d.)

(iii) Reserving risk

The reinsurance subsidiary’s claim liabilities, and consequently some of the inputs used in determining its premium liabilities, are based upon previous claims experience, existing knowledge of events, the terms and conditions of relevant policies and interpretation of circumstances. Upon notification of a claim by its cedants or receipt of market loss event, the reinsurance subsidiary sets aside reserves to meet the expected ultimate loss arising from this claim. These claim reserves are updated periodically for further developments via advice from cedants.

At each reporting date, the reinsurance subsidiary performs a test on the adequacy of its liabilities via the services of an independent qualified external actuary engaged for the purpose of ensuring that claim and premium liabilities are objectively assessed and adequately provided for. Any deficiency is recognised in the income statement.

(iv) Impact on liabilities, profit and equity

Key assumptions

Liabilities are determined based upon previous claims experience, existing knowledge of events, the terms and conditions of the relevant contracts and interpretation of circumstances. Particularly relevant are past experiences with similar cases, historical claims development trends, legislative changes, judicial decisions and economic conditions.

The inherent uncertainties in estimating liabilities arises from a variety of factors such as the range and quality of data available, underlying assumptions made and random volatility in future experience.

Sensitivity analysis

As a general reinsurer, the insurance contract liabilities of the reinsurance subsidiary are sensitive to various key factors which are both internal and external. External factors to which the reinsurance subsidiary is sensitive to include:

(i) Claims practices of ceding companies;(ii) Frequency and severity of claims incurred by cedants;(iii) Changes in premium rates in insurance and reinsurance markets; and(iv) Legislative and regulatory changes.






(iv) Impact on liabilities, profit and equity (cont’d.)

Sensitivity analysis (cont’d.)

The sensitivity analysis was applied to the ultimate loss ratio of the reinsurance subsidiary by increasing the said ratio of the two most recent underwriting years by 5%. The table below shows the impact on the reinsurance subsidiary’s gross and net claim liabilities, profit before tax and equity should the ultimate loss ratio be increased by 5%:

Impact on gross

liabilities

Impact on net

liabilities

Impact on profit

before tax Impact on

equity*

RM’000 RM’000 RM’000 RM’000

Increase/(decrease)

2016

Fire 18,091 18,074 (18,074) (15,338)

Marine 6,417 5,474 (5,474) (4,928)

Motor 8,454 8,441 (8,441) (6,545)

Miscellaneous 7,199 7,194 (7,194) (5,991)

40,161 39,183 (39,183) (32,802)

2015

Fire 16,187 16,186 (16,186) (13,553)

Marine 5,230 4,593 (4,593) (4,060)

Motor 7,031 6,961 (6,961) (5,295)

Miscellaneous 8,532 8,532 (8,532) (6,893)

36,980 36,272 (36,272) (29,801)

* The impact on equity reflects the after tax impact.

This analysis assumes that other factors relevant, but not significant, to the valuation of claim liabilities remain constant.

(v) Claims development table

The following tables show the estimate of cumulative ultimate incurred claims, including both claims provisions and IBNR for each successive underwriting year at each financial year end, along with cumulative claim payments to-date.

In setting provisions for claims, the reinsurance subsidiary relies on advice by its cedants and exercises discretion where the claim may develop more adversely than advised. An estimate will be made in the absence of a reported figure or in the event the loss is still preliminary and has not been fully assessed.

The estimates of the ultimate incurred claims are subject to a great deal of uncertainty in the early stages as claims are still being intimated and developed, particularly so for large and catastrophic claims. These uncertainties reduce over time as the claims develop and progress towards the ultimate cost.






(v) Claims development table (cont’d.)

Beginning 1 April 2009, the methodology used in the valuation of general reinsurance liabilities was changed. This change involved a more granular segregation of the business of the reinsurance subsidiary into specific portfolios with the intention of achieving greater accuracy in the estimation process. Accordingly, data pertaining to the gross general reinsurance liabilities prior to financial year ended 31 March 2009 was not available and hence only developments in gross general reinsurance liabilities for financial year ended 31 March 2009 onwards are disclosed.

Gross general reinsurance contract liabilities for 2016:

underwriting yearBefore

2008 2008 2009 2010 2011 2012 2013 2014 2015 Sub Total

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

At the end of underwriting year 418,389 573,070 640,777 643,911 663,610 712,406 690,348 736,158

One year later 496,009 570,029 603,851 722,113 642,522 746,746 718,599 -

Two years later 493,161 573,383 671,472 794,395 645,558 780,517 - -

Three years later 492,705 633,550 674,073 841,767 680,531 - - -

Four years later 576,942 633,211 669,536 874,635 - - - -

Five years later 571,554 627,195 680,333 - - - - -

Six years later 564,373 631,330 - - - - - -

Seven years later 581,142 - - - - - - -

Current estimate of booked ultimate claims incurred (a) 580,586 630,399 677,801 869,001 667,089 755,831 641,705 423,111


One year later 256,339 301,430 304,808 457,413 322,956 439,662 384,784 -

Two years later 358,844 430,566 489,316 650,735 461,369 596,034 - -


Four years later 515,279 574,075 617,380 810,994 - - - -

Five years later 529,417 594,717 636,513 - - - - -

Six years later 539,381 607,841 - - - - - -


Cumulative payments to-date (b) 567,520 607,841 636,513 810,994 551,145 596,034 384,784 48,141

Expected claim liabilities (a) - (b) 25,440 13,066 22,558 41,288 58,007 115,944 159,797 256,921 374,970 1,067,991

Other portfolios 551,575

Best estimate of claim liabilities 1,619,566

Claim handling expenses 6,930

Fund PRAD at 75% confidence interval 125,659

Gross general reinsurance claim liabilities 1,752,155







Net general reinsurance contract liabilities for 2016:


2008 2008 2009 2010 2011 2012 2013 2014 2015 Sub Total



One year later 480,442 546,681 557,852 707,118 624,620 731,426 692,643 -

Two years later 476,158 549,676 626,114 779,122 617,389 764,024 - -


Four years later 546,688 597,410 628,890 858,119 - - - -

Five years later 546,771 599,731 638,953 - - - - -

Six years later 546,212 606,579 - - - - - -




One year later 251,249 296,382 291,065 451,089 319,123 435,537 384,664 -

Two years later 350,613 415,719 471,728 642,608 454,603 591,654 - -


Four years later 501,521 554,187 578,564 799,487 - - - -

Five years later 515,394 574,402 597,046 - - - - -

Six years later 525,129 587,321 - - - - - -



Expected claim liabilities (a) - (b) 18,294 11,848 18,428 39,679 53,173 94,576 150,233 238,103 368,957 993,291





Less: Retrocession recoveries (31,749)

Net general reinsurance claim liabilities 1,465,648







Gross general reinsurance contract liabilities for 2015:


2007 2007 2008 2009 2010 2011 2012 2013 2014 Sub Total


At the end of underwriting year - 418,389 573,070 640,777 643,911 663,610 712,406 690,348

One year later 408,945 496,009 570,029 603,851 722,113 642,522 746,746 -

Two years later 448,593 493,161 573,383 671,472 794,395 645,558 - -


Four years later 457,881 576,942 633,211 669,536 - - - -

Five years later 555,322 571,554 627,195 - - - - -

Six years later 544,131 564,373 - - - - - -




One year later 224,029 256,339 301,430 304,808 457,413 322,956 439,662 -

Two years later 333,537 358,844 430,566 489,316 650,735 461,369 - -


Four years later 403,432 515,279 574,075 617,380 - - - -

Five years later 517,164 529,417 594,717 - - - - -

Six years later 521,617 539,381 - - - - - -








Gross general reinsurance claim liabilities 1,482,771







Net general reinsurance contract liabilities for 2015:


2007 2007 2008 2009 2010 2011 2012 2013 2014 Sub Total



One year later 418,288 480,442 546,681 557,852 707,118 624,620 731,426 -

Two years later 439,019 476,158 549,676 626,114 779,122 617,389 - -


Four years later 437,100 546,688 597,410 628,890 - - - -

Five years later 519,346 546,771 599,731 - - - - -

Six years later 515,127 546,212 - - - - - -




One year later 219,484 251,249 296,382 291,065 451,089 319,123 435,537 -

Two years later 324,757 350,613 415,719 471,728 642,608 454,603 - -


Four years later 390,048 501,521 554,187 578,564 - - - -

Five years later 497,241 515,394 574,402 - - - - -

Six years later 501,625 525,129 - - - - - -








Less: Retrocession recoveries (32,351)

Net general reinsurance claim liabilities 1,291,843





(b) General takaful fund

(i) Nature of risk

The takaful subsidiary principally issues the following types of general takaful contract: Motor, Fire, Personal Accident, and other Miscellaneous contracts. Risks under these contracts usually cover a twelve-month duration other than Long Term Fire and some Engineering contracts. For general takaful contracts, significant risks arise from frequency and severity of accidents. These risks vary significantly in relation to the location of risk, type of risk and industry covered.

The above risks are mitigated by diversification across a large portfolio of business and careful selection of risks. The variability of risks is designed to improve the portfolio experience by implementation of underwriting strategies and claim management policies which attempt to minimise losses.

The takaful subsidiary also manages its loss exposure by the use of retakaful arrangements. The retakaful treaty arrangements are reviewed annually by the RMCB and approved by the Board.

Stress Testing (“ST”) is performed on a quarterly basis and submitted to BNM on a half-yearly basis. The purpose of the ST is to test the solvency of the general takaful fund under the various scenarios according to regulatory guidelines, simulating drastic changes in major parameters such as new business volume and investment environment.

(ii) Reserving risk

The general takaful fund’s claim liabilities, and consequently some of the inputs used in determining its contribution liabilities and expense liabilities, are based upon claims experience, existing knowledge of the events, the terms and conditions of relevant certificates and interpretation of prevailing circumstances. Upon notification of a claim, the takaful subsidiary sets aside case and technical reserves to meet the expected ultimate loss arising from this claim. These claim reserves are updated periodically taking into account the development of the claims.

At each reporting date, the takaful subsidiary performs a valuation of liabilities that is certified by the Appointed Actuary for the purpose of ensuring that claim and contribution liabilities are objectively assessed and adequately provided for. Any deficiency is recognised in the income statement.





(b) General takaful fund (cont’d.)

(iii) Concentration of risk by type of contracts

The table below sets out the concentration of takaful contracts liabilities by classes of business:

Gross Retakaful Net

RM’000 RM’000 RM’000

2016

Fire 71,975 (13,179) 58,796

Motor 248,952 (102,362) 146,590

Personal Accident 17,441 (937) 16,504

Miscellaneous 39,681 (10,976) 28,705

378,049 (127,454) 250,595

2015

Fire 70,651 (20,093) 50,558

Motor 204,383 (78,217) 126,166

Personal Accident 24,690 (733) 23,957

Miscellaneous 36,456 (12,590) 23,866

336,180 (111,633) 224,547 All business of the general takaful fund is derived in Malaysia; accordingly, disclosure of concentration risk by geographical

region is not relevant to the general takaful fund.

(iv) Impact on liabilities, profit and equity Key assumptions The principal assumption underlying the estimation of liabilities is that the takaful subsidiary’s future claims development will

follow a pattern similar to the historical trend experience.

Additional qualitative judgements are used to assess the extent to which past trends may not apply in the future, for example, isolated occurrence, changes in market factors such as public attitude to claims notification and reporting, economic conditions, as well as internal factors such as portfolio mix, policy conditions and claims handling procedures. Judgement is further used to assess the extent to which external factors, such as judicial decisions and government legislation affect the estimates.

Other key circumstances affecting the reliability of assumptions include delays in settlement.






(iv) Impact on liabilities, profit and equity (cont’d.) Sensitivity analysis The general takaful claim liabilities are sensitive to the key assumptions shown below. It has not been possible to quantify the

sensitivity of certain assumptions such as legislative changes or uncertainty in the estimation process.

The analysis below is performed on possible movements in key assumptions with all other assumptions held constant, showing the impact on gross and net liabilities, profit before tax and general takaful fund. The correlation of assumptions will have a significant effect in determining the ultimate claim liabilities, however, to demonstrate the impact due to changes in assumptions, only individual factor is changed, while other assumptions are held constant. It should be noted that movements in these assumptions are non-linear.

The sensitivity analysis has been performed for the main classes of business which are Motor Act and Motor Others. Motor Act is stressed using changes in claim severity; while Motor Others is tested by considering a stressed ultimate loss ratio level.

Change inassumption of

ultimate claimsratio

Impact on gross

liabilities

Impact on net

liabilities

Impact on profit

before tax

Impact on general takaful

fund* RM’000 RM’000 RM’000 RM’000

Increase/(decrease) 2016

Motor Act Average Severity +10% 32,892 24,581 (24,581) (18,682)

Motor Others Expected Loss Ratio +10% 27,786 17,648 (17,648) (13,412)

2015

Motor Act Average Severity +10% 20,167 15,798 (15,798) (11,849)

Motor Others Expected Loss Ratio +10% 28,406 15,301 (15,301) (11,476)

* The impact on general takaful fund reflects the after tax impact.

The method used in performing the sensitivity analysis is consistent with the prior year.

(v) Claims development table The following tables show the estimate of cumulative incurred claims, including both claims reported and IBNR (including

IBNER) for each successive accident year at each reporting date, together with cumulative payments to-date.

In setting provisions for claims, the takaful subsidiary gives consideration to the probability and magnitude of future experience at best estimate level with a degree of caution in setting reserves when there is considerable uncertainty. In general, the uncertainty associated with the ultimate claims experience for an accident year is greatest when the claim is at an early stage of development; hence the provision for risk margin for adverse deviation is relatively higher than the provision for claims at a later development period. As the claims develop and the ultimate cost of claims becomes more certain, the relative level of margin maintained should decrease.







Gross General Takaful Contract Liabilities for 2016:

Accident yearPrior 2010 2010 2011 2012 2013 2014 2015 2016 Total

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

At the end of accident year 229,567 125,472 144,938 150,396 108,384 141,258 176,571 174,085

One year later 220,293 142,627 146,833 140,864 106,221 125,098 176,737 -

Two years later 214,055 134,623 137,705 132,409 97,322 122,664 - -


Four years later 201,378 122,290 126,080 122,028 - - - -

Five years later 197,786 122,147 128,074 - - - - -

Six years later 196,225 121,741 - - - - - -


Current estimate of cumulative claims incurred 193,912 121,741 128,074 122,028 96,354 122,664 176,737 174,085


One year later 148,256 82,592 95,957 88,561 70,413 89,811 121,645 -

Two years later 165,856 100,252 113,767 106,494 81,651 102,861 - -


Four years later 187,310 107,826 121,948 114,961 - - - -

Five years later 191,391 108,657 122,917 - - - - -

Six years later 192,549 108,934 - - - - - -


Cumulative payments to-date 193,082 108,934 122,917 114,961 85,797 102,861 121,645 69,883

Gross general takaful contract liabilities:

Best Estimate of Claims Liabilities (incl. Allocated Loss Adjustment Expenses “ALAE”) 830 12,807 5,157 7,067 10,557 19,803 55,092 104,202 215,515

Fund PRAD at 75% 24,742

Total 240,257







Net General Takaful Contract Liabilities for 2016:




One year later 199,459 119,456 131,893 126,239 74,561 80,459 102,643 -

Two years later 194,800 124,071 125,246 119,387 66,794 77,240 - -


Four years later 181,672 114,108 114,721 108,093 - - - -

Five years later 177,512 114,399 119,322 - - - - -

Six years later 175,704 115,634 - - - - - -




One year later 134,968 80,272 91,364 81,315 50,073 56,856 71,475 -

Two years later 151,648 95,035 106,958 96,004 57,352 64,848 - -


Four years later 165,156 102,007 113,938 102,090 - - - -

Five years later 171,557 102,776 114,787 - - - - -

Six years later 172,516 103,037 - - - - - -



Net general takaful contract liabilities:

Best Estimate of Claims Liabilities (incl. ALAE) 337 12,597 4,535 6,003 6,186 12,392 31,168 66,617 139,835


Total 155,642







Gross General Takaful Contract Liabilities for 2015:




One year later 51,290 93,740 142,627 146,833 140,864 106,221 125,098 -

Two years later 51,483 89,887 134,623 137,705 132,409 97,322 - -


Four years later 50,301 82,702 122,290 126,078 - - - -

Five years later 50,507 80,849 122,147 - - - - -

Six years later 50,166 80,259 - - - - - -




One year later 34,059 64,212 83,077 95,317 88,890 70,150 89,882 -

Two years later 39,159 72,939 100,539 112,994 106,834 81,392 - -


Four years later 47,722 78,729 107,734 121,220 - - - -

Five years later 49,488 79,468 108,720 - - - - -

Six years later 49,775 79,896 - - - - - -



Gross general takaful contract liabilities:

Best Estimate of Claims Liabilities (incl. Allocated Loss Adjustment Expenses “ALAE”) 68 363 13,427 4,858 12,170 15,930 35,216 104,126 186,158


Total 210,339







Net General Takaful Contract Liabilities for 2015:




One year later 47,361 81,492 119,456 131,893 126,239 74,561 80,459 -

Two years later 47,903 78,446 124,071 125,246 119,387 66,794 - -


Four years later 45,894 72,883 114,108 114,720 - - - -

Five years later 45,091 71,266 114,400 - - - - -

Six years later 44,591 70,735 - - - - - -




One year later 32,665 56,446 79,471 88,779 81,802 49,605 58,337 -

Two years later 37,569 64,216 94,614 103,862 96,453 55,605 - -


Four years later 43,721 69,505 100,448 110,484 - - - -

Five years later 44,519 70,071 101,372 - - - - -

Six years later 44,223 70,386 - - - - - -



Net general takaful contract liabilities:

Best Estimate of Claims Liabilities (incl. ALAE) 57 349 13,028 4,236 10,680 11,189 22,122 58,890 120,551


Total 136,210





(c) Family takaful fund

(i) Nature of risk

The takaful subsidiary principally issues the following types of family takaful certificate: Ordinary Takaful Plans, Mortgage Takaful Plans, Group Takaful Plans and Investment-linked Takaful Plans. The certificates were segregated into 2 separate funds: Participants’ Risk Fund (“PRF”) and Participants’ Investment Fund (“PIF”).

The PRF is compulsory for all certificates and refers to the fund used to pool the portion of contributions paid by participants on the basis of tabarru’ (donation) for the purpose of meeting claims on events/risks covered under the takaful certificates. Under the tabarru’ contract, the fund is collectively owned by the pool of participants. In managing the PRF, the Company adopted an appropriate set of policies and procedures to ensure the availability of funds to meet takaful benefits when due.

The PIF refers to the fund in which a portion of the contributions paid by takaful participants for a takaful certificate is allocated for the purpose of savings and/or investment. The PIF is individually owned by participant. In managing the PIF, the Company adopted an appropriate investment and management strategies to achieve returns that are in line with the participants’ reasonable expectations and where relevant, to ensure the availability of funds for future tabarru’ apportionment into the PRF. For investment-linked takaful, the PIF refers to the unit fund(s).

Family takaful underwriting risk exists from the anti-selection and adequacy of PRF to meet future claims arising from family takaful certificates. The risks arise when actual claims experience is different from the assumptions used in setting the prices for products and establishing the technical provisions and liabilities for claims. Sources of risk include certificate lapses and certificate claims such as mortality and morbidity and experience.

The takaful subsidiary utilises retakaful arrangements to manage the mortality and morbidity risks. Retakaful structures are set based on the risk appetite of the takaful subsidiary. The retakaful treaty arrangements are reviewed by the RMCB and approved by the Board.

The takaful subsidiary reviews the actual experience of mortality, morbidity, lapses and surrenders, as well as expenses to ensure that appropriate policies, guidelines and limits put in place to manage these risks to remain adequate and effective.

The family takaful funds are participating in nature. In the event of volatile investment climate and/or unusual claims experience, the investment profit and surplus distribution to the participants may be reduced.

For investment-linked funds, the risk exposure for the participant’s risk fund is limited only to the underwriting aspect as all investment risks are borne by the participants.

Stress Testing (“ST”) is performed on a quarterly basis and submitted to BNM on a half-yearly basis. The purpose of the ST is to test the solvency of the family takaful fund under the various scenarios according to regulatory guidelines, simulating drastic changes in major parameters such as new business volume, investment environment, mortality/morbidity patterns and lapse rates.





(c) Family takaful fund (cont’d.)

(ii) Concentration of risk by type of contracts

The table below shows the concentration of actuarial liabilities by type of contract:

Gross Retakaful Net

RM’000 RM’000 RM’000

2016

Family takaful plans 822,147 (10,678) 811,469

Investment-linked takaful plans 145,265 (10,343) 134,922

Mortgage takaful plans 819,704 - 819,704

Group credit takaful plans 216,606 (8,575) 208,031

Others 75,436 (34) 75,402

2,079,158 (29,630) 2,049,528

2015

Family takaful plans 708,684 (4,221) 704,463

Investment-linked takaful plans 21,880 (5,275) 16,605

Mortgage takaful plans 649,960 - 649,960

Group credit takaful plans 219,846 - 219,846

Others 101,257 - 101,257

1,701,627 (9,496) 1,692,131

All business of the family takaful fund is derived from participants in Malaysia; accordingly, disclosure of concentration risk by geographical region is not relevant to the family takaful fund.

(iii) Impact on liabilities, profit and equity

Key assumptions

Material judgement is required in determining the liabilities of the family takaful fund and in the selection of assumptions. Assumptions used are based on past experience, current internal data, external market indices and benchmarks which reflect current observable market prices and other published information. Assumptions and prudent estimates are determined at the date of valuation and no credit is taken for possible beneficial effects of voluntary withdrawals. Assumptions are further evaluated on a continuous basis in order to ensure realistic and reasonable valuations.

Mortality and morbidity rates

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

Assumptions are based on mortality rates as set out in the Actuarial Certificate submitted to BNM. They reflect the historical local experience and are adjusted, when appropriate, to reflect the participants’ own experience. Assumptions are differentiated by gender, occupational class and product group.






(iii) Impact on liabilities, profit and equity (cont’d.)

Key assumptions (cont’d.)

Mortality and morbidity rates (cont’d.)

An increase in rates will lead to a larger number of claims (as claims could occur sooner than anticipated), which will reduce the surplus from the Risk Fund and subsequently reduce profits for the shareholders in terms of lower surplus administration charge income. To the extent that mortality/morbidity is worse than that priced for, profitability of shareholder’s fund may be affected and may in a worst case scenario, lead to possible Risk Fund deficit. This is mitigated with adequate retakaful arrangement as well as contract design (in some circumstances) that builds in repricing mechanisms.

Discount rates

Family takaful liabilities of credit-related products (Mortgage Reducing Term Takaful (“MRTT”) and Group Credit Takaful (“GCT”)) are determined as the sum of the discounted value of the expected benefits less the discounted value of the expected tabarru’ (risk charge) that would be required to meet these future cash outflows. The valuation of liabilities will be discounted to valuation date using the government investment issues zero coupon spot yields which are obtained from the Bond Pricing Agency Malaysia rates as prescribed in the valuation guidelines.

A decrease in the discount rate will increase the value of the family takaful liabilities and therefore reduce profits for the shareholders in terms of lower surplus administration charge income.

The assumptions that have significant effects on the financial position and financial performance of the family takaful fund are listed below:

Type of business Mortality and morbidity rates

2016 Discount

rates

2015 Discount

rates

Credit related (MRTT and GCT) Base mortality 1, adjusted for retakaful rates 2 4% 4%

Others Base mortality 1 N/A N/A

1 These rates are obtained from the various industry mortality and morbidity experience tables that were used to determine the contribution rates.

2 Retakaful rates are derived from the fund’s retakaful arrangements with respect to the MRTT and GCT business.


The analysis below is performed for reasonably possible movements in key assumptions with all other assumptions held constant, showing the impact on gross and net liabilities, profit before tax and family takaful fund. The correlations of assumptions will have a significant effect in determining the ultimate family takaful liabilities but to demonstrate the impact due to changes in assumptions, assumptions are changed on an individual basis. It should be noted that movements in these assumptions are non-linear. Sensitivity information will also vary according to the current economic assumptions.






(iii) Impact on liabilities, profit and equity (cont’d.)

Sensitivity analysis (cont’d.)

Change inassumptions

Impact on gross liabilities

Impact on net liabilities

Impact on(loss)/profit

before tax

Impact on family

takaful fund*% RM’000 RM’000 RM’000 RM’000

Increase/(decrease) 2016

Mortality/morbidity + 10% 44,691 11,977 11,977 (11,977)

Discount rates + 1% (9,585) (7,501) (7,501) 7,501

2015

Mortality/morbidity + 10% 87,579 82,703 (82,703) (82,703)

Discount rates + 1% (21,906) (12,413) 12,413 12,413

* The impact on the family takaful fund reflects the after tax position which is presumed to be nil as the family takaful fund is taxed only on investment income.

The method used and significant assumptions made in deriving sensitivity information did not change from those used in the

previous year.

(d) General retakaful fund (i) Nature of risk The general retakaful business of the retakaful subsidiary principally consists of proportional and non-proportional treaty and

facultative businesses accepted from takaful and retakaful operators. Portfolios are segregated by class and by domestic and overseas businesses.

For general retakaful, the most significant risks arise from adverse development of loss ratios and catastrophic loss events. These risks vary significantly in relation to economic conditions and territories from which the risks originate.

The retakaful subsidiary also manages the general retakaful fund’s loss exposure via the use of retrotakaful arrangements. The retrotakaful arrangements are reviewed annually by the RMCB and approved by the Board.

Stress testing is performed on a quarterly basis and submitted to BNM twice a year. The purpose of the stress testing is to test the solvency of the general retakaful fund under various scenarios. These scenarios are based on regulatory guidelines and simulate drastic changes in major parameters such as new business volume, claims experience and investment environment.





(d) General retakaful fund (cont’d.)

(ii) Reserving risk The general retakaful fund’s claim liabilities, and consequently some of the inputs used in determining its contribution liabilities,

are based upon claims experience, existing knowledge of the events, the terms and conditions of relevant certificates and interpretation of circumstances. Upon notification of a claim, the retakaful subsidiary sets aside case and technical reserves to meet the expected ultimate loss arising from the claim. These claim reserves are updated periodically for further developments.

At each reporting date, the retakaful subsidiary performs a test on the adequacy of its liabilities via the services of an independent qualified external actuary engaged for the purpose of ensuring that claim and contribution liabilities are objectively assessed and adequately provided for. Any deficiency is recognised in the income statement.

(iii) Concentration of takaful contract liabilities

The table below sets out the concentration of takaful contract liabilities by classes of business.

Gross Retakaful Net RM’000 RM’000 RM’000

2016

Fire 27,808 (7,070) 20,738 Motor 25,210 - 25,210 Marine, Aviation & Transit 4,888 (227) 4,661 Miscellaneous 29,213 (16,912) 12,301

87,119 (24,209) 62,910

2015

Fire 40,193 (8,820) 31,373 Motor 25,813 (1) 25,812 Marine, Aviation & Transit 5,490 80 5,570 Miscellaneous 37,036 (20,127) 16,909

108,532 (28,868) 79,664

These can be further segregated by local and overseas exposures as follows:

Gross Retakaful Net RM’000 RM’000 RM’000

2016

Local 57,750 (23,972) 33,778 Overseas 29,369 (237) 29,132

87,119 (24,209) 62,910

2015

Local 75,855 (28,737) 47,118 Overseas 32,677 (131) 32,546

108,532 (28,868) 79,664





(d) General retakaful fund (cont’d.) (iv) Impact on liabilities, profit and equity Key assumptions

Additional qualitative judgements are used to assess the extent to which past trends may not apply in the future, for example, isolated occurrences, changes in market factors such as public attitude to claims notification and reporting, economic conditions, as well as internal factors, such as portfolio mix, policy conditions and claims handling procedures. Judgement is further used to assess the extent to which external factors, such as judicial decisions and government legislation affect the estimates.

Other key circumstances affecting the reliability of assumptions include variation in profit rates and delays in settlement.


The general retakaful fund’s claim liabilities are sensitive to changes in the loss ratio especially in the event of large or catastrophic claims.

The sensitivity analysis was applied to the ultimate loss ratio of the general retakaful fund by increasing the said ratio by 5%. The table below shows the impact on the general retakaful fund’s gross and net claim liabilities, profit before tax and general retakaful fund should the ultimate loss ratio be increased by 5%:

Impact on gross

liabilities

Impact on net

liabilities

Impact on profit/(loss) before tax

Impact on general

retakaful fund*

RM’000 RM’000 RM’000 RM’000

Increase/(decrease)

2016 6,082 5,510 (5,510) (5,510)

2015 6,122 5,835 5,835 (5,835)

* The impact on the general retakaful fund reflects the after tax impact which is presumed to be nil based on the current tax position of the fund.

This analysis assumes all other parameters are held constant.

(v) Claims development table

The following tables show the estimate of cumulative ultimate incurred claims, including both claims provisions and IBNR for each successive underwriting year at each financial year end, along with cumulative claim payments to-date.

In setting provisions for claims, the retakaful subsidiary relies on advice by the cedants and exercises discretion where the claim

may develop more adversely than advised. An estimate will be made in the absence of a reported figure or in the event the loss is still preliminary and has not been fully assessed. The estimates of the ultimate incurred claims are subject to a great deal of uncertainty in the early stages as claims are still being intimated and developed, particularly so for large and catastrophic claims. These uncertainties reduce over time as the claims develop and progress towards the ultimate cost.







Gross general retakaful claim liabilities for 2016:

underwriting year 2007 2008 2009 2010 2011 2012 2013 2014 2015 Sub Total


At the end of underwriting year - - - - 9,284 15,171 42,843 19,642 -

One year later - - - 27,915 33,682 56,646 32,126 19,703 -

Two years later - - 21,520 35,220 36,964 57,574 30,327 - -

Three years later - 17,461 18,780 41,994 42,744 60,819 - - -

Four years later 9,441 18,864 19,282 47,230 43,596 - - - -

Five years later 11,149 28,583 19,143 47,368 - - - - -

Six years later 8,983 30,340 19,028 - - - - - -

Seven years later 8,826 31,619 - - - - - - -

Eight years later 8,463 - - - - - - - -

Current estimate of booked ultimate claims incurred (a) 8,463 31,606 19,025 47,310 43,476 60,448 29,766 18,458 -

At the end of underwriting year (3,196) (8,238) (392) (3,293) 1,506 2,524 676 135 -

One year later 7,045 4,950 8,483 13,468 11,500 14,017 11,191 9,856 -

Two years later 8,036 14,171 12,669 25,419 21,355 23,897 15,420 - -

Three years later 6,005 16,391 14,145 30,745 27,968 30,926 - - -

Four years later 6,186 20,578 14,923 39,120 31,958 - - - -

Five years later 8,030 24,807 16,528 40,333 - - - - -

Six years later 8,220 27,548 17,297 - - - - - -



Cumulative payments to-date (b) 8,237 29,177 17,297 40,333 31,958 30,926 15,420 9,856 -

Expected claim liabilities (a) - (b) 226 2,429 1,728 6,977 11,518 29,522 14,346 8,602 - 75,348

Other portfolios 490

Best estimate of claim liabilities 75,838


Gross general retakaful claim liabilities 86,551







Net general retakaful claim liabilities for 2016:

underwriting year 2007 2008 2009 2010 2011 2012 2013 2014 2015 Sub Total


At the end of underwriting year - - - - 9,284 15,171 38,790 19,642 -

One year later - - - 27,915 33,682 55,371 32,126 19,703 -

Two years later - - 21,520 35,220 36,935 57,574 30,327 - -

Three years later - 17,641 18,780 41,994 42,744 60,819 - - -

Four years later 9,441 18,864 19,282 47,230 43,596 - - - -

Five years later 11,149 28,583 19,143 47,368 - - - - -

Six years later 8,983 30,340 19,028 - - - - - -



Current estimate of booked ultimate claims incurred (a) 8,461 31,595 19,014 47,286 43,379 60,179 28,943 18,012 -

At the end of underwriting year (3,196) (8,238) (392) (3,293) 1,506 2,524 676 135 -

One year later 7,045 4,950 8,483 13,468 11,500 14,017 11,191 9,856 -

Two years later 8,036 14,171 12,669 25,419 21,355 23,897 15,420 - -

Three years later 6,005 16,391 14,145 30,745 27,968 30,926 - - -

Four years later 6,186 20,578 14,923 39,120 31,958 - - - -

Five years later 8,030 24,807 16,528 40,333 - - - - -

Six years later 8,220 27,548 17,297 - - - - - -



Cumulative payments to-date (b) 8,237 29,177 17,297 40,333 31,958 30,926 15,420 9,856 -

Expected claim liabilities (a) - (b) 224 2,418 1,717 6,953 11,421 29,253 13,523 8,156 - 73,665




Less: Retrotakaful recoveries (19,794)

Net general retakaful claim liabilities 62,357







Gross general retakaful claim liabilities for 2015:

underwriting year 2007 2008 2009 2010 2011 2012 2013 2014 Sub Total


At the end of underwriting year - - - - 9,284 15,171 42,843 19,642

One year later - - - 27,915 33,682 56,646 32,126 -

Two years later - - 21,520 35,220 36,964 57,574 - -

Three years later - 17,641 18,780 41,994 42,744 - - -

Four years later 9,441 18,864 19,282 47,230 - - - -

Five years later 11,149 28,583 19,143 - - - - -

Six years later 8,983 30,340 - - - - - -



At the end of underwriting year (3,196) (8,238) (392) (3,293) 1,506 2,524 676 135

One year later 7,045 4,950 8,483 13,468 11,500 14,017 11,191 -

Two years later 8,036 14,171 12,669 25,419 21,355 23,897 - -


Four years later 6,186 20,578 14,923 39,120 - - - -

Five years later 8,030 24,807 16,528 - - - - -

Six years later 8,220 27,548 - - - - - -


Cumulative payments to-date (b) 8,360 27,548 16,528 39,120 27,968 23,897 11,191 135

Expected claim liabilities (a) - (b) 466 2,792 2,610 8,020 14,540 32,718 19,074 14,148 94,368




Gross general retakaful claim liabilities 105,907







Net general retakaful claim liabilities for 2015:

underwriting year 2007 2008 2009 2010 2011 2012 2013 2014 Sub Total


At the end of underwriting year - - - - 9,284 15,171 38,790 19,642

One year later - - - 27,915 33,682 55,371 32,126 -

Two years later - - 21,520 35,220 36,935 57,574 - -

Three years later - 17,641 18,780 41,994 42,744 - - -

Four years later 9,441 18,864 19,282 47,230 - - - -

Five years later 11,149 28,583 19,143 - - - - -

Six years later 8,983 30,340 - - - - - -



At the end of underwriting year (3,196) (8,238) (392) (3,293) 1,506 2,524 676 135

One year later 7,045 4,950 8,483 13,468 11,500 14,017 11,191 -

Two years later 8,036 14,171 12,669 25,419 21,355 23,897 - -


Four years later 6,186 20,578 14,923 39,120 - - - -

Five years later 8,030 24,807 16,528 - - - - -

Six years later 8,220 27,548 - - - - - -


Cumulative payments to-date (b) 8,360 27,548 16,528 39,120 27,968 23,897 11,191 135

Expected claim liabilities (a) - (b) 466 2,771 2,593 7,993 14,482 32,344 18,452 14,006 93,107




Less: Retrotakaful recoveries (24,906)

Net general retakaful claim liabilities 77,096





(e) Family retakaful fund

(i) Nature of risk

The family retakaful business of the retakaful subsidiary principally consists of the following categories of family retakaful businesses which are Individual Family Retakaful Plans, Group Family Retakaful Plans and Retakaful Individual Facultative.

Family retakaful underwriting risk relates to the pricing and loss ratios arising from family retakaful products. The risks arise when actual claims experience is different from the assumptions used in setting the yearly renewable term fees for retakaful products. Deviations in actual claims experience compared to the assumptions used may be due to deviations in actual mortality and morbidity experience.

The retakaful subsidiary utilises retrotakaful to manage mortality and morbidity risks.

The retakaful subsidiary reviews the actual experience of mortality and morbidity to ensure that appropriate policies, guidelines and limits put in place to manage these risks remain adequate and appropriate.

Stress testing is performed on a quarterly basis and submitted to BNM twice a year. The purpose of the stress testing is to test the solvency of the family retakaful fund under various scenarios. These scenarios are based on regulatory guidelines and simulate drastic changes in major parameters such as new business volume, investment environment and mortality/morbidity patterns.

(ii) Concentration of takaful contract liabilities

The business of the family retakaful fund is derived from Malaysian and overseas risks. Liabilities of the family retakaful fund are mainly spread within Malaysia, Brunei and Indonesia.

The table below sets out the concentration of takaful contract liabilities by local and overseas exposures:

Gross Retakaful Net

RM’000 RM’000 RM’000

2016

Local 10,080 (6,064) 4,016

Overseas 2,319 (734) 1,585

12,399 (6,798) 5,601

2015

Local 26,706 (6,647) 20,059

Overseas 2,064 (613) 1,451

28,770 (7,260) 21,510





(e) Family retakaful fund (cont’d.)

(iii) Impact on liabilities, profit and equity

Key assumptions

Material judgement is required in determining the liabilities and the choice of assumptions. Assumptions used are based on past experience, current internal data, external market indices and benchmarks which reflect current observable market prices and other published information. Assumptions and prudent estimates are determined at the date of valuation and no credit is taken for possible beneficial effects of voluntary withdrawals. Assumptions are further evaluated on a continuous basis in order to ensure realistic and reasonable valuations.


The family retakaful fund’s claim liabilities are sensitive to changes in loss ratios.

Due to limited information, the sensitivity analysis was applied to the ultimate loss ratio of the family retakaful fund by increasing the said ratio by 20%. The table below shows the impact on the family retakaful fund’s gross and net liabilities, profit/(loss) before tax and family retakaful fund should the ultimate loss ratio be increased by 20%:

Change in

assumptions

Impact on gross

liabilities

Impact on net

liabilities

Impact on profit/(loss) before tax

Impact on family retakaful

fund*

RM’000 RM’000 RM’000 RM’000

Increase/(decrease)

2016

Loss ratio -20% (4,597) (2,448) 2,448 2,448

Loss ratio +20% 15,881 11,433 (11,433) (11,433)

2015

Loss ratio -20% (23,414) (18,145) (18,145) 18,145

Loss ratio +20% 37,710 29,889 29,889 (29,889) * The impact on the family retakaful fund reflects the after tax impact which is presumed to be nil based on the current tax

position of the fund.

The method used in performing the sensitivity analysis is consistent with that of the prior year’s.




35. FINANCIAL RISK

Transactions in financial instruments may result in the Group and the Company assuming financial risks. These include credit risk, liquidity risk and market risk. This note presents information about the Group’s and the Company’s exposure to each of the above risks and the Group’s and the Company’s objectives, policies and processes for measuring and managing such risks.

The following tables summarise the financial assets and financial liabilities of the Group and the Company, and their carrying value and fair values, which are considered by management in monitoring and managing of its financial risks.

Group 2016 2015

Carrying value Fair value Carrying value Fair value

RM’000 RM’000 RM’000 RM’000

Financial and insurance/takaful assets

Financial assets at FVTPL (Note 19) 129,096 129,096 137,934 137,934

HTM investments (Note 19) 701,430 703,045 722,356 716,236

AFS financial assets (Note 19) 2,744,399 2,744,399 2,530,716 2,530,716

Loans and receivables:

Loans and receivables * (Note 19) 2,060,905 2,060,905 1,917,938 1,917,938

Insurance/takaful receivables * 357,012 357,012 303,918 303,918

Reinsurance/retakaful assets 497,180 497,180 374,653 374,653


6,667,335 6,668,950 6,070,217 6,064,097

Financial and insurance/takaful liabilities

Insurance/takaful contract liabilities 4,847,518 4,847,518 4,159,278 4,159,278

Other liabilities:

Borrowings * 320,000 320,000 320,000 320,000

Insurance/takaful payables * 199,285 199,285 169,424 169,424

Other payables and provisions * 194,004 194,004 170,807 170,807

5,560,807 5,560,807 4,819,509 4,819,509

Company

Financial assets

HTM investments (Note 19) 1,000 1,007 - -

AFS financial assets (Note 19) 50 50 50 50

Loans and receivables * (Note 19) 119,260 119,260 37,071 37,071


123,918 123,925 39,998 39,998

Financial liabilities

Borrowings * 320,000 320,000 320,000 320,000

Other payables and provisions * (Note 25) 12,530 12,530 9,203 9,203

332,530 332,530 329,203 329,203 * The carrying values of these loans and receivables, insurance/takaful receivables and other liabilities approximate their fair values due to their

short term nature.




35. FINANCIAL RISK (CONT’D.)

(a) Credit Risk

Credit risk is the risk of financial loss resulting from the failure of counterparties to reinsurance, takaful, retakaful and investment transactions to meet their contractual obligations.

Credit risk includes the following major elements:

(i) An investment credit risk which is the risk of financial loss arising from a change in the value of an investment due to a rating downgrade, default, or widening of credit spreads. Changes in credit spreads are largely driven by the different economic cycles and operating cycles while the less liquid securities tend to be priced at a wider spread. The liquidity of the securities is directly determined by its bid-to-ask spread.

(ii) A derivative counterparty risk which is the risk of financial loss arising from a derivative counterparty’s default, or the deterioration of the derivative counterparty’s financial position. As at the reporting date, the Group did not transact in derivatives and was not exposed to this risk; and

(iii) Reinsurance/retakaful counterparty risk which is the risk of financial loss arising from a default by the retrocessionaire/retakaful operator, or the deterioration of the solvency position of the retrocessionaire/retakaful operator.

The Group is exposed to investment credit risk on its investment portfolio, primarily from investments in corporate bonds. A creditworthiness assessment for new and existing investments is undertaken by the Group in accordance with the Investment Policy as approved by the Investment Committee. In addition, the credit ratings of the bond portfolio are regularly monitored and any downgrade in credit ratings will be evaluated to determine the required actions. As at the reporting date, the Group’s bond portfolio has no material exposure below investment grade.

The Group is exposed to reinsurance/retakaful counterparty risks of three different types:

(i) as a result of recoveries owing from the retrocessionaire/retakaful operators for claims; (ii) from amounts due from ceding companies; and (iii) as a result of reserves held by the reinsurers and/or retakaful operators which would have to be met by the reinsurance and/or

retakaful subsidiaries in the event of default.

Management of credit risk In order to manage and mitigate credit risk, the following policies and procedures were set in place:

(i) Investment policies prescribe the minimum credit rating for bonds that may be held. In addition, the policies are further aimed at investing in a diverse portfolio of bonds in order to reduce the potential impact that may arise from individual companies defaulting;

(ii) Counterparty limits are set for investments and cash deposits to ensure that there is no concentration of credit risk;

(iii) The Group’s investment portfolio is managed to ensure diversification and focuses on high quality investment grade bonds with good fundamentals. For the financial year ended 31 March 2016, the credit rating of the Group’s fixed income portfolio was dominated by securities rated AAA as determined by Rating Agency Malaysia (“RAM”) and/or Malaysian Rating Corporation Berhad (“MARC”); and

(iv) To mitigate reinsurance/retakaful counterparty risk, the Group will give due consideration to the credit quality of the reinsurer/retakaful operator. To facilitate this process, a list of acceptable reinsurers/retakaful operators based on their rating is maintained within the Group. The Group regularly reviews the financial security of its reinsurers/retakaful operators.





(a) Credit Risk (cont’d.)

The table below provides information regarding the credit risk exposures of the Group and of the Company by classifying assets according to the credit ratings of counterparties. Unearned premium and contribution reserves and reserves for unearned wakalah fees have been excluded from the analysis as they are not contractual obligations.

Credit exposure by credit rating for 2016

Government

guaranteed AAA

to BBB

BB to C

Not subject to credit risk Not rated Total

Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Financial assets at FVTPL Quoted shares in Malaysia - - - 3,689 - 3,689

Warrants - - - 61 - 61

Shariah approved unit trust funds - - - 125,346 - 125,346

HTM investments Malaysian government securities 78,525 - - - - 78,525

Unquoted corporate debt securities 79,926 - 246 - - 80,172

Government investment issues 542,733 - - - - 542,733

AFS financial assets Unquoted shares in Malaysia - - - 44,796 - 44,796

Malaysian government securities 50,327 - - - - 50,327

Unquoted corporate debt securities 491,893 1,511,567 - - - 2,003,460

Quoted shares in Malaysia - - - 271,753 - 271,753

Warrants - - - 337 - 337

Real estate investment trusts - - - 7,787 - 7,787


Loans and receivables Fixed and call deposits with licensed:

Commercial banks - 326,715 - - - 326,715

Investment banks - 499,014 - - - 499,014


Co-operative bank - 40,833 - - - 40,833

Islamic banks - 830,078 - - 126,872 956,950

Investment banks - 13,246 - - 33,415 46,661

Development bank - 56,573 - - 8,239 64,812

Secured staff loans - - - - 10,987 10,987

Income due and accrued - - - - 53,602 53,602






Credit exposure by credit rating for 2016 (cont’d.)

Government

guaranteed AAA

to BBB

BB to C



Loans and receivables (cont’d.)

Amount due from Insurance Pool accounts - - - - 13,698 13,698

Other receivables and deposits - - - - 47,633 47,633

Reinsurance/retakaful assets - 301,617 525 - 133,069 435,211

Insurance/takaful receivables - 92,669 6 - 264,337 357,012

Cash and bank balances - 173,430 - - 3,883 177,313

1,609,343 3,845,742 777 453,769 695,735 6,605,366

Company

HTM investments

Unquoted corporate debt securities - 1,000 - - - 1,000


Unquoted shares in Malaysia - - - 50 - 50





Islamic investment accounts with licensed Islamic banks - 41 - - - 41


Amounts due from subsidiaries - - - - 3,328 3,328

Income due and accrued - - - - 34 34


Cash and bank balances - 3,608 - - - 3,608

- 116,384 - 50 7,484 123,918






Credit exposure by credit rating for 2015

Government

guaranteed AAA

to BBB

BB to C


Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Financial assets at FVTPL Quoted shares in Malaysia - - - 3,951 - 3,951

Warrants - - - 28 - 28

Shariah approved unit trust funds - - - 133,955 - 133,955

HTM investments Malaysian government securities 78,734 - - - - 78,734

Unquoted corporate debt securities 99,779 - 251 - - 100,030


AFS financial assets Unquoted shares in Malaysia - - - 44,796 - 44,796

Malaysian government securities 49,478 - - - - 49,478

Unquoted corporate debt securities 478,750 1,472,276 - - - 1,951,026

Quoted shares in Malaysia - - - 289,064 - 289,064

Warrants - - - 141 - 141

Real estate investment trusts - - - 7,836 - 7,836


Loans and receivables Fixed and call deposits with licensed:




Co-operative bank - 28,939 - - - 28,939

Islamic banks - 784,158 - - 295,036 1,079,194


Development bank - 43,312 - - 15,595 58,907

Building society - 256 - - - 256


Income due and accrued - - - - 44,523 44,523






Credit exposure by credit rating for 2015 (cont’d.)

Government

guaranteed AAA

to BBB

BB to C




Amount due from Insurance Pool accounts - - - - 26,290 26,290


Reinsurance/retakaful assets - 199,406 67 - 131,870 331,343

Insurance/takaful receivables - 74,390 69 - 229,459 303,918

Cash and bank balances - 79,329 - - 3,373 82,702

1,438,708 3,296,049 387 479,771 811,992 6,026,907

Company


Unquoted shares in Malaysia - - - 50 - 50





Islamic investment accounts with licensed Islamic banks - 7,879 - - - 7,879


Amounts due from subsidiaries - 2,974 - - 1,137 4,111

Income due and accrued - - - - 72 72


Cash and bank balances - 2,877 - - - 2,877

- 34,012 - 50 5,936 39,998






Movement of allowance for impairment losses on receivables

Individually impaired

Group Collectively

impaired Total

RM’000 RM’000 RM’000

2016

At beginning of the year 16,631 14,396 31,027

Impairment losses/(reversal of impairment losses) for the year 8,115 (4,161) 3,954

Written off during the year (10,221) - (10,221)

At end of the year 14,525 10,235 24,760

2015

At beginning of the year 16,722 7,358 24,080

(Reversal of impairment losses)/impairment losses for the year (91) 7,038 6,947

At end of the year 16,631 14,396 31,027

(b) Liquidity Risk

Liquidity risk is the risk that the Group will not have sufficient cash resources available to meet its payment obligations without incurring material additional costs.

As part of its liquidity management strategy, the Group has in place a framework capable of measuring and reporting on:

(i) daily cash flows;(ii) minimum liquidity holdings;(iii) the composition and market values of investment portfolios, including liquid holdings; and(iv) the holding of liquid assets in the respective reinsurance, takaful and retakaful funds.

In order to manage the liquidity of the reinsurance/takaful/retakaful funds, the investment mandate requires that a certain proportion of the fund is maintained as liquid assets. Accordingly, the Group is required to maintain a minimum holding of low risk assets between 10% and 15% and no maximum limit on its placements in fixed and call deposits.

Maturity Profiles

The table below summarises the maturity profile of the assets and liabilities of the Group and of the Company based on remaining undiscounted contractual obligations, including interest/profit payable and receivable. For insurance and takaful contract liabilities and reinsurance and retakaful assets, maturity profiles are determined based on estimated timing of net cash outflows from the recognised insurance/takaful liabilities. Unearned premium and contribution reserves and reserves for unearned wakalah fees have been excluded from the analysis as they are not contractual obligations.





(b) Liquidity Risk (cont’d.)

Maturity profiles for 2016

Group Carrying

value up to

1 year 1 - 5

years Over

5 years No maturity

date Total

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


Quoted shares in Malaysia 3,689 - - - 3,689 3,689

Warrants 61 - - - 61 61

Shariah approved unit trust funds 125,346 - - - 125,346 125,346

HTM investments

Malaysian government securities 78,525 3,277 13,115 100,009 - 116,401

Unquoted corporate debt securities 80,172 8,042 60,995 24,653 - 93,690

Government investment issues 542,733 21,355 280,406 364,358 - 666,119


Unquoted shares in Malaysia 44,796 - - - 44,796 44,796


Unquoted corporate debt securities 2,003,460 155,263 1,168,222 1,303,309 - 2,626,794


Warrants 337 - - - 337 337

Real estate investment trusts 7,787 - - - 7,787 7,787




Commercial banks 326,715 331,734 - - - 331,734

Investment banks 499,014 501,711 - - - 501,711


Co-operative bank 40,833 41,007 - - - 41,007

Islamic banks 956,950 961,607 - - - 961,607


Development bank 64,812 64,812 - - - 64,812

Secured staff loans 10,987 4,251 6,736 - - 10,987

Income due and accrued 53,602 53,602 - - - 53,602

Amount due from Insurance Pool accounts 13,698 13,698 - - - 13,698

Other receivables and deposits 47,633 47,633 - - - 47,633






Maturity profiles for 2016 (cont’d.)

Group (cont’d.) Carrying

value up to

1 year 1 - 5

years Over

5 years No maturity

date Total

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


Reinsurance/retakaful assets 435,211 178,937 189,267 47,075 19,932 435,211

Insurance/takaful receivables 357,012 356,701 311 - - 357,012

Cash and bank balances 177,313 177,313 - - - 177,313

Total financial and insurance assets 6,605,366 2,989,318 1,847,386 2,267,891 473,701 7,578,296

Borrowings (320,000) (18,998) (326,108) - - (345,106)

Insurance/takaful contract liabilities (4,363,083) (898,622) (1,185,488) (2,113,261) (165,712) (4,363,083)

Insurance/takaful payables (199,285) (199,285) - - - (199,285)

Other payables (194,004) (194,004) - - - (194,004)

Total financial and insurance liabilities (5,076,512) (1,310,909) (1,511,596) (2,113,261) (165,712) (5,101,478)

Company

HTM investments

Unquoted corporate debt securities 1,000 50 198 1,218 - 1,466


Unquoted shares in Malaysia 50 - - - 50 50





Islamic investment accounts with licensed Islamic banks 41 42 - - - 42

Secured staff loans 2,420 2,420 - - - 2,420

Amounts due from subsidiaries 3,328 3,328 - - - 3,328

Income due and accrued 34 34 - - - 34



Total financial assets 123,918 123,632 198 1,218 50 125,098

Borrowings (320,000) (18,998) (326,108) - - (345,106)

Other payables (12,530) (12,530) - - - (12,530)

Total financial liabilities (332,530) (31,528) (326,108) - - (357,636)






Maturity profiles for 2015

Group Carrying

value up to

1 year 1 - 5

years Over

5 years No maturity

date Total

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



Warrants 28 - - - 28 28

Shariah approved unit trust funds 133,955 - - - 133,955 133,955

HTM investments


Unquoted corporate debt securities 100,030 23,188 68,031 25,525 - 116,744



Unquoted shares in Malaysia 44,796 - - - 44,796 44,796


Unquoted corporate debt securities 1,951,026 256,897 940,052 1,368,624 - 2,565,573


Warrants 141 - - - 141 141

Real estate investment trusts 7,836 - - - 7,836 7,836





Investment banks 421,505 416,629 6,582 - - 423,211


Co-operative bank 28,939 28,967 - - - 28,967

Islamic banks 1,079,194 1,084,438 - - - 1,084,438


Development bank 58,907 59,059 - - - 59,059

Building society 256 260 - - - 260

Secured staff loans 12,496 6,976 5,520 - - 12,496

Income due and accrued 44,523 44,523 - - - 44,523

Amount due from Insurance Pool accounts 26,290 26,290 - - - 26,290







Maturity profiles for 2015 (cont’d.)

Group (cont’d.) Carrying

value up to

1 year 1 - 5

years Over

5 years No maturity

date Total

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


Reinsurance/retakaful assets 331,343 132,260 145,388 40,333 13,362 331,343

Insurance/takaful receivables 303,918 303,810 108 - - 303,918


Total financial and insurance assets 6,026,907 2,753,698 1,448,433 2,244,511 493,133 6,939,776

Borrowings (320,000) (19,480) (342,335) - - (361,815)

Insurance/takaful contract liabilities (3,720,801) (765,847) (1,008,010) (1,826,581) (120,363) (3,720,801)

Insurance/takaful payables (169,424) (169,424) - - - (169,424)

Other payables (170,807) (170,807) - - - (170,807)

Total financial and insurance liabilities (4,381,032) (1,125,558) (1,350,345) (1,826,581) (120,363) (4,422,847)

Company


Unquoted shares in Malaysia 50 - - - 50 50





Islamic investment accounts with licensed Islamic banks 7,879 7,944 - - - 7,944

Secured staff loans 3,461 3,461 - - - 3,461

Amounts due from subsidiaries 4,111 4,111 - - - 4,111

Income due and accrued 72 72 - - - 72



Total financial assets 39,998 40,110 - - 50 40,160

Borrowings (320,000) (19,480) (342,335) - - (361,815)

Other payables (9,203) (9,203) - - - (9,203)

Total financial liabilities (329,203) (28,683) (342,335) - - (371,018)





(c) Market Risk

Market risk is the risk of loss arising from a change in the values of, or the income from, financial assets. A risk of loss also arises from volatility in asset prices, interest/profit rates, or exchange rates. Market risk includes the following elements:

(i) Equity price risk which is the risk of fluctuations in the fair value or future cash flows of a financial instrument arising from stock market dynamics impacting equity prices;

(ii) Foreign exchange risk which is the risk of fluctuations in the fair value or future cash flows of a financial instrument arising from a movement of or volatility in exchange rates; and

(iii) Interest/profit rate risk which is the risk of fluctuations in the fair value or future cash flows of a financial instrument arising from variability in interest/profit rates.

Equity price risk

Equity price risk is the risk that the fair value or future cash flow of a financial instrument fluctuates because of changes in market prices (other than those arising from interest rate/profit yield risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer or factors affecting similar financial instruments traded in the market.

The Group’s equity risk exposures relates to financial assets and financial liabilities whose values will fluctuate as a result of changes in market prices.

The Group’s equity price risk policy requires it to manage such risks by setting and monitoring objectives and constraints on investments, diversification plans, limits on investments in each sector, market and issuer, having regard also to such limits as stipulated by BNM for its reinsurance, takaful and retakaful subsidiaries. The Group complied with such limits as stipulated by BNM during the financial year and had no significant concentration of equity price risk.

The analysis below is performed for reasonably possible movements in key variables with all other variables held constant, showing the impact on profit before tax and equity (inclusive of the impact on other comprehensive income). The correlation of variables have a significant effect in determining the ultimate impact on price risk, but to demonstrate the impact due to changes in variables, changes in variables are considered individually. It should be noted that movements in these variables are non-linear. The equities under the investment-linked fund were excluded from the sensitivity analysis as the risks associated with the fluctuations in market prices of the equities are borne by the unitholders.





(c) Market Risk (cont’d.)

Equity price risk (cont’d.) Sensitivity analysis

Changes in market indices

Impact on profit before tax

Impact on equity*

RM’000 RM’000

2016

Group

Price + 5% 114 11,995

Price - 5% (3,380) (11,857)

2015

Group

Price + 5% 199 12,647

Price - 5% (1,273) (12,647)


Management is of the opinion that the Company is not subject to significant equity price risk and, hence, a sensitivity analysis has not been performed.

Foreign exchange risk/currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group’s primary transactions are carried out in Ringgit Malaysia (RM) and its exposure to foreign exchange risk arises principally because of its foreign currency denominated underwriting revenues (such as premiums/contributions) and expenses (such as claims/benefits and commission expenses).

In respect of the Group’s investment activities, investments are concentrated in RM denominated assets given that the Group’s base currency is in RM.

The Group has a foreign exchange risk management plan in place and is continuously enhancing its risk mitigation measures.

Interest/profit rate risk

The Group is exposed to interest/profit rate risk as follows: (i) fair values of fixed interest/profit-bearing assets would move inversely to changes in interest/profit rates; and (ii) future cash flows of variable interest/profit-bearing assets would move in direct proportion to changes in rates.





(c) Market Risk (cont’d.)

Interest/profit rate risk (cont’d.)

The earnings of the Group are affected by changes in market interest/profit rates due to the impact such changes have on interest/profit income from cash and cash equivalents, including investments in fixed/Islamic deposits. The fixed income portfolio is inversely related to interest/profit rates and, hence, it is the source of portfolio volatility.

The Group manages its interest/profit rate risk by matching, where possible, the duration and profile of assets and liabilities to minimise the impact of mismatches between the value of assets and liabilities from interest/profit rate movements.

The nature of the Group’s exposure to interest/profit rate risk and its objectives, policies and processes for managing interest/profit rate risk have not changed significantly from the previous financial year.


A change of 25 basis points (“bp”) in interest/profit rates at the reporting date would have increased/(decreased) the value of the portfolio of fixed-income investment by the amounts shown below.

Changes in variable

Impact on equity*

RM’000

2016

Group

Interest/profit rates +25 bp (27,321)

Interest/profit rates -25 bp 31,824

2015

Group

Interest/profit rates +25 bp (30,714)

Interest/profit rates -25 bp 21,654





36. OTHER RISKS

(a) Property Risk

Property risk is the risk associated with the Group’s investment in property or real estate for own occupancy, investment or rental purpose. The Operational Risk of the Group’s Property is detailed in operational manuals that describe the responsibilities in relation to management of the properties to maintain quality and satisfied tenants.

The financial risk arising from a delinquent or loss of tenants are managed at the outset through careful selection of properties with high tenancy including tenants with long term tenancies and a continuous maintenance and upgrade of facilities.

The Group has no significant exposure to property risk.

(b) Operational Risk

Operational risk is the risk of loss arising from process and system failure, human error, specific loss events or external events. When controls fail to perform, operational risks can cause damage to the reputation of the Group, have legal or regulatory implications or can lead to financial loss. The Group cannot expect to eliminate all operational risks, but by initiating a rigorous control framework and by monitoring and responding to potential risks, the Group is able to minimise risks to an acceptable level. Controls include effective segregation of duties, effective access controls, authorisation and reconciliation procedures, continuous staff education and appropriate assessment processes, including the use of internal audit.

(c) Shariah Risk

Shariah risk is defined as potential Shariah non-compliance that contributes to adverse reputation, financial losses and opportunity costs resulting from ineffective governance, incompetent employees and improper transactional and operational execution. The Group mitigates such risk by initiating, monitoring and responding to a robust Shariah control framework which includes the establishment of a Group Shariah Committee, Shariah Department and/or Shariah Compliance Officer for monitoring and oversight purposes.

The framework is guided by the Shariah Governance Framework issued by BNM which is designed to meet the following objectives:

(i) sets out the expectations of BNM on the Group’s Shariah governance structures, processes and arrangements to ensure that all its operations and business activities are in accordance with Shariah;

(ii) provides a comprehensive guidance to the Board, Group Shariah Committee and management of the Group in discharging its duties in matters relating to Shariah; and

(iii) outlines the functions relating to Shariah review, Shariah Audit, Shariah Risk management and Shariah research.

(d) Compliance Risk

Compliance risk is the risk arising from violations of, or non conformance with, business principles, internal policies and procedures, related laws and rules and regulations governing the Group’s products, services and activities.

Consequently, the exposure to this risk can damage the Group’s reputation, lead to legal or regulatory sanctions and/or financial loss.

The Group has established a Compliance Division at the Group and subsidiary level to oversee and monitor all compliance aspects in observing regulatory requirements. In this respect, it has developed internal policies and procedures to ensure compliance with all applicable laws and guidelines issued by the regulatory authorities.




37. SHAREHOLDERS’, REINSuRANCE, TAKAFuL AND RETAKAFuL FuNDS

(a) Consolidated income statement by fund

for the year ended 31 March 2016

General reinsurance

and shareholders’

fund

General takaful

fund

Family

takaful fund

General retakaful

fund

Family retakaful

fund

Eliminations and

adjustments Consolidated

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

Gross earned premiums/contributions 1,341,514 281,963 615,104 12,952 12,093 3,248 2,266,874

Premiums/contributions ceded to reinsurers/retakaful operators (135,009) (107,764) (63,279) (2,089) (8,471) (8,283) (324,895)

Net earned premiums/contributions 1,206,505 174,199 551,825 10,863 3,622 (5,035) 1,941,979

Investment income 226,318 12,838 85,396 3,126 1,473 (117,036) 212,115

Net realised gains 3,549 498 4,119 41 16 - 8,223

Net fair value (losses)/gains (18,158) (1,707) 3,341 (68) (91) (8,736) (25,419)

Fee and commission income (i) 267,137 28,370 - 82 74 (253,429) 42,234

Other operating revenue 12,122 - - 524 32 955 13,633

Other revenue 490,968 39,999 92,856 3,705 1,504 (378,246) 250,786

Gross claims and benefit paid (773,483) (140,220) (271,589) (28,457) (7,268) (8,738) (1,229,755)

Claims ceded to reinsurers/retakaful operators 50,925 57,164 11,749 3,849 4,540 8,738 136,965

Gross change in contract liabilities (269,384) (29,918) (360,300) 19,356 16,371 (18,407) (642,282)

Change in contract liabilities ceded to reinsurers/retakaful operators 95,579 10,486 2,882 (4,617) (462) - 103,868

Net claims and benefits (896,363) (102,488) (617,258) (9,869) 13,181 (18,407) (1,631,204)

Fee and commission expenses (i) (440,427) (65,450) (147,810) (3,400) (789) 214,854 (443,022)

Management expenses (ii) (265,936) 3,232 1,353 - - 48,146 (213,205)

Finance costs (18,260) - - - - 29 (18,231)

Other operating expenses (3,084) (1,848) (415) (409) (1) (955) (6,712)

Changes in expense liabilities (6,979) - - - - - (6,979)

Tax borne by participants - (10,326) (6,857) - - 700 (16,483)

Other expenses (734,686) (74,392) (153,729) (3,809) (790) 262,774 (704,632)




37. SHAREHOLDERS’, REINSuRANCE, TAKAFuL AND RETAKAFuL FuNDS (CONT’D.)

(a) Consolidated income statement by fund (cont’d.)

for the year ended 31 March 2016 (cont’d.)

General reinsurance

and shareholders’

fund

General takaful

fund

Family

takaful fund

General retakaful

fund

Family retakaful

fund

Eliminations and


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

Share of results of associates - - - - - 12,615 12,615

Operating profit/(loss) before (surplus)/deficit attributable to takaful participants, zakat and taxation 66,424 37,318 (126,306) 890 17,517 (126,299) (130,456)

(Surplus)/deficit attributable to takaful participants - (37,318) 126,306 (890) (17,517) 28,827 99,408

Operating profit/(loss) before zakat and taxation 66,424 - - - - (97,472) (31,048)

Zakat - - - - - - -

Taxation (7,781) - - - - - (7,781)

Net profit/(loss) for the year attributable to equity holders of the Parent 58,643 - - - - (97,472) (38,829)

(i) Reversal of Surplus Administration Charges (“SAC”) for general takaful business

In the previous financial year, SAC amounting to RM18.8 million had been declared by the Appointed Actuary of the general takaful fund for distribution to the shareholder’s fund as performance fee paid from the surplus of the general takaful fund.

During the current financial year, the Appointed Actuary of the general takaful fund had recommended that the previously declared SAC for the financial year ended 31 March 2015 be transferred back to the general takaful fund in order to strengthen the capital position of the general takaful fund in light of the anticipated liberalisation of the Fire and Motor businesses announced by BNM in 2016.

(ii) Reclassification of direct expenses in takaful funds to shareholder’s fund

During the financial year ended 31 March 2016, certain expenses which had been previously charged to the general and family takaful funds as approved by the Shariah Committee, have been reallocated back to the shareholder’s fund in accordance with the directive from BNM to ensure compliance with the Takaful Operational Framework (“TOF”) as issued by BNM. Approximately RM8.7 million and RM13.2 million respectively was transferred from the general and family takaful funds to the shareholder’s fund during the year.






for the year ended 31 March 2015

General reinsurance

and shareholders’

fund

General takaful

fund

Family

takaful fund

General retakaful

fund

Family retakaful

fund

Eliminations and


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

Gross earned premiums/contributions 1,323,292 268,356 553,955 34,267 35,711 (23,984) 2,191,597

Premiums/contributions ceded to reinsurers/retakaful operators (110,236) (96,352) (39,205) (10,913) (7,549) 19,989 (244,266)

Net earned premiums/contributions 1,213,056 172,004 514,750 23,354 28,162 (3,995) 1,947,331

Investment income 167,126 12,712 81,851 3,456 905 (66,543) 199,507

Net realised gains 2,648 865 6,068 112 40 - 9,733

Net fair value gains/(losses) 4,668 (761) (9,557) (171) (18) - (5,839)

Fee and commission income 315,953 26,563 - 495 425 (307,699) 35,737

Other operating revenue 9,864 950 - 264 81 (688) 10,471

Other revenue 500,259 40,329 78,362 4,156 1,433 (374,930) 249,609

Gross claims and benefit paid (809,894) (130,098) (243,079) (39,934) (43,301) 25,625 (1,240,681)

Claims ceded to reinsurers/retakaful operators 53,392 48,788 57,121 12,356 8,655 (25,625) 154,687

Gross change in contract liabilities (33,703) (8,820) (102,854) (7,583) 5,113 - (147,847)

Change in contract liabilities ceded to reinsurers/retakaful operators 46,049 20,204 (109,322) 6,567 372 - (36,130)

Net claims and benefits (744,156) (69,926) (398,134) (28,594) (29,161) - (1,269,971)






for the year ended 31 March 2015 (cont’d.)

General reinsurance

and shareholders’

fund

General takaful

fund

Family

takaful fund

General retakaful

fund

Family retakaful

fund

Eliminations and


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

Fee and commission expenses (431,092) (103,942) (152,548) (9,096) (4,376) 265,655 (435,399)

Management expenses (246,679) (3,439) (8,609) - - 49,172 (209,555)

Finance costs (18,123) - - - - - (18,123)

Other operating expenses (35,782) - (7,621) (405) - 36,128 (7,680)

Changes in expense liabilities (10,764) - - - - - (10,764)

Tax borne by participants - (8,508) (4,757) - - - (13,265)

Other expenses (742,440) (115,889) (173,535) (9,501) (4,376) 350,955 (694,786)

Share of results of associates - - - - - 4,157 4,157

Operating profit/(loss) before surplus attributable to takaful participants, zakat and taxation 226,719 26,518 21,443 (10,585) (3,942) (23,813) 236,340

Surplus attributable to takaful participants - (26,518) (21,443) - - 2,326 (45,635)

Operating profit/(loss) before zakat and taxation 226,719 - - (10,585) (3,942) (21,487) 190,705

Zakat (960) - - - - - (960)

Taxation (50,597) - - - - - (50,597)

Net profit/(loss) for the year attributable to equity holders of the Parent 175,162 - - (10,585) (3,942) (21,487) 139,148





(b) Consolidated statement of financial position by fund

as at 31 March 2016

General reinsurance

and shareholders’

fund

General takaful

fund

Family

takaful fund

General retakaful

fund

Family retakaful

fund

Eliminations and


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

Assets

Property, plant and equipment 131,839 - - - - 115,658 247,497

Investment properties 7,400 - 115,658 - - (115,658) 7,400

Intangible assets 14,824 - - - - - 14,824

Deferred tax assets 8,664 1,638 - 67 - 5,182 15,551

Investments in subsidiaries 843,705 - - - - (843,705) -

Investments in associates 77,615 - - - - 50,906 128,521

Financial assets at FVTPL 862 773 127,174 279 8 - 129,096

HTM investments 261,988 71,845 336,957 19,177 12,463 (1,000) 701,430

AFS financial assets 1,299,927 196,954 1,223,635 26,199 11,389 (13,705) 2,744,399

LAR 1,471,651 88,156 504,537 35,750 10,774 (49,963) 2,060,905

Reinsurance/retakaful assets 305,621 127,454 33,098 24,209 6,798 - 497,180

Insurance/takaful receivables 272,925 29,449 45,104 4,779 6,344 (1,589) 357,012

Tax recoverable 26,592 - - - - - 26,592

Cash and bank balances 32,623 26,846 117,735 74 35 - 177,313

Total assets 4,756,236 543,115 2,503,898 110,534 47,811 (853,874) 7,107,720





(b) Consolidated statement of financial position by fund (cont’d.)

as at 31 March 2016 (cont’d.)

General reinsurance

and shareholders’

fund

General takaful

fund

Family

takaful fund

General retakaful

fund

Family retakaful

fund

Eliminations and


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


Participants’ funds - 94,058 108,223 4,149 17,550 (22,794) 201,186

Borrowings 321,000 - - - - (1,000) 320,000

Insurance/takaful contract liabilities 2,098,230 378,049 2,263,314 87,119 12,399 8,407 4,847,518

Insurance/takaful payables 106,185 24,305 48,366 9,473 12,545 (1,589) 199,285

Other payables 89,605 45,841 82,095 9,793 5,298 (38,628) 194,004

Deferred tax liabilities 3,490 - 1,895 - 19 5,387 10,791

Provision for taxation 3,747 862 5 - - - 4,614

Provision for zakat 142 - - - - - 142

Total liabilities and participants’ funds 2,622,399 543,115 2,503,898 110,534 47,811 (50,217) 5,777,540

Equity

Share capital 1,126,570 - - - - (913,500) 213,070

Reserves 1,007,267 - - - - 109,843 1,117,110

Total equity attributable to equity holders of the Parent 2,133,837 - - - - (803,657) 1,330,180

Total liabilities, participants’ funds and equity 4,756,236 543,115 2,503,898 110,534 47,811 (853,874) 7,107,720






as at 31 March 2015

General reinsurance

and shareholders’

fund

General takaful

fund

Family

takaful fund

General retakaful

fund

Family retakaful

fund

Eliminations and


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

Assets

Property, plant and equipment 130,573 - - - - 106,922 237,495

Investment properties 7,100 - 106,922 - - (106,922) 7,100

Intangible assets 14,632 - - - - - 14,632

Deferred tax assets 7,835 - - 95 - 4,079 12,009

Investments in subsidiaries 843,705 - - - - (843,705) -

Investments in associates 77,615 - - - - 32,952 110,567

Financial assets at FVTPL 886 724 135,972 341 11 - 137,934

HTM investments 281,578 71,941 337,163 19,211 12,463 - 722,356

AFS financial assets 1,532,603 173,158 1,084,084 30,075 18,661 (307,865) 2,530,716

LAR 1,131,858 73,782 469,808 38,710 3,748 200,032 1,917,938

Reinsurance/retakaful assets 196,676 111,633 30,216 28,868 7,260 - 374,653

Insurance/takaful receivables 218,963 29,296 44,233 14,825 2,642 (6,041) 303,918

Tax recoverable 24,856 - 360 - - - 25,216

Cash and bank balances 16,044 24,116 42,523 9 10 - 82,702

Total assets 4,484,924 484,650 2,251,281 132,134 44,795 (920,548) 6,477,236






as at 31 March 2015 (cont’d.)

General reinsurance

and shareholders’

fund

General takaful

fund

Family

takaful fund

General retakaful

fund

Family retakaful

fund

Eliminations and


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


Participants’ funds - 55,340 232,291 3,173 - (4,078) 286,726

Borrowings 320,000 - - - - - 320,000

Insurance/takaful contract liabilities 1,792,782 336,180 1,903,014 108,532 28,770 (10,000) 4,159,278

Insurance/takaful payables 105,713 21,797 32,131 10,273 5,551 (6,041) 169,424

Other payables 84,021 66,919 81,750 10,156 10,465 (82,504) 170,807

Deferred tax liabilities 1,470 420 2,095 - 9 4,207 8,201

Provision for taxation 8,461 3,994 - - - - 12,455

Provision for zakat 871 - - - - - 871

Total liabilities and participants’ funds 2,313,318 484,650 2,251,281 132,134 44,795 (98,416) 5,127,762

Equity

Share capital 1,126,570 - - - - (913,500) 213,070

Reserves 1,045,036 - - - - 91,368 1,136,404

Total equity attributable to equity holders of the Parent 2,171,606 - - - - (822,132) 1,349,474

Total liabilities, participants’ funds and equity 4,484,924 484,650 2,251,281 132,134 44,795 (920,548) 6,477,236

38. SIGNIFICANT EVENTS

The Company, in the previous financial year, had made disclosures on the tax matters in regard to the Company’s takaful subsidiary, Takaful Ikhlas Berhad (“Takaful IKHLAS”). Recovery of taxes paid in excess for years of assessment 2004 to 2009 have been made in full by setting off against the taxes payable for years of assessment 2014 to 2016. Takaful IKHLAS is pursuing the recovery of the taxes paid in excess for years of assessment 2010 to 2014 with the Inland Revenue Board.




39. FAIR VALuES OF ASSETS

MFRS 7 Financial Instruments: Disclosures (“MFRS 7”) requires the classification of financial instruments measured at fair value according to a hierarchy that reflects the significance of inputs used in making the measurements, in particular, whether the inputs used are observable or unobservable. MFRS 13 Fair Value Measurement requires similar disclosure requirements as MFRS 7, but extends to include all assets and liabilities measured at fair value and/or for which fair values are disclosed. The following levels of hierarchy are used for determining and disclosing the fair value of the Group and the Company’s assets:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 - Inputs that are based on observable market data, either directly or indirectly Level 3 - Inputs that are not based on observable market data

The fair values of the Group and Company’s assets are determined as follows:

(i) The carrying amounts of financial assets, such as loans and receivables, insurance/takaful receivables and cash and bank balances, are reasonable approximation of their fair values due to the relatively short term maturity of these balances;

(ii) The fair values of quoted equities are based on quoted market prices as at the reporting date; (iii) The fair values of Malaysian government securities, government investment issues and unquoted corporate debt securities are

based on indicative market prices from the Bond Pricing Agency of Malaysia (“BPAM”); (iv) The fair values of investments in mutual funds, unit trust funds and real estate investment trusts are valued based on the net asset

values of the underlying funds as at the reporting date; and (v) Freehold land and buildings and investment property have been revalued based on valuations performed by accredited independent

valuers having appropriate recognised professional qualification. The valuations are based on the income and comparison approaches. In arriving at the fair value of the assets, the valuers had also taken into consideration the future developments in terms of infrastructure in the vicinity of the properties.

Description of significant unobservable inputs:

Valuation technique Significant unobservable inputs Range2016


Office building Income approach Yield 6.0% to 6.25%

Rental per square foot RM4.60

Comparison approach Sales price per square feet for similar properties RM641 to RM1,150

Investment property

Shoplots Income approach Rental per square metre RM2.00

2015


Office building Income approach Yield 6.0% to 6.25%

Rental per square foot RM4.50

Comparison approach Sales price per square feet for similar properties RM564 to RM1,235

Investment property

Shoplots Income approach Rental per square metre RM2.00

A significant increase or decrease in the unobservable inputs used in the valuation would result in a correspondingly higher or lower fair value.

There have been no transfers between Level 1 and Level 2 of the fair value hierarchy during the financial year.




39. FAIR VALuES OF ASSETS (CONT’D.)

As at the reporting date, the Group and the Company held the following assets that are measured at fair value and/or for which fair values are disclosed under Levels 1, 2 and 3 of the fair value hierarchy:

Level 1 Level 2 Level 3 Total

RM’000 RM’000 RM’000 RM’000

Group

2016

Assets measured at fair value:

(a) Property, plant and equipment

Freehold land - - 36,000 36,000

Buildings - - 203,151 203,151

- - 239,151 239,151

(b) Investment property - - 7,400 7,400

(c) Financial assets at FVTPL

Quoted shares in Malaysia 3,689 - - 3,689

Warrants 61 - - 61

Shariah approved unit trust funds 125,346 - - 125,346

129,096 - - 129,096

(d) AFS financial assets

Malaysian government securities - 50,327 - 50,327

Unquoted corporate debt securities - 2,003,460 - 2,003,460


Warrants 337 - - 337

Real estate investment trusts 7,787 - - 7,787

Government investment issues - 365,939 - 365,939

279,877 2,419,726 - 2,699,603

Assets for which fair values are disclosed:

HTM investments


Unquoted corporate debt securities - 81,003 - 81,003


- 703,045 - 703,045






RM’000 RM’000 RM’000 RM’000

Group

2015

Assets measured at fair value:

(a) Property, plant and equipment

Freehold land - - 34,000 34,000

Buildings - - 192,943 192,943

- - 226,943 226,943

(b) Investment property - - 7,100 7,100

(c) Financial assets at FVTPL


Warrants 28 - - 28

Shariah approved unit trust funds 133,955 - - 133,955

137,934 - - 137,934

(d) AFS financial assets


Unquoted corporate debt securities - 1,951,026 - 1,951,026


Warrants 141 - - 141

Real estate investment trusts 7,836 - - 7,836


297,041 2,188,879 - 2,485,920


HTM investments




- 716,236 - 716,236





Reconciliation of Level 3 fair value hierarchy

2015

RM’000

Group


At beginning of year 6,115

Reversal of impairment loss 4,990

Fair value gain 769

Unquoted corporate debt securities transferred to Level 2 (11,874)

At end of year -

There were no AFS financial assets which are categorised under Level 3 of the fair value hierarchy at the end of the previous and current financial years.


RM’000 RM’000 RM’000 RM’000

Company

2016


HTM investments





40. SuPPLEMENTARy INFORMATION - BREAKDOWN OF RETAINED PROFITS INTO REALISED AND uNREALISED PROFITS OR LOSSES

The breakdown of the retained profits of the Group and of the Company as at 31 March 2016 into realised and unrealised profits or losses is presented in accordance with the directives issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and 20 December 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Group Company

2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Realised and unrealised profits of the Company and its subsidiaries:

- Realised 991,375 997,424 325,241 245,270

- Unrealised 6,509 4,913 - -

997,884 1,002,337 325,241 245,270

Share of realised retained profits/(accumulated losses) from associated companies 9,159 (3,456) - -

1,007,043 998,881 325,241 245,270

Less: Consolidation adjustments (78,953) (31,962) - -

Total retained profits 928,090 966,919 325,241 245,270



Analysis of Shareholdingsas at 1 July 2016


SHARE CAPITAL

Authorised Capital : RM500,000,000 ordinary shares

Issued and Fully Paid-up Capital : 213,069,500 ordinary shares of RM1.00 each

No. of shareholders : 5,723

Class of Shares : RM1.00 ordinary shares

Voting Rights : 1 vote per ordinary share

ANALySIS By SIZE OF SHAREHOLDINGS

Share CapitalSize of Shareholdings

No. of Shareholders

Percentage of Shareholders

No. of Shares Percentage of Share Capital

(%) (%)

Less than 100 367 6.41 3,224 0.00

100 - 1,000 1,898 33.16 1,593,578 0.75

1,001 - 10,000 2,508 43.84 11,224,549 5.27

10,001 - 100,000 814 14.22 25,761,300 12.09

100,001 to less than 5% of issued shares 134 2.34 48,684,749 22.85

5% and above of issued shares 2 0.03 125,802,100 59.04

Total 5,723 100.00 213,069,500 100.00

LIST OF SuBSTANTIAL SHAREHOLDERS (5% AND ABOVE) AS AT 1 juLy 2016

No. Name of Substantial Shareholders Shareholdings Percentage (%)

1 AmanahRaya Trustees Berhad 98,617,000 46.28

<Amanah Saham Bumiputera>

2 Permodalan Nasional Berhad 27,185,100 12.76

LIST OF THIRTy (30) LARGEST SHAREHOLDERS AS AT 1 juLy 2016

No. Name of Shareholders No. of Shares Percentage (%)

1 AMANAHRAYA TRUSTEES BERHAD<AMANAH SAHAM BUMIPUTERA>

98,617,000 46.28

2 PERMODALAN NASIONAL BERHAD 27,185,100 12.76

3 CITIGROUP NOMINEES (TEMPATAN) SDN BHD<KUMPULAN WANG PERSARAAN (DIPERBADANKAN) (CRST SM ESG)>

2,272,400 1.07




4 JOHAN ENTERPRISE SDN. BHD. 2,230,000 1.05

5 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD<PLEDGED SECURITIES ACCOUNT FOR SHANMUGAM A/L THOPPALAN (8069535)>

1,909,000 0.90

6 HONG LEONG ASSURANCE BERHAD<AS BENEFICIAL OWNER (LIFE PAR)>

1,802,449 0.85

7 CITIGROUP NOMINEES (ASING) SDN BHD<CBNY FOR DIMENSIONAL EMERGING MARKETS VALUE FUND>

1,702,600 0.80

8 AMANAHRAYA TRUSTEES BERHAD<AMANAH SAHAM MALAYSIA>

1,699,200 0.80

9 CIMB GROUP NOMINEES (ASING) SDN BHD<EXEMPT AN FOR DBS BANK LTD (SFS)>

1,545,000 0.73

10 NEOH CHOO EE & COMPANY, SDN. BERHAD 1,440,000 0.68

11 HSBC NOMINEES (TEMPATAN) SDN BHD<HSBC (M) TRUSTEE BHD FOR AMB ETHICAL TRUST FUND (4256)>

1,230,800 0.58

12 CITIGROUP NOMINEES (ASING) SDN BHD<CBNY FOR EMERGING MARKET CORE EQUITY PORTFOLIO DFA INVESTMENT DIMENSIONS GROUP INC>

958,900 0.45

13 LIEW SWEE MIO @ LIEW HOI FOO 890,000 0.42

14 PUBLIC NOMINEES (TEMPATAN) SDN BHD 877,600 0.41

<PLEDGED SECURITIES ACCOUNT FOR LIM HOCK FATT (E-SS2)>

15 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD<PLEDGED SECURITIES ACCOUNT FOR CHONG YIEW ON (6000006)>

826,900 0.39

16 CITIGROUP NOMINEES (ASING) SDN BHD<CBNY FOR DFA EMERGING MARKETS SMALL CAP SERIES>

826,700 0.39

17 HLB NOMINEES (TEMPATAN) SDN BHD<PLEDGED SECURITIES ACCOUNT FOR GOH CHU YONG>

719,300 0.34

18 CHUA HIN BEE 715,000 0.34

19 HSBC NOMINEES (ASING) SDN BHD<EXEMPT AN FOR THE BANK OF NEW YORK MELLON (MELLON ACCT)>

692,100 0.32

20 THONG SU-F’NG 644,200 0.30

21 HSBC NOMINEES (ASING) SDN BHD<TNTC FOR LSV EMERGING MARKETS SMALL CAP EQUITY FUND, LP>

629,900 0.30

LIST OF THIRTy (30) LARGEST SHAREHOLDERS AS AT 1 juLy 2016 (CONT’D.)





22 HSBC NOMINEES (TEMPATAN) SDN BHD<HSBC (M) TRUSTEE BHD FOR PERTUBUHAN KESELAMATAN SOSIAL (UOB AMM6939-406)>

600,000 0.28

23 GAN CHUN HUI 575,700 0.27

24 GAN KHO @ GAN HONG LEONG 533,000 0.25

25 GAN HONG HU 515,000 0.24

26 SYNERGY MOTION SDN. BHD. 490,000 0.23

27 MAYBANK NOMINEES (TEMPATAN) SDN BHD<PLEDGED SECURITIES ACCOUNT FOR NG CHEE SIONG>

468,000 0.22

28 LEONG SOO HA @ LEONG CHOON YIN 451,000 0.21

29 CHENG HON SANG 432,500 0.20

30 HA SAU KIN 426,900 0.20

Total 153,906,249 72.26

INFORMATION ON DIRECTORS’ SHAREHOLDINGS AS AT 1 juLy 2016

No. Name of Directors Shareholdings Percentage (%)

1 Sharkawi Bin Alis - -

2 Mohd Din Bin Merican - -

3 Haji Yusoff Bin Yaacob - -

4 Megat Dziauddin Bin Megat Mahmud - -

5 Paisol Bin Ahmad - -

6 Hijah Arifakh Binti Othman - -

7 Mustaffa Bin Ahmad - -

CATEGORy OF SHAREHOLDERS AS AT 1 juLy 2016

Type of Ownership Shareholders Percentage (%) Shareholdings Percentage (%)

Government Agencies - - - -

Individual 4,868 85.06 47,391,855 22.24

Companies 122 2.13 137,691,451 64.63

Nominees Company 733 12.81 27,986,194 13.13

Grand Total 5,723 100.00 213,069,500 100.00

LIST OF THIRTy (30) LARGEST SHAREHOLDERS AS AT 1 juLy 2016 (CONT’D.)




AddressDate of Acquisition

Date of Revaluation

Description of Properties

Tenure/Existing use/Age of

Buildings

Land Area (sq.ft.) Build-up Area

(sq.ft.)

Net Book Value as at 31/3/2016

(RM)

Investment Properties

No. 15, Jalan Sri Hartamas 7Taman Sri Hartamas50480 Kuala Lumpur

14 July 1984 31 March 2016 1 unit of 4 storey shophouse

Freehold/rented out/32 years

1,600/6,150 3,600,000

No. 17, Jalan Sri Hartamas 7Taman Sri Hartamas50480 Kuala Lumpur

14 July 1984 31 March 2016 1 unit of 4 storey shophouse

Freehold/rented out/32 years

1,600/6,150 3,800,000

Total Investment Properties 7,400,000

Self Occupied Properties

Ikhlas Point, Tower 11Avenue 5, Bangsar SouthNo. 8, Jln Kerinchi59200 Kuala Lumpur

26 September 2008 31 March 2016 1 unit of 11 storey

intermediate office building

Leasehold/ office premise/

rented out/ 8 years

strata 40,535,000

Ikhlas Point, Tower 11AAvenue 5, Bangsar SouthNo. 8, Jln Kerinchi59200 Kuala Lumpur

26 September 2008 31 March 2016 1 unit of 10 storey corner

office building


occupied/ 8 years

strata 72,173,000

No. 17, Lorong DungunDamansara Heights50490 Kuala Lumpur

17 February 1995 31 March 2016 1 unit of 12 storey building with 2

storey basement car park

Freehold/ office premise/

rented out/ 21 years

61,300/ 366,409

118,800,000

Lot 528, Section 6Kuching Town Land District No. 11C, Jalan Kulas93732 Kuching, Sarawak

7 October 2010 29 March 2016 4 storey intermediate

terraced shophouse


occupied/6 years

Not applicable/ 1,200

1,850,000

Manchester TowerApartment 2406, Dubai MarinaDubai, UAE

28 July 2008 31 March 2016 1 unit of apartment

Freehold/ occupied by staff/

8 years


1,393,739

Apt. 507Marina Diamond 5Dubai MarinaDubai, UAE

29 July 2008 31 March 2016 1 unit of apartment


8 years


1,500,358

Yansoon 4, Apartment 204Burj Khalifa, Dubai Downtown, UAE

30 September 2010 31 March 2016 1 unit of apartment


6 years


1,799,024

Pejabat Wilayah KelantanPT 483, Jalan Jambatan Sultan Yahya KB waterfront, Seksyen 1715000 Kota Bahru, Kelantan

31 January 2013 31 March 2016 3 storey shophouse


occupied/3 years


1,100,000

Total Self Occupied Properties 239,151,121

List of Properties31 March 2016

List of Properties

(13487-A)

Proxy Form No. of Shares Held:

CDS Account No:

I/We I/C No. /Passport No./Company No.

of

being a member/members of MNRB HOLDINGS BERHAD hereby appoint

I/C No. /Passport No./Company No.

of

or failing him I/C No. /Passport No./Company No.

of

as my/our proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held at the Auditorium, 3rd Floor, Bangunan Malaysian Re, No. 17, Lorong Dungun, Damansara Heights, 50490 Kuala Lumpur on Thursday, 25 August 2016 at 10.00 a.m. and at any adjournment thereof, on the following resolutions referred to in the Notice of Annual General Meeting.

NO. RESOLuTIONS FOR AGAINST

ORDINARy BuSINESS

1. To re-elect Sharkawi Alis, who retires pursuant to Article 86 of the Company’s Articles of Association

2. To re-elect Mohd Din Merican, who retires pursuant to Article 86 of the Company’s Articles of Association

3. To re-elect Mustaffa Ahmad, who retires pursuant to Article 92 of the Company’s Articles of Association

4. To approve the payment of Directors’ fees

5. To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorize the Directors to fix their remuneration

6. To approve the continuing in office of Yusoff Yaacob as an Independent Non-Executive Director

7. To approve the continuing in office of Megat Dziauddin Megat Mahmud as an Independent Non-Executive Director

SPECIAL BuSINESS

8. To re-appoint Megat Dziauddin Megat Mahmud, who retires pursuant to Section 129 of the Companies Act, 1965

(Please indicate with a cross (x) in the space provided whether you wish your votes to be cast for or against the resolutions above. In the absence of specific instructions, your proxy will vote or abstain as he/they may think fit.)

Dated day of 2016.

SignedNOTEA member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy to attend and vote on a poll on his behalf. A proxy need not be a member of the Company. A member may appoint not more than two (2) proxies to attend the meeting. Where a member appoints two (2) proxies, the member shall specify in each proxy form the proportion of the member’s shareholdings to be represented by each proxy. Where a member is an exempt authorized nominee, who holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorized nominee may appoint in respect of each omnibus account it holds. An instrument appointing a proxy(ies) shall be in writing, and in the case of an individual shall be signed by the appointer or by his attorney duly authorized in writing, and in the case of a Corporation shall be either given under its common seal or signed on its behalf by its attorney or an officer of the Corporation so authorised. An instrument appointing a proxy(ies) must be deposited at the office of the Share Registrar of the Company, Symphony Share Registrars Sdn. Bhd., Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor, not less than forty-eight (48) hours before the time set for the Annual General Meeting or any adjournment thereof. Only members registered in the Record of Depositors as at 19 August 2016 shall be eligible to attend the Annual General Meeting or appoint proxy(ies) to attend and vote on his/her behalf.

SyMPHONy SHARE REGISTRARS SDN. BHD.Level 6, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/46 47301 Petaling JayaSelangor

Please affix Stamp

1st FOLD

2nd FOLD

12th Floor, Bangunan Malaysian ReNo. 17, Lorong Dungun, Damansara Heights

50490 Kuala LumpurTel : (603) 2096 8000Fax : (603) 2096 7000

Email : [email protected]

www.mnrb.com.my

leveraging on synergies - mnrb · 2016-08-08 · leveraging on synergies ... 06 20 04...

Documents