Page 205 - Full Book_24.4.2021

NOTES TO THE
FINANCIAL STATEMENTS in retrospect

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for the financial year ended 31 december 2020 (continUed)
the Will to Suceed

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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.15 General Takaful Fund (continued)
Contribution liabilities (continued) achieving a leading repute
(i) Unexpired risk reserves

the Urr is prospective estimate of the expected future payments arising from future events insured or covered |
under contracts in force as at the end of the financial year and also includes allowance for expenses, including
overheads and costs of 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 contributions refunds.
Urr is estimated via an actuarial valuation performed by qualified actuary, using a mathematical method of Paving the Way for a Sustainable future
estimation similar to incurred but not reported (“ibnr”) claims.
(ii) Unearned contribution reserves
the Unearned contribution reserves (“Ucr”) represent the portion of the net contributions of takaful certificates
written that relate to the unexpired periods of the certificates at the end of the financial year.
in determining the Ucr at the end of the reporting period, the method that most accurately reflects the actual 199
unearned contributions is used, as follows:

(a) 1/365 method for all General takaful business
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(b) 1/8 method for all classes of General treaty inward retakaful business
provision for outstanding claims
a liability for outstanding claims is recognised in respect of direct takaful business. the amount of outstanding claims adhering to the best Governance Practices
is the best estimate of the expenditure required together with related expenses less recoveries, if any, to settle the
present obligation at the end of the reporting period. any difference between the current estimated cost and subsequent
settlement is dealt with in the takaful statement of comprehensive income of the Group in the year in which the settlement
takes place.
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Provision is also made for the cost of claims (together with related expenses) and ibnr claims at the end of the reporting
period, using a mathematical method of estimation by a qualified actuary where historical claims experience are used to
project future claims. the provision includes a risk margin for adverse deviation. as with all projections, there are elements
of uncertainty and the projected claims may be different from actual. these uncertainties arise from changes in underlying
risk, changes in spread of risks, claims settlement pattern as well as uncertainties in the projection model and underlying Laying the Foundation for Financial Growth
assumptions.

2.16 Family Takaful Fund
included in family takaful fund are funds arising from:
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• Family Takaful;
• Group Family Takaful; and

• Family retakaful funds. additional information & disclosure Summary
the family takaful fund is maintained in accordance with the requirements of the islamic financial Services act, 2013
and includes the amounts attributable to participants which represents the participants’ share of the underwriting surplus
and return on the investments, where applicable and are distributable in accordance with the terms and conditions
prescribed by the Group.
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the surplus transfer from the family takaful fund to the profit or loss is based on the predetermined profit sharing ratio
24 th aGm information
of the underwriting surplus and return on investments.