Page 207 - 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)
2.16 Family Takaful Fund (continued)
provision for outstanding claims achieving a leading repute
claims and provisions for claims arising on family and group family takaful certificates, including settlement costs, are
accounted for using the case basis method and for this purpose the benefits payable under a family takaful certificate |
are recognised as follows:

(a) maturity or other policy benefit payments due on specified dates are accounted for as claims payable on the due
dates.
(b) death, surrender and other benefits without due dates are treated as claims payable on the date of receipt of Paving the Way for a Sustainable future
intimation of death of the participant or occurrence of contingency covered.
(c) for individual family, group health and medical business, provision is made for the cost of claims (together with
related expenses) and ibnr at the end of the reporting period, using a mathematical method of estimation by a
qualified internal 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 201
of risks, claim settlement pattern as well as uncertainties in the projection model and underlying assumptions.

2.17 Expense reserves

the expense reserves is reported as a liability in Shareholder’s fund.
(i) General Takaful Fund
the expense reserve for mudharabah certificates is calculated based on best estimate of the provision for unexpired adhering to the best Governance Practices
expense risk (“Uer”) and the provision of risk margin for adverse deviation (“Prad”). the expense reserve for
wakalah certificates refers to the higher of aggregate of the Unearned Wakalah fee (“UWf”) for all lines of
business or best estimate of the provision for Uer and the Prad at total fund level.

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(ii) Family Takaful Fund
expense reserves consists the followings:
(a) Expense liabilities
the expense reserves for the family takaful business are estimated assuming that the block of in-force Laying the Foundation for Financial Growth
contracts are to be maintained on a ‘going concern’ basis. Under a ‘going concern’ scenario, the contracts
so valued are taken as a particular sub-block of contracts and the cash flows are valued to the point the last
certificate goes off the books.
the maintenance expenses related to such contracts include the cost of functions that would normally be
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associated with operation of the business on a ‘going concern’ basis.
the method used to value expense liabilities shall be consistent with the method used to value takaful
liabilities of the corresponding family takaful certificate (for example, for a long-term ordinary takaful
certificate, the valuation method for expense liabilities should also be long-term in nature). additional information & disclosure Summary
(b) Deficiency Reserve for Skim Anuiti Takaful KWSp
in addition to the expense liabilities above, an additional requirement is also complied as stipulated below:
if Participant investment fund (Pif) is expected to be insufficient to meet future annuity certain benefit
and/or future life annuity tabarru’, another provision shall be set aside that is in line with requirement of the |
24 th aGm information
valuation guideline. Upon Pif insufficiency, the Shareholders’ fund shall honour the annuity certain benefit
payment to participants as well as the tabarru’ to Participant risk fund (“Prf”).