Page 208 - Full Book_24.4.2021

NOTES TO THE
FINANCIAL STATEMENTS

for the financial year ended 31 december 2020 (continUed)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.18 product classification
the family takaful fund and General takaful fund consist of certificate contracts that transfer takaful risk.
takaful contracts are those contracts that transfer significant takaful risk. a takaful contract is a contract under which
the fund has accepted significant takaful risk from another party (the certificate holders) by agreeing to compensate
the participants if a specified uncertain future event (the takaful event) adversely affects the participants. as a general
inteGrated annUal rePort 2020 if the takaful event did not occur.
guideline, to determine whether a contract has significant takaful risk, benefits paid are compared with benefits payable

investment contracts are those contracts that do not transfer significant insurance risk. there are no contracts that are
classified as investment contracts in the family and General takaful funds.
once a contract has been classified as a takaful contract, it remains a takaful contract for the remainder of its life-time,
even if the takaful risk reduces significantly during this period, unless all rights and obligations are extinguished or expired.
takaful contracts in the current portfolio are classified as being without discretionary participation features (“dPf”) as
it does not satisfy the criteria for dPf. dPf is a contractual right to receive, as a supplement to guaranteed benefits,
202 additional benefits that are:
• likely to be a significant portion of the total contractual benefits;
• whose amount or timing is contractually at the discretion of the issuer; and
bimb holdinGS berhad 199701008362 (423858-X) 2.19 Retakaful
• that are contractually based on the:
– performance of a specified pool of contracts or a specified type of contract;
– realised and/or unrealised investment returns on a specified pool of assets held by the issuer; or
– the profit or loss of the company, fund or other entity that issues the contract.

the fund cedes takaful risk in the normal course of business. retakaful assets represent balances receivable and recoverable
from retakaful operators. amounts recoverable from retakaful operators are estimated in a manner consistent with the
outstanding claims provision or settled claims associated with the retakaful’s certificates and are in accordance with the
related retakaful contracts.
ceded retakaful arrangements do not relieve the fund from its obligations to participants. contributions and claims are
presented on a gross basis for both ceded and assumed retakaful.
retakaful assets are reviewed for impairment at each reporting date or more frequently when an indication of impairment
arises during the reporting period. impairment occurs when there is objective evidence as a result of an event that occurred
after initial recognition of the retakaful asset that the family and General takaful fund may not receive all outstanding
amounts due under the terms of the contract and the event has a reliably measurable impact on the amounts that the
family and General takaful fund will receive from the retakaful operator. the impairment loss is recorded in profit or loss.
Gains or losses on buying retakaful, if any, are recognised in profit or loss immediately at the date of purchase and are
not amortised.
the fund also assumes retakaful risk in the normal course of business for family takaful and General takaful contracts
when applicable.
contributions and claims on assumed retakaful are recognised as revenue or expenses in the same manner as they
would be if the retakaful were considered direct business, taking into account the product classification of the retakaful
business. retakaful liabilities represent balances due to retakaful operators. amounts payable are estimated in a manner
consistent with the related retakaful contract.