The Thai Insurance Public Company Limited Review report and interim financial statements 30 June 2018
Independent Auditor s Report on Review of Interim Financial Information To the Shareholders of The Thai Insurance Public Company Limited I have reviewed the accompanying statements of financial position of The Thai Insurance Public Company Limited as at 30 June 2018, the related statements of comprehensive income for the three-month and six-month periods ended 30 June 2018, the statements of changes in equity and cash flows for the six-month period then ended, as well as the condensed notes to the financial statements. Management is responsible for the preparation and presentation of this interim financial information in accordance with Thai Accounting Standard 34 Interim Financial Reporting. My responsibility is to express a conclusion on this interim financial information based on my review. Scope of Review I conducted my review in accordance with Thai Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Thai Standards on Auditing and consequently does not enable me to obtain assurance that I would become aware of all significant matters that might be identified in an audit. Accordingly, I do not express an audit opinion. Conclusion Based on my review, nothing has come to my attention that causes me to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with Thai Accounting Standard 34 Interim Financial Reporting. Nonglak Pumnoi Certified Public Accountant (Thailand) No. 4172 EY Office Limited Bangkok: 8 August 2018
The Thai Insurance Public Company Limited Statements of financial position As at 30 June 2018 Note 30 June 2018 31 December 2017 (Unaudited (Audited) but reviewed) Assets Cash and cash equivalents 3 179,464,641 162,050,664 Premium receivables - net 4 313,084,980 295,991,441 Accrued investment income 8,147,883 11,742,445 Reinsurance assets - net 5 709,071,335 882,147,214 Reinsurance receivables 6 173,468,159 90,618,429 Investment assets Investments in securities - net 7 1,551,470,038 1,623,926,738 Loans 8 3,171,708 869,077 Property, buildings and equipment 9 19,041,693 20,434,472 Intangible assets 10 27,618,045 29,438,783 Deferred tax assets 11 126,812,332 112,315,787 Other assets Prepaid income tax 9,304,702 7,646,548 Other receivable, net 58,492,523 41,945,887 Claim receivables from litigants, net 28,345,137 33,910,072 Others 40,532,013 38,549,873 Total assets 3,248,025,189 3,351,587,430 The accompanying notes are an integral part of the financial statements.
The Thai Insurance Public Company Limited Statements of financial position (continued) As at 30 June 2018 Note 30 June 2018 31 December 2017 (Unaudited (Audited) but reviewed) Liabilities and equity Liabilities Insurance contract liabilities 12 1,878,470,182 1,977,876,952 Due to reinsurers 13 524,875,190 461,715,335 Employee benefit obligations 19,313,757 17,655,412 Other liabilities Premium received in advance 12,262,202 8,879,354 Accrued commission 50,115,604 40,727,780 Other accounts payable 51,037,892 47,939,796 Accrued expenses 55,159,998 58,248,640 Others 31,260,798 52,752,839 Total liabilities 2,622,495,623 2,665,796,108 The accompanying notes are an integral part of the financial statements.
The Thai Insurance Public Company Limited Statements of financial position (Continued) As at 30 June 2018 Note 30 June 2018 31 December 2017 (Unaudited (Audited) but reviewed) Equity Share capital Registered 717 non-cumulative preference shares of Baht 10 each 7,170 7,170 23,499,283 ordinary shares of Baht 10 each 234,992,830 234,992,830 235,000,000 235,000,000 Issued and paid up 717 non-cumulative preference shares of Baht 10 each 7,170 7,170 23,499,283 ordinary shares of Baht 10 each 234,992,830 234,992,830 235,000,000 235,000,000 Premium on share capital 103,600,111 103,600,111 Retained earnings Appropriated Statutory reserve 23,500,000 23,500,000 Other reserve 20,000,000 20,000,000 Unappropriated 271,394,933 288,001,501 Other components of equity 7.2 (27,965,478) 15,689,710 Total equity 625,529,566 685,791,322 Total liabilities and equity 3,248,025,189 3,351,587,430 - - The accompanying notes are an integral part of the financial statements. Directors
The Thai Insurance Public Company Limited Statements of comprehensive income For the three-month period ended 30 June 2018 Note 2018 2017 Profit or loss: Income Gross premium written 551,456,656 524,126,287 Less: Premium ceded to reinsurers (173,216,592) (213,783,860) Net premium written 378,240,064 310,342,427 Less: Unearned premium reserves increase from prior period (28,529,895) (11,464,875) Net earned premium 349,710,169 298,877,552 Fees and commissions income from reinsurance 59,376,662 75,055,164 Investment income 14,288,282 14,666,245 Gain on investments 313,173 8,456,601 Other income (389,855) 7,002,277 Total income 423,298,431 404,057,839 Expenses Gross claims and losses adjustments expenses 336,958,326 288,625,067 Less: Claims recovery from reinsurers (131,069,811) (127,243,071) Commissions and brokerages expenses 88,323,133 82,312,698 Other underwriting expenses 70,301,013 72,568,229 Operating expenses 14 69,755,482 72,956,889 Total expenses 434,268,143 389,219,812 Profit (loss) before income tax (10,969,712) 14,838,027 Income tax (expense) income 11 3,023,153 (525,209) Profit (loss) for the period (7,946,559) 14,312,818 The accompanying notes are an integral part of the financial statements.
The Thai Insurance Public Company Limited Statements of comprehensive income (Continued) For the three-month period ended 30 June 2018 Note 2018 2017 Other comprehensive income: Other comprehensive income to be reclassified to profit or loss in subsequent periods Loss on changes in value of available-for-sale investments 7.2 (34,782,841) (16,046,834) Add: Income tax effect 6,956,568 3,209,367 Other comprehensive income for the period - net of tax (loss) (27,826,273) (12,837,467) Total comprehensive income for the period (loss) (35,772,832) 1,475,351 Earning (loss) per share 15 Basic earning (loss) per share (0.34) 0.61 The accompanying notes are an integral part of the financial statements.
The Thai Insurance Public Company Limited Statements of comprehensive income For the six-month period ended 30 June 2018 Note 2018 2017 Profit or loss: Income Gross premium written 1,137,739,075 1,068,959,819 Less: Premium ceded to reinsurers (369,247,618) (443,340,444) Net premium written 768,491,457 625,619,375 Less: Unearned premium reserves increase from prior period (90,906,371) (29,687,316) Net earned premium 677,585,086 595,932,059 Fees and commissions income from reinsurance 125,827,001 153,105,630 Investment income 24,313,588 23,864,658 Gain on investments 13,138,938 26,102,301 Other income 4,960,041 11,944,824 Total income 845,824,654 810,949,472 Expenses Gross claims and losses adjustments expenses 622,825,822 544,138,376 Less: Claims recovery from reinsurers (234,382,129) (248,490,232) Commissions and brokerages expenses 181,297,439 168,910,951 Other underwriting expenses 141,222,319 156,713,516 Operating expenses 14 127,754,630 148,227,625 Total expenses 838,718,081 769,500,236 Profit before income tax 7,106,573 41,449,236 Income tax expenses 11 (213,141) (5,769,316) Profit for the period 6,893,432 35,679,920 The accompanying notes are an integral part of the financial statements.
The Thai Insurance Public Company Limited Statements of comprehensive income (Continued) For the six-month period ended 30 June 2018 Note 2018 2017 Other comprehensive income: Other comprehensive income to be reclassified to profit or loss in subsequent periods Loss on changes in value of available-for-sale investments 7.2 (54,568,985) (5,174,294) Add: Income tax effect 10,913,797 1,034,859 Other comprehensive income for the period - net of tax (loss) (43,655,188) (4,139,435) Total comprehensive income for the period (loss) (36,761,756) 31,540,485 Earning per share 15 Basic earning per share 0.29 1.52 The accompanying notes are an integral part of the financial statements.
The Thai Insurance Public Company Limited Cash flows statements For the six-month period ended 30 June 2018 2018 2017 Cash flows from operating activities Direct premium written 1,125,558,710 1,075,122,749 Cash received for reinsurance 43,005,985 39,827,463 Net investment income 28,261,297 24,983,332 Other income 5,004,601 12,135,099 Losses incurred on direct insurance (662,361,210) (554,058,675) Losses adjustments expenses on direct insurance (43,944,059) (37,392,427) Commissions and brokerages on direct insurance (185,028,681) (172,304,871) Other underwriting expenses (139,862,687) (154,567,324) Operating expenses (150,949,242) (145,831,385) Income tax expenses (5,454,043) (2,737,429) Investments in securities 79,672,507 16,684,044 Loans (2,302,631) (21,726) Deposits at financial institutions (49,000,000) (95,000,000) Net cash from operating activities 42,600,547 6,838,850 Cash flows from investing activities Property, buildings and equipment (1,018,520) (1,002,581) Intangible assets (668,050) (238,074) Net cash used in investing activities (1,686,570) (1,240,655) Cash flows from financing activities Dividend paid (23,500,000) (16,450,000) Net cash used in financing activities (23,500,000) (16,450,000) Net increase (decrease) in cash and cash equivalents 17,413,977 (10,851,805) Cash and cash equivalents at beginning of period 162,050,664 140,945,233 Cash and cash equivalents at end of period 179,464,641 130,093,428 The accompanying notes are an integral part of the financial statements.
The Thai Insurance Public Company Limited Statements of changes in equity For the six-month period ended 30 June 2018 Other components of equity - Surplus (deficit) on changes Retained earnings in value of Issued and paid-up Premium on Appropriated available-for-sale Preference shares Ordinary shares share capital Statutory reserve Other reserve Unappropriated investments Total Balance as at 1 January 2017 7,170 234,992,830 103,600,111 23,500,000 20,000,000 227,432,168 (6,651,544) 602,880,735 Profit for the period - - - - - 35,679,920-35,679,920 Other comprehensive income for the period (loss) - - - - - - (4,139,435) (4,139,435) Total comprehensive income for the period (loss) - - - - - 35,679,920 (4,139,435) 31,540,485 Dividend paid (Note 16) - - - - - (16,450,000) - (16,450,000) Balance as at 30 June 2017 7,170 234,992,830 103,600,111 23,500,000 20,000,000 246,662,088 (10,790,979) 617,971,220 Balance as at 1 January 2018 7,170 234,992,830 103,600,111 23,500,000 20,000,000 288,001,501 15,689,710 685,791,322 Profit for the period - - - - - 6,893,432-6,893,432 Other comprehensive income for the period (loss) - - - - - - (43,655,188) (43,655,188) Total comprehensive income for the period (loss) - - - - - 6,893,432 (43,655,188) (36,761,756) Dividend paid (Note 16) - - - - - (23,500,000) - (23,500,000) Balance as at 30 June 2018 7,170 234,992,830 103,600,111 23,500,000 20,000,000 271,394,933 (27,965,478) 625,529,566 - - - - The accompanying notes are an integral part of the financial statements.
The Thai Insurance Public Company Limited Notes to interim financial statements For the three-month and six-month periods ended 30 June 2018 1. General information The Thai Insurance Public Company Limited ( the Company ) is a public company incorporated and domiciled in Thailand. The Company is principally engaged in the non-life insurance business. The Company has a total of 14 branches located in Bangkok and other provinces. The Company s registered office is at 34/3 Soi Langsuan, Ploenchit Road, Lumpini, Patumwan, Bangkok. On 15 June 2018, Extraordinary General Meeting of the Company s shareholders No.1/2018 resolved to approve the Company s entering into the Joint Investment Agreement with Southeast Group Company Limited (SEG) in order to establish agreement with respect to the implementation of the business restructuring plan and the business alliance plan. When implementation of the plans is completed, SEG will control the Company s business through a holding company that it will establish, and wishes to make a conditional voluntary tender offer for all securities of the Company, as the first option for shareholders of the Company who wish to sell the Company s shares in exchange for a cash offering price of Baht 34.24 per share. This transaction is considered to be a backdoor listing and a connected transaction. 2. Basis for preparation of the financial statements 2.1 Basis for preparation of the interim financial statements These interim financial statements are prepared in accordance with Thai Accounting Standard No. 34 Interim Financial Reporting, with the Company choosing to present condensed interim financial statements. However, the Company has presented line items in the statements of financial position, comprehensive income, changes in equity and cash flows in the same format as that used for annual financial statements and in accordance with the format of financial statements specified in the Notification of the OIC regarding criteria, procedures, conditions and terms for preparation and submission of financial statements and operating performance reports of non-life insurance companies B.E. 2559 dated 4 March 2016. The interim financial statements are intended to provide information additional to that included in the latest annual financial statements. Accordingly, they focus on new activities, events and circumstances so as not to duplicate information previously reported. These interim financial statements should therefore be read in conjunction with the latest annual financial statements. 1
The interim financial statements in Thai language are the official statutory financial statements of the Company. The interim financial statements in English language have been translated from the Thai language interim financial statements. 2.2 New financial reporting standards (a) Financial reporting standards that became effective in the current year During the period, the Company has adopted the revised financial reporting standards and interpretations (revised 2017) which are effective for fiscal years beginning on or after 1 January 2018. These financial reporting standards were aimed at alignment with the corresponding International Financial Reporting Standards with most of the changes and clarifications directed towards disclosure in the notes to financial statements. The adoption of these financial reporting standards does not have any significant impact on the Company s financial statements. (b) Financial reporting standard that will become effective in the future During the period, the Federation of Accounting Professions issued the financial reporting standard TFRS 15 Revenue from Contracts with Customers, which is effective for fiscal years beginning on or after 1 January 2019. Key principles of this standard are summarised below. TFRS 15 Revenue from Contracts with Customers TFRS 15 supersedes TAS 11 Construction Contracts and TAS 18 Revenue, together with related Interpretations. Entities are to apply this standard to all contracts with customers unless those contracts fall within the scope of other standards. The standard establishes a five-step model to account for revenue arising from contracts with customers, with revenue being recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The standard requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model. The management of the Company believes that this financial reporting standard will not have any significant impact to the Company s financial statements when it is initially applied. 2
2.3 Significant accounting policies The interim financial statements are prepared using the same accounting policies and methods of computation as were applied in the financial statements for the year ended 31 December 2017. 3. Cash and cash equivalents 30 June 2018 31 December 2017 Cash on hand 365,000 365,000 Deposits at banks with no fixed maturity date 179,099,641 161,685,664 Cash and cash equivalents 179,464,641 162,050,664 As at 30 June 2018 and 31 December 2017, bank deposits in saving accounts carried interests between 0.10 and 0.75 percent per annum. 4. Premium receivables The balances as at 30 June 2018 and 31 December 2017 of premium receivables dued from direct insurance are classified by aging from the maturity date, under the stipulated law of the premium collection, as follows: 30 June 2018 31 December 2017 Not yet due 207,416,617 210,396,943 Not over 30 days 41,739,087 39,991,408 Over 31 days to 60 days 22,634,008 19,844,632 Over 61 days to 90 days 9,722,958 10,565,802 Over 90 days 72,365,973 60,146,023 Total premium receivables 353,878,643 340,944,808 Less: Allowance for doubtful accounts (40,793,663) (44,953,367) Total premium receivables, net 313,084,980 295,991,441 For premium receivables due from agents and brokers, the Company has stipulated the collection guideline in accordance with the law of the premium collection. For overdue premium receivables, the Company has the legal process with such agents and brokers. 3
5. Reinsurance assets 30 June 2018 31 December 2017 Insurance recoverable from reinsurers Claim reserves 319,549,680 388,838,664 Unearned premium reserves (UPR) 396,693,012 500,479,907 Less: Allowance for doubtful accounts (7,171,357) (7,171,357) Reinsurance assets, net 709,071,335 882,147,214 6. Reinsurance receivables 30 June 2018 31 December 2017 Amounts deposit on reinsurance 5,004 4,554 Amounts due from reinsurers 173,463,155 90,613,875 Total 173,468,159 90,618,429 The balances as at 30 June 2018 and 31 December 2017 of amounts due from reinsurers are classified by aging as follows: 30 June 2018 31 December 2017 Not yet due 69,158,538 72,641,016 Not over 12 months 97,945,673 11,364,169 Over 1 year to 2 years 6,358,944 4,045,996 Over 2 years - 2,562,694 Total amounts due from reinsurers 173,463,155 90,613,875 4
7. Investments in securities 7.1 Classified by type of investments 30 June 2018 31 December 2017 Cost/ Cost/ Amortised cost Fair value Amortised cost Fair value Available-for-sale investments Government and state enterprise securities 50,076,912 54,672,872 65,134,892 70,698,667 Private debt securities 405,192,989 414,624,635 365,259,147 377,686,095 Equity securities 347,175,294 276,313,542 355,179,114 337,823,609 Unit trusts 85,690,557 107,567,855 79,221,306 98,020,023 Warrants - - - 178,202 Total 888,135,752 853,178,904 864,794,459 884,406,596 Add (less): Unrealised gain (loss) (34,956,848) - 19,612,137 - Less: Allowance for impairment (8,068,034) (8,068,034) (8,068,034) (8,068,034) Total available-for-sale investments 845,110,870 845,110,870 876,338,562 876,338,562 Held-to-maturity investments Government and state enterprise securities 119,348,250 200,577,258 Deposits at financial institutions which amounts maturing over 3 months 585,011,078 545,011,078 Total held-to-maturity investments 704,359,328 745,588,336 Other investments Equity securities 2,834,211 2,834,211 Less: Allowance for impairment (834,371) (834,371) Total other investments 1,999,840 1,999,840 Total investments in securities 1,551,470,038 1,623,926,738 5
7.2 Other components of equity - Surplus (deficit) on changes in value of available-forsales investments For the six-month period ended 30 June 2018 For the year ended 31 December 2017 Balance - beginning of the period 15,689,710 (6,651,544) Changes during the period Unrealised gain (loss) during the period (41,430,047) 37,746,836 Realised gains that included in profit or loss (13,138,938) (9,820,269) (54,568,985) 27,926,567 Related income tax 10,913,797 (5,585,313) Net comprehensive income for the period (loss) (43,655,188) 22,341,254 Balance - end of the period (27,965,478) 15,689,710 7.3 Investments subject to restriction As at 30 June 2018 and 31 December 2017, the Company has placed the following securities as collateral. 30 June 2018 31 December 2017 Deposit at banks which pledged for Bank overdrafts 10,001,078 10,001,078 Letter of bank guarantees 10,000 10,000 Total 10,011,078 10,011,078 In addition, the Company pledged its securities with the Registrar as discussed in Notes 18 to the financial statements. 6
8. Loans As at 30 June 2018 and 31 December 2017, the balances of loans to employees are aged, based on due date, as follows: 30 June 2018 31 December 2017 Outstanding period Principal Accrued interest Principal Accrued interest Not yet due 3,171,708-869,077 - Total loans 3,171,708-869,077 - These represented loans provided to employees in accordance with employee s benefit plan for personal guarantee loans. Credit line is not over than Baht 1,000,000 with interest charge at the rate of 1-year fixed deposit rate plus 1 percent per annum as announced by commercial bank. 9. Property, buildings and equipment Movement of property, buildings and equipment during the six-month period ended 30 June 2018 are summarised below. Furniture, fixture and office Motor Land Buildings equipment vehicles Total Net book value as at 1 January 2018 10,163,636 2 10,270,832 2 20,434,472 Additions during the period - at cost - - 1,018,520-1,018,520 Disposals during the period - net book value - - (43,560) - (43,560) Depreciation for the period - - (2,367,739) - (2,367,739) Net book value as at 30 June 2018 10,163,636 2 8,878,053 2 19,041,693 7
10. Intangible assets Movement of intangible assets during the six-month period ended 30 June 2018 are summarised below. Computer software Work in process Total Net book value as at 1 January 2018 20,475,918 8,962,865 29,438,783 Additions during the period - at cost 668,050-668,050 Write-off - (232,000) (232,000) Amortisation for the period (2,256,788) - (2,256,788) Net book value as at 30 June 2018 18,887,180 8,730,865 27,618,045 11. Deferred tax assets/liabilities and income tax expenses 11.1 Deferred tax assets/liabilities As of 30 June 2018 and 31 December 2017, the components of deferred tax assets and deferred tax liabilities are as follows: 30 June 31 December Change in deferred tax assets that are recognised in profit or loss for the three-month periods ended 30 June Change in deferred tax assets that are recognised in profit or loss for the six-month periods ended 30 June 2018 2017 2018 2017 2018 2017 Deferred tax assets Allowance for doubtful accounts 9,854,928 10,671,408 (415,451) 978,960 (816,480) 1,548,091 Employment benefit obligation 3,886,257 3,566,186 227,403 245,972 320,071 278,120 Unearned premium reserves 38,240,135 31,488,628 274,168 1,865,585 6,751,507 4,290,053 Incurred but not reported loss reserves (IBNR) 11,076,241 11,084,545 (68,490) (1,780,505) (8,304) (3,231,902) Claims reserves 56,596,527 59,260,573 (2,212,215) (4,507,526) (2,664,046) (9,884,667) Allowance for impairment of investments in securities 166,874 166,874 - - - - Unutilised tax loss - - - 1,230,989-1,230,989 Deficit on changes in value of availablefor-sale investments 6,991,370 - Total 126,812,332 116,238,214 Deferred tax liabilities Surplus on changes in value of availablefor-sale investments - 3,922,427 Total - 3,922,427 Deferred tax assets - net 126,812,332 112,315,787 Changes in deferred tax assets that are recognised in profit or loss (2,194,585) (1,966,525) 3,582,748 (5,769,316) 8
11.2 Income tax expenses Income tax expenses for the three-month and six-month periods ended 30 June 2018 and 2017 comprise the following: For the three-month periods ended 30 June For the six-month periods ended 30 June 2018 2017 2018 2017 Current income tax: Current income tax charge for the period (6,931,956) (1,441,316) 2,081,671 - Adjustment of prior year s corporate income tax 1,714,218-1,714,218 - Deferred tax: Relating origination and reversal of temporary differences 2,194,585 1,966,525 (3,582,748) 5,769,316 Income tax expenses (income) as reported in the statements of comprehensive income (3,023,153) 525,209 213,141 5,769,316 The reconciliation between income tax expenses and the product of accounting profit multiplied with applicable tax rate for the three-month and six-month periods ended 30 June 2018 and 2017 are as follows: For the three-month periods ended 30 June For the six-month periods ended 30 June 2018 2017 2018 2017 Accounting profit (loss) before income tax (10,969,712) 14,838,027 7,106,573 41,449,236 Applicable tax rate 20% 20% 20% 20% Accounting profit (loss) before income tax multiplied by applicable tax rate (2,193,942) 2,967,605 1,421,315 8,289,847 Adjustment of prior year s corporate income tax 1,714,218-1,714,218 - Effect of non-deductible expenses/income (2,543,429) (2,442,396) (2,922,392) (2,520,531) Income tax expenses (income) reported in the statements of comprehensive income (3,023,153) 525,209 213,141 5,769,316 9
12. Insurance contract liabilities Insurance contract liabilities 30 June 2018 Liabilities on reinsurance Net Claims reserves and outstanding claims - Claims incurred and reported 643,287,421 (287,979,894) 355,307,527 - Claims incurred but not reported 79,779,635 (24,398,429) 55,381,206 Premium reserves - Unearned premium reserves 1,155,403,126 (396,693,012) 758,710,114 Total 1,878,470,182 (709,071,335) 1,169,398,847 Insurance contract liabilities 31 December 2017 Liabilities on reinsurance Net Claims reserves and outstanding claims - Claims incurred and reported 727,266,491 (354,763,223) 372,503,268 - Claims incurred but not reported 82,326,811 (26,904,084) 55,422,727 Premium reserves - Unearned premium reserves 1,168,283,650 (500,479,907) 667,803,743 Total 1,977,876,952 (882,147,214) 1,095,729,738 12.1 Claims reserves and outstanding claims For the six-month period ended 30 June 2018 For the year ended 31 December 2017 Balance - beginning of the period 809,593,302 815,690,617 Claims expenses for the period 695,808,005 1,272,042,049 Change in claims reserves and assumptions (69,534,747) (85,281,749) Claims expenses paid during the period (712,799,504) (1,192,857,615) Balance - end of the period 723,067,056 809,593,302 As at 30 June 2018 and 31 December 2017, the Company has claim reserves and outstanding claims under the reinsurance contracts of Baht 2.13 million and Baht 4.72 million, respectively. 10
12.2 Unearned premium reserves For the six-month period ended 30 June 2018 For the year ended 31 December 2017 Balance - beginning of the period 1,168,283,650 1,041,701,858 Premium written for the period 1,137,739,075 2,259,660,435 Premium earned for the current period (1,150,619,599) (2,133,078,643) Balance - end of the period 1,155,403,126 1,168,283,650 13. Due to reinsurers 30 June 2018 31 December 2017 Amounts withheld on reinsurance 376,654,983 390,811,619 Amounts due to reinsurers 148,220,207 70,903,716 Total due to reinsurers 524,875,190 461,715,335 14. Operating expenses For the three-month periods ended 30 June For the six-month periods ended 30 June 2018 2017 2018 2017 Personnel expenses 34,161,518 35,492,352 60,350,760 70,770,293 Premises and equipment expenses 17,062,852 18,358,327 33,347,534 37,971,043 Taxes and duties 459,522 155,108 1,529,497 1,137,028 Bad debts and doubtful accounts (reversal) (2,077,257) 4,894,803 (4,082,401) 7,740,454 Advertise and promotion expenses 6,632,709 3,296,623 12,923,577 9,650,936 Other operating expenses 13,516,138 10,759,676 23,685,663 20,957,871 Total operating expenses 69,755,482 72,956,889 127,754,630 148,227,625 15. Earnings per share Basic earnings per share is calculated by dividing the profit for the period (excluding other comprehensive income) by the weighted average number of ordinary shares and preference shares held by third parties in issue during the period. 11
16. Dividend paid During the period, the Company declared the following dividend. Dividend Approved by Total dividend Dividend per share Final dividend from 2017 retained earnings Final dividend from 2016 retained earnings Annual General Meeting of the shareholders No. 1/2561 on 25 April 2018 Annual General Meeting of the shareholders No. 1/2560 on 26 April 2017 (Million Baht) (Baht) 23.50 1.00 16.45 0.70 17. Related party transactions During the periods, the Company had significant business transactions with related party. Such transactions, which are summarised below, arose in the ordinary course of business and were concluded on commercial terms and bases agreed upon between the Company and those related party. For the three-month periods ended For the six-month periods ended 30 June 30 June 2018 2017 2018 2017 Transfer pricing policy Transactions with related company Gross premium written 141,946 200,749 379,406 477,654 Normal commercial terms for underwriting Directors and management s benefits During the three-month and six-month periods ended 30 June 2018 and 2017, the Company had employee benefit expenses payable to their directors and management as below. For the three-month periods ended 30 June For the six-month periods ended 30 June 2018 2017 2018 2017 Short-term employee benefits 7,996,228 8,280,904 22,982,091 17,522,878 Employee retirement benefits 768,355 904,692 1,542,666 1,887,873 Total 8,764,583 9,185,596 24,524,757 19,410,751 12
18. Assets pledged and reserved with the Registrar As at 30 June 2018 and 31 December 2017, the Company had the following assets pledged and reserved with the Registrar of the Office of Insurance Commission in accordance with the Non-life Insurance Act. (Unit: Million Baht) 30 June 2018 31 December 2017 Amortised cost Fair value Amortised cost Fair value Assets pledged Government bonds 14.04 14.71 14.04 14.11 Assets reserved Government and state enterprise bonds 119.35 129.01 179.53 188.65 State enterprise and private debt securities 45.00 47.71 - - Total assets pledged and reserved with the Registrar 178.39 191.43 193.57 202.76 19. Segment information The Company is organised into business units based on its products which consisted of Fire, Marine and transportation, Motor, Personal accident and health and Miscellaneous insurance. During the current period, the Company has not change the organisation of their reportable segments. The following tables present revenue and profit before tax information regarding the Company s operating segments for the three-month and six-month periods ended 30 June 2018 and 2017. 13
For the three-month period ended 30 June 2018 Personal Marine and accident Fire transportation Motor and health Miscellaneous Total Underwriting segment Underwriting income Gross premium written 37,585,265 18,949,925 364,156,906 101,265,093 29,499,467 551,456,656 Less: Premium ceded to reinsurers (15,772,006) (3,926,631) (87,808,061) (46,530,578) (19,179,316) (173,216,592) Net premium written 21,813,259 15,023,294 276,348,845 54,734,515 10,320,151 378,240,064 Add (less): Unearned premium reserves (increase) decrease from prior period (1,480,502) (3,296,650) (26,551,921) 2,149,702 649,476 (28,529,895) Net earned premium 20,332,757 11,726,644 249,796,924 56,884,217 10,969,627 349,710,169 Fees and commissions income from reinsurance 4,213,735 1,147,261 31,484,568 17,147,172 5,383,926 59,376,662 Total underwriting income 24,546,492 12,873,905 281,281,492 74,031,389 16,353,553 409,086,831 Underwriting expenses Gross claims and losses adjustments expenses 33,199,845 17,220,334 208,472,933 68,349,350 9,715,864 336,958,326 Less: Claims recovery from reinsurers (24,852,900) (5,282,805) (67,518,139) (31,666,976) (1,748,991) (131,069,811) Commissions and brokerages expenses 7,526,442 2,417,286 59,375,812 14,328,801 4,674,792 88,323,133 Other underwriting expenses 4,960,608 2,017,802 40,561,779 20,991,813 1,769,011 70,301,013 Total underwriting expenses 20,833,995 16,372,617 240,892,385 72,002,988 14,410,676 364,512,661 3,712,497 (3,498,712) 40,389,107 2,028,401 1,942,877 44,574,170 Operating expenses (69,755,482) Loss from underwriting before other income (25,181,312) Other income (389,855) Loss from underwriting segment (25,571,167) Investments segment Investment income 14,288,282 Gain on investments 313,173 Profit from investments segment 14,601,455 Loss before income tax (10,969,712) 14
For the three-month period ended 30 June 2017 Personal Marine and accident Fire transportation Motor and health Miscellaneous Total Underwriting segment Underwriting income Gross premium written 43,321,283 10,110,263 334,285,678 108,826,642 27,582,421 524,126,287 Less: Premium ceded to reinsurers (21,897,282) (2,398,469) (118,881,953) (52,790,013) (17,816,143) (213,783,860) Net premium written 21,424,001 7,711,794 215,403,725 56,036,629 9,766,278 310,342,427 Add (less): Unearned premium reserves (increase) decrease from prior period (498,768) (1,218,124) (13,880,941) 3,529,223 603,735 (11,464,875) Net earned premium 20,925,233 6,493,670 201,522,784 59,565,852 10,370,013 298,877,552 Fees and commissions income from reinsurance 6,118,750 694,584 44,895,469 18,172,171 5,174,190 75,055,164 Total underwriting income 27,043,983 7,188,254 246,418,253 77,738,023 15,544,203 373,932,716 Underwriting expenses Gross claims and losses adjustments expenses 10,413,903 4,584,319 178,374,678 76,050,336 19,201,831 288,625,067 Less: Claims recovery from reinsurers (2,273,519) (898,419) (75,606,566) (34,340,313) (14,124,254) (127,243,071) Commissions and brokerages expenses 8,600,053 706,348 53,005,250 15,726,595 4,274,452 82,312,698 Other underwriting expenses 4,641,029 1,263,812 48,715,809 16,766,433 1,181,146 72,568,229 Total underwriting expenses 21,381,466 5,656,060 204,489,171 74,203,051 10,533,175 316,262,923 5,662,517 1,532,194 41,929,082 3,534,972 5,011,028 57,669,793 Operating expenses (72,956,889) Loss from underwriting before other income (15,287,096) Other income 7,002,277 Loss from underwriting segment (8,284,819) Investments segment Investment income 14,666,245 Gain on investments 8,456,601 Profit from investments segment 23,122,846 Profit before income tax 14,838,027 15
For the six-month period ended 30 June 2018 Personal Marine and accident Fire transportation Motor and health Miscellaneous Total Underwriting segment Underwriting income Gross premium written 83,599,272 45,076,047 749,732,760 193,648,624 65,682,372 1,137,739,075 Less: Premium ceded to reinsurers (33,803,998) (16,243,779) (182,232,911) (92,039,156) (44,927,774) (369,247,618) Net premium written 49,795,274 28,832,268 567,499,849 101,609,468 20,754,598 768,491,457 Add (less): Unearned premium reserves (increase) decrease from prior period (9,037,277) (7,082,615) (87,726,200) 12,962,196 (22,475) (90,906,371) Net earned premium 40,757,997 21,749,653 479,773,649 114,571,664 20,732,123 677,585,086 Fees and commissions income from reinsurance 9,094,021 4,189,833 65,527,985 34,221,446 12,793,716 125,827,001 Total underwriting income 49,852,018 25,939,486 545,301,634 148,793,110 33,525,839 803,412,087 Underwriting expenses Gross claims and losses adjustments expenses 31,608,827 23,368,972 421,767,576 141,091,020 4,989,427 622,825,822 Less: Claims recovery from reinsurers (20,952,055) (6,224,326) (144,584,112) (66,867,780) 4,246,144 (234,382,129) Commissions and brokerages expenses 16,471,327 5,514,937 122,166,051 26,621,457 10,523,667 181,297,439 Other underwriting expenses 10,485,932 5,228,233 83,103,857 39,567,111 2,837,186 141,222,319 Total underwriting expenses 37,614,031 27,887,816 482,453,372 140,411,808 22,596,424 710,963,451 12,237,987 (1,948,330) 62,848,262 8,381,302 10,929,415 92,448,636 Operating expenses (127,754,630) Loss from underwriting before other income (35,305,994) Other income 4,960,041 Loss from underwriting segment (30,345,953) Investments segment Investment income 24,313,588 Gain on investments 13,138,938 Profit from investments segment 37,452,526 Profit before income tax 7,106,573 16
For the six-month period ended 30 June 2017 Personal Marine and accident Fire transportation Motor and health Miscellaneous Total Underwriting segment Underwriting income Gross premium written 91,500,066 23,841,306 661,791,470 230,173,521 61,653,456 1,068,959,819 Less: Premium ceded to reinsurers (47,140,764) (10,562,169) (233,279,342) (110,471,141) (41,887,028) (443,340,444) Net premium written 44,359,302 13,279,137 428,512,128 119,702,380 19,766,428 625,619,375 Add (less): Unearned premium reserves (increase) decrease from prior period (2,596,712) 628,950 (29,784,210) (372,834) 2,437,490 (29,687,316) Net earned premium 41,762,590 13,908,087 398,727,918 119,329,546 22,203,918 595,932,059 Fees and commissions income from reinsurance 13,217,355 1,787,470 88,235,911 38,386,472 11,478,422 153,105,630 Total underwriting income 54,979,945 15,695,557 486,963,829 157,716,018 33,682,340 749,037,689 Underwriting expenses Gross claims and losses adjustments expenses 7,590,204 7,285,480 354,979,412 140,896,229 33,387,051 544,138,376 Less: Claims recovery from reinsurers (430,452) (1,118,743) (159,124,122) (62,542,731) (25,274,184) (248,490,232) Commissions and brokerages expenses 18,206,161 2,455,876 105,186,894 33,263,316 9,798,704 168,910,951 Other underwriting expenses 11,041,362 2,116,376 100,443,984 39,049,286 4,062,508 156,713,516 Total underwriting expenses 36,407,275 10,738,989 401,486,168 150,666,100 21,974,079 621,272,611 18,572,670 4,956,568 85,477,661 7,049,918 11,708,261 127,765,078 Operating expenses (148,227,625) Loss from underwriting before other income (20,462,547) Other income 11,944,824 Loss from underwriting segment (8,517,723) Investments segment Investment income 23,864,658 Gain on investments 26,102,301 Profit from investments segment 49,966,959 Profit before income tax 41,449,236 Profit or loss for each segment does not include income tax expenses because the chief operating decision maker manages on a group basis and are not allocated to individual business segments. The Company does not present the assets and liabilities of each segment because the chief operating decision maker manages the Company s assets as a whole, and not separately based on business segment. 17
20. Commitments and contingent liabilities 20.1 Capital commitments As at 30 June 2018, the Company had capital commitments of approximately Baht 5.13 million relating to acquisition of computer systems (31 December 2017: Baht 5.19 million). 20.2 Operating lease commitments The Company has entered into several lease agreements in respect of the lease of building space, motor vehicle, equipment and service agreements. The terms of the agreements are generally between 1 and 5 years. As at 30 June 2018, future minimum lease payments required under these non-cancellable operating leases and services contracts are as follows: Million Baht Payable within: Less than 1 year 19.18 1 to 5 years 19.47 20.3 Litigation As at 30 June 2018, the Company has been sued for damages totaling approximately Baht 143.51 million as insurer. Total claims in these cases, to the extent that these do not exceed the sum insured per the relevant policies, and after recoveries from reinsurers, amounted to Baht 25.45 million. These cases are not yet finalised but the Company has set aside provision for potential loss in the financial statements amounting to Baht 23.94 million, which the Company s management believes is adequate. 21. Fair value measurement As of 30 June 2018 and 31 December 2017, the Company had the following assets that were measured at fair value using different levels of inputs as follows: (Unit: Million Baht) 30 June 2018 Fair value Book value Level 1 Level 2 Total Available-for-sale investments Debt securities 469.3-469.3 469.3 Equity securities 375.8 361.4 14.4 375.8 18
(Unit: Million Baht) 31 December 2017 Fair value Book value Level 1 Level 2 Total Available-for-sale investments Debt securities 448.4-448.4 448.4 Equity securities 428.0 411.0 17.0 428.0 The Company had valuation techniques for assets as follows: (a) (b) The fair value of investments in debt securities has been determined by using the yield curve as announced by the Thai Bond Market Association. Investments in marketable equity securities has been presented at fair value by using market price. Investments in unit trusts has been presented at fair value, derived from quoted market price or determined by using the net asset value as announced by asset management company. 22. Approval of interim financial statements These interim financial statements were authorised for issue by the Company s Board of Directors on 8 August 2018. 19