Annual Report 2018
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corporate website. information aboutTune Protect Group onour You canfindthisAnnual Report andadditional PERFORMANCE & BUSINESS REVIEW 2018 HIGHLIGHTS OVERVIEW Sustainability Statement Management Discussion &Analysis Financial Highlights Corporate Event Highlights Investor Relations Financial Calendar 2018 At AGlance Corporate Information Corporate Structure About Us&Core Values Vision &Mission 30 14 16 18 4 9 6 8 3 5 2
OTHER INFORMATION REPORTS & STATEMENTS CORPORATE GOVERNANCE LEADERSHIP and Guidelines Internal Policies, Frameworks Additional Compliance Information Control Statement Risk ManagementandInternal Risk ManagementCommittee Report Audit Committee Report Statement Corporate Governance Overview Profiles ofSeniorManagement Team Officer Profile ofGroup ChiefExecutive Profiles ofBoard ofDirectors Proxy Form Notice ofAnnualGeneral Meeting Ventures List ofBranches andOverseas Analysis ofShareholdings Notes to theFinancialStatements Statements ofCashFlows Statements ofChangesinEquity Statements ofComprehensive Income Statements ofFinancialPosition Independent Auditors’ Report Statutory Declaration Statement by Directors Directors’ Report 230 232 100 227 105 103 107 101 94 94 70 89 95 62 83 58 79 53 73 75 57
Vision & Mission
Stay In touch instantly in the digital age.
Faster, Simpler, Affordable. Be In trend by taking charge. Just Click,
Buy and Protect yourself when you need to, in ways you know best.
Get In tune with Protection Made Easy by Tune Protect.
Vision Mission
Leading Digital Insurer We believe that everyone deserves to be protected. That is why we are committed to making insurance easy to Tune Protect Group Berhad aspires to be a Leading Digital access, easy to understand, easy to buy, easy to claim and Insurer, distinctive in its culture, people and processes with easy on the pocket. We pair digital technology with a human a strong customer loyalty proposition. We will operate as a touch to deliver excellent products and services high performing digital champion, consistently striving for to our customers. customer experience excellence in sales and services.
PG.
2 Values Core Us About of everything we do. Respect andtrust are at thecore principles andethicalstandards. We donotcompromise on Integrity TUNE PROTECT GROUPBERHAD provider, Tune Protect Group hasbeeninstrumental its visionofbecoming aleadingdigitalinsurance the MainMarket ofBursaMalaysia in2013. True to Incorporated in2011, theCompany was listed on (“Tune Protect Group” Company”) or“the subsidiaries, associate andjointventure. reinsurance services for non-life insurance products through its is a financialholding company that provides underwriting and we do. into meaningfulsolutionsinwhat original ideasandimagination We are ableto transcend Curiosity fires ourcreativity. Creativity the digitalspace across ASEAN andbeyond. spearheading efforts inadvancing insurance into in changingthenational insurance landscape, achieve greater thingsahead. Together, we shallprogress to together inunityand inclusivity. We are afamily Togetherness Core Values About Us& – working PG. 3 Annual Report 2018 Protection Made Easy Corporate Structure
Tune Protect Group
Tune Protect Tune Protect Tune Protect Tune Protect Tune Protect Re Direct Malaysia Thailand EMEIA
100% 100% 83.3% 49% 49%
Tune Protect Tune Direct Tune Insurance Tune Insurance Tune Protect Re Ltd Ltd Malaysia Public Company Commercial Berhad1 Limited2 Brokerage LLC3
Retakaful window 100%
Tune Direct (M) Sdn Bhd
Notes: 1 The remaining 16.7% is owned by minority and unrelated shareholders PG. 2 The remaining 51% is owned by various Thai shareholders 4 3 The remaining 51% is owned by a local company in United Arab Emirates Non-Executive Director Senior Independent Mohamed Ghazalli Mohamed Rashdibin Non-Executive Director Independent Tan Ming-Li Non-Executive Director Non-Independent Datuk Kamarudin binMeranun Non-Executive Director Chairman, Independent Ng SoonLai@SiekChuan BOARD OFDIRECTORS (LS0009852) Kimberly OngSweet Ee COMPANY SECRETARY Mohamed Rashdibin SENIOR INDEPENDENTDIRECTOR Yap HsuYi Chen OoiWai Khoo AiLin Datuk Kamarudin bin Meranun ESOS COMMITTEE Khoo AiLin Ng SoonLai@SiekChuan Datuk Kamarudin binMeranun INVESTMENT COMMITTEE Mohamed Rashdibin Ng SoonLai@SiekChuan Tan Ming-Li(Chairman) REMUNERATION COMMITTEE Mohamed Rashdibin Ng SoonLai@SiekChuan Tan Ming-Li(Chairman) NOMINATION COMMITTEE Tan Ming-Li Ng SoonLai@SiekChuan Mohamed Rashdibin RISK MANAGEMENT COMMITTEE Tan Ming-Li Ng SoonLai@SiekChuan Mohamed Rashdibin AUDIT COMMITTEE Ghazalli (Chairman) (Chairman) Ghazalli Ghazalli Ghazalli (Chairman) Ghazalli (Chairman) Boardroom Share Registrars SdnBhd SHARE REGISTRAR Website Email Fax Tel Kuala Lumpur, Malaysia 50490 Wilayah Persekutuan Damansara Heights 19 Lorong Dungun Level 9, Wisma Tune REGISTERED OFFICE Fax Tel Kuala Lumpur, Malaysia 50490 Wilayah Persekutuan Pusat BandarDamansara Jalan Damanlela Level 23A,Menara Milenium Chartered Accountants Ernst &Young AUDITOR (Listed since 20 February 2013) Stock Name Stock Code Securities Berhad Main Market ofBursaMalaysia STOCK EXCHANGE LISTING HSBC BankMalaysia Berhad PRINCIPAL BANKER Email Fax Tel Selangor DarulEhsan,Malaysia 47301 Petaling Jaya Jalan PJU 1A/46 Pusat DaganganDana1 Level 6,Symphony House Registrars SdnBhd) (Formerly known asSymphony Share (Company No. 378993-D) : 603 2095 5332 : 603 7495 8000 : www.tuneprotect.com : [email protected] : 603 2092 1029 : 603 20566200 boardroomlimited.com : BSR.Helpdesk@ : 603 7841 8151/8152 : 603 7849 0777 : TUNEPRO : 5230 (AF 0039) Information Corporate PG. 5 Annual Report 2018 Protection Made Easy 2018 At A Glance
Tune Protect Group
4 Operating Revenue RM 566.1 mil Awards and The Best 3 Travel Insurance FY2017: RM 542.6 mil Accolades Facilitator 2018 2 BRONZE for Net Earned Premiums at the 2nd Best Use of Online Arabian Travel RM 295.4 mil MERIT for Advertising 1 FY2017: RM 321.3 mil Best Use in Kancil Awards Awards, held in Dubai, UAE GOLD for of Social & 2018 for ‘Skip the Profit After Tax Messaging Drama’ campaign Non-Traditional mil Annual Report: Platforms RM 52.9 FY2017: RM 50.0 mil Insurance: in Kancil Awards Financial Services 2018 for ‘Skip the Shareholders’ Equity in ARC Awards Drama’ campaign International 2018 RM 527.1 mil FY2017: RM 503.0 mil Earnings Per Share 6.6 sen FY2017: 6.2 sen
Return On Equity 9.4% FY2017: 9.2%
PG.
6 2018 At A Glance
GLOBAL TRAVEL GENERAL INSURANCE DIGITAL
Tune Protect Re Tune Protect Malaysia 8 products
available on tuneprotect.com Made Easy Protection Gross Written Gross Written Premiums Premiums New e-commerce products: RM 116.6 mil RM 450.8 mil FY2017: RM 105.2 mil FY2017: RM 460.8 mil
Profit After Tax Profit After Tax First on-demand protection plan for extreme sports RM 42.8 mil RM 21.1 mil FY2017: RM 43.2 mil FY2017: RM 22.7 mil Special care protection for the disabled New products: Launched HostProtect with one of our first affinity 1 Tune Protect Travel Baggage partner, HostAStay 2 Tune Protect Travel Gadget 3 Tune Protect Travel – AirAsia (Annual Plan) Tune Protect Thailand
65 countries Gross Written Global footprints Premiums 34 inbound markets RM 52.8 mil (AirAsia and Air Arabia) FY2017: RM 48.0 mil
14 markets Profit After Tax Business-to-Consumer (49% share of profit)
RM 2.6 mil 2018 Annual Report Tune Protect EMEIA FY2017: RM 3.5 mil
Gross Written Premiums RM 18.1 mil FY2017: RM 11.6 mil
Profit After Tax (49% share of profit) RM 2.3 mil FY2017: RM 1.0 mil
Retakaful Travel product launched for 6 markets
10 markets Business-to-Business
PG.
7 Financial Calendar
Quarterly Result
Date Event
25 May 2018 Unaudited consolidated results for the 1st quarter ended 31 March 2018
29 August 2018 Unaudited consolidated results for the 2nd quarter and half-year ended 30 June 2018
15 November 2018 Unaudited consolidated results for the 3rd quarter and nine months ended 30 September 2018
22 February 2019 Unaudited consolidated results for the 4th quarter and financial year ended 31 December 2018
Dividend
Date Event
4 May 2018 Notice of Book Closure for Final Tax Exempt Dividend under Single Tier System of 3.00 sen per Ordinary Share of RM0.10 each
1 June 2018 Date of Entitlement for Final Tax Exempt Dividend under Single Tier System of 3.00 sen per Ordinary Share of RM0.10 each
25 June 2018 Payment of Final Tax Exempt Dividend under Single Tier System of of 3.00 sen per Ordinary Share of RM0.10 each
Notice of 8th Annual General 8th Annual General Meeting Meeting and Issuance of Annual Report 2018
29 April 28 May 2019 2019
PG.
8 T INVESTOR RELATIONS CALENDAR Investor Relations Programme Relations programmes. with ourinvestors viaourmany Investor communication channel and build trust consistently strive to maintainanopen decisions ontheirinvestments. We so investors may make informed Group’s overall corporate strategy, plans anddeliverables alignedto the investors, communicating ourvision, as abridgebetween ourCompany and the investments community. We serve 1 No. 4 3 2 8 7 6 5 plays acrucialrole inengaging the Investor Relations function une Protect Group recognises that 4 January2018 Date 1 June2018 25 May 2018 28 February 2018 15 November 2018 15 October 2018 11 to 12October 2018 29 August 2018 CIMB 10 Details 7 Q1 FY2018 Analyst Briefing Q4 FY2017 Analyst Briefing Q3 FY2018 Analyst Briefing CIMB Non-DealRoadshow CIMB Non-DealRoadshow Q2 FY2018 Analyst Briefing th AnnualGeneral Meeting th AnnualMalaysia Corporate Day of achieving fair valuation andgreater share liquidity. Association. Ultimately, theInvestor Relations team aspires to meetourobjectives In 2018, we successfully: Cap inthe8 for Investor Relations –SmallCapandBest Investor Relations Professional –Small throughout theyear culminated inournomination for Best ChiefFinancialOfficer Our continuous efforts in managing relationships with our various stakeholders 4 3 2 1 non-deal roadshow organised by CIMB Met 15Malaysia andSingapore basedasset managementcompanies ina2-day collective considerable shareholding inourcompany Conducted aspeakingengagementto agroup ofprivate investors witha Registered a16%year-on-year increase inourshareholder base consistent dividendpayments track record Attracted more investors whosoughtarelatively more stable portfolio withour th Malaysia Investor Relations Survey by theMalaysian Investor Relations minutes isavailable onourInvestor Relations website. Group. All resolutions were duly passed. A summary of the shareholders, analysts andtheMinority Shareholder Watchdog We alsoprovided responses to theenquiries raised by our and outlookfor theremaining of2018. highlights for 2017, aswell asourstrategic initiatives updates showcasing ourachievements, recognitions andfinancial Our Group CEO gave a presentation to theshareholders’ in shareholders’ attendance compared to theprevious year. 1 June 2018 in Kuala Lumpur, Malaysia. There was a 47% increase Tune Protect Group’s 7 ANNUAL GENERAL MEETING Venue Kuala Lumpur, Malaysia Kuala Lumpur, Malaysia Kuala Lumpur, Malaysia Kuala Lumpur, Malaysia Singapore Kuala Lumpur, Malaysia Kuala Lumpur, Malaysia Kuala Lumpur, Malaysia th AnnualGeneral Meetingwas heldon Type Conference Analyst Briefing Analyst Briefing Analyst Briefing Roadshow Roadshow Analyst Briefing AGM Relations Investor
PG. 9 Annual Report 2018 Protection Made Easy Investor Relations
ANALYST BRIEFINGS
Tune Protect Group conducted 4 quarterly analyst briefings via teleconference immediately after the announcements of our quarterly financial results in 2018. In keeping with the highest standards of corporate governance and good disclosure practice, our analyst briefings were held on the same day that our Board of Directors convened to approve the quarterly financial results.
Briefing materials, which included the financial statements, analyst presentation, and press release were provided to all interested parties and made available immediately on our Investor Relations website.
INVESTORS AND ANALYSTS MEETINGS, CONFERENCES AND EVENTS
We regularly engaged with domestic and international analysts, fund managers, retail and institutional investors through one-on-one and group meetings and teleconferences in 2018.
We also participated in the “CIMB 10th Annual Malaysia Corporate Day” and a CIMB organised Non-Deal Roadshow both in Malaysia and Singapore in 2018. It was an ideal platform for us to meet existing and potential investors from both local and abroad. Group meeting organised by RHB Research Institute During the year, the senior management of Kumpulan Wang Persaraan (Diperbadankan) (“KWAP”), one of our major institutional shareholders visited our office. It was an opportunity for us to share about our corporate governance, recent initiatives as well as explore potential avenues for collaboration.
No. Meetings Attendees 1 One-on-one meetings 12 27 2 Group meetings 8 38 3 Teleconferences 8 10 4 Conference & Non-Deal 22* 53 KWAP’s visit to Tune Protect Group Roadshow Total Meetings & Attendees 50 128
* Number of companies met
INVESTOR RELATIONS WEBSITE
Our Investor Relations website is an essential communication channel to access investor information and receive feedback and queries. The website contains, among others, annual reports, financial statements, analyst presentations, investor information and interactive stock charts.
We appreciate and welcome feedback and queries on investor- Investor Relations team sharing session with a group of retail investors related matters and can be contacted at [email protected].
PG.
10 RAM Ratings ceased itscredit rating coverage onTune Protect Re effective 29November 2018. 1 Note: SUBSTANTIAL SHAREHOLDERS Investor Information Tune Protect Group iscurrently covered by thefollowing research houses. RESEARCH COVERAGE assessment ofourfinancialpositionandcreditworthiness. Tune Protect Group engageswithdomestic andforeign rating agenciesannuallyto provide stakeholders anindependent CREDIT RATINGS
2 4 3 2 1 No. 1 No. Shareholders: Tan SriAnthony Francis Fernandes (50%) andDatuk Kamarudin binMeranun (50%) A.M. Best Securities KAF-Seagroatt &Campbell CIMB Investment Bank AmInvestment Bank Affin Hwang Investment Bank Research Houses RAM Ratings Rating Agency Institutional investors Asset ManagementLLP River andMercantile Retail &other 47.12% 5.89% Tune Protect Re Tune Protect Group Rated Entities Molob Izzul HakimAbdul Winson Ng Kelvin Ong Tan EiLeen Analysts Effective shareholding asat Best’s Issuer Credit Rating Best’s FinancialStrength Rating Short-term Corporate Credit Rating Long-term Corporate Credit Rating Rating Classification 29 March 2019
7 6 5 No. UOB Kay HianSecurities RHB Research Institute Bank MIDF AmanahInvestment Research Houses Tune Group SdnBhd 15.77% (Diperbadankan) Kumpulan Wang Persaraan 8.17% Ratings 1 bbb+ CIMB SIIISdnBhd 9.40% B++ P1 A AirAsia Berhad 13.65% 1
Keith Wee Fiona Leong Khoo ZhenYe Analysts Outlook Stable Stable Relations Investor PG. 11 Annual Report 2018 Protection Made Easy Investor Relations
SHARE PRICE AND VOLUME
1.20 1,950.00 1,900.00 1.00 1,850.00 0.80 1,800.00 1,750.00 0.60 1,700.00 0.40 1,650.00 1,600.00 0.20 1,550.00 0 1,500.00 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Closing Price (RM) KLCI
2018 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Volume traded 30,596 42,649 53,531 22,126 40,940 73,096 39,644 38,472 18,807 35,062 35,011 17,662 (‘000)
DIVIDEND INFORMATION
54.53%
48.87% 48.70%
41.55% 42.00% Minimum Dividend Payout Policy of 40%
10.64 9.62 9.29 9.17
6.16 5.00 5.20 3.86 4.04 3.00
FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Dividend Per Share (sen) Earnings Per Share (sen) Dividend Payout PG.
12 10,000 10,500 FOREIGN SHAREHOLDINGMOVEMENT NUMBER OFSHAREHOLDERS 25% 20% 11,000 9,000 9,500 8,500 10% 15% 5% 0% Jan-18 Jan-18 Feb-18 Feb-18 Financial Year 2018 Financial Year 2017 Financial Year 2016 Financial Year 2015 Last date of eachFinancialYear Financial Year 2018 Financial Year 2017 Financial Year 2016 Financial Year 2015 Last date ofeachFinancialYear Mar-18 Mar-18 Apr-18 Apr-18 May-18 May-18 Foreign Shareholding Jun-18 Jun-18 Jul-18 Jul-18 Aug-18 Aug-18 15.09% 19.90% 25.25% 23.57% Foreign Shareholding 10,582 9,081 6,116 4,328 Number ofShareholders FBM KLCI Sep-18 Sep-18 Oct-18 Oct-18 Nov-18 Nov-18 Dec-18 Dec-18 Relations Investor 1,900 1,600 1,800 1,700 1,650 1,850 1,550 1,750 PG. 13 Annual Report 2018 Protection Made Easy Corporate Event Highlights
Feb
Tune Protect 5th year anniversary celebration Tune Protect Group Tune Protect Thailand Tune Protect EMEIA Tune Protect Re Tune Protect Malaysia
Nov Oct Tune Protect Malaysia’s CEO participated in the General Insurance Agents Convention 2018
Tune Protect Malaysia’s CEO Tune Protect partnered with Malaysian participated in the 3rd ASEAN Insurance Institute on Malaysian Insurance Summit Insurance Summit 2018
Press Conference on the DoctorOnCall partnership Press Conference on the launch of Sport+ PA product
PG.
14 Topsy Turvy Teambuilding 2018 celebrated Songkran Tune Protect Thailand Apr 2018” at the2 “The Best Travel Insurance Facilitator Tune Protect EMEIAwas awarded nd Arabian Travel Awards Sep business partners with customers and celebrated HariRaya Tune Protect Malaysia Jun
Workshop by Grow theGoose Financial Literacy &Empowerment Bootcamp Financial Literacy &Empowerment Orang AsliYouth at Tune Protect Dec 7 Tune Protect Group’s th AnnualGeneral Meeting Aug with HostAStay Tune Protect Malaysia partnered Investor Relations Awards Tune Protect Group at the8 2 Hari Raya celebration nd Quarter Town Halland Corporate Event th Malaysia Jul Highlights PG. 15 Annual Report 2018 Protection Made Easy Financial Highlights
TUNE PROTECT GROUP GENERAL INSURANCE
TUNE PROTECT MALAYSIA
Gross Written Premiums (RM mil) Operating Revenue ‘18 450.8 ‘17 460.8 ‘16 437.2 ‘15 414.2 2018 ‘14 380.0 2015 566.1 480.2 Net Earned Premiums (RM mil) 2017 2014 RM mil 542.6 RM mil 451.1 ‘18 180.0
2016 ‘17 215.4 516.6 ‘16 208.8 ‘15 179.9 ‘14 160.0
Profit After Tax (RM mil) Net Earned Premiums ‘18 21.1 ‘17 22.7 ‘16 40.1 ‘15 23.0 2018 2015 ‘14 22.2 295.4 303.8
2017 2014 TUNE PROTECT THAILAND RM mil 321.3 RM mil 267.0
2016 Gross Written Premiums (RM mil) 333.0 ‘18 52.8 ‘17 48.0 ‘16 49.4 ‘15 71.8 Profit After Tax ‘14 19.9* Profit After Tax (49%) (RM mil)
‘18 2.6
2018 ‘17 3.5 2015 52.9 72.9 ‘16 2.8
2017 2014 -2.8 ‘15 RM mil RM mil 50.0 76.1 ‘14 3.8* 2016 86.6
PG. Note: 16 * Since acquisition in May 2014 ^ Note: Return OnEquity Earnings Per Share Shareholders’ Equity TUNE PROTECT GROUP Since April2014 RM mil sen % 16.1 2016 9.2 2017 9.4 2018 10.6 2016 6.2 2017 6.6 2018 496.6 2016 503.0 2017 527.1 2018 RM mil sen % 406.7 2014 451.2 2015 17.8 2014 15.3 2015 9.6 2014 9.2 2015 Net EarnedPremiums Gross Written Premiums GLOBAL TRAVEL (RM mil) Profit After Tax (49%) Gross Written Premiums (RMmil) Profit After Tax (RMmil) ‘14 ‘15 ‘16 ‘17 ‘18 ‘14 ‘15 ‘16 ‘17 ‘18 ‘14 ‘15 ‘16 ‘17 ‘18 ‘14 ‘15 ‘16 ‘17 ‘18 ‘14 ‘15 ‘16 ‘17 ‘18 TUNE PROTECT RE TUNE PROTECT EMEIA 0.1^ 0.5 4.2^ 8.7 1.0 11.6 1.2 13.0
(RM mil)
(RM mil) 42.8 43.2 105.2 105.8 Highlights 105.9 107.0 57.4 Financial 116.6 59.9 115.4 124.0 123.9 2.3 18.1 65.9 124.2 129.3 PG. 17 Annual Report 2018 Protection Made Easy Management Discussion & Analysis
Khoo Ai Lin Group CEO Tune Protect Group
PG.
18 reach. partnerships andaffinitytie-ups towiden consumer enhancements; and the development of strategic process improvements andcustomer experience space; digitisation ledby product innovation, Group emphasisinggrowth intheretail non-motor of theyear, we setseveral targets across the Tune Protect Group Group”). (“the At thebeginning 2018 was ademandingyet promising year for Dear Shareholders, Africa (“EMEIA”). segment aswell asexpanded ourfootprints across Europe, MiddleEast, Indiaand UK–based insurtech, tripled our topline growth in Business-to-Business (“B2B”)travel partnerships andmadeastrong foray into theproperty solutionsmarket, invested ina including thefirst ofourexciting on-demandsuite, secured aselectfew affinity lines andlifestyle-related linesofbusiness, rolled outseveral new digitalproducts In 2018, we managedto deliver on our plansaswe madefurtherinroads onpersonal body examination medical workers’ largest foreign with Malaysia’s Partnership Q1 +40% Policies Partnership HostAStay Investment Laka Bahrain Retakaful – Digital ChannelGrowth (yoy) Q2 2018 Key Initiatives Gross Written Premiums • Oman • Lebanon • UAE • Iraq Retakaful RentDAX Sports+ +14% Q3 Kuwait Retakaful – EasyCare PA Q4
pain but long-term gain. In the longer growth, we view this as ashort-term this may inadvertently hurtourrevenue were affecting ourprofitability. Although decision to rationalise portfolios which accounts, while alsomakingaconscious respective linesofbusiness andclients’ thorough review andanalysis ofour Insurance front, we conducted a portfolio mix.OntheMalaysian General balanced, profitable andsustainable is more criticalisto maintainawell- Whilst topline growth isimportant,what key markets. phases andrecently went live inseveral development, integration and testing necessary requirements mapping, learning. We have completed the leveraging data analyticsandmachine optimisation ofTravel insurance, is essentially the customisation and AirAsia was Dynamic Pricing, which from ourregular engagementswith One revolutionary ideathat stemmed innovative ways to drive salesupwards. insurance?’, we continued to discuss on safe travel tips and ‘why buy travel In additionto educational campaigns policies issued. than doubledthenumberofbundled sector inMalaysia. For 2018, we more insurance to airfares in the aviation products orservices suchastravel from pre-selecting and addingoptional initiatives which restricted airlines insurance salesdueto regulatory address theslowdown inthetravel July 2017 asaremedial measure to We launched the bundled product in product ofAirAsia,continued to grow. embedded withinthepremium flex Travel, salesofourbundledinsurance We didnotstop there. OnGlobal the numberofbundledpoliciesissued doubled More than Management Discussion & Analysis
PG. 19 Annual Report 2018 Protection Made Easy Management Discussion & Analysis
The Tune Protect brand went through a facelift where & Marketing Officer and a Chief Technology Officer in April 2018 and you would have noticed a younger, more vibrant and June 2018 respectively, to spearhead lifestyle-oriented look, feel and positioning across and accelerate our digitisation journey through improvements in technology our marketing efforts and collaterals to reflect our and strengthening our digital capabilities so that we can better connect and dynamism and relevance as a leading digital insurer collaborate with customers and business and a lifestyle enabler. partners alike, both domestically and across borders.
We bade farewell to our respected run, we can expect improvements in loss Tune Protect Thailand managed to Group Chief Executive Officer ratios and a healthier portfolio mix, plus, secure several sizeable travel agents tie- (“GCEO”), Razman Hafidz bin Abu the slowdown in motor topline growth ups in 2018, further stamping our mark Zarim who retired from his position on would be compensated by the growth as a Travel insurance ‘guru’. The growth 31 December 2018 as he has decided in the non-motor business segment, focus moving forward for Tune Protect not to seek reappointment upon the namely from personal lines and Thailand, apart from travel insurance expiry of his regulatory tenure with small medium industries (“SMI”) lines which remains a priority, includes the Group. He had, however, assumed of business. affinity partnerships and new digital the role of advisor to the Board of revenue streams. Directors, a position he will hold until Our Overseas Ventures, particularly 14 July 2019 to ensure a smooth our joint venture (“JV”) in EMEIA, Tune Share of profits from our Overseas leadership transition. Prior to accepting Protect EMEIA, continued to exceed Ventures contributed 9% of the Group’s the GCEO position, he was the Group expectation. Our efforts are bearing earnings before tax. Chairman, a position he assumed in 2012. fruit evidenced by the higher sales In his capacity as GCEO, Razman led the generated from our B2B channel as our We are indeed focused on achieving company steadily, weathering through a relationships with partners, mature. our end goal of becoming a leading less favourable operating environment digital insurer. In realising this vision, during a period of phased liberalisation Our Thai associate, Tune Protect amongst others, we had strengthened of motor and fire insurance in Malaysia, Thailand had a healthy topline growth the digital and technology arms within the switch from “opt-in” to “opt-out” and underwriting margins, albeit lower our organisation with the appointment approach on the Malaysian online investment returns for 2018 due to some of several key hires during the year. travel insurance bookings and changes PG. exposure to the weak equity market. We recruited a Group Chief Digital in accounting standards. Together 20 increasing take-up rate. Asaresult our campaignsfor ourcustomers, thus, us to better craft products andrefined to purchases. Audience analytics allowed encouraging conversions from interests increase relevance to customers while and real-time audience data to leveraged performance marketing For instance, we intensified andbetter time tracking andaudience analytics. facets oftheirdigitalspace usingreal- We follow customers through themany extra emphasisondigitalplatforms. omnichannel marketing strategies with a more targeted effort inexecuting and alifestyle enabler. There has been relevance asaleadingdigitalinsurer collaterals to reflect our dynamism and across ourmarketing efforts and oriented look,feel andpositioning a younger, more vibrant andlifestyle- facelift where you would have noticed The Tune Protect brand went through a AirAsia Group andTune Group. ecosystem of companies within the assets as well as leveraging on the capitalising andmonetisingthedigital the full potential of the Group, Ai Lin’s immediate planwas to unlock were offto apromising start for 2019. With adynamicleaderinplace, we to succeeding therole ofGCEO. business, Tune Protect Malaysia, prior the Group’s Malaysian General Insurance Lin was theChiefExecutive Officer of roles. Alsonostranger to theGroup, Ai in leadershipandseniormanagement put inplace to ensure asmoothtransition succession planningthat theGroup had appointment was part of our Group’s January 2019, succeeding Razman.Her Khoo AiLinwas appointed GCEOin him well. stewardship andcommitment, andwish partnerships. We thankRazmanfor his homegrown assets andbuildingaffinity digital growth through theharnessing of realigned theGroup’s direction towards revisited core business strategies and both theGroup anditssubsidiaries,he with therenewed leadershipteam of
2 Travel Insurance Facilitator 2018 at the and received theaccolade astheBest Non-Traditional AnnualReport category the ARCAwards International 2018 for in various categories. We won Goldat international awards duringtheyear are also proud to have bagged several Social andMessaging Platforms. We and received aMeritfor Best Useof for Best Use of Online Advertising campaign, where we took home Bronze Awards for the‘SkipDrama’ recognised intheprestigious Kancil Our marketing efforts were duly (“yoy”) respectively. grow by 40%and14%year-on-year from(“GWP”) ourdigitalchannels policies andGross Written Premiums we rapidly witnessed thenumberof of ourconcerted marketing efforts, investment income. RM566.1 million undergirded by higher Operating revenue increased 4.3%to strived to optimise our portfolio mix. the year withRM519.0 millionaswe growth intheGroup’s GWP ending This partlycontributed to thenominal Malaysian General Insurance business. sustainability andsolvency ofour initiatives to strengthen the In 2018, we implemented several FINANCIAL PERFORMANCE second consecutive year. year respectively. by 40%and14%year-on- our digitalchannelsgrow Written Premiums from of policiesandGross witnessed thenumber efforts, we rapidly concerted marketing As aresult ofour nd Arabian Travel Award Awards for the
and effectiveness. transformation planto drive efficiency exercise whichisaligned to ourdigital voluntary separation scheme (“VSS”) RM21.1 million partly attributed to the franchise portfolios. PAT was lower at as rationalisation of selected agentsand rationalisation inoperating costs, aswell year suchashighermotor quotashare, stabilisation initiatives throughout the the managementexecuted various To achieve anoptimalportfolio mix, future long-term sustainable profits. various initiatives aimedat achieving business exhibited improvements from Our Malaysian General Insurance assessment appliedonreceivables. (“MFRS9”) with more rigorous Standard 9FinancialInstruments of the Malaysian Financial Reporting impairments following theadoption was marginally lower dueto higher East business. Bottomline performance airline partnershipsaswell asour Middle based contributed by product bundling, 10.9% yoy increase. Growth was broad- with ahigherGWP ofRM116.6million,a Re, resumed itsstrong performance Our Global Travel business, Tune Protect loss years. development from current andprior net claimsfrom favourable claims expenses were mitigated by lower yoy at 94.1% ashighermanagement increase. Combined ratio was stable RM52.9 million representing 5.8%yoy posting aProfit After Tax (“PAT”) of operating climate, we remained resilient Notwithstanding thechallenging
investment income undergirded by higher RM566.1 mil increased 4.3%to Operating revenue Management Discussion & Analysis PG. 21 Annual Report 2018 Protection Made Easy Management Discussion & Analysis
The Group’s total assets FINANCIAL POSITION AND LIQUIDITY at the end of 2018. The Group maintains a solid capital base which supports the as at the end of 2018 The Group’s total assets as at the end Group’s strategies, capital expenditure stood at RM1.5 billion of 2018 stood at RM1.5 billion which was and future growth without external RM188.8 million or 14.3% higher than financing. Effective and prudent which was RM188.8 2017, mainly from an increase in capital management remains the reinsurance assets as a result of focus for sustainability of the Group, million or 14.3% higher better management of claims via as well as compliance with the capital than 2017, mainly from an reinsurers. Total liabilities increased adequacy and solvency requirements by RM163.2 million or 21.2% primarily as prescribed by the Financial increase in reinsurance due to the corresponding increase Services Act 2013 and Labuan Financial assets as a result of in insurance contract liabilities. Services and Securities Act 2010 for Overall, this gave rise to a higher major subsidiaries. better management of net asset position by RM25.6 million, which was a 4.7% appreciation from There were no requirements for claims via reinsurers. RM0.67 to RM0.70 in net asset value per additional capital resources and our ordinary share attributable to owners of capital structure remained the same at the parent. year end.
We are pleased to report that the share The Group’s cash and cash equivalents DIVIDEND POLICY of profits from our Overseas Ventures at the end of 2018 was 36.9% lower at a was up 8.2% spurred by our Middle East healthy level of RM26.3 million thanks to Since Tune Protect Group Berhad’s business, Tune Protect EMEIA. Share prudent working capital and investment listing back in February 2013, we have of profits from Tune Protect EMEIA management. The Group continues to consistently maintained a payout ratio grew more than 100% underpinned by maintain a sound financial position in of above 40%. We foresee this trend to higher GWPs arising from AirArabia and the execution of its strategic objectives continue as our business continues to the main B2B markets. Tune Protect for long-term value creation. generate profits year after year whilst Thailand recorded better underwriting our capital reserves remain sturdy. The performance from lower net claims and CAPITAL AND RESOURCES current payout ratio is expected to be lower net commission ratios. Overall MANAGEMENT sustainable as we remain in a zero- share of results from Tune Protect gearing position with adequate liquidity Thailand was lower due to weaker The Group’s committed capital to support growth and investment investment performance. expenditure stood at RM30.6 million as initiatives moving forward.
Profit After Tax RM52.9 mil representing 5.8% yoy increase
PG.
22 whole year. Tune Protect Travel – AirAsia their travel insurance needsfor the one Travel insurance purchase to cover choice andconvenience ofmaking just travel regularly, they now have the travellers in mind.For customers who – AirAsiaAnnualPlan,with frequent We alsointroduced Tune Protect Travel baggage orbaby stroller. damage to acustomer’s checked in Travel Baggageprovides coverage on as lost dueto theft,whereas Tune Protect damage to acustomer’s gadgetaswell providesGadget coverage onaccidental Travel Baggage. Tune Protect Travel Protect Travel andTune Gadget Protect plans withtheintroduction ofTune of AirAsiaLifestyle Travel Protection expanded ontheadd-onproduct range activities during their travels. In 2018, we and benefitsmatching oftheirlifestyle customers theflexibility to selectplans plans are specificallydesigned to offer Our AirAsia Lifestyle Travel Protection from thiscollaboration. incremental Travel insurance revenue uplift ofbetween 3% to 5%in key markets. We expect to achieve an Pricing isalready live inseveral ofour which suits hisor her profile. Dynamic and product offer dependingon his orherown customised messaging different segments would each receive real-time data. Two customers from two to thecustomer, allbasedondynamic, recommending acustomised Travel plan read andpredict, before optimisingand The smart technology is able to first before offering aninsurance solution. deeper insightsinto acustomer’s profile on DynamicPricingallows usto have and an international technology provider opportunity to collaborate withAirAsia for singletripsorannualplans.The bundles to comprehensive cover, and options ofTravel plansfrom simple signature product. We offer many Travel insurance isundeniablyour Global Travel BUSINESS ANDOPERATIONS REVIEW
HostProtect Protect viaHostProtect. and properties are protected by Tune stay management.AllHostAStay’s hosts covers various system aspectsofshort- No.1. Their digitalplatform, HostPlatform, and withthevisionto beSoutheast Asia’s stay management company in Malaysia on board was HostAStay, theNo. 1short- One ofthefirst affinitypartnerthat came to taponto theretail mass inthissector. with several property solutionsproviders Protect Malaysia entered into tie-ups in theproperty sector. To thisend,Tune partnership space by establishing aniche Malaysia ventured into theaffinity in retail business, in2018, Tune Protect key strategies ofacquiring criticalmass In linewithoneofTune Protect Malaysia’s tech startup that offers four core with subsequently entered into a partnership property sector, Tune Protect Malaysia Realising thevast opportunities inthe own negligence. of anaccident causedby orthrough guests andthird partiesintheevent plan alsocovers thelegalliabilityto contents oftheirproperties. The against any loss ordamageto the enjoy peace of mind as it protects Malaysian General Insurance in excess of100%. translate to ayoy B2Btopline growth of travel agentsandthesepartnerships Protect EMEIAispartnerto over 800 travel agentsintheMiddleEast. Tune traction inthenumberofactivated B2B more new markets. Similarly, we gained our airlinepartners’routes expansion into footprints to 65countries alignedwith In 2018, we increased ourglobal with AirAsiaorany otherairlines. travelling domestically orinternationally cover for an individual or a family Annual Planprovides comprehensive
Affinity Partnerships DAX Venture, aproperty solutions allows homeowners to
Next onthelist isTune Protect Surgical insurance. Foreign Workers’ Hospitalisation & Workers’ Compensation Schemeand others, theproducts offered are Foreign the agency’s onlineportal.Among foreign workers/employees through can purchase insurance for their medical examination agency. Employers of insurers ofalarge foreign workers’ Tune Protect Malaysia joinedthepanel with theseorganisations. objective isto potentially grow together travellers, tenants andhomeowners. The and mutuallybenefittingservices to solutions providers to deliver compelling technology startups andproperty an established business working with and rentProtect isagreat example of insurance protection suchasHostProtect The incorporation or bundlingof personal accident. malicious damage, emergencies and are protected from rental defaults, to tenants, whilst thelandlords, inreturn, nolongerapplies ‘two-month deposit’ deposits collection, where the standard designed andbreaks thenorm inrental the rentDAX platform, rentProtect was Through thisexclusive partnershipon value chaininMalaysia. and inefficiencies withinthe property platforms aimedat reducing thefriction related partners. of ourcollaboration witheducation- Lumpur, SelangorandJohoras part to pre-school children inKuala in theoffering ofinsurance coverage Malaysia’s success insettingitsfootprints as at theendof2018 RM30.6 mil capital expenditure stood at The Group’s committed Management Discussion & Analysis
23 PG. Annual Report 2018 Protection Made Easy Management Discussion & Analysis
Given the wide breadth of pre-schools unforeseen medical expenses and HostProtect allows and childcare centres nationwide, Tune sports equipment damage. The extreme Protect Malaysia is in continuous talks sports covered include paragliding, homeowners to enjoy to penetrate other states in providing white water rafting, snowboarding and peace of mind as it protection to more students and even bungee jumping to name a few. children in the near future. protects against any The move to introduce Sports+ is in line loss or damage to Underserved Market with our commitment to be a leading lifestyle enabler in the region, and part the contents of In 2018, we also introduced a product for of our digital journey. their properties. the underserved community in Malaysia. This is in line with the aspiration of our Aside from Sports+, we have also regulators to create a more inclusive embarked on another on-demand financial system in Malaysia by targeting solution known as Pay-As-You-Drive Investment in Insurtech the disabled or the Persons With (“PAYD”). It is motor insurance plan Disability (“PWD”) segment. We wish to which rewards drivers for low mileage On the Insurtech front, we concluded be more instrumental in providing the recorded during the 12-month policy the investment in Laka Ltd, a UK-based necessary protection and care for the period by refunding part of the peer-to-peer (“P2P”) Insurtech startup disabled community in the country. premium paid. There is no impact on in 2Q2018 where the Group now holds the vehicles’ non-claimable discount, 9.99% equity interest. Laka Ltd offers The product, known as EasyCare PA, nor does it require any installation an alternative insurance model which is a personal accident insurance that of device in the vehicle making it provides a common platform for the provides affordable protection for the a product that is easy to access for UK cycling community to self-insure disabled covering accidental death, those who fit the criteria. their mid to high end bicycles. We are ambulance fees, medical expenses, currently evaluating the viability of the and rehabilitation allowance, among Rocketship business model for the Asia market. others. For ease of accessing the product, it is available on our Business- The various short-term and long-term Performance Marketing to-Consumer (“B2C”) website at initiatives laid out in 2018 are gradually tuneprotect.com. materialising to strengthen the Group’s In line with our digital agenda, our position as a leading digital insurer marketing approach has also gone Digital Agenda and lifestyle enabler in the region. deeper into performance marketing and This includes the development of a audience based analytics - a method of On-demand Solutions turnkey digital insurance enabling interactive advertising paid not based platform internally coined the on a set of rates, but on variable rates On-demand solutions mark another “Rocketship” which encompasses a that depend on the performance of the milestone of the many innovative mobile application and sets of advertisement and audience data. products that we are able to bring Application Programme Interfaces to the market. On-demand products (“API”) to enable affinity partnership With performance marketing, we are allow people to enjoy the benefits connectivity and a completely revamped able to follow or track prospective of protection at the right place and website that focuses on consumer customers digital footprints from right time. experience ranging from a refreshed the point of browsing a particular user interface, simpler customer webpage or any social media platforms In 2018, we launched our first on- registration and more. to encouraging them to click on an demand product, Sports+, the extreme offer or advertisement that could sports protection that provides the Phase 1 of this project has been potentially convert into sales. Today, we flexibility of selecting cover from just successfully completed which includes do run regular performance marketing 1 day, up to 1 year, all within a few clicks at the back-end and mobile application campaigns with our airline partners, for tuneprotect.com. Sports+ is the perfect development. As an insurer diagnostic their customers. companion for sports enthusiasts, platform, Rocketship is now ready for fitness buffs or anyone who needs deployment within the Group and with protection from accidental injuries, our partners within the region.
PG.
24 forward, we lookto expand ourscope of underwriters across theworld. Moving relationships withvarious localnon-life airline partnershipsandentrenched we hadsteadily established exclusive in 5continents. Inthelast few years, business spans across 65countries Our current nichetravel reinsurance Global Business and healthy capitaladequacy ratio. and maintain a strong business solvency healthy dividendsto ourshareholders underwriting profits to beableto pay revenue streams, achieve sustainable Ultimately, we want to diversify our capabilities and4)National business. 2) AirAsiaecosystem, 3)Insurtech business segments–1)Globalbusiness, GAIN essentially zooms in on our 4 core introduction ofourGAINaspiration. amplifying thiscommitment withthe customer experience. We are further reach, and3)Deliver exceptional & differentiation, 2)Widen distribution strategic pillars of 1) Product innovation digitisation journey alignedwithour3 We have beenconsistent inour FORGING FORWARD
continue to explore potential business in otherASEAN countries aswe Similar inroads are beingmade travel agents. platform offered by Tune Protect for through anintegrated B2Bonline agencies to distribute travel insurance national association of tours and travel with alocalIndonesianinsurer andthe into aMemorandum ofAgreement Indonesia as in 1Q2019, we entered We are already making inroads into embracing digitisation rather rapidly. low ininsurance penetration andyet, are sizeable young population, are relatively in retail anddigitalasthey bothhave a These markets present opportunities on theASEAN andIndochinamarkets. Our near-term focus ispartnerships affinity business leveraging digitisation. as well share acommon goalto grow potential, have sizeable retail bases, countries whichare reputable andwith tie-ups withunderwriters from various concept, we are ableto forge strategic By adoptingan“open architecture” technology capabilities,internationally. lines ofbusiness, aswell asoffer our of Travel business to otherretail lifestyle Global business from pure reinsurance
priorities in2019 to increase traction in Offline conversions willbeoneofour neglecting thegrowing offlinechannel. channel. Having saidthat, we are not higher take-up rate withintheonline platform. This isanticipated to drive a insurance onAirAsia’s upgraded booking we utilisedreal-time optimisation of went live inseveral key markets where In 1Q2019, ourDynamic Pricinginitiative booking platform. beyond Travel insurance on the online across the Tune Group ecosystem, and just within the AirAsia Group but also to reinforce our strategic partnership not there are synergistic opportunities for us million in2018. We are cognisant that carried grow to approximately 80 expansion whichhasseenitspassengers business has since grown withAirAsia’s for AirAsia back in2009. Ourtravel since ourgenesisascaptive insurers cornerstone ofourGroup’s business Global travel hasconsistently beenthe AirAsia Ecosystem from insurance premiums. revenue streams inadditionto revenue our digitalcapabilities to unlocknew the nearfuture. We lookto monetise other insurers andbusiness partnersin analytics andpropensity modelling to we lookto offer ourexpertise indata our insurtech anddigitalcapabilities, corporate partnersthere. By leveraging collaborations withunderwriters and tuneprotect.com. all withinafew clicksat just 1day, upto 1year, of selectingcover from provides theflexibility sports protection that Sports+, theextreme on-demand product, We launchedourfirst Management Discussion & Analysis
25 PG. Annual Report 2018 Protection Made Easy Management Discussion & Analysis
We have been consistent in our digitisation journey aligned with our 3 strategic pillars of Product innovation & differentiation, Widen distribution reach, and Deliver exceptional customer experience.
that space. Avenues we will explore such as seasonal products or campaigns. connect with their very own business include insurance for group bookings Through these various initiatives we clients and customers effortlessly, in the and expanding on the B2B travel agents expect growth from the AirAsia segment digital insurance ecosystem. The goal space. We continue to deliver value to to be steady. is for our partners to be able to fulfil customers, increase brand awareness their customers’ digital requirements and build customer loyalty by focusing Insurtech Capabilities quickly, without the need for them to on enhancing our customer’s end-to- make heavy investments in building the end experience. Today, many insurance companies are technology themselves. The aim is not eager to join or have joined the digital just to serve locally but globally with In October 2018, we partnered with bandwagon. In insurance, we have the intention to expand our insurtech ROKKI, an in-flight entertainment our fair share of digital disruptors and footprints into more territories. solutions brand to provide insurtechs, ranging from aggregators to complimentary chats plan for all robo-advisors. At Tune Protect, we are Recognising the endless insurtech AirAsia Tune Protect travel protection clear of our digital path as we continue opportunities, we embarked on our own policyholders on board all ROKKI- to strengthen our digital capabilities platform development – Rocketship, a enabled flights. We also partnered with within the Group. As it is, we already turnkey solution capable of integrating DoctorOnCall during the holiday season have our own homegrown digital assets front-end platforms seamlessly with in December 2018 to offer AirAsia Tune in managing our insurance business. back-end support systems, and in doing Protect travel protection policyholders’ Certainly, we want to take advantage so, allows the user speed to market and access to a wide range of medical of the capabilities of our digital assets, the agility to churn out product plans assistance services offered by the tele- customise and offer them as a value add on the fly. Phase 1 of Rocketship is ready health provider. We are continuously to our existing partners as well as a door for deployment within the Group and looking at opportunities to bring more opener for new partners, globally. Tune prospective external business partners. value and service to customers within Protect shall be the digital enabling The long-term plan is to leverage the traveller community and the wider platform for our insurance partners, in our digital assets while connecting AirAsia ecosystem. We are exploring the which we provide the full suite of apps, insurers, business partners, agents and
PG. feasibility of instant claims payout and web platform and set of API which customers digitally. automation, and innovative offerings can equip and allow our partners to 26 will continue to manage theseclosely. premiums, earnings and solvency, and business focus withtheperformance of We are mindful of balancing our shiftin lines ofbusiness. growing thenon-Motor retail andSMI Motor riskand channel efforts in a prudentapproach inunderwriting terms oflinesbusiness, we shalltake be asignificantrevenue contributor. In channel, whichintimeto come shall also invest efforts inbuilding theAffinity backbone distribution channels,we will drive profitable business from our broking channels. As we continue to and services, for both our agency and innovations in retail andSMIproducts digital society. 2019 willseeseveral and technology relevant to today’s and tools, leveraging innovation our salesforce withtherightproducts term strategy. We believe inequipping have, instead, taken onourown longer- we view that asless sustainable and premium rates to wincustomers over, thinner earningmargins by lowering Whilst otherplayers may optfor to face stiff competition intheindustry. Having saidthat, we expect to continue exact detailshave yet to beconfirmed. Fire businesses isanticipated thoughthe Malaysia, liberalisation oftheMotor and On thegeneral insurance landscape in National Business strong data driven organisation. and setthestage for the Group to bea the rapidly changingdigitallandscape, react quicklyto consumer demandsin enable theGroup to benimblerand invest indata analytics capabilitiesto the Group is committed to continue to categories, more accurately. Assuch, segments withmore specificproduct we canreach therighttarget audience and artificialintelligence capabilities, with real time data, machine learning right automation andalgorithms fused information sources. Coupled withthe leverage on to draw insights from various Data analyticsisapowerful tool we
product reinsurer. hence reduces theriskofbeingasingle us moving beyond travel reinsurance and diversify ourincome streams willalsosee major airlinepartner. Furtherplansto which helpedeaseourreliance onour growth from ourMiddleEast operations reduced. This isthanksto stronger written by theGroup, hasalsogradually of total Travel insurance premiums contributed by AirAsiaasapercentage partner to insurer to reinsurer. GWP timely collection ofpremiums from airline and itsinsurance partners,inensuring and regularly connects withbothAirAsia agreed standard operating procedure Tune Protect Re hasinplace aclearand associated withpremium receivables, countries itoperates. To mitigate risks local underwriters intherespective considering that itpartnersmultiple Re isalsoexposed to counterparty risk reinsurer for travel PA. Tune Protect Group andbeingasingle product exclusive partnership with AirAsia to concentration riskby virtueofits subsidiary, Tune Protect Re isexposed Global Travel –Ourreinsurance subsidiaries’ nature ofbusiness. and operational risksinherent to our We have highlighted somekey determining theactionsto mitigate them. that ourbusiness isexposed to whilst convenes regularly to assess therisks Risk ManagementCommittee that framework underthepurview ofour instituted arobust riskmanagement At Tune Protect Group, we have RISK MANAGEMENT where feasible. from Tune Protect’s internal ecosystem, leveraging innovation andtechnology sustainable business portfolios, whilst is to produce healthy, profitable and The goal for our Malaysian business considerable exposure to regulatory our reinsurance subsidiaryhas Protect Re’s international presence, Regulatory risk –Given Tune business
systems. with back-end support platforms seamlessly integrating front-end solution capableof – Rocketship, aturnkey platform development We embarked onourown in 2018 80 mil carried grow to approximately which hasseenitspassengers in tandemwithAirAsia’s expansion Our travel business hassince grown tolerance andappetite. relative to the company’s risk the Board to assess risk exposure risk appetite metricissubmitted to are mitigated. Tune Protect Re’s most aspectsofregulatory risks annual reviews conducted to ensure improved, aresult ofrigorous years, theframework hasbeen operating environment. Over the Re’s growth insuchadynamic equipped to support Tune Protect the framework and statement are was approved by theBoard. Both a RiskAppetite Statement which Framework andhave established a comprehensive RiskManagement Tune Protect Re, we have inplace particular country ofoperation. At risk globallywhichisuniqueto the Management Discussion & Analysis
27 PG. Annual Report 2018 Protection Made Easy Management Discussion & Analysis
V Leading Digital Insurer ISI ON We believe everyone deserves to be protected Committed to making insurance easy to M access, easy to understand, easy to buy, S IS TA SI easy to claim and easy on the pocket TE ON ME NT 1 Lead in Product 2 Widen Distribution 3 Deliver Exceptional Innovation & Channels & Customer Experience Differentiation Expand Reach S TR AT EG PIL IC LA RS
TR AN SF OR MA TIO PIL N LA RS
G A I N
Global Business AirAsia Ecosystem Insurtech Capabilities National Business
Going beyond Driving incremental Expanding & monetising Long-term sustainable travel protection growth beyond travel our capabilities underwriting profits for product & online Tune Protect Malaysia sales channel
PG.
28 volatile oilprices, ongoing trade tensions affecting theglobaleconomy suchas 2019 dueto theplethora of factors We are cautiouslyoptimistic about OUTLOOK on non-motor retail andSMIbusinesses. exposure whilst placingagreater focus forward, we expect to reduce ourmotor rationalisation in4Q2018. Moving also carriedoutamotor portfolio of motor premiums. Management included reducing thenetretention Among theremedial actionstaken to address theuntenable loss ratios. actions were taken by management Tune Protect Malaysia alone. Mitigating systemic industry issue notconfined to levels ofmotor claimsrepresent a approximately 40%. Current elevated business currently stands at portfolio inourgeneral insurance Tune Protect Malaysia –The motor interruption occur. high level of client service should an positioned to continue to provide a regulator. Tune Protect is well yearly basisasrequired by our arrangements isperformed ona Extensive testing ofourBCP and redundant infrastructure. staff, alternate processing locations, leveraging geographically located scope andimpact through business interruptions ofvarying risks. This approach addresses risks, technology risks,andhuman events covering riskssuchasnatural defines scenario-based plansfor awareness. Tune Protect’s BCP training for allemployees andsafety units andsystems, testing ofplans, planning for allcriticalbusiness ongoing riskmanagement,recovery implementing preventive measures, which covers amongst others, an enterprise wideongoinginitiative accessing live data. BCPisessentially their functionsat thealternate site departments successfully performed in September 2018 where all critical conducted for Tune Protect Malaysia – ABusiness Continuity Test was Business Continuity Planning(“BCP”)
oriented protection. innovative on-demandandlifestyle- SMI businesses as well as introducing focusing more onnon-motor retail and in the motor insurance space, include Malaysia to address challenges faced emptive measures taken by Tune Protect Motor, stay at elevated levels. Pre- while industry claims,particularly competition leading to margin erosion, further exacerbate product pricing liberalisation measures in2019 to ASEAN. In Malaysia, we foresee the full for ourplansto expand furtherinto the globalaverage. This bodeswell to GDPiscurrently less thanathird of ratio ofASEAN’s general insurance a vibrant young population whilethe upon favourable demographics with region remains promising premised General insurance growth in the ASEAN customer profile. and abetter understanding ofour via personalisedtravel protection appeal to different typesoftravellers Dynamic Pricing,we endeavour to or are embarking on. The launch of with themany initiatives we have we are managingthechallenges weigh on the aviation sector. However, airport departure levy which would passenger service charge rates and for Malaysia includepotentially higher industry. Otherdownside riskfactors to beakey concern for theairtravel Uncertainty offuelprices willcontinue Southeast Asia andbeyond. which would spearheadfree trade in Comprehensive Economic Partnership potential ratification oftheRegional region. Key themes for 2019 include the China vying to imposeitscloutinthis powers suchastheUnited States and This isevidenced by dominantworld in world trade cannotbedisregarded. ASEAN region, itsstature andinfluence 4.8% isanticipated for 2019. Asfor the growth in2018 andaforecast of4.3%to backdrop, Malaysia posted a4.7% GDP weak inflationary pressures. Against this accommodative financingconditions and back of a people-friendly budget 2019, Malaysia issomewhat insulated onthe and geopoliticalrisks.The impactto
the Group. capabilities within strengthen ourdigital path aswe continue to are clearofourdigital At Tune Protect, we transformation journey. as we make boldstrides inour We thankyou for standing by us digital economy. accessibility anddistribution inthis insurance companies to increase digital is alignedwithourregulator’s callfor vision to bealeading digitalinsurer in ourminds.We are pleasedthat our evolutions intheindustry, isforefront leveraging the digital disruptions and and profitable business capableof financial results. Forging a sustainable in delivering thedesired outcome and right talentsisofutmost importance business to drive it forward. Having the the rightpeopleinevery facet ofour journey becausewe have inplace We are bullishonourtransformation our platforms services. from income earned through and from years by unlocking new revenue streams on ourrevenue targets inthecoming IT platforms, we shallbeableto deliver Thanks to oursophisticated digitaland our businesses bothlocallyandglobally. to provide seamless supportto drive that therightinfrastructure isinplace 3-year journey, beginningwithensuring visualise our transformation plan as a does notmaterialise overnight. We pillars. We are cognisant that success delivering onour4transformational changes. For 2019, we are focused on post adjusting to airtravel regulatory Travel business resumed itsgrowth Insurance business whilst ourGlobal stabilising ourMalaysian General for 2018 haslargely beenabout For Tune Protect Group, thenarrative Management Discussion
& Analysis
29 PG. Annual Report 2018 Protection Made Easy Sustainability Statement
Introduction
This is our second year of sustainability reporting and our overarching sustainability priorities and approach to Economic, Environment and Social (“EES”) risks and opportunities continue to be defined by our “Responsible Actions, Sustainable Future” approach. The approach outlines our endeavour to be ‘Economically Productive, Environmentally Protective and Socially Proactive’ with respect to our impact on individuals, communities and the environment.
SCOPE
Our second sustainability statement covers our operations in Malaysia, comprising Tune Protect Group, Tune Protect Re and Tune Protect Malaysia. The disclosures comply with the Main Market Listing Requirements of Bursa Malaysia relating to Sustainability RESPONSIBLE ACTIONS, Statement in Annual Reports. The SUSTAINABLE FUTURE information presented in this statement reflects operations of the Company ustainability is not simply a for the reporting period from corporate goal for Tune Protect 1 January to 31 December 2018, unless SGroup, but a business imperative. otherwise stated. Unsustainable environmental, social and economic behaviours increase This report represents our first step risks and amplify financial losses. To towards our 2017 goal to progressively continue to thrive in a challenging publish more comprehensive and rapidly evolving industry and sustainability disclosures. We continue environment, we need to establish to work towards our target to align not just good controls, but sound the contents of future reporting with platforms for our people to implement the Global Reporting Initiative (“GRI”) our initiatives for a better world. Standards in order to ensure that our approach to sustainable matters is Underpinning our sustainability efforts both relevant and transparent. Moving is adherence to the highest ethical forward, we aim to show how we attain standards. We hold our values steadfast, sustainable outcomes in our business for they represent not just our conduct, and work to identify sustainability- but how we deliver on our promises to related strategic approaches throughout our stakeholders. It is our values that our value chain where we can create guide our credibility, team-spirited value for our stakeholders. and knowledge-driven organisational culture, and it is the culture that gives Tune In 2018, we also aligned our material Protect Group the innovative attitude matters with the United Nations needed to provide sustainable solutions. Sustainable Development Goals PG.
30 concern to stakeholders. We employ avariety ofmechanismsfor engagementto gainaholistic picture ofthesustainability matters that are ofutmost affect and are affected by our business, creating beneficial and impactful relationships to understand their evolving priorities. positive impactsacross theentirety ofourbusiness operations. In doingso, we regularly engagewithindividualsandgroups who At Tune Protect Group, we strive to create ashared value amongourshareholders by delivering products andservices with OUR STAKEHOLDERS acting inconcert withglobalefforts. framework ensures that oursustainability initiatives are addressing themost criticalandup-to-date matters andthat we are (“SDGs”), demonstrating ourcommitment to international efforts towards sustainability. OuralignmentwiththeSDGsglobal SUSTAINABILITY
HIGHLIGHTS
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the disabled care protection for EasyCare PA, aspecial sports enthusiasts, and designed for extreme an on-demandprotection products, i.e. Sports+, Launched two inclusive the organisation Marshalls throughout group ofGreen 2018 andappointed a Programme inFebruary Environmental Launched aSustainable service function centralised customer and settingupa (tuneprotect.com) our digitalplatform payment optionon Exchange (“FPX”) Financial Process experience by enabling Enhanced customer Engagement activities from ourCommunity Total of7,558 beneficiaries Malaysia’s headquarters Re andTune Protect Group, Tune Protect kWh at Tune Protect saving more than22,000 consumption by 3%, Reduced electricity 9.1 days to 8.8days resolve complaints from taken to respond and Improved average time internal recycling Raised RM2,600from satisfied andremain loyal of ourcustomers are of 86%where majority Net Promoter Score Sustainability Statement PG. 31 Annual Report 2018 Protection Made Easy Sustainability Statement
Below is a list of our stakeholders and how we engage them.
Stakeholder Group Engagement Approach Frequency/Availability
Customers • Customer Experience Department Location and operating hours available on the corporate website (tuneprotect.com)
• Customer satisfaction survey Available immediately to customers who make online purchases through the B2C platform
• Digital platforms (e.g. corporate website 24/7 (tuneprotect.com), B2C platform for Tune Protect Travel – AirAsia travel insurance (www.tuneprotect.com/airasia)
• Social media platforms (Facebook, Twitter, 24/7 Instagram, YouTube, ChatterBug (blog))
• Email newsletter Weekly
Regulators and • Audit and compliance assessment As required government bodies and monitoring
• Compliance with listing and regulatory Quarterly reporting requirements
• Regulatory reporting Monthly/Quarterly
• Face-to-face meetings, emails and calls Scheduled or ad-hoc
Shareholders, • Annual General Meeting (Annual Reports and Annually. Refer to Investor Relations section investors and analysts Shareholders’ Circulars) on pages 9 to 13
• Analyst briefings (analyst presentation slides, Quarterly. Refer to Investor Relations section financial statements, press releases) on pages 9 to 13
• Regular dialogues (one-on-one and group Ad-hoc basis. Refer to Investor Relations section meetings, conferences, roadshows, on pages 9 to 13 Bursa announcements)
• Investor Relations website at 24/7 www.tuneprotect.com/corporate/group/ investor-relations/
• Credit Rating exercise (press release) Annually
PG.
32 Stakeholder Group Insurance agents Employees Business partners Media Local communities Engagement Approach • • • • • • • • Conferences/Roadshows • Mediaengagements(interviews, events) • • • • • Training andawareness Code ofConduct Month Annual conventions Awards andrecognitions Policies andprocedures Performance reviews Culture Workshops) CEO’s Gem-bytes, CatchtheBuzz newsfeeds, (including town hallsmeetings,team building, Internal engagementactivitiesandtools Community activities meetings) Meetings (face-to-face andgroup briefing Company/Corporate events Press releases through partnerships Strategic community investments Frequency/Availability Annually Monthly Annually The Company’s Intranets Ongoing page 49 Refer to Employee Engagementsectionon Annually Annually Annually Quarterly Twice perquarter As required on page50 Refer to Community Engagementsection on page50 Refer to Community Engagementsection Sustainability Statement 33 PG. Annual Report 2018 Protection Made Easy Sustainability Statement
MATERIALITY
In 2017, Tune Protect Group’s material sustainability matters and a baseline strategy for addressing these matters were identified through a series of internal workshops and meetings. In 2018, we delved deeper into understanding and managing our material aspects, known as “Key Focus Areas”, via a Strategic Sustainability Workshop. The workshop, which was facilitated by an external consultant, brought together heads of departments and members of senior management to create a dialogue within the Company in advancing our sustainable actions.
Through several other focused sessions, we further refined our understanding of sustainability and took the first steps towards transitioning our sustainability agenda from operational to strategic sustainability. What the shift means to us is to move, in the long-term, from a reactive approach to sustainability-focused on operational compliance and end-of-pipe solutions, to a proactive approach in which strategic sustainable thinking is promulgated at all levels of our organisation. While we have some way to go to in realising this goal, the priorities outlined in our Strategic Sustainability Workshop have helped establish the building blocks for this transition towards a strategic focus.
2018 Key Focus Areas
Based on assessment by the Key Focus Areas Alignment to SDGs Sustainability Committee (“SuCom”) Focused Solutions and key management team, the material matters making up our Key Focus Areas were re-clustered to better fit # Key Focus Area 1: Great Customer Service our refined sustainability strategy. The workplace digitisation efforts are now grouped under #Key Focus Area 2 along with digital solutions, accessibility # Key Focus Area 2: Digitised Solutions, Accessibility, and innovation to reflect the manner in Innovation and Workplace Digitisation which these digital efforts act in unison to drive our movement towards sustainability. To better demonstrate our comprehensive efforts to care for # Key Focus Area 3: Environmental Integrity our workforce, employee health and well-being are now clustered alongside our priorities to build a diverse, inclusive Our Workforce and Culture workforce under #Key Focus Area 4. Finally, community engagement is # Key Focus Area 4: now the sole priority of #Key Focus • Building a Diverse, Inclusive Workforce Area 6, representing Tune Protect • Health and Well-Being Group’s movement towards strategic community engagement.
# Key Focus Area 5: Learning and Development Supporting the SDGs
The SDGs, developed by the United Nations, form a global roadmap towards a sustainable future for people and the planet. Together, the 17 goals represent a universal call to action for stakeholders # Key Focus Area 6: Community Engagement across all countries to address barriers to global sustainability, including climate change, poverty, inequality, and other priorities. The goals are universal and
PG.
34 committed to strategically guidingour Board ofDirectors Board”), (“the whoare sustainability starts at thetop, withour Tune Protect Group, our commitment to sustainability withinanorganisation. At essential inpositioning andprioritising Sound corporate governance is GOVERNANCE sustainable solutions. we might continue to provide valuable aligned withglobalagendas,sothat that our Key Focus Areas remain our materiality matters whileensuring continue to assess, discuss and update our sustainability strategy, we will contribute. As we move forward with Areas onto theSDGsto whichthey efforts, we mappedour Key Focus our actionsare alignedwithglobal targets. In2018, inorder to ensure that realising awiderange oftheseglobal the SDGs,allowing usto play arole in touch onmany oftheareas setoutin an insurer, our products and services agenda asoutlinedby theSDGs.As an opportunity to support the global We see oursustainability initiatives as year of2030. efforts ifthey are to bemet by thetarget require collaborative andcoordinated are interconnected by nature andwill Board ofDirectors
Department actsasacontact pointfor and monitoring targets. The CDIR driving initiatives, monthlyreporting reporting andoperations, including is responsible for overall sustainability and business units.The CDIRDepartment gatekeeper andliaisonbetween SuCom serves asasecretariat for SuCom, a Investor Relations (“CDIR”)Department The Corporate Development and quarterly basis. sustainability progress to theBoard ona convenes once amonthandreports with stakeholders’ priorities.SuCom sustainability matters that align to ensure robust management of the Company’s materiality assessments Board. Itisresponsible for overseeing feedback andrecommendations to the making and directions while providing in allsustainability-related decision initiatives. SuCom plays avitalrole and performance ofEES-related sustainability management,direction has beenoverseeing theoverall Since itsestablishment in2017, SuCom sustainability strategy andperformance. related matters andisaccountable for major disclosures andkey sustainability- our stakeholders. The Board reviews all and upholdingourresponsibilities to organisation, overseeing management Sustainability Committee (SuCom) Corporate Development and Investor Relations undertaken by theGroup for notation. the overall sustainability initiatives Directors have received updates on the Company’s subsidiaries’Board of for reporting purposes.Effective 2018, report results to theCDIRDepartment units, whoare required to track and responsibility ofindividual business initiatives and data collection is the On theground implementation of as needed. to SuCom for discussion and approval from sustainability initiatives are tabled initiatives are ontrack. Matters arising departments to ensure that identified sustainability and works with individual and otherrelevant partiesrelating to queries from analysts, investors, media they contribute. the SDGsto which Key Focus Areas onto efforts, we mappedour are alignedwithglobal ensure that ouractions In 2018, inorder to Business Units Sustainability Statement
35 PG. Annual Report 2018 Protection Made Easy Sustainability Statement
Highlights of SuCom 2018 SuCom Spotlight: Sustainability Newsletter
SuCom meetings were held once a An internal sustainability newsletter is distributed to all employees via email to month to review, discuss, oversee and ensure that employees are informed of ongoing and upcoming sustainability approve sustainability directives. The initiatives. Communication reminders for Earth Hour Fridays, recycling posters, meetings were chaired by Tune Protect recycling banners, and quarterly Green Report cards are some of the information Group’s Chief Executive Officer. disseminated through this newsletter.
SuCom provides sustainability updates Tune Protect Group has policies and systems in place to manage EES sustainability to the Board on a quarterly basis risks across our entire value chain. which include, but are not limited to, the following: Sustainability Policies and Systems (selected)*
1 Overall project implementation Economic • Group Anti-Fraud, Bribery and Corruption Policy • Group Confidentiality Policy • Group Corporate Governance Policy 2 Focus area or scope of data • Group Marketing Policy request in relation to EES and • Group Procurement Policy Governance of the year • Group Sustainability Policy • Group Whistleblowing Policy & Procedures 3 Initiatives, performance and • Group Dividend Policy gap analysis the year • Group Communication Policy • Information Risk Management Policy 4 Sustainability theme and tagline Social • Code of Conduct 5 Sustainability strategy • Group Employee Handbook • Group Fit & Proper Policy • Group Performance Management Policy • Group Recruitment & Selection Policy • Group Sexual Harassment Policy and Procedures • Complaints Management
* The relevant policies are featured above. For more information, refer to Internal Policies, Frameworks and Guidelines on pages 83 to 87
PG.
36 out onanannualbasisto allemployees. our business. Integrity isembeddedinourCode ofConduct (“CoC”), whichisrolled our customers, shareholders, employees andbusiness partnersfor thelongevity of fundamental partofourbusiness andplays asignificantrole inretaining thetrust of Main Market Listing Requirements andallrelated laws andregulations. Integrity isa Financial Services Act 2013, BankNegara Malaysia’s guidelines,BursaMalaysia’s As aresponsible andtransparent organisation, Tune Protect Group adheres to the Ethical Business ETHICAL BUSINESS, COMPLIANCE ANDRISKMANAGEMENT partners for thelongevity ofourbusiness. customers, shareholders, employees andbusiness plays asignificant role in retaining thetrust ofour Integrity isafundamentalpartofourbusiness and A mandatory CoC training module and rulesare adhered to effectively. CoC andensure that ourcore values to emphasisetheimportance ofthe activities andevents were conducted of theCoC. During themonth,various month to enhance theimplementation May 2018 was designated asourCoC customers andpartners.The monthof relationships withourcolleagues, the foundations for long-term trusting CoC andgroup-wide policiesthat lay Protect Group has put inplace a formal ethical business environment, Tune In order to promote ahealthy and Code ofConduct remember ourcore (Key message from 2018’s “Remember ICT, CoC month) values!”
our shareholders. with our business partners and conduct ourselves intheworkplace, values are alignedwiththeway we all theemployees. The new core foster thesenew values among organised duringthemonthto (“ICT”). Interactive activitieswere Integrity, launch ofournew core values: Our CoC month alsofeatured the employees online. tool are alsomadeavailable to and Conflict of Interest declaration betterment ofourCompany. CoC intheirdailyworking lives for the them to better adhere to and apply the to better understand our CoC andallow this training have helpedouremployees and understanding delivered through Tune Protect EMEIA.The knowledge Thailand, andJointVenture company, our associate company, Tune Protect module stood at 98% in 2018, including completion rate for ouronline CoC ethics related training. The overall key figures that tiedto ourbusiness are adhered to effectively, we tracked To ensure that ourcore values andrules Creativity andTogetherness, induction training for allnew employees. annually for allemployees andduring AMLATFPUAA training isconducted Activities Act 2001 (“AMLATFPUAA”). Financing andProceeds ofUnlawful Anti-Money Laundering,Anti-Terrorism on relevant laws andregulations, suchas standards, additional training isprovided understanding ofspecificintegrity To furtherimprove employees’ all employees. was communicated to theBoard and fraud, briberyandcorruption policy internal shared folder. In2018, ouranti- made available for allemployees inan via emailannually, andthepoliciesare and corruption policy and procedures are informed ofouranti-fraud, bribery employee communications. Employees post-recruitment process andthrough and delivered to employees duringthe standardisation throughout theGroup the Board priorto training to ensure Right Thing”. Policies were tabledto all employees theneedto “DoThe and procedures andimpressed upon programmes onanti-corruption policies message, we conducted various training across theGroup. To strengthen this the workplace isofkey importance As oneofourcore values, Integrity in Integrity Training andAwareness C oC OnlineTraining Certification 193.05 Employees Training 492 Hours Total Sustainability Statement
37 PG. Annual Report 2018 Protection Made Easy Sustainability Statement
Integrity is a fundamental part of our business and no substantial complaints regarding breach of customer privacy or customer plays a significant role in retaining the trust of our data loss.
customers, shareholders, employees and business In addition to the above and as part of good governance, Tune Protect partners for the longevity of our business. Group also conducts a credit check on its senior management team on yearly basis. The 2018 AMLATFPUAA training was Compliance conducted in October and November in EES and Governance Risk Management sessions for the employees in Malaysia. At Tune Protect Group, we view compliance as not only requirement, Our greatest exposure to EES and but an opportunity for transparency, Governance risks at Tune Protect AMLATFPUAA Training open culture, innovation and trust. Group are through the level of risks Regulatory influences help us achieve that we are exposed to by our clients our sustainability agenda and keep our or partners. Thus, the management Number of Training Hours efforts focused on long-term change. of risk has evolved into an important ‘18 1,132 business driver for strategic decisions in ‘17 1,386 Our Compliance Management support of the organisation’s business Framework outlines the structure and strategies. We take care to balance an appropriate level of risk taken Number of Employees Trained key processes for identifying and ensuring compliance with applicable proportionate to the desired level of ‘18 283 legislation, regulatory requirement and returns while maintaining a sound ‘17 342 internal policies and procedures. To financial position and company capital. ensure the protection of our stakeholders, The management of risk involves the we comply with the Personal Data establishment of risk principles and To ensure the efficacy of the controls Protection Act (2010) (“PDPA”) and strategies as the core foundation in we have in place for our products, Bank Negara Malaysia’s Guidelines on driving risk management practices our Group Compliance Department Internet Insurance (Consolidated). and processes and it is embedded in conducts regular reviews of anti-money all the processes and activities of Tune laundering and counter financing of We have in place several platforms Protect Group. terrorism procedures. A screening to raise awareness and develop of customers against the Malaysian competency in regulatory compliance. The risk management practices and Ministry of Home Affairs’ and the United Company-wide compliance policies processes are fundamental components Nations Security Council’s sanction and procedures are developed by the of the risk principles adopted by lists is done on a monthly basis and Compliance function which facilitates Tune Protect Group. To ensure a according to regulators’ requests when the implementation of these policies, comprehensive approach to risk new names added to the list. We are also including the CoC, by individual business management whilst supporting in the process of enhancing our system units. Within each business units, the the risk principles established, the in order to perform pre-onboarding respective Head of Department signs an risk management practices and screening for customers. annual attestation assuring the Board processes are essential in enabling that their department has the necessary Tune Protect to systematically The Company communicates all anti- controls in place to manage compliance identify, measure, control, monitor corruption policies and procedures risks and requirements. and report risk exposures throughout to stakeholders and persons outside the organisation. the organisation or value chain via the With Tune Protect Malaysia, we make Tune Protect corporate website under monthly compliance declarations on Through these established principles the Investor Relations section. This selected data under our requirements for and strategies, we at Tune Protect aim to information is readily available and reporting to the Bank Negara Malaysia. transform the risk identification process updated whenever changes are made. This monitoring and reporting allow us by improving the early warning signals To ensure the integrity of stakeholders to track whether individual business from lagging to leading indicators within our value chain, new vendors, units are in compliance with the laws, to achieve a proactive management agents and employees are subject to regulations and requirements set out approach that is consistent with the screening before a business relationship by the regulators. In 2018, there were strategy for long term sustainability. PG. is established. These stakeholders are 38 screened annually. Information Technology (“IT”) Security malfunctions. The BCPincludesan accidents, hardware orsoftware outsource contracts, natural disasters, which may bedue to disrupted system failure or business interruptions, services are available intheevent of in ensuringthat criticalresources and The BCPplays(“BCP”). acrucialrole has inplace aBusiness Continuity Plan to ouroperations, Tune Protect Group In order to mitigate the risk of disruption both internally andexternally. and actual risksfaced by departments kept abreast of thepotential, emerging the RiskManagementCommittee is business units.The reviews ensure that performed quarterly withallindividual organisation, RiskRegister reviews are address EESrisksat alllevels ofthe systems are inplace to assess and In order to ensure that riskmanagement risk-taking activities. duties independentlyoftheCompany’s risk management systems perform their employees responsible for implementing also responsible for ensuringthat the The RiskManagementCommittee is as well astheriskappetite statement. by theRiskManagementCommittee, exposures andtrends are reviewed risks. Managementreports onrisk systems are inplace for managing that infrastructure, resources and policies andframeworks andensured the adequacy ofriskmanagement Management Committee alsoreviewed for theBoard’s approval. The Risk tolerance limits and thresholds and policies, strategies, exposures, and recommending riskframeworks Committee isresponsible for reviewing same committee. The Risk Management both auditandriskfunctionsshared the Management. Priorto 16March 2017, of theCompany, independentfrom management and compliance functions assist theBoard inoverseeing therisk was established on16March 2017 to The Risk Management Committee annually for allemployees. Workshop content islisted inthefollowing table: will bedelivered to new employees duringtheirinductiontraining andconducted nine sessions, reaching approximately 200employees. Moving forward, theworkshop Protect Re andTune Protect Malaysia. The one-hourworkshop was delivered over Culture Awareness workshop for allemployees from Tune Protect Group, Tune In April2018, ourRiskManagementandCompliance Departmentconducted aRisk was sucessfully conducted inSeptember 2018. as well asaDisaster Recovery Planfor eachindividualdepartment.Ourlast BCPTest Report for reporting onITsystem securityandrecovery intheevent ofadisruption, performed quarterly withallindividualbusiness units. levels oftheorganisation, RiskRegister reviews are are inplace to assess andaddress EESrisksat all In order to ensure that riskmanagementsystems 10 4 9 8 3 5 2 6 7 1 specific timeline List ofincidents to bereported to BankNegara Malaysia withtheincident Tune Protect Re andTune Protect Malaysia) New Escalation Matrix for respective entities(Tune Protect Group, The establishment oftheGroup Information RiskGuideline The importance ofInformation Risk other stakeholders The importance ofduediligence onbusiness partners,service providers and our company Importance ofPersonal Data Protection Act 2010 andhow itcould affect Do’s andDon’tsoftheoffice workspace (where information risk isconcerned) Information Asset Classification Clean DeskPolicy andpremises sweep Activities Act 2001 Anti-Money Laundering,Anti-Terrorism FinancingandProceeds ofUnlawful Sustainability Statement 39 PG. Annual Report 2018 Protection Made Easy Sustainability Statement
Moving forward, premise sweeps will be held twice a year to monitor the outcome FOCUSED SOLUTIONS of the Risk Culture Awareness Workshop and evaluate employee uptake of our information risk policies. In 2018, the result of the premise sweep was “Satisfactory’’, At Tune Protect Group, we are committed with almost all employees adhering to the Clean Desk Policy. These included not to delivering focused solutions to the leaving documents and removable media containing confidential information barriers for a sustainable future. We unattended on employees’ desks and locking all rooms and cabinets. Desktop understand that to achieve sustainable computers were also switched off and laptops were either taken home or locked in growth, we must innovate to address cabinets at the end of the workday. Finally, all sources of confidential information, the issues that are most material to our including documents, whiteboard and flip chart notes were erased or disposed stakeholders. These issues, defined as of accordingly. Key Focus Areas, are opportunities to generate long term benefits in terms of In order to ensure that our sales process is informative and to protect our customers shared value. from risk, product disclosures are made available to our prospective customers throughout the decision-making process. #KEY FOCUS AREA 1: GREAT CUSTOMER SERVICE Protecting Our Customers From Risk We are dedicated to delivering Our customers entrust Tune Protect Group with their personal information, and in an exceptional customer service return, we promise to ensure that their private data is properly managed, controlled experience to all of Tune Protect and protected. Group’s stakeholders. Our customers are our number one priority and their Clean Desk Policy Cybersecurity satisfaction in our services is our primary objective. It is only through quality We emphasise a Clean Desk Policy as To prevent cybersecurity breaches, customer care that we can retain our one of our top strategies in reducing Tune Protect Group ensures that all clients’ trust in managing their financial the risk of security breaches in the information we receive is stored and risk. We have a number of initiatives, workplace. Through this policy, safeguarded using technical and platforms and tools in place to ensure employees are made aware of best administrative measures that provide that customers receive the highest practices for protecting sensitive confidence and security. We protect standard of service. information in our possession, and against the loss, misuse or alteration the threat of security incidents and of any information provided to us Customer Experience Initiatives data loss to malicious entities is through a number of safety provisions, reduced. Training on our Clean Desk including limiting employees’ access to Customer preferences are continuously Policy is provided through the Risk and handling of information provided evolving, and in response we are Culture programme including our Risk to us by current and past clients. We constantly innovating to ensure that Culture Awareness Workshop, while also take caution in preventing the we uphold our commitment to provide office areas are regularly monitored disclosure of non-public information, efficient, responsive and reliable for compliance. except as required by regulators. Our service to our customers. To do so, Privacy Policy ensures that customers we regularly review our products are aware of their obligations and and identify opportunities whereby rights in relation to the personal data they can be made more relevant and and information that they provide to accessible. In keeping up with current the Company. trends, we place a particular focus on the development of our digital At Tune Protect Group, we believe that diligent monitoring, evaluation and adjustment business and product innovation in is the key to a secure system. On-the-ground compliance with our information risk this field. In 2018, two improvements policies is constantly reviewed and monitored by our Compliance Team through were undertaken to enhance digital regular internal audits, office walkthroughs and employee surveys. customer experience.
Our Risk Management Framework and our comprehensive approach to risk As part of our commitment to quality management, enables us to establish an ethical, safe and secure working environment customer care, we centralised our
PG. and maintain customer confidence and trust. For more information, refer to our Risk customer service function in 2018 Management and Internal Control Statement on pages 75 to 78. 40 more seamless claimexperience. products withgreater easeandenjoy a customerswill beableto purchaseour these initiatives andfuture changes, current process. We hopethat through already yieldedenhancements to our journey withTune Protect Group have Our efforts to improve thecustomer operating environment. to incompatibility withthecurrent were placed onholdorremoved due another 2in2018. The remaining 11 11 were rolled outin2017 followed by product platforms. Oftheseinitiatives, 24 key initiatives to buildbetter and Travel, andwe successfully identified for ourtwo key products, namelyMotor products. This exercise was conducted customer experience whenreviewing our goal ofgainingdeeperinsightinto the exercise we conducted in2017 withthe built uponthecustomer journey mapping Our customer experience initiatives are payment issues. already reduced complaints regarding a transfer from their existing account, has free, real-time online payments through which allows customers to make hassle- This secure digitalpayment system, products ontheTune Protect website. enabling aFPX payment optionfor our improved thecustomer experience by In addition to the call centre, we further timely mannerregarding claimsstatus. also able to notify our customers in a customer inquiriesandneeds,we are customer service team to cater to our departments. With a centralised lines neededto betransferred between which customers callingviageneral and simplifiestheprevious system, under complaints. The callcentre streamlines emails whilealsotracking queriesand who attend to customers callsand centre. This includesadedicated team by establishing afull-service contact
on thecomplexity ofindividual cases. within 7to 14working days, depending will ensure thecomplaint isresolved Our Customer Experience department to therelevant departmentasrequired. process thecomplaint and forward it department whowillimmediately complaint withourCustomer Experience Insurance products can file an official with services related to ourGeneral Customers whoare unsatisfied our customers. issues effectively andgainthetrust of approach whichhelpsusaddress our through multiple channels – an performance andprovide feedback are ableto review ourcompany’s value to our customers. Customers processes inorder to provide greater improve ourproducts, services and opportunity to criticallyexamine and Group. Customer complaints are an which istaken seriouslyat Tune Protect customer dissatisfaction, something Complaints are a manifestation of Complaints Management them to return inthefuture. positive purchasing journey, prompting ensures that customers experience a design for online buyingexperience protective policies.Asimplifiedweb the confidence neededto purchase insurance policies,givingcustomers increased understanding ofourtravel with general enquiriespromote our onlineplatform for live assistance for customers, whileenhancements to to greater awareness offinancialrisk promote financialriskliteracy andlead times. Ourdigitaleducation materials f process for customers, creating ahassle- and baggagetracing simplifytheclaims checks onboarding status, flightdelays Digitisation initiatives suchasauto Adding Value Through Digitisation ree service withquicker response
and future customers. of bettering theexperience for current common complaint issues withthegoal received, we proactively address Based onthefeedback that we complexity ofindividualcases. between 1to 7days, dependingonthe and resolution ofacomplainant caseis The turnaround timefor thehandling and resolution of a complainant case. relevant partiesregarding theprocess complaints andcommunicate with the clarityandcompleteness ofall Experience departmentwillcheck on theB2Cwebsite. OurCustomer lodged via an email that is available customers, complaints canalsobe For Tune Protect Travel –AirAsia’s Financial Services. Negara Malaysia orthe Ombudsmanfor to have theirmatter reviewed by Bank by ourresponse, they may alsochoose 8.8 days. Ifacomplainant isunsatisfied respond to andresolve acomplaint was In 2018, theaverage turnaround timeto Number ofComplaints Received Resolve Complaints Average Time Taken to Respond and Number ofComplaints Resolved ‘17 ‘18 ‘17 ‘18 Tune Protect Travel –AirAsia 140 140 172 172 Sustainability 8 days 8 2017 days 3 2018 Statement all PG. 41 Annual Report 2018 Protection Made Easy Sustainability Statement
We hold true to our belief Total Number of Respondents customers who are likely to increase their purchases and actively recommend that everyone deserves 2018 Tune Protect’s products and services to be protected and that 1,632 to others. we are committed to 2017 We are currently looking into expanding 1,315 the scope of our surveys with a plan to making insurance easy to add email surveys to our survey platform in 2019. We have also adopted the use understand, easy to buy, of the Net Promoter Score (“NPS”) as easy to claim, easy to Customer Response Rate a standardised score of our customer satisfaction performance. As advised access and easy on 2018 by our regulators, we have established 9.5% processes to measure our level of the pocket. services against the industry’s Customer 2017 Service Charter (“CSC”) for long term 9.3% benefits. Our NPS score, which serves a metric for customer satisfaction and General Insurance Products loyalty, is currently 86%, demonstrating that our customers are satisfied and Customer Purchase Satisfaction Survey Number of Complaints Received remain loyal with our product.
‘18 37 2018 #KEY FOCUS AREA 2: 89% ‘17 38 DIGITISED SOLUTIONS, ACCESSIBILITY, INNOVATION AND 2017 Number of Complaints Resolved 84% WORKPLACE DIGITISATION
‘18 37 We hold true to our belief that everyone ‘17 38 deserves to be protected and we are Recommendation Survey committed to making insurance easy to understand, easy to buy, easy to Average Time Taken to Respond and claim, easy to access and easy on the Resolve Complaints 2018 89% pocket. The digitisation of our services plays a pivotal role in this by creating Direct-to-Consumer platforms that 2018 2017 85% 8.8 days provide easy, convenient, relevant and value-based products and offerings. 2017 Aligning our workplace practices with 9.1 days our digital ambitions by embracing Net Promoter Score* the digitisation of internal systems has allowed us to streamline our processes 2018 and services to provide greater support Customer Satisfaction Survey 86% for our employees and better value to our customers. The support of our customers is essential to our goal of becoming a leading digital Digitised Solution insurer. To ensure that our customers feel valued and to understand how we can A key initiative for Tune Protect Group better serve them, we invite customers * NPS tracking commenced in 2018 in providing digital solutions is a to share their experience through our consolidation of the various digitisation customer experience satisfaction survey. positive. Based on the results of our initiatives in the Group to deliver a The results of this survey allow us to Customer Purchase Satisfaction and unified mobile application and an improve on our customer engagement. Recommendation surveys, 89% of intuitive website. The deployment of PG. In 2018, survey feedback was extremely respondents are loyal and enthusiastic this project will entail the integration of 42 November 2018. December 2018 since itslaunchin has reached 17,000 pageviews asof and new Tune Protect customers and deals. Chatterbug is targeted at existing well asTune Protect Group product attractive contest announcements as ideas that are related to ourproducts, lifestyle content, travel tipsandactivity casual tone. The blogoffers exciting form content conveyed in a simplified engage withcustomers using long- functions asamediumto educate and form of our Chatterbug blog. Chatterbug a new digitaloutreach initiative inthe In November 2018, we alsointroduced their travels. of insurance before, duringandafter reach potential customers thebenefits campaign, theinitiative soughtto Media. Called the “Dennis Yin Helliday” delivered in collaboration withHavas digital insurance education campaign, such initiative from 2018 was our annual andquarterly reports. One and company reports, includingour including social media, press releases services through a number of channels, we communicate our products and and familiarity withourproducts, To promote financialriskliteracy individual needs. widely known andtailored to meet our products are easy to understand, make thishappenby ensuringthat At Tune Protect Group, our goal is to and theirloved onesare well-protected. armed with the knowledge that they should beableto enjoy life’s adventures, Individuals at alllevels ofourcommunity Product Accessibility needs ofitsonlinecustomers. Group’s business modelto meetthe Together, thesealignwithTune Protect the Group’s “on-demand” products. will alsoimprove thespeedto market patterns withinasingular platform. This to service various customer behaviour an omni-channelcustomer supportsuite
customers through product innovation. ways inwhichto create value for our continue to work onidentifyingnew meet agreater variety ofneeds.We developed usingcustomer profiles to comprehensive coverage andproducts suit every budget,bundledproducts for dynamic pricingtools for products that Through initiatives suchastheuse of exactly what we work towards delivering. products. At Tune Protect Group, that is A changingmarket requires changing Innovation andValue Creation the community. rates andmore protection throughout to them,prompting greater take-up understanding ofthepoliciesavailable we ensure that customers have abetter through avariety ofdistribution channels By offering simplified product information of thecommunity. and tailor-madeinsurance to every level customers inouraimto bringsimplified Malaysia to serve non-digital based 2018, operates 21branches across services, Tune Protect Malaysia, asof communication. Inadditionto ourdigital depending onthemediumof hours to 1monthafter anincident, through offlinechannels between 24 within 24 hoursofanincident and to stakeholders through onlinechannels Important updates are communicated information to our stakeholders. mechanism for conveying critical Online channelsare alsoan important it must bepurchased 48hoursprior. their scheduledflight,andJapan,where purchased upto thelast minute before of Malaysia, where coverage canbe scheduled flighttime, withtheexception insurance upto 1hourbefore their 14 markets canpurchase travel AirAsia’s B2Cplatform, customers in coverage. With Tune Protect Travel – simplify the process of purchasing a constant range ofnew services that simplified terms andconditions and our Direct-to-Consumer platform offers To furtherpromote product accessibility,
and casualtone. conveyed withasimplified using long-form content engage withcustomers a mediumto educate and Chatterbug functionsas our Chatterbug blog. initiative intheform of new digitaloutreach We alsointroduced a financial burden. loved ones are safe from potential the knowledge that they andtheir their adrenaline rusharmedwith duration, ensures customers enjoy one day to aslong asoneyear in flexible coverage from asshort allows customers to quicklypurchase extreme sports.This product, which financial harmwhenparticipating in Sports+ protects customers from case of accidents, our new product enthusiasts from physical injuryinthe equipment serve to protect sports Just as protective gear and safety for and EasyCare PA, a special care protection designed for extreme sportsprotection of ourfirst on-demand product, Sports+, inclusivity ofourproducts with thelaunch we improved onthediversity and landlords. Inadditionto theseofferings, built-in insurance cover for tenants and businesses, as well asrentProtect, a platform to managetheirshort-stay and hosts whoutilise the HostAStay plan that aimsto safeguard homeowners also launchedHostProtect, aninsurance collaboration withouraffinity partners, we are rewarded withpartialrefunds. Through product where customers whodrive less (“PAYD”), a mileage-based motor insurance In 2018, we offered Pay-As-You-Drive the disabled. Sustainability Statement
43 PG. Annual Report 2018 Protection Made Easy Sustainability Statement
EasyCare PA aims to reach out to the underserved Digitising Advertising Collaterals members of the community by providing an In a new initiative to increase brand awareness of Tune Protect Group and affordable protection plan for people with disabilities. our products, we have introduced QR codes to our business cards. The QR code, which leads to our Company’s Our other new product, EasyCare PA, reporting system, allowing our team digital platform, exposes potential aims to reach out to the underserved to expedite verification of customers’ customers to our website and products members of the community by providing travel details for Flight Delay and in a simple and mobile-friendly way. an affordable protection plan for people On-time Guarantee insurance claims. Through this, we also reduce the amount with disabilities. At Tune Protect Group, Since the implementation of this of print materials as the business cards we fully support everyone living their initiative, we have drastically reduced double as digital product flyers. best lives and have developed two the number of reopened cases and distinct EasyCare PA plan types to the average processing time of our #KEY FOCUS AREA 3: meet consumers’ specific needs. We policies. Digitisation efforts such as this ENVIRONMENTAL INTEGRITY applaud the strength demonstrated by help improve efficiency and customer the disabled community in rising above experience, enhance customer retention In 2017, we embarked on a journey the challenges they face and hope that and will remain a key component of our to quantify and manage our direct with this product, we can support them medium to long-term growth strategy. environmental impacts. For 2018, in in their journey. addition to monitoring our paper and energy consumption, we began tracking Number of Reopened Cases Sports+ and other upcoming on- our non-paper recyclables. To further demand solutions represent exciting incorporate sustainability initiatives milestones for the Company with 2018 Updates into our core business, we are currently respect to growing our digital agenda ‘18 276* researching and selecting a set of environmental targets most relevant to and strengthening our position in After Integration the insurtech space. Our innovation the Company. ‘17 17 efforts continue to focus on the better implementation of product bundling Before Integration Environmental Awareness Initiatives across all of our insurance sectors along ‘16 45 with the continued delivery of product Our internal environmental initiatives personalisation categories, such as on- serve to create environmental awareness demand, usage-based and behaviour- Average Processing Time (days) among our employees and promote based products. We have also launched social change on a wider scale. In 2018, spearheaded by the People and Culture an optimisation programme – Dynamic 2018 Updates Department, we worked to ‘Create Pricing – with our airline partner ‘18 3 which allows us deeper insights into a Awareness and Enable Social Change’ traveller’s profile by leveraging real time After Integration within the Company to promote climate analytics and machine learning before ‘17 1.2 action amongst employees. Initiatives include digital reminders of our customising a message and product Before Integration plan to him or her. weekly Earth Hour Friday and a Green ‘16 13.6 Report Card emailed to employees to promote environmental awareness and Workplace Digitisation * In 2018, we recorded a higher number of re-opened cases due to the re-classification targets with actions. Our Green Report of Travel Re-route claims, including baggage Card provides a benchmark by which Integration & Service Improvement claims, from Non-Fast Track to Fast employees can track their progress, Track claims We are constantly seeking to improve promoting personal fulfilment and our ability to track, store and process self-awareness. the quantifiable components of our business. In the 1Q2017, we integrated our E-Customer Experience Portal with PG. a section of our airline partner’s flight 44 warming Nature appreciation tripto FRIMto ‘Create Awareness andEnableSocialChange’to reverse global opposed to colour, as well asencourage printing onrecycled our default office printsettingsto adouble-sidedoptionandto printingrayscale as we further reduced the environmental burden of our printingactivities by adjusting customers to purchase ourproducts onlineby offering monetary rebates. In2018, submissions for selected policiesto bemadeentirely online. We alsoincentivise our making digitalcopies ofpoliciesavailable to policyholders andallowing claims order to reduce ourown andourcustomers’ paperconsumption. Activities include We continue to prioritiseandpromote theuseof digital products over paperin the office. appointed onarotation basisandundergo training to helpdrive green initiatives in February 2018, theDepartment alsooversees agroup of‘Green Marshalls’whoare Since theofficiallaunchofCompany’s Sustainable Environmental programme in Paper Consumption Management to reduce greenhouse gasemissions. employee understanding ofgreen livingandtheenvironmental actionsthey cantake lighting-emitting diodelightsinselected areas. These programmes serve to increase to minimiseelectricity wastage, thepromotion ofrecycling andtheinstallation of Other initiatives includethedevelopment ofaworkplace lightingplanfor employees reduce ourresource consumption. in thisdimensionofsustainability, we have implemented anumberofinitiatives to tracking theGroup’s consumption ofkey resources since 2016. To drive improvement To monitor ourenvironmental footprint andevaluate ourperformance, we have been Environmental Impact square feet green space. riddles to spotandphotograph plantsandtheirscientificnamesinthe300,000 Challenge at theSecret Garden 1UtamaShopping Centre, where participantssolved (“FRIM”). Our 2018 corporate team building exercise also featured a Nature Awareness and organising anature appreciation tripto Forest Research Institute ofMalaysia the Truly Loving Company (“TLC”) to create awareness aboutwater pollution In 2018, ourenvironmental awareness initiatives alsoincludedcollaborating with when necessary. paperfor internal usage
Non-Printing Purposes (reamsNon-Printing Purposes Amount ofPaper Usedfor * from ManagementInitiatives (kg) Amount ofPaper Products Saved lighting between 12p.m. to 1p.m. every which promotes switching off office our weekly EarthHourFriday initiative, off office lights. One such campaign is oversee employees’ efforts to switch Green Marshalls,whopromote and continue to rely ontheefforts ofour consumption from office lighting, we boiler perday. To reduce ourelectricity of 12hourselectricitysavings per water boilers, resulting in an average 4 programme timersfor ourdrinking Malaysia’s headquarters, we installed Group, Tune Protect Re and Tune Protect electrical consumption at Tune Protect In 2018, to aidinourefforts to reduce Energy Consumption * (sheets) Amount ofPaper Usedfor Printing Tracking commenced in2018 Tracking commenced inJune2017 Sustainability 2,808,720* 2017 4,565,496 2018 1,961* 2018 Statement 3,674 2017 3,329 2018 ) 45 PG. Annual Report 2018 Protection Made Easy Sustainability Statement
Friday. This resulted in a 3% reduction conserve water, we promote awareness Malaysia branches in Kota Kinabalu, in total energy consumption compared among our employees using creative Sandakan, Tawau Kuching, Puchong to 2017. Moving forward, we will roll out and strategically located stickers, mirror and Ipoh for the collection of a further these energy saving initiatives to all our and cupboard wraps to remind our 723 kg of newspaper, the funds from Tune Protect Malaysia branches, making employees to conserve water as well which were similarly donated. In total, energy reduction and environmental as installed self-closing push taps to over two tonnes of paper products was consciousness a Group-wide culture. minimise wastage. recycled throughout the Group in 2018.
Total Electricity Consumption (kWh) Waste Management An additional Climate Action Challenge was held at Rainforest at 1 Utama ‘18 (% vs ‘17) 673,165 ( 3%) In 2017, Tune Protect Group identified Shopping Centre as part of TTT18 waste management as a material issue and saw all team builders supporting ‘17 (% vs ‘16) 695,737 ( 1%) for our sustainability efforts. In response environmental initiatives through the ‘16 700,574 to this issue, we have begun tracking our recycling of plastic bottles and the non-paper wastes, particularly waste refilling of non-disposable water bottles from discarded electronic appliances to reduce plastic waste. Tune Protect Group (kWh) (e-waste) and other recyclable office waste. We have in place three types of Taking Going Green to the Next Level ‘18 (% vs ‘17) 19,160 ( 13%) recycling bins within the Tune Protect ‘17 (% vs ‘16) 21,992 ( 1%) Group headquarter to collect paper As a responsible organisation, Tune products, plastic, aluminium cans and Protect shall continue to care for ‘16 21,814 steel. We have engaged with three the environment and manage our separate recycling contractors to consumption and waste efficiently. We Tune Protect Re (kWh) manage the waste collected through aim to intensify our efforts in recycling, these bins. We are finalising and moving beyond the current paper, ‘18 (% vs ‘17) 12,774 ( 13%) identifying the best contractor for the plastic and aluminium products to ‘17 (% vs ‘16) 14,661 ( 1%) long-term management of our recyclable other recyclable items generated by our material. Our 5R Initiative focuses on: business operations and offices which we ‘16 14,543 operate in. For starters, we are looking 1 Refuse at the collection and proper disposal Tune Protect Malaysia – HQ (kWh) of light bulbs in accordance with safety standards to minimise its impact on the 2 Reduce ‘18 (% vs ‘17) 186,565 ( 3%) environment. We shall also inculcate a recycling mindset at our employees level ‘17 (% vs ‘16) 180,935 ( 2%) 3 Reuse by initiating a project to bring recyclable ‘16 176,857 and reusable items from home to office. These household items could include 4 Recycle pre-loved items such as eyewear and Tune Protect Malaysia – 20 branches homeware which can be channelled to (kWh) 5 Replenish those who have better need for them.
‘18 (% vs ‘17) 454,666 ( 5%) To reinforce the importance of recycling ‘17 (% vs ‘16) 478,149 ( 2%) in an engaging and team-building ‘16 487,360 manner, we included recycling challenges in our Topsy Turvy Teambuilding 2018 (“TTT18”) initiative. In the first ‘Climate Water Consumption Action Newspaper Recycling Challenge’ teams competed against each other to Although our water usage comes solely collect the heaviest load of newspapers through personal consumption in our for recycling, leading to the collection The TTT18 Climate Action Newspaper Recycling of over 801 kg of newspaper. The funds offices and is therefore modest, at Tune Challenge Protect Group, we believe no action is from this collection were channelled to a
PG. too small when it comes to sustainability. worthy charitable cause. The challenge To ensure that we are doing our best to was also extended to Tune Protect 46 Force on Climate-Related Financial that have beensetoutby theTask the reporting recommendations business operations. We acknowledge need for transparency inclimate-related environmental issue and that there is a global climate changeisapressing green initiatives, we recognise that As we move forward withour office management. the fullsupportofth 5R initiatives. This effort hasreceived bulbs andtheimplementation ofthe protection, theresponsible disposalof recycling, water conservation and Fridays, electricityconservation, including Tune Protect EarthHours affiliated companies in Wisma Tune, environmental initiatives across our Today’, efforts willmirror theexisting the tagline‘Protecting Tomorrow, shall take root in2019. Working with a brand new GoGreen initiative which storey buildinginto aGreen Zone with our otheraffiliates inturningthenine- and co-tenant inWisma Tune, to lead Tune Group SdnBhd,ourshareholder We are excited to becollaborating with e-newsletter. frequently through ourSustainability Reminders to allemployees are made standby modeat the end of each day. microwave ovens leftonor shredders, coffee machinesand personal computers, photocopiers, to switch offelectricalitems suchas wastage ofenergy by makingitahabit We shallalsomanageany further The TTT18endedona‘frozen’ highnote at theRoyale Ice Skating Rink e building
opportunity within ourorganisation supported through ensuringequal the hiring process, diversity is further presented by candidates. Beyond focused ontheskillsandcapabilities our recruitment process isunbiasedand ethnicity andageaswell asensure that well-balanced withrespect to gender, seek to maintain a workforce that is successful working environment. We and perspectives to contribute to a that each has his or her own experiences We value ourpeopleandacknowledge Diversity andInclusivity WORKFORCE BUILDING ADIVERSE,INCLUSIVE #KEY FOCUSAREA4: our customers. while delivering thebest solutionsfor keep abreast of rapid industry change and resilient, withthecapacity to workforce that isinformed, adaptable full potential. We seekto develop a knowledge necessary to reach their employees can develop the skillsand and impactfulworkplace where our We strive to create asafe, respectful is therefore one of our top priorities. in their development and well-being our strength. Continued investment At Tune Protect Group, our peopleare OUR WORKFORCE ANDCULTURE recommendations inourorganisation. working towards addressing theTCFD Disclosures (“TCFD”) and are gradually
insurance industry. and theemployer ofchoice inthe Protect Group become aleader will play akey role inhelpingTune that a diverse and inclusive workforce promotion andtraining. We believe with respect to career development, * Current Employees 2018* 2016 2017 2018* 2017 2016 Work Type Gender in Dec2018 Company viaourcost rationalisation exercise This data includesemployees whoexited the Female Permanent 297 (66%) 295 (67%) 288 (64%) 440 (98%) 434 (97%) 431 (98%) Male Contract 159 (36%) 153 (34%) 147 (33%) Sustainability 10 (2%) 13 (3%) Statement 11 (2%)
47 PG. Annual Report 2018 Protection Made Easy Sustainability Statement
Current Employees (cont’d.)
Age Group
56 (13%) 90 (20%) 84 (19%)
95 (21%) 83 (18%) 83 (19%) 2018* 2017 2016 141 (32%) 137 (31%) 147 (33%) 140 (31%) 155 (34%) 128 (29%)
<30 30-≤40 40-≤50 ≥50
Ethnicity
18 (4%) 17 (4%) 16 (4%)
60 (13%) 59 (13%) 63 (14%) 2018*Malay Indian2017 2016 197 (44%) 200 (44%) 189 (43%)
172 (39%) 174 (39%) 174 (39%)
Malay Chinese Indian Others
Number of Employees Who Took Parental Leave Return to Work Rate1
‘18* 6 ‘18* 15 ‘18* 100% ‘18* 80%
‘17 7 ‘17 11 ‘17 100% ‘17 73%
‘16 5 ‘16 17 ‘16 80% ‘16 82%
* This data includes employees who exited the Company via our cost 1 Employees who remained employed 12 months after returning from rationalisation exercise in Dec 2018 parental leave
Our workforce is young and diverse. Women in Management We strive to ensure representation of the different age brackets in terms of talent and leadership pipeline. Women Board of Directors Senior Management play a key role in the organisation and make up 42% of top management. ‘18 1 (25%) ‘18 11 (42%) At the Board, we continue to benefit ‘17 2 (40%) ‘17 12 (44%) from the counsel of directors of varied backgrounds. In 2018, the gender ratio ‘16 1 (25%) ‘16 14 (42%) of our Board fell to 1 woman among 4 Directors following resignation of one of our female directors.
PG.
48 New Hires country’s up-and-coming workforce. to promote thedevelopment ofthe internships for undergraduates inorder processes. The Company alsoprovides intake diversity andtransparency inour principles ofmerit-basedselection, of thebest candidates through the this manner, we ensure theappointment the underlyingprinciplesofourCoC. In minimises hiring risk and is based on with allapplicableemployment laws, our employment process, complies Selection Policy. The policy, whichguides have inplace aGroup Recruitment and recruitment andselectionprocess, we To ensure aconsistent andunbiased Recruitment <30 Age Group 30-≤40 2018* 2016 2017 40-≤50 ≥50 13 (21%) 27 (44%) 20 (33%) 1 (2%) 21 (23%) 19 (20%) 43 (46%) 10 (11%) 20 (24%) 30 (37%) 28 (34%) 4 (5%) maintain include: them. The grievance channelsthat we familiar withtheoptionsavailable to in asafe andconfidential mannerand the Company ortheirfellow employees are aware oftheirrightto speakupabout Protect Group, we ensure our employees healthy andhappy workplace. At Tune securely is essential in maintaining a The abilityto voice concerns safely and approximately 80%in2017. to reach 100%ofournew hires, upfrom was held every two months, allowing us induction. In2018, aCulture Workshop Workshop conducted duringtheir values andculture through a Culture company structure, business, core All new hires are introduced to the and comfortable intheorganisation. ensure that allnew hires feel familiar with At Tune Protect Group, we want to Employee Engagement * 2016 2017 2018* 4 2 3 1 Gender in Dec2018 Company viaourcost rationalisation exercise This data includesemployees whoexited the anonymously grievances to bechannelled our corporate website, enables Procedures, whichisavailable on Our Whistleblowing Policy & Risk &Compliance Shareholders –reports to Group Group Risk&Compliance Business partners–reports to & Compliance People &Culture andGroup Risk Workplace –reports to Group 48 (59%) 30 (49%) 51 (55%) Female Male 34 (41%) 31 (51%) 42 (45%) attire and joinedourGroup CEOandTune Everyone camedressed intheirsports a 2-hour‘Tune Protect Fitness Day’. healthy. In March 2018, we organised the importance of keeping theirhearts all ouremployees to create awareness on Health Month,duringwhichwe engage and have implemented an annual Heart and events to promote employee health arrangements, we regularly holdtalks addition to thesebenefits andworking hours undercertain circumstances. In home ordetermine their own working which allow employees to work from of ourflexible working arrangements, Employees can alsotake advantage requirements ofthelocalgovernment. leave inexcess ofthepaternity leave maternity leave aswell aspaternity including their spouses and children, medical coverage for all employees, Our comprehensive benefits provide market standards. benefit schemeto ensure that itreflects health, and review and update our the importance ofphysical andmental regularly engagewithouremployees on ensuring ouremployee’s well-being. We workplace, andwe play anactive role in maintaining ahappy andproductive people is of paramount importance in The safety, healthandwellness ofour HEALTH ANDWELL-BEING #KEY FOCUSAREA4: efficiency and optimisation. digital transformation planto drive rationalisation andalignmentto our than previous years asaresult ofcost The turnover rate in2018 was higher ‘17 ‘18 ‘16 Turnover Rate 10% 13% Sustainability Statement 33% 49 PG. Annual Report 2018 Protection Made Easy Sustainability Statement
Protect Malaysia’s CEO who led the way the contributions they made to the with fun activities and group dance that Company’s success. The PMP helps drove home the importance of practicing employees to understand their value a healthy lifestyle so that employees will to our Company and provides clarity be able to contribute positively to the in their work expectations. In the case Total Expenses for Employee growth of the organisation and enjoy of underperformance, the PMP allows Training in 2018 a quality life. We also encouraged our managers to quickly and effectively RM464,909 employees to contribute to the health provide guidance and correction to of our community by organising two ensure that the Company’s objectives blood donation drives held in June are met. and September. Our employees spent at average eight #KEY FOCUS AREA 5: hours on training, with compulsory LEARNING AND DEVELOPMENT AMLATFPUAA and CoC training. Number of Beneficiaries from We also delivered communications Community Engagement Initiatives We believe in investing in our employees. workshops and held five Lunch and Learn in 2018 Providing opportunities for continuous knowledge-sharing sessions, covering learning and development is the only topics such as Investor Relations, 7,558 way to ensure that our employees Actuarial, Employment Insurance System and business reach their full potential Awareness, Bank Negara Malaysia in a rapidly evolving industry. We Employer Screening Awareness, and Fire support employee development through Prevention Awareness. structured learning opportunities, training modules and openings for #KEY FOCUS AREA 6: cross-organisational moves, all of COMMUNITY ENGAGEMENT Monetary Contribution for which help employees grow to meet Community Engagement Initiatives new challenges and take on new roles. As a responsible corporate citizen, we in 2018 We continue to reward employee are committed to giving back to the achievement in service and quality. communities in which we operate. In doing RM136,400 so, we focus on four key areas: personal Employee Training well-being, education, financial literacy and environmental protection. This is in Health and Well-Being in line with We promote learning through a number line with SDG 3 Good Health and Well- SDG 3. Employee activities featured of channels, including delivering in-house Being, SDG 4 Quality Education, SDG 11 in this year’s event included a Good programmes, engaging external trainers Sustainable Cities and Communities and Cholesterol, Bad Cholesterol Talk or sending employees for external SDG 13 Climate Action. We partner with by Dr Abraham and ‘Pump-It-Up’ training and development programmes. several external organisations in order to Zumba workout class with Zumba The training methods employed in each leverage their expertise for the delivery extraordinaire Hannah Kamal. We also case are dependent on the specific of the most impactful programs and held our 4th annual Blood Donation Drive requirements of our employees. activities. Ultimately, we seek a future in in collaboration with the National Blood Through our programmes, we aim to which our business growth is matched by Centre at the lobby of Wisma Tune equip our employees with 21st century our communities’ empowerment. where 36 bags of blood were donated. skills, including soft skills, technical skills, Our Heart Health Month aims to bring leadership skills, digital skills and other Community Programmes – Health and about social change within Tune Protect industry-specific knowledge. Wellness Group, ultimately creating a healthier workforce by creating awareness of In order to deliver targeted and Healthy Living with Heart Health Month cardiovascular illnesses that can affect effective learning and development the quality of life, including impacting in the most resource-efficient We held our 2nd annual Heart Health lifespan as well as limiting productivity. manner, we implement a Performance Month in conjunction with World Heart Management Process (“PMP”). Through Day celebrated every September to the PMP, employees are made aware promote awareness of cardiovascular
PG. of their performance expectations health among our employees. This and are provided with feedback on initiative serves to promote Good 50 Emergency Academy workshop conducted for staff by Earthwin Adult andpaediatric emergency CPRandchoking Malaysia sponsored goodiebags Challenges won sports equipment and Quaker Winners ofHeartHealthMonthOffice Slugfest 4 6 3 5 2 1 our HeartHealthMonth: Other activitiesconducted during of Wisma Tune employees and allothertenants by Quaker Malaysia for Booth set-upandoat sampling wellness experts inMalaysia by myWorkWell, workplace Microcirculation andbloodanalysis and ‘lawn’ bowling challenges Office Slugfest Jianzi,hula-hoop and nutritiontalkby Oranger demonstration, sampling Cold-pressed slow-juicing longan distribution to employees Bentong red dragon fruitand Earthwin Academy (“CPR”) andchokingworkshop by Cardiopulmonary Resuscitation Adult andpaediatric emergency employees, forming PROBRATS. The Kanak and children of Tune Protect Chow Kit’s PusatAktiviti Kanak- for 10‘at-risk’ children from Yayasan 6-month rugby training programme tournaments, in2018 we initiated a In additionto thetwo COBRA promoting activitiesandevents. sustaining ourconnection with health- our brand andproducts, whilealso expected to create awareness about personnel. The sponsorshipwas medical personnel, referees and security parents, coaches, pitch marshals, attendees of6,500includingparticipants, the two tournaments saw atotal Selangor and Penang. Combined, 10’s Minirugby tournaments heldin Once again,we sponsored two COBRA Well-Being. SDG 3promoting Good Health and (“COBRATS”) programme inlinewith of COBRA Rugby ClubMalaysia’s communities through oursponsorship being oftheyounger membersofour We continue to supportthewell- Getting Active withCOBRATS 20 volunteers from theprogramme. insurance coverage for 120children and percussion and acting. We also provided featured recycled percussion, body event. The competition performances Orang Aslicommunity, could attend the these parents, who are members of the GoodKids League competition sothat for the parents of performers in the arts. In2018, we sponsored tickets alternative learning through performing develop confidence andself-respect by enterprise that helps at-risk youth Group supportsGoodKids,asocial wellbeing. For that reason, Tune Protect support for theirsocialandmental are disadvantaged, require additional some children, particularlythosewho health andwellness, we recognise that As partofourcommitment to promoting GoodKids League Developing Confidence with
security personnel. personnel, referees and marshals, medical parents, coaches, pitch including participants, attendees of6,500 tournaments saw atotal Combined, thetwo Buloh, Selangor Bola ERubberResearch Institute Malaysia Sungai Under-13 CupChampionsfrom COBRA at Padang COBRA 10sMini2018 Rugby Tournament Girls the community. benefits ofrugby to awidersectionof promote theirorganisation andthe COBRATS gainstheopportunityto resilience, respect andteamwork, while creativity ontheplaying field,discipline, training teaches thechildren about would notbeavailable to them.The productive leisure activitythat otherwise Chow Kitto anew healthy and we introduced thechildren at Yayasan transportation. With this collaboration, membership, weekly rugby training and of full sets of PROBRATS jerseys, club collaboration involved thesponsorship Sustainability Statement
PG. 51 Annual Report 2018 Protection Made Easy Sustainability Statement
Community Programmes – this programme, several small business Quality Education ventures have taken-off and funds were provided to assist the Orang We have undertaken several initiatives to Asli entrepreneurs with the much support the betterment and proliferation needed financial support to promote of education in Malaysia. and distribute their rainforest-sourced handmade items sold to sustain their Sponsor A Kid Back to School livelihoods.
We believe everyone has the right to Community Programmes – Climate education and are committed to helping Change and Sustainable Cities those who are less fortunate realise and Communities that right. Our ‘Sponsor A Kid Back to School’ programme promotes education Merdeka Charity Food Bazaar among ‘at-risk’ children under the care of Yayasan Chow Kit’s Pusat Aktiviti The Merdeka Charity Food Bazaar is a Kanak-Kanak in the Chow Kit area by brand-new initiative introduced in 2018 providing full sets of school supplies and to raise funds for community climate uniforms for the new schooling year. The action initiatives. Contributions to the funds for this programme, which were Bazaar were made by our generous raised through a one-for-one matched employees, who contributed both store- donation drive held within Tune Protect bought delicacies and home cooked Group, and were used to provide 114 food. Approximately RM2,000 was complete sets of school uniforms for 57 Workshop graduates aged 6 to 16 years old, generated from the fund-raising event some with parents and money jars, raring children. An additional sum was donated to apply their learning and manage their and channeled towards a recognised for urgent repairs required at the centre money responsibly charitable organisation for their to repair major leakage and flooding. contribution to a climate action initiative We expect to once again support in an underserved community. To disadvantaged school-going children minimise the environmental footprint of with schooling essentials in 2019. The the event, employees were encouraged cheque was presented to Yayasan Chow to use reusable food containers Kit Board of Governors member His and cutlery, while non-toxic and Royal Highness Tunku Datuk Seri Zain biodegradable TLC washing detergent Al-‘Abidin Ibni Tuanku Muhriz. and photo degradable garbage bags were provided. Promoting Financial Literacy 11 year old Rubik’s Cube expert Ronn Tan, an and Empowerment The event was a huge success among employee’s child and workshop graduate, conducted a Rubik’s Cube Workshop that earned Tune Protect employees and the guests Financial literacy forms the foundation for him a handsome RM50 for his money jar who came together as responsible financial security but is often overlooked Malaysians to celebrate our country in in children’s education. In 2018, Tune an environmental-friendly manner. Protect Group collaborated with Grow the Goose to sponsor and run three Financial Literacy and Empowerment Workshops for children of employees and agents as well as children from single parent families and with special needs ranging from 6 to 16 years of age. We also sponsored the first of two Financial Literacy and Empowerment Budding 9 year old entrepreneur Alexandra Wong, Boot Camps for Orang Asli youth aged an employee’s child and workshop graduate, ‘sold 17 to 24 to empower these youths to out’ 15 tubs of her homemade scented and coloured ‘play slime’ at RM5 per tub PG. venture into entrepreneurship. Under
52 Malaysian Aged 65 Male Ng SiekChuan Ng SoonLai@ Chairman, Independent Non-Executive Director N the financial year. He attended all seven (7)Board meetings during regulatory bodiesduringthefinancial year. sanction or penalty imposed on him by the relevant the past five (5) years and there are nopublic He hasnoconviction for any offences within the Company. He does not have any conflict of interest with Director and/or majorshareholder oftheCompany. He does not have any family relationship with any Bank (Malaysia) BerhadandWCT Holdings Berhad. ELK-Desa Resources Berhad,ChinaConstruction currently holdsindependent directorships with Chartered Accountants inEnglandandWales. He Ng SiekChuanisafellow oftheInstitute of Bank Malaysia Berhadin2005. resigned asChiefExecutive Director ofAlliance of Alliance Merchant BankBerhadin2002. He Director in1994.HebecameaBoard member of Credit andwas later appointed ChiefExecutive Bank Malaysia Berhadin1991asGeneral Manager bank and a finance institution. He joined Alliance he madehiscareer witha leading localmerchant pivotal switch to thefinancialsector in1980, where in London and Kuala Lumpur. Hethenmade a in auditandaccounting withCoopers &Lybrand financial services industry, he started hiscareer With closeto four decadesofexperience inthe Nomination andRemuneration Committees. a memberoftheAudit, RiskManagementand Committee until16 March 2017. Heremains as Committee andtheNomination &Remuneration Board, hewas theChairmanofAudit andRisk 2019. Duringhiscapacityasamemberofthe Independent Non-Executive Director on18April Senior IndependentNon-Executive Director to on 22May 2017. Hehasbeenre-designated from He was appointed asChairmanoftheCompany Non-Executive Director on5October 2012. Chuan”) joinedtheBoard asIndependent g SoonLai@NgSiekChuan(“ Board ofDirectors Profiles of
53 PG. Annual Report 2018 Protection Made Easy Profiles of Board of Directors
atuk Kamarudin bin Meranun (“Datuk Kamarudin”) was appointed Non-Independent DNon-Executive Director of Tune Protect Group Datuk Kamarudin on 11 March 2013. He is also Chairman of Employees’ Share Option Scheme (“ESOS”) and Investment bin Meranun Committee. With close to 30 years’ experience under his belt, Non-Independent Datuk Kamarudin is a prominent, national business tycoon known for co-founding AirAsia with Tan Sri Non-Executive Director Anthony Francis Fernandes. He started his career in 1988 as a Portfolio Manager with Arab-Malaysian Aged 57 Merchant Bank before leaving in 1994, to join Innosabah Capital Management Sdn Bhd where he Malaysian remains as an Executive Director to date. Male Datuk Kamarudin was appointed Deputy Group Chief Executive Officer and President of Group Finance, Treasury Corporate Finance and Legal of AirAsia Berhad until 2012, when he was re-designated as a Non-Independent Non-Executive Director and appointed as Deputy Group Chief Executive Officer of AirAsia ASEAN Inc. On 6 November 2013, Datuk Kamarudin was appointed Executive Chairman of AirAsia Berhad, where he takes the lead in engaging with the government, aviation regulators and airport authorities in Malaysia.
He is a shareholder of the Company and also the co-founder and director of Tune Group Sdn Bhd. He is currently the Executive Chairman of AirAsia Berhad and AirAsia Group Berhad and a Non-Independent Executive Director of AirAsia X Berhad. He is also a Director of Yayasan Pendidikan Titiwangsa.
Datuk Kamarudin graduated with a Bachelor of Science (BSc) with Distinction (Magna Cum Laude) majoring in Finance in 1986, and a Master of Business Administration (MBA) in 1987 from Central Michigan University.
He does not have any family relationship with any Director and/or major shareholder of the Company. He does not have any conflict of interest with the Company.
He has no conviction for any offences within the past five (5) years and there are no public sanction or penalty imposed on him by the relevant regulatory bodies during the financial year.
He attended six (6) Board meetings during the financial year.
PG.
54 Malaysian Aged 50 Tan Ming-Li Female Non-Executive Director Independent T financial year. She attended six(6)Board meetingsduringthe regulatory bodiesduringthefinancial year. sanction orpenaltyimposedonherby therelevant the past five (5) years andthere are nopublic She hasnoconviction for any offences within the Company. She does not have any conflict of interest with Director and/or majorshareholder oftheCompany. She does not have any family relationship with any Jaya Group Berhad. Director ofBPPlastics HoldingBhdandIkhmas She iscurrently anIndependent Non-Executive and science. Australia withadoubledegree inLaw (Hons) She isagraduate oftheUniversity ofMelbourne, corporate finance related work. and acquisitions, corporate restructuring aswell as advising oncapital market transactions, mergers securities law where she is principally involved in since 1994. She specialises in corporate and + Cheang&Ariffandhasbeeninlegalpractice Li isapartnerinthelegalfirm,Chooi& Company Berhad, a subsidiary of Tune Protect Group. Ming- She sits on the Board of Tune Insurance Malaysia of theAudit andRiskManagementCommittees. Remuneration Committees. Sheisalsoamember she became the Chairman of the Nomination and Protect Group on 1 April 2014. On 1 June 2017, Independent Non-Executive Director ofTune an Ming-Li (“Ming-Li”) was appointed Board ofDirectors Profiles of
55 PG. Annual Report 2018 Protection Made Easy Profiles of Board of Directors
ohamed Rashdi bin Mohamed Ghazalli (“Mohamed Rashdi”) was appointed MIndependent Non-Executive Director of Mohamed Rashdi bin the Company on 1 June 2017. He has been re- designated from Independent Non-Executive Mohamed Ghazalli Director to Senior Independent Non-Executive Director on 18 April 2019. He is also Chairman of the Audit Committee and RiskManagement Senior Independent Committee, as well as member of the Nomination Non-Executive Director and Remuneration Committees.
Aged 62 Mohamed Rashdi had a successful career in IT and Management Consulting with Coopers & Lybrand, Malaysian IBM Consulting and PricewaterhouseCoopers over a span of 20 years. During his career, Mohamed Rashdi Male worked with Telecoms Australia as well as Coopers & Lybrand in the United Kingdom. He was a Partner of PwC Consulting (East Asia) as well as IBM Consulting and was also IT and Consulting Advisor with PwC Malaysia focusing on capacity building, business development and quality assurance.
As a management and technology consultant, Mohamed Rashdi has personally led assignments in strategy and economics, business process improvement, information systems planning and IT project management. He has provided consultancy expertise across a range of industries such as government, telecommunications, oil & gas, transport and utilities with some involvement in manufacturing and financial services.
Mohamed Rashdi graduated in 1979 with a Bachelor of Science (Honours) degree in Computation from the University of Manchester Institute of Science and Technology, United Kingdom. He is also a Director on the Boards of Sapura Energy Berhad and Danajamin Nasional Berhad.
He does not have any family relationship with any Director and/or major shareholder of the Company. He does not have any conflict of interest with the Company.
He has no conviction for any offences within the past five (5) years and there are no public sanction or penalty imposed on him by the relevant regulatory bodies during the financial year.
He attended six (6) Board meetings during the financial year.
PG.
56 Malaysian Aged 50 Khoo AiLin Female Chief Executive Officer Group
1 Note: K Chief Executive Officer of Tune Protect Malaysia regulatory bodiesduringthefinancial year. sanction orpenaltyimposedonherby therelevant the past five (5) years and there are nopublic She hasnoconviction for any offences within any conflict ofinterest withthe Company. shareholder of the Company. She does not have relationship withany Director and/or major companies andlisted issuers aswell asany family She does not have other directorships in public and Finance. degree inEconomics, majoringinBanking La Trobe University, Australia holding a Bachelor’s in theinsurance industry, AiLinisagraduate of A well-established thought leaderandpartner keen interest inthegrowing realm ofinsurtech. insurance more accessible andrelevant andhasa digital technology will lead the way to making business performance. AiLinfirmlybelieves that capabilities whilestrengthening theNational leveraging theAirAsiaecosystem andInsurtech to accelerate theexpansion ofGlobalbusiness, works closelywiththeGroup managementteam Bringing herdynamicversatility to thetable, AiLin and composite insurance. as well asAffinity Business withinthelife, general Distribution, Bancassurance, Business Development her belt,servingvarious roles inPartnerships, She hasmore than20years ofexperience under joint venture company –Tune Protect EMEIA. associate company – Tune Protect Thailand; and directorships insubsidiary–Tune Protect Re; and ESOS Committee oftheCompany. Sheholds She isamemberoftheInvestment Committee since 2August 2017. subsidiary of theCompany, arole that sheassumed This information iscorrect at timeofprinting Group ChiefExecutive Officer Group on14January2019. Sheisalsothe Group ChiefExecutive Officer of Tune Protect hoo Ai Lin (“Ai Lin”) was appointed as the Profile of 1 , a
57 PG. Annual Report 2018 Protection Made Easy Profiles of Senior Management Team
01 02 03
Aged 50 Female Malaysian Aged 44 Male Malaysian Aged 37 Male Malaysian
Chen Ooi Loh Ooi Wai Chuan Keat Ben Jern Chief Financial Principal Officer, Chief Digital and Officer Tune Protect Re Marketing Officer
Chen Ooi Wai (“Shirley”) joined the Ooi Chuan Keat (“Ooi”) joined the Loh Ben Jern (“Ben”) joined the Group Group as Chief Financial Officer on Group as Principal Officer of Tune as Chief Digital and Marketing Officer 1 September 2016. She is primarily Protect Re on 2 April 2018 with direct on 2 April 2018 with the responsibility responsible in the enabling of financial overview of all aspects of business of developing brand strategy, unlocking strategies within the Group, for long- and operations of Tune Protect Re, value in the InsurTech space and term value creation through sound involving the development of strategies re-engineering customer’s touch points capital and financial management, and initiatives, working alongside key for the Group. alongside achieving the Group’s stakeholders to drive the Digital Global business objectives and sustainable Travel business to the next level. Having over 12 years of experience in growth. She is also a Director in crafting and execution of digital and Tune Direct Ltd. and Tune Direct (M) He began his career with ING Insurance marketing strategies, IT consulting Sdn Bhd. before moving on to Allianz General and vast exposure in spearheading Insurance Malaysia, heading various roles Malaysia’s largest integrated media With more than 20 years’ experience in Consumer Lines, Digital Innovation, group’s OTT strategy, he leverages in the insurance industry, Shirley has and Special Projects as a Project sound technology, data, analytics and served in instrumental management Director to drive transformational actionable insights to build and catapult roles in both local and multinational projects involving digitisation, sales, brands to bigger success – in the most insurers such as Pacific Insurance, claims, underwriting and operations. Ooi creative and fun ways. Prior to joining Tokio Marine Life and AXA General. She also chaired the Product Development the Group, he served tonton – Malaysia’s brings with her a wealth of experience Committee in Allianz. Prior to joining first & largest homegrown OTT service from auditing, financial reporting, the Group, Ooi was with Hannover and Media Prima Radio Network – both investment, compliance, enterprise risk Rueck SE, a global reinsurer as the Head under the belt of the Media Prima Group management and merger integration. of Personal Lines for South and South Berhad, as well as Astro Radio. East Asia. Graduated from The University of Iowa, Ben is a graduate in Bachelor of Business USA with a Bachelor’s degree in Business Ooi holds an Advance Diploma from the & Information Technology of Monash Administration majoring in Accounting, Insurance School of Japan Tokyo and University with certification in various she is a member of the Malaysian a Bachelor’s Degree in Accounting & leadership programmes and exposure Institute of Accountants (MIA) and Finance from the Southern Queensland in technology infrastructure, software Malaysian Institute of Certified Public University, Australia. development, plus cloud computing. Accountants (MICPA).
PG.
58 Aged 53 Australia. the University ofNew SouthWales, and aBachelorofScience from He isagraduate inMaster ofCommerce & Enterprise Architect. President, undertheGroup ITStrategy RHB BankingGroup astheSeniorVice Protect Group, Chee Aik was with the and Microsoft. Priorto joiningTune IT vendors such as Hewlett-Packard Earlier inhiscareer, heworked with Alliance Bank,CIMBBankandMaybank. across financialinstitutions including IT projects andIToperations, spanning in various leadershiproles indelivering He hasmore than30years’ experience businesses across theGroup. support business strategy for alllinesof technology strategy will continue to drive initiatives, ensuring the Group’s key stakeholders to design,develop and is responsible inworking closelywith vision androadmap for theGroup. He 4 June2018 to definethe technology Group asChiefTechnology Officer on Koay CheeAik(““)joinedthe 04 Male Officer Chief Technology Chee Aik Koay Malaysian Aged 46 degree inCommerce. Technology, Australia withaBachelor’s She graduated from CurtinUniversity of bancassurance partnership in Indonesia. team instrumental inthesetup ofthe in CIMB,shewas partofthepioneer such asAIG,EtiqaandCIMB.While in majorfinancialservices institutions served inlocalandregional capacities and corporate planning,shehad development, project management of business development, product experience amongothersintheareas With more than20years’ Protect Thailand). CompanyPublic Limited, Thailand (Tune Direct (M)SdnBhdandTune Insurance Chiew LingisalsoaDirector ofTune engaging analysts andinvestors alike. initiatives andcore projects aswell as management oftheGroup’s key She isprimarilyresponsible for strategic Investor Relations and Communications. core areas –Corporate Development, and Investor Relations, overseeing three currently Chief–Corporate Development the Group on10February 2014 andsheis Koot Chiew Ling(“Chiew Ling”)joined 05 Female Investor Relations Development and Chief –Corporate Chiew Ling Koot Malaysian
and organisation. high impactsolutionsfor people industry peers, while delivering the Group anditssubsidiaries from a distinctive culture that separates leading the people strategy to create she isresponsible for definingand Chief –People andCulture where on 4May 2016 andshe is currently Yap HsuYi (“HsuYi”) joinedtheGroup achievements inhumanresources. and external awards for outstanding Finance, sheisarecipient ofinternal Commerce majoring in Accounting and Australia degree withaBachelor’s in Graduated from MonashUniversity, Consulting, Telenor andPepsiCo. Mercersuch asArthurAndersen,PwC, various industries, including companies Tune Protect Group, shehasworked in & talentpipelinedevelopment. Priorto employee engagement,culture, career management, change compensation & benefits, performance tax andHRconsulting/operations in in diverse areas ofcorporate andpersonal has almost 20 years’ experience working An experienced HR professional, Hsu Yi Aged 44 06 Senior ManagementTeam Female and Culture Chief –People Hsu Yi Yap Profiles of Malaysian
59 PG. Annual Report 2018 Protection Made Easy Profiles of Senior Management Team
07 08 09
Aged 33 Male Malaysian Aged 30 Male Malaysian Aged 50 Male Malaysian
Mohd Dixon Wong Suresh Maria Yusof Hafiz Kit Seng Alexander Mohamad Chief – Strategy Head of Internal Audit Chief – Government and Regulatory Affairs
Mohd Yusof Hafiz Mohamad (“Yusof”) Dixon Wong Kit Seng (“Dixon”) joined Suresh Maria Alexander (“Suresh”) joined the Group on 1 March 2019 as the Group on 25 February 2019 as joined the Group as Head of Internal Chief – Government and Regulatory Chief – Strategy to drive and materialise Audit on 2 July 2018, undertaking the Affairs to ensure sustainability of the digital business strategies, strengthen responsibility of defining the Group’s Group’s revenue streams globally from the Corporate Finance functions to drive internal audit vision and roadmap. a legal and regulatory perspective value for the Group focusing on digital Reporting directly to the Group Audit while supporting the implementation global business via M&A and/or Strategic Committee, he works closely with key of regulatory policies across the Group. Partnerships, as well as driving digital stakeholders to design, develop and His roles include having direct oversight insurance strategies and synergies across drive audit initiatives in support of over Legal and Company Secretarial the Group’s ecosystem. the Group’s business strategy. He also functions whilst supporting effective oversees the internal audit functions of corporate governance across the Group. He brings along experiences in Global the subsidiary and associate entities. Markets with a couple of banks, before Yusof spent 6 years with Insurance transitioning into Corporate Finance Suresh has more than 24 years’ & Takaful Supervision team of Bank & Strategy with Tune Group Sdn Bhd. experience, and an extensive career in Negara Malaysia working on various He worked closely with the founders of the field of internal auditing, spanning projects and review works including the Tune Group on a variety of portfolios across various insurance and banking implementation of Risk Based Capital which include managing the group’s organisations in the industry, which and Investment Management. Since loan portfolios, structuring corporate includes the Hong Leong Group, Kurnia then, he has been exposed to roles in exercises & financial transactions, M&A, Insurans Berhad and AmBank Group. compliance, data science consultancy, investments and business strategies for Prior to joining Tune Protect Group, he and capital and credit risk management. the group and the founder’s respective was the Chief Internal Auditor of The Prior to joining the Group, he was in a personal businesses prior to joining Pacific Insurance Berhad. Consultancy role for the Group from Tune Protect Group. He currently sits September 2018. on the Board of Tune Talk Sdn Bhd and Suresh is a fellow member of the Institute Caterham Cars Ltd. of Internal Auditors Malaysia (IIAM) Yusof is a graduate in Bachelor and is a Certified Internal Auditor (CIA) of Science in Actuarial Science He holds a Master of Business majoring and a Certified Information System (Hons.) from the London School of in International Business from the Auditor (CISA). Economics, UK. Queensland University of Technology, Australia.
PG.
60 Aged 41 Institute International). awarded by DRI(Disaster Recovery Business Continuity Professional in Computer Engineering and a Certified Admin ManagementandHigher Diploma School andInformatics withBusiness He graduated from Stamford Business Tune Protect Group. known as AIA Group) prior to joining Citibank, Great Eastern andING(now companies suchasMaybank, HSBC, and insurance industries, heserved working across financialinstitutions With more than14years’ experience across theGroup. promote theawareness onriskculture tasked to buildastrong governance and risk managementintheGroup, heisalso implementing andmonitoring effective mitigation ofrisks.Inadditionto leading, Tune Protect Group through effective financial and reputational integrity of risk managementframework to ensure enforce an appropriate enterprise-wide responsibility to strategise, leadand Compliance on2January2018 withthe as HeadofRiskManagementand Anthony (“Raymond”) joinedtheGroup Raymond MichaelA/LM 10 Male Compliance Management and Head ofRisk Anthony Michael M Michael A/L Raymond Malaysian relevant regulatory bodiesduringthefinancialyear None oftheSeniorManagementhasbeenconvicted for any publicsanctionorpenalty imposedby the Conviction for Offences None oftheSeniorManagementhasany conflict ofinterest withTune Protect Group Conflict ofInterest of Tune Protect Group None oftheSeniorManagementhasany family relationship withany otherDirector and/or majorshareholder Family Relationship None oftheSeniorManagementhasany otherdirectorships inpubliccompanies andlisted issuers Other Directorship Notes: Senior ManagementTeam Profiles of PG. 61 Annual Report 2018 Protection Made Easy Corporate Governance Overview Statement
The Board of Directors (“the Board”) The Company, including its subsidiaries, associate and joint venture company (collectively referred to as (“the Group”)), of Tune Protect Group is committed applies high standards of ethics, integrity, and corporate to continuously improve in the governance in all its dealings. The Board considers all the principles and best practices as set out in the MCCG 2017, implementation of the principles Bursa Malaysia Corporate Governance Guide and BNM’s Corporate Governance policy throughout the financial year and best practices of Corporate ended 31 December 2018. Governance (“CG”), as provided in The Board presents this statement to provide an overview of the Malaysian Code on Corporate the CG practices of the Company under the leadership of the Governance (“MCCG 2017”), the Main Board during the financial year ended 31 December 2018. This statement is prepared in compliance with the MMLR of Bursa Market Listing Requirements (“MMLR”) Malaysia and takes guidance from the key CG principles as set out in the MCCG 2017. It is to be read together with the CG of Bursa Malaysia Securities Berhad Report 2018 (“CG Report”) of the Company which is available (“Bursa Malaysia”) and Bank Negara on the Company’s corporate website at tuneprotect.com.
Malaysia (“BNM”). Section A of the CG Report provides the details on how the Company has applied each Practice during the financial year ended 31 December 2018 as set out in the MCCG 2017 and Section B provides details on the adoption of CG practices as guided by BNM’s Corporate Governance policy.
PRINCIPLE A | Board Leadership and Effectiveness
I. BOARD RESPONSIBILITIES • Results and financial reporting; • Dividend policy and proposals for dividend payments; Roles and Responsibilities • New ventures; • Major acquisitions, disposals, and other transactions The Board is accountable to the shareholders for outside delegated limits; achieving the Group’s strategic objectives, for the delivery • The Group’s overall risk appetite; of strong and sustainable performance, and for ensuring • Review of the Group’s overall corporate governance that the business operates within its risk limits. The Board arrangements; retains full and effective control over the Group’s affairs • Maintenance and review of the systems of risk and is the principal decision-making forum in providing management and internal control; stewardship and entrepreneurial leadership through its • Changes to the structure, size and composition of the Board Committees. Board, including new appointments; • Succession plans for the Board and senior management; The Board had endorsed the authority limit granted to the and Group Chief Executive Officer (“CEO”) and Management • Annual review of its own performance and that of its team for day-to-day management and operations of Board Committees. the business. The Chairman and Group CEO positions are held by The Board has a formal schedule of reserved matters, different individuals. Further details of the Chairman and reviewed annually, which includes: members’ roles and responsibilities can be found in the Board Charter. • The Group’s long-term strategy, corporate objectives and plans; Terms of Reference • The Group’s capital structure; • Operating and capital budgets; The Board Charter was last reviewed on 29 August • Any significant changes to accounting policies 2018 and is available on the corporate website at PG. and practices; tuneprotect.com. 62 II. Members oftheBoard are asfollows: is higher, to beindependentdirectors. one third (1/3) oftheBoard oftheCompany, whichever 15.02(1) oftheMMLRwhichrequires at least two (2)or are IndependentDirectors. This complies withParagraph The Board comprises four (4)Directors, three (3)ofwhom resources, andperformance oftheGroup. business operations, to bearonthegovernance, strategies, law, economics, investment, technology andinternational range ofrelevant experiences inbanking,accounting, gender, and other attributes. Board members have a wide differences inskills,industry experience, background, The Company’s diverse Board includes andleverages Board Balance andIndependence BOARD COMPOSITION the Company. are taken andmaintainedinthestatutory register of proper records oftheproceedings andresolutions passed Committees are properly convened, andthat accurate and During theyear, allmeetingsoftheBoard andBoard procedures are followed andany deviation minimized. best practices andrelated statutory obligations and compliance oflisting requirements, corporate governance the Board. ShealsoadvisestheBoard onissues relating to Company Secretary in ensuring the effective functioning of has unrestricted access to theadvice andservices ofthe Secretary inevery role andresponsibilities; andtheBoard supported by asuitablyqualifiedandcompetent Company Board andto ensure regulatory compliance. The Board is the needarises,to enhance theeffective functioning of the provide advice andservices for theDirectors asandwhen Companies Commission ofMalaysia. Sheisresponsible to Secretary on14May 2018 andsecretary licensed by the Kimberly OngSweet Ee was appointed asCompany Company Secretary Tan Ming-Li bin Meranun Datuk Kamarudin Ng SiekChuan Ng SoonLai@ Name Member Member Chairman Designation Executive Director Independent Non- Director Non-Executive Non-Independent Executive Director Independent Non- Directorship
attendance oftheBoard membersare asfollows: Board heldatotal ofseven (7)meetings.The detailsof During thefinancialyear ended31December 2018, the Attendance ofMeetings found onpages53 to 56ofthisAnnualReport. more thannine(9)years. The profiles oftheBoard canbe of theIndependentDirectors have served ontheBoard for During thefinancialyear ended31December 2018, none Note: Note: training programmes. provided to the Board to encourage their participation in responsibilities. There isaprovision for training allowance essential for theDirectors to discharge their dutiesand The Group recognises that continuous education is Professional Development its duties. expert advice at theCompany’s expense inperforming The Board hasunrestricted access to independentand to beinfrequent contact between meetings. issues discussed. The Directors andManagementcontinue able to exert theirindependentjudgementto bearon constructive challenge anddebate, andallDirectors were conducted inanopenatmosphere whichallowed for Board Committees meeting held during the year were for Board and Board Committees meeting. All Board and to theBoard withsufficienttimefor membersto prepare Meeting notices, agendas and board papers are circulated Ghazalli bin Mohamed Mohamed Rashdi Name Mohamed Rashdi bin Mohamed Ghazalli Tan Ming-Li Datuk Kamarudin binMeranun Ng SoonLai@SiekChuan Directors Director oftheCompany ceased on1July2018 Siegtraund Teh Siew Foong, aNon-IndependentNon-Executive meetings priorto hercessation on1July2018 Siegtraund Teh Siew Foong attended four (4)outoffour (4) Member Designation Corporate Governance Overview Statement Director Non-Executive Senior Independent Directorship Attendance 6/7 6/7 6/7 /7 7/
63 PG. Annual Report 2018 Protection Made Easy Corporate Governance Overview Statement
The programmes and seminars attended by the Directors Name Designation Directorship during the year can be found in Section B of the CG Report. Tan Ming-Li Chairman Independent Non-Executive Conflicts of Interest Director
Board members have declared their directorships Ng Soon Lai @ Member Independent in companies other than in the Group, and such Ng Siek Chuan Non-Executive directorships are within the limit of five directorships in Director public listed companies. Directors have declared their respective shareholdings in the Group, and their interests Mohamed Rashdi Member Senior in any contract with the Group. Directors abstain from bin Mohamed Independent any discussions and decision-making related to other Ghazalli Non-Executive companies they hold directorships in. Director
Board Committees Note: Siegtraund Teh Siew Foong ceased as a member of Nomination Committee on 1 July 2018 The Board has delegated its authority to the Audit Committee, Risk Management Committee, Nomination Key matters deliberated during the four (4) Committee, Remuneration Committee, Employees’ Share Nomination Committee meetings held in the financial Option Scheme (“ESOS”) Committee, and Investment year ended 31 December 2018 were: Committee. Save for the ESOS and Investment Committees, the Board Committees are chaired by • Performance evaluation of the Board and Board Independent Directors and comprised of a majority of Committees; Independent Directors. • Review and update of Board Charter and Terms of Reference for Board Committees namely The Nomination Committee may invite other Board Audit Committee, Risk Management Committee, members and the Group CEO to attend meetings when it Nomination Committee, Remuneration Committee deems appropriate. and Investment Committee; and • Review the re-appointment of Directors, with (a) Nomination Committee recommendations to the Board.
The Board through its Nomination Committee The Nomination Committee assesses annually, in a conducts an annual review of its size and composition, formal and transparent manner, the independence to determine if the Board has the right size and of Independent Directors, the effectiveness of the sufficient diversity with independence elements that Board as a whole, and the effectiveness of its various fit the Company’s objectives and strategic goals. The Committees and Directors in the discharge of their Board through the Nomination Committee considers duties and responsibilities. The Board Assessment gender diversity as part of its selection of candidates and Individual (Self & Peer) Assessment are done for the Board and Senior Management positions. by using:
The Nomination Committee comprised entirely of • Audit Committee Evaluation Questionnaire Non-Executive Directors, three (3) of whom are • Audit Committee Members’ Self and Peer Independent Directors during the financial year ended Evaluation Form 31 December 2018 as follows: • Independent Directors’ Self-Assessment Checklist • Directors’/Key Officers’ Evaluation Form • Board & Board Committee Evaluation Form
PG.
64
(b) remuneration review and compensation for the financial year ended 31December 2018 was the Remuneration Committee meetingsheldinthe Key matters deliberated duringthethree (3) 31 December 2018 asfollows: Independent Directors duringthefinancialyear ended of Non-Executive Directors, three (3)of whomare The Remuneration Committee comprised entirely Remuneration Committee tuneprotect.com. Committee isavailable onthecorporate website at The Terms ofReference oftheNomination Terms ofReference reference andthere were nomajorissues identified. out theirdutiesinaccordance withtheirterms of the Audit Committee and its members have carried Independent Assessment Form to determine whether of the Audit Committee and each of its members vide Company reviewed theterm ofoffice andperformance commendable. The Nomination Committee of the individual Directors duringthereview periodwere of the Board, the Board Committees and the assessment indicated that the performance and transparent manner. The results oftheannual The annualassessment was conducted inaformal the minutes ofthemeeting. will accordingly beaddressed anddulyrecorded in Board Committees, as well as the meetings’ decisions, deliberated at meetingsoftheBoard, orany ofits view expressed by any Director on any matter the willofmajority),andany concern ordissenting consensus (andfailing this,that thedecisionsreflect ensures that theBoard’s decisionsare reached by interest ofimproving itseffectiveness. The Chairman Secretary) conveyed thefindingsto theBoard inthe Committee Chairmanandtheevaluator (e.g. Company Upon completion oftheevaluations, theNomination Ghazalli bin Mohamed Mohamed Rashdi Ng SiekChuan Ng SoonLai@ Tan Ming-Li Name Member Member Chairman Designation Director Non-Executive Independent Senior Director Non-Executive Independent Director Non-Executive Independent Directorship
(d) (c) T Note: Note: 31 December 2018 were: the ESOS Committee duringthefinancialyear ended other related matter asrequired. The membersof eligibility, optionoffers, share allocations, andany regulations thereof, andto determine theparticipation of theGroup inaccordance withtheobjectives and Committee was established to administer theESOS The Employees’ Share OptionScheme(“ESOS”) Employees’ Share OptionSchemeCommittee appropriate recommendations to theBoard. Directors, CEOandSeniorManagementTeam, with the following: financial year ended31December 2018 consist members oftheInvestment Committee duringthe allocation, dealing,recording, andreporting. The up policiesandprocedures for monitoring, assets in themanagementofinvestments, includingdrawing the Board indischarging itsdutiesandresponsibilities The Investment Committee was established to assist Investment Committee tuneprotect.com. Committee isavailable onthecorporate website at The Terms ofReference oftheRemuneration Yap HsuYi Chen OoiWai Meranun Kamarudin bin Datuk Ng SiekChuan Ng SoonLai@ Meranun Kamarudin bin Datuk Name Name erms ofReference Committee on 31December 2018 Razman Hafidzbin AbuZarimceased asamemberofESOS Investment Committee on31December 2018 Razman HafidzbinAbuZarimceased asamemberof Member Member Chairman Member Chairman Designation Designation Corporate Governance Overview Statement and Culture Chief – Officer Chief Financial Director Non-Executive Non-Independent Director Non-Executive Independent Director Non-Executive Non-Independent Directorship Directorship People
65 PG. Annual Report 2018 Protection Made Easy Corporate Governance Overview Statement
III. REMUNERATION long-term business goals, a review was done and in 2018, a revised performance system was implemented to create Remuneration Framework or Practices a stronger link towards performance and sustainable business results. Corporate financial goals are shared The Company’s Remuneration Framework provides a among the key senior officers to drive growth, profitability reference for employees to understand the principles and solvency. In addition, the Company also introduced on which the Company’s rewards are structured on. other measures and key performance indicators to The framework is designed to support and reward the drive, measure and instil awareness of sustainability and organisation’s business strategy and employees throughout profitability among the rest of the workforce. This was their career via: implemented in 2018 and will continue in 2019.
For the Organisation: 3. Differentiation
• Reinforcing our performance culture by linking Employee’s compensation is tied to their individual employees’ and the Company’s performance performances. Our performance index differentiates • Attract and retain highly talented and diverse employees high performers by providing greater incentives for needed to achieve our growth objectives superior performance and consequences for lower • Ensure that programs are affordable to both the performance at an individual level. The basis of pay for employees and the Company performance is communicated to employees in a variety of ways, i.e. during onboarding, refresher sessions on For the Employee: performance management, information is also available on our intranet. • Rewarding employees’ with competitive pay • Providing quality health and welfare benefits To ensure that our compensation practices are in line • Financial protection in the event of illness, disability with prudent risk-taking, we have also implemented the or death following controls: • Work-Life quality benefits to encourage associates and their families to lead healthier lives • The remuneration for CEO and key officers are reviewed and determined by the Board of Directors The key drivers for our remuneration practices are as follows: and Board Committees, including new hires and performance bonuses; 1. Market Competitiveness • Employees in control functions are remunerated based on their achievements of their control objectives and are When designing our Total Rewards programme, we independent of the financial results of the businesses consider: they oversee; • The performance metrics of the organisation and key i. External factors such as market dynamics and the senior officers are reviewed and approved by the Board legal regulatory environment of Directors and Board Committee members annually. ii. Internal factors such as organisational design and Performance metrics are cascaded top-down to create cost structure shared ownership and alignment of key priorities; • Pay levels and components of pay are designed to As we have a variety of roles that we secure from consider all types of risks and short/long term benefits various market segments/industries, we ensure to the Company. Typically, this will involve quantitative that pay is competitive relative to the market by and qualitative judgement such as market benchmarking performing market benchmarking against the relevant from various sources including external consultants, market segments. supply and demand within the same industry as well as other industries, short and long term business priorities 2. Performance and Growth of the Company, financial position of the Company as well as regulatory requirements; We need to foster a high performance culture with a • Mandatory key performance metrics on Risk/ strong link between performance & rewards. However, Governance/Compliance are imposed on the workforce this needs to be done in a manner to balance top line to promote competencies this area and increase level of
PG. growth with quality earnings & cash flow management compliance; and to deliver sustainable results. In line with the Company’s 66
Note: are asfollows: The total Directors’ remuneration received from theCompany andtheGroup duringthefinancial year ended31December 2018 Total Directors’ Remuneration for 2018 (1) Section BoftheCG Report. The total remuneration of theSeniorManagementduringfinancialyear ended31December 2018 isdisclosedin Financial Statements andSectionBoftheCG Report. The total remuneration oftheGroup CEOduringthefinancialyear ended31December 2018 isdisclosedinNote 27(c) to the 3. 2. 1. the following principles: In remunerating itsDirectors, theCompany isguidedby • Total Mohamed Rashdibin Tan Ming-Li Siegtraund Teh Siew Foong Datuk Kamarudin bin Ng SoonLai@ Non-Executive Directors NIL Executive Director
Mohamed Ghazalli Meranun Ng SiekChuan Ceased on1July2018 except inthecontext ofsign-onbonuses;and Bonuses to Executive Directors shallnotbeguaranteed, of profits orturnover; fixed sum,andnotby acommission onorpercentage Fees payable to Non-Executive Directors shallbeby a include acommission onorpercentage ofturnover; Salaries payable to Executive Directors shallnot performance oftheCompany. The size ofthebonuspoolislinked to theoverall (1) Remuneration received from theCompany Directors’ RM’000 666 202 Fee NIL 146 152 122 44 Allowance Meeting RM’000 264 NIL 60 30 70 87 17
remuneration alignswithmarket practice. undertaken by theDirectors concerned. The Board’s reflects theexperience andlevel of responsibilities Board and Board Committees. The level of remuneration quarterly ormonthlywheneachmeetingisheldfor the Annual Fixed Fees andMeetingAllowances are paideither fees, meetingallowances andhospitalisation benefits. The Board’s remuneration package currently comprises 4. RM’000 of time. the potential for risksto crystallise over alongerperiod reflect thetimehorizon ofrisksandtake account of immediately. The vesting periodofshare optionsshall Share options,ifgranted to Directors, shallnotvest Total 930 206 289 222 NIL 152 61 Remuneration received from theGroup Directors’ RM’000 848 202 296 Fee 152 NIL 122 76 Allowance Meeting RM’000 Corporate Governance Overview Statement 329 NIL 30 117 70 87 25 RM’000 Total 1,177 289 222 NIL 413 152 101
67 PG. Annual Report 2018 Protection Made Easy Corporate Governance Overview Statement
PRINCIPLE B | Effective Audit and Risk Management
The Company’s Audit Committee and Risk Management Committee, including a summary of work performed during the financial year ended 31 December 2018 is available in the Audit Committee Report on pages 70 to 72 and Risk Management Committee Report on pages 73 to 74.
I. AUDIT COMMITTEE II. RISK MANAGEMENT AND INTERNAL CONTROL FRAMEWORK The Audit Committee comprised entirely of Independent Directors during the financial year ended 31 December The Board fulfils its responsibility in the risk governance 2018. The Audit Committee was chaired by a Senior and oversight functions through its Risk Management Independent Non-Executive Director, Mohamed Rashdi Committee to review the effectiveness of the Group’s bin Mohamed Ghazalli. The Board through its Audit systems of risk management and internal control in Committee evaluates and continuously improves the managing risks identified, and provides reasonable effectiveness of the Internal Audit function, financial assurance that risks linked to business goals, strategies, and operational control, and governance processes of and objectives are managed within the risk appetite and the Group. risk limits approved by the Board.
PRINCIPLE C | Integrity in Corporate Reporting and Meaningful Relationship with Stakeholders
I. COMMUNICATION WITH STAKEHOLDERS Tune Protect Corporate Website
Communication with stakeholders is important and The Group’s corporate website (tuneprotect.com) the Company has in place an Investor Relations Policy, publishes necessary information about the Group, available on the corporate website at tuneprotect.com. including all the announcements made to Bursa Malaysia, The CEO and Investor Relations team have the day- relevant press releases, and official releases of material to-day responsibility in communicating with analysts information to the market within a reasonable timeframe and institutional shareholders on the Group’s strategy after such information is released to Bursa Malaysia. and plans to achieve its objectives. Regular dialogues ensure that the Group’s strategy is understood, updates The approach to stakeholders’ engagement can be found on the status of the Group in meeting its objectives on pages 32 to 33 of this Annual Report. is provided, and any issues arising are addressed in a constructive manner. II. CONDUCT OF GENERAL MEETINGS
External analysts’ reports are circulated to the Directors The annual general meeting (“AGM”) and other general and Management team. Shareholders can direct questions meetings of the Company are the primary forum for on their shareholdings to the Share Registrar or the dialogue with its shareholders. All notices of general Company Secretary. meetings and accompanying explanatory materials are published on the corporate website (tuneprotect.com), Details on quarterly results and Investor Relations activities advertised in a leading, mainstream local newspaper, and throughout the year can be found on pages 9 to 13 of this the necessary announcement made to Bursa Malaysia. Annual Report. In addition, the notice of AGM, which forms part of the Annual Report, and the CD-ROM, is circulated to its Annual Report shareholders. The form and content of the notices of the general meetings comply with the Companies Act 2016 The Company’s Annual Report is an instrumental means and any other applicable regulatory requirements under of communicating the Group’s activities, operations, and Bursa Malaysia and the Securities Commission Malaysia. performance to shareholders. Shareholders may deposit their proxy forms for AGMs and other general meetings of the Company to the Company Secretary at its registered address.
PG.
68 via theBoard, for re-appointment to theshareholders. assessment oftheexternal auditors andrecommended them, the year. The Audit Committee conducted theindependent reviewed thenon-auditservices provided to theGroup during policy. Messrs. Ernst &Young also confirmed that they have regulatory requirements andinaccordance withtheirinternal engagement in accordance with relevant professional and have been,independentthroughout theconduct oftheaudit Report, Messrs. Ernst &Young confirmed that they are, and external auditors. Asindicated intheIndependentAuditors’ an appropriate, formal andtransparent relationship withthe The Board, through theAudit Committee, hasmaintained Relationship withtheExternal Auditors with allrelevant approved accounting standards. the financialstatements have beenprepared inaccordance are prudentandreasonable. The Board isoftheopinionthat prudently, as well as made judgements and estimations, which accounting policiesandappliedthem consistently and ended 31December 2018, theCompany hasusedappropriate the Company’s financialstatements for thefinancialyear Companies Act 2016. The Board issatisfied that inpreparing them to ensure that the financial statements comply with the any time, thefinancialpositionof theCompany andto enable records are kept, whichdiscloses,withreasonable accuracy at The Board isresponsible for ensuring that proper accounting Directors’ Responsibilities inFinancialReporting ACCOUNTABILITY ANDAUDIT the Company. further participation by shareholders at AGMs of of engagementwithitsshareholders andfacilitate the leveraging oftechnology to enhance thequality voting system. The Company continues to explore The voting at theAGM was conducted viatheelectronic conference call. at least once perquarter, eitherinperson,orvia available for meetingswithkey analysts andshareholders The ManagementoftheCompany makes themselves
20 March 2019. This CG Overview Statement was approved by theBoard on basis isappropriate. preparation of the financial statements on a going-concern Based onthisreview, theDirectors are satisfied that the the next twelve months,includingregulatory capitalsurpluses. The Board hasreviewed theGroup’s financialprojections for Going Concern the financialyear ended31December 2017 and2018. year ended31December 2016 andwas remain engagedfor A new engagementpartnerwas assigned since thefinancial partner will be assigned to the Company every five years. Ernst &Young’s internal policy, adifferent engagement External Auditor policy documentissued by BNMandMessrs. Young annually since 2011. In line with the requirement in the The Company hasengagedandre-appointed Messrs. Ernst & Audit Committee onmatters that may require theirattention. From timeto time, theexternal auditors inform andupdate the well asto seektheirprofessional advice onrelated matters. Group’s auditplans,findingsandfinancialstatements as at least twice ayear. Meetingsare heldto furtherdiscuss the the presence oftheManagement,whenever necessary, and The Audit Committee meetswith Messrs. Ernst &Young without Corporate Governance Overview Statement
69 PG. Annual Report 2018 Protection Made Easy Audit Committee Report
MEMBERSHIP AND AUTHORITY financial and operational control, and governance processes. In this regard, the Internal Audit function reports directly to The Audit Committee was established on 16 March 2017 to the Audit Committee to facilitate its oversight responsibilities assist the Board of Directors (“the Board”) in overseeing the for the Group. Audit and Corporate Governance functions of the Group, independent from Management. The Audit Committee’s meeting calendar and agenda are linked to events in Tune Protect Group’s financial calendar. The Audit The Chairman of the Audit Committee is an Independent Committee is kept up-to-date with relevant developments, Director, appointed by the Board on the recommendation of changes in legislation and regulations, and information on the Nomination Committee. external seminars and conferences by the Company Secretary, the Management, including the Group Chief Executive Officer, The Audit Committee comprises two (2) Independent the Group Chief Financial Officer, and Group Internal Audit. The Non-Executive Directors and one (1) Senior Independent external auditors are regularly invited to attend the relevant Non-Executive Director. The composition of the Audit parts of the Audit Committee meetings so as to participate Committee is as follows: in the deliberation on relevant matters and provide advice as appropriate. Name Designation Directorship TERMS OF REFERENCE Mohamed Rashdi bin Chairman Senior Mohamed Ghazalli Independent The Terms of Reference of the Audit Committee is available on Non-Executive the corporate website at tuneprotect.com. Director
Ng Soon Lai @ Member Independent ATTENDANCE OF MEETINGS Ng Siek Chuan Non-Executive Director During the financial year ended 31 December 2018, the Audit Committee held a total of five (5) meetings. The details of Tan Ming-Li Member Independent attendance of the Audit Committee members are as follows: Non-Executive Director Members Attendance Mohamed Rashdi bin Mohamed Ghazalli 5/5 The Audit Committee also fulfilled the appropriate criteria for membership to the Audit Committee as prescribed by Ng Soon Lai @ Ng Siek Chuan 5/5 the relevant regulators, including the Malaysian Institute of Tan Ming-Li 5/5 Accountants, the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) and Bank Negara Malaysia. The Audit Committee consists SUMMARY OF WORK PERFORMED BY THE AUDIT of members with a broad spectrum of skills, professional COMMITTEE DURING THE FINANCIAL YEAR ENDED experience, and backgrounds with high integrity. Alternate 31 DECEMBER 2018 directors are not permitted to be appointed as a member of the Audit Committee. Also, the Audit Committee Chairman is During the year under review, the Audit Committee carried out not the Chairman of the Board. the following work in the discharge of its functions and duties:
In addition to financial matters, the Audit Committee 1. FINANCIAL REPORTING provides active oversight on the Internal Audit and Corporate Governance functions and activities, to ensure appropriate (a) Reviewed the financial statements pertaining thereto independence, scope of work, and resource requirements. and made recommendations to the Board of Directors The functions collaborate with Management to support Tune for approval of the same as follows: Protect Group towards achieving its objectives by embedding a systematic, disciplined approach to evaluating and continuously improving the effectiveness of the Internal Audit,
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70 2. Corporate Governance Report 2017. Information for inclusionintheAnnualReport andthe and Internal Control Statement, Additional Compliance Statement, Audit Committee Report, RiskManagement the approval of theCorporate Governance Overview Reviewed andrecommended to theBoard ofDirectors ANNUAL REPORT (c) (b) legal requirements. Accounting Standards Board (“MASB”) andother accounting standards approved by the Malaysian and unusualevents andcompliance withapplicable of accounting policies,key auditmatters, significant and approval, withparticularattention to any changes prior to submission to theBoard for theirconsideration the audited financialstatements for thefinancialyear Reviewed anddeliberated withtheexternal auditors subsidiaries andassociate company. the managementaccounts andreports ofoperating Reviewed anddiscussed withtheManagementon financial performance. present atrueandfair view oftheCompany’s requirements, to ensure that thefinancialstatements with therelevant accounting standards andotherlegal assumption, significant andunusualevents, compliance from theexternal audit,ifany, thegoingconcern policies andpractices, significantadjustment arising significant changesinorimplementation ofaccounting The above reviews were focused particularly on 15 November 2018 29 August 2018 25 May 2018 20 March 2018 28 February 2018 Date ofMeeting 30 September 2018. financial periodended Third quarter results for the 30 June2018. financial periodended Second quarter results for the 31 March 2018. financial periodended First quarter results for the 31 December 2017. for thefinancialyear ended Audited FinancialStatements 31 December 2017. financial year ended Fourth quarter results for the Review ofFinancialStatement
4. 3. (d) (c) (b) (a) INTERNAL AUDIT (e) (d) (c) (b) (a) EXTERNAL AUDITORS controls have beentimelyandcompletely addressed. recommendations to ensure that every key risks and Reviewed andmonitored implementation ofaudit environment. procedures to strengthen the Group’s internal control updates to theexisting policiesandinternal control Reviewed andapproved thenew policies as well as (v) (iv) (iii) (ii) (i) the following areas: in additionto reviewing internal auditreports covering Reviewed andmonitored theInternal Audit activities Group andupdates to the planasappropriate. and comprehensive coverage over theactivitiesof Audit Planfor 2018 and2019 to ensure adequate scope Reviewed andapproved theGroup’s Annual Internal and address any issues ofconcern. without thepresence oftheManagementto discuss Conducted private sessions withtheexternal auditors their independence. rendered by theexternal auditors to assess Reviewed andapproved thenon-auditservices of theaudit. process andscope oftheauditbefore commencement Discussed withtheexternal auditors onthenature, the Board ontheirre-appointment andremuneration. the external auditors and made recommendations to Reviewed thesuitability, expertise andperformance of matters that mightaffect theirindependence. report to the Audit Committee as necessary on all independence. The external auditors are required to by theManagementandto assess theirlevel of significant findings and remedial actions to be taken external auditors, Messrs. Ernst &Young, onthe Reviewed anddeliberated reports issued by the Legal Department. Operations Department;and Analysis;Audit Gap (“ORION”) Reporting; Operational RiskIntegrated OnlineNetwork Recurring Related Party Transaction (“RRPT”); Audit Committee Report
PG. 71 Annual Report 2018 Protection Made Easy Audit Committee Report
(e) Reviewed and monitored the scope and competence The Group Internal Auditors’ scope of work includes the of internal audit functions and considered various review and evaluation of the adequacy and effectiveness of internal audit findings and recommendations to the internal control system to anticipate any potential risks improve internal controls and operational efficiencies. and recommend improvements, if any. The Internal Auditor also assesses: 5. RELATED PARTY TRANSACTIONS • Ethical and regulatory compliance; (a) Reviewed and monitored the Group’s Related Party • Accounting and Finance; Transaction (“RPT”) and RRPT for the financial year • Information, Communications and Technology asset and to ensure compliance with the MMLR of Bursa management; Malaysia; and • Risk Management; • Business Continuity; (b) Reviewed and recommended to the Board of Directors • Quality Assurance Review; for approval, the Circular to Shareholders in relation • Special Projects; and to the proposed renewal of shareholders’ mandate for • Internal controls, risk management and compliance of RRPT of a revenue or trading nature. the Group.
(c) To ensure the adequacy of the controls and During the business audit planning cycle, high impact risk procedures in ensuring the RPT are not more areas were assessed and incorporated into the Annual favourable to the related parties than those generally Internal Audit Plan. Risk profiling was carried out to examine available to the public and is not detrimental to the the Group’s business activities, risks and key governance minority shareholders. issues facing Tune Protect Group. These assessments form the basis for Tune Protect Group’s risk-based audit plan and 6. OTHER ACTIVITIES strategy. Internal audit covers amongst others, the review of the adequacy of risk management, operations and financial Noted the relevant technical pronouncements and controls, compliance with established procedures, guidelines, accounting standards issued by the MASB, Bursa Malaysia’s statutory requirements and business processes improvement. MMLR, and other related regulations. The internal audit reports were discussed with the Management SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT and relevant plans of actions were agreed and implemented. All FUNCTION DURING THE FINANCIAL YEAR ENDED internal audit findings were presented to the Audit Committee 31 DECEMBER 2018 for consideration and reporting of significant findings to the Board of Directors. The Group has two in-house Internal Audit Departments; one in Tune Protect Group and the other in its subsidiary, Tune In addition, the internal auditors also provide necessary Protect Malaysia. Tune Protect Group’s Internal Auditor reports assistance and manpower for any special assignments or directly to the Audit Committee and proactively assists the investigations which the Management requested from time to Audit Committee in discharging its duties and responsibilities. time, with the approval of the Audit Committee. Tune Protect Group’s Internal Audit regularly engages the subsidiary’s internal audit function, in ensuring the continued independence of the audit function, and to provide assurance on the adequacy and effectiveness of the risk management, internal controls and governance processes, in addition to providing value added audit services within the Group.
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72 • • • within theGroup are asfollows: oversight oftheRiskManagementandCompliance function Risk ManagementCommittee to ensure there isaneffective Compliance function. The roles and responsibilities of the on the initiatives conducted by the Risk Management and The RiskManagementCommittee provides anactive oversight appointed asamemberoftheRiskManagementCommittee. backgrounds withhighintegrity. Alternate directors cannotbe a broad spectrum of skills, professional experience, and The RiskManagementCommittee consists ofmemberswith Risk ManagementCommittee isasfollows: Independent Non-Executive Director. The Composition ofthe Independent Non-Executive Directors andone(1)Senior The RiskManagementCommittee comprises two (2) the Group, independentfrom Management. overseeing theriskmanagementandcompliance functionsof March 2017 to assist theBoard ofDirectors Board”) (“the in The RiskManagementCommittee was established on16 MEMBERSHIP ANDAUTHORITY Tan Ming-Li Ng SiekChuan Ng SoonLai@ Mohamed Ghazalli Mohamed Rashdibin Name are functioningeffectively, asintended; Ensuring that riskmanagement frameworks andprocesses monitoring andcontrolling risks; policies andframeworks for identifying,measuring, Reviewing andassessing theadequacy ofriskmanagement the Board’s approval; tolerance limits, risk appetite statement and thresholds for policies, riskmanagementstrategies, riskexposures, risk Reviewing and recommending riskframeworks and Member Member Chairman Designation Director Non-Executive Independent Director Non-Executive Independent Director Non-Executive Independent Senior Directorship members are asfollows: details ofattendance oftheRiskManagementCommittee Management Committee heldatotal of five (5)meetings.The During the financial year ended 31 December 2018, the Risk ATTENDANCE OFMEETINGS available onthecorporate website at tuneprotect.com. The Terms ofReference oftheRiskManagementCommittee is TERMS OFREFERENCE held every quarter. attend theRiskManagement Committee Meetingswhichare Head ofRiskManagementandCompliance are invited to regulations. The Group ChiefExecutive Officer andGroup date withrelevant developments, changesinlegislation and calendar. The RiskManagement Committee iskept up-to- agenda are linked to events inTune Protect Group’s financial The RiskManagementCommittee’s meetingcalendarand • • • Tan Ming-Li Ng SoonLai@SiekChuan Mohamed RashdibinGhazalli Members compositions/concentrations andtrends. Reviewing managementreports onriskexposures, of theGroup’s risk-taking activities;and management systems perform theirdutiesindependently Ensuring that the staff responsible for implementing risk place for managingrisks; Ensuring that infrastructure, resources andsystems are in Risk ManagementCommittee Attendance Report 5/5 5/5 5/5 73 PG. Annual Report 2018 Protection Made Easy Risk Management Committee Report
SUMMARY OF WORK PERFORMED BY THE RISK MANAGEMENT COMMITTEE DURING THE FINANCIAL YEAR ENDED 31 DECEMBER 2018
During the year under review, the Risk Management Committee carried out the following duties in the discharge of its functions:
1. FINANCIAL REPORTING
Reviewed and monitored the Capital Adequacy Ratio which was presented to the Board together with the Group Capital Sufficiency Indicator. These numbers were benchmarked against the requirements from regulators as well as the Internal Capital Target.
2. ANNUAL REPORT
Reviewed and recommended to the Board for approval of the Corporate Governance Overview Statement, Risk Management Commitee Report, Risk Management and Internal Control Statement, and Additional Compliance Information for inclusion in the Annual Report and the Corporate Governance Report 2017.
3. RISK AND COMPLIANCE
(a) Reviewed the quarterly risk reports and discussed significant risks highlighted, including adequacy of mitigating actions in place;
(b) Ensure implementation of Risk and Compliance policy;
(c) Ensure latest regulations from regulators are shared and adopted;
(d) Conducted Risk Management awareness culture sessions;
(e) Reviewed the performance of the Risk Management and Compliance function;
(f) Established an Escalation Matrix for Tune Protect Group and its subsidiaries. This was rolled out across all subsidiaries in Malaysia; and
(g) Established and reviewed the ORION reporting for the insurance subsidiary.
PG.
74 situations that give riseto suchdeficiencies. directs effort into identifyingroot causes,andcorrecting meetings. Where deficiencies are identified, Management operational issues are discussed at Group Management financial performances, goalachievements, risks, andother in written policiesand procedures. New initiatives, strategies, implementing Board-approved internal controls established The Managementis responsible for recommending and Management deficiencies identified. audit activities,andmonitors Management’s effort to correct developments, riskmanagement,compliance, andinternal on anannualbasis.The Board receives reports onregulatory during aformal andregular scheduleofmeetingsprefixed and effective oversight ofriskandcontrols withintheGroup established governance structure for ensuringadequate Risk ManagementCommittees, continues to review the In view of the above, the Board, through its Audit and balance between growth, return goals,andrisks. such systems isnotto eliminate allrisksbutto ensure the external events, theBoard recognises that theintention of Due to theinherent limitations arising from humanerror, or system aswell asreviewing itsadequacy andeffectiveness. establishing a soundriskmanagementandinternal control The Board acknowledges itsoverall responsibility in The Board RESPONSIBILITIES financial year ended31December 2018. management andinternal control oftheCompany duringthe to ensure adequacy andintegrity ofthesystem ofrisk Berhad. Itoutlinestheprocesses that have beenimplemented Listedof Public Issuers” issued by Bursa Malaysia Securities Management &Internal Control –Guidelinesfor Directors was prepared inaccordance withthe“Statement onRisk This RiskManagementandInternal Control Statement delivering stakeholders’ value. high standards of corporate governance is key to continuously dealings oftheCompany. The Board believes that maintaining proper corporate governance inthebusiness operations and committed to upholdthevalues ofintegrity, honesty and importance onhighstandards ofcorporate conduct andare The Board andtheManagementofCompany place great INTRODUCTION
rating tablefound intheriskmanagement framework and Risks are identified usingbusiness mapping,thelikelihood and Managementinperforming theirrisk oversight function. framework ofprinciplesonriskgovernance to guidetheBoard The Policy DocumentonRiskGovernance setsouta www.bnm.gov.my. Framework. The policy documentcanbefound at what should bethebuildingblocksofaRiskManagement Bank Negara Malaysia RiskGovernance Policy Documenton Group’s stakeholders. The framework iscarved outfrom the in terms ofrisksand opportunitiesandbuildingvalue for the details thepoliciesandprocesses for managinguncertainties level ofrewards. The Group RiskManagementFramework balancing the appropriate level of risk taken to the desired strategic decisionsinsupportofbusiness strategies while Risk managementhasevolved into animportantdriver for Risk ManagementFramework the RiskManagementFramework. authorities, roles andresponsibilities are clearly specified in oversight and policy making. The risk reporting lines, structure that delineates the functionofrisktaking, is supported by aGroup-wide riskmanagementorganisation appetite andrisktolerance limitsapproved by theBoard. This are identifiedtimely, assessed andmonitored withintherisk business goals, objectives, reputation and long-term viability that riskswhichcould underminetheGroup’s strategies, The Group’s riskmanagementframework isdesignedto ensure RISK MANAGEMENT Audit Committee. whilst theInternal Audit functionreports directly to the function reports directly to the Risk Management Committee Audit functions. The Risk Management and Compliance the business, Risk Management, Compliance and Internal level ofindependence andsegregation ofdutiesbetween to where therisksarisewhilefacilitating anappropriate place accountability and ownership as close aspossible of theriskmanagementapproach. This structure aimsto defence, provides independentassurance ontheeffectiveness risks, whilst the Internal Audit Function, the third line of infrastructure that dealswithmore pervasive, entity-wide as thesecond lineofdefence, whichisacentral support first lineofdefence. The RiskManagementfunctionserves resides inthebusiness andfunctionalsupportunitsasthe Day-to-day riskmanagementfunctionsandresponsibilities been implemented. adequately andeffectively andthat necessary processes have risk management and internal control system is operating The Managementhasprovided assurance that theGroup’s Internal Control Statement Risk Managementand
75 PG. Annual Report 2018 Protection Made Easy Risk Management and Internal Control Statement
the impact of those risks assessed based on a predefined procedures. It serves to promote the importance of regulatory Likelihood Rating table. Controls are then put in place and and operations compliance, and connection to corporate their effectiveness measured using a Control Effectiveness values, as well as to ensure compliance obligations are met Rating table and any residual risks are managed with the by establishing monitoring and reporting mechanisms for implementation of risk mitigation strategies. instances of non-compliance and tracking remedial actions. Compliance obligations registers are consolidated for review The Group has in place on-going processes for the identification, and monitoring by the Risk Management Committee. measurement, control, mitigation, monitoring and reporting of major strategic, business and operational risks within the INTERNAL AUDIT Group, as described below: The Group’s internal audit function is governed by the Risk Identification: The risk process begins with the International Professional Practices Framework (“IPPF”) that business strategies and objectives. organises authoritative guidance promulgated by The Institute Risks arising from these business of Internal Auditors (“IIA”), a global, guidance setting body. strategies and objectives are pursued The IIA provides internal audit professionals worldwide with and identified. The risks identified are authoritative guidance organised in the IPPF. the internal and external risks that pose a threat to the Company. The Group’s in-house Internal Audit function provides independent assurance on the adequacy and effectiveness Measurement: The measurement process involves of the systems of risk management and internal control. High determining the impact and likelihood impact risk areas identified are periodically assessed and form of each of the identified risks and the the basis of the risk-based internal audit plan and strategy. quantification of the risk exposure. It Internal Audit activities are approved by and are monitored also involves the continual reassessment quarterly by the Board, through the Audit Committee. and identification of emerging risks. Remedial actions by Management arising from internal audit findings are tracked by the Audit Committee until resolution. Control & Mitigation: Quantitative and qualitative controls A summary of key activities performed by the Internal Audit are developed to oversee risk exposure function as well as Audit Committee oversight is available in and deploy risk mitigation strategies. the Audit Committee Report on pages 70 to 72. The controls and mitigation strategies are reviewed regularly to ascertain its The Group has two (2) in-house Internal Audit departments; effectiveness against the risk appetite one in Tune Protect Group and the other in its subsidiary, Tune statement and thresholds. Protect Malaysia. There are seven (7) full time employees in Monitoring: Accurate and timely monitoring the internal audit function. The table below shows the key mechanisms on the identified risks personnel responsible for internal audit and their qualifications: are established during the monitoring process. This process also involves Resources Qualifications prompt decision making and Suresh Maria Alexander • Certified Internal Auditor mitigation strategies. • Chartered Fellow Member of Reporting: The risk profiles of the group as well IIA Malaysia as the subsidiaries are tabled to the Hawariah Mohd Ariffin Bachelor of Accountancy Risk Management Committee which is (with Honours) focused on risk mitigation strategies based on risk ratings and are reviewed on a quarterly basis. The Board confirmed that the internal audit personnel are free from any relationships or conflicts of interest, and the Internal Audit activities performed are in accordance with a Compliance Management Framework recognised framework. This Board-approved framework outlines the structure, and key processes, for identifying and ensuring compliance with The total costs incurred by the Group Internal Audit function applicable laws and regulations, and internal policies and performed in-house for the year ended 31 December 2018 was RM771,123. PG.
76 fully investigated. parties inabusiness relationship withtheGroup willbe consultants, vendors, external agencies,andany other or suspected irregularities involving employees, shareholders, internal control; andprovides assurance that allirregularities out theresponsibilities for development andoperations of promoting aculture ofintegrity withintheGroup. Itsets commitment against fraud, bribery and corruption by The policy reinforces the Group’s zero tolerance and Anti-Fraud, BriberyandCorruption Policy described within. disciplinary procedures andsteps for raising grievances are guide ouremployees’ actionsintheworkplace. Established working conditions, and behavioural expectations that This handbookisacompilation ofthepolicies,procedures, Employee Handbook can befound inthe corporate website at tuneprotect.com . partners, shareholders, and employees. The Code ofConduct stakeholders – with integrity and respect for ourbusiness The Code ofConduct governs how we interact withour Code ofConduct is monitored by theBoard quarterly. for approval andtheGroup’s performance against thebudget The annualbusiness planandbudget are tabledto theBoard Annual Business Planand Budget on theday-to-day operations ofthebusiness. system. The Managementassists theBoard intheiroversight roles, andresponsibilities, to supporttheinternal control The Board hasestablished clearreporting lines,authorities, Organisation Structure include butnotlimited to thefollowing: by theBoard. ElementsoftheGroup’s internal control system laws andregulations. Allpoliciesare reviewed andapproved reliable reporting, andisalways incompliance withapplicable manner that is effective and efficient, producing accurate and assurance that theGroup continues to pursueitsgoalsina An effective internal control system provides reasonable INTERNAL CONTROL
of tasks. updated to guideemployees intheirday-to-day execution policy, payment procedures, are established andcontinuously financial authoritylimits,procurement policy, communication Departmental manualsandwritten operational controls suchas and managementofpoliciesprocedure documents. applicable to staff whoare responsible for thedevelopment Company, its subsidiaries and associates. The framework is Framework for managementofPolicies andProcedures at the The Company hasestablished aGroup Policy andProcedure Operating Policies andProcedures handling andsettlementprocesses. detail thewritten operational controls surrounding claims adequately assess risksbeing underwritten. ClaimGuidelines Underwriting Guidelines are established to manageand Underwriting andClaims tuneprotect.com. This policy canbefound inthecorporate website at impact the Economic, Environment and Social aspects. of theGroup andcovers theactionsandactivitiesthat may and stakeholders. This Policy appliesto Directors, employees commitment to create alasting value for itsshareholders The Company hasaSustainability Policy aspartofits Sustainability Policy tuneprotect.com. This policy canbefound inthecorporate website at appropriately investigated objectively andconfidentially. of reporting provides assurance that alldisclosures willbe Chairman oftheRiskManagementCommittee. This channel channeled to the Senior Independent Director who is also the Whistleblowing Policy are securely loggedandconfidentially (directors, employees andthird parties). Allreports underthe The Whistleblowing Policy isapplicable to allparties Whistleblowing Policy Internal Control Statement Risk Managementand
77 PG. Annual Report 2018 Protection Made Easy Risk Management and Internal Control Statement
ASSURANCE FROM MANAGEMENT
The Board has received written assurance from the Group Chief Executive Officer and Chief Financial Officer that the Group’s systems of risk management and internal control are operating adequately and effectively, in all material aspects, during the year under review. Based on the reports and the risk registers that were presented to the Board in 2018, the Board is satisfied that there is an effective and adequate risk management and internal control system in place, and there were no significant issues reported for the year ended 31 December 2018.
REVIEW OF THIS STATEMENT BY EXTERNAL AUDITORS
As required by paragraph 15.23 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the external auditors have reviewed this Risk Management and Internal Control Statement. Their review was performed in accordance with Audit and Assurance Practice Guide (“AAPG”) 3 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 Risk Management and Internal Control Statement: Guidelines for Directors of Listed Issuer, nor is the Statement factually inaccurate. The external auditors are not required by AAPG 3 to consider whether this Statement covers all risks and controls, or to form an opinion on the effectiveness of te Group’s risk management and control procedures.
This Risk Management and Internal Control Statement was approved by the Board on 20 March 2019.
PG.
78 1.0 the BursaMalaysia’s MMLR: The information setoutbelow isdisclosed in compliance with
as follows: 18 March 2014 andthedetailsofESOS offered are ESOS was offered to employees oftheCompany since came into effect on the date of Listing, 20 February 2013. approved by the shareholders on 2 January 2013 and The ESOS is the only share scheme of the Company Employees’ Share OptionScheme(“ESOS”) Granted to Tune Insurance Total numberofoptionsor Total numberofoptions Total numberofoptionsor Granted to Group CEO Total numberoptionsor Total numberofoptions Total numberofoptionsor Total numberofoptionsor Total numberofoptions Total numberofoptionsor Malaysia Berhad’s CEO shares outstanding exercised orshares vested shares offered shares outstanding exercised orshares vested shares offered shares outstanding exercised orshares vested shares offered As at 31December As at 31December As at 31December 6,494,000 6,494,000 1,000,000 1,000,000 500,000 500,000 2018 2018 2018 - - -
2.0 5.0 4.0 3.0
financial year ended31December 2018 asfollows: Messrs. Ernst andYoung, external auditors, duringthe services rendered to theCompany andtheGroup by The amountofAudit andNon-Audit fees incurred for Audit andNon-Audit Fees paidto External Auditors transactions (“RRPTs”) ofarevenue ortrading natur and/or itssubsidiaries to enter into recurrent related party obtained ashareholders’ mandate to allow theCompany At the AGM heldon1June2018, the Company had Trading Nature Recurrent Related Party Transactions ofaRevenue or capital, strategic investments and listing expenses. fully utilisedfor repayment ofbankborrowings, working raised from thecorporate proposal in2013 hadbeen the financialyear ended31December 2018. The proceeds There was nocorporate proposal to raise proceeds during Utilisation ofproceeds interest for theyear ended31December 2018. executive whoisnotadirector andmajorshareholders’ Company anditssubsidiaries involving directors, achief There were nomaterial contracts entered into by the who isnotadirector andMajorShareholders Material Contracts involving Directors, ChiefExecutive Note 27 to theFinancialStatements. The Audit and Non-Audit fees are also disclosed in 18 March 2014. and Executive Directors pursuantto theESOS since There were nooptionsgranted to bothNon-Executive The Group The Company Audit fees The Group The Company Non-Audit fees Additional Compliance 31 December 2018 31 December 2018 Information For theFinancial For theFinancial RM622,000 RM225,000 Year ended Year ended RM91,000 RM91,000 e.
79 PG. Annual Report 2018 Protection Made Easy Additional Compliance Information
The breakdown of the aggregate value of the RRPTs entered into by the Group from 1 January 2018 to 31 December 2018 is as follows:
Class and relationship of Actual value No. Transacting Parties Nature of RRPTs the Related Parties (RM’000) 1 AirAsia Berhad Provision of right to access AirAsia’s Interested Director 32 (Company No. 284669-W) customer database for the purposes of Datuk Kamarudin bin Meranun overall insurance business of AirAsia and the provision of management services by Interested Major our Company to AirAsia Berhad’s travel Shareholders insurance business. Tan Sri Anthony Francis Fernandes Provision of travel insurance by Tune Datuk Kamarudin bin Meranun 11,361 Insurance Malaysia Berhad to AirAsia Berhad’s customers for flights originating from Malaysia resulting in underwriting commission received by AirAsia Berhad.
2 AirAsia X Berhad Provision of agency services to Tune Interested Director 2,800 (Company No. 734161-K) Insurance Malaysia Berhad in relation to Datuk Kamarudin bin Meranun the Travel Protection Plan originating from Malaysia to the passengers of AirAsia X Interested Major Berhad pursuant to the Agency Agreement Shareholders entered into between AirAsia X Berhad and Tan Sri Anthony Francis Tune Insurance Malaysia Berhad. Fernandes Datuk Kamarudin bin Meranun AirAsia Berhad
3 PT Indonesia AirAsia Provision of the right to our Company to Interested Director 8 (Company No. market insurance products to the customers Datuk Kamarudin bin Meranun 09.03.1.62.29927) of PT Indonesia AirAsia via direct marketing initiatives pursuant to the Distribution Interested Major Agreement entered into between PT Shareholders Indonesia AirAsia and our Company. Tan Sri Anthony Francis Fernandes Provision of marketing services to Tune Datuk Kamarudin bin Meranun 453 Insurance Malaysia Berhad in relation to AirAsia Berhad the Travel Protection Plan originating in Malaysia to the passengers of PT Indonesia AirAsia pursuant to the Business Collaboration Agreement entered into between Tune Insurance Malaysia Berhad and PT Indonesia AirAsia.
PG.
80 No. 4 6 5 (Company No. 020041-H) SP&G Insurance Brokers 798868-P) Sdn Bhd(Company No. its assignee Tune Group (Company No. 59919) or Tune Group.com Limited 0105546113684) (Company No. Thai AirAsiaCo. Ltd Transacting Parties Protect Re Ltd. between SP&G Insurance Brokers andTune Facultative Reinsurance arrangement the Personal Accident andSickness Travel Brokers to Tune Protect Re Ltd pursuantto consultancy services by SP&G Insurance Provision ofinsurance broking and Insurance Malaysia Berhad. between SP&G Insurance Brokers andTune pursuant to thebroking arrangement Brokers to Tune Insurance Malaysia Berhad consultancy services by SP&G Insurance Provision ofinsurance broking and Rental andutilities charges at Wisma Tune. Bhd. Limited oritsassignee Tune Group Sdn Insurance’ trademark by Tune Group.com Company andsubsidiariesto usethe‘Tune Provision of thelicense andrightto our Berhad andThai AirAsiaCo. Ltd. into between Tune Insurance Malaysia Business Collaboration Agreement entered of Thai AirAsiaCo. Ltd pursuantto the originating inMalaysia to thepassengers in relation to theTravel Protection Plan services to Tune Insurance Malaysia Berhad Provision ofmarketing andadministration AirAsia Co. Ltd andourCompany. Agreement entered into between Thai initiatives pursuantto theDistribution of Thai AirAsiaCo. Ltd viadirect marketing market insurance products to thecustomers Provision oftherightto ourCompany to Nature ofRRPTs Datuk Kamarudin binMeranun Interested Director Tan SriAnthony Francis Shareholders Interested Major Datuk Kamarudin binMeranun Interested Director AirAsia Berhad Tan SriAnthony Francis Shareholders Interested Major Datuk Kamarudin binMeranun Interested Director the Related Parties Class andrelationship of Datuk Kamarudin binMeranun Datuk Kamarudin binMeranun Fernandes Fernandes Additional Compliance
Actual value Information (RM’000) 6,506 1,571 703 703 452 277 19
PG. 81 Annual Report 2018 Protection Made Easy Additional Compliance Information
The shareholdings of the interested Directors and Major Shareholders in our Company as at 29 March 2019 are as follows:
Direct Indirect No. of Shares % No. of Shares % Interested Director Datuk Kamarudin bin Meranun 81,900 0.01 221,172,150(1) 29.42 Interested Major Shareholders Tune Group Sdn. Bhd. 118,563,150 15.77 - - AirAsia Berhad 102,609,000 13.65 - - Tan Sri Anthony Francis Fernandes 100,000 0.01 221,172,150(1) 29.42 Datuk Kamarudin bin Meranun 81,900 0.01 221,172,150(1) 29.42
Note: (1) Deemed interested by virtue of the shareholders’ interest in Tune Group Sdn. Bhd. and AirAsia Berhad pursuant to Section 8 of the Companies Act, 2016
Please refer to Section 6 and Section 2.4 of the Circular to Shareholders dated 4 May 2018 and 29 April 2019 respectively on the directorships and shareholdings of the interested directors and interested major shareholder in the transacting parties as stated above.
PG.
82 Some ofthekey policies,frameworks andguidelinesoftheCompany are listed below: profile onregulatory requirements, risksandinternal control measures for mitigation andonnew products andservices. Our policies, frameworks and guidelines are reviewed periodicallyto keep abreast with the perpetual development of the industry to therelevant stakeholders inatimelymanner. Directors for implementation across theCompany, where relevant. Approved policies,frameworks andguidelinesare cascaded The established policieshave beenendorsedby theRiskManagementCommittee andapproved by theCompany’s Board of best practices. Company’s policies,frameworks andguidelinesare formulated to incorporate current regulatory requirements aswell asindustry Polices are established to administer standard day-to-day operations andto managetheexpected risksoftheCompany. The No. 4 6 5 3 2 1 Group FinancialAuthority Limits Group DividendPolicy Group Credit Control Policy Group Sustainability Policy Group Investor Relations Policy Group Communication Policy Title the Company. of financialtransactions duringtheordinary course ofbusiness of This policy provides clearguidelinesfor theapproval andauthorisation and payment process. ensure consistency andtransparency oftheentire dividenddeclaration application, approval and payment of dividend to shareholders, to This policy provides clear guidelines on proposing, determining, receivables management. This policy provides aclearguidance ontheguidedprinciples ofeffective Social (EES)aspectsofthebusiness. Company’s sustainability withthefocus onEconomy, Environment & stakeholders. Italsocreates awareness andprovides guidance onthe the sustainability expectations andneedsofourshareholders and This policy embedssustainability andsupports theCompany to meet and theinvestment community to make informed investment decisions. operations, strategy and financial performance to enable its shareholders programme setsoutto fairly andaccurately represent theCompany’s will beexecuted, andtheinternal procedures related to itsactivities.The This policy setsoutthemannerwhichInvestor Relations programme Tune Protect. personal useofDigitalMediawhere thisisrelated to theirwork for The policy alsoclarifiestheobligations employees have regarding their other stakeholders. media, customers, authorities,investors, financialcommunity and It covers therelease ofinformation abouttheCompany to thepublic, This policy establishes guidelines for communications by the Company. Description Frameworks andGuidelines Internal Policies,
83 PG. Annual Report 2018 Protection Made Easy Internal Policies, Frameworks and Guidelines
No. Title Description 7 Group Fixed Assets Policy This policy provides clear guidelines for the property and equipment (PE) to ensure proper and consistent recognition, i.e. acquisitions, disposals and transfer of assets. In additions, the policy includes intangible assets, i.e. acquired computer software licenses are capitalised or expensed off.
8 Group Month End Closing & Financial This policy provides clear guidelines for the month-end closing and Statement Policy financial statement process of the Company to ensure all figures reported are reasonably correct and accurate.
9 Group Procurement Policy This policy provides clear guidelines for the procurement of goods and services for the Company to ensure best value for money, good management practices, legislative compliance and transparency.
10 Group Investment Policy and Guidelines This policy sets out to provide a framework for the management of the Company’s investment assets and also set the objectives, goals and guidelines to guide the investment of the Company’s assets to ensure funds are available to meet the liabilities of the businesses as they become due and payable by establishing acceptable levels of return, risks and liquidity.
11 Group Legal Manual & Framework This manual sets out to provide guidance to the Company, in ensuring that the Legal Departments are managed effectively, efficiently and are consistent and aligned throughout the Group.
12 Group Confidentiality Policy This policy aims to protect the Personal Data and Confidential Information that may be collected during the Company’s operations and business activities. This Policy also outlines regulatory and best practice requirements expected of all persons when dealing with Information and provides technical and organizational measures to safeguard from unlawful processing or disclosure, as well as accidental loss, misuse or modification.
13 Group Corporate Governance Policy This policy aims to ensure that the Company is managed in a sound and prudent manner and effectively in accordance with the direction of the Board.
14 Group Fit & Proper Policy The policy aims to provide the framework for evaluating potential conflicts of interest, independence factors and disclosure obligations arising out of transactions, arrangements and relationships between the Company and its related persons.
15 Group Related Party Transactions Policy The policy aims to provide the framework for evaluating potential conflicts of interest, independence factors and disclosure obligations arising out of transactions, arrangements and relationships between the Company and its related persons.
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84 No. 20 23 22 19 16 18 21 17 Group Whistleblowing Policy &Procedures Group Anti-Fraud Bribery&Corruption Policy Travel &Entertainment Policy Group Recruitment &SelectionPolicy Group Performance ManagementPolicy Code ofConduct Group Marketing Policy Title (“BCM”) Framework Group Business Continuity Management of openness, accountability andintegrity. concern(s) underthispolicy. Italsohelps promote anddevelop aculture any fear ofharassment, intimidation orreprisal from anyone for raising other stakeholders across the Company in a confidential manner without perceived unethical or illegal conduct of employees, management and This policy helpsto encourage employees andthird partiesto report become aware suchactivity. fraudulent activityaswell asactionsthat they needto take ifthey and Business partners, forbidding themfrom gettinginvolved inany integrity within the company by providing clear guidelines to Employees fraud, briberyandcorruption. Italsosetsoutto promote aculture of This policy outlinestheCompany’s commitment andframework against submitting related claimsfor reimbursement. Travel andEntertainment expenses andto outlinetheprocedures for This policy provides guidelinesto employees ontheentitlementfor the positionisfilled. all processes from thetimeavacancy isopenfor recruitment to thedate and selectionprocedures oftheCompany. The policy issetupto cover The purpose of this policy isto provide a standard for therecruitment any organization. of Company goals.Itis an essential tool inthemanagementof action to betaken whichwillcontribute significantlyto theachievement and respond to performance issues. Performance managementallows and structures established by managementto identify, monitor, assess A performance managementframework comprises systems, processes anti-violence, health&safety andsoon. encompasses diversity andinclusion,anti-harassment, anti-bribery, values that are upheldby theCompany anditsemployees. This document This documentsetsoutto provide guidance to theCompany onthe3 throughout allentities. Company to ensure the group achieves brand imageconsistency This policy outlines the Brand andDigital Marketing policiesfor the Description full recovery assoonpossible, andwithinacceptable timelines. stabilise the effects ofsuchevents andreturn to normaloperations with of apotentially disruptive event. Itsetsoutto guidetheCompany to critical to theCompany’s objectives continue despite theoccurrence The purposeofthisBCMFramework isto ensure that services that are Frameworks andGuidelines Internal Policies,
85 PG. Annual Report 2018 Protection Made Easy Internal Policies, Frameworks and Guidelines
No. Title Description 24 Group Compliance Management Framework This document outlines the structure, including the measures and key processes the Company will operate within to ensure compliance with its obligations as stated in the Compliance Policy. The purpose is to implement compliance policies working towards effective corporate governance risk management and compliance with applicable legislations, regulatory requirements, and internal policies and procedures.
25 Group Risk Management Framework The framework sets out to provide a systematic approach to the early identification and management of risks. It also provides consistent risk assessment criteria and makes available accurate and concise risk information that informs decision making which may include business direction. This framework also helps in the adoption of risk treatment strategies that are cost effective and efficient in reducing risk to an acceptable level.
26 Group Outsourcing Policy This policy sets out to establish the requirements for identifying, justifying and implementing outsourcing arrangements for the Company’s operational functions or activities.
27 Risk & Compliance Incident Reporting This document provides direction to employees on the types of risk and Guidelines compliance incidents to be reported upon discovery of the incidents.
28 Risk Management Policy This policy embeds the management of risks as an integral part of the Company’s business processes. The policy sets out to establish an effective system of risk identification, analysis, evaluation and treatment within all areas and all levels of the Company.
29 Information Risk Management Policy The policy provides guidance on the ownership, responsibility and effective management of information assets and its associated risks across the Company guided by the information handling rules in accordance to the information lifecycle.
30 Group Change Request and Incident This policy sets out to establish processes to ensure that change request Management Policy to the IT environment goes through evaluating, testing and approval before any changes are made to the production IT environment. This policy also covers incident management for the IT environment; to analyse the incident, to fix and prevent it from occurring again.
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86 No. 34 36 38 33 35 32 37 31 Group Data ManagementPolicy Title Procedures Group Sexual Harassment Policy and Group Employee Handbook Operations &Reinsurance Policy Impairment Policy (Tune Protect Re) Group Server &Desktop ManagementPolicy Group Identity&Access ManagementPolicy Complaints Management and breaches ofprivacy. ensuring that electronic data isprotected from unauthoriseduse, access possible, consistent withlegislation andrelevant to policies,whilst to data andinformation heldby theCompany, to thegreatest extent information are defined.The intention ofthePolicy isto enableaccess the roles andresponsibilities ofthosewhomanageoruse thedata and belonging to theCompany. Itaimsto provide aframework within which The purposeofthispolicy isto protect theelectronic data andinformation Description at work includingsexual harassment. employees free from discrimination onany ground andfrom harassment The purposeofthispolicy isto provide asafe environment for allits actions inourworkplace. conditions and behavioural expectations that will guide our employees’ This documentisacompilation ofthepolicies,procedures, working reporting, billing&payments andcustomer experience. partners, UserAcceptance Testing (“UAT”) testing, premium andclaims This policy provides guidance onmanaging new orexisting business evidence that receivables are impaired. applies to assets, at eachreporting date, whetherthere isobjective This policy setsoutto prescribe theprocedures that theCompany management ofcomputers isenforced throughout theCompany. This policy setsoutto establish processes to ensure that standardised throughout theCompany. standardised useridentityandaccess managementisenforced The purposeofthispolicy isto establish processes to ensure that managing complaints. This documentcontains thestandard operating procedures of Frameworks andGuidelines Internal Policies,
87 PG. Annual Report 2018 Protection Made Easy Reports & Statements
89 Directors’ Report 94 Statement by Directors 94 Statutory Declaration 95 Independent Auditors’ Report 100 Statements of Financial Position 101 Statements of Comprehensive Income 103 Statements of Changes in Equity 105 Statements of Cash Flows 107 Notes to the Financial Statements
PG.
88 Results principal activitiesandotherinformation ofthesubsidiariesare setoutinNote 6to thefinancialstatements. The principal activities of the Company are investment holding and the provision of managementservices to itssubsidiaries. The Principal activities Company for thefinancialyear ended 31December 2018. The directors have pleasure inpresenting theirreport together withtheaudited financialstatements oftheGroup andofthe The amountofdividendpaidby theCompany since 31December 2017 was asfollows: Dividends to thefinancialstatements. substantially affected by any item, transaction orevent ofamaterial and unusualnature, otherthanasdisclosedinNote 43(c) In theopinionofdirectors, theresults oftheoperations oftheGroup andoftheCompany duringthefinancial year were not financial statements. There were nomaterial transfers to orfrom reserves orprovisions duringthefinancialyear otherthanasdisclosedinthe Profit attributable to: Net profit for theyear Final singletierdividendof3.0 senperordinary share on751,759,980 ordinary shares, declared on1June2018 In respect ofthefinancialyear ended31December 2017: Non-controlling interests Equity holders oftheCompany and paidon25June2018 RM'000 49,505 52,918 52,918 Group 2018 3,413 Directors’ Company Report RM'000 RM'000 24,451 24,451 24,451 22,553 2018 -
89 PG. Annual Report 2018 Protection Made Easy Directors’ Report
Directors of the entities Holding Company Subsidiaries Name of Director TPG* TIMB* TPR* TDL* TDM*
Ng Soon Lai @ Ng Siek Chuan (Chairman of TPG) √ - - - - Datuk Kamarudin Bin Meranun √ - - - - Resigned on Tan Ming-Li √ √ 12 July 2018 - - Mohamed Rashdi Bin Mohamed Ghazalli √ - - - - Mohd Yusof Bin Hussian - √ - - - Chee Siew Eng - √ - - - Lim Chong Beng - √ - - - Appointed on Hong Kean Yong - √ 10 April 2018 - - Khoo Ai Lin - - √ - - Koot Chiew Ling - - - - √ Appointed on Chen Ooi Wai - - - √ 12 January 2018 Appointed on Loh Ben Jern - - - 12 March 2019 - Resigned on Resigned on Resigned on Razman Hafidz Bin Abu Zarim - 31 December 2018 31 December 2018 31 December 2018 - Resigned on Resigned on 30 September Siegtraund Teh Siew Foong 1 July 2018 - 2018 - - Resigned on Cheong Lai Lai - - - - 13 January 2018
* TPG – Tune Protect Group Berhad TIMB – Tune Insurance Malaysia Berhad TPR – Tune Protect Re Ltd TDL – Tune Direct Ltd TDM – Tune Direct (M) Sdn Bhd
PG.
90 Company oritsrelated corporations duringthefinancialyear. Other than as disclosed above, none of the directors in office at the end of the financial year had any interest in shares of the #2 #1 in theCompany oritsrelated corporations duringthefinancialyear were asfollows: According to theregister ofdirectors’ shareholdings, theinterests ofdirectors inoffice at theendoffinancialyear inshares Directors’ interests of theGroup were RM30,000,000 andRM90,640 respectively. During thefinancialyear, thetotal amountofindemnitycoverage andinsurance premium paidfor theDirectors andtheofficers is amember, or withacompany inwhichhehasasubstantial financialinterest. statements) by reason ofacontract made by theCompany orarelated corporation withthe director orwitha firm ofwhichhe related corporations, orthefixed salaryofafull-timeemployee oftheCompany asshown inNotes 27 and34(b) to thefinancial included intheaggregate amountofemolumentsreceived ordueandreceivable by thedirectors from theCompany and Since the end of the previous financial year, no director has received or become entitledto receive a benefit (other than benefits debentures oftheCompany orany otherbodycorporate. Company oritssubsidiarieswere aparty, whereby thedirectors mightacquire benefitsby meansofacquisition ofshares inor Neither at theendoffinancialyear, norat any timeduringthat financialyear, didthere subsist any arrangement to whichthe Directors’ benefits Notes: Datuk Kamarudin Bin Meranun Indirect interests: Chee Siew Eng Mohd Yusof BinHussian Directors ofthesubsidiaries: Ng SoonLai@SiekChuan Datuk Kamarudin BinMeranun Directors oftheCompany: Direct interests: Datuk Kamarudin Bin Meranun
Deemed interested by virtue ofhisinterest in Tune Group Sdn.Bhd. Deemed interested by virtueofhisinterest inAirAsiaBerhad #2 #1 102,609 1.1.2018 118,563 Asat ‘000 100 50 82 10 Number ofordinary shares Acquired ‘000 20 - - - - -
Disposed ‘000 ------31.12.2018 102,609 Directors’ 118,563 Asat ‘000 Report 100 70 70 82 10 PG. 91 Annual Report 2018 Protection Made Easy Directors’ Report
Employees’ share option scheme (“ESOS”)
On 18 March 2014, the Company offered 15,715,000 ESOS shares to eligible employees of the Group. The offer period was from 18 March 2014 to 17 April 2014. The ESOS is exercisable over a period of 10 years from the grant date of 17 April 2014 at an exercise price of RM1.71 per ESOS share. There were no ESOS shares exercised during the year.
The members of the committee administering the ESOS are as follows:
Datuk Kamarudin Bin Meranun Chen Ooi Wai Yap Hsu Yi Razman Hafidz Bin Abu Zarim (resigned on 31 December 2018)
The salient features and other terms of the ESOS are disclosed in Note 28 to the financial statements.
Details of the ESOS as at 31 December 2018 are as follows:
Vesting Term to period Exercise expiry from from grant price Number of Tranche Vesting date grant date date RM options
1 17 April 2015 10 years 1 year 1.71 3,928,750 2 17 April 2016 10 years 2 years 1.71 3,928,750 3 17 April 2017 10 years 3 years 1.71 3,928,750 4 17 April 2018 10 years 4 years 1.71 3,928,750 15,715,000
Other statutory information
(a) Before the statements of financial position and statements of comprehensive income 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.
(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 allowance for doubtful debts of the Group and of the Company inadequate to any substantial extent; and
(ii) the values attributed to 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.
PG.
92 (e) (d) Other statutory information (cont’d.) (f) Kuala Lumpur, Malaysia Ng SoonLai@ NgSiekChuan Signed onbehalfoftheBoard inaccordance witharesolution ofthedirectors dated 20March 2019. Auditors’ remuneration isdisclosedinNote 27 to thefinancialstatements. The auditors, Ernst &Young, have expressed theirwillingness to continue inoffice. Auditors andauditors’ remuneration financial statements. The significantevents duringandsubsequentevents after thefinancialyear-end are disclosedinNote 43to the Significant andsubsequentevents (g) (ii) (i) As at thedate ofthisreport, there doesnotexist: statements misleading. or financialstatements oftheGroup andoftheCompany whichwould render any amountstated inthefinancial At thedate ofthisreport, thedirectors are notaware ofany circumstances nototherwisedealtwithinthisreport (ii) (i) In theopinionofdirectors: FSA”) GuidelinesonValuation Basisfor LiabilitiesofLabuanGeneral Insurance Business. Negara Malaysia (“BNM”) and the valuation requirements stipulated intheLabuanFinancial Services Authority’s (“Labuan the valuation methodsprescribed underPart DoftheRisk-Based Capital(“RBC”)Framework for Insurers issued by Bank took reasonable steps to ascertain that there was adequate provision for insurance contract liabilitiesinaccordance with Before thestatements offinancial position andthestatements ofcomprehensive income were madeout,thedirectors insurance andreinsurance contracts underwritten intheordinary course ofbusiness oftheGroup. For the purpose of paragraphs (e)(ii) above, and (f)(i) contingent or other liabilities do not include liabilities arisingfrom any contingent liabilityinrespect oftheGroup oroftheCompany whichhasarisensince theendoffinancialyear. secures theliabilitiesofany otherperson;or any charge on the assets of the Group and of the Company which has arisen since the end of thefinancialyear which the Company for thefinancialyear inwhichthisreport ismade. year andthedate ofthisreport which islikely to affect substantially theresults oftheoperations oftheGroup orof no item, transaction orevent ofamaterial andunusualnature hasarisenintheinterval between theendoffinancial to meettheirobligations asandwhenthey fall due;and twelve months after theendoffinancialyear whichwillormay affect theabilityofGroup andoftheCompany no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of Mohamed Rashdi BinMohamedGhazalli Directors’ Report
93 PG. Annual Report 2018 Protection Made Easy Statement by Directors Pursuant to Section 251(2) of the Companies Act, 2016
We, Ng Soon Lai @ Ng Siek Chuan and Mohamed Rashdi Bin Mohamed Ghazalli, being two of the directors of Tune Protect Group Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 100 to 226 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 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 December 2018 and of their financial performance and cash flows for the year then ended.
Signed on behalf of the Board in accordance with a resolution of the directors dated 20 March 2019.
Ng Soon Lai @ Ng Siek Chuan Mohamed Rashdi Bin Mohamed Ghazalli Kuala Lumpur, Malaysia
Statutory Declaration Pursuant to Section 251(1)(b) of the Companies Act, 2016
I, Chen Ooi Wai (MIA Membership No. 11060), being the officer primarily responsible for the financial management of Tune Protect Group Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 100 to 226 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 Chen Ooi Wai at ) Kuala Lumpur in the Federal Territory ) on 20 March 2019. ) Chen Ooi Wai
Before me,
PG.
94 financial statements. including theprocedures performed to address thematter below, provide thebasisofourauditopiniononaccompanying respond to ourassessment oftherisksmaterial misstatement ofthefinancialstatements. The results ofourauditprocedures, of ourreport, includinginrelation to thesematters. Accordingly, ourauditincludedtheperformance ofprocedures designedto We have fulfilled the responsibilities described in the Auditors’ responsibilities for the audit of the financialstatements section matters below, ourdescriptionofhow ourauditaddressed thematter isprovided inthat context. of theGroup asawhole, andinforming ouropinion thereon, andwe donotprovide aseparate opiniononthesematters. For the statements oftheGroup are describedbelow. These matters were addressed inthecontext ofourauditthefinancialstatements to communicate inourreport onthefinancialstatements oftheCompany. The key auditmatter for theauditoffinancial statements oftheGroup andoftheCompany for thecurrent year. We have determined that there are nokey auditmatters Key auditmatters are thosematters that, inourprofessional judgement,were ofmost significance inourauditofthefinancial Key auditmatters with theBy-Laws andtheIESBACode. Code of Ethicsfor Professional Accountants (“IESBACode”), andwe have fulfilledourotherethicalresponsibilities inaccordance Practice) oftheMalaysian Institute ofAccountants (“By-Laws”) andtheInternational EthicsStandards Board for Accountants’ We are independentoftheGroup andoftheCompany inaccordance withtheBy-Laws (on Professional Ethics,Conduct and Independence andother ethicalresponsibilities a basisfor ouraudit opinion. statements sectionofourreport. We believe that theauditevidence we have obtainedissufficientandappropriate to provide Our responsibilities under thosestandards are furtherdescribedintheAuditors’ responsibilities for theauditoffinancial We conducted ourauditinaccordance withapproved standards onauditinginMalaysia andInternational Standards onAuditing. for opinion Basis the Companies Act, 2016 inMalaysia. accordance withMalaysian FinancialReporting Standards, International FinancialReporting Standards andtherequirements of of theCompany asat 31December 2018, andoftheirfinancialperformance andtheircashflows for theyear thenendedin In ouropinion,theaccompanying financialstatements give atrueand fair view ofthefinancialpositionGroup and statements, includingasummaryofsignificantaccounting policies,assetoutonpages100to 226. in equityandstatements ofcashflows oftheGroup andoftheCompany for theyear thenended,andnotes to thefinancial at 31December 2018 oftheGroup andoftheCompany, andthestatements ofcomprehensive income, statements ofchanges We have audited thefinancialstatements ofTune Protect Group Berhad,whichcomprise thestatements offinancialpositionas Opinion Report ontheauditoffinancialstatements Independent Auditors’ (Incorporated inMalaysia) Report 95 PG. Annual Report 2018 Protection Made Easy Independent Auditors’ Report (Incorporated in Malaysia)
Report on the audit of the financial statements (cont’d.)
Key audit matters (cont’d.)
1. Valuation of general insurance contract liabilities of the Group
The Group’s insurance contract liabilities as at 31 December 2018 amounted to RM772.6 million or approximately 83% of its total liabilities. The insurance contract liabilities include the claims and premium liabilities of the insurance and reinsurance subsidiaries, Tune Insurance Malaysia Berhad and Tune Protect Re Ltd.
These liabilities have been estimated based on standard actuarial valuation methodologies and other estimation models as allowed under the Risk-Based Capital Framework issued by Bank Negara Malaysia and guidelines issued by the Labuan Financial Services Authority, as well as the accounting policies described in Note 2.3(q)(ii), (iii) and (iv) for premium liabilities, claim liabilities and liability adequacy test respectively.
The complexity of the actuarial valuation methodologies and other estimation models applied to derive the claims and premium liabilities may give rise to estimation errors as a result of inadequate or incomplete data, the design and application of the relevant valuation models by the management’s expert (i.e. the Appointed Actuary) and the use of inappropriate or outdated assumptions. Significant professional judgement is applied by the Group in deriving the assumptions (as described in Note 2.6 to the financial statements) and any significant changes thereon may have a material effect on the insurance contract liabilities.
Estimates of claims liabilities have to be made for both the expected ultimate costs of claims already reported at the reporting date, and for the expected ultimate costs of claims incurred but not yet reported (“IBNR”) as of the financial year end. The estimates of premium liabilities is based on the higher of the Unearned Premium Reserves (“UPR”), as estimated by management and the Unexpired Risk Reserve (“URR”), as estimated by the Appointed Actuary. The estimation of insurance contract liabilities are sensitive to various factors and uncertainties as discussed in Note 37(b). Significant management judgement is applied in setting these assumptions.
Our audit procedures were focused on the following key areas:
• Understanding and documenting the qualifications, objectivity and independence of management’s experts tasked with estimating the insurance contract liabilities of the Group;
• Reviewing the reports prepared by management’s experts in respect of the insurance contract liabilities of the Group;
• Assessing the design and testing the operating effectiveness of internal controls over the actuarial valuation process with respect to financial reporting;
• Testing the completeness and sufficiency of data used in the valuation of insurance contract liabilities. These tests also included control tests performed on a selected sample of claims reserves, claims paid and insurance policies issued by the Group to ascertain effectiveness of operating controls over quality and accuracy of the underlying data;
• Assessing the experience analyses of the insurance and reinsurance subsidiaries used during the setting of the key assumptions to derive the insurance contract liabilities and challenging the rationale applied by the management’s experts and management in deriving those assumptions. In addition and where appropriate, comparisons have also been made against other industry constituents and the experience of the respective subsidiaries;
• Performing independent analyses and re-computation of the insurance contract liabilities for selected classes of business, focusing on the most significant business portfolio and those which may potentially result in significant deviations in estimates. We compared our independent analyses and re-computations to those performed by management to ascertain if the reserves were sufficient and within range of our independent analyses;
PG.
96 1. Key auditmatters (cont’d.) Report ontheauditoffinancialstatements (cont’d.) 2. • • • Valuation of general insurance contract liabilitiesof theGroup (cont’d.) • Our auditprocedures were focused onthefollowing key areas: consider thisarea to beanarea ofauditsignificance. dispute isuncertain andcould result inamaterial amountoftaxpayable orreversal oftaxrecoverable and,accordingly, we This taxdispute isinthepreliminary stages andmay take extended years to resolve. The eventual resolution ofthistax challenging thedisputed amountsimposedby theLHDN. approximately RM10.7 million (the “disputed amounts”) is open to challenge andhad engaged tax solicitors to assist in million. The insurance subsidiarywas oftheview that outoftheadditionalassessment andpenaltiesofRM11.1 million, tax assessments andpenaltieslevied by theLembaga HasilDalamNegeri(“LHDN”),amountingto approximately RM11.1 As disclosedinNote 43(b) to thefinancialstatements, theinsurance subsidiaryoftheGroup isdisputingcertain additional Tax dispute insurance contract liabilitiesoftheGroup. on Auditing 620:Reliance ontheWork of anAuditors’ Expertto assist usinperforming ourauditprocedures onthe We have alsoengaged our Actuarial Services professionals inaccordance withtherequirements ofInternational Standard Reliance ontheWork of anAuditors’ Expert. We have engagedourtaxspecialists inaccordance withtherequirements ofInternational Standard onAuditing 620: • • •
in Note 16. Assessing theadequacy ofdisclosures madeinrespect oftheinsurance contract liabilitiesoftheGroup asdisclosed quality andsecurityoftheunderlyingreinsurance counterparties; and Reviewing management’s estimation ofthecalculated reinsurance assets andthereon, theirassessment ofthecredit URR valuations performed by themanagement’s experts to ascertain ifadequate reserves have beenestablished; Performing tests ontheUPRcalculations produced by managementandthereafter, comparing theUPRagainst the (c) (b) (a) Reviewing, together withourtaxspecialists: of thetaxdispute. by managementandassessing thereasonableness ofthebasesadopted by theminevaluating thepossible outcome Understanding and documenting the objectivity, independence and expertise of the external legal counsel engaged management’s position;and Obtaining confirmations from theGroup’s external legalcounsel for purposesofcomparing theexpert’s opinionsto Enquiring anddiscussing withmanagementandtheDirectors on thecurrent developments related to thetaxdispute;
the advice provided by theexternal legalcounsel to ascertain iftheGroup’s legalposition canbesupported; tax dispute; the correspondences between theinsurance subsidiary, itsexternal legalcounsel andtheLHDNrelating to the the basesstipulated by theLHDNinarrivingat theadditionaltaxassessments andpenalties; (Incorporated inMalaysia) Independent Auditors’ Report 97 PG. Annual Report 2018 Protection Made Easy Independent Auditors’ Report (Incorporated in Malaysia)
Report on the audit of the financial statements (cont’d.)
Information other than the financial statements and auditors’ report thereon
The directors of the Company are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.
Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial statements
The directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements of the Group and of the Company, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit 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 Group’s and the Company’s internal control.
PG. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures. 98 20 March 2019 Kuala Lumpur, Malaysia Chartered Accountants AF: 0039 Ernst &Young 2016 in Malaysia andfor nootherpurpose. We donotassume responsibility to any other personfor thecontent ofthisreport. This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act, Other matters acted asauditors, are disclosed inNote 6to thefinancialstatements. In accordance withtherequirements oftheCompanies Act, 2016 inMalaysia, we report that thesubsidiaryofwhichwe have not Report onother legalandregulatory requirements consequences ofdoingsowould reasonably beexpected to outweigh thepublicinterest benefitsofsuchcommunication. in extremely rare circumstances, we determine that amatter should notbecommunicated inourreport because theadverse describe thesematters inourauditors’ report unless law orregulation precludes publicdisclosure aboutthematter orwhen, of thefinancialstatements oftheGroup andoftheCompany for thecurrent year andare therefore thekey auditmatters. We From thematters communicated withthe directors, we determine thosematters that were ofmost significance intheaudit and where applicable, related safeguards. and to communicate withthemallrelationships and othermatters that may reasonably bethoughtto bearonourindependence, We alsoprovide thedirectors withastatement that we have complied withrelevant ethicalrequirements regarding independence, audit findings,includingany significantdeficienciesininternal control that we identifyduringouraudit. We communicate withthedirectors regarding, amongothermatters, theplannedscope andtimingoftheauditsignificant • • • Auditors’ responsibilities for theauditoffinancialstatements (cont’d.) Report ontheauditoffinancialstatements (cont’d.) and performance ofthegroup audit.We remain solelyresponsible for ourauditopinion. the Group to express anopiniononthefinancialstatements oftheGroup. We are responsible for thedirection, supervision Obtain sufficient appropriate audit evidence regarding the financial information ofthe entities or business activities within transactions andevents inamannerthat achieves fair presentation. including thedisclosures, andwhetherthefinancialstatements oftheGroup andoftheCompany represent theunderlying Evaluate the overall presentation, structure andcontent ofthefinancialstatements oftheGroup andoftheCompany, Company to cease to continue asagoingconcern. evidence obtainedupto thedate ofourauditors’ report. However, future events orconditions may causetheGroup orthe and oftheCompany or, ifsuchdisclosures are inadequate, to modifyouropinion.Ourconclusions are basedontheaudit we are required to draw attention inourauditors’ report to therelated disclosures inthefinancialstatements oftheGroup on theGroup’s ortheCompany’s abilityto continue asagoingconcern. Ifwe conclude that amaterial uncertainty exists, evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt Conclude ontheappropriateness ofthedirectors’ useofthegoingconcern basisofaccounting and,basedontheaudit Chartered Accountant No. 02937/09/2019 J Brandon Bruce Sta Maria (Incorporated inMalaysia) Independent Auditors’ Report 99 PG. Annual Report 2018 Protection Made Easy Statements of Financial Position As at 31 December 2018
Group Company 2018 2017 2018 2017 Note RM’000 RM’000 RM’000 RM’000
Assets Property and equipment 3 7,838 8,409 687 733 Investment property 4 - 2,899 - - Intangible assets 5 3,838 2,866 354 423 Investments in subsidiaries 6 - - 179,128 174,675 Investment in an associate 7 58,605 55,471 40,955 40,955 Investment in a joint venture company 8 4,138 2,842 433 433 Goodwill 9 24,165 24,165 - - Investments 10 690,039 707,513 60,169 63,768 Deferred tax assets 17 1,731 1,245 - - Reinsurance assets 11 451,939 268,256 - - Insurance receivables 12 158,735 130,545 - - Other receivables 13 97,801 105,581 5,438 6,742 Cash and bank balances 7,228 7,453 1,807 453 Total assets 1,506,057 1,317,245 288,971 288,182
Equity Share capital 14 248,519 248,519 248,519 248,519 Available-for-sale (“AFS”) reserves - (4,098) - - Employee share option reserves 4,006 4,998 4,006 4,998 Foreign currency translation reserve 7,157 6,716 - - Other comprehensive income (“OCI”) reserve 155 - - - Other reserve 124 116 - - Retained earnings 267,114 246,763 33,961 32,063 Equity attributable to owners of the parent 527,075 503,014 286,486 285,580 Non-controlling interests 6 47,614 46,063 - - Total equity 574,689 549,077 286,486 285,580
Liabilities Insurance contract liabilities 16 772,555 617,221 - - Deferred tax liabilities 17 1,249 1,509 - - Insurance payables 18 111,881 99,326 - - Retirement benefits 19 573 738 - - Other payables 20 45,110 49,374 2,485 2,602 Total liabilities 931,368 768,168 2,485 2,602 Total equity and liabilities 1,506,057 1,317,245 288,971 288,182
PG.
100 The accompanying notes form an integral part of the financial statements. Net profit for theyear Taxation Profit before taxation Share ofresults ofajointventure company Share ofresults ofanassociate Other expenses Other operating expenses Management expenses Fee andcommission expense Net claims Change incontract liabilitiesceded to reinsurers Gross changeto contract liabilities Claims ceded to reinsurers Gross claimspaid Other revenue Other operating income Fees andcommission income Fair value gainsandlosses Realised gainsandlosses Investment income Net earnedpremiums Premiums ceded to reinsurers Gross earnedpremiums Operating revenue 22(b) 22(a) Note 29 26 26 26 26 26 24 25 25 23 22 27 21 8 7 (100,983) (203,641) (241,579) (173,362) (134,642) (225,051) RM’000 (88,894) 295,431 537,010 566,122 186,419 46,452 55,070 89,601 80,806 52,918 29,112 (2,152) 2,552 2,315 (1,515) 1,551 2018 2,551 1,140 Group For thefinancial year ended31December 2018 (204,762) (193,954) RM’000 542,598 (140,717) (80,502) (121,429) (186,163) 321,330 515,284 (51,938) 36,054 52,904 50,023 40,677 72,553 61,330 27,314 (2,881) (2,831) 3,504 2,124 2017 1,518 920 996 Comprehensive Income RM’000 (23,461) 24,549 (23,011) 48,010 24,451 41,881 41,881 5,803 (450) 2018 (189) Statements of (98) 515 Company ------RM’000 (25,378) 60,340 34,904 (25,331) 34,962 55,305 55,305 5,260 2017 (557) 332 (58) (47) ------101 PG. Annual Report 2018 Protection Made Easy Statements of Comprehensive Income For the financial year ended 31 December 2018
Group Company 2018 2017 2018 2017 Note RM’000 RM’000 RM’000 RM’000
Net profit for the year 52,918 50,023 24,451 34,904
Other comprehensive income/(loss): Items that will not be subsequently reclassified to profit or loss: Share of other comprehensive income of an associate 7 163 95 - -
Items that may be subsequently reclassified to profit or loss: Changes in AFS financial assets, net: - 136 - - – Gain on fair value changes of AFS financial assets - 362 - - – Share of gain on fair value changes of AFS investments of an associate 7 - 59 - - – Realised gains transferred to profit or loss 24 - (229) - - – Deferred tax relating to AFS financial assets 17 - (56) - -
Effect of post-acquisition foreign exchange translation reserve on investment in associate and joint venture company 441 (770) - - Other comprehensive income/(loss) for the year 604 (539) - - Total comprehensive income for the year 53,522 49,484 24,451 34,904
Profit attributable to: Owners of the parent 49,505 46,303 24,451 34,904 Non-controlling interests 3,413 3,720 - - 52,918 50,023 24,451 34,904
Other comprehensive income/(loss) attributable to: Owners of the parent 604 57 - - Non-controlling interests - (596) - - 604 (539) - -
Total comprehensive income attributable to: Owners of the parent 50,109 46,360 24,451 34,904 Non-controlling interests 3,413 3,124 - - 53,522 49,484 24,451 34,904
Earnings per share attributable to owners of the parent (sen per share) Basic and diluted 30 6.59 6.16
PG.
102 The accompanying notes form an integral part of the financial statements. The accompanying notes form anintegral partof thefinancialstatements. At 31December 2018 Dividends paid to Dividends paidto Dividends on ordinary Dividends onordinary Grant ofequity-settled Total comprehensive Other comprehensive Net profit for theyear At 1January2018 (as Changes on initial Changes oninitial At 1January2018 At 31December 2017 Transition in Dividends paid to Dividends paidto Dividends on ordinary Dividends onordinary Dissolution of a Dissolution ofa Grant ofequity-settled Total comprehensive Other comprehensive Net profit for theyear At 1January2017 Group interests (Note 6) non-controlling shares (Note 31) employees share optionsto income for theyear income for theyear restated) MFRS 9(Note 2.4) application of stated) (as previously (Note 14) (Note 14) January 2017 value regime on31 2016 to non-par the Companies Act, Section 618(2) of accordance with interests (Note 6) non-controlling shares (Note 31) subsidiary subsidiary employees share optionsto the year income/(loss) for the year income/(loss) for
RM’000 RM’000 248,519 248,519 248,519 248,519 (Note 14) 248,519 248,519 248,519 173,343 173,343 capital capital 75,176 Share Share ------
premium premium (173,343) RM’000 RM’000 (Note 14) 173,343 173,343 Share Share ------
RM’000 RM’000 (Note 15) Merger Merger (13,838) deficit deficit 13,838 13,838 ------
Available- reserves RM’000 RM’000 for-sale for-sale (4,098) (4,098) (4,830) 4,098 4,098 Attributable to theowners oftheparent 732 732 732 732 ------Non distributable
RM’000 RM’000 reserve OCI OCI 155 155 155 155 155 155 ------
- RM’000 RM’000 reserve Other Other 124 124 116 116 116 116 116 116 95 95 95 21 21 8 8 ------
Employee reserves RM’000 RM’000 option option 4,006 4,006 4,998 4,998 4,998 4,998 4,998 4,998 5,897 share (992) (899) ------
- For thefinancial year ended31December 2018 translation currency RM’000 RM’000 Foreign reserve 7,486 6,716 6,716 6,716 6,716 6,716 6,716 (770) (770) (770) 7,157 441 441 ------
- Distributable Retained Retained earnings earnings 246,763 246,763 RM’000 RM’000 253,390 253,390 246,763 246,763 (22,553) (39,092) 240,162 46,303 46,303 46,303 46,303 (13,838) 49,505 49,505 267,114 (6,601) ------
Changes inEquity 496,645 496,645 503,014 RM’000 RM’000 503,014 (22,553) (39,092) 527,075 500,511 46,360 46,360 46,303 46,303 49,505 50,109 (2,503) Total (992) (899) 604 Statements of 57 57 - - - -
controlling interests RM’000 RM’000 46,063 46,063 46,063 (Note 6) 44,712 44,712 (1,842) 47,614 (1,673) 3,720 Non- 3,124 3,413 3,413 (596) (100) (20) ------546,554 546,554 549,077 549,077 RM’000 RM’000 549,077 549,077 (22,553) (39,092) 574,689 541,357 49,484 50,023 52,918 52,918 (2,523) equity equity 53,522 (1,842) (1,673) Total (992) (899) (539) (100) 604 -
103 PG. Annual Report 2018 Protection Made Easy Statements of Changes in Equity For the financial year ended 31 December 2018
Non-distributable Employee Dis- share tributable Share Share option Retained Total capital premium reserves earnings equity Company RM’000 RM’000 RM’000 RM’000 RM’000 (Note 14) (Note 14)
At 1 January 2017 75,176 173,343 5,897 36,251 290,667 Total comprehensive income for the year - - - 34,904 34,904 Dividends on ordinary shares (Note 31) - - - (39,092) (39,092) Grant of equity-settled share options to employees (Note 28) - - (899) - (899) Transition in accordance with Section 618(2) of the Companies Act, 2016 to non-par value regime on 31 January 2017 (Note 14) 173,343 (173,343) - - - At 31 December 2017 248,519 - 4,998 32,063 285,580
At 1 January 2018 248,519 - 4,998 32,063 285,580 Total comprehensive income for the year - - - 24,451 24,451 Dividends on ordinary shares (Note 31) - - - (22,553) (22,553) Grant of equity-settled share options to employees (Note 28) - - (992) - (992) At 31 December 2018 248,519 - 4,006 33,961 286,486
PG.
104 The accompanying notes form an integral part of the financial statements. Other payables Retirement benefits Insurance payables Insurance contract liabilities Other receivables Insurance receivables Reinsurance assets Operating profit/(loss) before working capital
Adjustments for: Profit before taxation Cash flows from operating activities
changes Share ofresults ofajointventure company Share ofresults ofanassociate employees Write-back ofequity-settled share optionsto Allowance for impairmentlosses of Allowance for impairmentlosses of Write-off ofintangibleassets Write-off ofproperty andequipment Amortisation ofintangibleassets Depreciation ofinvestment property Depreciation ofproperty andequipment Losses/(gains) ondisposaloffixed assets Fair value (gains)/losses of investments Realised loss/(gain) ondisposalofinvestment Net unrealised (gains)/losses onforeign exchange Investment income Realised gainondisposalofAFSandfair value insurance receivables reinsurance assets in asubsidiary through profit orloss (“FVTPL”) investments 27(a) Note 24 24 24 25 25 25 23 27 27 4 3 5
RM’000 (184,120) (43,350) 155,334 55,070 12,600 (29,112) (2,552) (1,493) (4,264) 32,857 (2,315) 12,555 17,701 1,562 1,798 (1,551) (992) 2018 (983) 437 343 23 10 28 12 - Group For thefinancialyear ended31December 2018 RM’000 (36,661) (42,817) 52,904 30,740 (27,314) 34,677 (3,504) 33,821 2,004 2,348 3,857 2,277 (1,512) 12,114 (920) 5,153 (996) 2017 (899) 327 491 681 27 27 (6) 6 - RM’000 24,549 (41,881) (17,273) 2018 (514) (309) (119) 249 249 Statements of 265 189 (10) (23) Company (1) ------Cash Flows RM’000 (55,305) (19,658) 34,962 (1,335) 2017 (395) (725) 1,179 469 339 393 393 557 31 12 4 ------105 PG. Annual Report 2018 Protection Made Easy Statements of Cash Flows For the financial year ended 31 December 2018
Group Company 2018 2017 2018 2017 Note RM’000 RM’000 RM’000 RM’000
Cash (used in)/generated from operating activities (13,259) 36,058 (17,605) (19,814) Net interest received 11,377 12,803 28 32 Net dividend received 1,041 - 39,612 52,817 Rental received 31 36 - - Retirement benefits paid 19 (193) (7) - - Income tax paid (5,980) (9,765) (27) (36) Net cash (used in)/generated from operating activities (6,983) 39,125 22,008 32,999
Investing activities Purchases of FVTPL financial assets (372,945) (625,239) (40,300) (115,715) Proceeds from maturities/disposal of AFS financial assets - 16,986 - - Proceeds from disposal of FVTPL financial assets 378,237 177,508 46,466 121,716 Movement in amortised cost financial assets/loan and receivables (“LAR”) 11,859 428,977 - - Proceeds from disposal of property and equipment 28 101 2 14 Proceeds from disposal of investment properties 2,532 - - - Purchase of property and equipment 3 (1,266) (1,967) (220) (143) Purchase of intangible assets 5 (2,534) (1,363) (180) (112) Investment in subsidiary 6 - - (4,453) - Net cash generated from/(used in) investing activities 15,911 (4,997) 1,315 5,760
Financing activities Advances from/(to) subsidiaries - - 574 (97) Dividends paid to equity holder (22,553) (39,092) (22,553) (39,092) Dividends paid to non-controlling interests (1,842) (1,673) - - Net cash used in financing activities (24,395) (40,765) (21,979) (39,189)
Net (decrease)/increase in cash and cash equivalents (15,467) (6,637) 1,344 (430) Effect of exchange rate changes on cash and cash equivalents 70 (163) 10 (12) Cash and cash equivalents at beginning of year 41,701 48,501 453 895 Cash and cash equivalents at end of year 26,304 41,701 1,807 453
Cash and cash equivalents comprise: Fixed and call deposits (with original maturities of less than three months) with licensed financial institutions (Note 10(a)) 19,076 34,248 - - Cash and bank balances 7,228 7,453 1,807 453
PG. 26,304 41,701 1,807 453
106 The accompanying notes form an integral part of the financial statements. 2. 1. 2.1 Significant accounting policies on 20March 2019. The financialstatements were authorisedfor issue by theBoard ofDirectors inaccordance witharesolution ofthedirectors 50490 Kuala Lumpur Damansara Heights No. 19, Lorong Dungun Level 9, Wisma Tune The address oftheprincipalplace ofbusiness andregistered office oftheCompany isasfollows: the financialyear otherthanasdisclosedinNote 6. There have beennosignificantchangesinthenature oftheprincipalactivitiesCompany anditssubsidiariesduring The principalactivitiesofthesubsidiariesare setoutinNote 6. The principalactivitiesoftheCompany are investment holdingandprovision ofmanagementservices to itssubsidiaries. and islisted ontheMainMarket ofBursaMalaysia SecuritiesBerhad. Tune Protect Group Company”) Berhad (“the isapubliclimited liabilitycompany, incorporated anddomiciledinMalaysia, Corporate information (RM’000) except whenotherwiseindicated. The financialstatements are presented inRinggitMalaysia (RM)andallvalues are rounded to thenearest thousand specifically disclosedintheaccounting policiesoftheGroup andoftheCompany. statements ofcomprehensive income unless required orpermitted by any accounting standard orinterpretation, as net basis,orto realise theassets andsettletheliabilitysimultaneously. Income andexpense willnotbeoffsetin the only when there islegally enforceable right to offset the recognised amountsandthere isanintention to settle ona Financial assets andfinancialliabilitiesare offsetandthenetamountisreported inthestatements offinancialposition, unless otherwise stated intheaccounting policies. The financialstatements oftheGroup andtheCompany have been prepared underthehistorical cost convention, MFRSs asdescribedfullyinNote 2.4. At thebeginningofcurrent financialyear, theGroup andtheCompany hadfullyadopted thenew andamended requirements oftheCompanies Act, 2016 inMalaysia. Financial Reporting Standards (“IFRS”)asissued by theInternational Accounting Standards Board (“IASB”) andthe Reporting Standards (“MFRS”)asissued by theMalaysian Accounting Standards Board (“MASB”), International The financialstatements oftheGroup andoftheCompany have beenprepared inaccordance withMalaysian Financial Basis ofpreparation For thefinancial year ended31December 2018 Financial Statements Notes to the 107 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
2. Significant accounting policies (cont’d.)
2.2 Basis of consolidation
(a) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2018. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:
– Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); – Exposure, or rights, to variable returns from its involvement with the investee; and – The ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights results 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:
– The contractual arrangement with the other vote holders of the investee; – Rights arising from other contractual arrangements; and – The Group’s voting rights and potential voting rights.
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. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statements of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (“OCI”) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non- controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.
PG.
108 2. 2.2 Significant accounting policies(cont’d.) (b) Basis ofconsolidation (cont’d.) of thedisposedoperation andtheportionofCGU retained. the gainorloss ondisposal.Goodwilldisposedinthesecircumstances is measured basedontherelative values associated withthedisposedoperation isincludedinthecarryingamountofoperation whendetermining Where goodwillhasbeenallocated to aCGU andpartoftheoperation withinthat unitisdisposed,thegoodwill or liabilitiesoftheacquiree are assigned to thoseunits. generating units(“CGU”) that are expected to benefitfrom thecombination, irrespective ofwhetherotherassets of impairment testing, goodwill acquired in a business combination is allocated to eachoftheGroup’s cash- After initial recognition, goodwill is measured at cost less any accumulated impairmentlosses. For the purposes aggregate consideration transferred, thenthegainisrecognised inprofit orloss. acquisition date. If the reassessment still results in anexcess ofthefair value ofnet assets acquired over the all oftheliabilitiesassumed andreviews theprocedures usedto measure theamountsto berecognised at the consideration transferred, theGroup reassesses whetherithascorrectly identified alloftheassets acquired and assets acquired andliabilitiesassumed. Ifthefair value ofthenetassets acquired isinexcess of the aggregate the amountrecognised for non-controlling interests, andany previous interest held,over thenetidentifiable Goodwill isinitiallymeasured at cost, beingtheexcess oftheaggregate oftheconsideration transferred and and itssubsequentsettlementisaccounted for withinequity. accordance withtheappropriate MFRS.Contingent consideration that isclassified asequityisnotremeasured either inprofit orloss orOCI.Ifthecontingent consideration isnotwithinthescope ofMFRS9, itis measured in of MFRS9FinancialInstruments (“MFRS9”),ismeasured at fair value withchangesinfair value recognised date. Contingent consideration classified asanasset orliabilitythat isafinancialinstrument, andwithinthescope Any contingent consideration to betransferred by theacquirer willberecognised at fair value at theacquisition equity interest intheacquiree isremeasured to fair value asat theacquisition date through profit orloss. If thebusiness combination isachieved instages, theacquisition date fair value oftheacquirer’s previously held business combination. by theacquiree. Noreclassification ofinsurance contracts isrequired aspartoftheaccounting for the conditions at theacquisition date. This includestheseparation ofembeddedderivatives from host contracts classification and designation in accordance with the contractual terms, economic circumstances and pertinent When theGroup acquires abusiness, itassesses thefinancialassets andliabilitiesassumed for appropriate incurred andincludedinmanagementexpenses. at theproportionate share oftheacquiree’s identifiablenetassets. Acquisition-related costs are expensed as combination, theGroup electswhetherto measure thenon-controlling interests intheacquiree at fair value or (“acquisition date fair value”), andtheamountofany non-controlling interest intheacquiree. For eachbusiness as theaggregate oftheconsideration transferred, whichismeasured at fair value at theacquisition date Business combinations are accounted for usingtheacquisition method.The cost ofanacquisition ismeasured Business combinations andgoodwill For thefinancial year ended 31December 2018 Financial Statements Notes to the
109 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
2. Significant accounting policies (cont’d.)
2.2 Basis of consolidation (cont’d.)
(c) Merger method of accounting
Business combinations involving entities under common control are accounted for by applying the merger method of accounting. Accordingly, the assets and liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial statements of the controlling holding company. Any difference between the consideration paid and the share capital of the “acquired” entity is reflected within equity as a merger reserve or merger deficit. The statements of comprehensive income reflect the results of the combining entities for the full year, irrespective of when the combination takes place. Comparatives are presented as if the entities have always been combined since the date the entities had come under common control.
2.3 Summary of significant accounting policies
(a) Investments in associates and joint ventures
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries.
The Group’s investments in its associate and joint venture are accounted for using the equity method. Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is not tested for impairment separately.
The statement of comprehensive income reflects the Group’s share of the results of operations of the associate or joint venture. Any change in OCI of those investees is presented as part of the Group’s OCI. In addition, when there has been a change recognised directly in the equity of the associate or joint venture, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the Company and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture.
The aggregate of the Group’s share of profit or loss of an associate and a joint venture is shown on the face of the statement of comprehensive income outside operating profit and represents profit or loss after tax and non- controlling interests in the subsidiaries of the associate or joint venture.
The financial statements of the associate or joint venture are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.
PG.
110 2. 2.3 Significant accounting policies(cont’d.) (b) (a) Summary ofsignificantaccounting policies(cont’d.)
Buildings Leasehold land to itsresidual value over itsestimated usefullife at thefollowing annualrates: Depreciation of property and equipment is provided for on a straight-line basis to write off the cost ofeach asset of thereplaced partisderecognised. will flow to the Group and the Company and the cost of the item can be measured reliably. The carrying amount separate asset, as appropriate, only when it is probable that future economic benefits associated with the item period inwhichitisincurred. Subsequentcosts are includedintheasset’s carryingamount,orrecognised asa and equipmenthave beenputinto operation, suchasrepairs andmaintenance, ischarged to profit orloss inthe of bringingtheasset to itsworking condition for itsintended use. Expenditure incurred after items ofproperty The cost ofanitem ofproperty andequipmentcomprises itspurchase price andany directly attributable costs the recognition andmeasurement ofimpairmentlosses is inaccordance withNote 2.3(g). consumption of the future economic benefits embodied in the items of property and equipment. The policy for amount, methodandperiodofdepreciation are consistent with previous estimates andtheexpected pattern of lives and depreciation method are reviewed and adjusted, if appropriate, at each reporting date to ensure that the equipment are stated at cost less accumulated depreciation andany impairmentlosses. Residual values, useful computers andmotor vehicles. Freehold landisnotdepreciated andiscarriedat cost. Otherproperty and Property andequipmentincludes property occupied by theGroup, renovation, furniture, fittings,office equipment, Property andequipment investment andproceeds from disposalisrecognised inprofit orloss. associate or jointventure upon loss of significant influence or joint control and the fair value of the retained and recognises any retained investment at itsfair value. Any difference between thecarryingamountof Upon loss ofsignificantinfluence over theassociate orjointcontrol over thejointventure, theGroup measures the associate orjointventure anditscarryingvalue, andthenrecognises theloss inprofit orloss. evidence, theGroup calculates theamountofimpairmentasdifference between therecoverable amountof there isobjective evidence that theinvestment intheassociate orjoint venture isimpaired. Ifthere issuch loss on its investment in its associate or joint venture. At each reporting date, the Group determines whether After application oftheequitymethod,Group determines whetheritisnecessary to recognise animpairment Investments inassociates andjointventures (cont’d.) financial year endandadjusted prospectively, ifappropriate. The residual values, usefullives andmethodsofdepreciation of property andequipmentare reviewed at each between thenetdisposalproceeds andthenetcarryingamount isrecognised inprofit orloss. expected from itsuseordisposal.Uponthedisposal ofanitem of property andequipment,the difference An item of property and equipment is derecognised upon disposal or when no future economic benefits are Computers Furniture, fittingsandoffice equipment Motor vehicles Renovation For thefinancial year ended 31December 2018 over theleaseterm of99years Financial Statements Notes to the 12% –17% 20% 25% 10% 2% 111 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
2. Significant accounting policies (cont’d.)
2.3 Summary of significant accounting policies (cont’d.)
(c) Investment property
Properties that are held for long-term rental yields or for capital appreciation or both, and that are not significantly occupied by the Group, for use by, or in the operations of the Group, are classified as investment property. If an investment property becomes owner-occupied, it is reclassified to property and equipment at its carrying value on the date of transfer.
Investment properties are initially measured at cost, including related transaction costs. Subsequent to initial recognition, investment properties are carried at cost less accumulated depreciation and any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.3(g).
Depreciation is provided for on a straight-line basis over the estimated useful life of 50 years for the investment properties. The residual values and useful lives of the investment properties are reviewed, and adjusted if appropriate, at each reporting date.
Any gains or losses on the retirement or disposal of an investment property are recognised when it has been disposed or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal.
Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year of retirement or disposal.
(d) Assets held for sale
Non-current assets are classified as assets held for sale and stated at the lower of carrying amount and fair value less costs to sell if their carrying amount is recovered principally through a sale transaction rather than through continuing use.
(e) Intangible assets
Intangible assets of the Group and the Company consist of digital assets development-in-progress, computer software, agency relationship, customer relationship and digital direct marketing platform. These intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The costs of generating other internally generated intangible assets are classified into whether they arise in a research phase or development phase. Research expenditure is charged to profit or loss in which the expense is incurred whilst development expenditure that meets specified criteria is capitalised at cost.
The useful lives of intangible assets are assessed as 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 asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least once annually at each reporting date. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category that is consistent with
PG. the function of the intangible assets.
112 2. 2.3 Significant accounting policies(cont’d.) (e) Summary ofsignificantaccounting policies(cont’d.) (g) (f) Digital direct marketing platform Customer relationship Agency relationship Computer software useful lives: use. The acquired intangibleassets are amortisedusingthestraight linemethodover thefollowing estimated Digital assets development-in-progress are notamortiseduntilsuchtimethat they are ready for theirintended Intangible assets (cont’d.) carrying amount oftheotherassets in theunitonapro-rata basis. to reduce thecarryingamountofany goodwillallocated to thoseunitsorgroups ofunitsandthen,to reduce the and iswritten down to itsrecoverable amount. Impairmentlosses recognised inrespect ofaCGU isallocated first asset. Where thecarryingamount ofanasset exceeds itsrecoverable amount,theasset isconsidered impaired discount rate that reflects current market assessments ofthe time value ofmoney andtherisksspecificto the In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax An asset’s recoverable amountisthehigherofanasset’s orCGU’s fair value less costs to sellanditsvalue inuse. benefit from thesynergies ofthecombination. a business combination is,from theacquisition date, allocated to eachoftheGroup’s CGUs that isexpected to this isthecase, recoverable amountisdetermined for theCGU to whichthe asset belongs. Goodwillacquired in basis unless theasset doesnotgenerate cashflows that are largely independentofthose from otherassets. If For thepurposeof impairmenttesting oftheseassets, recoverable amountisdetermined onanindividualasset impairment are identified. For goodwill, the recoverable amount is estimated at each reporting date or more frequently when indicators of determine theamountofloss. is any indication ofimpairment.Ifany suchindication exists, theasset’s recoverable amountisestimated to The carryingamountsofnon-financialassets are reviewed at eachreporting date to determine whetherthere Impairment ofnon-financialassets carrying amountsisincludedinprofit orloss. impairment losses. Ondisposalofsuchinvestments, thedifference between thenetdisposalproceeds andtheir In theCompany’s separate financialstatements, investments insubsidiariesare accounted for at cost less Investments insubsidiaries net disposalproceeds andthecarryingamountofasset andare recognised inprofit orloss. orlossesGains arisingfrom thederecognition ofanintangibleasset are measured asthedifference between the or disposal. An intangibleasset isderecognised upondisposalorwhennofuture economic benefitsare expected from itsuse prospective basis. indefinite life continues to besupportable. Ifnot, thechangeinusefullife from indefinite to finite ismadeona individually orat theCGU level. The assessment ofindefinite life isreviewed annuallyto determine whetherthe Intangible assets with indefinite usefullives are notamortised,butare tested for impairmentannually, either For thefinancial year ended 31December 2018 Financial Statements Notes to the 4 years 4 years 8 years 5 years 113 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
2. Significant accounting policies (cont’d.)
2.3 Summary of significant accounting policies (cont’d.)
(g) Impairment of non-financial assets (cont’d.)
An impairment loss is recognised in profit or loss in the period in which it arises, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for as a revaluation decrease to the extent that the impairment loss does not exceed the amount held in the asset revaluation reserve for the same asset.
Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase.
(h) Investments and financial assets
(A) Policy applicable before 1 January 2018
Initial recognition and measurement
Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss (“FVTPL”), loans and receivables (“LAR”), and available-for-sale (“AFS”) financial assets, as appropriate. All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e. the date that the Group or the Company commits to purchase or sell the asset.
Subsequent measurement
Financial assets at FVTPL
Financial assets at FVTPL include financial assets held-for-trading and those designated upon initial recognition at FVTPL. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Financial assets at FVTPL are carried in the statements of financial position at fair value with net changes in fair value recognised in profit or loss.
LAR
LAR are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, LAR are measured at amortised cost, using the effective interest rate method, less impairment losses. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate method. Gains and losses are recognised in profit or loss when the investments are derecognised or impaired, as well as through the amortisation process.
PG.
114 2. 2.3 Significant accounting policies(cont’d.) (h) Summary ofsignificantaccounting policies(cont’d.) (ii) (i) Debt instruments are heldat amortisedcost ifbothof thefollowing conditions are met: Debt instruments measured at amortisedcost commits to purchase orselltheasset. Regular way purchases andsalesoffinancialassets are recognised ontrade-date, thedate onwhichthegroup the instruments. The classification dependsontheinstrument’s contractual terms andtheentity’s business modelfor managing financial assets recorded at FVTPL,transaction costs are addedto thisamount. (“FVTPL”) andat amortisedcost. Financial instruments are initiallyrecognised at theirfair value. Except for Financial instruments are classified, at initialrecognition, asfinancialassets at fair value through profit orloss Initial recognition andmeasurement (B) Policy applicableafter 1January2018 – – primarily derecognised (i.e. removed from theGroup’s ortheCompany’s statement offinancialposition)when: A financialasset (or, where applicable, apartoffinancialasset orpartofagroup ofsimilarfinancialassets) is Derecognition and otherchangesinthecarryingamountofsecurity. currency are analysed between translation differences resulting from changesinamortisedcost ofthesecurity the AFSreserve to profit orloss. Fair value gainsandlosses ofmonetarysecurities denominated inaforeign operating income, or the investment is determined to be impaired, when the cumulative loss is reclassified from reserve untiltheinvestment isderecognised, at whichtimethecumulative gainorloss isrecognised inother unrealised gainsorlosses recognised inothercomprehensive income (“OCI”)andcredited ordebited intheAFS of thetwo preceding categories. After initialmeasurement, AFSfinancialassets are measured at fair value with AFS financialassets are non-derivative financialassets that are designated asAFSorare notclassified inany AFS financialassets Subsequent measurement (cont’d.) (A) Policy applicablebefore 1January2018 (cont’d.) Investments andfinancialassets (cont’d.) payments ofprincipalandinterest (“SPPI”) ontheprincipalamount outstanding. The contractual terms of the debt instrument give rise on specified dates to cash flows that are solely contractual cashflows; and The instruments are heldwithinabusiness model withtheobjective ofholdingthe instrument to collect the all therisksandrewards oftheasset, buthastransferred control oftheasset. and rewards of the asset, or (b) the Group or the Company have neither transferred nor retained substantially through’ arrangement; andeither(a)theGroup ortheCompany have transferred substantially alltherisks an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass- The Group ortheCompany have transferred its rights to receive cashflows from theasset orhave assumed The rightsto receive cashflows from theasset have expired; or For thefinancial year ended 31December 2018 Financial Statements Notes to the 115 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
2. Significant accounting policies (cont’d.)
2.3 Summary of significant accounting policies (cont’d.)
(h) Investments and financial assets (cont’d.)
B) Policy applicable after 1 January 2018 (cont’d.)
Initial recognition and measurement (cont’d.)
The details of these conditions are outlined below.
(i) Business model assessment
The Group and the Company determine its business model at the level that best reflects how it manages groups of financial assets to achieve its business objective.
The Group and the Company hold financial assets to generate returns and provide a capital base to provide for settlement of claims as they arise. The Group and the Company consider the timing, amount and volatility of cash flow requirements to support insurance liability portfolios in determining the business model for the assets as well as the potential to maximise return for shareholders and future business development.
The Group’s business model is not assessed on an instrument-by-instrument basis, but at a higher level of aggregated portfolios that is based on observable factors such as:
(a) How the performance of the business model and the financial assets held within that business model are evaluated and reported to the Group’s key management personnel;
(b) The risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way those risks are managed; and
(c) How managers of the business are compensated (for example, whether the compensation is based on the fair value of the assets managed or on the contractual cash flows collected).
The expected frequency, value and timing of asset sales are also important aspects of the Group’s assessment.
The business model assessment is based on reasonably expected scenarios without taking ‘worst case’ or ‘stress case’ scenarios into account. If cash flows after initial recognition are realised in a way that is different from the Group’s original expectations, the Group does not change the classification of the remaining financial assets held in that business model, but incorporates such information when assessing newly originated or newly purchased financial assets going forward.
(ii) SPPI test
As a second step of its classification process, the Group assesses the contractual terms to identify whether they meet the SPPI test.
‘Principal’ for the purpose of this test is defined as the fair value of the financial asset at initial recognition and may change over the life of the financial asset (for example, if there are repayments of principal or amortisation of the premium/discount).
The most significant elements of interest within a debt arrangement are typically the consideration for the time value of money and credit risk. To make the SPPI assessment, the Group applies judgement and PG. considers relevant factors such as the currency in which the financial asset is denominated, and the period 116 for which the interest rate is set. 2. 2.3 Significant accounting policies(cont’d.) (h) Summary ofsignificantaccounting policies(cont’d.) (ii) (i) derecognised when: A financialasset (or, where applicable, apartoffinancialasset orpartofagroup ofsimilarfinancialassets) is Derecognition income whentherightto thepayment hasbeenestablished. rate. Dividend income from equity instruments measured at FVTPL is recorded in profit or loss as other operating are recorded in profit or loss. Interest earned on assets measured at FVTPL is recorded using contractual interest Financial assets at FVTPLare recorded inthestatement offinancialpositionat fair value. Changesinfair value Financial assets at FVTPL are recognised inthestatement ofprofit orloss whentheinvestments are impaired. or premium onacquisition andfee orcosts that are anintegral partoftheEIR.Expected Credit Losses (“ECLs”) (“EIR”) method,less allowance for impairment. Amortised cost iscalculated by takinginto account any discount After initialmeasurement, debtinstruments are measured at amortisedcost, usingtheeffective interest rate Debt instruments at amortisedcost Subsequent measurement contractual cashflows andsell. are notheldwithinabusiness modelwhoseobjective iseitherto collect contractual cashflows, orto bothcollect under MFRS9. This category includesdebtinstruments whosecashflow characteristics fail theSPPIcriterion or designated by managementuponinitialrecognition, orare mandatorily required to bemeasured at fair value Financial assets inthiscategory are thosethat are managedinafair value business model,orthat have been Financial assets measured at FVTPL Initial recognition andmeasurement (cont’d.) B) Policy applicableafter 1January2018 (cont’d.) Investments andfinancialassets (cont’d.) substantially alltherisksandrewards oftheasset, buthastransferred control oftheasset. risks andrewards oftheasset; or(b) theGroup andtheCompany have neithertransferred norretained through’ arrangement; andeither:(a)theGroup andtheCompany have transferred substantially allthe an obligation to pay thereceived cashflows infullwithoutmaterial delay to athird partyundera‘pass- The Group and the Company have transferred its right to receive cash flows from the asset or has assumed The rightsto receive cashflows from theasset have expired; or For thefinancial year ended 31December 2018 Financial Statements Notes to the 117 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
2. Significant accounting policies (cont’d.)
2.3 Summary of significant accounting policies (cont’d.)
(h) Investments and financial assets (cont’d.)
(B) Policy applicable after 1 January 2018 (cont’d.)
Derecognition (cont’d.)
The Group and the Company consider control to be transferred if and only if, the transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without imposing additional restrictions on the transfer.
When the Group and the Company have neither transferred nor retained substantially all the risks and rewards and has retained control of the asset, the asset continues to be recognised only to the extent of the Group and the Company’s continuing involvement, in which case, the Group and the Company also recognise an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group and the Company have retained.
(i) Impairment of financial assets
(A) Policy applicable before 1 January 2018
The Group and the Company assess, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. An impairment exists if one or more events that has occurred, since the initial recognition of the asset (an incurred ‘loss event’), has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group and the Company first assess whether impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group or the Company determine that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them 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 carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised in profit or loss. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited in profit or loss.
PG.
118 2. 2.3 Significant accounting policies(cont’d.) (i) Summary ofsignificantaccounting policies(cont’d.) and assumptions, includingany forecasts offuture economic conditions, are reviewed regularly. future forecasts ineconomic conditions to estimate theamountofexpected impairmentloss. The methodology The Group andtheCompany consider past loss experience andobservable data suchascurrent changesand (iii) LGD (ii) EAD (i) PD (“EAD”) andtheLoss Given Default (“LGD”). These are the main components to measure ECL which are Probability of Default (“PD”),Exposure at Default grouped onthebasisofsimilar riskcharacteristics. has increased significantlyon anindividualorcollective basis.For impairmentassessment, financialassets are credit qualityofafinancialasset. The Group andtheCompany assess whetherthecredit riskonafinancialasset Group and the Company use external credit rating and other supportive information to assess deterioration in In determining whether credit risk on a financial asset has increased significantly since initial recognition, the reporting date andthedate ofinitialrecognition. in credit riskfor financialassets by comparing theriskofdefault occuring over theexpected life between the At eachfinancialyear end,theGroup andtheCompany assess whetherthere hasbeenasignificantincrease the contract andallthecashflows that theGroup andtheCompany expect to receive. not heldat FVTPL.ECLsare basedonthedifference between thecontractual cash flows dueinaccordance with The Group andtheCompany recognise anallowance for expected credit losses (“ECLs”)for alldebtinstruments (B) Policy applicableafter 1January2018 previously recognised inprofit orloss. the difference between theamortisedcost andthecurrent fair value, less any impairmentloss onthat investment assets carriedat amortisedcost. However, theamountrecorded for impairmentisthecumulative loss measured as In thecaseofdebtinstruments classified asAFS,theimpairmentisassessed basedonthesamecriteria asfinancial evidence that aninvestment oragroup ofinvestments isimpaired. For AFSfinancialassets, theGroup andtheCompany assess at eachreporting date whetherthere isobjective AFS financialassets (A) Policy applicablebefore 1January2018 (cont’d.) Impairment offinancialassets (cont’d.) to receive. Itisusuallyexpressed asapercentage oftheEAD. is basedonthedifference between thecontractual cashflows dueandthose that theCompany would expect The Loss Given Default isanestimate oftheloss arisinginthecasewhere adefault occurs at agiven time. It changes intheexposure after thereporting date. The Exposure at Default isanestimate oftheexposure at afuture default date, takinginto account expected with consideration ofeconomic scenarios andforward-looking information. The Probability of Default is an estimate of the likelihood of default over a given time horizon. It is estimated For thefinancial year ended 31December 2018 Financial Statements Notes to the 119 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
2. Significant accounting policies (cont’d.)
2.3 Summary of significant accounting policies (cont’d.)
(i) Impairment of financial assets (cont’d.)
(B) Policy applicable after 1 January 2018 (cont’d.)
For insurance and other receivables, the Group and the Company apply the simplified approach in accordance with MFRS 9 Financial Instruments. MFRS 9 includes the requirement or policy choice to apply the simplified approach that does not require the Group and the Company to track changes in credit risk and the practical expedient to calculate ECLs using a provision matrix with the usage of forward looking information.
The carrying amount of the financial asset is reduced through the use of an allowance for impairment loss account and the amount of impairment loss is recognised in profit or loss. When a financial asset becomes uncollectible, it is written off against the allowance for impairment loss account.
Write-off
The gross carrying amount of a financial asset is written off when the Group and Company have no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. The Group and the Company make an assessment with respect to the timing and amount of write off based on whether there is a reasonable expectation of recovery. The Group and the Company expect no significant recovery from the amount written off.
(j) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, according to the substance of the contractual arrangements entered into and the definitions of a financial liability.
Financial liabilities are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.
All financial libilities are recognised initially at fair value plus any directly attributable transaction costs. All financial libilities of the Group and the Company, comprising insurance payables and other payables are classified as other financial liabilities.
Subsequent measurement
Insurance payables and other payables are subsequently measured at amortised cost using the effective interest rate method.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. 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 the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss. PG.
120 2. 2.3 Significant accounting policies(cont’d.) (n) (m) (l) (k) Summary ofsignificantaccounting policies(cont’d.)
– – that the transaction to selltheasset ortransfer theliabilitytakes place either: between market participants at the measurement date. The fair value measurement is based on the presumption Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction The Group andtheCompany measure certain financialinstruments at fair value at eachreporting date. Fair value measurement reporting date. Dividends for theyear that are approved after thereporting date are dealtwithasanevent after the the Company’s shareholders. Dividendsare deducted from equitywhenthey are paid. Dividends onordinary shares are recognised asaliabilityanddeducted from equitywhenthey are approved by Dividends onordinary share capital attributable to theissuance oftheseshares are recognised inequity, netoftax. The Company hasissued ordinary shares that are classified as equity. Incremental external costs that are directly Ordinary share capital Equity instruments Insurance payables are derecognised whentheobligation undertheliabilityissettled,cancelled orexpired. initial recognition, they are measured at amortised cost usingtheeffective interest rate method. Insurance payables are recognised whendueandmeasured oninitialrecognition at fair value. Subsequentto Insurance payables Note 2.3(h),have beenmet. Insurance receivables are derecognised whenthederecognition criteria for financialassets, asdescribedin profit orloss. These processes are describedinNote 2.3(i). The Group recognises an allowance for ECL for insurance receivables and recognises that impairment loss in using theeffective interest rate method. consideration receivable. Subsequentto initialrecognition, insurance receivables are measured at amortisedcost, Insurance receivables are recognised whendueandmeasured oninitialrecognition at thefair value ofthe Insurance receivables would usethe asset initshighest andbest use. economic benefitsby usingtheasset initshighest andbest use orby sellingitto anothermarket participant that The fair value measurement ofanon-financialasset takes into account amarket participant’s abilityto generate when pricingtheasset orliability, assuming that market participants actintheireconomic best interests. The fair value ofanasset oraliabilityismeasured usingtheassumptions that market participantswould use The principalorthemost advantageous market must beaccessible by theGroup andtheCompany. In theabsence ofa principalmarket, inthemost advantageous market for theasset orliability. In theprincipalmarket for theasset orliability; For thefinancial year ended 31December 2018 Financial Statements Notes to the
121 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
2. Significant accounting policies (cont’d.)
2.3 Summary of significant accounting policies (cont’d.)
(n) Fair value measurement (cont’d.)
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 (unadjusted) market prices in active markets for identical assets or liabilities – Level 2 - Valuation techniques for which all inputs that are significant to the fair value measurement are directly or indirectly observable – Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
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.
For investments in unit trust funds and collective investment schemes, fair value is determined by reference to published net asset values.
The fair values of floating rate over-night deposits with financial institutions is their carrying value. The carrying value is the cost of the deposit/placements.
The fair values of Malaysian Government Securities, Cagamas Papers and unquoted corporate bonds are determined by reference to Bond Pricing Agency Malaysia.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above.
Fair-value related disclosures for financial instruments and non-financial assets that are measured at fair value or where fair values are disclosed, are summarised in the following notes:
- Disclosures for valuation methods, significant estimates and assumptions Note 40 - Quantitative disclosures of fair value measurement hierarchy Note 40 - Investment property Note 4 - Financial instruments (including those carried at amortised cost) Notes 10 & 40
PG.
122 2. 2.3 Significant accounting policies(cont’d.) (p) Reinsurance (o) Summary ofsignificantaccounting policies(cont’d.) the contract istransferred to anotherparty. Reinsurance assets orliabilities are derecognised whenthecontractual rightsare extinguished orexpire orwhen reinsurance contracts. outstanding claimsprovision associated withthereinsurer’s policiesandare inaccordance withtherelated at the reporting date. Amountsrecoverable from reinsurers are estimated inamannerconsistent with the represent balances due from reinsurance companies in relation to unsettled insurance contract liabilities as The Group also cedes insurance risk in the normal course of business for all of its business. Reinsurance assets are estimated inamannerconsistent withtherelated reinsurance contract. reinsured business. Reinsurance liabilitiesrepresent balances dueto reinsurance companies. Amountspayable would beifthereinsurance were considered direct business, takinginto account theproduct classification ofthe Premiums andclaimsonassumed reinsurance are recognised asrevenue orexpenses inthesamemannerasthey when applicable. The Group assumes reinsurance riskinthenormalcourse ofbusiness for non-life insurance contracts Investment contracts are thosecontracts that donottransfer significantinsurance risk. position similarto investment contracts. insurance contracts andtheremaining elementisaccounted for asadepositthrough thestatements offinancial are unbundled.Any premiums relating to theinsurance riskcomponent are accounted for onthesamebasesas and thecashflows from thetwo components are distinct andcanbemeasured reliably, theunderlyingamounts When insurance contracts contain bothafinancialriskcomponent andasignificantinsurance riskcomponent are extinguished orexpired. of itslifetime, even iftheinsurance riskreduces significantlyduringtheperiod,unless allrightsandobligations Once acontract hasbeenclassified asaninsurance contract, itremains aninsurance contract for theremainder event didnot occur. whether ithasaccepted significantinsurance risk,by comparing claimspaidwithpayable iftheinsured (the insured event) adversely affects thepolicyholders/cedants. Asageneral guideline, theGroup determines policyholders/cedants) by agreeing to compensate thepolicyholders/cedants ifaspecifieduncertain future event under whichtheGroup (theinsurer/reinsurer) hasaccepted significantinsurance riskfrom anotherparty(the Insurance contracts are thosecontracts that transfer significantinsurance risk.Aninsurance contract isacontract The Group currently onlyissues contracts that transfer insurance risk. Product classification For thefinancial year ended 31December 2018 Financial Statements Notes to the
123 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
2. Significant accounting policies (cont’d.)
2.3 Summary of significant accounting policies (cont’d.)
(p) Reinsurance (cont’d.)
Reinsurance contracts that do not transfer significant insurance risk are accounted for directly through the statements of financial position. These are deposit assets or financial liabilities that are recognised based on the consideration paid or received less any explicit identified premiums or fees to be retained by the reinsured. Investment income on these contracts is accounted for using the effective interest rate method when accrued.
Ceded reinsurance arrangements do not relieve the Group from its obligations to policyholders. Premiums and claims are presented on gross basis for both ceded and assumed reinsurance.
Reinsurance assets are reviewed for impairment at each reporting date or more frequently when an indication of impairment arises during the reporting period. Impairment is recognised when there is objective evidence as a result of an event that occurs after initial recognition of the reinsurance asset that the Group may not receive all outstanding amounts due under the terms of contract and the event has a reliably measurable impact on the amounts that the Group will receive from the reinsurer. The impairment loss is recorded in profit or loss.
(q) General insurance/reinsurance underwriting results
The general insurance/reinsurance underwriting results are determined after taking into account premiums, movements in premium liabilities and claim liabilities and commissions.
(i) Gross premiums
Gross premiums are recognised as income in a financial period in respect of risks assumed during that particular financial period.
Inwards facultative reinsurance premiums are recognised in the financial period in respect of the facultative risks assumed during that particular financial period, as in the case of direct policies, following individual risks’ inception dates.
In respect of inward treaty reinsurance premiums relating to proportional treaties, it is recognised on the basis of periodic advices received from the cedants, given that the periodic advices reflect the individual underlying risks being incepted and reinsured at various inception dates of these risks and are contractually accounted for, as such, to reinsurers under the terms of the proportional treaties.
(ii) Premium liabilities
Premium liabilities represent the insurance/reinsurance subsidiaries’ future obligations on insurance contracts as represented by premiums received for risks that have not yet expired. The movement in premium liabilities is released over the term of the insurance contracts and is recognised as premium income.
Premium liabilities are reported at the higher of the aggregate of the unearned premium reserves (“UPR”) for all lines of business or the best estimate value of the insurance/reinsurance subsidiaries’ unexpired risk reserves (“URR”) at the end of the financial period and a Provision of Risk Margin for Adverse Deviation (“PRAD”) calculated at a 75% confidence level.
PG.
124 2. 2.3 Significant accounting policies(cont’d.) (q) Summary ofsignificantaccounting policies(cont’d.) (ii) General insurance/reinsurance underwritingresults (cont’d.)
(b) (a) Premium liabilities(cont’d.) – – 1/8 1/365 The UPRfor thetravel insurance riskassumed by thereinsurance subsidiaryare computed usingthe – 1/24 – premium usedisasfollows: In determining UPRat thereporting date, themethodthat most accurately reflects theactualunearned periods ofthepoliciesat theendoffinancialperiod. UPR represent the portion of the net premiums of insurance policies written that relate to the unexpired Unearned premium reserves method ofestimation similarto Incurred ButNotReported (“IBNR”) claims. URR is estimated via an actuarial valuation performed by a qualified actuary, using a mathematical administering thesepoliciesandsettlingtherelevant claims,andexpected future premium refunds. including overheads andcost ofreinsurance, expected to beincurred duringtheunexpired periodin under policiesinforce asat theendoffinancialyear andalsoincludesallowance for expenses, The URRisaprospective estimate oftheexpected future payments arisingfrom future events insured Unexpired riskreserves Non-annual policiesare timeapportionedover theperiodofrisks of 20%for commission Other classes – – – Workmen’s compensation andemployers’ liability – – Medical andhealth Fire, engineering,aviation andmarinehull Motor limits specifiedby BNMasfollows: of accounted gross direct business commissions andagency-related expenses notexceeding the 25% methodfor marine, aviation cargo and transit business th methodthat best reflects theactualliability at reporting date. th methodfor allotherclasses ofoverseas inward treaty business withadeduction th Employers’ Liability Other workers Foreign workers Group of3ormore Standalone individuals methodfor allother classes ofMalaysian policiesreduced by thecorresponding percentage For thefinancial year ended 31December 2018 Financial Statements Notes to the 25% 25% 25% 10% 10% 10% 15% 15%
125 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
2. Significant accounting policies (cont’d.)
2.3 Summary of significant accounting policies (cont’d.)
(q) General insurance/reinsurance underwriting results (cont’d.)
(iii) Claim liabilities
Claim liabilities are recognised as the obligation to make future payments in relation to all claims that have been incurred as at the end of the financial year. The value is the best estimate value of claim liabilities which includes provision for claims reported, claims incurred but not enough reserved (“IBNER”), IBNR claims and direct and indirect claim-related expenses as well as a PRAD at a 75% confidence level. These are based on an actuarial valuation by a qualified actuary, using a mathematical method of estimation based on, among others, actual claims development pattern.
(iv) Liability adequacy test
At each reporting date, the insurance/reinsurance subsidiaries review all insurance 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 contracts issued. In performing this review, the Group compares all contractual cash flows against the carrying value of insurance contract liabilities. Any deficiency is recognised in profit or loss.
The estimation of claim and premium liabilities performed at reporting date is part of the liability adequacy tests performed by the insurance/reinsurance subsidiaries.
(v) Acquisition cost
The gross costs of acquiring and renewing insurance/reinsurance policies and income derived from ceding reinsurance premiums are recognised as incurred and properly allocated to the periods in which it is probable they give rise to income.
(r) Other revenue recognition
Other revenue is recognised when control of the goods or the services or performance obligations are transferred to the customer at an amount that reflects the consideration to which the Group and the Company expect to be entitled in exchange for those goods or services.
Rental income
Rental income is recognised on an accrual basis in accordance with the substance of the relevant agreements.
Interest income
Interest income is recognised using the effective interest method.
Dividend income
Dividend income is recognised on a declared basis when the shareholder’s right to receive payment is established.
PG.
126 2. 2.3 Significant accounting policies(cont’d.) (s) (r) Summary ofsignificantaccounting policies(cont’d.) a flat amount ofRM20,000. at 3%of thechargeable profit orby electionunderSection7oftheLabuanBusiness Activity Tax Act, 1990, to pay Labuan income taxrepresents theamountpayable inrespect ofthechargeable profit for theyear andismeasured directly inequity. arises from atransaction whichisrecognised directly inequity, inwhichcasethedeferred taxisalsorecognised Deferred taxisrecognised asincome oranexpense andincludedinprofit orloss for theperiod,except whenit the liabilityissettled,basedontaxrates that have beenenacted orsubstantively enacted at thereporting date. Deferred taxismeasured at thetaxrates that are expected to applyintheperiodwhenasset isrealised or profit nortaxable profit. in a transaction which is not a business combination and at the time of the transaction, affects neither accounting Deferred taxisnotrecognised ifthe temporary difference arisesfrom theinitialrecognition ofanasset orliability against which thedeductibletemporary differences, unusedtaxlosses andunusedtaxcredits canbeutilised. unused taxlosses andunusedtaxcredits to theextent that itisprobable that taxable profits willbeavailable taxable temporary differences anddeferred taxassets are recognised for alldeductibletemporary differences, Deferred taxisprovided for, usingtheliabilitymethod.Inprinciple, deferred taxliabilitiesare recognised for all in equityisrecognised inequityandnottheprofit orloss. to berecovered from orpaidto thetaxation authorities.Current income taxrelating to items recognised directly been enacted at the reporting date. Current income tax assets and liabilities are measured at the amount expected income taxes payable inrespect ofthetaxable profit for theyear andismeasured usingthetaxrates that have Income taxexpense for theyear comprises current anddeferred tax.Current taxistheexpected amountof Income tax Management fees income from subsidiariesare recognised whenservices are rendered. Management fees income charged to profit orloss intheperiodwhichthey are earned. Fees andcommission income derived from reinsurers inthecourse ofcession ofpremiums to reinsurers are Fees andcommission income or amortisedcost andare recorded onoccurrence ofthesaletransaction. on the sale of investments are calculated as the difference between net sales proceeds and the original, revalued Realised gains and losses recorded in profit orloss include gainsandlosses onfinancialassets.and losses Gains Realised gainsandlosses oninvestments Other revenue recognition (cont’d.) For thefinancial year ended 31December 2018 Financial Statements Notes to the 127 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
2. Significant accounting policies (cont’d.)
2.3 Summary of significant accounting policies (cont’d.)
(t) Provisions
Provisions are recognised when the Group and the Company have 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 of the obligation. When the Group and the Company expect some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in profit or loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
(u) Employee benefits
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. 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 absences. Short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur.
Defined contribution plans
Defined contribution plans are post-employment benefit plans under which the Group and the Company pay fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in profit or loss as incurred. As required by law, the Group and the Company make such contributions to the Employees Provident Fund (“EPF”).
Staff retirement benefits
Provision for retirement benefits is made for all eligible staff in the Group from the date of employment under an unfunded defined contribution plan. For eligible executive staff, gratuity is calculated based on the last drawn monthly salary of an employee multiplied by years of service up to a maximum of 15 years. For eligible clerical staff, an additional 3% over and above the Group’s and the Company’s monthly statutory EPF contribution is provided. The staff will be entitled to this gratuity upon completion of 5 years of service in the Group.
Other staff are entitled to additional EPF contribution between 1% to 5% over the Group’s and the Company’s monthly statutory EPF contribution rate after completion of 1 year of service. This benefit is charged to profit or loss as incurred.
PG.
128 2. 2.3 Significant accounting policies(cont’d.) (v) (u) Summary ofsignificantaccounting policies(cont’d.) (ii) (i) Foreign currencies share options. the optionsare exercised. The share optionreserve istransferred to retained earnings uponexpiry ofthe The proceeds received netofany directly attributable transaction costs are credited to share capitalwhen the share optionreserve. and acorresponding adjustment to equityover theremaining vesting period.The equity amountis recognised in exercisable onvesting date. Itrecognises theimpactofrevision oforiginalestimates, ifany, inprofit orloss At eachreporting date, the Group revises its estimates of thenumber ofoptionsthat are expected to become exercisable onvesting date. market vesting conditions are includedinassumptions aboutthenumberofoptions that are expected to become upon which the options were granted but excluding the impact of any non-market vesting conditions. Non- The fair value ofshare optionsismeasured at grant date, takinginto account, ifany, themarket vesting conditions within equityover thevesting periodandtakinginto account theprobability that theoptionswillvest. employee cost or amounts due from subsidiaries, with a corresponding increase intheshare optionreserve shares oftheCompany. The total fair value ofshare optionsgranted to employees isrecognised asan The ESOS is an equity-settled share-based compensation plan that allows the Group’s employees to acquire Share-based compensation —Employee Share OptionScheme (“ESOS”) Employee benefits(cont’d.) non-monetary items are also recognised directly inequity. respect ofwhichgainsandlosses are recognised directly inequity. Exchange differences arisingfrom such profit orloss for theperiod except for thedifferences arisingonthetranslation ofnon-monetaryitems in Exchange differences arisingonthetranslation ofnon-monetaryitems carriedat fair value are includedin value was determined. foreign currencies measured at fair value are translated usingtheexchange rates at thedate whenthefair using the exchange rates asat thedates of the initial transactions. Non-monetaryitems denominated in Non-monetary items denominated inforeign currencies that are measured at historical cost are translated liabilities denominated inforeign currencies are translated at therate ofexchange rulingat thereporting date. currencies at exchange rates approximating thoserulingat thetransaction dates. Monetary assets and the Group andtheCompany’s functional currencies are recorded oninitialrecognition inthefunctional In preparing thefinancialstatements of theGroup andtheCompany, transactions incurrencies other than Foreign currency transactions presented inRinggitMalaysia (RM),whichisalsotheCompany’s functionalcurrency. economic environment in whichtheentity operates functionalcurrency”). (“the The financialstatements are The financialstatements oftheGroup andtheCompany are recorded usingthecurrency oftheprimary Functional andpresentation currency For thefinancial year ended 31December 2018 Financial Statements Notes to the
129 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
2. Significant accounting policies (cont’d.)
2.3 Summary of significant accounting policies (cont’d.)
(w) Cash and cash equivalents
Cash and cash equivalents consist of cash in hand and deposits held at call with financial institutions with original maturities of three months or less.
(x) Transactions with non-controlling interests
Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statements of comprehensive income and within equity in the consolidated statements of financial position, separately from equity attributable to owners of the Company.
Changes in the ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.
2.4 Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year except with respect to the following Standards, Amendments to Standards and Interpretation which are mandatory for annual financial periods beginning on or after 1 January 2018 and which were adopted by the Group and the Company on 1 January 2018.
– Amendments to MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements to MFRS Standards 2014 – 2016 Cycle) – Amendments to MFRS 2 Classification and Measurement of Share-based Payment Transactions – MFRS 9 Financial Instruments – MFRS 15 Revenue from Contracts with Customers – Amendments to MFRS 4 Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts – Amendments to MFRS 128 Investments in Associates and Joint Ventures (Annual Improvements to MFRS Standards 2014 – 2016 Cycle) – Amendments to MFRS 140 Transfers of Investment Property – IC Interpretation 22 Foreign Currency Transactions and Advance Consideration
The adoption of the above pronouncements did not have any material impact on the financial statements of the Group or the Company except as discussed below:
MFRS 9 Financial Instruments
MFRS 9 replaced MFRS 139 Financial Instruments: Recognition and Measurement for annual periods beginning on or after 1 January 2018. The Group and the Company have applied MFRS 9 retrospectively by restating the opening balance of retained earnings at 1 January 2018 but restatement of comparative information was not compulsory. The areas with significant impact from application of MFRS 9 are summarised below:
PG.
130 2. 2.4 Significant accounting policies(cont’d.)
– following: characteristics andtheobjective ofthebusiness modelassociated withholdingtheassets. Key changesincludethe The classification andmeasurement offinancialassets are determined onthebasisofcontractual cashflow Changes to classification andmeasurement MFRS 9FinancialInstruments (cont’d.) Changes inaccounting policies(cont’d.) – – – – categories underMFRS9for theGroup’s financialassets asat 1January2018. The following table shows the original measurement categories in accordance with MFRS 139 and the new measurement no impactontheclassification andmeasurement oftheGroup’s financial liabilities. The adoptionofMFRS9hadaneffect ontheclassification andmeasurement oftheGroup’s financialassets, andhad – Investments Financial Assets – – – Insurance receivables Other receivables (netofprepayments andtax Debt securities Debt securities Unit trust funds Loans anddepositswithfinancialinstitutions recoverable) – – – Three (3)principalclassification categories for financialassets are introduced: profit orloss to bepresented inothercomprehensive income. attributable to changesin‘own credit risk’for financialliabilities designated andmeasured at fair value through Classification of financial liabilities will remain largely unchanged, other than the fair value gains and losses A new asset category for non-traded equityinvestments measured at FVOCI isintroduced; achieved by bothcollecting contractual cashflows andsellingfinancialassets; flow characteristics that are solelypayments ofprincipalandinterest andheldinamodelwhoseobjective is A new asset category measured at FVOCI isintroduced. This appliesto debtinstruments withcontractual cash removed; The held-to-maturity (“HTM”),available-for-sale (“AFS”) andloansreceivables (“LAR”)asset categories are Fair Value through Profit orLoss (“FVTPL”); Fair Value through OtherComprehensive Income (“FVOCI”); and Amortised Cost (“AC”); classification under MFRS Original FVTPL FVTPL LAR LAR LAR AFS 139 31 December amount at Carrying 130,545 RM’000 135,576 500,211 78,840 10,008 For thefinancial year ended 31December 2018 61,718 2017 classification under MFRS FVTPL FVTPL FVTPL New AC AC AC AC AC AC Financial Statements 9 1January2018 New carrying Notes to the amount at RM’000 135,576 500,211 78,840 10,008 127,985 61,718 131 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
2. Significant accounting policies (cont’d.)
2.4 Changes in accounting policies (cont’d.)
MFRS 9 Financial Instruments (cont’d.)
Changes to classification and measurement (cont’d.)
The Group had investments in debt securities as at 31 December 2017 classified as available for sale with a fair value of RM10,008,000 under MFRS 139. Under MFRS 9, the Group has elected to designate these investments to be measured at FVTPL. Other than the above, there were no changes to the investments classification which will continue to be carried at FVTPL or AC.
Following the reclassification of all AFS financial assets to FVTPL, the deficit in AFS reserves as at 31 December 2017 of RM4,098,000 was reclassified to the opening balance of retained earnings on 1 January 2018.
There were no impact on the classification and measurement of the Company’s financial assets and financial liabilities.
Changes to impairment calculation
The MFRS 9 impairment requirements are based on an expected credit loss model (“ECL”) that replaces the incurred loss model under the current accounting standard. The Group is required to recognise either a 12-month or lifetime ECL, depending on whether there has been a significant increase in credit risk since initial recognition. The Group is also required to consider future forecasts in economic conditions as part of its impairment assessment under MFRS 9. The ECL model will apply to financial assets measured at amortised cost or at FVOCI, which will include insurance receivables, deposits with financial institutions and other receivables held by the Group. MFRS 9 has changed the Group’s current methodology for calculating allowances for impairment, in particular the requirements for individual and collective assessment and provisioning.
The Group considers the insurance receivables to be in default when contractual payments are one year past due. Details of the Groups’ impairment methodology under MFRS 9 are disclosed in Note 2.3(i).
The following disclosure shows the change in the closing impairment allowance for financial assets in accordance with the requirements of MFRS 139 as at 31 December 2017 to the opening ECL allowance determined in accordance with the requirements of MFRS 9 as at 1 January 2018. The adoption of the ECL requirements of MFRS 9 resulted in an increase in impairment allowances which was adjusted to retained earnings as at 1 January 2018.
MFRS 139 Recognition MFRS 9 impairment of additional impairment loss impairment loss allowance losses using allowance as at the ECL as at 31 December model under 1 January 2017 MFRS 9 2018 Group RM’000 RM’000 RM’000
Impairment losses for insurance receivables (Note 12) 14,616 2,560 17,176
PG.
132 2.
2.4 Significant accounting policies(cont’d.) – – RM6,601,000. The components oftheadjustments are asfollows: The total adjustment, netoftaxto theopeningbalance oftheGroup’s retained earningsasat 1January2018 is at 31December 2018, whichreflects therequirements ofMFRS9. requirements ofMFRS9andtherefore isnotcomparable to theresults, financialpositionandcashflows presented as as shown above. Accordingly, theresults, financialpositionandcashflows presented for 2017 doesnotreflect the liabilities arising from the adoption of MFRS 9 are recognised in retained earnings and reserves as at 1 January2018 Comparative periods have not been restated. Differences in the carryingamounts of financial assets and financial retained earningson1January2018. There was noimpactonothercomponents ofequity. The following disclosure summarisestheimpactoftransition to MFRS9ontheopeningbalance ofAFSreserve and Impact oftheadoptionMFRS9 MFRS 9FinancialInstruments (cont’d.) Changes inaccounting policies(cont’d.) Retained earnings AFS reserves Equity Group the ECLmodel. A decrease ofRM2,503,000, netoftaxinretained earningsdueto additionalimpairment losses recognised under financial assets from AFSto FVTPL;and A reclassification ofRM4,098,000 from AFSreserves to retained earningsarisingfrom theclassification of 31 December As reported For thefinancial year ended 31December 2018 246,763 RM’000 (4,098) as at 2017 Adjustments adoption of RM’000 MFRS 9 due to 4,098 (6,601) Financial Statements balance asat Notes to the 1 January Adjusted opening RM’000 240,162 2018 - 133 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
2. Significant accounting policies (cont’d.)
2.5 Standards issued but not yet effective
The following are Standards, Amendments to Standards, Interpretation and annual improvements to standards issued by the Malaysian Accounting Standards Board (“MASB”), but not yet effective, up to the date of issuance of the Group’s and the Company’s financial statements. The Group and the Company intend to adopt these Standards, Amendments to Standards, IC Interpretation and annual improvements to standards, if applicable, when they become effective:
Effective for annual periods beginning Description on or after
MFRS 16 Leases 1 January 2019 IC Interpretation 23 Uncertainty over Income Tax Treatments 1 January 2019 Amendments to MFRS 128 Long-term Interests In Associates and Joint Ventures 1 January 2019 Amendments to MFRS 9 Prepayment Features with Negative Compensation 1 January 2019 Amendments to MFRS 119 Plan Amendment, Curtailment or Settlement 1 January 2019 Annual improvements to MFRS Standards 2015–2017 Cycle 1 January 2019 Amendments to References to the Conceptual Framework in MFRS Standards 1 January 2020 Amendments to MFRS 3 Definition of a Business 1 January 2020 Amendments to MFRS 101 Definition of Material and Amendments to MFRS 108 Definition of Material 1 January 2020 MFRS 17 Insurance Contracts 1 January 2021 Amendments to MFRS 10 Consolidated Financial Statements and To be announced MFRS 128 Investment in Associates and Joint Ventures by MASB
The directors expect that the adoption of the above pronouncements will have no material impact to the financial statements of the Group and the Company in the period of initial application except for those discussed below:
MFRS 16 Leases
MFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model, similar to the accounting for finance leases under MFRS 117. The standard will supersede MFRS 117 Leases, IC Interpretation 4 Determining whether an Arrangement contains a Lease, IC Interpretation 115 Operating Lease-incentives and IC Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.
PG.
134 2. 2.5 Significant accounting policies(cont’d.)
(ii) (i) MFRS 16Leases (cont’d) Standards issued butnotyet effective (cont’d.) of theStandard, whiletheimpactto theCompany isestimated to beapproximately RM1,577,000. it willrecognise leaseliabilitiesandrights-of-use ofapproximately RM4,126,000 asat 1January2019 from the adoption During 2018, the Group and the Company have performed an impact assessment of MFRS 16. The Group estimates that Transition to MFRS16 printing andphotocopying machines) that are considered oflow value. asset isoflow value. The Group andtheCompany have leasesofcertain office equipment(i.e., personalcomputers, the leaseterms endswithin12monthsasofthedate ofinitialapplication, andleasecontracts for whichtheunderlying The Group andtheCompany willelectto usetheexemptions proposed by thestandard onleasecontracts for which and ICInterpretation 4. not applythestandard to contracts that were notpreviously identifiedascontaining aleasewhenapplyingMFRS117 previously identifiedasleasesapplyingMFRS117andICInterpretation 4.The Group andtheCompany willtherefore expedient allowed underMFRS16,theGroup andtheCompany willelectto applytheStandard to contracts that were retrospective approach, whereby comparative information isnotrequired to berestated. Inlinewiththepractical The Group andtheCompany planto adoptMFRS16for thefirst timeasof1January2019, usingthemodified standard usingeitherafullretrospective oramodifiedretrospective approach. The standard iseffective for annualperiodsbeginningonorafter 1January2019. Alessee canchooseto applythe types ofleases:operating andfinance leases. continue to classify allleasesusingthesameclassification principleasinMFRS117anddistinguish between two Lessor accounting underMFRS16issubstantially thesameasaccounting underMFRS117. Lessors will Lessor recognise interest expense ontheleaseliabilityanddepreciation expense ontheright-of-useasset. representing therightto usetheunderlyingasset duringtheleaseterm. Subsequently, lessees willberequired to At thecommencement date ofalease, alessee willrecognise aliabilityto make leasepayments andanasset Lessee For thefinancial year ended 31December 2018 Financial Statements Notes to the 135 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
2. Significant accounting policies (cont’d.)
2.5 Standards issued but not yet effective (cont’d.)
MFRS 17 Insurance Contracts
On 15 August 2017, MASB issued MFRS 17, a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. Once effective, MFRS 17 will replace MFRS 4 Insurance Contracts that was issued in 2011. MFRS 17 applies to all types of insurance contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features. A few scope exceptions will apply. The overall objective of MFRS 17 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements in MFRS 4, which are largely based on grandfathering previous local accounting policies, MFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects. The core of MFRS 17 is the general model, supplemented by:
(i) A specific adaptation for contracts with direct participation features (the variable fee approach); and
(ii) A simplified approach (the premium allocation approach) mainly for short-duration contracts.
MFRS 17 is effective for reporting periods beginning on or after 1 January 2021, with the option to apply a full retrospective, modified retrospective or fair value approach on transition. Early application is permitted, provided the entity also applies MFRS 9 and MFRS 15 on or before the date it first applies MFRS 17.
The Group has completed the assessment of the operational impacts for adopting MFRS 17 and intends to assess the financial impacts in the financial year ending 2019.
On 14 November 2018, the IASB tentatively decided to propose an amendment to the effective date of IFRS 17 to reporting periods beginning on or after 1 January 2022. The proposed deferral is subject to public consultation which is expected in 2019.
2.6 Significant accounting judgements, estimates and assumptions
(a) Critical judgements made in applying accounting policies
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. These are areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. The Group and the Company have not applied any significant judgements in preparing the financial statements.
PG.
136 2. 2.6 Significant accounting policies(cont’d.) (b) Significant accounting judgements,estimates andassumptions (cont’d.)
Key sources ofestimation uncertainty andassumptions insurance contract liabilitiesaswell astheconsequential impacts to profit orloss andequity. Note 37(b) provides asensitivityanalysis ontheeffects ofchangesinkey assumptions on the carryingvalue of to theliability. At eachreporting date, theseestimates are reassessed for adequacy andchanges willbereflected asadjustments interpretations, legislative changesandclaimshandlingprocedures. There are many factors that willdetermine thelevel ofuncertainty suchasinflation, inconsistent judicial loss, there may still beuncertainty asto themagnitudeofclaim. reported to the insurance/reinsurance subsidiaries. Following the identification and notification of an insured There may besignificantreporting lags between theoccurrence ofaninsured event andthetimeitisactually the eventual settlementofpremiums andclaimsliabilities may vary from theinitialestimates. establishment oftechnical provisions isaninherently uncertain process and,asaconsequence ofthisuncertainty, The estimates ofpremium andclaim liabilities are therefore sensitive to various factors and uncertainties. The develop asprojected andmay vary from theGroup’s projections. decisions andeconomic conditions. Itiscertain that actual future premium andclaimliabilitieswillnotexactly relevant ispast experience withsimilarcases,historical claimsdevelopment trends, legislative changes,judicial of events, theterms andconditions oftherelevant policiesandinterpretation ofcircumstances. Particularly Generally, premium andclaimliabilitiesare determined baseduponprevious claimsexperience, existing knowledge expenses aswell asaPRADat 75% confidence level. while claimliabilitiescomprise provision for outstanding claims,IBNRanddirect andindirect claim-related comprise unearnedpremium reserves, unexpired riskreserves andprovision for riskmargin for adverse deviation from thetechnical provisions whichincludethepremium liabilitiesandclaimliabilities.The premium liabilities The principaluncertainty intheinsurance/reinsurance subsidiaries’general insurance/reinsurance business arises Uncertainty inaccounting estimates for general insurance/reinsurance business (Note 16) the next financialyear are discussed below: that have asignificant riskofcausingamaterial adjustment to thecarryingamountsofassets andliabilitieswithin The key assumptions concerning thefuture andotherkey sources ofestimation uncertainty at thereporting date, For thefinancial year ended 31December 2018 Financial Statements Notes to the 137 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
3. Property and equipment
Properties Furniture, fittings, office Building on equipment Leasehold leasehold Motor and land land Renovation vehicles computers Total Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cost At 1 January 2017 1,237 2,210 1,671 95 7,747 12,960 Additions - - 219 377 1,371 1,967 Disposals - - (75) - (83) (158) Written off - - - - (151) (151) At 31 December 2017 1,237 2,210 1,815 472 8,884 14,618 Additions - - 390 - 876 1,266 Disposals - - - - (95) (95) Written off - - - - (86) (86) At 31 December 2018 1,237 2,210 2,205 472 9,579 15,703
Accumulated depreciation At 1 January 2017 60 125 393 24 3,461 4,063 Charge for the year (Note 27) 15 26 229 96 1,982 2,348 Disposals - - (16) - (41) (57) Written off - - - - (145) (145) At 31 December 2017 75 151 606 120 5,257 6,209 Charge for the year (Note 27) 15 26 264 92 1,401 1,798 Disposals - - - - (68) (68) Written off - - - - (74) (74) At 31 December 2018 90 177 870 212 (6,516) (7,865)
Net carrying amount At 31 December 2017 1,162 2,059 1,209 352 3,627 8,409
At 31 December 2018 1,147 2,033 1,335 260 3,063 7,838
PG.
138 3. Property andequipment(cont’d.) At 31December 2018 At 31December 2017 Net carryingamount At 31December 2018 Disposals Charge for theyear (Note 27) At 31December 2017 Written off Disposals Charge for theyear (Note 27) At 1January2017 Accumulated depreciation At 31December 2018 Disposals Additions At 31December 2017 Written off Disposals Additions At 1January2017 Cost Company Renovation For thefinancial year ended 31December 2018 RM’000 340 452 452 383 461 112 69 69 43 42 27 27 (9) ------equipment computers Furniture, RM’000 fittings, office 1,449 1,665 2,012 1,799 1,819 (140) 1,176 (144) 220 350 347 222 and 427 143 Financial Statements (14) (19) (6) (7) Notes to the RM’000 2,464 2,280 2,251 1,777 1,203 Total 1,518 (140) (144) 220 469 265 687 733 (28) 143 (14) (6) (7) 139 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
4. Investment property
Group 2018 2017 RM’000 RM’000
Freehold land and building
Cost At 1 January 3,053 3,053 Disposals (3,053) - At 31 December - 3,053
Accumulated depreciation At 1 January 154 127 Charge for the year (Note 27) 23 27 Disposals (177) - At 31 December - 154
Net carrying amount - 2,899
Fair value - 2,850
In 2017, the above investment property was revalued on 13 October 2017 by a firm of independent professional valuers that has appropriate recognised professional qualifications and recent experience in the location and category of the property being valued. The fair values disclosed is based on open market values, being the estimated amount for which a property could be exchanged between a willing buyer and a willing seller in an arm’s length transaction based on the market comparison approach method.
There were no rental income and operating expenses in relation to the investment property in the current and previous years.
The Group has no restrictions on the realisability of its investment property and no contractual obligations to either purchase, construct or develop investment property or for repairs, maintenance and enhancements.
The fair value hierarchy disclosure for investment property has been provided in Note 40.
During the current financial year, the Group disposed its investment property and a realised loss of RM344,000 was recognised in profit or loss, as disclosed in Note 24.
PG.
140 5. Intangible assets At 31December 2018 Additions At 31December 2017 Written off Additions Amortisation for theyear At 1January2017 Accumulated amortisation At 1January2017 Cost At 31December 2018 At 31December 2017 Net carryingamount At 31December 2018 Amortisation for theyear At 31December 2017 Written off Group At 31December 2018 Additions At 31December 2017 Written off Additions At 1January2017 Cost Company (Note 27) (Note 27) development- development- -in-progress RM’000 Digital assets 1,138 1,138 1,138 ------Computer software RM’000 4,663 3,630 (1,227) 5,353 5,708 1,033 (1,718) 2,086 6,749 1,266 3,591 1,363 1,723 1,396
relationship RM’000 Agency 2,554 3,100 3,100 2,166 3,100 1,778 546 934 388 388 - - - - relationship Computer Customer For thefinancial year ended 31December 2018 software RM’000 RM’000 2,500 2,500 2,500 2,500 2,500 2,291 (150) 209 672 672 852 710 710 180 112 ------
marketing marketing platform platform RM’000 RM’000 Digital Digital direct direct 496 564 564 564 564 209 564 564 355 Financial Statements 214 141 141 68 ------Notes to the RM’000 RM’000 14,051 10,213 2,004 2,534 (1,227) 11,517 3,838 2,866 11,872 8,651 1,562 1,236 (1,718) 7,874 Total Total 1,363 1,416 1,274 (150) 180 112 141 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
5. Intangible assets (cont’d.)
Digital direct Computer marketing software platform Total Company (cont’d.) RM’000 RM’000 RM’000
Accumulated amortisation At 1 January 2017 379 214 593 Amortisation for the year (Note 27) 198 141 339 Written off (119) - (119) At 31 December 2017 458 355 813 Amortisation for the year (Note 27) 108 141 249 At 31 December 2018 566 496 1,062
Net carrying amount At 31 December 2017 214 209 423
At 31 December 2018 286 68 354
6. Investments in subsidiaries
Company 2018 2017 RM’000 RM’000
Unquoted shares, at cost:
At 1 January 174,675 175,475 Additional investment during the year (Notes 43(e) and 43(f)(i)) 4,453 - Repayment of capital in Tune Insurance (Labuan) Ltd - (800) At 31 December 179,128 174,675
PG.
142 6. ** * All subsidiariesare incorporated inMalaysia/Federal Territory ofLabuan.Detailsthesubsidiariesare asfollows: Investments insubsidiaries(cont’d.) Affin Hwang Income TIMB andTPR: Tune Insurance PCC Ltd TPR: Tune Direct (M)SdnBhd TDL: Held through subsidiaries: Tune Direct Ltd (“TDL”) Tune Insurance Malaysia Tune Protect Re Ltd (“TPR”) Held by theCompany: Name ofCompany Fund I** (“TIPCCL”)* (“TDM”) Berhad (“TIMB”) Audited by afirmofChartered Accountants otherthanErnst &Young. on dissolution was recognised inprofit orloss oftheGroup, asdisclosedinNote 24. TIPCCL was dissolved on12July2018. Furtherdetailshave beendisclosedinNote 43(d). Arealised loss ofRM10,000 Collective investment Dissolved on12July2018 Business oftrading and Consultant, facilitator and Underwriting ofgeneral Underwriting ofgeneral Principal activities scheme facilitation services consultancy and/or technology solutions, to, providing digitaland including, butnotlimited providing services company and investment holding technology services provider of digitaland insurance business window reinsurance andretakaful % ofownership interest 100.00 100.00 100.00 held by theGroup 83.26 84.28 2018 % - For thefinancial year ended 31December 2018 100.00 100.00 100.00 100.00 83.26 83.28 2017 % non-controlling interest % ofownership heldby 16.74 2018 15.72 Financial Statements % - - - - Notes to the 16.74 16.72 2017 % - - - - 143 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
6. Investments in subsidiaries (cont’d.)
Material partly-owned subsidiary
Financial information of the subsidiary that have material non-controlling interests are provided below:
Proportion of equity interest held by non-controlling interests 2018 2017 Name of subsidiary Country of incorporation and operation % %
Tune Insurance Malaysia Berhad Malaysia 16.74 16.74
2018 2017 RM’000 RM’000
Accumulated balances of non-controlling interests: Tune Insurance Malaysia Berhad 47,202 45,533
Profit allocated to non-controlling interests: Tune Insurance Malaysia Berhad 3,530 3,406
The summarised financial information of the subsidiary that has material non-controlling interests is provided below. This information is based on amounts before any eliminations between entities.
Tune Insurance Malaysia Berhad 2018 2017 RM’000 RM’000
Summarised statements of comprehensive income:
Operating revenue 492,016 477,486
Gross earned premiums 468,945 458,184 Premiums ceded to reinsurers (288,949) (242,739) Net earned premiums 179,996 215,445
PG.
144 6. information isbasedonamountsbefore any eliminations between entities.(cont’d.) The summarisedfinancialinformation ofthesubsidiarythat hasmaterial non-controlling interests isprovided below. This Material partly-owned subsidiary(cont’d.) Investments insubsidiaries(cont’d.) Claims ceded to reinsurers Gross claimspaid Other revenue Other operating income Fees andcommission income Fair value gainsandlosses Realised gains andlosses Investment income Summarised statements ofcomprehensive income: (cont’d.) Dividends paid to non-controlling interests Attributable to non-controlling interests Total comprehensive income Other comprehensive loss for theyear Deferred taxrelating to components ofothercomprehensive loss Realised gaintransferred to profit orloss onfairGain value changesofAFSinvestments Other comprehensive income/(loss): Net profit for theyear Taxation Profit before taxation Other expenses Other operating expenses Management expenses Fee andcommission expense Net claims Change incontract liabilitiesceded to reinsurers Gross changeto contract liabilities For thefinancial year ended 31December 2018 (201,897) (172,901) (85,804) RM’000 186,070 (62,746) (95,578) (148,581) 60,983 23,328 21,086 21,086 93,150 (2,242) 23,071 2,380 87,491 Malaysia Berhad 1,842 3,530 Tune Insurance 2018 904 Financial Statements 153 (31) - - - - Notes to the (138,544) (134,265) (182,842) RM’000 (59,467) (74,336) (53,841) 20,345 63,258 57,569 19,302 34,881 (2,667) (2,363) 22,708 82,882 (2,810) 25,218 3,406 1,673 2017 (462) 2,016 3,113 363 882 (59) 145 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
6. Investments in subsidiaries (cont’d.)
Material partly-owned subsidiary (cont’d.)
The summarised financial information of the subsidiary that has material non-controlling interests is provided below. This information is based on amounts before any eliminations between entities. (cont’d.)
Tune Insurance Malaysia Berhad 2018 2017 RM’000 RM’000
Summarised statements of financial position as at 31 December:
Property and equipment 4,304 4,795 Investment property - 2,389 Intangible assets 1,705 1,398 Investments 512,892 534,775 Reinsurance assets 452,340 268,813 Insurance receivables 125,249 104,582 Other receivables 64,143 77,571 Tax recoverable 28,693 25,541 Cash and bank balances 2,971 4,475 Deferred tax assets 1,285 763 Insurance contract liabilities (761,263) (606,526) Insurance payables (119,243) (107,392) Retirement benefits (573) (738) Other payables (30,534) (38,445) Net assets 281,969 272,001
Attributable to: Equity holders of the parent 234,767 226,468 Non-controlling interests 47,202 45,533 281,969 272,001
Summarised cash flow information for the year ended 31 December:
Operating activities (14,965) 28,767 Investing activities 1,271 (25,829) Financing activities (1,410) (10,001) Net decrease in cash and cash equivalents (15,104) (7,063)
PG.
146
7. Group, isasfollows: The summarisedfinancialinformation oftheassociate, notadjusted for theproportion ofownership interest heldby the by afirmofchartered accountants affiliated to Ernst &Young, Malaysia. The financial statements oftheassociate asat financialyear end are coterminous withthoseoftheGroup, andwere audited The associate isincorporated inThailand. Otherdetails are asfollows: Investment inanassociate Tune Insurance Company Public Limited Exchange differences Share ofpost-acquisition reserves Unquoted shares, at cost Commissions andbrokerages income Net earnedpremiums Summarised statement ofcomprehensive income: Operating expenses Underwriting expenses Total underwritingincome Net profit for theyear Taxation Profit before taxation Other expenses Total otherrevenue Other income Investment income Total underwritingexpenses Name ofassociate (“TIPCL”) Underwriting ofgeneral insurance Principal activities RM’000 40,955 58,605 10,509 51,464 2018 7,141 Group For thefinancial year ended 31December 2018 RM’000 40,955 48,749 55,471 6,722 7,794 2017 % ofownership interest RM’000 RM’000 (24,858) (15,984) 30,344 40,955 40,955 40,955 held by theGroup 19,082 (8,874) 49.00 49.00 11,262 6,370 5,207 (1,163) 2018 2018 2018 (49) 345 933 588 Financial Statements Company - - Notes to the RM’000 RM’000 (27,066) 40,955 40,955 40,955 (18,674) (8,392) 31,654 49.00 49.00 (1,635) 4,448 4,348 22,181 8,786 9,473 2017 2017 2017 (250) 7,151 100 - - 147 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
7. Investment in an associate (cont’d.)
The summarised financial information of the associate, not adjusted for the proportion of ownership interest held by the Group, is as follows: (cont’d.)
2018 2017 RM’000 RM’000
Summarised statement of comprehensive income: (cont’d.)
Net profit for the year 5,207 7,151
Group’s share of profit for the financial year 2,552 3,504 Group’s share of other comprehensive income 163 95 Group’s share of gain on fair value changes of AFS investments - 59 Group’s share of total comprehensive income for the financial year 2,715 3,658
Summarised statement of financial position as at 31 December:
Assets Property and equipment 667 675 Intangible assets 90 53 Investments 87,114 66,071 Deferred tax assets 961 956 Reinsurance assets 8,659 7,207 Insurance receivables 14,968 12,018 Other receivables 3,825 7,546 Cash and bank balances 29,173 28,909 145,457 123,435
Liabilities Insurance contract liabilities 17,347 21,142 Insurance payables 24,114 7,715 Other payables 14,970 12,849 Retirement benefits 902 - 57,333 41,706
Net assets of an associate 88,124 81,729 Proportion of the Group’s ownership interest in an associate 49% 49% Share of net assets of the associate 43,181 40,047 Add: Goodwill 15,424 15,424 Carrying amount of interest in an associate as at 31 December 58,605 55,471
PG.
148
8. Group, isasfollows: The summarised financial information of the joint venture, not adjusted for the proportion of ownership interest held by the a firmofchartered accountants otherthanErnst &Young. The financial statements of the above joint venture company is coterminous with those of the Group, and were audited by The jointventure company isincorporated inDubai,United Arab Emirates. Otherdetailsare asfollows: Investment inajointventure company Tune Protect Commercial Brokerage LLC Exchange differences Share ofpost-acquisition reserves Unquoted shares, at cost Group’s share ofprofits for thefinancialyear Net profit for theyear Taxation Profit before taxation Management expenses Fees andcommission income Summarised statement ofcomprehensive income: Name ofjointventure company (“TPCBLLC”) Facilitator ofonlineinsurance Principal activities RM’000 3,689 4,122 2018 4,138 433 16 Group For thefinancial year ended 31December 2018 RM’000 2,848 2,842 2,415 2017 433 (6) % ofownership interest RM’000 RM’000 held by theGroup 49.00 49.00 4,725 4,725 (3,116) 2,315 7,841 2018 2018 2018 433 433 433 Financial Statements Company - - - Notes to the RM’000 RM’000 (2,623) 49.00 49.00 4,655 2,032 2,032 2017 2017 2017 996 433 433 433 - - - 149 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
8. Investment in a joint venture company (cont’d.)
The summarised financial information of the joint venture, not adjusted for the proportion of ownership interest held by the Group, is as follows: (cont’d.)
2018 2017 RM’000 RM’000
Summarised statement of financial position as at 31 December:
Assets Property and equipment 17 5 Trade and other receivables 5,101 5,180 Cash and bank balances 3,992 976 9,110 6,161
Liabilities Trade payables 666 362
Net assets of the joint venture 8,444 5,799 Proportion of the Group’s ownership interest in joint venture 49% 49% Carrying amount of interest in joint venture as at 31 December 4,138 2,842
9. Goodwill
Group 2018 2017 RM’000 RM’000
At 1 January/31 December 24,165 24,165
The goodwill above arose from the acquisition of TIMB on 23 May 2012.
Goodwill is allocated to the Group’s CGU which is expected to benefit from the synergies of the acquisition. The recoverable amount of the CGU is assessed based on its value-in-use and compared to the carrying value of the CGU to determine whether any impairment exists. Impairment is recognised in profit or loss if the carrying amount of the CGU exceeds its recoverable amount.
The value-in-use calculations are derived from discounted cash flow projections prepared and approved by management, covering a five-year period.
PG.
150
9. 10. Investments The Group’s andCompany’s financialinvestments are summarisedby categories asfollows: (iv) (iii) (ii) (i) The key assumptions for thecomputation ofvalue-in-use are asfollows: Goodwill (cont’d.) financial year end. value oftheCGU to exceed itsrecoverable amount.Accordingly, there isnoevidence ofimpairmentgoodwillasat the Management believes that reasonably possible changesinany oftheabove key assumptions would notcausethecarrying Deposits withfinancialinstitutions Unit trust funds Financial assets at FVTPL (Note (c)) AFS financialassets (Note (b)) Amortised cost (Note (a)) Loans andreceivables (Note (a)) Loans Equity securities Debt securities Terminal value cashflow growth rate is4.7%, whichisconsistent withtheGross Domestic Product rate. is estimated to be12.10% perannum(pre-tax discount rate of11.81%perannum);and The discount rate appliedistheinternal weighted average cost ofcapital ofTIMBat thetimeofassessment, which The retention ratio andnetclaimsincurred ratio are estimated to beapproximately 42%and57% perannumrespectively; The growth ingross written premium isexpected to beat anaverage of9%perannum; RM’000 RM’000 609,039 690,039 653,772 481,581 36,060 36,267 169,518 2,673 2018 2018 207 - - Group Group For thefinancial year ended 31December 2018 RM’000 RM’000 635,787 635,787 145,584 707,513 707,513 500,211 10,008 61,364 61,718 2017 2017 354 - - RM’000 RM’000 60,169 60,169 60,169 60,169 2018 2018 Financial Statements Company Company ------Notes to the RM’000 RM’000 63,768 63,768 63,768 63,768 2017 2017 ------151 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
10. Investments (cont’d.)
(a) Amortised cost (2017: Loans and receivables)
Group 2018 2017 RM’000 RM’000
Fixed and call deposits with licensed financial institutions 36,060 61,364 Loans receivable: Staff mortgage loans 205 350 Other unsecured staff loans 2 4 207 354 36,267 61,718
Included in fixed and call deposits with licensed financial institutions of the Group are short term deposits with original maturity periods of less than 3 months amounting to RM19,076,000 (2017: RM34,248,000) which have been classified as cash and cash equivalents for the purpose of the statements of cash-flows.
The carrying value of the fixed and call deposits approximates fair value due to the relatively short term maturities.
The carrying value of the staff mortgage loans and other staff loans are reasonable approximations of fair value due to the insignificant impact of discounting.
The financial assets at amortised cost category was introduced and the loans and receivables category was removed upon the adoption of MFRS 9 on 1 January 2018. Comparative figures are not restated in line with the transition requirements under MFRS 9. The financial effects of the adoption of MFRS 9 are discussed in Note 2.4.
(b) AFS financial assets
Group 2018 2017 RM’000 RM’000
At fair value: Unquoted debt securities in Malaysia - 10,008
The AFS financial instruments category was removed upon the adoption of MFRS 9. The financial effects of the adoption of MFRS 9 are discussed in Note 2.4.
PG.
152 10.
11. (d) (c) Investments (cont’d.) described inNote 43(c). outstanding claimrecoveries duefrom aReinsurer withwhomtheinsurance subsidiaryiscurrently indispute, asfurther Included inimpairmentlosses for reinsurance assets at 31December 2018 isanamountofRM709,000 (2017: Nilrelated to Reinsurance assets Less: Impairment Premium liabilities(Note 16) Claim liabilities(Note 16) institutions, at netcarryingamountsare asbelow: The average effective interest rates for eachclass ofinterest-bearing investment andplacements withlicensed financial Average effective interest rates Financial assets at FVTPL Unquoted equitysecuritiesoutsideMalaysia Quoted unittrust fundsinMalaysia Unquoted debtsecuritiesinMalaysia At fair value: Deposits withfinancialinstitutions Loans Debt securities (acquired duringtheyear) RM’000 653,772 481,581 169,518 2,673 2018 Group For thefinancial year ended 31December 2018 RM’000 635,787 635,787 135,576 500,211 2017 - RM’000 RM’000 453,057 362,740 451,939 60,169 60,169 90,317 (1,118) 2018 2018 2018 5.00 3.54 5.17 Financial Statements Company % - - Group Group Notes to the RM’000 RM’000 268,256 268,937 176,321 63,768 63,768 92,616 2017 2017 2017 5.00 3.33 5.35 (681) % - - 153 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
12. Insurance receivables
Group 2018 2017 RM’000 RM’000
Due premiums including agents, brokers and co-insurers balances 95,163 80,193 Due from reinsurers and cedants 91,683 63,950 Deposits paid to reinsurers 1,235 1,018 188,081 145,161 Allowance for impairment losses (29,346) (14,616) 158,735 130,545
Offsetting of insurance receivables and insurance payables:
Gross amounts of recognised insurance receivables 272,377 171,064 Less: Gross amounts of recognised insurance payables offset in the statements of financial position (84,296) (25,903) Net amounts of recognised insurance receivables, before allowance for impairment losses 188,081 145,161
Included in the amount due from reinsurers and cedants is an amount of RM831,000 (2017: RM2,626,000) due from a joint venture company, Tune Protect Commercial Brokerage LLC. The amount receivable is subject to settlement terms stipulated in the reinsurance contracts.
The carrying amounts of insurance receivables above approximate their respective fair values due to the relatively short- term maturity of these balances.
The movements in allowance for impairment losses of insurance receivables are as follows:
Group Individually Collectively impaired impaired Total RM’000 RM’000 RM’000
At 1 January 2017 3,259 7,263 10,522 Written off - (1,059) (1,059) Increase during the year (Note 27) 57 5,096 5,153 At 31 December 2017 3,316 11,300 14,616
At 1 January 2018, as previously restated 3,316 11,300 14,616 Changes on initial application of MFRS 9 (Note 2.4) - 2,560 2,560 At 1 January 2018, as restated 3,316 13,860 17,176 Written off - (430) (430) Increase during the year (Note 27) 11,628 972 12,600
PG. At 31 December 2018 14,944 14,402 29,346
154
13. 12. * There were noindividuallyorcollectively impaired otherreceivables for theyears ended31December 2018 and2017. The amountsduefrom subsidiariesandajointventure company are unsecured, interest free andare repayable ondemand. the relatively short-term maturity ofthesebalances. The carryingamountsoffinancialassets includedunderotherreceivables approximate theirrespective fair values dueto Other receivables further describedinNote 43(c). related to outstanding claimrecoveries duefrom aReinsurer withwhomtheinsurance subsidiaryiscurrently indispute, as Included in impairment losses for insurance receivables at 31 December 2018 isan amount of RM4,016,000 (2017: Nil) Insurance receivables (cont’d.) Total Tax recoverable Prepayments Non-financial assets: Other receivables Malaysian Institute ofInsurance bonds Assets heldunder theMalaysian Motor Insurance Pool Amount duefrom ajointventure company Income dueandaccrued Amounts duefrom subsidiaries Financial assets: (“MMIP”)* disclosed inNote 16. The Group’s proportionate share ofthePool’s insurance contract liabilitiesarisingfrom itsparticipation inthePool is assets heldunder MMIPrepresents theGroup’s share ofthePool’s netassets, before insurance contract liabilities. date, theGroup accounts for itsproportionate share oftheassets, liabilitiesandperformance ofthePool. The net As a participating member of MMIP, the Group shares a proportion of the Pool’s net assets/liabilities. At each reporting RM’000 52,360 28,693 29,613 97,801 68,188 14,891 2018 260 646 920 31 - Group For thefinancial year ended 31December 2018 RM’000 105,581 78,840 58,462 25,612 19,577 26,741 2017 1,129 440 260 101 - RM’000 4,062 5,438 1,024 2018 5,117 321 321 Financial Statements Company 31 - - - - Notes to the RM’000 5,025 6,236 6,742 2017 1,110 506 435 101 71 71 - - - 155 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
14. Share capital and share premium
Group and Company Share capital (Issued and fully paid) Total share Number of capital and ordinary Share share shares Amount premium premium ‘000 RM’000 RM’000 RM’000
At 1 January 2017 751,760 75,176 173,343 248,519 Transfer in accordance with Section 618(2) of the Companies Act, 2016 to non-par value regime on 31 January 2017 - 173,343 (173,343) - At 31 December 2017/At 1 January 2018/At 31 December 2018 751,760 248,519 - 248,519
The holders of the ordinary shares are entitled to receive dividends as and when declared by the Company. The ordinary shares carry one vote per share without restrictions and rank equally with regards to the Company’s residual assets.
15. Merger deficit
Group 2018 2017 RM’000 RM’000
At 1 January - (13,838) Dissolution of a subsidiary, Tune Insurance (Labuan) Ltd - 13,838 At 31 December - -
Merger deficit represented the difference between consideration given and the carrying value of ordinary shares of a subsidiary acquired. The said subsidiary was dissolved in the previous year resulting in realisation of the balance of the merger deficit.
16. Insurance contract liabilities
2018 2017 Gross Reinsurance Net Gross Reinsurance Net Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
General insurance (Note 16(a)) 761,264 (452,997) 308,267 606,526 (268,869) 337,657 General reinsurance (Note 16(b)) 11,291 (60) 11,231 10,695 (68) 10,627 772,555 (453,057) 319,498 617,221 (268,937) 348,284
General insurance and reinsurance liabilities comprise the following:
Provision for claims reported by policyholders 377,817 (232,341) 145,476 288,754 (127,595) 161,159 Provision for IBNR claims and PRAD 224,180 (130,399) 93,781 139,881 (48,726) 91,155 Claim liabilities 601,997 (362,740) 239,257 428,635 (176,321) 252,314
PG. Premium liabilities 170,558 (90,317) 80,241 188,586 (92,616) 95,970 772,555 (453,057) 319,498 617,221 (268,937) 348,284 156 16. Insurance contract liabilities(cont’d.) (b) (a) Group (cont’d.)
Premium liabilities (ii) Claim liabilities(i) Provision for IBNRclaims Provision for claimsreported General reinsurance
(ii) (i)
Premium liabilities(ii) Claim liabilities(i) Provision for IBNRclaims Provision for claimsreported General insurance and PRAD by policyholders the year the year assumptions changes in the year and PRAD by policyholders At 31December Premiums earnedduring Premiums written during At 1January Premium liabilities Adjustment to claims Claims incurred inthe At 1January Claim liabilities At 31December Claims paidduring accident years dueto incurred inprior current accident year
(468,945) (201,897) 593,694 593,694 420,792 RM’000 450,781 761,264 185,734 221,935 167,570 167,570 371,759 371,759 (44,312) 419,111 2,988 Gross 6,058 8,303 11,291 2,245 Reinsurance (238,424) (362,740) (130,399) (266,545) (452,997) (362,740) (176,321) RM’000 (232,341) (92,548) 240,715 (90,257) (90,257) 2018 89,602 (9,476) (60) (60) - - - (228,230) 230,954 RM’000 244,471 230,954 308,267 (112,295) 212,357 152,566 (53,788) 139,418 91,536 93,186 77,313 77,313 2,928 6,058 8,303 2,245 11,231 Net For thefinancial year ended 31December 2018 460,800 (458,184) (182,842) 606,526 332,340 RM’000 283,643 420,792 420,792 366,951 (95,657) 185,734 185,734 137,149 10,695 183,118 Gross 2,852 7,843 2,732 5,111 Reinsurance (268,869) (214,053) (139,874) RM’000 (127,595) (127,001) (176,321) (92,548) (176,321) (92,548) (48,726) 192,869 (71,364) 2017 30,323 60,231 Financial Statements (68) (68) - - - Notes to the (265,315) 205,339 RM’000 246,747 156,048 (65,334) 227,077 337,657 244,471 244,471 (122,611) 88,423 111,754 10,627 93,186 93,186 2,784 7,843 2,732 5,111 Net 157 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
16. Insurance contract liabilities (cont’d.)
2018 2017 Gross Reinsurance Net Gross Reinsurance Net Group (cont’d.) RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
(b) General reinsurance (cont’d.)
(i) Claim liabilities At 1 January 7,843 - 7,843 9,746 (393) 9,353 Claims incurred in the current accident year 3,831 - 3,831 4,947 (31) 4,916 Movements in claims incurred in prior years (1,627) - (1,627) (3,529) (675) (4,204) Claims paid during the year (1,744) - (1,744) (3,321) 1,099 (2,222) At 31 December 8,303 - 8,303 7,843 - 7,843
(ii) Premium liabilities At 1 January 2,852 (68) 2,784 3,043 (102) 2,941 Premiums written during the year 68,201 (856) 67,345 56,909 (1,051) 55,858 Premiums earned during the year (68,065) 864 (67,201) (57,100) 1,085 (56,015) At 31 December 2,988 (60) 2,928 2,852 (68) 2,784
As at 31 December 2018, the insurance contract liabilities above includes the Group’s proportionate share of MMIP’s claims and premium liabilities amounting to RM36,350,000 (2017: RM40,705,000) and RM2,801,000 (2017: RM3,339,000) respectively.
17. Deferred tax (assets)/liabilities
Group 2018 2017 RM’000 RM’000
At 1 January 264 (1,178) Recognised in: Profit or loss (Note 29) (746) 1,386 Other comprehensive income - 56 At 31 December (482) 264
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority.
PG.
158 17.
Deferred tax(assets)/liabilities (cont’d.) as follows: The components andmovements ofdeferred taxliabilitiesandassets duringthefinancialyear priorto offsettingare At 31December 2018 Recognised inprofit orloss At 31December 2017 At 31December 2018 Recognised inprofit orloss At 31December 2017 Recognised in: At 1January2017 Deferred taxassets Recognised inprofit orloss At 1January2017 Deferred taxliabilities Group Group Presented asfollows: Other comprehensive income Profit orloss Deferred taxassets Deferred taxliabilities Accelerated onproperty equipment allowance Fair value financial RM’000 RM’000 capital assets 1,158 (222) 1,012 1,116 236 and 237 (42) 146 (57) 56 14 of Investment liabilities Premium property For thefinancial year ended 31December 2018 RM’000 RM’000 (586) 534 (125) 120 (52) 125 172 126 (1) - - Intangible RM’000 RM’000 RM’000 Others (2,040) (1,429) assets (1,865) (1,731) 1,249 (436) (482) 2018 226 367 (141) 133 Financial Statements (93) 611 - Group Notes to the RM’000 RM’000 RM’000 (2,683) (1,245) (1,245) (1,731) 1,509 1,249 1,509 1,505 Total Total 1,382 (486) 2017 (260) 264 56 4
159 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
18. Insurance payables
Group 2018 2017 RM’000 RM’000
Due to agents, brokers, co-insurers and insureds 50,312 35,337 Due to reinsurers and cedants 61,569 63,989 111,881 99,326
Offsetting of insurance receivables and insurance payables:
Gross amounts of recognised insurance payables 196,177 125,229 Less: Gross amounts of recognised insurance receivables offset in the statements of financial position (84,296) (25,903) Net amounts of recognised insurance payables 111,881 99,326
The carrying amounts approximate fair values due to their relatively short-term maturities.
19. Retirement benefits
Group 2018 2017 RM’000 RM’000
At 1 January 738 418 Provision for the year 28 327 766 745 Payments during the year (193) (7) At 31 December 573 738
Amount payable after 12 months 373 553
PG.
160 21. 20. Operating revenue The amountsdueto ajointventure andsubsidiariesare unsecured, interest free andare repayable ondemand. The carryingamountsofthefinancialliabilitiesapproximate fair value dueto theirrelatively short-term maturities. Other payables Total Accrued expenses ESOS provision Provision for taxation Non-financial liabilities: Others Reinsurance deposits Investment income (Note 23) Claims payable Amounts dueto subsidiaries Gross earnedpremiums (Note 22(a)) Amount dueto ajointventure Financial liabilities: RM’000 RM’000 537,010 566,122 12,299 29,112 22,107 4,835 2,334 45,110 3,535 32,811 3,022 9,263 2018 2018 14 - Group Group For thefinancial year ended 31December 2018 RM’000 RM’000 542,598 515,284 49,374 38,929 27,314 10,445 4,094 6,062 21,616 6,740 3,687 2017 2017 7,157 18 - RM’000 RM’000 41,881 41,881 1,904 1,904 2,485 2018 2018 Financial Statements 581 581 Company Company ------Notes to the RM’000 RM’000 55,305 55,305 2,602 1,440 2017 2017 1,051 1,162 1,162 389 ------161 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
22. Net earned premiums
Group 2018 2017 RM’000 RM’000
(a) Gross earned premiums Gross written premiums 518,982 517,709 Change in premium liabilities 18,028 (2,425) 537,010 515,284
(b) Premiums ceded to reinsurers Gross premiums ceded to reinsurers 239,280 215,104 Change in premium liabilities 2,299 (21,150) 241,579 193,954
Net earned premiums 295,431 321,330
23. Investment income
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Rental income from property 31 36 - - Interest income: – AFS financial assets - 598 - - – LAR - 2,763 - - – AC financial assets 1,458 - – FVTPL financial assets 7,534 6,229 - - – Bank balances 75 88 28 32 Share of investment income from MMIP 2,033 3,244 - - Dividend income: – AFS financial assets - 119 - - – FVTPL financial assets 17,981 14,237 2,241 2,456 – Subsidiaries - - 38,571 52,817 – A joint venture company - - 1,041 - 29,112 27,314 41,881 55,305
PG.
162 24. Realised gainsandlosses Realised gains: FVTPL financialassets: Net realised gainsfor AFSfinancialassets Total netrealised gains Net realised gainsfor FVTPLfinancialassets Realised gains: AFS financialassets: Realised (loss)/gain ondissolution ofasubsidiary Investment inasubsidiary: Realised loss ondisposalofinvestment property Investment property: Realised gainondisposalofproperty andequipment Property andequipment: Quoted unittrust fundsinMalaysia Unquoted debtsecuritiesinMalaysia Unquoted debtsecuritiesinMalaysia Quoted unittrust fundsinMalaysia RM’000 1,493 2018 1,358 1,140 (344) (10) 135 - - - Group 1 For thefinancial year ended 31December 2018 RM’000 1,283 2017 1,518 1,273 229 192 37 37 10 6 - - RM’000 2018 514 514 515 Financial Statements Company 1 ------Notes to the RM’000 2017 (393) 332 725 725 ------163 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
25. Other operating income/(expenses)
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Other operating income: Foreign exchange gains: – realised - 860 - 25 – unrealised 983 - 10 - Tele-marketing commission income 59 116 59 116 Management fees income - 46 5,563 4,928 Sundry income 1,509 1,102 171 191 2,551 2,124 5,803 5,260
Other operating expenses: Foreign exchange losses: – realised (1,503) - (450) - – unrealised - (2,277) - (12) Write-off of property and equipment (12) (6) - (4) Write-off of intangible assets - (491) - (31) Sundry expense - (57) - - (1,515) (2,831) (450) (47)
26. Net claims
Group 2018 2017 RM’000 RM’000
Gross claims paid (203,641) (186,163) Claims ceded to reinsurers 89,601 61,330 Net claims paid (a) (114,040) (124,833)
Gross change in contract liabilities (173,362) (51,938) Change in contract liabilities ceded to reinsurers 186,419 36,054 Net change in contract liabilities (b) 13,057 (15,884) Net claims (a) + (b) (100,983) (140,717)
PG.
164
27. Management expenses (a) Administration andgeneral expenses Printing charges Professional fees Rental ofpremises Marketing expenses Management fees Allowance for impairmentlosses oninsurance receivables Computer expenses Communication expenses expensesPublicity Allowance for impairmentlosses onreinsurance assets Amortisation ofintangibleassets (Note 5) Depreciation ofinvestment property (Note 4) Depreciation ofproperty andequipment(Note 3) Auditors’ remuneration: Directors’ remuneration (Note 27(b)) Employee benefitsexpense (Note 27(a)) (Note 12) – – – other services regulatory related services statutory audits as furtherdisclosedinNote 27(c). Included inemployee benefitsexpense oftheCompany isCEO’s remuneration ofRM2.2million(2017: RM2.0 million)
Other benefits Share-based compensation (Note 28) Contributions to definedcontribution plan Social securitycontributions Wages andsalaries Employee benefitsexpense RM’000 134,642 12,600 48,457 61,733 61,733 6,005 8,020 6,580 2,495 9,923 3,859 7,930 13,581 1,562 5,920 1,798 2,172 (992) 2018 445 437 652 328 622 84 23 141 Group For thefinancial year ended 31December 2018 RM’000 121,429 20,366 41,607 12,098 51,654 51,654 6,040 2,004 4,088 4,886 2,486 2,348 2,052 4,827 5,153 5,731 2017 (899) 1,510 4,511 384 769 769 329 681 351 80 27 27 RM’000 23,011 13,811 13,811 1,044 11,735 1,266 2018 4,197 1,228 349 (119) 249 249 207 926 242 265 228 930 Financial Statements Company 41 41 41 41 16 91 75 - - - - Notes to the RM’000 25,331 10,791 10,791 6,242 9,292 2,623 1,063 2017 (395) 1,513 469 983 883 339 583 224 319 831 218 29 28 72 72 15 - - - - 165 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
27. Management expenses (cont’d.)
(b) Directors’ remuneration
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Directors of the Company:
Non-executive: Fees 848 905 666 673 Allowances and other emoluments 329 232 264 158 1,177 1,137 930 831
Directors of the subsidiaries:
Executive: Fees 122 146 - - Allowances and other emoluments 47 45 - - 169 191 - - Non-executive: Fees 579 517 - - Allowances and other emoluments 247 207 - - 826 724 - - 995 915 - - Total 2,172 2,052 930 831
PG.
166 27. (b) Management expenses (cont’d.) Directors oftheCompany: Directors’ remuneration (cont’d.) Mohamed RashdiBinGhazalli Siegtraund Teh Siew Foong Tan Ming-Li Datuk Kamarudin BinMeranun Tan SriDr. Anthony Francis Fernandes Ng SoonLai@SiekChuan Non-executive: Mohamed RashdiBinGhazalli Siegtraund Teh Siew Foong Tan Ming-Li Datuk Kamarudin BinMeranun Ng SoonLai@SiekChuan Non-executive: 2017: 2018: For thefinancial year ended 31December 2018 RM’000 Fees 666 202 205 673 673 146 122 149 152 147 44 44 89 89 39 39 Allowances andother RM’000 emolu- ments 264 158 Financial Statements 60 40 40 30 70 70 50 87 87 17 15 8 5 Notes to the RM’000 Total 206 930 289 222 255 104 152 189 831 187 49 49 47 47 61 61 167 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
27. Management expenses (cont’d.)
(b) Directors’ remuneration (cont’d.)
The number of directors of whose total remuneration received and receivable from the Group during the year that fall within the following bands is analysed below:
Number of directors 2018 2017
Directors of the Company:
Non-executive directors: RM0 – RM50,000 - 2 RM50,001 – RM100,000 1 - RM100,001 – RM150,000 - 1 RM150,001 – RM200,000 1 2 RM200,001 – RM250,000 2 - RM250,001 – RM300,000 1 1
Directors of the subsidiaries:
Non-executive directors: RM0 – RM50,000 - 2 RM50,001 – RM100,000 1 - RM100,001 – RM150,000 - - RM150,001 – RM200,000 2 3 RM200,001 – RM250,000 2 1
Executive director: RM150,001 - RM200,000 1 1
PG.
168 27. 28. (c) Management expenses (cont’d.) received duringtheyear isasfollows: The write-back recognised by theGroup andtheCompany inrelation to resigned employees andemployee services date ofgrant. The optionsare active untilMarch 2024. There are nocashsettlementalternatives. of theoptionsisgrant price whichisadiscounted price of 10%from theaverage weighted price for five days preceding exercisable onlyby theemployees duringtheiremployment withtheGroup andbefore theexpiry date. The exercise price Group andwhoseemployment hasbeenconfirmed inwriting,asat thedate ofoffer. The optionsgranted underESOS is All employees are entitled to a grant of options, under the ESOS, once they are employed by and on the payroll of the 21 November 2017 at anexercise price ofRM0.99 perESOS share. was from 21November 2017 to 31December 2017. The ESOS isexercisable over aperiodof6years from thegrant date of On 21November 2017, theCompany offered 500,000 ESOS shares to theChiefExecutive Officer ofTIMB. The offer period 17 November 2016 at anexercise price ofRM1.45perESOS share. was from 17November 2016 to 16December 2016. The ESOS isexercisable over aperiodof7years from thegrant date of On 17November 2016, the Company offered 1,000,000 ESOS shares to theGroup ChiefExecutive Officer. The offer period at anexercise price ofRM1.71 perESOS share. from 18 March 2014 to 17 April 2014. The ESOS is exercisable over a period of 10 years from the grant date of 17 April 2014 On 18March 2014, theCompany offered 15,715,000 ESOS shares to eligibleemployees oftheGroup. The offer periodwas Employees’ Share OptionScheme(“ESOS”) Write-back arisingfrom equity-settled share-based payment transactions (Note 27(a)) The detailsofremuneration received by the CEOoftheCompany duringthefinancialyear are asfollows: CEO’s remuneration Total remuneration (Note 34(b)) Benefits-in-kind Defined contribution plan Bonus Salaries andotheremoluments RM’000 (992) 2018 Group For thefinancial year ended 31December 2018 RM’000 2017 (899) RM’000 RM’000 1,889 2,217 2018 2018 (119) 196 125 Financial Statements Company Company 7 Notes to the RM’000 RM’000 2,005 1,655 2017 2017 (395) 230 113 7 169 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
28. Employees’ Share Option Scheme (“ESOS”) (cont’d.)
Movements during the year
The number and weighted average exercise prices (“WAEP”) of, and movements in, ESOS during the current and previous years are as follow:
Outstanding Outstanding as at as at 1.1.2018 Granted Exercised Forfeited 31.12.2018 Vested Grant date ‘000 ‘000 ‘000 ‘000 ‘000 ‘000 18 March 2014* 6,814 - - (1,820) 4,994 4,994 17 November 2016** 1,000 - - - 1,000 500 21 November 2017*** 500 - - - 500 125 8,314 - - (1,820) 6,494 5,619
The WAEP for year 2018 is RM1.61 per ESOS share.
Outstanding Outstanding as at as at 1.1.2017 Granted Exercised Forfeited 31.12.2017 Vested Grant date ‘000 ‘000 ‘000 ‘000 ‘000 ‘000
18 March 2014* 9,119 - - (2,305) 6,814 5,111 17 November 2016** 1,000 - - - 1,000 250 21 November 2017*** - 500 - - 500 - 10,119 500 - (2,305) 8,314 5,361
The WAEP for year 2017 is RM1.64 per ESOS share.
* Expiry date set on 17 April 2024 at an exercise price of RM1.71 per ESOS share. ** Expiry date set on 17 March 2024 at an exercise price of RM1.45 per ESOS share. *** Expiry date set on 17 March 2024 at an exercise price of RM0.99 per ESOS share.
PG.
170 28. 29. Taxation Fair value ofshare options: price andtheassumptions were asfollows: and conditions uponwhichtheoptionswere granted. The fair value ofshare optionsmeasured, weighted average exercise The fair value ofshare optionswas estimated by anexternal valuer usingtheBinomialModel,takinginto account theterms Fair value ofshare optionsgranted Employees’ Share OptionScheme(“ESOS”) (cont’d.) measurement offair value. which may alsonotnecessarily betheactualoutcome. Nootherfeatures oftheoptionsgranted were incorporated into the that may occur. The expected volatility reflects theassumption that thehistorical volatility was indicative offuture trends, The expected life oftheoptionswas basedonhistorical data andtherefore isnotnecessarily indicative ofexercise patterns Malaysian income tax: Deferred tax(Note 17): Labuan income tax: Expected life ofESOS Risk-free interest rate (perannum) Dividend yield(perannum) – – – – Expected volatility (perannum) (Over)/under provision inprioryears Under/(over) provision inprioryears Current income tax Relating to origination and reversal of Current income tax Tranche 4(RM) Tranche 3(RM) Tranche 2(RM) Tranche 1(RM) temporary differences RM’000 2,878 2,152 2,172 2018 (547) (746) (199) 706 20 Group 0.848903 0.728658 0.774476 For thefinancial year ended 31December 2018 0.813938 18 March RM’000 10 years 33.00% (1,207) 2,682 3.59% 1,386 2,881 1,475 1.98% 2017 2014 637 637 749 749 20 17 November Grant dates 0.489987 0.527398 RM’000 0.537133 0.511858 33.00% 7 years 4.20% 2.90% 2018 2016 Financial Statements 98 98 98 Company - - - - - 21 November Notes to the 0.304063 0.324220 0.328428 0.316020 RM’000 33.00% 6 years 2.90% 3.80% 2017 2017 (33) 58 58 91 - - - - 171 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
29. Taxation (cont’d.)
The Labuan subsidiaries are entitled to elect to pay tax of 3% of the chargeable profits or RM20,000 based on the election under Section 7 of the Labuan Business Activity Tax Act, 1990 in respect of its chargeable profits for the period.
The income tax for the Company and Malaysia incorporated subsidiaries are based on the corporate tax rate of 24% (2017: 24%) of the estimated assessable profit for the financial year.
A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expenses at the effective income tax rate is as follows:
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Profit before taxation 55,070 52,904 24,549 34,962
Taxation at Malaysian statutory tax rate of 24% 13,217 12,697 5,892 8,391 Effect of chargeable profits subject to RM20,000 tax election (9,504) (9,674) - - Income not subject to tax (4,330) (3,706) (10,045) (13,266) Expenses not deductible for tax purposes 3,430 5,214 4,251 4,966 Share of results of an associate (612) (841) - - Share of results of a joint venture company (556) (239) - - Under/(over) provision of income tax in prior years 706 (1,207) - (33) (Over)/ under provision of deferred tax in prior years (199) 637 - - Tax expense for the year 2,152 2,881 98 58
The Group has not recognised any provisions in respect of the disputed additional tax and penalties levied by the Lembaga Hasil Dalam Negeri (“LHDN”) during the year, as further described in Note 43(b).
30. Earnings per share
Basic earnings per share is calculated by dividing the profit for the year, net of tax attributable to ordinary equity holder of the Company by the number of ordinary shares in issue.
Diluted earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of the Company by the number of ordinary shares in issue plus the number of ordinary shares that would be issued under the Employees’ Share Option Scheme.
PG.
172 30. 31. Dividends years ended31December 2018 and2017: The following reflects theprofit andshare data usedinthecomputation ofbasicanddiluted earnings pershare for the Earnings pershare (cont’d.) of thesefinancialstatements. There have beennoothertransactions involving ordinary shares between thereporting date andthedate ofauthorisation price ofoptionsgranted undertheEmployees’ Share OptionScheme. There are nodilutive effects inthecurrent andprioryear, astheaverage market share price was lower thantheexercise Final singletierdividendof5.2senperordinary share on751,759,980 ordinary shares, Final singletierdividendof3.0 senperordinary share on751,759,980 ordinary shares, Recognised duringthefinancialyear: Basic anddiluted earningspershare (sen) Effects ofdilution–Employees’ Share OptionScheme(‘000) Number ofordinary shares inissues (‘000) Profit attributable to ordinary equityholders(RM’000) declared on22May 2017 andpaidon15June2017 declared on1June2018 andpaidon25June2018 For thefinancial year ended 31December 2018 RM’000 Group andCompany 751,760 751,760 22,553 49,505 2018 2018 6.59 Financial Statements - - Group Notes to the RM’000 751,760 751,760 46,303 39,092 39,092 2017 2017 6.16 - - 173 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
32. Operating lease arrangements
(a) The Group as lessee
The Group has entered into lease agreements for rental of office premises.
The future aggregate minimum lease payments under operating lease contracted for as at the reporting date but not recognised as liabilities are as follows:
Future minimum rental payments:
Group and Company 2018 2017 RM’000 RM’000
Rental of office premises: Payable within one year 1,184 2,351 Payable after one year 474 2,514 1,658 4,865
(b) The Group as lessor
The Group has entered into a non-cancellable operating lease arrangement on its property. The lease has a remaining cancellable lease term of 2 years.
The future minimum lease payments receivable under a non-cancellable operating lease contracted for as at the reporting date but not recognised as receivables, are as follows:
Group 2018 2017 RM’000 RM’000
Receivable within one year 46 17 Receivable after one year 61 - 107 17
Rental income recognised in profit or loss during the relevant financial years is disclosed in Note 23.
PG.
174 34. 33. (a) Related partydisclosures The commitments oftheGroup andoftheCompany asat thefinancialyear endare asfollows: Capital commitments Approved butnotcontracted for: Capital expenditure Property andequipment Intangible assets The Group andtheCompany hadthefollowing significanttransactions withrelated partiesduringthefinancialyear: Significant related partytransactions Management fee income TIPCL Transactions withassociate: Management fee income TDM Management fee income Dividend income TIMB Reimbursement ofexpenses incurred Management fee income Dividend income TPR Transactions withsubsidiaries: Income/(expense): RM’000 RM’000 29,674 30,654 2018 2018 980 ------Group Group - For thefinancial year ended 31December 2018 RM’000 RM’000 21,753 16,120 5,633 2017 2017 46 ------RM’000 RM’000 29,411 2,022 3,286 9,160 2,896 2018 2018 255 948 870 Financial Statements Company Company 78 - Notes to the RM’000 RM’000 44,490 4,882 8,327 3,270 1,378 2017 2017 1,120 258 46 - - 175 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
34. Related party disclosures (cont’d.)
(a) Significant related party transactions (cont’d.)
The Group and the Company had the following significant transactions with related parties during the financial year: (cont’d.)
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Income/(expense): (cont’d.)
Transactions with joint venture company: TPCBLLC Dividend income - - 1,041 - Facilitator fees (7,235) (3,998) - - Sundry income/(expenses) 358 (59) - -
Transactions with corporate shareholder of the Company, AirAsia Berhad: Gross written premium 45,442 43,592 - - Fee and commission expense (11,361) (10,898) - - Data management fee (32) (54) (32) (54)
Transactions with related companies: AirAsia X Berhad Gross written premium 11,201 12,055 - - Fee and commission expense (2,800) (3,014) - -
PT Indonesia AirAsia Gross written premium 1,811 1,691 - - Telemarketing commission expense (8) (12) - - Fee and commission expense (453) (423) - -
Thai AirAsia Co. Ltd Gross written premium 1,807 1,536 - - Telemarketing commission expense (19) (48) - - Fee and commission expense (452) (384) - -
Tune Group Sdn Bhd Royalty fee (6,506) (8,679) (3,974) (5,818) Rental and utilities charges (1,571) (1,522) (219) (235) PG.
176 34.
(a) Related partydisclosures (cont’d.) Details ofbalances withrelated partiesat theendof respective years are disclosedinNotes 12,13and20. (cont’d.) The Group and the Company had the following significant transactions with related parties during the financial year: Significant related partytransactions (cont’d.) Fee andcommission expense Gross written premium Bex Travel Malaysia SdnBhd Fee andcommission expense Gross written premium Venture SdnBhd AirAsia BhdandSkybus Fee andcommission expense Gross written premium PT IndonesiaAirAsiaExtra Fee andcommission expense Gross written premium Philippines AirAsiaInc Brokerage fee SP&G Insurance Brokers Telemarketing commission expense PT CIMBSunlife Rental ofpremise Data managementfee Tune Hotels Regional Services SdnBhd Transactions withrelated companies (cont’d.): Income/(expense): (cont’d.) RM’000 2018 (164) (980) (127) 504 657 (2) (1) - - - Group 7 7 For thefinancial year ended 31December 2018 RM’000 (1,206) 2017 (232) (137) (56) (24) 926 547 (2) (1) (1) 5 7 RM’000 2018 Financial Statements Company ------Notes to the RM’000 2017 ------177 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
34. Related party disclosures (cont’d.)
(b) Compensation of key management personnel
The remuneration of key management personnel during the year are as follows:
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
Executive director’s remuneration (Note 27(b)) – directors of the subsidiaries 169 191 - - Non-executive directors’ remuneration: (Note 27(b)) – directors of the Company 1,177 1,137 930 831 – directors of the subsidiaries 826 724 - - 2,003 1,861 930 831 CEO’s remuneration (Note 27(c)) 2,217 2,005 2,217 2,005 4,389 4,057 3,147 2,836
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group. The key management personnel of the Group includes the Directors and Chief Executive Officer of the Company.
35. Regulatory capital/working fund and solvency requirements of subsidiaries
(i) TPR
The Guidelines on Application for Licence - Insurance and Insurance Related Activities (“the Guidelines”) were introduced as the capital adequacy, working fund and solvency requirement for all insurers licensed under the Labuan Financial Services and Securities Act 2010 (“LFSSA 2010”) effective from 13 December 1997. It was imposed by the Labuan Financial Services Authority (“Labuan FSA”), pursuant to Section 109 of the LFSSA 2010 as a licensing condition for insurance companies.
TPR, as a Labuan reinsurer is required to maintain at all times, a minimum paid-up capital/net working funds of RM10.0 million each.
In addition, TPR is also required to have minimum solvency margin of:
(1) RM10.0 million; or
(2) 20% of net premium income of the preceding year, whichever is greater for TPR.
As at 31 December 2018, the margin of solvency of the Company was a surplus of RM111,878,000 (2017: RM97,376,000) which complies with requirements of Section 109 of the LFSSA 2010.
(ii) TIMB
The insurance subsidiary, TIMB is required to comply with the regulatory capital requirement prescribed in the RBC Framework which is impose by the Ministry of Finance. Under the RBC Framework issued by BNM, insurance companies are required to satisfy a minimum capital adequacy ratio of 130%. As at year end, TIMB has a capital adequacy ratio in excess of the minimum requirement. PG.
178 36. 35. (f) (e) (d) Liquidity; (c) (b) (a) approved by theBoard, comprise thefollowing components: of riskthat the Board iswillingto bear and accept inpursuitofachieving strategic objectives. The statements, whichare The subsidiaries’riskappetite statements together withtheassociated metrics,articulate thelevels, boundariesand nature Risk appetite to adoptthesepoliciesto govern therunningofbusiness. The Committee hasworked withtheManagementto develop thesepoliciesandbothManagementBoard have agreed are inplace, andmonitoring compliance withpoliciesandprocedures. Committee isresponsible for regularly identifyingrisks,ensuringthat adequate riskmanagementpoliciesandprocedures risk management,hasestablished aRiskManagementCommittee (“RMC”)of4independentNon-Executive Directors. The The Board ofDirectors oftheinsurance subsidiary, whichhastheultimate responsibility for ensuringanadequate system of Risk managementframework (ii) Regulatory capital/working fundandsolvency requirements ofsubsidiaries(cont’d.) Reinsurance andintermediaries counterparty risks; Investment strategy andincome; Underwriting performance; Business growth strategies; Capital adequacy riskpolicy; are provided asbelow: The capitalstructure ofTIMBasat 31December 2018 andthecomparative, asprescribed undertheRBCFramework, TIMB (cont’d.) Total capitalavailable Amount deducted from capital Eligible reserves Tier 2capital Reserves, includingretained earnings Share capital(paid-up) Eligible Tier 1capital For thefinancial year ended 31December 2018 RM’000 103,348 281,969 178,621 278,211 3,758 2018 Financial Statements - Notes to the RM’000 268,935 103,348 168,647 271,995 3,066 2017 6 179 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
36. Risk management framework (cont’d.)
Risk appetite (cont’d.)
The subsidiaries’ risk appetite statements together with the associated metrics, articulate the levels, boundaries and nature of risk that the Board is willing to bear and accept in pursuit of achieving strategic objectives. The statements, which are approved by the Board, comprise the following components: (cont’d.)
(g) Compliance with regulatory guidelines;
(h) Reputational risks;
(i) Operational risks; and
(j) Credit settlement period.
Overview of risk management policies
The Group and the Company’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group and the Company’s business whilst managing the key risks faced by the Group and the Company.
A. Underwriting
i. Risk
Acceptance of poor insurance risks, risks with low profit margins and inadequate reinsurance arrangements contribute to low profitability and inadequate capital growth. Insurance risk is also the risk of outstanding insurance contract liabilities being greater than estimated.
ii. Policy
The following outlines the Group’s policies to safeguard against these risks:
(a) Underwrite only classes of risks which have been approved by the Board;
(b) Accept risks within the approved classes only according to comprehensive underwriting guidelines and within limits of delegated authority;
(c) Expand into new lines only where there is adequate experience within the Group and after management has obtained appropriate Board authority;
(d) Price risks with sufficient margin to ensure ongoing viability of the business, and maintaining a professional approach to this function;
(e) Retain risks according to guidelines on maximum risks to be retained;
(f) Mitigate foreign currency risks on reinsurance by all significant reinsurance arrangements being entered into in Malaysian Ringgit;
(g) Ensure compliance with treaty arrangements in accepting risks;
(h) Maintain a balanced portfolio to yield a reasonable level of profits; and
PG. (i) Review on a regular basis the insurance contract liabilities. 180 36. B. Reinsurance Overview ofriskmanagementpolicies(cont’d.) Risk managementframework (cont’d.) C. Claims ii. Policy i. Risk ii. Policy i. Risk (d) (c) (b) (a) The following outlinestheGroup’s policiesto safeguard against theserisks: risks andoperational risks. Reinsurance arrangement exposes theGroup to residual insurance risks,legalcounterparty risks,liquidity (e) (d) (c) (b) (a) The Group’s policiesto guard against theserisksare: could affect theGroup’s profitability, financialpositionandreputation. Exposure to unexpected orexcessive losses, fraudulent claimsandinadequate provisions for outstanding claims
Regularly review thefinancialsoundness ofthereinsurers. reinsurance sources aswell asthefinancialpositionofreinsurers; and Determine thereinsurer selectionprocess includingselectioncriteria to ensure sufficientdiversification of pricing; Use ofintermediaries suchasreinsurance brokers to obtainanindependentadviseandto source for best Set retention limitsinaccordance to theGroup’s riskappetite anditsrisktolerance level; fashion. Ensure that losses are mitigated andpotential recovery action isfollowed upinaprofessional andtimely claims outsidecontractual obligations for fraudulent reasons andfor detecting fraudulent claims;and Assess exposure to fraud periodically and employ measures to minimise potential losses through accepting exchange movements onsuchliabilities; Make adequate provisions for allclaimliabilities,especiallyfor long-tailliabilitiesandadverse foreign appropriate loss adjustment; Maintain goodclaimsadministration andsettlementprocesses to ensure prudentclaimsestimation and information andat least once ayear; Identify claims exposures and properly assess them, and routinely review them upon the receipt of further For thefinancial year ended 31December 2018 Financial Statements Notes to the 181 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
36. Risk management framework (cont’d.)
Overview of risk management policies (cont’d.)
D. Investments
i. Risk
Investment risk is the risk of inadequate investment returns from poor investment strategies and adverse movements in the value of investments. Investment risk is derived from market risk, credit risk, investment concentration risk, liquidity risk, and asset/liability mismatch risk.
ii. Policy
Returns from the investment of premium income are an important source of income to the Group and the Company and maintenance of the market value of the investments is essential for the financial stability of the Group and the Company. The absence of prudent investment strategies and investment decision framework could result in poor investment return which would affect the Group’s and the Company’s profitability and competitiveness and also result in the Group and the Company not being able to meet its obligations as they fall due. It is the Group’s and the Company’s policy to:
(a) Implement an investment strategy to ensure appropriate asset allocation, concentration of investments and matching of asset and liability portfolios;
(b) Ensure that investments are held in different classes within limits specified by the Investment Committee;
(c) Undertake a thorough analysis before making an investment to minimise market risk and continuously monitor the performance and risk of the investment;
(d) Manage disposal of investments to optimise the returns on realisation;
(e) Limit exposure to interest rate risk by investing in term deposits, corporate bonds and government securities on a long and short-term basis at competitive rates;
(f) Ensure liquidity by maintaining sufficient cash float at any time and regularly matching the expected duration of liabilities and investments and uncertainties arising from the timing and amount of cash flows;
(g) Minimise credit risk and investment concentration risk by investing with institutions that have a minimum rating of “B” within specific overall limits for each institution; and
(h) Monitor investment portfolio and performance weekly or at other shorter intervals and report investment exposure and performance to the Board monthly.
PG.
182 36. E. Overview ofriskmanagementpolicies(cont’d.) Risk managementframework (cont’d.) F. Operations ii. Policy i. Risk Credit quality ii. Policy i. Risk (d) (c) (b) (a) Policies to limitcredit risksincludethefollowing: premiums andlarge exposures. and canadversely affect theGroup andtheCompany’s viability. The riskarisesmainlyfrom default ofdue Credit qualityriskisassociated withcredit exposure that increase theriskprofile oftheGroup andtheCompany (d) (c) (b) (a) The policiesto monitor andminimisetheserisksare asfollows: continuity andkey personnelrisk. fraud, compliance, legalrisk,physical damageto property, pooroutsourcing arrangements, threats to business Non-financial or operational risks the Group and the Company face include technology risk, risk to reputation, in thecaseofduepremiums andconsider thecancellation ofinsurance policiesat theexpiry ofcredit terms. Collect amounts due in accordance with agreed credit terms, enforce prompt collection of overdue amounts Monitor compliance withestablished credit limits;and arrangements madeinexception cases; placements which exceed 30%oftheGroup andtheCompany’s capital baseas well asexposure from base. However, specificBoard approval isrequired to sanctionexposures includingfacultative reinsurance Limit exposure to singlepartiesorgroups ofrelated entitiesto 30%oftheGroup andtheCompany’s capital of credit to thecedants andspecifiesguidelinesfor settinglimitsoncredit asperthequotashare agreement; Maintain credit control inaccordance withappropriate policiesandprocedures whichgovern theextension under thelegislative framework ismaintained; Ensure at alltimesthat compliance withregulatory requirements andfulfilmentofmaterial obligations Closely monitor the external relationships; Effect appropriate insurance cover for allidentifiedoperational riskswhichcanbecost-effectively insured; Undertake annualriskaudits to identifymaterial operational risksto whichtheGroup are exposed; For thefinancial year ended 31December 2018 Financial Statements Notes to the 183 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
36. Risk management framework (cont’d.)
Overview of risk management policies (cont’d.)
F. Operations (cont’d.)
ii. Policy (cont’d.)
(e) Maintain an ethics and personal conduct policy to ensure that the affairs of the Group and the Company are conducted in a manner that would avoid any action by the Group and the Company or its officers that would bring disrepute to the Group and the Company;
(f) Implement adequate security procedures to prevent unauthorised access, damage, loss to assets and facilities and harm to employees;
(g) Ensure that division of responsibility is clear and mutually understood where any part of the Group’s and the Company’s business is outsourced to third parties whilst ultimate control over the outsourced operations is retained by the Group and the Company; and
(h) Identify the possible types of fraud the Group and the Company is exposed to and develop and maintain effective controls to prevent them and to take appropriate and prompt action if fraud occurs.
G. Regulatory compliance and corporate governance
The Management is responsible to follow a systematic approach to the business and effectively manage the risks. The key risks that have been identified are monitored and their status communicated as appropriate throughout all levels of the organisation and are also incorporated in the Group’s and the Company’s performance management reporting.
The Group maintains a register of risks and follows a project management approach toward mitigation of risk.
The Internal Audit Department, which reports independently to the Board, undertakes a wide-ranging programme of work designed to keep the Board fully informed on the compliance of the business with agreed risk management policies, controls and procedures.
Regular reports are submitted to the Board with Key Performance Indicators covering the Group’s and the Company’s performance and the key risks identified.
A Compliance Department is in place to ensure regulatory compliance. The department is under the responsibility of the Head of Compliance who shall monitor compliance to regulatory requirements.
The Head of Compliance shall take responsibility to ensure regulatory compliance is adhered to and any changes to policy and practices are communicated appropriately to all parties concerned.
PG.
184 36. 37. H. Overview ofriskmanagementpolicies(cont’d.) Risk managementframework (cont’d.) conditions andterritories from whichtheriskoriginated. the adverse development oftheloss ratio andcatastrophic events. These risks vary significantlyinrelation to economic The Group alsounderwrites treaty business onaproportional basismainlyintravel insurance business. Riskscanarisefrom reputable reinsurers andbrokers, andpremised ontheriskappetite oftheGroup. accordance withtheauthorisedlimits.The retention ofrisksisprotected by proportional andnon-proportional treaties with The Group has in place comprehensive underwriting guidelinesandlimits of authority to ensure that risks are accepted in Insurance risk (f) (e) (d) (c) (b) (a) Effective andefficientoperation oftheorganisation would beensured through: management ofrisk. In accordance withthesepoliciesaframework for managementofidentifiedriskhasbeendeveloped for theeffective Regulations ofriskmanagement and theutilisation ofitsresources. Prompt andcomprehensive managementreporting systems to assess performance andprogress ofthebusiness Improving motivation ofstaff through asuitablecommunication, review, feedback andrewards system; and systems andprocedures; Retention of a level of well-qualified staff through appropriate recruitment, training and staff development Development ofprocedures to ensure that riskmanagementstrategies are implemented; A managementstructure that clearlyidentifiestheroles andresponsibilities ofthestaff; controlled manner; Providing aframework for anorganisation that enablesfor activitiesto beundertaken inaconsistent and For thefinancial year ended 31December 2018 Financial Statements Notes to the 185 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
37. Insurance risk (cont’d.)
(a) Concentration of risks
(i) General reinsurance
The premium and claim liabilities of the general reinsurance business are primarily in respect of travel insurance risks.
The following table sets out the concentration of travel insurance risks by country/regions based on the geographical location of the primary insurers or reinsurers from which the gross premium are written.
Group 2018 2017 RM’000 RM’000
Geographical diversification
Thailand 21,610 19,561 United Arab Emirates (UAE) 9,029 6,598 Indonesia 4,018 4,618 Singapore 5,144 4,965 Australia 1,788 2,299 Shenzhen, China 2,439 3,127 Philippines 6,887 2,526 Saudi Arabia 1,990 1,637 Hong Kong, China 1,706 1,718 Japan 1,438 1,474 Qatar 1,023 606 Macau, China 1,027 876 Morocco 3,365 1,409 Vietnam 894 784 Kuwait 667 486 Oman 881 410 Brunei 430 517 Cambodia 630 637 Europe - 323 Other countries 3,235 2,338 68,201 56,909
PG.
186 37. (a) Insurance risk(cont’d.)
(ii) Concentration ofrisks(cont’d.) reporting date: The tablebelow shows theconcentration ofpremium andclaimliabilitiesby class ofbusiness at the The tablebelow shows theconcentration ofgross written premium by class ofbusiness: General insurance Others Marine, aviation andtransit Fire Motor 2018 Premium liabilities Others Marine, aviation andtransit Fire Motor 2017 Others Marine, aviation andtransit Fire Motor Class ofbusiness diversification For thefinancial year ended 31December 2018 RM’000 167,570 185,734 109,106 98,667 35,458 12,408 21,037 47,756 19,435 Gross 9,437 insurance RM’000 RM’000 (57,900) 450,781 (90,257) 142,653 (92,548) (19,926) (54,577) (15,506) 183,136 (14,702) 53,923 71,069 (5,662) (6,769) (7,763) Group 2018 Re- Financial Statements Group Notes to the 460,800 RM’000 RM’000 145,929 40,767 40,767 28,689 32,250 54,529 63,427 63,723 187,721 77,313 93,186 6,746 4,733 1,674 2017 1,111 Net
187 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
37. Insurance risk (cont’d.)
(a) Concentration of risks (cont’d.)
(ii) General insurance (cont’d.)
The table below shows the concentration of premium and claim liabilities by class of business at the reporting date: (cont’d.)
Group Re- Gross insurance Net RM’000 RM’000 RM’000
Claim liabilities
2018
Motor 278,877 (106,722) 172,155 Fire 94,606 (80,745) 13,861 Marine, aviation and transit 130,942 (124,001) 6,941 Others 89,269 (51,272) 37,997 593,694 (362,740) (230,954)
2017
Motor 222,158 (42,322) 179,836 Fire 75,245 (57,172) 18,073 Marine, aviation and transit 38,297 (29,817) 8,480 Others 85,092 (47,010) 38,082 420,792 (176,321) 244,471
(b) Sensitivity analysis
Key assumptions
The principal assumptions underlying the estimation of liabilities is that the Group’s future claims development will follow a similar pattern to past claims development experience. This includes key assumptions such as the adopted Ultimate Loss Ratios (“ULR”), risk margin percentages (i.e. PRAD) and expense ratios in respect of claims handling and other overhead expenses.
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 claiming, economic conditions, as well as internal factors such as 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.
PG.
188 37. (b) Insurance risk(cont’d.) (i) been restated to enhance comparability withthecurrent year’s approach. are usedinclaimliabilities estimation, instead ofallaccident periodsinprevious year. Prioryear’s comparative has year. Estimated impactongross andnetliabilitiesare now inrespect ofaccident periodswhere loss ratio assumptions The methodusedfor derivingsensitivity information onloss ratio assumptions hasbeenupdated from theprevious in theseassumptions are non-linear. due to changesinassumptions, assumptions are changedonanindividualbasis.Itshouldbenoted that movements assumptions willhave asignificanteffect indetermining theultimate claimliabilities,butto demonstrate theimpact held constant, showing theimpactongross andnetliabilities,profit before taxandequity. The correlation of The analysis below isperformed for reasonably possible movements inkey assumptions withallotherassumptions estimation process. not been possible to quantify the sensitivity of certain assumptions, such as, legislative changes or uncertainty in the The general reinsurance andgeneral insurance claimliabilitiesare sensitive to thekey assumptions shown below. Ithas Sensitivities Sensitivity analysis (cont’d.) General reinsurance Loss ratio 2017 Loss ratio 2018 invariable Changes +1% +1% -1% -1%
liabilities ongross RM’000 Impact (43) (86) 43 86 liabilities For thefinancial year ended 31December 2018 RM’000 Increase/(decrease) Impact onnet (43) (86) 43 86 onprofit taxation RM’000 Impact before (43) Financial Statements (86) 43 86 Notes to the onequity RM’000 *Impact (43) (86) 43 86 189 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
37. Insurance risk (cont’d.)
(b) Sensitivity analysis (cont’d.)
Sensitivities (cont’d.)
(ii) General insurance
Increase/(decrease) Impact Impact Impact on profit on gross on net before *Impact Changes liabilities liabilities taxation on equity in variable RM’000 RM’000 RM’000 RM’000
2018
Loss ratio +10% 86,304 34,679 (34,679) (26,356) PRAD +10% 5,536 2,416 (2,416) (1,836) Provision for expenses +10% 944 1,039 (1,039) (790)
Loss ratio -10% (75,077) (28,559) 28,559 21,704 PRAD -10% (5,536) (1,936) 1,936 1,471 Provision for expenses -10% (944) (944) 944 718
2017
Loss ratio +10% 52,137 39,415 (39,415) (29,955) PRAD +10% 2,788 1,879 (1,879) (1,428) Provision for expenses +10% 994 994 (994) (755)
Loss ratio -10% (52,137) (33,438) 33,438 25,413 PRAD -10% (2,788) (1,879) 1,879 1,428 Provision for expenses -10% (994) (994) 994 755
* Impact is net of tax of 24% (2017: 24%) for the general insurance business.
(c) Claims development table
The following tables show the estimate of cumulative incurred claims, including both claims notified and IBNR for each successive accident year at each reporting date, together with cumulative payments to-date.
In setting provisions for claims, the Group gives consideration to the probability and magnitude of future experience being more adverse than assumed and exercises a degree of caution in setting reserves when there is considerable uncertainty. In general, the uncertainty associated with the ultimate claims experience in an accident year is greatest when the accident year is at an early stage of development and the margin necessary to provide the confidence in adequacy of provision is relatively at its highest. As claims develop and the ultimate cost of claims becomes more PG. certain, the relative level of margin maintained should decrease. 190 37. (c) Insurance risk(cont’d.) (i) Claims development table(cont’d.) Gross general reinsurance contract liabilitiesfor 2018: General reinsurance One year later At endofaccident year Two years later
Three years later Gross general reinsurance Four years later Five years later Current estimate of Seven years later Six years later Gross general reinsurance Elimination/adjustment upon At endofaccident year One year later Two years later Cumulative payments Seven years later Six years later Five years later Four years later Three years later to-date elimination contract liabilitiesbefore cumulative claimsincurred position (Note 16(b)) statement offinancial contract liabilitiesper consolidation
RM’000 2011 (20) (20) (19) (19) (19) (19) (19) (19) 20 20 23 25 19 19 19 19 19 - - RM’000 (1,005) (1,007) (1,007) (1,007) (1,007) 1,007 1,007 1,023 1,855 (1,011) (1,011) 2012 (597) 1,017 1,122 1,011 1,011 - RM’000 (2,844) (2,844) (2,844) (2,843) (2,845) (2,841) (1,953) 3,045 2,844 2,844 2,845 2,845 4,276 2,897 2013 - RM’000 (6,805) (6,805) (6,805) (3,063) (5,596) (5,610) 6,805 6,805 8,932 7,576 2014 6,178 6,811 - RM’000 (3,360) (3,478) (3,478) (3,253) 3,400 3,480 3,480 (2,168) 3,388 3,817 2015 For thefinancial year ended 31December 2018 2 RM’000 (3,563) (3,563) (3,553) (2,673) 8,668 3,577 3,577 2016 3,731 14 RM’000 (5,081) (5,081) (4,167) 5,522 5,522 7,073 2017 441 Financial Statements RM’000 (4,246) (4,246) 2,785 7,031 7,031 2018 Notes to the RM’000 (27,048) 30,290 3,242 8,303 Total 5,061 191 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
37. Insurance risk (cont’d.)
(c) Claims development table (cont’d.)
(i) General reinsurance (cont’d.)
Net general reinsurance contract liabilities for 2018:
2011 2012 2013 2014 2015 2016 2017 2018 Total Accident year RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At end of accident year 25 1,855 4,276 4,999 3,891 8,731 7,136 7,031 One year later 23 1,122 3,045 6,245 3,390 3,731 5,586 Two years later 19 1,017 2,900 4,080 3,400 3,577 Three years later 19 1,024 2,845 4,107 3,480 Four years later 19 1,007 2,845 4,100 Five years later 19 1,007 2,844 Six years later 19 1,011 Seven years later 20 Current estimate of cumulative claims incurred 20 1,011 2,844 4,100 3,480 3,577 5,586 7,031 27,649
At end of accident year - (597) (1,953) (3,063) (2,168) (2,673) (4,231) (4,246) One year later (19) (1,005) (2,841) (4,054) (3,253) (3,553) (5,145) Two years later (19) (1,007) (2,843) (4,068) (3,360) (3,563) Three years later (19) (1,007) (2,845) (4,100) (3,478) Four years later (19) (1,007) (2,844) (4,100) Five years later (19) (1,007) (2,844) Six years later (19) (1,011) Seven years later (20) Cumulative payments to-date (20) (1,011) (2,844) (4,100) (3,478) (3,563) (5,145) (4,246) (24,407)
Net general reinsurance contract liabilities before elimination - - - - 2 14 441 2,785 3,242 Elimination/adjustment upon consolidation 5,061 Net general reinsurance contract liabilities per statement of financial position (Note 16(b)) 8,303
PG.
192 37. (c) Insurance risk(cont’d.) (i) Claims development table(cont’d.) Gross general reinsurance contract liabilitiesfor 2017: General reinsurance (cont’d.) At endofaccident year One year later Accident year Two years later Three years later At endofaccident year Current estimate ofcumulative claims Six years later Five years later Four years later One year later Two years later Three years later Cumulative payments to-date Six years later Five years later Four years later Gross general reinsurance contract Gross general reinsurance contract Elimination/adjustment uponconsolidation incurred liabilities before elimination position (Note 16(b)) liabilities perstatement offinancial RM’000 2011 (19) (19) (19) (19) (19) (19) (19) 23 25 19 19 19 19 19 19 - - RM’000 (1,005) (1,007) (1,007) (1,007) (1,007) (1,007) 1,007 1,007 1,007 1,023 1,855 2012 (597) 1,017 1,122 - RM’000 (2,844) (2,844) (2,843) (2,845) (2,841) (1,953) 3,045 2,845 2,845 2,845 4,276 2,897 2013 1 RM’000 (6,805) (6,805) (3,063) (5,596) (5,610) 8,932 7,576 2014 6,178 6,811 6,811 For thefinancial year ended 31December 2018 6 RM’000 (3,360) (3,360) (3,253) 3,400 3,400 (2,168) 3,388 3,817 2015 40 RM’000 (3,553) (3,553) (2,673) 8,668 2016 3,731 3,731 178 Financial Statements RM’000 (4,167) (4,167) 2,906 7,073 7,073 2017 Notes to the RM’000 (21,755) 24,886 7,843 Total 4,712 3,131 193 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
37. Insurance risk (cont’d.)
(c) Claims development table (cont’d.)
(i) General reinsurance (cont’d.)
Net general reinsurance contract liabilities for 2017:
2011 2012 2013 2014 2015 2016 2017 Total Accident year RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At end of accident year 25 1,855 4,276 4,999 3,891 8,731 7,136 One year later 23 1,122 3,045 6,245 3,390 3,731 Two years later 19 1,017 2,900 4,080 3,400 Three years later 19 1,024 2,845 4,107 Four years later 19 1,007 2,845 Five years later 19 1,007 Six years later 19 Current estimate of cumulative claims incurred 19 1,007 2,845 4,107 3,400 3,731 7,136 22,245
At end of accident year - (597) (1,953) (3,063) (2,168) (2,673) (4,231) One year later (19) (1,005) (2,841) (4,054) (3,253) (3,553) Two years later (19) (1,007) (2,843) (4,068) (3,360) Three years later (19) (1,007) (2,845) (4,100) Four years later (19) (1,007) (2,844) Five years later (19) (1,007) Six years later (19) Cumulative payments to-date (19) (1,007) (2,844) (4,100) (3,360) (3,553) (4,231) (19,114)
Net general reinsurance contract liabilities before elimination - - 1 7 40 178 2,905 3,131 Elimination/adjustment upon consolidation 4,712 Net general reinsurance contract liabilities per statement of financial position (Note 16(b)) 7,843
PG.
194 37. (c) Insurance risk(cont’d.) (ii) Claims development table(cont’d.) Gross general insurance contract liabilitiesfor 2018: General insurance At endofaccident year Accident year One year later Gross general insurance Two years later Current estimate of Seven years later Five years later At endofaccident year Six years later Four years later Three years later One year later Five years later Three years later Two years later Cumulative payments Seven years later Six years later Four years later to-date position (Note 16(a)) statement offinancial contract liabilitiesper cumulative claimsincurred
(120,906) (109,790) (116,683) (119,536) 134,945 (75,244) RM’000 (121,410) 124,932 129,325 139,573 (30,815) (118,521) 130,951 130,951 131,463 164,136 150,123 (121,410) 2011 & 9,541 prior (199,666) (199,666) 205,044 224,094 (132,823) 208,027 (167,023) (197,296) 208,847 (185,774) RM’000 243,986 (195,914) 247,486 203,991 203,991 (76,857) 4,325 2012 (104,766) RM’000 (119,878) (119,878) (112,583) 148,205 136,947 154,652 (114,124) (91,862) 211,969 (47,381) 127,251 127,251 173,116 7,373 2013 (144,298) (153,854) RM’000 207,343 (120,315) (54,979) 246,130 183,695 169,387 169,387 (157,531) (157,531) 171,284 171,284 11,856 2014 (164,360) (164,360) (150,069) (125,894) RM’000 256,297 207,973 189,658 185,293 185,293 (57,884) 20,933 2015 For thefinancial year ended 31December 2018 RM’000 (118,303) 190,560 (138,351) (138,351) 229,818 (58,917) 177,779 177,779 39,428 2016 (174,302) (174,302) RM’000 332,338 (85,432) 147,509 321,811 321,811 2017 Financial Statements RM’000 352,729 (66,382) (66,382) 419,111 419,111 2018 Notes to the (1,141,880) 1,735,574 593,694 RM’000 Total 195 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
37. Insurance risk (cont’d.)
(c) Claims development table (cont’d.)
(ii) General insurance (cont’d.)
Net general insurance contract liabilities for 2018:
2011 & prior 2012 2013 2014 2015 2016 2017 2018 Total Accident year RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At end of accident year 134,687 134,376 120,999 144,802 158,569 170,009 203,874 149,366 One year later 121,263 128,136 103,629 123,661 124,410 140,195 174,840 Two years later 108,850 114,501 96,867 107,164 110,685 131,430 Three years later 104,165 103,145 92,564 98,948 104,517 Four years later 103,640 102,074 83,153 96,123 Five years later 100,454 101,632 81,213 Six years later 102,442 98,900 Seven years later 100,118 Current estimate of cumulative claims incurred 100,118 98,900 81,213 96,123 104,517 131,430 174,840 143,366 936,507
At end of accident year (28,737) (34,057) (35,220) (39,627) (37,371) (45,175) (59,278) (35,666) One year later (66,529) (76,815) (64,442) (73,221) (72,798) (85,912) (107,969) Two years later (90,298) (89,842) (72,345) (84,040) (84,626) (100,545) Three years later (93,871) (94,837) (76,604) (89,070) (91,522) Four years later (95,673) (97,006) (77,591) (90,375) Five years later (96,541) (97,729) (78,411) Six years later (97,540) (98,107) Seven years later (97,897) Cumulative payments to-date (97,897) (98,107) (78,411) (90,375) (91,522) (100,545) (107,969) (35,666) (700,492)
Net general insurance contract liabilities before elimination 2,221 793 2,802 5,748 12,995 30,885 66,871 113,700 236,015 Elimination/adjustment upon consolidation (5,061) Net general insurance contract liabilities per statement of financial position (Note 16(a)) 230,954
PG.
196 37. (c) Insurance risk(cont’d.) (ii) Claims development table(cont’d.) Gross general insurance contract liabilitiesfor 2017: General insurance (cont’d.) At endofaccident year At endofaccident year Current estimate of Seven years later One year later One year later Six years later Five years later Three years later Accident year Two years later Gross general insurance Cumulative payments to-date Seven years later Five years later Four years later Three years later Four years later Six years later Two years later cumulative claimsincurred position (Note 16(a)) statement offinancial contract liabilitiesper (142,696) (142,696) (137,006) (133,744) (110,466) RM’000 (127,828) 146,560 (141,976) 149,468 170,544 168,597 (95,372) 151,280 148,331 (38,182) 146,125 151,919 151,919 9,223 2010 (109,790) RM’000 (116,683) (120,186) (120,186) (119,536) 125,002 125,002 (75,244) 124,932 129,325 139,573 (30,815) (118,521) 131,463 164,136 150,123 4,816 2011 205,044 205,044 224,094 (132,823) 208,027 (167,023) (197,296) (197,296) 208,847 (185,774) RM’000 243,986 (195,914) 247,486 (76,857) 7,748 2012 (104,766) RM’000 (112,583) 148,205 136,947 136,947 154,652 (114,124) (114,124) (91,862) 211,969 (47,381) 22,823 173,116 2013 (144,298) (153,854) (153,854) RM’000 207,343 (120,315) (54,979) 246,130 183,695 171,284 171,284 171,284 171,284 17,430 2014 For thefinancial year ended 31December 2018 (150,069) (150,069) (125,894) RM’000 256,297 207,973 189,658 189,658 (57,884) 39,589 2015 RM’000 (118,303) (118,303) 190,560 190,560 229,818 (58,917) 72,257 2016 Financial Statements 246,906 RM’000 332,338 332,338 (85,432) (85,432) 2017 Notes to the (1,081,960) 1,502,752 RM’000 420,792 Total 197 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
37. Insurance risk (cont’d.)
(c) Claims development table (cont’d.)
(ii) General insurance (cont’d.)
Net general insurance contract liabilities for 2017:
2010 2011 2012 2013 2014 2015 2016 2017 Total Accident year RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
At end of accident year 114,029 134,687 134,376 120,999 144,802 158,569 170,009 203,874 One year later 106,956 121,263 128,136 103,629 123,661 124,410 140,195 Two years later 98,737 108,850 114,501 96,867 107,164 110,685 Three years later 94,709 104,165 103,145 92,564 98,948 Four years later 93,967 103,640 102,074 83,153 Five years later 93,366 100,454 101,632 Six years later 92,538 99,132 Seven years later 94,314 Current estimate of cumulative claims incurred 94,314 99,132 101,632 83,153 98,948 110,685 140,195 203,874 931,933
At end of accident year (34,592) (28,737) (34,057) (35,220) (39,627) (37,371) (45,175) (59,278) One year later (67,182) (66,529) (76,815) (64,442) (73,221) (72,798) (85,912) Two years later (77,525) (90,298) (89,842) (72,345) (84,040) (84,626) Three years later (86,020) (93,871) (94,837) (76,604) (89,070) Four years later (87,975) (95,673) (97,006) (77,591) Five years later (89,420) (96,541) (97,729) Six years later (91,004) (97,120) Seven years later (91,424) Cumulative payments to-date (91,424) (97,120) (97,729) (77,591) (89,070) (84,626) (85,912) (59,278) (682,750)
Net general insurance contract liabilities before elimination 2,890 2,012 3,903 5,562 9,878 26,059 54,283 144,596 249,183 Elimination/adjustment upon consolidation (4,712) Net general insurance contract liabilities per statement of financial position (Note 16(a)) 244,471
PG.
198 38. liabilities oftheGroup andoftheCompany by categories: The following tablessummarisethefinancialinstruments (other thancashandbankbalances) andinsurance assets or Financial instruments andinsurance assets andliabilities Total assets Other receivables (netofprepayments Insurance receivables Total liabilities Other payables (netofprovision for taxation andaccrued expenses) Retirement benefits Insurance payables Insurance contract liabilities 2018 Liabilities Reinsurance assets Investments 2017 Total assets Group Other receivables (netofprepayments Insurance receivables Reinsurance assets Investments 2018 Assets Group and taxrecoverable) and taxrecoverable) AC/LAR RM’000 130,545 158,735 209,385 263,190 78,840 36,267 68,188 - - - RM’000 10,008 10,008 AFS ------liabilities financial For thefinancial year ended 31December 2018 RM’000 RM’000 653,772 653,772 635,787 635,787 635,787 635,787 145,265 FVTPL 111,881 Other 32,811 573 ------Assets under Liabilities RM’000 RM’000 268,256 268,256 MFRS4 451,939 451,939 772,555 772,555 MFRS 4 under Financial Statements ------Notes to the 1,368,901 RM’000 RM’000 1,123,436 690,039 268,256 130,545 158,735 645,795 451,939 772,555 78,840 917,820 68,188 111,881 32,811 Total Total 573
199 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
38. Financial instruments and insurance assets and liabilities (cont’d.)
The following tables summarise the financial instruments (other than cash and bank balances) and insurance assets or liabilities of the Group and of the Company by categories: (cont’d.)
Other Liabilities financial under liabilities MFRS 4 Total Group RM’000 RM’000 RM’000
Liabilities (cont’d.)
2017
Insurance contract liabilities - 617,221 617,221 Insurance payables 99,326 - 99,326 Retirement benefits 738 - 738 Other payables (net of provision for taxation and accrued expenses) 38,929 - 38,929 Total liabilities 138,993 617,221 756,214
AC/LAR FVTPL Total Company RM’000 RM’000 RM’000
Assets
2018
Investments - 60,169 60,169 Other receivables (net of prepayments and tax recoverable) 5,117 - 5,117 5,117 60,169 65,286
2017
Investments - 63,768 63,768 Other receivables (net of prepayments and tax recoverable) 6,236 - 6,236 6,236 63,768 70,004
PG.
200 38. 39. liabilities oftheGroup andoftheCompany by categories: (cont’d.) The following tablessummarisethefinancialinstruments (other thancashandbankbalances) andinsurance assets or Financial instruments andinsurance assets andliabilities(cont’d.) (a) Financial risks Other payables (netofaccrued expenses) 2017 Other payables (netofaccrued expenses) 2018 Liabilities Company on theclaimsrecoverable from suchreinsurers/retrocessionaires at that pointintime. counterparty. The maximumamountrecoverable from eachreinsurer/retrocessionaire at any timeisalso dependent to theextent of the amountoffinancialassets that hasnotbeenfullyoffsetby financialliabilitieswiththesame accounts to besettledonanetbasis.Insuchcases,the maximumexposure to credit riskisexpected to belimited statements offinancialposition,althoughinthecasereinsurance receivables, itisfairly common practice for The maximumexposure to credit riskisnormallyrepresented by thecarryingamountofeachfinancialasset inthe either A.M.Best orStandard &Poor’s. reinsurance transactions, theGroup willgive dueconsideration to retrocessionaires withrating ofA- andabove, by processes are regularly reviewed andmonitored by theRiskManagementCommittee oftheinsurance subsidiary. For process, aswell astheinsurance andreinsurance receivables collection andimpairmentassessment processes. These The Group hasestablished acounterparty andcredit managementpoliciesthat govern thecredit selectionandreview and bankbalances withlicensed financialinstitutions. reinsurance assets, investment securities, trade receivables and otherreceivables which are financialassets, and cash its obligations. The Group andtheCompany are exposed to credit riskprimarilyfrom netinsurance receivables, Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on Credit risk For thefinancial year ended 31December 2018 Financial Statements Notes to the liabilities RM’000 financial Other 1,440 581 201 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
39. Financial risks (cont’d.)
(a) Credit risk (cont’d.)
Amounts arising from ECL
The Group applies the simplified approach in accordance with MFRS 9 Financial Instruments and measures the allowance for impairment loss based on a lifetime ECL from initial recognition.
Measurement of ECL – Explanation of inputs, assumptions and estimation techniques
The key inputs into the measurement of ECL are based on the following variables as described in Note 2.3(i):
– probability of default (‘PD’); – loss given default (‘LGD’); and – exposure at default (‘EAD’).
Definition of default
The Group considers a financial asset to be in default by assessing the following criteria:
Quantitative criteria
Insurance receivables are considered to be in default when the counterparty fails to make contractual payments within 12 months when they fall due, which is derived based on the Group’s historical information.
Qualitative criteria
Default occurs when the counterparty is in bankruptcy or has indications of potentially significant financial difficulty such as lawsuits or similar actions that threaten the financial viability of the counterparty.
The criteria above have been applied to all financial instruments held by the Group and are consistent with the definition of default used for credit risk management purposes. The default definition has been applied consistently to model the PD, EAD and LGD throughout the Group’s expected loss calculations.
PG.
202 39. (a) Financial risks(cont’d.) * paid to reinsurers) usingaprovision matrix: Set outbelow istheinformation aboutthecredit riskexposure ontheGroup’s insurance receivables (netofdeposits the Group for theyear ended31December 2018. The sensitivityoftheECLto theeconomic variable assumptions affecting thecalculation ofECLwas notmaterial to range ofpossible scenarios. within theGroup’s different portfolios to establish that thechosenscenarios are appropriately representative ofthe forecasts to represent itsbest estimate ofthepossible outcomes andhasanalysed thenon-linearitiesandasymmetries uncertainty andtheactualoutcomes may besignificantlydifferent from thoseprojected. The Group considers these As with any economic forecasts, the projections and likelihoods of occurrence are subject to a high degree ofinherent the impactchangesinthesevariables have had historically ondefault rates andthecomponents ofLGD andEAD. variables onthePD, EADandLGD hasbeendetermined by performing statistical regression analysis to understand and provide thebest estimate view oftheeconomy over thenext four to five years. The impactoftheseeconomic of theseeconomic variables (the“baseeconomic scenario”) are obtainedfrom publiclyavailable economic databases These economic variables andtheirassociated impactonthePD, EADandLGD vary by financialinstrument. Forecasts analysis andidentifiedkey economic variables impactingcredit riskandexpected credit losses for eachportfolio. has increased significantlysince itsinitialrecognition anditsmeasurement ofECL.The Group hasperformed historical The Group incorporates forward-looking information into bothitsassessment ofwhetherthecredit riskofaninstrument Incorporation offorward-looking information Credit risk(cont’d.) Allowance for ECL Gross carryingamount–insurance ECL rate 1 January2018 Allowance for ECL Gross carryingamount–insurance ECL rate 31 December 2018 receivables receivables RM34,456,000) andECLallowance ofRM17,439,000 (1January2018: RM10,424,000). Included inthesebalances are credit impaired gross receivables amountingto RM47,982,000 (1January2018: < 30days RM’000 47,945 44,181 661 801 2% 1%
31to 60 RM’000 24,940 24,920 1,244 days 317 5% 1% 61 to 90 RM’000 12,719 Days past due 9,286 days 744 403 For thefinancial year ended 31December 2018 4% 6% 91to 180 RM’000 26,502 35,663 2,783 2,572 days 10% 8% More than 180 days* RM’000 Financial Statements 65,599 39,234 23,914 13,083 36% 33% Notes to the RM’000 186,846 29,346 144,143 17,176 Total 203 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
39. Financial risks (cont’d.)
(a) Credit risk (cont’d.)
Credit exposure
At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by the maximum amount of each class of financial and reinsurance assets recognised in the statements of financial position as shown in the table below. The reinsurers’ share of unearned premiums have been excluded from the analysis as they are not contractual obligations.
Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000
AC/LAR: Fixed and call deposits with licensed financial institutions 36,060 61,364 - - Loans receivable: Staff mortgage loans 205 350 - - Other unsecured staff loans 2 4 - - AFS financial assets: Debt securities - 10,008 - - FVTPL financial assets: Debt securities 169,518 135,576 - - Reinsurance assets 362,740 176,321 - - Insurance receivables 158,735 130,545 - - Other receivables (net of prepayments and tax recoverable) 68,188 78,840 5,117 6,236 Cash and bank balances 7,228 7,453 1,807 453 802,676 600,461 6,924 6,689
PG.
204 39. (a) Financial risks(cont’d.) ^ financial andreinsurance assets subjectto credit riskaccording to thecredit ratings ofcounterparties. The tablebelow provides information regarding thecredit riskexposures oftheGroup andtheCompany by classifying Credit exposure by credit rating Credit risk(cont’d.) Cash andbankbalances Other receivables (netofprepayments Insurance receivables Reinsurance assets^ FVTPL financialassets: AC: 2018 Group and taxrecoverable) Debt securities loans Loans receivable: institutions Fixed andcalldeposits Other unsecured staff Staff mortgage loans with licensed financial Financial Services Authority are classified underthe“notrated” category. Reinsurance assets from brokers/insurers/reinsurers licensed under the Financial Services Act 2013 and Labuan RM’000 46,976 26,542 14,057 6,246 AAA AAA 131 - - - -
RM’000 132,572 144,567 2,736 7,925 229 788 317 AA AA - -
RM’000 126,842 99,373 17,798 9,325 213 133 For thefinancial year ended 31December 2018 A - - -
BBBand RM’000 lower 105 98 7 ------RM’000 484,186 146,576 67,527 263,131 Financial Statements 5,091 rated 1,593 205 Not 61 61 2 Notes to the 802,676 362,740 158,735 RM’000 169,518 36,060 68,188 7,228 Total 205 2 205 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
39. Financial risks (cont’d.)
(a) Credit risk (cont’d.)
Credit exposure by credit rating (cont’d.)
The table below provides information regarding the credit risk exposures of the Group and the Company by classifying financial and reinsurance assets subject to credit risk according to the credit ratings of counterparties. (cont’d.)
BBB and Not AAA AA A lower rated Total Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2017
LAR: Fixed and call deposits with licensed financial institutions 24,604 35,213 - 50 1,497 61,364 Loans receivable: Staff mortgage loans - - - - 350 350 Other unsecured staff loans - - - - 4 4 AFS financial assets: Debt securities - - 10,008 - - 10,008 FVTPL financial assets: Debt securities 30,535 105,041 - - - 135,576 Reinsurance assets^ - 29,461 127,005 653 19,202 176,321 Insurance receivables - 2,689 9,265 399 118,192 130,545 Other receivables (net of prepayments and tax recoverable) 10 233 213 1 78,383 78,840 Cash and bank balances 3,292 1,899 2,203 - 59 7,453 58,441 174,536 148,694 1,103 217,687 600,461
^ Reinsurance assets from brokers/insurers/reinsurers licensed under the Financial Services Act 2013 and Labuan Financial Services Authority are classified under the “not rated” category.
PG.
206 39. (b) (a) Financial risks(cont’d.) premiums have beenexcluded from the analysis asthey are notcontractual obligations. timing ofnetcashoutflows ofrecognised insurance liabilities.Unearned premiums andreinsurers’ share ofunearned For insurance contract liabilitiesandreinsurance assets, maturity profiles are determined basedontheestimated including interest receivable. contract liabilitiesoftheGroup andtheCompany based ontheremaining undiscounted contractual obligations, The tablesbelow summarisethematurity profile ofthefinancialandinsurance assets andfinancialinsurance Maturity profiles and unittrust funds, to ensure highliquidity. reasonable cost at any time. The Group maintains alarge tranche ofliquidasset instruments, primarilybankdeposits Liquidity riskisthethat theGroup andtheCompany isunableto meetitsobligations inatimelymannerat a Liquidity risk financial andreinsurance assets subjectto credit riskaccording to theGroup’s credit ratings ofcounterparties. (cont’d.) The tablebelow provides information regarding thecredit riskexposures oftheGroup andtheCompany by classifying Credit exposure by credit rating (cont’d.) Credit risk(cont’d.) Cash andbankbalances Other receivables (netofprepayments andtaxrecoverable) 2017 Cash andbankbalances Other receivables (netofprepayments andtaxrecoverable) 2018 Company For thefinancial year ended 31December 2018 RM’000 1,807 1,807 AAA AAA 453 453 - - RM’000 6,236 6,236 rated 5,117 5,117 Not Financial Statements - - Notes to the RM’000 6,689 6,236 1,807 6,924 Total 5,117 453 207 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
39. Financial risks (cont’d.)
(b) Liquidity risk (cont’d.)
Maturity profiles (cont’d.)
No Carrying Less than Over 1–5 Over 5 maturity value 1 year years years date Total Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2018
AC: Fixed and call deposits with licenced financial institutions 36,060 36,210 - - - 36,210 Loans receivable: Staff mortgage loans 205 24 8 173 - 205 Other unsecured staff loans 2 2 - - - 2 FVTPL: Equity securities 2,673 - - - 2,673 2,673 Unit trust funds 481,581 - - - 481,581 481,581 Debt securities 169,518 39,301 114,726 46,609 - 200,636 Reinsurance assets 362,740 210,922 146,232 5,586 - 362,740 Insurance receivables 158,735 158,735 - - - 158,735 Other receivables (net of prepayments and tax recoverable) 68,188 68,188 - - - 68,188 Cash and bank balances 7,228 7,228 - - - 7,228 Total financial and insurance assets 1,286,930 520,610 260,966 52,368 484,254 1,318,198
Insurance contract liabilities 601,997 348,855 243,075 10,067 - 601,997 Insurance payables 111,881 111,881 - - - 111,881 Retirement benefits 573 200 - 373 - 573 Other payables (net of provision for taxation and accrued expenses) 32,811 32,811 - - - 32,811 Total financial and insurance liabilities 747,262 493,747 243,075 10,440 - 747,262 Liquidity surplus 539,668 26,863 17,891 41,928 484,254 570,936
PG.
208 39. (b) Financial risks(cont’d.) Maturity profiles (cont’d.) Liquidity risk(cont’d.) Liquidity surplus/(deficit) Total financialandinsurance liabilities Other payables (netofprovision for Retirement benefits Insurance payables Insurance contract liabilities Total financialandinsurance assets Cash andbankbalances Other receivables (netofprepayments Insurance receivables Reinsurance assets FVTPL: AFS financialassets: LAR: 2017 Group taxation andaccrued expenses) and taxrecoverable) Debt securities Unit trust funds Debt securities Loans receivable: Fixed andcalldepositswith Other unsecured staff loans Staff mortgage loans licenced financialinstitutions 1,028,946 Carrying RM’000 428,635 130,545 135,576 457,631 500,211 78,840 176,321 99,326 571,315 10,008 61,364 42,616 value 7,453 350 738 4 Less than 389,360 RM’000 335,659 130,545 247,233 (53,701) 78,840 99,326 98,877 19,944 61,700 42,616 1year 7,453 322 185 4 - - Over 1–5 RM’000 124,264 199,597 172,275 172,275 75,333 10,536 27,322 years 113 For thefinancial year ended 31December 2018 ------RM’000 Over 5 (7,569) 9,680 years 9,127 2,111 2,111 237 553 ------RM’000 maturity 500,211 500,211 500,211 Financial Statements date No ------Notes to the 1,037,578 466,263 RM’000 428,635 144,208 130,545 500,211 78,840 176,321 99,326 571,315 61,700 10,858 42,616 7,453 Total 350 738 4 209 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
39. Financial risks (cont’d.)
(b) Liquidity risk (cont’d.)
Maturity profiles (cont’d.)
No Carrying Less than Over 1-5 Over 5 maturity value 1 year years years date Total Company RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2018
FVTPL: Unit trust funds 60,169 - - - 60,169 60,169 Other receivables (net of prepayments and tax recoverable) 5,117 5,117 - - - 5,117 Cash and bank balances 1,807 1,807 - - - 1,807 Total financial assets 67,093 6,924 - - 60,169 67,093
Other payables (net of provision for taxation and accrued expenses), representing total financial liabilities 581 581 - - - 581 Liquidity surplus 66,512 6,343 - - 60,169 66,512
2017
FVTPL: Unit trust funds 63,768 - - - 63,768 63,768 Other receivables (net of prepayments and tax recoverable) 6,236 6,236 - - - 6,236 Cash and bank balances 453 453 - - - 453 Total financial assets 70,457 6,689 - - 63,768 70,457
Other payables (net of provision for taxation and accrued expenses), representing total financial liabilities 1,440 1,440 - - - 1,440 Liquidity surplus 69,017 5,249 - - 63,768 69,017
PG.
210 39. (c) Financial risks(cont’d.) * in theNetAsset Value (“NAV”) withallothervariables heldconstant isindicated inthetablebelow: Management’s best estimate oftheeffect onthenetprofit for theyear andequitydueto areasonably possible change Price risk limits oncategories ofpurchase. to the Group’s risk appetite on investments in unit trust funds, collective investment schemes and bonds,by placing Fund managers’performance are monitored constantly andparameters are prescribed to fundmanagersaccording high grade shares andbonds,constant watch ontheinvestment portfolio for adverse changesand opportunities. review ontheperformance ofunittrust funds,proper initialandcontinuous credit evaluation ofbonds,purchase of Market riskarises with changes in prices ofunittrust fundsandbondprices. This riskismitigated through regular Market risk NAV NAV Market indices: 2017 NAV NAV Market indices: 2018 Impact isnetoftax24%. Changein NAV +10 +10 -10 -10 %
profit for (36,600) theyear RM’000 Increase/(decrease) 36,600 (38,016) *Effect onnet 38,016 Group *Effect on For thefinancial year ended 31December 2018 (36,600) RM’000 (38,016) 36,600 equity 38,016 profit for theyear RM’000 Increase/(decrease) *Effect (4,846) (4,573) onnet 4,846 4,573 Financial Statements Company Notes to the *Effect on RM’000 (4,846) (4,573) equity 4,846 4,573 211 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
39. Financial risks (cont’d.)
(c) Market risk (cont’d.)
Interest rate risk
The Group’s exposure to interest rate risk arises primarily from investments in interest-bearing investments classified as available-for-sale (2017) and FVTPL (2017 and 2018). The interest and capital value of the latter may be affected by changes in the interest yield curve. The Group has an investment policy that investments are made at competitive interest rates.
The analysis below are performed for reasonably possible movements in key variables with all other variables held constant, showing the impact on profit or loss and impact on equity. The correlation of variables will have a significant effect in determining the ultimate impact on interest rate yield risk but to demonstrate the impact due to changes in variables, variables had to be changed on an individual basis. It should be noted that movements in these variables are non-linear.
Sensitivity analysis:
Group (Decrease)/Increase *Effect on net profit for *Effect on Changes in the year equity basis points RM’000 RM’000
2018
Interest-bearing investments: FVTPL + 100 bps (214) (214) FVTPL - 100 bps 214 214
2017
Interest-bearing investments: Available-for-sale + 100 bps - (6) Available-for-sale - 100 bps - 6 FVTPL + 100 bps (82) (82) FVTPL - 100 bps 82 82
* Impact is net of tax of 24%.
PG.
212 39. (c) Financial risks(cont’d.) The Group’s andtheCompany’s exposure to foreign currencies are asfollows: the netexposure isat anacceptable level. in currencies other than Ringgit Malaysia. Foreign currency risk is monitored closely on an ongoing basis to ensure that The Group andtheCompany are exposed to foreign currency riskontransactions andbalances that are denominated Foreign currency risk Market risk(cont’d.) Insurance receivables:
Cash andbankbalances:
Insurance contract liabilities:
Insurance payables:
Thai Baht Indonesian Rupiah Singapore Dollar Hong Kong Dollar United States Dollar Philippines Peso China Yuan Renminbi Australia Dollar Other currencies United States Dollar Thai Baht Indonesian Rupiah United States Dollar Thai Baht Other currencies China Yuan Renminbi Hong Kong Dollar United States Dollar Other currencies For thefinancial year ended 31December 2018 RM’000 42,300 (1,509) 18,541 3,054 3,077 2,886 8,478 3,378 1,884 1,270 (305) (780) 2018 1,163 (279) (145) 604 (411) 398 (64) (96) (39) Financial Statements 26 81 Group Notes to the RM’000 25,329 6,944 5,208 1,730 1,246 1,739 1,739 1,765 5,781 (309) 2017 1,274 (348) (401) 630 (157) (80) (811) 641 (87) 891 (111) (14) 28 - 213 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
39. Financial risks (cont’d.)
(c) Market risk (cont’d.)
Foreign currency risk (cont’d.)
The Group’s and the Company’s exposure to foreign currencies are as follows: (cont’d.)
Group 2018 2017 RM’000 RM’000
Cash and bank balances: United States Dollar 91 17 Indonesian Rupiah 26 28 117 45
Sensitivity analysis:
A 5% strengthening/weakening of the Ringgit Malaysia against the foreign currencies as at the end of 31 December 2018 would have decreased/increased net profit of the Group and the Company by approximately RM2,088,000 and RM6,000 respectively (2017: RM1,272,000 and RM2,000 respectively). This assumes that all other variables remain constant.
40. Fair value measurement
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation techniques:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly
Level 3: Techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assesing 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.
PG.
214 40. with thefair value hierarchy: The following tableprovides ananalysis ofassets measured and/or disclosedat fair value onarecurring basisinaccordance Fair value measurement (cont’d.) Investment property 2017 2018: NIL Assets for whichfair values Quoted unittrust fundsin Unquoted equitysecurities Quoted unittrust fundsin Unquoted debtsecuritiesin Financial assets at FVTPL: 2018 Assets measured at fair Unquoted debtsecurities in Financial assets at FVTPL: Unquoted debtsecuritiesin AFS financialassets: 2017 Group are disclosed: Malaysia in theUnited Kingdom Malaysia Malaysia value: Malaysia Malaysia 31 December 2018 31 December 2018 31 December 2018 31 December 2017 31 December 2017 31 December 2017 31 December 2017 Date ofvaluation
RM’000 (Level 1) Quoted 481,581 481,581 500,211 500,211 market price Valuation technique using - - - - - Observable For thefinancial year ended 31December 2018 RM’000 (Level 2) 135,576 135,576 169,518 169,518 10,008 inputs - - - - observable RM’000 (Level 3) inputs 2,850 2,673 2,673 Un- Financial Statements ------Notes to the RM’000 635,787 635,787 653,772 481,581 135,576 500,211 169,518 10,008 2,850 2,673 Total 215 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
40. Fair value measurement (cont’d.)
The following table provides an analysis of assets measured and/or disclosed at fair value on a recurring basis in accordance with the fair value hierarchy: (cont’d.)
Valuation technique using Quoted Un- market Observable observable price inputs inputs (Level 1) (Level 2) (Level 3) Total Company Date of valuation RM’000 RM’000 RM’000 RM’000
Assets measured at fair value:
2018
Financial assets at FVTPL: Quoted unit trust funds in Malaysia 31 December 2018 60,169 - - 60,169
2017
Financial assets at FVTPL: Quoted unit trust funds in Malaysia 31 December 2017 63,768 - - 63,768
There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the current and previous financial year. There were also no transfers in and out of Level 3 of the fair value hierarchy. The only movement involving Level 3 of the fair value hierarchy relates to the acquisition of unquoted equity of RM2,673,000 which is disclosed in Note 10(c).
Determination of fair value and fair value hierarchy
The fair values of the Group’s and the Company’s assets which are carried at fair value or for which fair value is disclosed, are determined as follows:
(i) The fair values of unquoted corporate bonds are determined by reference to Bond Pricing Agency Malaysia.
(ii) The fair value of investment in unit trust funds is determined by reference to published net asset values.
(iii) The fair value of investment property in the previous year was estimated by an accredited independent valuers based on the market comparison approach method.
(iv) The fair value of an investment in unquoted equity securities is determined using the recent transaction price on acquisition.
PG.
216 41. segment transactions have beenentered into inthenormalcourse ofbusiness basedonnegotiated andmutualterms. investment schemes,general reinsurance andgeneral insurance business. The Directors are oftheopinionthat allinter- The Group isorganised into four majorbusiness segments,investment holdingandothers,fundsmanagedthrough collective Segmental information Results Inter-segment External Operating revenue For theyear ended
losses Realised gains and Investment income Net earnedpremiums reinsurers Premiums ceded to Gross earnedpremiums 31 December 2018 Other revenue income Other operating income Fees andcommission losses Fair value gainsand holdingand Investment RM’000 48,023 39,612 others 41,881 41,881 2,269 5,816 (189) 515 - - - - investment Collective schemes RM’000 6,850 6,850 6,850 7,826 839 135 - - - - - 2 reinsurance business RM’000 General 119,442 116,299 115,435 48,234 71,208 71,208 4,950 3,143 (864) (338) 1,331 814 - insurance (288,949) business 468,945 For thefinancial year ended 31December 2018 485,795 RM’000 492,016 179,996 General 60,983 23,071 2,380 87,551 6,221 964 153 Adjustments eliminations RM’000 (48,234) (45,833) (94,067) (94,067) (67,544) 48,234 (14,531) (5,562) (1,141) (477) and Financial Statements - - Consolidated Notes to the (241,579) RM’000 295,431 537,010 566,122 566,122 46,452 80,806 29,112 2,551 1,551 1,140 - 217 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
41. Segmental information (cont’d.)
Investment Collective General General Adjustments holding and investment reinsurance insurance and others schemes business business eliminations Consolidated RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
For the year ended 31 December 2018 (cont’d.)
Results (cont’d.) Gross claims paid - - (5,293) (201,897) 3,549 (203,641) Claims ceded to reinsurers - - - 93,150 (3,549) 89,601 Gross changes to contract liabilities - - (112) (172,901) (349) (173,362) Change in contract liabilities ceded to reinsurers - - - 186,070 349 186,419 Net claims - - (5,405) (95,578) - (100,983)
Fee and commission expense - - (40,679) (62,746) 14,531 (88,894) Management expenses (23,046) (460) (30,419) (85,864) 5,147 (134,642) Other operating expenses (450) - (1,039) (31) 5 (1,515) Other expenses (23,496) (460) (72,137) (148,641) 19,683 (225,051)
Share of results of an associate - - - - 2,552 2,552 Share of results of a joint venture company - - - - 2,315 2,315 Profit before taxation 24,526 7,366 42,843 23,328 (42,994) 55,070 Taxation (101) - (33) (2,242) 224 (2,152) Net profit for the year 24,425 7,366 42,810 21,086 (42,770) 52,918
PG.
218 41. Segmental information (cont’d.)
Netclaims Changeincontract Gross changesto Claimsceded to Gross claimspaid Results Inter-segment External Operating revenue For theyear ended Other revenue income Other operating income Fees andcommission losses Fair value gainsand Investment income reinsurers liabilities ceded to contract liabilities reinsurers losses Realised gains and Net earnedpremiums reinsurers Premiums ceded to Gross earnedpremiums 31 December 2017 holdingand Investment RM’000 60,364 55,307 55,307 others 52,817 2,490 5,282 (557) 332 ------investment Collective schemes RM’000 7,985 7,333 7,333 7,333 642 10 ------reinsurance business RM’000 General 106,970 105,885 109,761 49,870 49,870 (6,348) 59,891 (1,085) 3,469 (2,173) 4,072 1,099 2,791 (393) 300 836 145 - insurance (242,739) business (138,544) For thefinancial year ended 31December 2018 (182,842) RM’000 472,884 477,486 General 215,445 458,184 (53,841) 63,258 82,882 57,569 19,302 34,881 4,602 2,016 3,113 882 Adjustments eliminations (107,289) (107,289) RM’000 (49,870) (82,750) (16,892) 49,870 49,870 (57,419) (4,876) (3,027) (2,237) (1,566) (1,326) 3,027 1,566 and Financial Statements - - - Consolidated Notes to the (193,954) RM’000 542,598 542,598 (140,717) (186,163) 321,330 515,284 (51,938) 36,054 40,677 72,553 61,330 27,314 2,124 1,518 920 - 219 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
41. Segmental information (cont’d.)
Investment Collective General General Adjustments holding and investment reinsurance insurance and others schemes business business eliminations Consolidated RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
For the year ended 31 December 2017 (cont’d.)
Results (cont’d.) Fee and commission expense - - (37,927) (59,467) 16,892 (80,502) Management expenses (25,363) (1,639) (24,343) (74,336) 4,252 (121,429) Other operating expenses (47) - (2,325) (462) 3 (2,831) Other expenses (25,410) (1,639) (64,595) (134,265) 21,147 (204,762)
Share of results of an associate - - - - 3,504 3,504 Share of results of a joint venture company - - - - 996 996 Profit before taxation 34,954 6,346 43,189 25,518 (57,103) 52,904 Taxation (71) (116) (34) (2,810) 150 (2,881) Net profit for the year 34,883 6,230 43,155 22,708 (56,953) 50,023
PG.
220 41. Segmental information (cont’d.) Retained earnings Total equity Non-controlling interests Equity attributable to Other reserve OCI reserve Foreign currency Employee share option Share capital Equity Total assets Cash andbankbalances Other receivables Insurance receivables Reinsurance assets Deferred taxassets Investments Goodwill Investment inajoint Investments inan Investment insubsidiaries Intangible assets Property andequipment Assets As at 31December 2018 owners oftheparent translation reserve reserves venture company associate holdingand Investment 293,445 293,445 180,908 RM’000 296,025 256,351 40,955 62,842 33,088 others 4,006 1,500 6,052 2,656 433 679 679 ------investment Collective schemes 160,303 RM’000 160,234 160,234 160,094 156,357 3,877 209 ------reinsurance business RM’000 General 114,445 158,785 122,698 132,698 132,698 10,000 42,525 1,392 109 161 60 93 ------insurance business 452,340 1,193,582 For thefinancial year ended 31December 2018 RM’000 103,348 General 512,892 281,969 281,969 125,249 178,621 92,836 4,304 1,705 2,971 1,285 ------Adjustments eliminations (180,908) (160,234) (277,537) (302,638) (293,657) RM’000 (341,271) 17,650 24,165 (71,170) (9,039) 47,614 (1,248) 3,705 2,746 7,157 (461) 540 446 124 155 and Financial Statements - - Consolidated Notes to the 1,506,057 RM’000 690,039 248,519 158,735 574,689 451,939 527,075 58,605 267,114 24,165 4,006 97,801 47,614 3,838 7,228 7,838 4,138 7,157 1,731 124 155 - 221 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
41. Segmental information (cont’d.)
Investment Collective General General Adjustments holding and investment reinsurance insurance and others schemes business business eliminations Consolidated RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
As at 31 December 2018 (cont’d.)
Liabilities Insurance contract liabilities - - 11,751 761,263 (459) 772,555 Deferred tax liabilities - - - - 1,249 1,249 Insurance payables - - 1,679 119,243 (9,041) 111,881 Retirement benefits - - - 573 - 573 Other payables 2,580 69 12,657 30,534 (730) 45,110 Total liabilities 2,580 69 26,087 911,613 (8,981) 931,368
Total equity and liabilities 296,025 160,303 158,785 1,193,582 (302,638) 1,506,057
As at 31 December 2017
Assets Property and equipment 733 - 116 4,795 2,765 8,409 Investment property - - - 2,389 510 2,899 Intangible assets 423 - 111 1,398 934 2,866 Investment in subsidiaries 174,760 - 641 - (175,401) - Investments in an associate 40,955 - - - 14,516 55,471 Investment in a joint venture company 433 - - - 2,409 2,842 Goodwill - - - - 24,165 24,165 Investments 63,768 144,664 109,027 534,775 (144,721) 707,513 Deferred tax assets - - - 1,245 - 1,245 Reinsurance assets - - 68 268,813 (625) 268,256 Insurance receivables - - 34,933 104,582 (8,970) 130,545 Other receivables 6,749 - 1,016 103,112 (5,296) 105,581 Cash and bank balances 681 218 2,079 4,475 - 7,453 Total assets 288,502 144,882 147,991 1,025,584 (289,714) 1,317,245
PG.
222 41. Segmental information (cont’d.) Equity attributable to Total equityand Total liabilities Other payables Retirement benefits Insurance payables Deferred taxliabilities Insurance contract Liabilities Total equity Non-controlling interests Retained earnings Foreign currency Share capital Equity As at 31December 2017 Employee share option Other reserve Available-for-sale owners oftheparent liabilities liabilities translation reserve (cont’d.) reserves reserves holdingand Investment 285,806 285,806 249,469 249,469 RM’000 288,502 others 31,339 4,998 2,696 2,696 ------investment Collective schemes RM’000 144,720 144,720 144,882 141,984 2,736 162 162 ------reinsurance business RM’000 General 122,313 147,991 122,313 25,678 111,584 13,455 10,729 11,319 904 ------insurance 1,025,584 business For thefinancial year ended 31December 2018 606,526 RM’000 General 753,583 103,348 272,001 272,001 168,647 107,392 38,445 482 738 6 - - - - Adjustments eliminations (275,763) (289,714) (321,826) RM’000 (257,011) (67,543) 46,063 (13,951) (8,970) (5,384) (4,104) 6,716 1,027 (624) and Financial Statements 116 - - Consolidated Notes to the 1,317,245 RM’000 549,077 246,763 503,014 248,519 768,168 46,063 99,326 (4,098) 49,374 617,221 4,998 1,509 6,716 738 116 223 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
42. Capital management
The Group’s capital management objective is to ensure that the Group creates value for its shareholders while minimising the potential adverse effects on the performance of the Group.
The Group manages its capital structure, and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the financial years 31 December 2018 and 2017.
The Company is not subject to any externally imposed capital requirements.
The Labuan subsidiaries are required to comply with the capital requirements stipulated under the Guidelines on application for License - Insurance and Insurance Related Activities (“the Guideline”), as issued by the Labuan Financial Services Authority. Similarly, TIMB is required to meet the minimum capital adequacy requirements as prescribed by the RBC Framework. The status of compliance of the subsidiaries with the Guideline and RBC Framework above are disclosed in Note 35.
43. Significant and subsequent events
(a) Update to the Malaysian Competition Commisssion (“MyCC”)’s Proposed Decision against PIAM and its 22 members
On 22 February 2017, the general insurance subsidiary, Tune Insurance Malaysia Berhad (“TIMB”), received a notice from the Malaysia Competition Commission (“MyCC”) concerning a proposed preliminary decision (“Proposed Decision”) which found that TIMB and 21 other general insurance companies in Malaysia who are members of the General Insurance Association of Malaysia (“PIAM”) had purportedly infringed one of the prohibitions under the Competitions Act 2010 (“CA”) in Malaysia.
The Proposed Decision by MyCC is pursuant to the investigation outcome in respect of the agreement entered into between PIAM and the Federation of Automobile Workshop Owners’ Association of Malaysia (“FAWOAM”) concerning the trade discount rates applicable to automobile parts for certain types of vehicles and agreed labour rates for PIAM Approved Repairer’s Scheme workshops. On the directive of Bank Negara Malaysia, PIAM engaged with FAWOAM to resolve the issues concerning parts trade discounts and the hourly labour rates and subsequently approved the agreed rates via the issuance of a PIAM members’ circular which was subsequently adopted by PIAM members including TIMB.
The Proposed Decision suggests a financial penalty of RM3,608,530 on the part of TIMB and a consolidated amount of RM213,454,814 on all the 22 members of PIAM. The Proposed Decision is not conclusive as PIAM members have been given the opportunity to make its written representations with the MyCC to defend its positions. On 5 April 2017, TIMB filed its written representations with the MyCC to defend its position. On 29 January 2018, TIMB, represented by its legal counsels made its oral representations to the MyCC to further fortify its written representations.
On 8 November 2018, the legal counsel of PIAM requested for a new oral hearing so as to provide further clarification that the new Chairman of MyCC may have prior to the finalisation of any decisions.
On 21 February 2019, the counsel for PIAM made their oral representations to the MyCC Commissioners and it was treated as a de novo hearing, i.e. fresh hearing from the beginning. All previous submissions of counsels of the insurers were allowed to be adopted and will form part of the record of evidence. This matter is fixed for further oral representations on 13 and 14 May 2019 and 17 and 18 June 2019. TIMB’s legal counsel will be making their representations during the June 2019 session.
TIMB in consultation with its legal counsel, will take all necessary and appropriate actions to defend its position that it has not infringed Section 4(2) of the CA and at all times maintain that TIMB acted in accordance with the directives issued.
PG. As at the authorisation date of the financial statements, there have been no further developments on this matter. 224 43.
(c) (b) Significant andsubsequentevents (cont’d.) matter isnow fixed for casemanagementon3April2019 inMalaysia to enabletheDefendant to enter anappearance. TIMB to proceed withtheservice ofNotice ofWrit to beserved outofjurisdictionto theReinsurer inHongKong. The the non-disputed balances ofRM2,822,000 from theReinsurer. On19February 2019, theHighCourt granted leave to On 29January2019, awritofsummonwas filedwiththeHighCourt ofMalaya, Kuala Lumpur(“HighCourt”)to recover amounted to RM9,427,000 ofwhichRM4,016,000 hasbeenimpaired asdisclosedinNote 12. Reinsurance Contract through itsappointed solicitors. Asat 31December 2018, theamountowed by theReinsurer EWP. Accordingly, TIMBhascommenced legalactionto recover certain amountsowed by theReinsurer underthe models ofvehicles. The Reinsurer hadfailed to remit theirshare ofpayment for claimspaidby TIMBunderthe TIMB isthereinsured underaReinsurance Contract for anExtended Warranty Programme for various (“EWP”) On-going litigation withaforeign reinsurer Reinsurer”) (“the at theHighCourt. penalties inthefinancialstatements for theyear ended31December 2018, pendingfurtherdevelopments ofthecase Accordingly, TIMBandtheGroup have notrecognised any liabilityinrespect ofthedisputed additionaltaxand of payment oftheadditionaltaxandpenaltiesto LHDN. and thehearinghasbeenscheduledfor 23May 2019. At thesametime, theHighCourt alsogranted astay inrespect against LHDN’s assessments. The High Court had,on18February 2019, granted TIMBleave to proceed withthecase On 11January2019, TIMBfiledanAffidavit to theHighCourt ofMalaya (“HighCourt”)to applyfor ajudicialreview engaged taxsolicitors to assist inchallengingthesaiddisputed additionaltaxandpenaltiesimposedby theLHDN. by the LHDN, RM10.7 miilion, being the disputed additional tax and penalties, is open to challenge and has hence, TIMB isoftheview given legaladvice received that outoftheRM11.1 millionofadditionaltaxes andpenaltieslevied taxes andpenaltieswas soughtby theLHDN. Negeri (“LHDN”) in respect of Years of Assessment (“YA”) 2013 to 2015, wherein a sum of RM11.1 million of additional On 20December 2018, TIMBreceived Notices ofAdditional Assessment (Form JA) from theLembaga HasilDalam Tax dispute withtheLembaga HasilDalamNegeri(“LHDN”) For thefinancial year ended 31December 2018 Financial Statements Notes to the 225 PG. Annual Report 2018 Protection Made Easy Notes to the Financial Statements For the financial year ended 31 December 2018
43. Significant and subsequent events (cont’d.)
(d) Member’s voluntary winding-up and dissolution of a wholly owned subsidiary, Tune Insurance PCC Ltd (“TIPCCL”)
Tune Insurance PCC Ltd (“TIPCCL”) surrendered its Labuan captive insurance licence with effect from 3 October 2016. On 30 April 2017, TIPCCL was placed under Members’ Voluntary Winding-up pursuant to the provision of Section 131(1) of Labuan Companies Act, 1990 applying Section 439(1)(b) of the Companies Act, 2016.
During the year, TIPCCL received confirmation from the Labuan Financial Services Authority (“LFSA”) that the winding- up of TIPCCL had been completed and that TIPCCL had been officially dissolved on 12 July 2018.
As a result of the dissolution of TIPCCL, a loss of RM10,000 was recognised in the profit or loss of the Group as disclosed in Note 24.
(e) Subscription of redeemable preference shares
On 12 June 2018, the Company subscribed to 700,000 Redeemable Preference Shares in Tune Direct Ltd, a wholly- owned subsidiary of the Company, for a total cash consideration of USD700,000 (equivalent to RM2,788,000), for the purpose of investments as disclosed in Note 43(g).
(f) Subscription of ordinary shares
(i) Tune Direct Ltd.
On 3 December 2018, the Company subscribed to 400,000 Ordinary Shares in Tune Direct Ltd. a wholly-owned subsidiary of the Company, for a total cash consideration of USD400,000 (equivalent to RM1,664,800), for the purpose of working capital.
(ii) Tune Direct (M) Sdn. Bhd.
On 3 December 2018, the Group via its wholly-owned subsidiary, Tune Direct Ltd., subscribed to 1,700,000 Ordinary Shares in Tune Direct (M) Sdn. Bhd., for a total cash consideration of RM1,700,000, for the purpose of financing the development of digital assets.
(g) Subscription of equity interest in Laka Ltd.
The Group via its wholly-owned subsidiary, Tune Direct Ltd, had on 19 June 2018, acquired a 9.99% equity interest in Laka Ltd, for a cash consideration of an aggregate subscription price of GBP499,478 (equivalent to RM2,673,000). Laka Ltd is involved in the business of insurtech.
PG.
226 DISTRIBUTION OFSHAREHOLDINGS Voting Rights Class ofShares Number ofIssued Shares SHARE CAPITAL (i) Note: related corporations basedontheCompany’s Register ofDirectors’ Shareholdings are asfollows: The interests oftheDirectors andCEOofTune Protect Group intheShares andoptionsover shares intheCompany andits DIRECTORS’ ANDCEO’SSHAREHOLDINGS 4. 3. 2. 1. Directors No. Size ofHoldings 1. Chief Executive Officer 10,001 –100,000 100 –1,000 Less than100 Total 5% andabove ofissued shares 100,001 –to less than5%ofissued shares 1,001 –10,000 shares). Indirect interest is by virtue of the shareholders’ interest in Tune Group Sdn. Bhd. (118,563,150 shares) and AirAsia Berhad (102,609,000 Tan Ming-Li Mohamed RashdibinGhazalli Datuk Kamarudin binMeranun Ng SoonLai@SiekChuan Name Khoo AiLin : : : One vote perordinary share Ordinary Shares 751,759,980 Shares held Shareholders 100,000 81,900 No. of Direct 10,682 No. of 5,627 3,352 - - - 1,103 493 103 4 0.01 0.01 % - - - 100.00 52.68 Shares held 10.33 31.38 0.04 0.96 4.62 221,172,150 % No. of Indirect 333,096,034 751,759,980 276,465,523 110,192,837 - - - - ofShares 31,173,170 of Shareholdings 831,039 29.42 1,377 No. as at 29March 2019 % - - - - Analysis 100.00 36.78 44.31 14.65 Note 0.00 4.14 0.11 % (i) - - - -
227 PG. Annual Report 2018 Protection Made Easy Analysis of Shareholdings as at 29 March 2019
SUBSTANTIAL SHAREHOLDERS
Direct Indirect No. of No. of No. Name of shareholders Shares held % Shares held % Notes
1. AirAsia Berhad 102,609,000 13.65 - - - 2. Tan Sri Anthony Francis Fernandes 100,000 0.01 221,172,150 29.42 (i) 3. Datuk Kamarudin bin Meranun 81,900 0.01 221,172,150 29.42 (i) 4. CIMB SI II Sdn. Bhd. 70,679,123 9.40 - - - 5. Tune Group Sdn. Bhd. 118,563,150 15.77 - - - 6. Kumpulan Wang Persaraan (Diperbadankan) 59,177,400 7.87 2,204,600 0.30 (ii) 7. CIMB Group Sdn. Bhd. - - 70,679,123 9.40 (iii) 8. CIMB Group Holdings Berhad - - 70,679,123 9.40 (iii) 9. River and Mercantile Asset Management LLP 44,254,300 5.89 - - -
Notes:
(i) Deemed interested by virtue of the shareholders’ interest in Tune Group Sdn. Bhd. (118,563,150 shares) and AirAsia Berhad (102,609,000 shares). (ii) Held though fund manager. (iii) Deemed interested by virtue of the shareholders’ interest in CIMB SI II Sdn. Bhd.
THIRTY LARGEST SECURITIES HOLDERS
No. Registered Holders No. of Shares % of Shares
1. AirAsia Berhad 102,609,000 13.65 2. CIMB SI II Sdn Bhd 70,679,123 9.40 3. Kumpulan Wang Persaraan (Diperbadankan) 59,177,400 7.87 4. CIMB Group Nominees (Tempatan) Sdn Bhd 44,000,000 5.85 – Pledged Securities Account for Tune Group Sdn Bhd (GCM CBM-SKY X) 5. Kenanga Nominees (Tempatan) Sdn Bhd 37,532,934 4.99 – ECM Libra Partners Sdn Bhd Pledged Securities Account for Tune Group Sdn Bhd 6. RHB Capital Nominees (Tempatan) Sdn Bhd 30,076,000 4.00 – RHB Islamic Bank Berhad Pledged Securities Account for Tune Group Sdn Bhd 7. HSBC Nominees (Asing) Sdn Bhd 16,267,700 2.16 – TNTC for Towers Watson Common Contractual Fund 8. Citigroup Nominees (Asing) Sdn Bhd 10,945,400 1.46 – Exempt an for Merrill Lynch International (Prime Broker) 9. DB (Malaysia) Nominee (Asing) Sdn Bhd 10,223,700 1.36 – BNYM SA/NV for Ramam World Recovery Fund 10. HSBC Nominees (Asing) Sdn Bhd 8,163,700 1.09 – JPMCB NA for the National Farmers Union Mutual Insurance Society Ltd
PG.
228 THIRTY LARGEST SECURITIESHOLDERS(CONT’D.) No. 30. 20. 26. 24. 29. 28. 23. 25. 22. 27. 14. 16. 19. 18. 13. 15. 12. 21. 17. 11. Public Strategic– Public SmallcapFund Amanahraya Trustees Berhad – Maybank Private Wealth Managementfor LimKianOnn(PW-M00543)(415941) Maybank Nominees(Tempatan) SdnBhd – Citigroup Nominees(Asing)SdnBhd – Exempt anfor Credit Suisse Securities(Europe) Limited (CLTAC N-Treaty) HSBC Nominees(Asing)SdnBhd – BNYMSA/NV for NFUMutualGlobalDeveloping Markets Fund DB (Malaysia) Nominee(Asing)SdnBhd – JPMCBNAfor Westpac Wholesale UnhedgedInternational Share Trust HSBC Nominees(Asing)SdnBhd OrientalIncome – State Street Luxembourg FundAD69 for AllianzGlobalInvestors Fund–Allianz DB (Malaysia) Nominee(Asing)SdnBhd – NTGS Luxfor Uninvest HSBC Nominees(Asing)SdnBhd – Exempt anfor BankJuliusBaer&Co. Ltd (Singapore Bch) HSBC Nominees(Asing)SdnBhd – PledgedSecuritiesAccount for Tune Group SdnBhd(EDG&GCM) Cimsec Nominees(Tempatan) SdnBhd – Tune Group SdnBhd(ECMLibra Partn) Kenanga Nominees(Tempatan) SdnBhd – BPSS FFTfor Allianzgi-Fonds Ranw II HSBC Nominees(Asing)SdnBhd – CBNYfor DFA Emerging Markets SmallCapSeries Citigroup Nominees(Asing) SdnBhd Ding HuongKai – HSBC(M)Trustee Bhdfor RHBSmallCapOpportunityUnitTrust HSBC Nominees(Tempatan) SdnBhd – JPMCBNAfor WSSP International Equities Trust HSBC Nominees(Asing)SdnBhd – TNTC for theHealth Foundation HSBC Nominees(Asing)SdnBhd – DB (Malaysia) Nominee(Asing)SdnBhd – Employees Provident FundBoard (Pheim) Citigroup Nominees(Tempatan) SdnBhd – ChuaEngHoWa’A @Chua EngWah Maybank Nominees(Tempatan) SdnBhd Registered Holders CBNYfor Emerging Market Core Equity Portfolio DFA Investment DimensionsGroup Inc BNYM SA/NV for River andMercantile FundsICVC-River andMercantile GlobalHighAlpha No. ofShares 4,000,000 5,000,000 3,400,000 4,002,000 3,480,000 2,050,000 2,704,000 4,405,700 3,750,000 5,588,200 2,298,500 5,431,000 2,781,000 3,721,000 3,148,200 2,584,100 3,132,600 2,317,900 7,179,200 2,112,800 As at 29March 2019 of Shareholdings % ofShares Analysis 0.50 0.46 0.49 0.45 0.34 0.42 0.42 0.95 0.59 0.36 0.67 0.28 0.53 0.53 0.37 0.27 0.74 0.72 0.31 0.31
229 PG. Annual Report 2018 Protection Made Easy List of Branches and Overseas Ventures
TUNE PROTECT MALAYSIA’S BRANCHES
1. Kuala Lumpur, Malaysia (Head Office) 6. Alor Setar Level 9, Wisma Tune, No. 2174-T Taman Tunku Habsah, 19, Lorong Dungun, 05100 Alor Setar, Kedah Darul Aman Damansara Heights, Phone : +604 730 7988 50490, Kuala Lumpur +604 732 7987 Toll-Free No. : 1 800 885 753 Fax : +604 732 7989 Phone : +603 2087 9000 Mobile : +6019 4168 088 Fax : +603 2094 1366 Email : [email protected] 7. Ipoh Website : www.tuneprotect.com/my Ground & 1st Floor, No. 52, Jalan Medan Istana, 2. Shah Alam Bandar Ipoh Raya, No.57, Ground Floor & 1st Floor, 30000 Ipoh, Perak Darul Ridzuan Jalan Snuker 13/28, Seksyen 13, Phone : +605 254 3305 / 254 1239 40100 Shah Alam, Selangor Darul Ehsan Fax : +605 254 6789 Phone : +603 5510 3667 Mobile : +6012 521 1197 +603 5510 3730 Fax : +603 5513 5801 8. Melaka Mobile : +6016 220 9448 No 529 & 530, Ground Floor, Taman Melaka Raya, 3. Puchong 75000 Melaka No. 12, Jalan Puteri 2/6, Phone : +606 284 2828 Bandar Puteri, +606 283 3109 47000 Puchong, Selangor Darul Ehsan +606 281 2753 Phone : +603 8063 5416 / 8063 5277 Fax : +606 283 5110 Fax : +603 8063 5419 Mobile : +6012 623 9176 Mobile : +6018 915 2836 9. Johor Bahru 4. Penang Unit 22-02 Level 22, Menara Zurich, No. 29-G, 29-1, 29-2 Persiaran Bayan Indah, 15 Jalan Dato Abdullah Tahir, Bayan Bay, 11900 Bayan Lepas, Penang 80300, Johor Bahru, Phone : +604 643 0288 / 641 2388 Johor Darul Takzim Fax : +604 641 1588 Phone : +607 333 1518 / 330 5603 Mobile : +6019 411 0939 Fax : +607 336 5539 Mobile : +6016 702 0268 5. Bukit Mertajam Units 2-11 & 2-12, Level 2, 10. Batu Pahat Kompleks Perniagaan Pauh Jaya @ Frontage, 1st Floor, No. 55-1, Jalan Baru, Jalan Cengal, Taman Batu Pahat, 13700 Seberang Perai, 83000 Batu Pahat, Johor Pulau Pinang Phone : +607 431 3591 / 431 3752 Phone : +604 386 6368 / 386 6828 Fax : +607 431 4779 Fax : +604 386 6578 Mobile : +6012 775 9600 Mobile : +6019 416 8088
PG.
230 15. Kuching 14. 13. 12. Kuantan 11. Kluang Mobile Fax Phone 93400 Kuching, Sarawak Jalan Tun AhmadZaidiAdruce, Kuching Town LandDistrict, Lot 579, Section10, Mobile Fax Phone 20200 Kuala Terengganu Jalan SultanSulaiman, No 888C,Lot 3886, Tingkat 1, Kuala Terengganu Mobile Fax Phone 15050 Kota Bharu,Kelantan Rumah Kedai Lembah Sireh, PT 389, Ground &1 Kota Bahru Mobile Fax Phone Pahang DarulMakmur 25000 Kuantan, Sri Dagangan,JalanTun Ismail, A109, Ground Floor, Mobile Fax Phone 86000 Kluang,JohorDarulTakzim Jalan Rambutan, No: 53, 1 st &2 nd : +6016 8603296 : +6082256045 417 343 : +6082241 266/ : +6012 248 3766 : +6096223151 +609624 5828 4828/9337 : +6096229828/ : +6012 9888171 : +609744 5414 +609748 4895 : +609748 3986 : +6016 950 3333 : +6095148970 +6095145259 : +6095131914 : +6016 772 0019 : +607 776 5473 : +607 776 5468 Floor, st Floor, 16. Miri 17. Sibu
1 19. Tawau 18. 20. Sandakan
Lot 788, 1 No. 17C,1 Mobile Fax Phone 98000 Miri,Sarawak Bintang Jaya Commercial Centre, Jalan BintangJaya 4, Mobile Fax Phone 88200 Kota Kinabalu,Sabah Jalan Aeropod, OffJalanKepayan Aeropod Commercial Square Lot D-3A-01, Parcel No:D-01, Kota Kinabalu Mobile Fax Phone 96000 Sibu,Sarawak Jalan Pedada, Mobile Fax Phone 90000 Sandakan, Sabah North Road, Bandar Indah,Mile4, Ground Floor, Lot 3,Block7 Mobile Fax Phone 91000 Tawau, Sabah Jalan ChongThien Vun, Pusat Komersil BDC(1Arena), st Floor, Lot 7, st st Floor, Floor, : +6013 5644500 : +6085438904 +6085422344 : +6085424 243 : +6016 8303213 : +6088218272 +6088218292 +6088253 120 117/257 : +6088221116/ : +6010 959 3559 : +6084353 022 : +6084353 033 : +6013 8888820 : +6089 224 790 : +6089 224 770 /780 : +6016 8214110 : +6089 763 179 +6089-763 178 : +6089 763 177 75 White Group Building1,6 Limited) (Tune Insurance Company Public TUNEPROTECT THAILAND Thailand Website Fax Phone P.O Box Business Bay, Dubai,UAE Level 8No. 807, BlueBayTower, LLC) (Tune Protect Commercial Brokerage TUNEPROTECT EMEIA Europe, MiddleEast, IndiaandAfrica OVERSEAS VENTURES Phone Klongtoey, Bangkok 10110, Thailand Rubia, Sukhumvit 42Road, Prakanong, Website Email Fax : www.tuneinsurance.co.th : : +662769 9801 /9802 /9803 : +662769 9888 : www.tuneprotect.com/emeia : +971 44203920 : +971 43606872 : 124177 [email protected] and Overseas Ventures List ofBranches th Floor, Soi 231 PG. Annual Report 2018 Protection Made Easy Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Eighth Annual General Meeting (“AGM”) of Tune Protect Group Berhad (“Tune Protect Group” or “the Company”) will be held at The Summit 2 Ballroom, Level M1, Connexion Conference & Event Centre @ The Vertical, No. 8, Jalan Kerinchi, Bangsar South City, 59200 Kuala Lumpur on Tuesday, 28 May 2019 at 10.00 a.m. for the following purposes:
AS ORDINARY BUSINESS
1. To receive the Audited Financial Statements together with the Reports of the Directors and Auditors thereon for the financial year ended 31 December 2018. Please refer to Note A.
2. To declare a final dividend comprising a single tier dividend of 3.00 sen per ordinary share in respect of the financial year ended 31 December 2018. Please refer to Note B. Resolution 1
3. To re-elect the following Directors who retire pursuant to Article 123 of the Company’s Constitution (Articles of Association): (a) Datuk Kamarudin bin Meranun Resolution 2 (b) Tan Ming-Li Resolution 3
4. To approve the payment of Directors’ fees of RM879,000 to the Non-Executive Directors of the Company from the date of the forthcoming AGM until the conclusion of the next AGM of the Company. Please refer to Note C. Resolution 4
5. To approve the payment of Directors’ benefits as described in Note D to the Non-Executive Directors of the Company from the date of the forthcoming AGM until the conclusion of the next AGM of the Company. Please refer to Note D. Resolution 5
6. To re-appoint Messrs. Ernst & Young as Auditors of the Company and to authorise the Directors to fix their remuneration. Resolution 6
AS SPECIAL BUSINESS
To consider and if thought fit, to pass with or without modifications, the following Resolutions:
7. ORDINARY RESOLUTION AUTHORITY TO ALLOT SHARES PURSUANT TO SECTIONS 75 AND 76 OF THE COMPANIES ACT, 2016
“THAT pursuant to Sections 75 and 76 of the Companies Act, 2016 and subject to the approval of relevant authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, at any time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this resolution during the preceding 12 months does not exceed ten per centum (10%) of the total number of issued shares (excluding treasury shares) of the Company for the time being and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad (“Bursa Malaysia”); AND THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next AGM is required to be held after the approval was given, whichever is earlier unless revoked or varied by an ordinary PG. resolution of the Company in accordance with Section 76 of the Companies Act, 2016.” 232 Please refer to Note E. Resolution 7 8.
(a) (b) the following: in Section2.4oftheCircular to Shareholders dated subjectfurtherto 29April2019 (“Circular”), operations oftheCompany and/or itssubsidiaries (“RRPTs”) withtherelated partiesassetout party transactions ofarevenue ortrading nature andwhichare necessary for theday-to-day Company anditssubsidiarycompanies shallbemandated to enter into suchrecurrent related “THAT subjectto theMainMarket Listing Requirements (“MMLR”)ofBursaMalaysia, the NATURE MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING PROPOSED NEWSHAREHOLDERS’MANDATE ANDRENEWAL OFEXISTING SHAREHOLDERS’ ORDINARY RESOLUTION (c) RRPTs contemplated and/or authorisedby thisOrdinary Resolution. Company in their discretion deem fit, necessary, expedient, finalise and give full effect to the transactions, deeds,agreements, arrangements and/or undertakings theDirectors ofthe to complete anddoallsuchacts and thingstake allsuch steps andto execute allsuch THAT theDirectors ofthe Company and/or any oneofthem be andare hereby authorised whichever istheearliest. (iv) (iii) (ii) (i) theRRPTs are entered into intheordinary course ofbusiness whichare: (ii) (i) the following information: RRPTs conducted pursuantto theshareholders’ mandate duringthefinancialyear basedon disclosure ismadeintheannual report ofthebreakdown oftheaggregate value ofthe (i) only continue to beinfullforce until: the shareholders’ mandate is subject to annual renewal andthisshareholders’ mandate shall (iii) (ii)
not to thedetrimentofminorityshareholders oftheCompany; undertaken onarm’s lengthbasis;and related partiesthanthosegenerally available to thepublic; on normalcommercial terms andtransaction price whichare notmore favourable to the necessary for theday-to-day operations;
relationship withtheCompany. the names of the related parties involved in each type of the RRPT made and their the typeofRRPTs made;and 2016; or such extension asmay beallowed pursuantto Section340(4)oftheCompanies Act, held pursuantto Section 340(2)oftheCompanies Act, 2016 (but shallnotextend to the expiration of the period within which the next AGM after the date is required to be resolution passed at thenext AGM, suchauthorityisrenewed; shareholders’ mandate isapproved, at whichtimeitwilllapse, unless by anordinary the conclusion ofthenext AGM oftheCompany following theAGM at whichthis in ageneral meeting, revoked orvaried by ordinary resolution passed by theshareholders oftheCompany Annual General Meeting Notice of
233 PG. Annual Report 2018 Protection Made Easy Notice of Annual General Meeting
AND THAT as the estimates given for the RRPTs specified in Section 2.4 of the Circular being provisional in nature, the Directors of the Company and/or any one of them be and are hereby authorised to agree to the actual amount or amounts thereof provided always that such amount or amounts comply with the procedures set out in Section 2.7 of the Circular.” Please refer to Note F. Resolution 8
9. ORDINARY RESOLUTION AUTHORITY TO ALLOT SHARES TO KHOO AI LIN
“THAT the Directors be and are hereby authorised to allot up to 500,000 ordinary shares of (“Tune Protect Group Shares”) to Khoo Ai Lin, the Group Chief Executive Officer (“GCEO”) of the Company pursuant to her exercise of options offered to her under the Employees’ Share Option Scheme (“ESOS”) from time to time and subject always to such terms and conditions and/or any adjustments which may be made in accordance with the provisions of the By-Laws.” Please refer to Note G. Resolution 9
10. SPECIAL RESOLUTION PROPOSED ADOPTION OF A NEW CONSTITUTION OF THE COMPANY IN PLACE OF THE EXISTING MEMORANDUM AND ARTICLES OF ASSOCIATION (“PROPOSED ADOPTION”)
“THAT approval be and is hereby given for the Company to adopt the new Constitution in the form and manner as set out in Appendix II of the Circular, in place of the existing Memorandum & Articles of Association AND THAT the Board of Directors of the Company be and is hereby authorised to assent to any modifications, variations and/or amendments as may be required by the relevant authorities, and to do all acts and things and take all such steps as may be considered necessary to give full effect to the foregoing.” Please refer to Note H. Special Resolution
11. To transact any other business for which due notice shall have been given.
NOTICE OF DIVIDEND PAYMENT AND DIVIDEND ENTITLEMENT DATE
NOTICE IS ALSO HEREBY GIVEN THAT, subject to the approval of the shareholders at the Eighth AGM of the Company to be held on Tuesday, 28 May 2019 at 10.00 a.m., a final single tier dividend of 3.00 sen per ordinary share for the financial year ended 31 December 2018 will be paid on 19 June 2019 to depositors whose names appear in the Record of Depositors on Tuesday, 28 May 2019. A depositor shall qualify for entitlement to the dividend only in respect of:
(a) shares transferred into the Depositor’s Securities Account before 4.00 p.m. on Tuesday, 28 May 2019, in respect of ordinary transfers; and
(b) shares bought on Bursa Malaysia on a cum entitlement basis according to the Rules of Bursa Malaysia.
By Order of the Board
KIMBERLY ONG SWEET EE LS0009852 Company Secretary
PG. Kuala Lumpur 29 April 2019 234 of theCompany at thecloseofbusiness on28May 2019. the financialyear ended31December 2018, whichifapproved, willbepaidon19June2019 to thoseshareholders ontherecord The Directors have recommended afinaldividendcomprising asingletierdividedof3.00 senperordinary share inrespect of Note B shareholders for voting. a formal approval oftheshareholders for the Audited FinancialStatements. Hence, thisAgenda item isnotputforward to This Agenda ismeantfor discussion onlyastheprovisions ofSection340(1)(a)theCompanies Act, 2016 doesnotrequire Note A EXPLANATORY NOTES: 7) 6) 5) 4) 3) 2) 1) NOTES ONAPPOINTMENTOFPROXY: way ofpoll. toPursuant Paragraph 8.29A(1)oftheMMLRBursaMalaysia, allresolutions setoutinthisNotice shallbeputto vote by the exempt authorisednomineemay appointinrespect ofeachomnibusaccount itholds. multiple beneficialowners is one(1)securitiesaccount (“omnibus account”), there isnolimit to thenumberofproxies which Where amemberoftheCompany isanexempt authorisednomineewhichholdsordinary shares intheCompany for shareholdings to berepresented by eachproxy. Where amemberappointstwo proxies, theappointmentshallbeinvalid unless hespecifiestheproportion ofhis either underitscommon sealorunderthehandofanofficer orattorney dulyauthorised. The Proxy Form inthecaseofanindividualshallbesignedby theappointor orhisattorney, andinthecaseofa corporation, proxy are notacceptable. hours before the time set for holding the AGM or any adjournment thereof. 19, Lorong Dungun,Damansara Heights, 50490 Kuala Lumpur, Wilayah Persekutuan, Malaysia notless thanforty-eight (48) The instrument appointingaproxy(ies) must bedeposited at theRegistered Office oftheCompany at Level 9, Wisma Tune, attend andvote inhisstead. There shallbenorestriction asto thequalification oftheproxy(ies). in the case of a corporation, to appoint a representative) (in accordance withSection333 of the Companies Act, 2016), to A memberoftheCompany entitledto attend andvote at theAGM isentitledto appointnotmore thantwo (2)proxies (or disregarded indetermining therightsofany personto attend andvote at theMeeting. in his/herstead. Any changesintheentriesonRecord ofDepositors after theabovementioned date andtimeshallbe (“General MeetingRecord ofDepositors”) shallbeeligibleto attend theMeetingorappointproxy(ies) to attend and/or vote In respect ofdeposited securities,onlyadepositor whosenameappearson theRecord ofDepositors asat 20May 2019 Faxed copies of the duly executed form of Annual General Meeting Notice of
235 PG. Annual Report 2018 Protection Made Easy Notice of Annual General Meeting
Note C
Pursuant to Section 230(1) of the Companies Act, 2016 requires that the fees of the Directors and any benefits payable to the Directors be approved at the general meeting. The details of the Directors’ fees are as follows:
No. of Members + Additional to Per Non-Executive be appointed Director/ Non-Executive Director during Per Other Committee Total Amount Board and Board Chairman (RM) the year Member (RM) (RM) Committees (a) (b) (b)*members fee=(c) (a)+(c) Board of Directors 101,000 5 5 * 78,000 = 390,000 491,000 Audit Committee 28,000 3 3 * 23,000 = 69,000 97,000 Risk Management Committee 28,000 3 3 * 23,000 = 69,000 97,000 Nomination Committee 11,000 3 3 * 9,000 = 27,000 38,000 Remuneration Committee 11,000 3 3 * 9,000 = 27,000 38,000 Investment Committee 44,000 2 2 * 37,000 = 74,000 118,000 Total 223,000 879,000
Note D
Pursuant to Section 230(1) of the Companies Act, 2016 requires that the fees of the Directors and any benefits payable to the Directors be approved at the general meeting. The Company is requesting shareholders’ approval for the payment of Directors’ benefits to the Non-Executive Directors from the date of the forthcoming AGM until the conclusion of the next AGM of the Company in accordance with the remuneration structure set out below:
(a) Meeting Allowance of RM2,500 (same meeting allowance benefit amount as per previous year) per attendance per Board of Director and per Board Committee
No. of Members + Additional to be appointed Estimated Meeting Allowance Estimated Director No. of (“MA”) of RM2,500 Total Amount during the year Meetings held per attendance of Meeting (a) (b) (a)*(b)*MA Allowance (RM)
Board of Directors 6 11 6 * 11 * 2,500 165,000 Audit Committee 4 8 4 * 8 * 2,500 80,000 Risk Management Committee 4 8 4 * 8 * 2,500 80,000 Nomination Committee 4 5 4 * 5 * 2,500 50,000 Remuneration Committee 4 5 4 * 5 * 2,500 50,000 Investment Committee 3 7 3 * 7 * 2,500 52,500 Total 477,500
(b) Hospitalisation & Surgical (“H&S”)
Overall annual limit for H&S benefit for each director is up to RM150,000.
PG.
236 (iii) (ii) (i) By appointingaproxy(ies) and/or representative(s) for theAGM, amemberoftheCompany hereby: Personal data privacy: the Constitution inlinewiththeCompanies Act, 2016 andtheMMLRofBursaMalaysia. The Company isproposing anew Constitution to replace itsexisting Memorandum andArticlesofAssociation inorder to bring Note H pursuant to theexercise oftheOptionsunderESOS hasbeenobtainedfrom theBursaMalaysia on8January2013. up share capitalofourCompany duringthesubsistence oftheESOS. The approval for thelisting ofthenew shares to beissued eligible employees of our Group to subscribe for new shares, not exceeding in aggregate 10% of the enlarged issued and paid- with ourlisting ontheMainMarket ofBursaMalaysia on20February 2013. The ESOS was established for thegrant ofOptionsto Khoo AiLin,theGCEOofCompany. The ESOS which cameinto effect on20February 2013 was established inconjunction The proposed Ordinary Resolution 9isto seekauthorityfor theDirectors to allotnew shares intheCompany undertheESOS to Note G together withtheNotice ofAGM andProxy Form for more details. to the Recurrent Related Party Transactions of A Revenue or Trading Nature Circular dated 29 April2019 which is despatched Company unless authorityfor therenewal isobtainedfrom theshareholders oftheCompany at ageneral meeting.Pleaserefer which are necessary for theGroup’s day-to-day operations. This mandate shalllapseat theconclusion ofthenext AGM ofthe based oncommercial terms whichare notmore favourable to theRelated Parties thanthosegenerally available to thepublicand into recurrent related partytransactions ofarevenue ortrading nature withRelated Parties intheordinary course ofbusiness The proposed Ordinary Resolution 8,ifpassed, willprovide arenewed mandate for theCompany and/or itssubsidiariesto enter Note F the Company hasnotissued any new shares undertheGeneral Mandate obtainedinitsprevious AGM. administrative timeandcosts associated withtheconvening ofadditionalshareholders meeting(s). Asat thedate ofthisNotice, funding future investment project(s), repayment ofbankborrowing, working capitaland/or acquisition(s) andthereby reducing to theCompany for any future fundraising activities,includingbutnotlimited to furtherplacingofshares for thepurposesof to fulfilitsobligations under theCompany’s Employees’ Share OptionSchemeinanexpedient manneraswell asprovide flexibility which thenext AGM isrequired by law to beheld,whichever isearlier. The General Mandate, ifgranted, willenabletheCompany or varied by theCompany inaGeneral Meeting,expire at theconclusion ofthenext AGM ortheexpiration oftheperiodwithin Company at theirdiscretion withouthaving to first convene anotherGeneral Meeting.The General Mandate will,unless revoked The proposed Ordinary Resolution 7, if passed, will give the Directors of the Company authority to issue ordinary shares in the Note E of the member’s breachof themember’s ofwarranty. agrees that thememberwillindemnify theCompany inrespect ofany liabilities,demands,losses anddamagesasaresult their personaldata by theCompany (or itsagents); and warrants that relevant priorconsent ofsuchproxy(ies) and/or representative(s) hasbeen obtainedfor theuseofhis/her/ purpose incidentalto theAGM; consents to thecollection, useanddisclosure personaldata by ofthemember’s theCompany (or itsagents) for any Annual General Meeting Notice of
237 PG. Annual Report 2018 Protection Made Easy Notice of Annual General Meeting
STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING (Pursuant to Paragraph 8.27(2) of the MMLR of Bursa Malaysia)
Directors who are standing for re-election at the Eighth Annual General Meeting of the Company:
(i) Datuk Kamarudin bin Meranun (Resolution 2) (ii) Tan Ming-Li (Resolution 3)
Further details of Directors who are standing for re-election are set out in the Directors’ Profile on pages 54 to 55 of this Annual Report. Tan Ming-Li does not hold any shares in the Company. Information relating to the securities holdings of Datuk Kamarudin bin Meranun is set out in the Analysis of Shareholdings on pages 227 to 228 of this Annual Report.
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238 PROXY FORM CDS Account No.
TUNE PROTECT GROUP BERHAD No. of Shares held (Company No. 948454-K) (Incorporated in Malaysia)
I/We (FULL NAME IN BLOCK LETTERS)
*NRIC No./Passport No./Company No. of
being a member(s) of TUNE PROTECT GROUP BERHAD (“the Company”) hereby appoint:
Full Name (in Block) NRIC/Passport No. Proportion of Shareholdings No. of Shares % Address
*and/or
Full Name (in Block) NRIC/Passport No. Proportion of Shareholdings No. of Shares % Address
or failing him, *the Chairman of the Meeting, as *my/our proxy/(ies) to vote for *me/us on *my/our behalf at the Eighth Annual General Meeting (“AGM’’) of the Company to be held at The Summit 2 Ballroom, Level M1, Connexion Conference & Event Centre @ The Vertical, No 8, Jalan Kerinchi, Bangsar South City, 59200 Kuala Lumpur on Tuesday, 28 May 2019 at 10.00 a.m. or at any adjournment thereof, in the manner indicated below:
NO. RESOLUTIONS FOR AGAINST 1. Declare of final dividend comprising a single tier dividend of 3.00 sen per ordinary share in respect of the financial year ended 31 December 2018. 2. Re-election of Datuk Kamarudin bin Meranun. 3. Re-election of Tan Ming-Li. 4. Approve the payment of Directors’ fees of RM879,000 to the Non-Executive Directors of the Company from the date of the forthcoming AGM until the conclusion of the next AGM of the Company. 5. To approve the payment of Directors’ benefits as described in Note D to the Non-Executive Directors of the Company from the date of the forthcoming AGM until the conclusion of the next AGM of the Company. 6. Re-appointment of Messrs. Ernst & Young as the Auditors of the Company. 7. Authority to allot shares pursuant to Section 75 and 76 of the Companies Act, 2016. 8. Proposed New Shareholders’ Mandate and Renewal of Existing Shareholders’ Mandate for Recurrent Related Party Transactions of A Revenue or Trading Nature. 9. Authority to Allot Shares to Khoo Ai Lin. SPECIAL RESOLUTION 1. Proposed Adoption of a New Constitution of the Company in place of the existing Memorandum and Articles of Association.
(Please indicate with an “X” in the spaces provided on how you wish your votes to be cast. If you do not do so, the Proxy will vote or abstain from voting at his discretion.)
Signed this day of 2019 *Signature (s)/Common Seal of Shareholder * Delete if not applicable NOTES ON APPOINTMENT OF PROXY: 1) In respect of deposited securities, only a depositor whose name appears on the Record of Depositors as at 20 May 2019 (“General Meeting Record of Depositors”) shall be eligible to attend the Meeting or appoint proxy(ies) to attend and/or vote in his/her stead. Any changes in the entries on the Record of Depositors after the abovementioned date and time shall be disregarded in determining the rights of any person to attend and vote at the Meeting. 2) A member of the Company entitled to attend and vote at the AGM is entitled to appoint not more than two (2) proxies (or in the case of a corporation, to appoint a representative) (in accordance with Section 333 of the Companies Act, 2016), to attend and vote in his stead. There shall be no restriction as to the qualification of the proxy(ies). 3) The instrument appointing a proxy(ies) must be deposited at the Registered Office of the Company at Level 9, Wisma Tune, 19, Lorong Dungun, Damansara Heights, 50490 Kuala Lumpur, Wilayah Persekutuan, Malaysia not less than forty-eight (48) hours before the time set for holding the AGM or any adjournment thereof. Faxed copies of the duly executed form of proxy are not acceptable. 4) The Proxy Form in the case of an individual shall be signed by the appointor or his attorney, and in the case of a corporation, either under its common seal or under the hand of an officer or attorney duly authorised. 5) Where a member appoints two proxies, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy. 6) Where a member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. 7) Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all resolutions set out in this Notice shall be put to vote by way of poll.
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Stamp
The Company Secretary TUNE PROTECT GROUP BERHAD (948454-K) Level 9, Wisma Tune 19, Lorong Dungun Damansara Heights 50490 Kuala Lumpur Wilayah Persekutuan Malaysia
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TUNE PROTECT GROUP BERHAD (Company No. 948454-K)
Level 9, Wisma Tune, 19 Lorong Dungun, Damansara Heights, 50490 Wilayah Persekutuan Kuala Lumpur, Malaysia