REACHING NEW HEIGHTS MNRB HOLDINGS BERHAD annual report 2011 (13487-A) Reaching New Heights

MNRB Holdings Berhad (MNRB) today benefit its clients. Vast experience and represents a solid combination of various strong leadership form a unified Group that subsidiaries with diverse strengths to will continuosly soar to a greater height. contents

MNRB HOLDINGS BERHAD MALAYSIAN REINSURANCE MALAYSIAN RE (DUBAI) LTD. BERHAD 4 Corporate Profile 98 Corporate Profile 5 Corporate Milestones 58 Corporate Profile 99 Corporate Information 7 Notice of 38th Annual General 59 Corporate Information 100 Directors’ Profile Meeting 60 Directors’ Profile 101 Senior Management Team’s Profile 10 Statement Accompanying Notice 63 Management Team of Annual General Meeting 64 Senior Management Team’s Profile MMIP SERVICES SDN.BHD. 11 Corporate Information 67 Corporate Activities and Services 12 Directors’ Profile 69 Malaysian Re’s Portfolio of Business 102 Corporate Profile 15 Management Team 103 Corporate Information 16 Senior Management Team’s Profile TAKAFUL IKHLAS SDN. BHD. 19 Group Structure 20 Chairman’s Statement 72 Corporate Profile 26 Corporate Social Responsibility 73 Corporate Information 34 Statement on Corporate 74 Directors’ Profile Governance 77 Shariah Committee Members’ 44 Audit Committee Report Profile 47 Statement on Internal Control 79 Management Team 49 Statement of Directors’ 80 Senior Management Team’s Profile Responsibility in Relation to the Financial Statements MNRB RETAKAFUL BERHAD 50 Statement on Risk Management 52 Five-Year Financial Highlights 86 Corporate Profile 53 Financial Calendar 87 Corporate Information 54 MNRB’s Growth 88 Directors’ Profile 55 Investors’ Information 91 Shariah Committee Members’ 104 Calendar of Significant Events Profile 109 Financial Statements 93 Management Team 278 Additional Compliance Information 94 Senior Management Team’s Profile 279 Analysis of Shareholdings 95 MRT’s Portfolio of Business 283 List of Properties

• Proxy Form • Complaint Form of Bursa Malaysia

Like the tree, our growth does not happen only in favourable circumstances. We have seen good times and challenging times, and have emerged out of both situations stronger and more confident.

MNRB HOLDINGS BERHAD CORPORATE PROFILE

In early 1965, the Malaysian Government conceived the idea of forming a national reinsurance company in order to curtail the ever increasing outflow of reinsurance premium overseas. A feasibility study on the formation of such company was done in 1971 and on 30 December 1972, Malaysian National Reinsurance Berhad was incorporated under the Companies Act, 1965. It commenced operations on 19 February 1973. Effective 1 April 2005, as part of the restructuring exercise of the MNRB Group, the reinsurance business, reinsurance license and reinsurance assets, up to a net amount of RM400 million, were transferred from Malaysian National Reinsurance Berhad to Malaysian Reinsurance Berhad (Malaysian Re). Pursuant to the restructuring, Malaysian National Reinsurance Berhad became an investment holding company and was renamed MNRB Holdings Berhad (MNRB).

MNRB is listed on the Main Market of Bursa Malaysia Securities Berhad (Bursa Securities). Its wholly-owned subsidiaries are Malaysian Reinsurance Berhad (Malaysian Re), a general reinsurance company, Takaful Ikhlas Sdn. Bhd. (Takaful IKHLAS), a Takaful operator, MNRB Retakaful Berhad (MRT), a general and family retakaful operator and Malaysian Re (Dubai) Ltd. (MRDL), a company incorporated in Dubai, UAE, to underwrite the reinsurance business for Malaysian Re and to service Malaysian Re’s business partners in the Middle East and North Africa (MENA) regions. Another subsidiary company is MMIP Services Sdn. Bhd. (MSSB), the manager of the Malaysian Motor Insurance Pool (MMIP), a pool established by the local insurance industry to provide insurance coverage for vehicle owners who have difficulty in obtaining motor insurance coverage.

In addition, Motordata Research Consortium Sdn. Bhd. (MRC), a company that manages database for standard motor parts, prices and repairs, is an associate company of MNRB whilst Labuan Reinsurance (L) Ltd. (Labuan Re), an offshore reinsurance company incorporated in the Labuan International Offshore Financial Centre (IOFC), is an associate company of Malaysian Re.

Backed by a wealth of experience and knowledge in the reinsurance, takaful and retakaful businesses, sound financial position and the strong support from its substantial shareholders, namely, Permodalan Nasional Berhad (PNB) and the various unit trust schemes of PNB, the MNRB Group will continue to grow as a renowned corporation, both locally and internationally.

CAPITAL STRUCTURE

The Company has an Authorised Capital of RM500 million, divided into 500 million ordinary shares of RM1.00 each and a Paid-up Capital of RM213 million, divided into 213 million ordinary shares of RM1.00 each.

4 MNRB Holdings Berhad CORPORATE MILESTONES

1973-1975 * Rating Committee - to • Appointed as Manager of the Malaysian MNRB • Malaysian National Reinsurance determine special rate under Aviation Pool Berhad commenced operations on the Fire Tariff for Fire and • Malaysian National Reinsurance 19 February 1973 Industrial All Risks Insurances Berhad was listed on the Main Board of • Voluntary Cessions (VC) to Malaysian the Kuala Lumpur Stock Exchange National Reinsurance Berhad 1988-1990 (now known as Bursa Malaysia commenced four (4) months later • Increased level of retrocession from Securities Berhad) • Began to offer Excess of Loss fifty percent (50%) to fifty-five percent Treaties to local insurance companies (55%) to shareholding companies of 1997-1999 • Began to write Local Facultative Malaysian National Reinsurance • Commencement of Overseas Facultative business and non-reciprocal inwards Berhad business overseas business • Implementation of Stage 1 - new • Launching of Malaysian National levels of VC, Retrocessions and other Reinsurance Berhad Homepage 1976-1978 market reinsurance arrangements (http://www.malaysian-re.com.my) • Retroceded part of the VC cessions • Began to organise Annual Golf • Launching of MNRB Scholarship Fund to the local insurance companies for Tournaments and Outward Bound of RM1 million their net account School for the insurance industry • Malaysian National Reinsurance • Sponsored the 1st Kuala Lumpur Berhad moved to its own building, Insurance Seminar, attended by over 1991-1993 Bangunan Malaysian Re 400 delegates • Implementation of automatic cessions • Implementation of new levels of VC, • Commenced writing ten percent on Facultative and Treaty business Retrocessions and other market (10%) Quota Share of the • Appointed as the Administration reinsurance arrangements Miscellaneous Accidents and Motor Manager of Malaysian Motor businesses Insurance Pool 2000-2001 • Increased level of retrocessions from • Malaysian-Re International Insurance • Awarded the MS ISO 9002:1994 twenty-five percent (25%) to thirty (L) Ltd. (MIIL) was set up as a wholly- certification percent (30%) for Fire and Personal owned subsidiary • Appointed as Account Manager for the Accident businesses • Implementation of Stage II - new Sihat Malaysia Scheme levels of VC, Retrocessions and other • Injected additional RM1 million to the 1979-1981 market reinsurance arrangements MNRB Scholarship Fund • Increased paid-up capital from • Malaysian National Reinsurance • Acquired another building, Wisma KT RM5,200,002 to RM6,240,003 Berhad and MNI jointly hosted and (now known as Bangunan Takaful • Commenced reciprocal exchange organised the 13th General Meeting IKHLAS), Petaling Jaya, Selangor with overseas companies of the Federation of Afro - Asian • Perbadanan Nasional Berhad’s Insurers and Reinsurers (F.A.I.R.) 2002 (PERNAS) fifty percent (50%) share in attended by over 350 international • Arrangement of terrorism insurance via Malaysian National Reinsurance and local participants the Malaysian Terrorism Facility Berhad was transferred to PNB • Received approval in principle from 1994-1996 BNM to set up a takaful operation 1982-1984 • Bank Negara Malaysia (BNM) • Paid-up capital increased to appointed Malaysian National 2003 RM8,216,004 Reinsurance Berhad to manage the • BNM approved the registration of • Published the 1st edition of the Scheme for Insurance of Large and Takaful Ikhlas Sdn. Bhd. (Takaful Malaysian Insurance Directory Specialised Risks IKHLAS) on 21 April 2003 and it • Introduced Common Account Excess • Appointed as Manager for the commenced operations on 2 July 2003 of Loss for retrocessionaires Malaysian Energy Risks Consortium • MNRB was granted the approval on • Launching of the Central Certification to the new ISO Standard, 1985-1987 Administration Bureau MS ISO 9001:2000 • Formation of the following: • Implementation of Stage III - new • Implementation of new levels of VC, * Technical Services Department levels of VC, Retrocessions and other Retrocessions to the industry ceased - to conduct fire surveys market reinsurance arrangements with effect from 1 January 2003 including advisory services on • MIIL, now known as Labuan • Acquired another building, Block A, risk management with the cost Reinsurance (L) Ltd. (Labuan Re), Plaza Damansara, Kuala Lumpur mostly borne by Malaysian ceased to be a wholly-owned National Reinsurance Berhad subsidiary of Malaysian National * Inspection Department - to Reinsurance Berhad with the equity ensure companies’ adherence interest being diluted to twenty to the various Inter-Company percent (20%) Agreements

5 CORPORATE MILESTONES

2004 2007 • MRT’s IFS rating of ‘BBB+’ with stable • Commenced the restructuring • Malaysian Re’s FSR of A- (Excellent) outlook was reaffirmed by Fitch Ratings exercise of the Group and ICR of ‘a-’ was reaffirmed by • Malaysian Re and Labuan Re jointly A.M. Best Co. hosted and organized the 21st F.A.I.R. 2005 • Malaysian Re’s IFS rating of ‘A-’ with Conference, attended by over 600 • The Group’s restructuring exercise stable outlook was reaffirmed by Fitch delegates including leaders and experts was completed on 1 April 2005 and Ratings in the insurance industry hereon Malaysian National • MRT commenced operations in • Takaful IKHLAS won “Best Reinsurance Berhad became MNRB August 2007 as the first retakaful Takaful/Retakaful Provider” for the Holdings Berhad (MNRB). The new operator in Malaysia second time at the Islamic Finance holding company is an investment News Polls Awards 2009 holding company that focuses on 2008 • Takaful IKHLAS won The business expansion to broaden the • MRDL was officially launched on BrandLaureate - SMEs Chapter Award Group’s income base and further 18 March 2008 2009, “Best Brands in Product strengthen its financial position. The • MRDL was wholly transferred from Branding, Consumer Healthcare reinsurance business was then Malaysian Re to MNRB Insurance” & The BrandLaureate - transferred to a newly incorporated • MNRB acquired 9.99% stake in SMEs Chapter Award 2009, Corporate 100% subsidiary of MNRB, Malaysian Principal Insurance Holdings Limited Branding – “Best Brands in Services - Reinsurance Berhad (Malaysian Re). (PIHL) (formerly known as British Islamic Protection Services” The takaful business continues to be Islamic Insurance Holdings Ltd.) undertaken by Takaful IKHLAS, a • MRT was officially launched on 2010 wholly-owned subsidiary of MNRB. 11 August 2008 • Takaful IKHLAS was named the “Best Labuan Re became an associate • MRT was assigned an IFS rating of Takaful Provider” at the Euromoney company of Malaysian Re ‘BBB+’ with stable outlook by Fitch Islamic Finance Awards 2010 Ratings organised by financial magazine, 2006 • MRT was awarded “The Most Euromoney • MMIP Services Sdn. Bhd. (MSSB), Outstanding Retakaful Operator • IKHLAS Medical Assistance Takaful was formed to manage the 2008” at the KL Islamic Finance won “Best Takaful Product” by administrative of Malaysian Motor Forum 2008 (KLIFF 2008) International Takaful Awards 2010 Insurance Pool (MMIP), a pool • Malaysian Re was reaffirmed the MS • Takaful IKHLAS moved to its new established by the insurance industry ISO 9001:2000 Quality Management corporate office, IKHLAS Point, in to provide insurance coverage for Systems certification Bangsar South, Kuala Lumpur vehicle owner who finds difficulty in • Takaful IKHLAS was awarded “Best obtaining coverage Takaful/Retakaful Provider 2008” by 2011 • MNRB obtained BNM’s approval to Islamic Finance News (IFN) • Takaful IKHLAS was named Best establish a retakaful operation under • Takaful IKHLAS won The Takaful product by The International the Takaful Act, 1984 to conduct both BrandLaureate - SMEs Chapter Takaful Awards 2010. general and family retakaful Award 2008, “Best Brands in Product • Takaful IKHLAS was awarded The businesses. The wholly-owned Branding, Consumer Healthcare BrandLaureate - SMEs Chapter Award subsidiary company of MNRB is Insurance” 2010 (third consecutive year) known as MNRB Retakaful Berhad • IKHLAS Medic Assist Takaful (IMAT) • Takaful IKHLAS was named Best (MRT) won the “Most Innovative Product Takaful/Retakaful Provider by Islamic • Malaysian Re (Dubai) Ltd. (MRDL) a Award” by KLIFF 2008 Finance News Polls Awards 2010 wholly-owned subsidiary of Malaysian (third consecutive year) Re was incorporated 2009 • Takaful IKHLAS was awarded for its • Malaysian Re won the prestigious • Malaysian Re’s FSR of A- (Excellent) excellence in Branding by Reinsurance Industry Contribution and ICR of ‘a-’ was reaffirmed by ’BrandLaureate SMEs Chapter Awards Award given by the Asia Insurance A.M. Best Co. 2010’ in the categories of The Best Review and the Review Magazine • Malaysian Re’s IFS rating of ‘A-‘ with Brands in Corporate Branding - Islamic • Malaysian Re was assigned a stable outlook was reaffirmed by Fitch Financial Protection Services (second Financial Strength Rating (FSR) of A- Ratings consecutive year) and The Best Brands (Excellent) and an Issuer Credit Rating • A recertification audit was conducted in Product Branding - Health Insurance (ICR) of ‘a-’ by A.M. Best Co. by SIRIM. Malaysian Re was Services (third consecutive year). • Malaysian Re was assigned an ‘A-’ reaffirmed the MS ISO 9001:2000 • Fitch Ratings upgraded Malaysian Re’s Insurer Financial Strength (IFS) rating Quality Management Systems Insurer Financial Strength (IFS) from with stable outlook by Fitch Ratings certification ‘A-’ to ‘A’ with Stable Outlook

6 MNRB Holdings Berhad NOTICE OF 38th ANNUAL GENERAL MEETING

NOTICE IS HEREBY given that the Thirty-Eighth Annual General Meeting of the Company will MNRB be held at the Auditorium, 3rd Floor, Bangunan Malaysian Re, No. 17, Lorong Dungun, Damansara Heights, 50490 Kuala Lumpur on Friday, 23 September 2011 at 10.00 a.m. for the following purposes:-

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 31 March 2011 and the Reports of the Directors and Auditors thereon. (Ordinary Resolution 1)

2. To approve the payment of a First and Final Dividend of twenty percent (20%) less twenty five percent (25%) income tax, for the financial year ended 31 March 2011. (Ordinary Resolution 2)

3. To re-elect the following Directors retiring pursuant to Article 86 of the Company’s Articles of Association:

(i) Sharkawi Alis (Ordinary Resolution 3) (ii) Dato’ Syed Ariff Fadzillah Syed Awalluddin (Ordinary Resolution 4)

4. To approve Directors’ remuneration amounting to RM685,000 for the year ended 31 March 2011 (2010: RM725,000). (Ordinary Resolution 5)

5. To re-appoint Messrs Ernst & Young as Auditors and to authorise the Directors to fix their remuneration. (Ordinary Resolution 6)

AS SPECIAL BUSINESS

To consider and if thought fit, to pass the following Ordinary Resolution:

6. Re-appointment of Director retiring pursuant to Section 129(6) of the Companies Act, 1965

“THAT Datuk Mohd Khalil Dato’ Mohd Noor, being over the age of seventy (70) years and retiring in accordance with Section 129(6) of the Companies Act, 1965, be and is hereby re-appointed a Director of the Company to hold office until the conclusion of the next Annual General Meeting.” (Ordinary Resolution 7)

To consider and if thought fit, pass with or without modification, the following Special Resolution:

7. Proposed Amendments to the Articles of Association of the Company

“THAT Article 140 of the Company’s Articles of Association be deleted in its entirety and substituted by the following new Article 140:-

Existing Provision

Any dividend, interest or other moneys payable in cash in respect of shares may be paid by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of that one (1) of the joint holders who is first named on the Register or to such person and to such address as the holder or joint holders may in writing direct. Every such cheque or warrant shall be sent at the risk of the person entitled to the money represented thereby and made payable to the order of the person to whom it is sent. Any one (1) of two (2) or more joint holders may give effectual receipts for any dividends, bonuses, or other money payable in respect of the shares held by them as joint holders.

7 NOTICE OF 38th ANNUAL GENERAL MEETING

Revised Provisions

(1) Subject to the provision of the Act, the Central Depositories Act and the Rules, the Listing Requirements and/or regulatory authorities, payment of dividend may be made by direct transfer or such other mode of electronic means to the bank account of the holder whose name appears in the Record of Depositors or, if more that one (1) person is entitled thereto in consequence of the death or bankruptcy of the holder, payment in such manner to the bank account of any one (1) of such persons or to the bank account of such person as such persons may by writing direct. The payment of any dividend by such electronic means shall constitute a good and full discharge to the Company of the dividend to which it relates regardless of any discrepancy given by the Member in the details of bank account(s).

(2) Subject to the provision of the Act, the Central Depositories Act and the Rules, any dividend, interest or other money payable in cash in respect of shares may be paid by banker’s draft, money order, cheque or warrant sent through the post to the address of the holder or in case of joint holders to the address of that one (1) whose name stands first on the Record of Depositors or to such person and to such address as the holder or joint holders may by writing direct. Every such draft, money order, cheque or warrant shall be made payable to the order of the persons to whom it is sent or to such person as the holder or joint holders may direct and payment of same if purporting to be endorsed shall be a good discharged to the Company. Every such draft, money order, cheque or warrant shall be sent at the risk of the persons entitled to the money represented thereby. (Special Resolution 1)

8. To transact any other business which may properly be transacted at the Annual General Meeting.

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS ALSO HEREBY GIVEN that subject to the approval of the shareholders at the Thirty-Eighth Annual General Meeting to be held on 23 September 2011, a First and Final Dividend of twenty percent (20%) less twenty-five percent (25%) income tax will be paid on 19 October 2011 to the shareholders whose name appear in the Register of Depositors on 4 October 2011.

A Depositor shall qualify for entitlement only in respect of:

(a) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 4 October 2011 in respect of ordinary transfers.

(b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.

By Order of the Board

NORAZMAN HASHIM (MIA 5817) LENA ABD LATIF (LS 8766) Company Secretaries Kuala Lumpur 26 August 2011

8 MNRB Holdings Berhad NOTICE OF 38th ANNUAL GENERAL MEETING MNRB NOTE:

1. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy to attend and vote in his behalf. A proxy need not be a member of the Company.

2. A member may appoint more than two (2) proxies to attend the meeting provided the member shall specify in each proxy the proportion of the member’s shareholdings to be represented by each proxy and only one (1) proxy shall be entitled to vote on a show of hands.

3. Where a member is an authorized nominee, it may appoint at least one (1) proxy in respect of each securities account it holds.

4. An Instrument appointing a proxy shall be in writing, and in the case of an individual shall be signed by the appointer or by his attorney duly authorized in writing, and in the case of a Corporation shall be either given under its common seal or signed on its behalf by its attorney or an officer of the Corporation so authorised.

5. All proxies must be deposited at the office of the Share Registrar of the Company, Symphony Share Registrars Sdn. Bhd., Level 6, Symphony House, Block D13, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor, not less than forty-eight (48) hours before the time set for the Annual General Meeting or any adjournment thereof.

6. Payment of First and Final Dividend

Pursuant to Section 8.26 of the Main Market Listing Requirements of Bursa Securities Malaysia Berhad the First and Final Dividend, if approved, will be paid no later than three (3) months from the shareholders’ approval.

7. Explanatory Notes on Special Business

(i) Ordinary Resolution 7 - Re-appointment of Directors pursuant to Section 129(6) of the Companies Act, 1965

The proposed Ordinary Resolution 7 is to seek shareholders’ approval for the re-appointment of director who is over the age of seventy (70) years and retiring in accordance with Section 129(6) of the Act. If passed, it will enable the Director to hold office until the next AGM of the Company.

(ii) Special Resolution 1 - Proposed Amendments to the Articles of Association of the Company

The Special Resolution 1, proposed under item 7 of the Agenda, if passed, will allow the Company to incorporate the amendment to Article 140 of the Company’s Articles of Association. The proposed amendment is to streamline the Company’s Articles of Association with the provisions of the Companies Act, 1965 and the Main Market Listing Requirement of Bursa Malaysia Securities Berhad.

9 STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

Pursuant to Paragraph 8.27(2) of the Bursa Malaysia Main Market Listing Requirements

There is no individual standing for election as Director (other than Directors standing for re-election i.e. Sharkawi Alis and Dato’ Syed Ariff Fadzillah Syed Awalluddin and re-appointment of Datuk Mohd Khalil Dato’ Mohd Noor) at this forthcoming Thirty-Eighth Annual General Meeting of the Company.

10 MNRB Holdings Berhad CORPORATE INFORMATION

BOARD OF DIRECTORS RISK MANAGEMENT COMMITTEE MNRB

SHARKAWI ALIS Yusoff Yaacob (Chairman) Non-Independent Non-Executive Chairman P. Raveenderen Datuk Mohd Khalil Dato’ Mohd Noor ANUAR MOHD HASSAN President & Group Chief Executive Officer Non-Independent Executive Director INVESTMENT COMMITTEE (Retired on 31 March 2011) Datuk Mohd Khalil Dato’ Mohd Noor (Chairman) P. RAVEENDEREN Megat Dziauddin Megat Mahmud Non-Independent Non-Executive Director Paisol Ahmad

DATO’ SYED ARIFF FADZILLAH SYED AWALLUDDIN Independent Non-Executive Director AUDITORS

YUSOFF YAACOB Ernst & Young Independent Non-Executive Director Level 23A, Menara Millenium Jalan Damanlela DATUK MOHD KHALIL DATO’ MOHD NOOR Pusat Bandar Damansara Non-Independent Non-Executive Director Damansara Heights 50490 Kuala Lumpur MEGAT DZIAUDDIN MEGAT MAHMUD Tel : +603-7495 8000 Senior Independent Non-Executive Director Fax : +603-2095 5332

PAISOL AHMAD Non-Independent Non-Executive Director SHARE REGISTRAR

Symphony Share Registrars Sdn. Bhd. GROUP CHIEF OPERATING OFFICER Level 6, Symphony House Datuk Ramlan Abdul Rashid Block D13, Pusat Dagangan Dana 1 Jalan PJU 1A/46 47301 Petaling Jaya, Selangor Darul Ehsan COMPANY SECRETARIES Tel : +603- 7841 8000 Fax : +603-7841 8008 Norazman Hashim (MIA 5817) Lena Abd Latif (LS 8766) BANKERS

AUDIT COMMITTEE Malayan Banking Berhad CIMB Bank Berhad Megat Dziauddin Megat Mahmud (Chairman) Dato’ Syed Ariff Fadzillah Syed Awalluddin P. Raveenderen REGISTERED OFFICE Paisol Ahmad Yusoff Yaacob - (Appointed with effect from 19 July 2011) 12th Floor, Bangunan Malaysian Re No. 17, Lorong Dungun Damansara Heights NOMINATION COMMITTEE 50490 Kuala Lumpur Tel : +603-2096 8000 Dato’ Syed Ariff Fadzillah Syed Awalluddin (Chairman) Fax : +603-2096 7000 Sharkawi Alis E-mail : [email protected] Yusoff Yaacob - (Appointed with effect from 19 July 2011) Website : www.mnrb.com.my

REMUNERATION COMMITTEE STOCK EXCHANGE LISTING Bursa Securities Megat Dziauddin Megat Mahmud (Chairman) – Main Market Dato’ Syed Ariff Fadzillah Syed Awalluddin Yusoff Yaacob

11 DIRECTORS’ PROFILE

SHARKAWI ALIS, aged sixty-four (64), P. RAVEENDEREN, aged sixty-six DATO’ SYED ARIFF FADZILLAH Malaysian. Non-Independent Non- (66), Malaysian. Appointed as a Non- SYED AWALLUDDIN, aged sixty-seven Executive Director since 7 January 2005 Independent Non-Executive Director on (67), Malaysian. Independent Non- and was subsequently appointed 11 November 1993 and re-designated Executive Director since 31 January as Non-Independent Non-Executive as an Independent Non-Executive 2003. Chairman of the Nomination Chairman on 3 September 2007. Director on 1 September 2003. He was Committee, member of the Audit Member of the Nomination Committee. then re-designated as Non-Independent Committee and the Remuneration Non-Executive Director on 19 July 2011. Committee. Graduated from the He is a Barrister-at-Law from Middle Member of the Audit Committee and University of Malaya with a Bachelor of Temple, London where he was called in the Risk Management Committee. Arts degree, then obtained a Diploma in 1971. He served in the Malaysian Judicial A Chartered Insurer. Was the Chief International Relations from University and Legal Service in various capacities Executive Officer of Royal Insurance (M) of Oslo, Diploma in Development for eleven (11) years before he was Sdn. Bhd. since 1985 until the Administration from London School of appointed as Group Legal Adviser of Company merged with Sun Alliance Economics and Masters Degree in Malaysian Mining Corporation Berhad. Insurance (M) Sdn. Bhd. on International Relations from University In January 1997, he joined the Securities 1 September 1999 when he assumed of New York. Joined the Government Commission, Malaysia as Director of the position of an Executive Director of service in 1967 and was later posted Market Supervision and subsequently as the merged Royal & Sun Alliance abroad to serve in Canada, Libya and Director of Corporate Resources Division Insurance (M) Bhd. until his retirement the United Nations in New York and till March 2003. Also Chairman of on 31 August 2001. Also a Director of Indonesia. Was appointed as the Malaysian Re, Takaful IKHLAS, MRT, Malaysian Re. Not related to any Ambassador to Fiji, Republic of Korea Labuan Re and MRDL, Director of MIDF Directors and/or major shareholders of and Thailand until his retirement from Amanah Asset Management Berhad, MNRB. Does not have any conflict of Government Service in 2001. Also a Malaysian Industrial Development interest with MNRB and has never been Director of Malaysian Re, MRT, EcoFirst Finance Berhad, MIDF Amanah convicted for any offences within the Consolidated Bhd. and one (1) other Investment Bank Berhad, MIDF Property past ten (10) years. Attended all the private limited company. Not related to Berhad and MRC. Not related to any nine (9) Board Meetings held in the any Directors and/or major Directors and/or major shareholders of financial year. shareholders of MNRB. Does not have MNRB except by virtue of being a any conflict of interest with MNRB and nominee Director of PNB. Does not have has never been convicted for any any conflict of interest with MNRB and offences within the past ten (10) years. has never been convicted for any Attended all the nine (9) Board offences within the past ten (10) years. Meetings held in the financial year. Attended all the nine (9) Board Meetings held in the financial year.

12 MNRB Holdings Berhad DIRECTORS’ PROFILE MNRB

YUSOFF YAACOB, aged sixty-three DATUK MOHD KHALIL DATO’ MOHD (63), Malaysian. Independent Non- NOOR, aged seventy (70), Malaysian. Executive Director since 10 November Non-Independent Non-Executive 2004. Chairman of the Risk Management Director since 14 December 2004. Committee, member of the Audit Chairman of the Investment Committee Committee, Remuneration Committee and member of the Risk Management and the Nomination Committee. Committee. Graduated from the Obtained a Diploma in Insurance Studies University of Malaya with a Bachelor of & Insurance Management from the Arts degree and then obtained a University of Nottingham, United Diploma in Commercial Policy from Kingdom. A Chartered Insurance GATT Training Institute in Geneva, Practitioner and a Fellow of the Switzerland. Was the former Auditor- Chartered Insurance Institute, United General of Malaysia from 1994 to 2000. Kingdom. Started his career as an Also the former Secretary of the Foreign Insurance Trainee with Malaysia Investment Committee, Deputy National Insurance Berhad in 1970 and Secretary General of the Ministry of held the position of Marine Manager Trade and Industry and Secretary until 1979. Joined Petroliam Nasional General of the Ministry of Works. Berhad (PETRONAS) in 1979 and was Currently, the Chairman of TIME the General Manager (Insurance Engineering Berhad, Director of IOI Division) until his retirement in 2003. Corporation Berhad, Malaysian Re, Also a Director of Malaysian Re. Not MRT and Dagang Net Technologies related to any Directors and/or major Sdn. Bhd. Not related to any Directors shareholders of MNRB. Does not have and/or major shareholders of MNRB any conflict of interest with MNRB and except by virtue of being a nominee has never been convicted for any Director of PNB. Does not have any offences within the past ten (10) years. conflict of interest with MNRB and has Attended all the nine (9) Board never been convicted for any offences Meetings held in the financial year. within the past ten (10) years. Attended all the nine (9) Board Meetings held in the financial year.

13 DIRECTORS’ PROFILE

MEGAT DZIAUDDIN MEGAT PAISOL AHMAD, aged fifty-seven (57), MAHMUD, aged sixty-five (65), Malaysian. Non-Independent Non- Malaysian. Independent Non-Executive Executive Director since 11 April 2008. Director since 24 August 2006 and Member of the Audit Committee and the re-designated as Senior Independent Investment Committee. Obtained Non-Executive Director on 19 July 2011. Diploma in Accountancy from Universiti Chairman of the Remuneration Teknologi MARA and a Fellow of the Committee, Chairman of the Audit Association of Chartered Certified Committee and member of the Accountants, United Kingdom. Also a Investment Committee. He holds a Chartered Accountant with the Malaysian Bachelor of Science (Econs.) (Hons.) Institute of Accountants, a Fellow of the degree from the Queen’s University of Financial Services Institute of Australasia Belfast, Northern Ireland and is a Fellow and a Certified Financial Planner with the of the Institute of Chartered Accountants Financial Planning Association of in Ireland as well as a Chartered Malaysia. Was the Senior Accountant of Accountant with the Malaysian Institute Pernas Charter Management Sdn. Bhd. of Accountants. He had served Golden Then held various positions in Amanah Hope Plantations Berhad as Group Saham Nasional Berhad before Director, Finance, Arab-Malaysian being appointed as its Executive Merchant Bank, first as General Manager Director/Senior Vice President II. - Operations and later as General Subsequently, being transferred to PNB Manager - Investment, Bank Simpanan and is currently the Senior Vice President Nasional as Finance Manager and the I of its Financial Management Audit & Accountant-General’s Department as Risk Management Division. Also a Treasury Accountant. Also a Director of director of Takaful IKHLAS, KAF Malaysian Re, MRT Pernec Corporation Investment Bank Berhad and two (2) Bhd, Alliance Financial Group Bhd, other private limited companies. Not Alliance Bank Berhad, Alliance related to any Directors and/or Investment Bank Berhad, Alliance shareholders of MNRB except by virtue Investment Management Berhad, and of being a nominee director and several private limited companies. Not employee of PNB. Does not have any related to any Directors and/or conflict of interest with MNRB and has shareholders of MNRB. Does not have never been convicted for any offences any conflict of interest with MNRB and within the past ten (10) years. Attended has never been convicted for any all the nine (9) Board Meetings held in the offences within the past ten (10) years. financial year. Attended all the nine (9) Board Meetings held in the financial year.

14 MNRB Holdings Berhad MANAGEMENT TEAM

Group Chief Operating Officer : Head of Corporate Finance : MNRB Datuk Ramlan Abdul Rashid, MA in Actuarial Science Ekmarrudy Othman, B.Sc (Hons) in Finance & Accounting

Executive Vice President & Group Chief Financial Officer / Head of Corporate Communications : Company Secretary : Noorazimah Tahir, M.Sc Corporate Communications Norazman Hashim, CA (M), FCCA, MBA Head of Property : Zulkifli Abdul Razak, BA (Hons) Risk Mgmt SENIOR VICE PRESIDENTS Information Communication Technology : Group Chief Investment Officer : Ahmad Refaei Saibon, MBA (IT) Ahkter Abdul Manan, B Soc. Sc. (Hons) Human Capital Management : Group Chief Information Officer : Fuzaidah Yusof, CIPM Azlan A. Azizee, M.Sc. Deputy Group Chief Internal Auditor : Group Chief Strategy Officer : Y.M. Raja Zalman Tuah Raja Izzaham, ACCA Ahmad Ruhaizad Hashim, CPA, BA (Hons) Economics and Accounting ASSISTANT VICE PRESIDENTS Group Chief Risk Management & Compliance Officer : Mohd Radzuan Mohamed, Bachelor (Hons) Head of Administration : Risk Management, AIRM, INSTERP Raihanah Yahaya, MBA (Finance) Head of Human Capital Management : Head of Market Training : Razman Radzi, BBA (Hons), DIPM Noridora Ibrahim, Diploma in Business Studies

VICE PRESIDENTS

Company Secretary / Head of Legal & Secretarial : Lena Abd Latif, LL.B (Hons)

Head of Finance : Sharmini Perampalam, CA (M), CMIIA, B.Acc (Hons)

Group Chief Internal Auditor : Romie Khalid, B.Sc Economics (Hons)

Corporate Services : Nazzahatol Azura Aziz, B.Sc in Management (Hons)

15 SENIOR MANAGEMENT TEAM’S PROFILE

DATUK RAMLAN ABDUL RASHID NORAZMAN HASHIM is the Executive AHKTER ABDUL MANAN is the Senior has been appointed as the Group Chief Vice President & Group Chief Financial Vice President & Group Chief Investment Operating Officer of MNRB with effect Officer/Company Secretary of MNRB. Officer of MNRB. He graduated from from 1 April 2011. He joined MNRB He obtained his Masters degree in University Science of Malaysia with a Retakaful Berhad in March 2010 as Business Administration from the Bachelor of Social Science (Honours) Executive Vice President & Deputy CEO Cranfield School of Management, United majoring in Management. He is and has an extensive twenty-two Kingdom in 1990. He is also a fellow responsible for the overall investment (22) years of experience in the member of the Association of Chartered and property division of MNRB Group. insurance industry. Prior to joining the Certified Accountants (ACCA), United He started his career in the Investment Group, he was the Chief Executive Kingdom and a member of the Malaysian and Securities Department (IVS) of Officer/Executive Director of a leading Institute of Accountants (MIA). He joined Malaysian International Merchant local composite insurance company. the then Malaysian National Reinsurance Bankers Berhad (MIMB) in 1987 as an He was also the Vice President of Life Berhad in 1985 and was appointed as its Investment Analyst. Insurance Association of Malaysia Financial Controller and Company (LIAM) for 2006/07 and Management Secretary in 1994. In 1991, he was promoted to Manager, Committee member of PIAM from 2002 Head of IVS and in 1995 to Assistant to 2007. Datuk Ramlan graduated with He was subsequently transferred to General Manager. He was subsequently B.Sc (Hons) in Mathematics from Malaysian Re on 1 April 2005 and promoted to General Manager of IVS in Universiti Sains Malaysia (USM) in 1983 promoted to General Manager to head 1997. He was then seconded to MIDF and Masters in Actuarial Science from the Corporate Services Division, Aberdeen Asset Management Sdn. Ball State University, Indiana, United comprising Administration, Legal & Bhd. (MIDF Aberdeen), which he set up States of America in 1985 under the Secretarial, Corporate Communications, in 1998. On 1 January 2001, he was sponsorship of the Asia Foundation Human Capital Management and appointed as the Chief Executive Scholarship. Finance Departments in June 2005. Officer and Executive Director of MIDF He was transferred to MNRB on 1 April Aberdeen. He joined Asia Unit Trust 2008 and assumed his current position. Berhad (AUTB) on 1 September 2004 He is also a Director of MSSB and the as Chief Executive Officer following the Company Secretary of Malaysian Re, transfer of business of MIDF Aberdeen MRT, MRDL and Takaful IKHLAS . to Amanah SSCM Asset Management Berhad. He left AUTB on 16 July 2007 and joined MNRB on 17 July 2007. In total, he brings along to the Company more than twenty-three (23) years experience in the fund management industry.

16 MNRB Holdings Berhad SENIOR MANAGEMENT TEAM’S PROFILE MNRB

AZLAN A. AZIZEE is the Senior Vice AHMAD RUHAIZAD HASHIM is the MOHD RADZUAN MOHAMED is the President & Group Chief Information Senior Vice President & Group Chief Senior Vice President & Group Chief Risk Officer of MNRB. He obtained his Strategy Officer of MNRB. He graduated Management and Compliance Officer of Bachelor of Science degree in Computer in 1990 with a Bachelor of Economics MNRB. He graduated in 1995 with a Science from the University of Wisconsin, and Accounting Degree from the Bachelor (Hons), Risk Management from Green Bay, United States of America and University of Leeds, England. He is a the Glasgow Caledonian University, a Masters of Science degree in member of the Malaysian Institute of Scotland and BBA (Hons) Risk Information Systems Technology from Certified Public Accountants (MICPA) Management and Insurance from UiTM the George Washington University, since 1995 as well as a member of the in 1994. He is a member of the Institute Washington D.C., United States of MIA. He brings almost twenty (20) years of Risk Management, UK since 1996. His America. of experience in corporate management career started in 1997 when he joined and advisory services. His career started Malaysian Reinsurance Berhad as a He joined the then Malaysian National in 1991 when he joined Arthur Andersen graduate trainee and promoted to Reinsurance Berhad in 1987 and was as an auditor. He served Arthur Andersen Assistant Manager of the Technical promoted to Assistant General Manager for more than five (5) years until 1996 Services department. He served in 1994. He was transferred to Malaysian when he left to join KUB Malaysia Malaysian Re for more than six (6) years Re on 1 April 2005. On 1 April 2008, he Berhad. He then rejoined Arthur until 2003 when he decided to join was transferred to MNRB to assume his Andersen in 1999 to head the Kuala Takaful Nasional Sdn. Bhd. and left in current position. Terengganu branch operation. In 2002, 2005. He then joined Mayban Fortis he joined Putrajaya Holdings Sdn. Bhd. Holdings Berhad as an Assistant as the Head of the Corporate Planning Vice President, Risk Mitigation and Department. He joined MNRB on Analytics, Operational Risk Management. 2 January 2008. He later joined Syarikat Takaful Malaysia Berhad as an Assistant General Manager, Risk Management Division from 2007 until 2010. He joined MNRB on 3 January 2011.

17 SENIOR MANAGEMENT TEAM’S PROFILE

RAZMAN RADZI is the Senior Vice ROMIE KHALID is the Vice President & President & Head of Human Capital Group Chief Internal Auditor of MNRB. Management of MNRB. He graduated in He graduated in 1996 with a Bachelor of 1989 with a Business Administration Science (Economics), majoring in degree from the International Islamic Accounting & Finance from the London University in Kuala Lumpur after which he School of Economics & Political Science. obtained a Diploma in Personnel He started his career as an auditor with Management from the Malaysian Institute Arthur Andersen in 1997, where he of Personnel Management in 1994. Prior served in the financial services group of to his current appointment, he was the the audit division. In 2003, he joined the General Manager of Human Resources then Malaysian National Reinsurance & Administration in UEM Land and has Berhad as an Executive in the Finance also served Sarawak Shell Berhad, Department. He was then transferred to Goodyear Malaysia Berhad, Linatex the Risk Management Department in Rubber Products Sdn Bhd (formerly 2004 to take up the role as the Risk known as Harrisons & Crossfields), Island Management Officer (RMO). On 1 April & Peninsular Berhad, Malaysian Mining 2005, he was transferred to Malaysian Corporation Berhad, Kumpulan Guthrie Re, serving as the Malaysian Re’s RMO. Berhad and Affin Bank Berhad. In total, Subsequently on 1 August 2007, he was he brings along to the Company more transferred back to MNRB and assumed than twenty (20) years of working his current position on 7 August 2007 experience in Human Resource Management and Development, both at the operational as well as strategic levels. He joined MNRB on 1 March 2011.

18 MNRB Holdings Berhad GROUP STRUCTURE MNRB

100% Malaysian Reinsurance Berhad 20% *Labuan Reinsurance (L) Ltd. LABUAN Re

100% Takaful Ikhlas Sdn. Bhd.

100% MNRB HOLDINGS BERHAD MNRB Retakaful Berhad

100% Malaysian Re (Dubai) Ltd.

MMIP Services Sdn. Bhd. 100%

40% * Motordata Research Consortium Sdn. Bhd.

* Associate Company

19 CHAIRMAN’S STATEMENT

On behalf of the Board of Directors, it gives me a great pleasure to present to the Shareholders, the Annual Report and Audited Financial Statements of the Group and of the Company for the financial year ended 31 March 2011.

GENERAL OVERVIEW

The year 2010 was a challenging year marked by the looming global financial crisis and credit crunch in certain economies of the world. This was exacerbated with uncertainties in the global environment, triggered by the ongoing geopolitical tensions and aftershock impacts of natural catastrophes.

In Asia, the emerging economies were less affected by the global crisis. Malaysia, which registered a contraction of - 1.7% in Gross Domestic Product (“GDP”) a year ago, posted an impressive rebound of 7.2% in 2010; which was spearheaded by robust domestic demand, increase in exports and supportive fiscal and monetary policies.

Investors’ confidence in the local stock market remained strong as evidenced by Bursa Malaysia Securities Berhad’s (“Bursa Malaysia”) record of 29 new Initial Public Offerings (“IPOs”) which generated RM19.9 billion in total funds raised, as compared to RM12.0 billion in 2009. Although very much influenced by external factors, the consistent current account surplus and net portfolio inflows had enabled Ringgit Malaysia to strengthen its position throughout the year in comparison to the US Dollar, Euro and Pound Sterling.

20 MNRB Holdings Berhad CHAIRMAN’S STATEMENT MNRB 40,457 79,261 164,952 144,644 193,955

Bank Negara Malaysia (“BNM”) had, during the year, announced the issuance of new family takaful licences to four joint ventures between local and foreign entities. To-date, three of these joint ventures have commenced their 07 08 09 10 11 operations. Although competition is expected to intensify in the future, with the sizeable potential business still Profit Before Tax untapped, we are optimistic of maintaining our leadership position in OVERVIEW OF GROUP’S In comparison, previous year’s results were the market. PERFORMANCE also affected by the one-off provision for impairment loss made on the Company’s To place the insurance and takaful For the year ended 31 March 2011, the investment in Principle Insurance Holdings industry on a firmer footing, BNM had Group recorded a total revenue of Limited, United Kingdom ("PIHL"). also introduced the Guidelines on Takaful RM1.46 billion, an increase of 9.1% Operational Framework (“TOF”) and compared to RM1.34 billion recorded in The Group’s profit before zakat and Syariah Governance Framework. Both the preceding year. The improved taxation during the year under review was were designed to better regulate the revenue was attributable to the increase somewhat impacted by a provision for management of takaful and retakaful in gross premium written by the impairment loss of RM14.6 million on the companies, these frameworks, we reinsurance subsidiary, Malaysian Qard by MRT to its general retakaful fund. believe, will benefit the industry in the Reinsurance Berhad (“Malaysian Re’’) long run. and higher wakalah fees earned by the Against this backdrop, the Group takaful and retakaful subsidiaries namely, registered a record profit after tax of During the year, the Group adopted the Takaful Ikhlas Sdn Bhd (“Takaful RM122.9 million for the financial year FRS 4 on Insurance Contracts, which IKHLAS”) and MNRB Retakaful Berhad ended 31 March 2011, an increase of had a significant financial impact on the (“MRT”), respectively. 142.4% against RM50.7 million recorded takaful and retakaful subsidiaries. The last year. Group Earnings Per Share, as a adoption of FRS 4 however, had minimal Favourable business conditions had result, increased by more than doubled impact on the reinsurance subsidiary that enabled the Group’s profit before zakat from 23.8 sen previously to 57.7 sen had met most of its requirements when and taxation to surge from RM79.3 during the year under review. adopting the Risk Based Capital million previously to RM165.0 million Framework (“RBC”) in 2009. during the year under review. This significant increase in profit of 108.1% during the year was mainly due to lower claims incurred and higher capital gain realised from investments by Malaysian Re.

21 CHAIRMAN’S STATEMENT

For the financial year ended 31 March 2011, Takaful IKHLAS registered a lower profit before tax and zakat of RM14.1 3,378,919 3,845,983 4,466,456 1,963,036 2,576,247 million, as compared to RM20.6 million in the preceding year. This was mainly due to the additional provision in relation to expense liabilities as required under the FRS4 and lower gains from disposal of investments. Meanwhile, the company’s profit after tax and zakat is lower at RM8.9 million as compared to RM13.8 million in the preceding year.

To-date, Takaful IKHLAS registered a total of 1.8 million certificate (policy) holders and 07 08 09 10 11 approximately 6,000 agents nationwide, for both Family and General Takaful. As at Total Assets the end of the financial year, Takaful IKHLAS has a total of 11 branches Malaysian Reinsurance Berhad For the year under review, Malaysian Re nationwide. registered a total investment income For the financial year ended 31 March (including net realised and fair value In a span of 8 years, Takaful IKHLAS has 2011, Malaysian Re registered an gains) of RM109.7 million. This been able to provide its customers with a increase in total gross premium written represents an increase of RM34.2 million choice of over 90 products. To maximize by 7.4%, from RM1.09 billion recorded or 45.4% from RM75.5 million recorded its value proposition to its customers’ the last year to RM1.17 billion this year. last year. The growth was mainly due to subsidiary has not only offered them with a About 72% of Malaysian Re’s total higher interest income and capital gain wide variety of excellent products, but also business volume during the year were realised from the sale of investment superior delivery system, such as enabling from the domestic market, while the in equities. our financial institution partners to access remaining 28% were generated from information and print cover notes through overseas business. Consequently, Malaysian Re recorded a its I-POS, thus providing enhanced higher pre-tax profit of RM179.9 million, convenience to its customers. Voluntary Cession (“VC”) accounted for an increase of RM66.4 million or 58.6% 42% of the total business volume, while compared to RM113.5 million last year. the remaining 58% were contributed by Profit after tax stood at RM140.9 million MNRB Retakaful Berhad non-VC business. this year compared to RM89.1 million in the previous year. MRT continued to progress significantly In spite of the large losses incurred as a during the financial year under review with result of the Japanese Tsunami and total gross contribution increased to Takaful Ikhlas Sdn Bhd floods in the northern and southern RM56.5 million for the year ended states of Peninsular Malaysia, Malaysian 31 March 2011 as compared to RM45.4 Takaful IKHLAS’s gross contribution Re managed to improve its overall loss million in the previous year. Of this total, income increased from RM614.7 million ratio from 67.7% to 59.4% during the General Retakaful business accounted for in the previous financial year to RM760.2 year. The improvement which was seen 77% of the total volume while the million during the year under review. across all portfolios, particularly in Marine remaining 23% were generated from Family Takaful accounted for 64% of the and Motor classes, was due to our Family Retakaful business. total gross contribution, whilst 29% were adoption of a more focused strategic from the General Takaful, and the approach in underwriting. remaining 7% were derived from Investment-Linked products.

22 MNRB Holdings Berhad CHAIRMAN’S STATEMENT

The subsidiary’s current year result MNRB however, was affected by a provision for 835,646 892,513 998,716 808,477 impairment loss of RM14.6 million on the 893,919 Qard provided to the General Retakaful Fund, in compliance with the FRS 139 and BNM’s guidelines under the newly introduced TOF.

As a result, MRT recorded a loss after zakat and tax of RM9.5 million as compared to a profit after zakat and tax of RM2.2 million in the previous year.

Malaysian Re Dubai Ltd (“MRDL”) 07 08 09 10 11

MRDL registered a higher gross premium Shareholders’ of RM51.8 million, underwritten on behalf Fund of Malaysian Re, as compared to RM44.6 million recorded last year. The In terms of Revenue Growth, the Group • On 5 January 2011, A.M. Best continuous improved performance recorded a lower growth of 8.8 %, Co., affirmed Malaysian Re’s indicates our growing success in the against the target of 12.9%. The lower financial strength rating of A- Middle East and North African (MENA) growth was mainly due to the lower (Excellent) and issuer credit markets, despite the adverse economic wakalah fee income earned by Takaful rating of “a-” with Stable and political environment in the region. IKHLAS. Outlook for both.

PROGRESS & ACHIEVEMENTS The ratings reflect Malaysian Report on Headline Key Re’s consistently profitable Performance Indicators (“KPIs”) In 2010, the Group recorded several underwriting performance, Achievement notable achievements, namely:- prudent investment portfolio and adequate capitalisation. i. Ratings The Group’s Headline KPIs for the Being a key subsidiary of financial year ended 31 March 2011 were • On 29 June 2011, Fitch MNRB Holdings Berhad, the as follows:- Ratings upgraded Malaysian ratings also manifest the Group Re’s Insurer Financial Strength synergy and administrative i. Return on Equity (“ROE”) of 9.8%; (IFS) from ‘A-’ to ‘A’ with Stable support. and Outlook. ii. Revenue Growth of 12.9%. • On 3 December 2010, Fitch This upgrade reflects the Ratings also affirmed MRT’s IFS For the year under review, the Group company's stronger financial at ‘BBB+’ and maintains its recorded a higher ROE of 13.0% as performance and continued Stable Outlook. compared to the target of 9.8%. This is efforts to de-risk its balance achieved on the back of Malaysian Re’s sheet. The Stable Outlook improved underwriting results and higher reflects Fitch's expectation that income from investments. The Malaysian Re will maintain its improvement however, was offset by the robust financial fundamentals, impairment of Qard of RM14.6 million which places heavy emphasis at MRT’s level. on bottom-line profitability as opposed to top-line growth.

23 CHAIRMAN’S STATEMENT

ii. Awards DIVIDENDS PROSPECT

Takaful IKHLAS continues to receive The Group’s capital preserving strategy The IMF has recently projected that the recognitions both on the domestic had resulted in Malaysian Re establishing world economy is susceptible to further and international fronts. Among the a commendable level of capital buffer as slowdown from 5.1% growth in 2010 to awards received were:- required under the Risk Based Capital 4.3% in 2011. With a growth projection Framework ("RBC"). Following the of 6.6%, developing economies are • The Merit Industrial Award for significant increase in this capital level, anticipated to continuously outpace the the insurance sector, 2010 by together with improved financial 2.2% growth of advanced economies. In the Kuala Lumpur Malay performance of the MNRB Group for the addition to that, on 5 August 2011, the Chamber of Commerce. year under review, the Board of Directors ‘AAA’ credit rating that the US had is recommending a First and Final enjoyed since 1941 was slashed by • Best Islamic Finance News dividend of 20%, less 25% income tax. Standard & Poor by one notch to ‘AA+’. Provider for 2010 The total net dividend payout for the year, - This is the first downgrade in the (Retakaful/Takaful Provider which will amount to RM31.9 million, country’s history and this factor is Award) from Islamic Finance is subject to shareholders’ approval at expected to aggravate further the News Awards Polls. Similar the forthcoming Annual General Meeting. existing adverse outlook of the world award was also won in 2008 economy. Coupled with the European and 2009. debt crisis, volatile commodity prices and CORPORATE SOCIAL the prolonged and widespread political • Best Takaful Product from RESPONSIBILITY (“CSR”) instability in the Middle East, the year International Takaful Award INITIATIVES 2011 will be a challenging one for the 2010. insurance and takaful industry. The development of human capital • Best Takaful Provider 2010 remains a priority within the Group. In this On the home front, BNM had earlier in Award by Euromoney Islamic respect, during the year, we continued the year projected that the Malaysian Finance. with our various human capital economy is expected to grow between development programmes which are 5% to 6% based on the economic • Global Leadership Award 2011 designed to enhance the capabilities and fundamentals and stronger domestic from The Leaders Magazine, competencies of our people. Steps are demand in the developing Asia which is supported by taken to ensure retention and continuity economies. The Government has also The American Leadership of skills development through strategic taken steps to strengthen Malaysia’s Association. placements of seeding positions and financial system so that it is able to succession planning. withstand global volatility and risks.

For the financial year under review, the In addition, through the Government’s size of the MNRB Scholarship Fund had dynamic Economic Transformation Plan increased to RM7.3 million. To-date, the (“ETP”), our economy is expected to be Fund has benefitted a total of 292 partly cushioned from the vulnerable deserving students through its external factors. scholarship program. This scholarship award demonstrates our unwavering commitment towards championing human capital development. We hope that this effort would produce larger number of insurance professionals with higher level of calibre and integrity to address the shortage of qualified manpower in our local insurance industry.

24 MNRB Holdings Berhad CHAIRMAN’S STATEMENT MNRB The Group will continue to implement I would like to also take this opportunity and monitor its management action to express our sincere appreciation and plans to ensure that it is adequately gratitude to Permodalan Nasional capitalized to meet all regulatory Berhad and all the other shareholders of requirements and support our business the Company for their continuous growth. It will also adopt a prudent and support, invaluable guidance and most conservative approach and remain of all, the confidence given to the Group. vigilant of its performance in the coming Your Board will continue its concerted financial year, in order to further enhance effort in creating and building on its shareholders’ value. shareholders’ value.

I also wish to thank my fellow Board FAREWELL AND WELCOME members for their commitment, contribution and counsel. MNRB is On 31 March 2011, Encik Anuar Mohd indeed fortunate to have such committed Hassan retired after having served the individuals to serve in its Board and I look Group for 31 years, including 17 years as forward to their continuous support and the CEO. The Board would like to record dedication in the coming years. our heartfelt appreciation to Encik Anuar for his loyal, dedicated and meritorious These achievements would not have service to MNRB. We wish him all the been possible if not for the commitment best in his future endeavors. and dedication of all our employees whose collective effort and teamwork We also had the pleasure of have enabled the Group to ride the congratulating Y.Bhg Datuk Ramlan challenges of the past years. Let us now Abdul Rashid on his appointment as the double our efforts and strive further in the Group Chief Operating Officer effective coming year in order to realise the 1 April 2011. He previously served as the Group’s vision especially in today’s Executive Vice President and Deputy everchallenging economic environment. CEO of MRT. We are confident that Y.Bhg Datuk Ramlan, with his vast experience in the insurance industry, will On behalf of the Board contribute positively to the future growth of the Group. Sharkawi Alis Chairman ACKNOWLEDGEMENTS 26 August 2011 On behalf of the Board, I would like to extend my appreciation and gratitude to all our business partners, ceding companies and intermediaries, Bank Negara Malaysia, and the local insurance and the takaful associations for their continued support, trust, cooperation and contributions.

25 CORPORATE SOCIAL RESPONSIBILITY

WORKPLACE 23 February 2011 BLOOD DONATION DRIVE DIRECTORS AND SENIOR MANAGEMENT TRAINING The “MNRB Blood Donation Drive” which was held in The MNRB Group places high importance on continuous collaboration with National Blood Center (NBC) received an learning and the development of its employees and Directors. overwhelming response from the MNRB Group’s employees as It continues to develop directors by leveraging on various training well as the tenants of Bangunan Malaysian Re. A total of ninety- programmes. Specially tailored training program were organized five (95) successfull donors came forward to show their support. for the board of directors and the senior management of the MNRB Group. 24 – 25 February 2011 ALL ABOUT VITAMINS 2 – 4 July 2010 ANNUAL FAMILY OUTING MNRB once again collaborated with Chemical Company of Malaysia Berhad (CCM) to organize a Vitamins Sale for all the The 28th Annual Family Outing was held at Nexus Karambunai, employees of MNRB Group and tenants of Bangunan Malaysian Sabah, and it drew an overwhelming response from both staff Re. This event will indirectly help to educate the MNRB Group’s and family members. The staff were divided into four (4) groups employees on all aspects of health as part of developing a namely, Green Zone, Red Knights, Blues Gang and Yellow King. preventive educational programme. All participants enjoyed the interesting activities and games that were organized for the outing.

24 September 2010 SYAWAL NAN CERIA

A special “Hari Raya” gathering was organized for the employee of MNRB Group with the objective of fostering a spirit of camaraderie and togetherness. Interesting activities and performances were held during this exclusive event, which was well received by all employees. Amongst the activities were the Karaoke Competition, the Best Dressed Department and of course, everyone’s favorite the Lucky Draw!

26 MNRB Holdings Berhad CORPORATE SOCIAL RESPONSIBILITY MNRB

4 March 2011 – 31 March 2011 30 March 2011 – 1 April till 4 April 2011 SUDOKU PUZZLE CONTEST MNRB – MAKNA CANCER AWARENESS CAMPAIGN

The Sudoku Puzzle Contest is very popular among the MNRB is very concerned on the health and well-being of its staff employees of the MNRB Group. The objective of this contest is regardless male or female. MNRB Group recently organized a to nurture critical-thinking skills and challenge creative minds. “MNRB - MAKNA Cancer Awareness Campaign” as part of its CSR Activities program. The four (4) days programme comprised a free Clinical Breast Screening Package, Pap Smear 23 – 25 March 2011 and a talk on cancer. The campaign was also aimed to educate HEALTHY HEART AWARENESS CAMPAIGN staff and develop preventive educational program on possible risk factors of cancer diseases. The “6th Healthy Heart Awareness” campaign was another collaboration with the Heart Foundation of Malaysia, and it drew an overwhelming response from the MNRB Group’s employees. The objectives of this campaign were to create awareness, to develop preventive educational programme, and to educate the employees on all aspects pertaining to heart disease. A cardiologist from the Heart Foundation of Malaysia conducted the talk which placed an emphasis on the importance of general heart-well being. MNRB contributed RM10,000 to the Foundation.

27 CORPORATE SOCIAL RESPONSIBILITY

MARKETPLACE COMMUNITY AND ENVIRONMENT

MARKET TRAINING PROGRAMMES 20 April – 26 April 2010 MSAM IN BORNEO MNRB is conscious of its commitment to all stakeholders, in particular, the insurance industry. In order to instil a higher degree MNRB and Takaful IKHLAS participated in Minggu Saham of professionalism in the industry by developing more Amanah Malaysia (MSAM) 2010 which was held at Wisma Bapa professionals, MNRB identifies, organises and offers training Malaysia, Kuching, Sarawak. This was the 11th consecutive year programmes to the industry that are aimed to provide a platform that MNRB participated in the event. MNRB was the ‘Rakan for participants to exchange ideas and update themselves on Utama’ while Takaful IKHLAS become the ‘Rakan Program current industry developments. Keagamaan’ for the third year. MNRB’s involvement in MSAM is part of the efforts to introduce the MNRB Group to the public and to enhance it presence. 16 – 19 July 2010 9th ANNUAL MALAYSIAN RE CLIENTS’ COURSE 20 April 2010 A total of thirty-one (31) participants from local insurance FREE MEDICAL CHECK-UP AND ZAKAT companies, including Malaysian Re’s staff, attended the CONTRIBUTIONS AT MSAM 2010 IN SARAWAK Malaysian Re’s market seminar at the Grand Preanger Hotel, Bandung, Indonesia. Themed as “Team Bonding in the In conjunction with MSAM 2010, Takaful IKHLAS undertook Workplace”, the seminar was conducted by Dr. Stephen Khaw, various activities which were related to CSR, such as free a Certified Professional Trainer from the International Professional medical examinations and play activities with elements. It also Managers Association (IPMA), UK. It managed to foster closer disseminated information on investments and financial planning relationships among the participants. to the community. Takaful IKHLAS also handed over zakat contributions while conducting a blood donation campaign. Apart from helping in the social development of the local community, contributions as well as the community activities sponsored were aimed at rewarding them irrespective of race or religion. Contribution and sponsored community activities were aimed at helping the social development of the local community as well as providing assistance.

28 MNRB Holdings Berhad CORPORATE SOCIAL RESPONSIBILITY MNRB

22 April 2010 6 May 2010 TAKAFUL IKHLAS RENOVATES SARAWAK GENERAL MNRB SCHOLARSHIP FUND AWARDED 37 SCHOLARSHIPS HOSPITAL’S ORTHOPAEDIC WARD The MNRB Scholarship Fund awarded scholarships to thirty- The therapy and recreational corner at Sarawak General Hospital seven (37) motivated and highly inspired students to pursue their now has a new look after the renovation process by Takaful studies in various insurance related fields. This included IKHLAS. The renovation project involved repainting the room scholarships offered to candidates pursuing the Diploma of the walls and decorating them with cartoon character stickers. Malaysian Insurance Institute (DMII) and the Associateship of the Takaful IKHLAS also equipped the room with a Plasma TV, DVD Malaysian Insurance Institute (AMII). The scholarship awards are Player, cupboard to store items and books, air-conditioning, testament of the Group’s commitment towards human capital window rails, rubber mats and other items. In addition, Takaful development, particularly in the Insurance and Takaful industry. IKHLAS provided the hospital with physiotherapy equipments. Overall, Takaful IKHLAS contributed RM 25,000 for this project. 9 August 2010 TAKAFUL IKHLAS DONATES WHEELCHAIRS TO TENGKU 23 April 2010 AMPUAN RAHIMAH HOSPITAL TAKAFUL IKHLAS EXTENDS FINANCIAL ASSISTANCE TO UPGRADE SMK SAINT THOMAS SURAU Takaful IKHLAS donated fifteen (15) wheelchairs to the Paediatric Ward of Tengku Ampuan Rahimah Hospital in Klang. Senior Takaful IKHLAS handed over financial contributions to the Saint Vice-President (Agency Business Development) of Takaful Thomas National Type Secondary School (SMK), Kuching, IKHLAS, Wan Rosli Shahruddin, led the hospital visit recently to Sarawak for the school's surau upgrading project. The project forge closer ties between the hospital staff and Takaful IKHLAS was to enable the SMK Saint Thomas muslim staff and students employees. Besides promoting caring and sharing with the to perform their religious obligations and activities in comfort. approach of the holy month of Ramadhan, the visit also brought It also reflected the 1Malaysia spirit of providing assistance to cheers and delights to the children undergoing treatment at the needy regardless to racial or religious background. the hospital.

29 CORPORATE SOCIAL RESPONSIBILITY

20 August 2010 24 August 2010 CONTRIBUTION TO PROGRAMME ‘TITIPAN KASIH’ RAYA CONTRIBUTION TO UNDERPRIVILEGED FAMILY HARIAN METRO Takaful IKHLAS celebrated the spirit of Ramadan Al-Mubarak Takaful IKHLAS participated in the ‘Titipan Kasih’ programme and Syawal with three (3) underprivileged families in Puchong, organized by Harian Metro in conjunction with Syawal Sungai Buloh and Klang, Selangor. Takaful IKHLAS donated celebration. Takaful IKHLAS handed-over duit raya and goody cash, food, biscuits, condensed milk, cooking oil, rice and other bags for fifty (50) orphanages and poor families located in Ipoh goods to these families. and Melaka to Harian Metro representatives.

26 August 2010 23 August 2010 TAKAFUL IKHLAS BREAKS FAST AND BUYS RAYA CONTRIBUTION AND BREAKING-OF-FAST WITH OUTFITS FOR NEEDY CHILDREN ORPHANS AND UNDERPRIVILEGED OF ASNAF (ASRAMA DARUL FALAH) Takaful IKHLAS brought cheers to twenty-five (25) poor children in the Petaling Jaya district by taking them out for Hari Takaful IKHLAS organized a breaking-of-fast programme with Raya shopping and treating them to a breaking-of-fast dinner. orphans and underprivileged residents of ASNAF. The programme was organised in collaboration with the Each orphan received cash (duit raya) and goody bag from Petaling Jaya branch of Selangor Tithe Board. Through this Takaful IKHLAS representative. programme, the children, aged ranging from five (5) to fifteen (15) years, were taken out to a shopping complex in Bukit Tinggi, Klang, where Takaful IKHLAS picked up the tabs for all their purchases of clothes and shoes, before ending the evening with a sumptuous iftar dinner treat. Takaful IKHLAS allocated up to RM300 for each child.

30 MNRB Holdings Berhad CORPORATE SOCIAL RESPONSIBILITY MNRB

2 September 2010 4 November 2010 SINCERE GESTURES FROM MNRB SHARE THE LIGHT OF DEEPAVALI

In conjunction with the holy month of ‘Ramadhan Al-Mubarak’, In conjuction with the Deepavali festive season, MNRB Group MNRB Group has once again organised a charitable activity with presented RM6,000 cash donations and electrical appliances to underprivileged children of Pusat Jagaan Lambaian Kasih, thirty-four (34) underprivileged children of Thara Bhavan with Kg. Sungai Penchala, Kuala Lumpur. The Home currently response to their needs. This CSR initiative is to help them realize houses fifty-six (56) underprivileged children, aged four (4) to their dreams and hopes and also to give the children a more seventeen (17) years old, who are in dire need of help. MNRB meaningful celebration of Deepavali. Group presented to the residents, RM6,000 cash donations, food hampers, and ‘duit raya’. The Home also received groceries as part of their daily essential needs and two (2) units 12 November 2010 of computers in further response to the needs of the Home. QURBAN MISSION IN CAMBODIA 2010

Takaful IKHLAS organized motorbikes convoy to Cambodia to 7 October 2010 conduct the act of devotion. There is no struggle that does not MNRB SHARE THE SPIRIT OF SYAWAL WITH THE require any sacrifice in this world. All the sacrifice done for the UNDERPRIVILEGED offering do not go to waste. In fact, it will be repaid with better rewards and returns. That is the choice made by the participants MNRB share the spirit of Syawal with the underprivileged and which included three (3) ladies in the Cambodia Charity Mission orphans at Rumah Sentuhan Budi located at Kampung Sri Batu. Programme which was held in conjunction with Eidul Adha 2010 The home which was set-up on August 2007, houses twenty- celebration recently. five (25) children aged four (4) to seventeen (17) years old. A total number of twenty-three (23) cows and twenty-one (21) MNRB Group donated RM6,000 cash, food hampers, ‘duit goats were successfully prepared for the sacrifice donated by raya’, two (2) unit of computers and groceries as part of their the staff and representatives of Takaful IKHLAS, corporate daily essential needs. partners as well as individuals. The slaughtering of the sacrificial animals was done in a number of selected villages in the Kampot Region. Among them were the villages of Keh, Perai Tenor, Mak Prang, Priang Pring and Kandal. Besides performing the acts of qurban and aqiqah, Takaful IKHLAS also donated some RM78,462 for the development of Islamic Education Centre in Kampot. The complex is under the supervision of Imam Syafie’ Academy. In addition, Takaful IKHLAS also donated RM28,000 for the payment of the religious teachers’ salary there besides a business zakat contribution of RM40,000.

31 CORPORATE SOCIAL RESPONSIBILITY

14 December 2010 27 January 2011 BACK TO SCHOOL 2010 - CONTRIBUTION BY TAKAFUL SODOMIZED VICTIM’S APPEAL GETS MEDIA COVERAGE IKHLAS The MNRB Group has once again demonstrated its The preparation for going back to school for some one hundred commitment to serve the society. It has made a generous (100) orphans and poor children in Perlis, Kedah and Kuala contribution to sodomy victim, Mohd. Shah Abdul Razak, who Lumpur brought joy as they received their school bags and has been experiencing pain and suffering since he was schooling paraphernalia besides a minimum cash contribution of sodomized eleven (11) years ago. His story has drawn a great RM100 to buy their school uniforms and shoes under the "Back deal of media interest and was publicized in the newspapers. to School" programme. As a responsible corporate citizen, Takaful IKHLAS has always been concerned with the hardship To ease the burden of financing the cost of the treatment, and difficulty endured by the less fortunate. Therefore, Takaful medicines and equipment that he needs, a team of MNRB IKHLAS through its Corporate Social Responsibility initiative - employees travelled to his home in East Town, Kulai Jaya, Johor, “IKHLAS untuk Komuniti” - gave contribution to these one to deliver a contribution of RM5,000. The contribution was hundred (100) orphans and needy children. Sixty (60) of these presented by Noorazimah Tahir, Vice President and Head of orphans and needy children from Kedah and Perlis were those Corporate Communications, MNRB. In addition, there were affected by heavy flood. MNRB Group personnel who had contributed by having money deducted from their monthly salary and to be deposited into 22 December 2010 Mohd. Shah Abdul Razak’s bank account. MNRB GROUP BRING FESTIVE JOY TO THE HOUSE OF JOY 27 January 2011 MNRB Group ended the festive seasons this year with love, MNRB GROUP BRING JOY TO RUMAH CARING KAJANG attention and joy of Christmas with House of Joy, Puchong, Selangor. The House of Joy was founded in August 1992 and The MNRB Group started the Chinese New Year by sharing located at Taman Tenaga, Puchong, Selangor. This home is a the joy of ‘Gong Xi Fa Chai’ with the twenty-eight (28) non-profit charitable home that administers shelter, care and residents of Rumah Caring Kajang. The MNRB Group made a training to orphans, children and teens that are underprivileged, monetary donation in response to the home’s needs, and it abused, abandoned and neglected. The home has been in also gave food hampers to all the residents. operation for the past eighteen (18) years and currently provides shelter to thirty (30) children from the age of four (4) to eighteen (18) and also ten (10) senior citizens. Again, MNRB Group contributed RM6,000 cash donations to the home and food hampers to the children. During the visit, the children were also treated to fun games and magical clown show.

32 MNRB Holdings Berhad CORPORATE SOCIAL RESPONSIBILITY MNRB

10 February 2011 12, 19, 26 March & 2 April 2011 TAKAFUL IKHLAS CHEER UP FLOOD VICTIMS CSR PROJECT: BASIC ENGLISH FOR KG. KERINCHI CHILDREN As floodwaters receded in Johor, the aftermath proved to be equally taxing as victims returned to clean up. Thousands of The CSR project was originally meant for forty (40) residents were evacuated when their homes were in undated participants. Takaful IKHLAS ended up having fifty-one (51) from 31 January 2011, with some houses in almost 2.5m of students. The biggest breakthrough was to get them involved water. To ease the flood victims' burden, Takaful IKHLAS in class. They now know that by using the knowledge of “Zip- donated some cash to the New Straits Times Press Malaysia Up” “Open-Up” and “Be-There”, they can acquire the ability (Berhad) and Media Prima. In addition, Takaful IKHLAS also of absorbing whatever that is being taught in school. The sent its “IKHLAS untuk Komuniti” uniform team to assist with applied knowledge, enabled us to have successful sessions cleaning and distribution of bags of food items, toiletries and other necessities.

19 & 26 February 2011 MOTIVATIONAL PROGRAMME FOR PRIMARY AND SECONDARY SCHOOLS

Following the “Back to School” programme, the “IKHLAS untuk Komuniti” programme has organized another event named “Kecemerlangan Ilmu Syahsiah & Ukhwah IKHLAS” for students of Sekolah Rendah Agama Sri Pantai and Sekolah Menengah Kebangsaan Sri Pantai. The programme was a collaboration effort with “IKHLAS Akademik” and was managed by Perkasa Diri; represented by Ustaz Nasib Zawawi and Ustaz Hashim Ahmad. The programme provided the knowledge on the right pedigree and practices of learning and methods of performing acts of devotion. It was conducted on 19 February 2011 for the primary school while the programme for secondary school attended by fifty (50) participants was held on 26 February 2011. The students were instilled with how to gain blessings during studying, the right way of performing prayer and other activities which relate to generating ideas and motivations.

33 STATEMENT ON CORPORATE GOVERNANCE

The Board of Directors of MNRB is committed to maintaining high standards of corporate governance and strives to continuously improve the effective application of the principles and best practices as laid down in the Malaysian Code on Corporate Governance (Revised 2007), the Corporate Governance Guide issued by Bursa Securities, the Bursa Malaysia Securities Berhad Main Market Listing Requirements (Bursa Malaysia Main Market Listing Requirements) and the Green Book published by the Putrajaya Committee on GLC High Performance (the Green Book).

MNRB’s policy is to implement all those principles and best BOARD COMPOSITION practices and to uphold high standards of business integrity in all the activities undertaken by the Group. This includes a Under the Company’s Articles of Association, the number of commitment to emulate good industry examples and comply Directors shall not be less than two (2) or more than ten (10). with guidelines and recommendations in the conduct of business activities within the Group. The Board currently comprises seven (7) members, all of whom are Non-Executive Directors including the Chairman. Three (3) of Set out below is a statement on how MNRB has applied the the members are independent. The President & Group Chief principles and complied with the Best Practices as prescribed Executive Officer (GCEO), Encik Anuar Mohd Hassan had retired under the above Code on Corporate Governance, Bursa on 31 March 2011. Currently the Company is in the midst of Malaysia Main Market Listing Requirements and the Green Book appointing its President & GCEO. Meanwhile, the Board had during the financial year ended 31 March 2011. appointed Datuk Ramlan Abdul Rashid to be the Group Chief Operating Officer of MNRB Holdings Berhad effective from 1 April 2011. BOARD OF DIRECTORS No individual or group of individuals dominate in the decision The Board of MNRB is responsible for the proper stewardship of making process of the Board to enable a balance and objective the Group resources, the achievement of Group’s objectives and consideration of issue, hence facilitating optimal decision good corporate citizenship. It discharges this responsibility making. By virtue of this composition, the Company has thus through compliance with all the relevant Acts and Regulations, complied with Paragraph 15.02 of the Bursa Malaysia Main including adopting the Principles and Best Practices of the Market Listing Requirements which requires that at least two (2) above Code on Corporate Governance, Bursa Malaysia Main directors or one-third (1/3rd) of the Board of Directors, whichever Market Listing Requirements and the Green Book. is the higher, to be independent.

The Board retains full and effective control over the Group’s The meetings of the Board are chaired by the Non-Executive affairs. This includes responsibility to determine the Group’s Chairman, whose role is clearly separated from the role of the development and overall strategic direction. Key matters, such President & GCEO. The Chairman is primarily responsible for as approval of quarterly and annual results, major acquisitions ensuring the effectiveness and conduct of the Board whilst the and disposals, major capital expenditures, budgets, business President & GCEO will ensure that Board policies and decisions plans and succession planning for top management are are implemented accordingly. reserved for the Board or its committees appointed to deal with. The Board members are: The Board comprises members with a wide range of experience in relevant fields such as insurance and reinsurance, accounting, • Sharkawi Alis - Chairman legal, economic, investment, international business, banking and (Non-Independent Non-Executive Director) business operations. Therefore, all Directors have the necessary depth to bring experience and judgment to bear on issues of • Anuar Mohd Hassan - President & Group CEO strategy, performance, resources and ethical standards. The (Non-Independent Executive Director) profiles of the Directors are provided on pages 12 to 14 of this (Retired on 31 March 2011) Annual Report. • P. Raveenderen (Non-Independent Non-Executive Director) (Re-designated as Non-Independent Non-Executive Director on 19 July 2011)

34 MNRB Holdings Berhad STATEMENT ON CORPORATE GOVERNANCE

• Dato’ Syed Ariff Fadzillah Syed Awalluddin MNRB (Independent Non-Executive Director)

• Yusoff Yaacob (Independent Non-Executive Director)

• Datuk Mohd Khalil Dato’ Mohd Noor (Non-Independent Non-Executive Director)

• Megat Dziauddin Megat Mahmud (Senior Independent Non-Executive Director)

• Paisol Ahmad (Non-Independent Non-Executive Director)

CONFLICT OF INTEREST

Directors are required to declare their respective shareholdings in the Company and related companies and their interests in any contracts with the Company or any of its related companies. The Directors are also required to declare their directorships in other companies. The Directors concerned will abstain from any discussions and decision-making in relation to these companies.

The Board members’ directorship in companies other than the Company and the Group, are well with in the restriction of not more than ten (10) directorships in public listed companies and not more than fifteen (15) directorships in non-public listed companies as stated in the Bursa Malaysia Main Market Listing Requirements.

BOARD MEETINGS

The Board has scheduled meetings at least six (6) times a year, besides the Annual General Meeting (AGM). For the year ended 31 March 2011, the Board held nine (9) meetings.

The details of attendance of the Directors at Board meetings held during the financial year are as follows:

Name of Director No. of Meetings Attended Percentage of Attendance

Sharkawi Alis 9/9 100% Anuar Mohd Hassan 9/9 100% P. Raveenderen 9/9 100% Dato’ Syed Ariff Fadzillah Syed Awalluddin 9/9 100% Yusoff Yaacob 9/9 100% Datuk Mohd Khalil Dato’ Mohd Noor 9/9 100% Megat Dziauddin Megat Mahmud 9/9 100% Paisol Ahmad 9/9 100%

35 STATEMENT ON CORPORATE GOVERNANCE

At each scheduled Board meeting, there is a report on the six (6) elements of responsibility of the Board under the Malaysian Code on Corporate Governance, namely: i) Reviewing / adoption of strategic and business plans for the Group; ii) Overseeing the conduct of the Group’s business to evaluate whether the business is being properly managed; iii) Identifying principal risks and ensuring the implementation of appropriate systems to manage the risks; iv) Succession planning, including appointing, training, fixing the compensation of and where appropriate, replacing key management; v) Developing and implementing an investor/ shareholder relations programme or communication policy for the Group; and vi) Reviewing the adequacy and integrity of the Group’s systems of internal control and of management information.

There is also a financial and business review and discussion of the Group’s quarterly performance including operating performance to date against the annual budget and business plan previously approved by the Board for that year.

APPOINTMENTS TO THE BOARD

The appointment of new Board members are considered and properly evaluated by the Nomination Committee. The Nomination Committee would then recommend the proposed appointment to the Board for approval. In making these recommendations, the Nomination Committee assesses the suitability of candidates, taking into account the required mix of skills, knowledge, expertise and experience, professionalism, integrity, competencies and other qualities, before recommending them to the Board for appointment.

The Nomination Committee and Board will devote sufficient time to review, deliberate and finalise the selection of directors.

The Company Secretary will ensure that all the appointments are properly made, all necessary information are obtained, as well as all legal and regulatory requirements are met.

RE-ELECTION OF DIRECTORS

In accordance with the Company’s Articles of Association, one-third (1/3rd) of the Directors for the time being or if their number is not a multiple of three (3), then the number nearest to one-third (1/3rd), shall retire from office at each AGM. All retiring Directors can offer themselves for re-election.

Directors who are appointed by the Board during the financial period before the AGM are also required to retire from office and shall seek re-election by the shareholders at the first opportunity after their appointment.

The Articles further provide that all Directors shall retire from office at least once in every three (3) years but shall be eligible for re-election.

Pursuant to Section 129(2) of the Companies Act, 1965, the office of a director of over the age of seventy (70) years becomes vacant at every AGM unless he is re-appointed by a resolution passed at such an AGM of which no shorter notice than that required for the AGM has been given and the majority by which such resolution is passed is not less than three-fourths of all members present and voting at such an AGM.

One (1) Director is due to retire pursuant to Section 129 of the Companies Act, 1965 and two (2) Directors are due for re-election at the 38th AGM.

The Board does not fix a maximum tenure limit for Directors as the Board is of the view that there are significant advantages to be gained from the long-serving Directors who possess tremendous insight and knowledge of the Company’s affairs.

36 MNRB Holdings Berhad STATEMENT ON CORPORATE GOVERNANCE MNRB SUPPLY OF INFORMATION

The Directors have full and unrestricted access to all information pertaining to the Group’s business affairs, whether as a full Board or in their individual capacity, to enable them to discharge their duties.

Prior to Board meetings, every Director receives a notice of meeting, agenda and Board papers. Sufficient time is given to the Directors to enable them to obtain further explanations, where necessary, so that the meeting will be well participated.

The Board papers include at least the following:

• Minutes of the previous Board meeting and meetings of Board Committees • Report on the performance of the subsidiary companies • Financial reports • Internal Audit reports • Compliance reports

Proper guidelines have been given by the Board pertaining to the content, presentation style and delivery of papers to the Board for each Board meeting to ensure adequate information be disseminated to the Directors.

All Directors have direct access to the members of the Senior Management team and the services of the Company Secretary. The Directors may, if necessary, obtain independent professional advice from external consultants, at the Company’s expense.

Throughout their period in office, Directors are updated on the Group’s business, the competitive and regulatory environments in which it operates and other changes by way of written briefings and meetings with senior executives.

DIRECTORS’ TRAINING

The Company acknowledges that continuous education is vital for the Board members to gain insight into the regulatory updates and management studies to enhance the Directors’ skills and knowledge in discharging their responsibilities.

All new Directors are required to undergo an induction programme where they receive information about the Group, the formal statement of the Board’s role, the powers that have been delegated to the Company’s Senior Management and Management committees and latest financial information about the Group. This is to enable them to contribute effectively from the outset of their appointment. All Directors have attended the Mandatory Accreditation Programme in accordance with the Bursa Malaysia Main Market Listing Requirements.

With the repeal of Practice Note 15 on Continuing Education Programme by Bursa Securities, the continuous training needs of the Directors are now vested on the Board.

During the financial year, the Directors had attended various seminars and programmes to strengthen their skills sets and knowledge in order to effectively discharge their responsibilities, and to acquire sound understanding of current issues and developments in the financial and business environment.

The Company Secretary facilitates the organisation of internal training programmes and Directors attendance of external programmes, and keeps a complete record of the training received or attended by the Directors.

37 STATEMENT ON CORPORATE GOVERNANCE

The following are some of the programmes and seminars attended by the Board members during the financial year: i) Bank Negara Malaysia’s Financial Institutions Directors Education ii) Global Islamic Finance Forum 2010 iii) Financial Industry Conference 2010 iv) Investment Forum 2010 v) Takaful and FRS 4, FRS 7 & FRS 139 and Introduction to Reinsurance and its Application to the Revenue Account vi) KPMG Audit Committee Institute Roundtable Discussion vii) Directors & Senior Management Training Programme – Managing The Risk & Evolution in Anti-Money Laundering (AMLA) & Counter Terrorism Financing viii) Global Investment Performance Standards (GIPS) ix) Malaysian Institute of Corporate Governance – Updates on Regulatory Framework and Directors’ Duties x) Independent Directors: Actual Vs. Perceived Independence xi) World Congress of Accountant 2010 xii) Dialogue : 10 Years Assessment on Current Financial Sector Masterplan-Preparing the Industry & Implications for the New Blueprint xiii) Strategic Islamic Finance xiv) Senior Leadership Program

BOARD COMMITTEES

The Board has delegated specific responsibilities to five (5) Board Committees, as follows: i) Audit Committee ii) Nomination Committee iii) Remuneration Committee iv) Risk Management Committee v) Investment Committee

These Committees have their respective Terms of Reference, which clearly defines their duties and obligations in assisting and supporting the Board. The ultimate responsibility for the final decision on all matters lies with the entire Board.

1. AUDIT COMMITTEE

The Audit Committee comprises five (5) members of whom three (3) are Independent Non-Executive Directors and two (2) are Non-Independent Non-Executive Director. Two (2) members of the Committee are qualified Accountants and members of the Malaysian Institute of Accountants. The members of the Committee are:

• Megat Dziauddin Megat Mahmud – Chairman (Senior Independent Non-Executive Director) (Appointed as a Chairman with effect from 19 July 2011)

• Dato’ Syed Ariff Fadzillah Syed Awalluddin (Independent Non-Executive Director)

• P. Raveenderen (Non-Independent Non-Executive Director)

• Paisol Ahmad (Non-Independent Non-Executive Director)

• Yusoff Yaacob (Independent Non-Executive Director) (Appointed with effect from 19 July 2011)

38 MNRB Holdings Berhad STATEMENT ON CORPORATE GOVERNANCE MNRB The Committee’s Terms of Reference include the review and deliberation of the Financial Statements of the Company and the Group, findings of the External and Internal Auditors, any related party transactions and any conflict of interest situation within the Group as well as making recommendation to the Board on appointment/ reappointment of External Auditors.

In order to encourage a greater exchange of free and honest views and opinions between the Audit Committee and External Auditors, meetings between them without the executive board member and the management team being present were held twice during the year.

The Audit Committee’s duties, as spelt-out in the Audit Committee Report on Pages 44 to 46 of this Annual Report, include primarily the duties as spelt out in paragraph 15.12 of the Bursa Malaysia Main Market Listing Requirements.

The Committee met five (5) times during the financial year.

2. NOMINATION COMMITTEE

The Board had established a Nomination Committee comprising three (3) Non-Executive Directors.

The members of the Committee are:

• Dato’ Syed Ariff Fadzillah Syed Awalluddin - Chairman (Independent Non-Executive Director)

• Sharkawi Alis (Non-Independent Non-Executive Director)

• Yusoff Yaacob (Independent Non-Executive Director) (Appointed with effect from 19 July 2011)

The Committee’s primary objective is to establish a documented formal and transparent procedure for the appointment of Directors and key senior officers and to assess the effectiveness of Directors, the Board as a whole and the various committees of the Board on an ongoing basis. The Committee regularly reviews the profile of the required mix of skills and attributes of the Directors and is satisfied that the Board has the appropriate balance of expertise and ability to discharge its responsibilities. All assessments and evaluations carried out by the Committee were properly documented by the Company Secretary.

The Committee, upon its recent annual review, was satisfied that the size of the MNRB Board is optimum and that there is appropriate mix of knowledge, skills, attributes and core competencies in the composition of the Board. The Committee was satisfied that all the members of the Board are suitably qualified to hold their positions as Directors of MNRB in view of their respective academic and professional qualifications, experience and qualities. Furthermore, all the Directors had been assessed as complying with the standards for “fit and proper” criteria and the Independent Directors had also been assessed as complying with the definition of “Independent Directors” which are consistent with the BNM Guidelines on Corporate Governance for Licensed Institutions (Revised BNM/GP1) and the Bursa Malaysia Main Market Listing Requirements.

The Committee met four (4) times during the financial year.

3. REMUNERATION COMMITTEE

The Board had established a Remuneration Committee comprising three (3) Non-Executive Directors.

The members of the Committee are:

• Megat Dziauddin Megat Mahmud - Chairman (Senior Independent Non-Executive Director)

• Dato’ Syed Ariff Fadzillah Syed Awalluddin (Independent Non-Executive Director)

• Yusoff Yaacob (Independent Non-Executive Director)

39 STATEMENT ON CORPORATE GOVERNANCE

The Committee’s primary objective is to establish a formal and transparent procedure for developing a remuneration policy for Directors, Executive Directors and key senior officers and ensuring that their compensation is competitive and consistent with the Company’s culture, objectives and strategies. Additionally, the Committee is also responsible for recommending to the Board on the specific remuneration packages for Directors, Executive Directors and key senior officers.

The Board as a whole will determine the remuneration of Non-Executive Directors and each individual Director abstains from the Board decision on his own remuneration.

The Committee met four (4) times during the financial year.

4. RISK MANAGEMENT COMMITTEE

The Board believes that an effective Risk Management Framework is essential to the Group in its quest to achieve its corporate objectives, continued profitability and enhancement of shareholders’ value in today’s rapidly changing market environment.

With this in mind, the Board had established a dedicated Board Committee known as the Risk Management Committee of the Board (RMCB) to develop and oversee the implementation of an enterprise-wide risk management framework. The Committee comprises three (3) members and is chaired by an Independent Non-Executive Director.

The members of the Committee are:

• Yusoff Yaacob - Chairman (Independent Non-Executive Director)

• P. Raveenderen (Non-Independent Non-Executive Director)

• Datuk Mohd Khalil Dato’ Mohd Noor (Non-Independent Non-Executive Director)

The RMCB is responsible for:

i) reviewing and recommending risk management strategies, policies and risk tolerance for the Board’s approval; ii) reviewing and assessing the adequacy of risk management policies and framework for identifying, measuring, monitoring and controlling risks as well as the extent to which these are operating effectively; iii) ensuring adequate infrastructure, resources and systems are in place for an effective risk management i.e. ensuring that the staff responsible for implementing risk management systems perform those duties independently of the Group’s risk taking activities; and iv) reviewing the management’s periodic reports on risk exposure, risk portfolio composition and risk management activities.

The Committee met four (4) times during the financial year.

40 MNRB Holdings Berhad STATEMENT ON CORPORATE GOVERNANCE MNRB 5. INVESTMENT COMMITTEE

Currently the Investment Committee, comprising two (2) Non-Independent Non-Executive Director and one (1) Independent Non-Executive Director, examines strategic investment proposals and makes decisions to optimize the Group’s returns on its investment activities.

The members of the Committee are:

• Datuk Mohd Khalil Dato’ Mohd Noor - Chairman (Non-Independent Non-Executive Director)

• Megat Dziauddin Megat Mahmud (Senior Independent Non-Executive Director)

• Paisol Ahmad (Non-Independent Non-Executive Director)

The Committee met four (4) times during the financial year.

DIRECTORS’ REMUNERATION

REMUNERATION POLICY AND PROCEDURE

The recommendation to the Board on the appropriate remuneration packages for the Directors as well as Executive Director and the key senior officers in order to attract, motivate and retain the Directors, Executive Director and the key senior officers of the necessary calibre and quality required by the Group would be made by the Remuneration Committee. The Group’s Remuneration policy is to reward the Executive Directors and the key senior officers competitively, taking into account performance, market comparisons and competitive pressures in the industry. Whilst not seeking to maintain a strict market position, the Committee takes into account comparable roles in similar organisations that may be similar in size, market sector or business complexity.

The Executive Director does not participate in any way in determining his individual remuneration.

All Non-Executive Directors are paid with Directors’ fees, which are determined by the Board and approved annually by the shareholders at the General Meeting.

The details of the total remuneration of each Director of the Company during the financial year ended 31 March 2011 are as follows:

Directors’ Remuneration Executive Director Non-Executive Director Total RM RM RM

Fees - 685,000.00 685,000.00 Salaries and other emoluments 1,932,000.00 - 1,932,000 Benefits-in-kind 79,000.00 - 79,000.00

Total 2,011,000.00 685,000.00 2,696,000.00

41 STATEMENT ON CORPORATE GOVERNANCE

Number of Directors Directors Remuneration Executive Director Non-Executive Director

Up to RM50,000 - - RM50,001 to RM100,000 - 6 RM100,001 to RM150,000 - 1 RM150,001 to RM200,000 - - RM200,001 to RM1,000,000 - - RM1,000,001 to RM1,500,000 - - RM1,500,001 to RM2,000,000 - - Above RM2,000,000 1 -

Total 1 7

SHAREHOLDERS

DISCUSSION BETWEEN THE GROUP, INVESTORS AND ANALYSTS

As part of the Board’s responsibility in developing and implementing an investor relations program, half-yearly briefings are held between the Group with the analysts and investors immediately after the announcement of the Group’s half-year and full-year results to Bursa Securities.

Presentations based on permissible disclosures are made to explain the Group’s performance and major development programs. Price-sensitive information about the Group is however, not disclosed in these briefings until after the prescribed announcement to Bursa Securities has been made.

MNRB also maintains a website which shareholders and the public in general can access to gain information about the Group at www.mnrb.com.my.

In addition, shareholders and the public can also convey their concerns and queries to the Senior Independent Non-Executive Director, Megat Dziauddin Megat Mahmud at [email protected].

ANNUAL GENERAL MEETING (AGM)

The AGM is the principal forum for dialogue with shareholders. The Company’s AGM is normally well attended as it provides the shareholders direct access to the Board as well as giving them opportunity to participate effectively and vote.

Notice of the AGM and annual reports are sent out to shareholders at least twenty-one (21) days before the date of the meeting. Besides the normal agenda for the AGM, the Board presents reports on the progress and performance of the Group in the annual report and provides opportunities for shareholders to raise questions pertaining to the business activities of the Group. All Directors are available to provide responses to questions from the shareholders during this meeting.

Each item of Special Business included in the notice of the meeting will be accompanied by an explanatory statement and / or Circular to Shareholders to facilitate full understanding and evaluation of the issues involved.

42 MNRB Holdings Berhad STATEMENT ON CORPORATE GOVERNANCE MNRB ACCOUNTABILITY AND AUDIT

FINANCIAL REPORTING

For financial reporting through interim quarterly reports to Bursa Securities and the annual report to shareholders, the Directors have a responsibility to present a fair assessment of the Group’s position and prospects. The Audit Committee assists the Board in scrutinizing information for disclosure to ensure accuracy, adequacy and completeness.

The Directors are responsible for ensuring that the accounting records are properly kept and that the Group’s financial statements are prepared in accordance with applicable approved accounting standards in Malaysia. The Statement by Directors pursuant to Section 169 of the Companies Act, 1965 is set out on page 49 of this Annual Report.

INTERNAL CONTROL AND RISK MANAGEMENT

Information on the Group’s internal control is presented in the Statement on Internal Control set out on page 47. The Group’s Statement on Risk Management is also set out on page 50 of this Annual Report.

RELATIONSHIP WITH AUDITORS

Information on the role of the Audit Committee in relation to the External Auditors may be found in the Audit Committee Report set out in pages 44 to 46 The Group has always maintained a close and transparent relationship with its auditors in seeking professional advice and ensuring compliance with the accounting standards in Malaysia.

MANAGEMENT’S ACCOUNTABILITY

The Group has an organizational structure showing all reporting lines as well as clearly documented job descriptions for all its Management and Executive employees and formal performance appraisals are done on periodic basis.

Authority limits, as approved by the Board, are clearly established and made available to all employees.

None of the Directors and Senior Management staff of the Group have any conflict of interest situations as referred to in Sections 54 and 55 of the Insurance Act, 1996.

STATEMENT ON COMPLIANCE WITH THE BEST PRACTICES OF THE CODE

The Group is committed to achieving high standards of corporate governance and the highest level of integrity and ethical standards in all its business dealings. The Board considers that it has complied throughout the financial year with all the Principles and Best Practices as set out in Part 2 of the Malaysian Code on Corporate Governance the Corporate Governance Guide issued by Bursa Securities, the Bursa Malaysia Main Market Listing Requirements and the Green Book.

This Statement on Corporate Governance is made in accordance with the resolution of the Board of Directors dated 31 May 2011.

43 AUDIT COMMITTEE REPORT

MEMBERS OF THE COMMITTEE

Megat Dziauddin Megat Mahmud Chairman & Senior Independent Non-Executive Director (Appointed as Chairman with effect from 19 July 2011)

Dato’ Syed Ariff Fadzillah Syed Awalluddin Independent Non-Executive Director

P. Raveenderen Non-Independent Non-Executive Director

Paisol Ahmad Non-Independent Non-Executive Director

Yusoff Yaacob Independent Non-Executive Director (Appointed with effect from 19 July 2011)

MEMBERSHIP

The Audit Committee shall be appointed by the Board and comprises at least three (3) members of whom all members must be non- executive directors and the majority shall be independent directors. At least one (1) member of the Committee must be a member of the Malaysian Institute of Accountants or eligible for membership.

The members of the Audit Committee must elect a Chairman among themselves who is an independent director.

The term of office shall be reviewed no less than once in every two (2) years.

AUTHORITY

The Committee is authorised by the Board to undertake any activity within its terms of reference and must have unlimited access to all information and documents relevant to its activities, to both the internal and external auditors, as well as to all employees of the Group.

It must be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the listed issuer, whenever deemed necessary.

It must also have the authority to obtain independent legal or other professional advice as it considers necessary.

TERMS OF REFERENCE

The main duties of the Committee are:

1. To review and approve the annual audit plan, audit charter, budget, scope of audit procedures, audit programmes and reports of the internal auditors including actions taken on internal audit recommendations;

2. To review the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work;

3. To review annually with the external auditors, the audit plan and the report including the coordination between the internal and external auditors to prevent duplication of effort;

4. To review the quarterly results and year-end financial statements before approval by the Board including the assistance given by the Company’s officers to the auditors;

5. To recommend to the Board the nomination of the external auditors after evaluating their performance and to consider the auditors’ remuneration and any questions of resignation or dismissal;

6. To review the external auditors’ management letter and Management’s response thereto;

7. To review the disclosure statements in the annual report to be in compliance with Bursa Malaysia requirements;

44 MNRB Holdings Berhad AUDIT COMMITTEE REPORT

8. To review any related-party transactions and any conflict of interests situation that may arise within the Group; and MNRB

9. To review the allocation of options pursuant to the Company’s Employees’ Share Option Scheme.

MEETINGS

A quorum shall consist of at least two-thirds (2/3rd) of the members with independent directors forming the majority.

A minimum of four (4) meetings per year is planned. Additional meetings may be called at any time if so requested by any committee member, the Management, the internal or external auditors.

The Chairman of the Committee shall invite any person to be in attendance to assist the Committee in its deliberations.

The minutes of the meetings shall be circulated to the Board after confirmation.

The Secretary to the Committee shall be the Company Secretary.

For the financial year under review, a total of five (5) audit committee meetings were held. The details of attendance of the Audit Committee members were as follows:

Name of Audit Committee member No. of meetings attended i. Megat Dziauddin Megat Mahmud 5/5 ii. Dato’ Syed Ariff Fadzillah Syed Awalluddin 5/5 iii. P. Raveenderen 5/5 iv. Paisol Ahmad 5/5 v. Yusoff Yaacob (appointed with effect from 19 July 2011) -

The main activities that took place during the meetings were:

1. Reviewed the quarterly results and year-end financial statements prior to approval by the Board;

2. Considered and recommended to the Board the nomination of the external auditors for the financial year ended 31 March 2011;

3. Reviewed the external auditors’ audit plan for the year ended 31 March 2011;

4. Reviewed the external auditors’ management letter and Management’s response thereto. Meetings without the presence of the Management were also held with the external auditors;

5. Reviewed the disclosure statements in the annual report to be in compliance with Bursa Malaysia requirements;

6. Reviewed and recommended to the Board for adoption of the new and revised Financial Reporting Standards issued by the Malaysian Accounting Standard Board;

7. Considered and recommended to the Board that there be no payment of any interim and final dividends;

8. Reviewed the results of the internal audits carried out in the year and the adequacy of actions taken by Management; and

9. Reviewed the Internal Audit Department’s annual audit plan for the year 2011.

In respect of the Company’s Employees’ Share Option Scheme, there was no allocation of options in the year for the Audit Committee to review.

45 AUDIT COMMITTEE REPORT

INTERNAL AUDIT DEPARTMENT

The Internal Audit Department was set up in-house on 2 January 1991. It is independent of the activities or operations of the operating units.

For the financial year ended 31 March 2011, the total costs incurred for the Group Internal Audit function were RM 2,067,000.

A summary of its activities for the year is as follows:

1. Conducted audits of the various business portfolios/departments of the Group;

2. Conducted follow-up audits on the implementation of the Audit Committees’ recommendations and Management’s actions taken to improve on issues identified during the audits; and

3. Prepared annual audit plans and budget for the Audit Committees’ consideration.

46 MNRB Holdings Berhad STATEMENT ON INTERNAL CONTROL

RESPONSIBILITY FOR INTERNAL CONTROL MNRB

The Board acknowledges that it is responsible for the Group’s system of internal control and for reviewing its effectiveness, adequacy and integrity. It recognizes that the review of the system of internal control is a continuous process, designed to manage rather than eliminate the risk of failure to achieve the Group’s business objectives. In pursuing these objectives, internal controls can only provide reasonable and not absolute assurance against material misstatement or loss.

The Board has established processes for identifying, evaluating and managing the significant risks faced by the Group. These processes have been in place for the whole of the financial year ended 31 March 2011 and have continued up to the date on which this Statement was approved. The Board is confident that these processes provide reasonable assurance on the effectiveness and efficiency of both the financial and operational aspects of the Group.

KEY PROCESSES

The key processes that the Board has established for review of the adequacy and integrity of the system of internal controls of the Group are as follows:-

• The Group has a well-defined organisational structure with clear lines of responsibility and accountability.

• The Group’s Risk Management policy, setting out the Board’s attitude toward risks and the processes to achieve the business objectives of the Group, is clearly documented in the Statement of Risk Management as set out in this Annual Report.

• The Internal Audit Department of the Group, which reports to the Audit Committee, performs regular reviews of the business processes of the Group in an effort to assess the adequacy and effectiveness of internal controls and to highlight significant risks impacting the Group and recommends further improvement, where necessary.

• The Group holds a 20% effective equity interest in its associated company, Labuan Reinsurance (L) Limited (“Labuan Re”) through its subsidiary, Malaysian Re and is represented on the Board of Labuan Re by two (2) of its directors. It also has a 40% effective equity interest in, another associated company, Motordata Research Consortium Sdn. Bhd. (“MRC”) and is similarly represented on the Board of MRC by two (2) of its directors.

COMMITTEES OF THE BOARD

The Board has established Committees of the Board at both the Group and subsidiary levels with a view to assist and provide added focus in discharging its duties.

The Committees of MNRB Holdings Berhad are:

• The Audit Committee, which is appointed by the Board comprising five (5) Non-Executive Directors. The Audit Committee reviews and considers both the internal and external auditors’ reports, and in the process gauges the effectiveness and adequacy of the system of internal controls. Appropriate recommendations for improvement are made to the Board for approval.

• The Investment Committee, which comprises three (3) Non-Executive Directors is responsible for reviewing and approving investment proposals, as well as monitoring the Group’s investment portfolio to ensure conformity with overall business objectives and statutory requirements.

• The Risk Management Committee, which comprises three (3) Non-Executive Directors, is responsible for the review and recommendation to the Board on the adoption of appropriate risk management strategies and policies. It is also responsible for the development and monitoring of the risk management process for the Group.

47 STATEMENT ON INTERNAL CONTROL

• The Nomination Committee, which comprises three (3) Non-Executive Directors, is responsible to recommend to the Board the appointment of directors. The Nomination Committee is also responsible for the annual assessment of the effectiveness of the Board.

• The Remuneration Committee, which comprises three (3) Non-Executive Directors, is responsible to recommend the appropriate remuneration packages for the directors.

OTHER KEY ELEMENTS OF INTERNAL CONTROL

• The Board has also adopted communication policies to ensure that all decisions made are communicated promptly to staff of all levels within the Group and vice versa where feedbacks and suggestions on improvements could be communicated to the Board and Management.

• The Underwriting Guidelines of the Reinsurance, Takaful and Retakaful subsidiary companies have been put in place to manage risks that are being underwritten.

• The Treaty programs ensure that there is a spread of reinsurers with acceptable ratings from accredited agencies. The securities of treaty reinsurers are reviewed on an annual basis.

• Departmental manuals are available within the Group and these set out policies and procedures for day-to-day operations and act as guidance to employees on the necessary steps to be taken in a given set of circumstances. The manuals enable tasks to be carried out with minimal supervision. It also specifies relevant authority limits to be complied with by each level of management within the subsidiaries. In this respect, the Reinsurance subsidiary has obtained the ISO 9001:2008 certification, while the Takaful Operator subsidiary has obtained the ISO 9001:2008 and MS 1900:2005 certifications from SIRIM.

• The Group’s financial systems record all transactions to produce monthly and quarterly performance reports that allow the respective Management to focus on key areas of concern.

• Annual business plans are submitted to the Board for approval.

• A detailed budgeting process has been implemented in the Group where each department prepares a budget for the up-coming financial year for the approval of the Board. The budget is monitored and major variances are followed-up by the respective Management.

• Every employee of the Group is contractually bound to observe prescribed standards of business ethics in the manner of conducting themselves at work and their relationships with external parties such as customers and suppliers. The Group expects each employee to conduct him/herself with integrity and objectivity and not to place him/herself in a position of conflict of interest. The competence of staff personnel is maintained through a structured recruitment process, a performance measurement and rewarding system and a wide variety of training and development programmes.

The Board believes that the system of internal controls of the Group is adequate for its purposes and will adequately safeguard shareholders’ investments and the Group’s assets. Reviews of the state of internal controls are carried out on an ongoing basis in accordance with “Statement on Internal Controls: Guidance for Directors of Public Listed Companies”, to ensure continued effectiveness of the system and to further strengthen it, where necessary.

This Statement is made in accordance with a resolution of the Board of Directors dated 31 May 2011.

48 MNRB Holdings Berhad STATEMENT OF DIRECTORS’ RESPONSIBILITY IN RELATION TO THE FINANCIAL STATEMENTS pursuant to paragraph 15.26(a) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad

The Directors are required to prepare financial statements, which give a true and fair view of the state of affairs of the Company and MNRB the Group as at the end of each financial year and of their results and their cash flows for that year then ended.

The Directors consider that in preparing the financial statements,

• the Company and the Group have used appropriate accounting policies, which are consistently applied;

• reasonable and prudent judgements and estimates were made; and

• all applicable approved accounting standards in Malaysia have been followed.

The Directors are responsible for ensuring that the Company and the Group maintain accounting records that disclose with reasonable accuracy on the financial position of the Company and the Group, and which enable them to ensure that the financial statements are drawn up in accordance with the requirements of the applicable approved Financial Reporting Standards issued by the Malaysian Accounting Standards Board and the provisions of the Companies Act, 1965.

The Directors have general responsibilities for taking such steps that are reasonably available to them to safeguard the assets of the Company and the Group, in that context, to have proper regard to the establishment of appropriate systems of internal control with a view to prevent and detect fraud and other irregularities.

The Directors consider that they have pursued the actions necessary to meet their responsibilities as set out in this Statement.

This statement is made in accordance with the resolution of the Board of Directors dated 31 May 2011.

49 STATEMENT ON RISK MANAGEMENT

RISK MANAGEMENT FRAMEWORK

The Board of MNRB believes that an effective Risk Management Framework is essential to the Group in its quest to achieve its corporate objectives, especially on the continued profitability and enhancement of shareholders’ value in today’s rapidly changing market environment.

With this in mind, the Board has established dedicated Board Committees known as the Risk Management Committee of the Board (“RMCB”) at the holding company and each of its subsidiary companies to oversee the implementation of a Group’s risk management framework in each company. To further complement the risk management framework of the Group, dedicated Management Committees known as the Operational Risk Management Committee (“ORMC”) at the operational level of the respective subsidiaries were also established to assist their respective RMCBs in ensuring a proactive risk management culture on an enterprise-wide basis at the subsidiaries level and by extension, the Group-wide basis as well.

RISK MANAGEMENT COMMITTEE OF THE BOARD (“RMCB”)

The Terms of Reference of the RMCB at the holding company and at the operating subsidiaries are as set out below:

OBJECTIVES

The primary objective of the RMCB is to oversee the Senior Management’s activities in managing the key risk areas of the holding company and the operating subsidiaries and to ensure that the risk management process is in place and functioning effectively.

COMPOSITION OF THE RMCB OF MNRB

The members of the RMCB were appointed by the Board comprising at least three (3) Non-Executive Directors. The Chairman of the RMCB is an Independent Non-Executive Director appointed by the Board amongst the members of the Committee.

The members of the Committee are as follows:

Yusoff Yaacob - Chairman P. Raveenderen Datuk Mohd Khalil Dato’ Mohd Noor

COMMITTEE’S RESPONSIBILITIES

The RMCB is responsible for: i) Reviewing and recommending risk management strategies, policies and risk tolerance for the Board’s approval; ii) Reviewing and assessing the adequacy of risk management policies and framework for identifying, measuring, monitoring and controlling risks as well as the extent to which these are operating effectively; iii) Ensuring adequate infrastructure, resources and systems are in place for an effective risk management i.e. ensuring that the staff responsible for implementing risk management systems perform those duties independently of the subsidiaries’ risk taking activities; and iv) Reviewing the management’s periodic reports on risk exposure, risk portfolio composition and risk management activities.

COMMITTEE MEETING

The RMCB holds regular meetings, at a minimum once every quarter and reports regularly to the Board.

QUORUM

The quorum for RMCB meetings consists of at least two (2) members, one (1) of whom is an Independent Director.

50 MNRB Holdings Berhad STATEMENT ON RISK MANAGEMENT MNRB OPERATIONAL RISK MANAGEMENT COMMITTEE (“ORMC”)

ORMCs were set up at each respective operating subsidiaries and its members consist of key management personnel of each company.

The ORMCs’ key role is to assist the RMCB of each respective subsidiary in overseeing the management of practices risks. In conjunction with the set-up of the ORMCs, Risk Management division was also formed to improve practices risk management and to provide support to the respective ORMC in carrying out its functions.

In summary, the Board believes that risk management is a collective responsibility throughout the entire organisation and there must be clear accountability outlined to ensure its success. As such, the risk management framework within the Group is structured on the following basis: - i) The Board is ultimately responsible for the management of risks. In this respect, the RMCB, on behalf of the Board, oversees the effective implementation of the risk management framework within the Group, including the major areas of risk relating to strategic, financial, operational & other risk; ii) The Audit Committee complements the role of the RMCB by providing an independent assurance of the adequacy and reliability of the risk management process, and compliance with the risk management framework and regulatory guidelines. The Audit Committee is assisted by an independent Internal Audit Department in performing its role; iii) The ORMC provides the necessary assistance to the RMCB in implementing the risk management framework; and iv) The individual departments must also play its role by implementing the risk management policies & process and ensure that they are complied with on the day-to-day activities.

KEY INITIATIVES UNDERTAKEN

The Group had put in place the enterprise risk management framework for the effective and ongoing identification, evaluation, management and reporting of the Group’s risks in compliance with the Listing Requirements.

In line with the needs of the risk management framework, the Group had completed an enterprise-wide level assessment of the Group’s current state of risk profile, which includes the following: - i) Identification of key risks that may impede the Group from achieving its strategic objective; ii) Implementation of risk treatment strategy to mitigate these key risks; and iii) Monitor & report the development of the risks.

The Group also ensures continued application of risk management process before embarking on any major project/initiatives.

Further to the above, the following key activities have been undertaken during the financial year to complement the enterprise-wide risk management framework: - i) The Group had taken the initiative to review the existing risk management framework with the focus toward evaluating and benchmarking the Group’s Risk Management Practices against best practices namely ISO 31000 Standard on Risk Management. Part of the initiative is to increase the sophistication of risk management program by looking into developing the following:

a. key risk indicator that will allow management to proactively monitor key risks trend & exposure, enabling risk treatment to be implemented before the risk evolves into a major incident; and

b. designing risk aggregation and consolidation framework in the risk management system that will provide holistic view of the Group’s risks. ii) Recognizing that Asset Liability Management (“ALM”) is an important part of Risk and Capital Management, which in turn an important part of Enterprise Risk Management; the Group had implemented Group Wide initiatives to establish an ALM structure, process and infrastructure to ensure that decisions and actions taken with respect to asset and liability are coordinated and future cash flow needs and capital requirements are met.

With the enhanced risk management framework in place, apart from having an established and structured process for the definition and management of risks, the Group also aspires to take the implementation of Enterprise-wide Risk Management to the next level in line with the demands and complexities in today’s business environment.

51 FIVE-YEAR FINANCIAL HIGHLIGHTS

2011 2010 2009 2008 2007 RM’000 RM’000 RM’000 RM’000 RM’000

Operating revenue 1,463,262 1,341,798 1,173,819 978,555 834,127

Profit before zakat and tax 164,952 79,261 40,457 193,955 144,644

Profit after zakat and tax 122,942 50,713 26,288 170,441 129,479

Technical reserves 1,266,110 1,180,750 1,113,062 1,351,251 1,065,270

Total assets 4,466,456 3,845,983 3,378,919 2,576,247 1,963,036

Shareholders’ fund 998,716 892,513 835,646 893,919 808,477

Paid-up capital 213,070 213,070 213,070 212,523 211,866

Earnings per share (sen) 57.7 23.8 12.3 80.3 61.4

Net assets per share (RM) 4.69 4.19 3.92 4.21 3.82

Profit before zakat and tax to Shareholders’ fund (%) 16.5 8.9 4.8 21.7 17.9

Profit after zakat and tax to Shareholders’ fund (%) 12.3 5.7 3.1 19.1 16.0

Dividends (%) 20.0 - 10.0 40.0 46.0

Net dividends per share (sen) 15.0 - 7.5 29.4 37.6

52 MNRB Holdings Berhad FINANCIAL CALENDAR

2009 2010 MNRB

Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept

Quarterly Results

• 1st Quarter Results 28 25

• 2nd Quarter Results 26

• 3rd Quarter Results 25

• 4th Quarter Results 31

AGM

• Notice of AGM 1

• AGM 23

2010 2011

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Quarterly Results

• 1st Quarter Results

• 2nd Quarter Results 30

• 3rd Quarter Results 24

• 4th Quarter Results 31

AGM

• Notice of AGM 26

• AGM 23

53 MNRB’S GROWTH

RM Million

4,500

4,000

3,500

3,000

2,800

2,600

2,400

2,200

2,000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

0 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 Year

Total Assets Shareholders’ Fund

Year Shareholders’ Fund Total Assets RM’000 RM’000

2000 444,833 1,283,187 2001 460,092 1,257,161 2002 506,313 1,329,716 2003 564,609 1,427,390 2004 617,010 1,476,021 2005 677,039 1,607,197 2006 747,803 1,772,311 2007 808,477 1,963,036 2008 893,919 2,576,247 2009 835,646 3,378,919 2010 892,513 3,845,983 2011 998,716 4,466,456

54 MNRB Holdings Berhad Price Earning Ratio(x) Price Earning MNRB HOLDINGSBERHAD-PERFORMANCEOFSHARE Closing Price(RM) rs iied il % 7.60* Gross DividendYield (%) oa oueTae '0) 9,803 Total Volume Traded ('000) Lowest Price(RM) Highest Price(RM) PERFORMANCE OFSHARES(JANUARY 2009-MARCH2011) COUNTER: MNRBHOLDINGSBERHAD SHARE PRICESANDVOLUMETRADED(JANUARY 2009-MARCH2011) INVESTORS’ INFORMATION

Kuala Lumpur Composite Index Closing Price (RM) 1000 1100 1200 1300 1400 1500 1600 3.10 3.30 3.50 3.70 3.90 2.50 2.70 2.90 800 900

Jan-09 Jan-09

Feb-09 Feb-09

Mar-09 Mar-09

Apr-09 Apr-09

May-09 1/4/07-31/3/081/4/06-31/3/07 1/4/08-31/3/09 1/4/09-31/3/10 1/4/10-31/3/11 May-09

Jun-09 Jun-09

Jul-09 Jul-09

Aug-09 4.55 2.63 1.90 Aug-09 3.04

Sep-09 Sep-09 Oct-09 Oct-09 Nov-09 Nov-09 Dec-09 Dec-09 Jan-10

Jan-10 14,614

Feb-10 12.77 3.04 2.68 Feb-10 3.39

Mar-10 0 Mar-10 Apr-10 Apr-10 May-10 May-10 Jun-10 Jun-10 Jul-10

Jul-10 12,254 Aug-10 25.7 3.64 2.75 2.60 4.92 Aug-10 Closing PriceofMNRBShare Kuala LumpurCompositeIndex

Sep-10 Volume Traded Closing PriceofMNRB Sep-10 Oct-10 Oct-10 Nov-10 Nov-10 Dec-10 Dec-10 Jan-11

Jan-11 28,508 Feb-11 5.68 8.77 4.56 4.32 Source: Bloomberg@1/06/2011

Feb-11 5.8 Mar-11

Mar-11 2.5 2.6 2.7 2.8 2.9 3 3.1 3.2 3.3 3.4 3.5 3,500.0 500.0 1,000.0 1,500.0 2,000.0 2,500.0 3,000.0

Closing Price (RM) * Proposeddividend

Volume Traded 27,326 10.22 7.33 4.50 3.70 4.88 55

MNRB

As we grow from strength to strength, from one height to another, we encounter many challenges. But as long as there is resilience and determination, we will keep rising above them and continue to grow.

MALAYSIAN REINSURANCE BERHAD CORPORATE PROFILE

MALAYSIAN REINSURANCE BERHAD (Malaysian Re) was incorporated on 27 August 2004 as a wholly-owned subsidiary of MNRB Holdings Berhad. As part of the restructuring exercise of the MNRB Group, the reinsurance business, the reinsurance license and reinsurance assets of MNRB were transferred to Malaysian Re on 1 April 2005. As the national reinsurer, Malaysian Re will continue to pursue the same primary objective as that successfully achieved by MNRB for more than thirty (30) years, that is to reduce the outflow of reinsurance premiums overseas. Malaysian Re will also continue to enhance the competitiveness and efficiency of the local insurance companies in an increasingly globalised marketplace through its active involvement in leading and underwriting their reinsurance needs. The classes of business underwritten can broadly be categorised under Fire, Engineering, Motor, Marine, and Miscellaneous Accidents. Leveraging on its breadth and depth of experience and expertise, strong fundamentals and proven track record, Malaysian Re has grown in stature as an international player having established a strong market presence in Asia, the Middle East, Africa and China.

CAPITAL STRUCTURE

Malaysian Re has an Authorised Capital of RM1 billion, divided into 1 billion ordinary shares of RM1.00 each and a Paid-up Capital of RM510 million, divided into 510 million ordinary shares of RM1.00 each.

58 Malaysian Reinsurance Berhad CORPORATE INFORMATION

BOARD OF DIRECTORS REMUNERATION COMMITTEE

SHARKAWI ALIS Megat Dziauddin Megat Mahmud (Chairman)

Non-Independent Non-Executive Chairman Dato’ Syed Ariff Fadzillah Syed Awalluddin RE MALAYSIAN Yusoff Yaacob HASHIM HARUN President & Chief Executive Officer RISK MANAGEMENT COMMITTEE Non-Independent Executive Director Yusoff Yaacob (Chairman) ANUAR MOHD HASSAN P. Raveenderen Non-Independent Non-Executive Director Datuk Mohd Khalil Dato’ Mohd Noor (Retired on 31 March 2011)

P. RAVEENDEREN INVESTMENT COMMITTEE Non-Independent Non-Executive Director Datuk Mohd Khalil Dato’ Mohd Noor (Chairman) DATO’ SYED ARIFF FADZILLAH SYED AWALLUDDIN Megat Dziauddin Megat Mahmud Independent Non-Executive Director Hashim Harun

YUSOFF YAACOB Independent Non-Executive Director AUDITORS

DATUK MOHD KHALIL DATO’ MOHD NOOR Ernst & Young Non-Independent Non-Executive Director Level 23A, Menara Millenium Jalan Damanlela MEGAT DZIAUDDIN MEGAT MAHMUD Pusat Bandar Damansara Independent Non-Executive Director Damansara Heights 50490 Kuala Lumpur Tel : +603-7495 8000 COMPANY SECRETARIES Fax : +603-2095 5332

Norazman Hashim (MIA 5817) Lena Abd Latif (LS 8766) BANKERS

Malayan Banking Berhad AUDIT COMMITTEE CIMB Bank Berhad

Megat Dziauddin Megat Mahmud (Chairman) Dato’ Syed Ariff Fadzillah Syed Awalluddin REGISTERED OFFICE P. Raveenderen 12th Floor, Bangunan Malaysian Re No. 17, Lorong Dungun NOMINATION COMMITTEE Damansara Heights 50490 Kuala Lumpur Dato’ Syed Ariff Fadzillah Syed Awalluddin (Chairman) Tel : +603-2096 8000 Sharkawi Alis Fax : +603-2096 7000 P. Raveenderen E-mail : [email protected] Yusoff Yaacob Website : www.malaysian-re.com.my Datuk Mohd Khalil Dato’ Mohd Noor

59 DIRECTORS’ PROFILE

SHARKAWI ALIS, aged sixty-four (64), HASHIM HARUN, aged fifty-seven (57), P. RAVEENDEREN, aged sixty-six (66), Malaysian. Non-Independent Non- Malaysian. Non-Independent Executive Malaysian. Independent Non-Executive Executive Chairman since 3 September Director since 1 April 2008. Member of Director since 27 August 2004 and 2007. Member of the Nomination the Investment Committee. Currently, the re-designated as Non-Independent Committee. President & Chief Executive Officer of Non-Executive Director on 19 July 2011. Malaysian Re. He is also the Chairman of Member of the Audit Committee, the Other information on Sharkawi Alis is Persatuan Insurans Am Malaysia (PIAM) Risk Management Committee and the disclosed in the Directors’ Profile and Malaysian Insurance Institute (MII), a Nomination Committee. section of MNRB on page 12 of this Director of MRDL, MMIP Services Sdn. Annual Report. Bhd., Financial Park (Labuan) Sdn. Bhd. Other information on P. Raveenderen is and Asian Institute of Finance (AIF). disclosed in the Directors’ Profile Obtained his Bachelor of Arts (Hons.) section of MNRB on page 12 of this degree from the University Malaya. Annual Report. He started his career at Credit Corporation (M) Berhad, a finance company, in 1977. He served in various capacities and was appointed as General Manager in 1988. In 1996, with the acquisition of Credit Corporation (M) Berhad by the DRB Hicom Group, he was appointed as the General Manager at one (1) of its subsidiaries, Automotive Corporation (M) Sdn. Bhd. assembler and distributor of Isuzu vehicles and the national truck, Hicom. In 1998, he served on the Board of SEA Insurance Berhad (now UNI.Asia General Insurance Berhad) and subsequently appointed as CEO in 1999. He served as a Director at UNI.Asia Capital Berhad and UNI.Asia Life Assurance Berhad from 1999 to 2008. Held the position of Chairman of Central Administration Bureau (CAB) from 2003 to 2005. A Director of Malaysian Rating Corporation Berhad from 2005 to 2007.

60 Malaysian Reinsurance Berhad DIRECTORS’ PROFILE MALAYSIAN RE MALAYSIAN

DATO’ SYED ARIFF FADZILLAH YUSOFF YAACOB, aged sixty-three SYED AWALLUDDIN, aged sixty-seven (63), Malaysian. Independent Non- (67), Malaysian. Independent Non- Executive Director since 31 March 2005. Executive Director since 27 August Chairman of the Risk Management 2004. Chairman of the Nomination Committee and member of the Committee and member of the Nomination Committee and the Remuneration Committee and the Audit Remuneration Committee. Committee. Other information on Yusoff Yaacob is Other information on Dato’ Syed Ariff disclosed in the Directors’ Profile Fadzillah Syed Awalluddin is disclosed in section of MNRB on page 13 of this the Directors’ Profile section of MNRB on Annual Report. page 12 of this Annual Report.

61 DIRECTORS’ PROFILE

DATUK MOHD KHALIL DATO’ MOHD MEGAT DZIAUDDIN MEGAT NOOR, aged seventy (70), Malaysian. MAHMUD, aged sixty-five (65), Non-Independent Non-Executive Malaysian. Independent Non-Executive Director since 31 March 2005. Chairman Director since 24 August 2006. of the Investment Committee and Chairman of the Remuneration member of the Risk Management Committee, Chairman of the Audit Committee and the Nomination Committee and member of the Committee. Investment Committee.

Other information on Datuk Mohd Khalil Other information on Megat Dziauddin Dato’ Mohd Noor is disclosed in the Megat Mahmud is disclosed in the Directors’ Profile section of MNRB on Directors’ Profile section of MNRB on page 13 of this Annual Report. page 14 of this Annual Report.

62 Malaysian Reinsurance Berhad MANAGEMENT TEAM

President & Chief Executive Officer : ASSISTANT VICE PRESIDENTS Hashim Harun, BA (Hons), Arts Head of Inspection :

Fatimy Abdul Rashid, MBA RE MALAYSIAN SENIOR VICE PRESIDENTS Head of Technical Services : Chief Underwriter, International Treaties : Musi Kadim, B. Eng. (Hons) Mech. Paul Ng Wooi Yip, B. Eng. (Hons) Mech. Head of Motor Insurance Pool cum Compliance Officer : Chief Underwriter, Domestic Treaties : Thomas V. T. Zachariah, Diploma in Auto Eng. Rajinder Mohan, FCII, AIINZ Head of Claims : Chief Underwriter, Facultative & Technical Support : Norehan Hashim, ADBS (Insurance), Dip in Actuarial Science T. Sivapalan Tharmapalan, CII, ACII, AMII, B. Mech. Eng. (Hons) Head of Actuarial Services : Tony Tan Chee Yew, M.Sc Actuarial Sc. Head of Reinsurance Administration / Claims : Teoh Bee Lan, CA (M), B. Acc. (Hons)

VICE PRESIDENTS

Head of Central Administration Bureau & Large & Specialised Risks : Hajjah Mili Mohd Yusoff, FCII, ACII

Head of Market Pools : Abdul Halim Anuar Sharif, B.Sc. Mech. Eng.

Senior Underwriter, Facultative - Domestic / International : Thiyaga Rajan Kaliaperumal, B. Eng. (Hons) Chem

Senior Underwriter, International Treaties : Zaini Abdul Aziz, BBA Actuarial Sc. and Risk Mgmt & Ins.

Senior Underwriter, Domestic Treaties : Lua Tiong Aik, B. Eng. (Industrial)

Voluntary Cessions/Autofac, Domestic Treaties : Izaham Ishak, DIA

63 SENIOR MANAGEMENT TEAM’S PROFILE

The President & Chief Executive Officer, PAUL NG WOOI YIP is the Senior Vice RAJINDER MOHAN is the Senior Vice HASHIM HARUN, leads the day-to-day President & Chief Underwriter of President & Chief Underwriter of operations of Malaysian Re together with International Treaties Department. He Domestic Treaties Department. He is a the key management staff which graduated with a Bachelor of Science Fellow member of the Chartered includes: (Honours) degree in Mechanical Insurance Institute, United Kingdom and Engineering from the University of a Senior Associate member of the Salford, Manchester, United Kingdom in Australian and New Zealand Institute of 1984. He began his career with the then Insurance and Finance. He started his Malaysian National Reinsurance Berhad career as an Executive with Guardian as a Risk Engineer in 1984. Working up Royal Exchange (New Zealand) in the ranks, he was promoted to Assistant February 1988 and subsequently joined General Manager in 1994. He was the then Malaysian National Reinsurance transferred to Malaysian Re on 1 April Berhad in November 1988 as an 2005 and assumed his present position Underwriting Executive. He was in October 2005. promoted to Assistant General Manager for Business Unit 2 in April 2002. He was transferred to Malaysian Re on 1 April 2005 and assumed his present position in October 2005.

64 Malaysian Reinsurance Berhad SENIOR MANAGEMENT TEAM’S PROFILE MALAYSIAN RE MALAYSIAN

T. SIVAPALAN is the Senior Vice TEOH BEE LAN is the Senior Vice President & Chief Underwriter of President of Claims and Retrocessions. Facultative and Technical Support She graduated from the University of Division. He graduated with a Bachelor Malaya with a Bachelor of Accounting of Mechanical Engineering (Honours) (Honours) degree in 1984. Her career from University Malaya. He is also a first commenced with Messrs Hanafiah Chartered Insurer and an Associate Raslan & Mohamed (now merged with member of the Chartered Insurance Ernst & Young) before she joined the then Institute (ACII) and Malaysian Insurance Malaysian National Reinsurance Berhad Institute (AMII). He has over twenty (20) as an Insurance Audit Executive in 1986. years of experience in the insurance From 1989 to 1990, she resumed industry, both with foreign and local auditing with Messrs Price Waterhouse, direct insurers as well as with a foreign Singapore before she returned to reinsurance company. He started his Malaysian National Reinsurance Berhad career in risk management and had in 1991 to set up the Internal Audit since moved on to underwriting, Department. She was subsequently reinsurance, claims, marketing and promoted to Senior Manager, Internal senior management. Throughout his Audit in 1994 and Assistant General career, he has served in a number of Manager in 1996. She was the Assistant PIAM Sub-Committees and is currently General Manager of Corporate Planning the Chairman of the Rating Committee. & Compliance Department from January 1999 and subsequently the Assistant General Manager in charge of Reinsurance Administration Department in June 2002. She was transferred to Malaysian Re on 1 April 2005 and assumed her present position in October 2005. She is a member of the MIA.

65 SENIOR MANAGEMENT TEAM’S PROFILE

MILI MOHD YUSOFF is the Vice ABDUL HALIM ANUAR SHARIF is the President & Head of Central Vice President & Head of Market Pools. Administration Bureau (CAB) and Large He graduated with a Bachelor of Science & Specialised Risks (LSR) Department. in Mechanical Engineering in 1986 from She was a PERNAS scholar and South Dakota State University, United obtained her Associateship of the States of America. He commenced his Chartered Insurance Institute from the career with the Technical Services London School of Insurance. Whilst in Department of the then Malaysian the UK, she was attached to Gil y National Reinsurance Berhad as Risk Carvajal Brokers Pte Ltd where she Engineer in 1987. He was transferred to received training as a junior reinsurance Voluntary Cession Department in 1996, broker. She subsequently returned to Market Cession & Facultative Malaysia in 1987 and thereafter, spent a Department in 1998, Marketing / major part of her career in insurance Underwriting - Business Unit 1 in 2002, broking specializing in Oil & Gas, Marine Retrocessions / Claims / Pools and Specialised Risks portfolios. Department in 2003 and later transferred She was the Risk and Insurance to Malaysian Re on 1 April 2005. Manager for a major Dutch oil company He assumed his present position in for a short stint before returning to the May 2010. broking fraternity in 2001. In her last broking assignment, she led her team to successfully secure Malaysia’s first deepwater offshore construction project. She was also the Client Manager for the country’s ‘Angkasawan (Astronaut)’ insurance programme. A Fellow of the Chartered Insurance Institute (by examination, 1994).

66 Malaysian Reinsurance Berhad CORPORATE ACTIVITIES AND SERVICES

Malaysian Re has been actively involved in underwriting all classes of general reinsurance business from the Malaysian market. It has RE MALAYSIAN expanded its business internationally and is actively underwriting business from the Asian, Middle East, Africa and China markets. Malaysian Re will continue to provide prompt services and will ensure the existing products to be not only competitive but also meet the requirements of its customers.

MARKET SERVICES

Malaysian Re is currently involved in providing various services to the Malaysian insurance industry. The services amongst others, include the following:

A) TECHNICAL SERVICES

Surveying and Advisory Services on Risk Management D) MALAYSIAN MARKET POOLS

Malaysian Re provides Property and Engineering Risk • Malaysian Aviation Pool Survey services to the local insurance industry for the purpose of special rating, underwriting and also loss Malaysian Re assumed the role as Manager of the estimation. Property Risk assessment and risk Malaysian Aviation Pool (MAP) effective 1 October management services tailored to the insured’ needs are 1996. Currently, its membership comprises eight (8) also provided through their insurers when requested. local insurers and four (4) reinsurers with a total underwriting capacity of RM 393 million. The B) CENTRAL ADMINISTRATION BUREAU underwriting of risks is by a Committee, nominated by participating companies. The business written by Malaysian Re initiated the establishment of the Central MAP is primarily Malaysian risks and Malaysian Administration Bureau (CAB) in 1995 and it now manages interests abroad. the centralized computerized system for the administration and settlement of facultative reinsurance between CAB • Malaysian Energy Risks Consortium members ie. insurers and reinsurers operating in Malaysia. The elimination of reconciliation problems and the efficient Malaysian Energy Risks Consortium (MERIC) was settlement of balances and claims recovery between established in March 1995 with the objective to members were the main drivers for the formation of CAB. optimise national retention, promote wider interest The cost of development and operations of the system is and develop underwriting skills in the specialised jointly funded by its members and since the launching of class of energy business. MERIC comprises twelve the web-based system in 2004, reinsurers have (12) local insurers and three (3) reinsurers with experienced a distinct enhancement in the overall Malaysian Re taking on the role of Secretariat. It has performance of the CAB system. a capacity to underwrite up to a combined single limit C) INSPECTION of RM 50 million for upstream and downstream risks. The underwriting of risks is by a Committee, Malaysian Re was given the mandate by PIAM to form an nominated by participating companies. The primary Inspection Task Force to conduct inspections or carry out portfolio of the business written by MERIC is investigations on the conduct and activities of its members in Malaysian risks and Malaysian interests abroad. accordance with the terms and provisions of the various However, recognising the need to develop a broader Inter-Company Agreements. With effect from 1 April 1992, spread of risks and premium base, the portfolio has the various Inter-Company Agreements had now been been extended to include risks within Asia and Pacific amalgamated into a single agreement called “Inter-Company regions, Middle East and North Africa countries. Agreement On General Insurance Business” (ICAGIB). 67 CORPORATE ACTIVITIES AND SERVICES

E) MARKET TRAINING G) SIHAT MALAYSIA

Over the years, Malaysian Re has and will continue to The Sihat Malaysia Scheme, which was officially launched organise various courses/seminars on insurance and on 18 February 2000, was developed by the National reinsurance subjects for staff of insurance companies to Insurance Association of Malaysia (NIAM). Members of instil a higher degree of professionalism in the industry. NIAM subscribing to this Scheme provide a uniformed health insurance programme covering health care including F) SCHEME FOR INSURANCE OF LARGE & cashless admission to hospitals, medical treatments, SPECIALISED RISKS surgery as well as emergency assistance to policy holders. Managed Care Organisation has been appointed under the The Scheme for Insurance of Large & Specialised Risks Scheme to provide specialised services to both the policy (SILSR) was implemented on 1 January 1994 with holders and NIAM members. Malaysian Re was appointed Malaysian Re appointed as Scheme Manager by BNM. It as the Account Manager of the Scheme, which is currently was designed with the objective of developing and being subscribed to by eight (8) NIAM members. enhancing the level of the Malaysian insurance industry’s technical expertise and professionalism. In line with this H) SPECIAL RATING objective, SILSR aimed to promote optimum retention with reinsurance placed to the best national advantage whilst Malaysian Re was appointed by PIAM to form a Rating facilitating the most favourable cover at internationally Committee specifically for the purpose of determining competitive terms for the Malaysian risk owners. special rates for Fire and Industrial All Risks (IAR) Insurances, for risks which qualify for special rating under the Fire Tariff. This Committee comprises not less than six (6) qualified or experienced fire insurance underwriters or risk surveyors from among PIAM members of whom not more than three (3) shall be from Malaysian Re. The Chairman of the Rating Committee shall be a representative from Malaysian Re. By virtue of this appointment, Malaysian Re also acts as the Secretariat to this Committee as well as handles the day-to-day operations of all matters pertaining to special rating applications.

68 Malaysian Reinsurance Berhad MALAYSIAN RE’S PORTFOLIO OF BUSINESS

2011 2010 Class RM’000 % RM’000 %

Fire 417,299 36 388,719 36 RE MALAYSIAN Motor 266,857 23 240,327 22 Miscellaneous Accidents 293,802 24 279,261 25 Marine 194,427 17 182,879 17

Total 1,172,385 100 1,091,186 100

17% 17% Marine Marine

36% 36% Fire Fire

2011 2010

23% 22% 24% Motor 25% Motor Miscellaneous Miscellaneous Accident Accident

69

Our desire for growth is as natural as the trees needing light.

TAKAFUL IKHLAS SDN BHD CORPORATE PROFILE

TAKAFUL IKHLAS SDN. BHD. (TAKAFUL IKHLAS) was incorporated on 18 September 2002 and is a wholly-owned subsidiary of MNRB Holdings Berhad.

Takaful IKHLAS has, within the eight (8) years of its operations, established a strong presence in the provision of Islamic financial protection services based on the Takaful System, which stresses on a spirit of cooperation and joint responsibility among participants. Today, Takaful IKHLAS is widely known in the market as a dynamic “brand”.

Thus far, more than 1.8 million individuals and corporations have placed their trust to become its certificate holders (participants).

Takaful IKHLAS’ commitment and adherence to values that cherished, coupled with the application of appropriate technology in conducting business have earned Takaful IKHLAS a sound reputation for its ethical approach and service delivery.

Takaful IKHLAS offers individuals and commercial enterprises a comprehensive range of Family, Group and General Takaful Plans and Riders, with more being planned in the not too distant future. The distribution/service channels comprise highly knowledgeable and well-trained people. These channels comprise more than 6,000 agency personnel, brokers, financial institutions, motor franchiseholders, co-operatives and Islamic bodies.

Takaful IKHLAS has now established an extensive agency network with eleven (11) branches located in Selangor, Sungai Petani, Kota Bharu, Johor Bharu, Kuching, Kota Kinabalu, Melaka, Kuantan, Ipoh, Terengganu and Putrajaya.

High ethical standards have been set for both staff and business partners as evidenced by Takaful IKHLAS’ response to customers and growing reputation for ensuring fair and fast claims settlement. There are no “backlogs” in claim payments with approvals given within twenty-four (24) hours for many cases.

The use of technology has been both deliberated and well thought out. Takaful IKHLAS has invested considerably in this area in support of its philosophy of creating efficiency and effectiveness to serve its participants and business partners.

Aside from acquiring the latest technology to drive both front and back-end processes, and integrate the same, Takaful IKHLAS was among the first to utilise the e-Cover Note System linking Takaful IKHLAS with the Road Transport Department or JPJ. Additionally, the Company has in place an Electronic Claims Estimation System that considerably speeds up the assessment of motor claims. In addition, an agency portal, I-POS, has been established to enable agents to track their business portfolios. Takaful IKHLAS was also the first to introduce both new and renewal motor takaful purchases called e-IKHLAS.

Takaful IKHLAS has also introduced an e-Marine portal which enables selected agents and banks to issue certificates of cover immediately for their marine cargo Takaful needs. An existing e-Cover Note System has also been expanded to include Non-Motor takaful business that allows Takaful IKHLAS’ agents to issue Fire, Houseowner, Householder and Personal Accident certificates for their clients.

Takaful IKHLAS’ objective is to be the preferred provider of Islamic financial protection services and towards this end, will leave no stone unturned to achieve this.

CAPITAL STRUCTURE

Takaful IKHLAS has an Authorised Capital of RM500 million and a Paid-up Capital of RM295 million.

72 Takaful Ikhlas Sdn. Bhd. CORPORATE INFORMATION

BOARD OF DIRECTORS REMUNERATION COMMITTEE

SHARKAWI ALIS Yahaya Besah (Chairman) Non-Independent Non-Executive Chairman Dato’ Othman Hashim

Halim Din IKHLAS TAKAFUL DATO’ SYED MOHEEB SYED KAMARULZAMAN Paisol Ahmad President & Chief Executive Officer Non-Independent Executive Director RISK MANAGEMENT COMMITTEE ANUAR MOHD HASSAN Non-Independent Non-Executive Director Dato’ Othman Hashim (Chairman) (Retired on 31 March 2011) Paisol Ahmad Dr. Syed Musa Syed Jaafar Alhabshi DATO’ OTHMAN HASHIM Yahaya Besah Independent Non-Executive Director

HALIM DIN INVESTMENT COMMITTEE Independent Non-Executive Director Paisol Ahmad (Chairman) YUSOFF YAACOB - (Appointed with effect from 25 May 2011) Independent Non-Executive Director Dato’ Syed Moheeb Syed Kamarulzaman (Resigned with effect from 30 December 2010) Dr. Syed Musa Syed Jaafar Alhabshi Halim Din PAISOL AHMAD - (Appointed with effect from 25 May 2011) Non-Independent Non-Executive Director

YAHAYA BESAH AUDITORS Independent Non-Executive Director Ernst & Young DR. SYED MUSA SYED JAAFAR ALHABSHI Level 23A, Menara Millenium Independent Non-Executive Director Jalan Damanlela Pusat Bandar Damansara Damansara Heights COMPANY SECRETARIES 50490 Kuala Lumpur Tel : +603-7495 8000 Norazman Hashim (MIA 5817) Fax : +603-2098 5332 Lena Abd Latif (LS 8766)

BANKERS SHARIAH COMMITTEE Maybank Islamic Berhad Dato’ Mohd Mokhtar Shafii (Chairman) CIMB Islamic Berhad Datuk Nik Moustpha Nik Hassan Bank Islam Malaysia Berhad Prof. Dr. Ahmad Hidayat Buang EONCAP Islamic Bank Berhad Assoc. Prof. Dr. Shamsiah Mohamad AmIslamic Bank Berhad Dr. Muhammad Naim Omar

AUDIT COMMITTEE REGISTERED OFFICE

Halim Din (Chairman) 9th Floor, IKHLAS Point Dato’ Othman Hashim Tower 11A, Avenue 5 Paisol Ahmad Bangsar South Dr. Syed Musa Syed Jaafar Alhabshi No. 8, Jalan Kerinchi Yahaya Besah 59200, Kuala Lumpur Tel : +603-2723 9999 Fax : +603-2723 9998 NOMINATION COMMITTEE E-mail : [email protected] Website : www.takaful-ikhlas.com.my Dr. Syed Musa Syed Jaafar Alhabshi (Chairman) - (Appointed with effect from 24 February 2011) Sharkawi Alis Halim Din Dato’ Othman Hashim

73 DIRECTORS’ PROFILE

SHARKAWI ALIS, aged sixty-four (64), DATO’ SYED MOHEEB SYED He also sits on the board of ISM Malaysian. Non-Independent Non- KAMARULZAMAN, aged fifty-eight Insurance Services Malaysia Berhad, Executive Director and Chairman of (58), Malaysian. Non-Independent and is a member of the Professional Takaful IKHLAS since 3 January 2008. Executive Director since 2003. Member Development Council of International Member of the Nomination Committee. of the Investment Committee. He is also Centre of Education in Islamic Finance the President & Chief Executive Officer (INCEIF). He also sits on the steering Other information on Sharkawi Alis is of Takaful IKHLAS for the past eight (8) committee of the Malaysian disclosed in the Directors’ Profile years. He has thirty-six (36) years in the International Islamic Financial Centre section of MNRB on page 12 of this insurance, reinsurance and takaful (MIFC) and on the Board of Principle Annual Report. industry and has helmed several local Insurance Company, UK (the first and multinational direct insurance independent takaful company in the UK). and reinsurance companies. Currently, he is a Board member of the MII and He is also a frequent speaker in sits on its Executive Committee. He is conferences and forums locally and also the Chairman of the Malaysian internationally. Takaful Association and the Central Administration Bureau. In addition, Syed Moheeb sits on the investment committee of Baitulmal Perlis and on the Trust Management Committee of the Olympic Council of Malaysia.

He was appointed to the board of the International Cooperative and Mutual Insurance Federation (ICMIF) and chairs the Takaful Network of ICMIF. He is a council member for the Association of Chartered Islamic Finance Professional (ACIFP) council.

74 Takaful Ikhlas Sdn. Bhd. DIRECTORS’ PROFILE TAKAFUL IKHLAS TAKAFUL

DATO’ OTHMAN HASHIM, aged fifty- HALIM DIN, sixty-five (65), Malaysian. PAISOL AHMAD, aged fifty-seven (57), nine (59). Malaysian. Independent Non- Independent Non-Executive Director Malaysian. Non-Independent Non- Executive Director since 2003. Chairman since 2003. Chairman of the Audit Executive Director of Takaful IKHLAS of the Risk Management Committee. Committee. Member of the Nomination since 11 April 2004. Chairman of the Member of the Audit Committee, the and the Remuneration Committee. He is Investment Committee. Also the Remuneration Committee and the also in the Investment Committee. He is Director of MNRB. Member of the Nomination Committee. Graduated from a Chartered Accountant who spent more Audit Committee, Remuneration the Royal Military College, Sungai Besi. than thirty (30) years working for Committee and the Risk Management Obtained his Degree in Law from London multinational corporations and Committee. and qualified as a Barrister-at-Law from international consulting firms. He Council of Legal Education, London. accumulated eighteen (18) years of Other information on Paisol Ahmad is He was among the first batch of lecturers experience working in the Oil and Gas disclosed in the Directors’ Profile to teach Diploma in Law at the Mara Industry - six (6 ) years of which as a section of MNRB on page 14 of this Institute of Technology. In 1983, he set- Board member of Caltex/ Chevron, Annual Report. up his partnership legal practice, Messrs. responsible for financial management Othman Hashim, Chen & Co. In 1990, before engaging in the consulting he moved on and sets up his own legal business. He was the Managing Partner practice, Messrs. Othman Hashim & Co. of the Consulting Division of Ernst & He is also the Director of Dynaura Young Malaysia. He later became the Trading Sdn. Bhd. Vice President of Cap Gemini Ernst & Young Consulting when Cap Gemini of France merged with Ernst & Young Consulting. In 2003, he with two (2) partners took over the consulting business of Cap Gemini Ernst & Young, Malaysia and rebranded it as Innovation Associates where he is currently the Group Managing Director. He is also an independent member of the Board of Wah Seong Corporation Berhad and Kris Assets Holdings Berhad.

75 DIRECTORS’ PROFILE

YAHAYA BESAH, aged sixty (60), DR. SYED MUSA SYED JAAFAR Malaysian. Independent Non- ALHABSHI, aged fifty (50), Malaysian. Executive Director since 20 August Independent Non-Executive Director 2009. Chairman of the Remuneration since 20 August 2009. Chairman of the Committee. Member of the Audit Nomination Committee. Member of the Committee and the Risk Management Audit Committee, the Risk Management Committee. He is also the Director Committee and the Investment of MRT. Committee. He is also the Director of MRT. Graduated from the University Science of Malaysia with a Bachelor Degree in Obtained a Diploma in Business Studies Social Science. He was a director at the from Ngee Ann Polytechnic, Singapore Office of the Director General of in1984, a Bachelor of Business Insurance, Federal Treasury from 1975 to Administration (Hons.) Degree from the 1988. Joined BNM in 1988 and had International Islamic University Malaysia served in various insurance related in 1989 and a Doctorate in Business departments throughout his length of Administration majoring in Accounting service. He was the former Director in the and Finance from University of Insurance Supervision Division from Strathclyde, Glasgow, United Kingdom 1995 until 1998 and also Director Internal in 1994. Audit of BNM from 1998 until 2005. His last position in BNM was Director He began his career with Coopers & Special Projects (Deposit Insurance) Lybrand, Singapore as an Audit Assistant before he retired in 2006. in 1984. From 1989 until 1994 he joined IIUM as an Assistant Lecturer and continued his profession as an academician and held various positions in various departments. He joined Universiti Tun Abdul Razak in 2000 and was Head of Centre for Graduate Studies in 2001. He served as Dean of Faculty of Business in 2005 and is currently Associate Professor and Dean of Graduate School of Business. In 2006 he joined Amanie Business Solutions Sdn Bhd and is currently attached as a fellow Consultant with the company. He currently sits on the Shariah Committees of EONCAP Islamic Bank Berhad and MNRB Retakaful Berhad.

76 Takaful Ikhlas Sdn. Bhd. SHARIAH COMMITTEE MEMBERS’ PROFILE TAKAFUL IKHLAS TAKAFUL

DATO' MOHD. MOKHTAR SHAFII, DATUK NIK MOUSTPHA HAJI NIK PROF. DR. AHMAD HIDAYAT BUANG, aged sixty-nine (69). Chairman of Takaful HASSAN, aged fifty-eight (58). Shariah aged forty-nine (49). Shariah Committee IKHLAS Shariah Committee since 2002. Committee member of Takaful IKHLAS member of Takaful IKHLAS since 2002. Holds a Master of Art (1976) and since 2002. Director General of Islamic Professor of Academy of Islamic Studies Bachelor of Art (Honors) (1972) from the Understanding Malaysia (IKIM). Holds a at University Malaya. Holds a Bachelor in University of Malaya. Started his career Bachelor of Business Administration Shariah from the University Malaya. in 1975 as a lecturer with the University (1977) and Master of Economics (1978) Completed his Masters in Law and of Malaya. In 1984, he was appointed from the University of Ohio, United States Doctorate from the University of London Associate Professor (Dean) of the of America. Prior to joining IKIM, he was (specialising in Islamic Contracts). International Islamic University of the Dean of Kulliyyah of Economics and, Former member of OCBC Bank Berhad Malaysia. In 1997, he was appointed the subsequently, Dean of Kulliyyah of Post and CIMB Shariah Council. Deputy Rector of Institut Pengajian Ilmu- Graduate Studies of the International Ilmu Islam following which, he became Islamic University of Malaysia. Senior Vice President of Kolej Dar Al-Hikmah in 2002, a position he continued to hold till 2007. Also a Shariah Council member for MARC Berhad, and previously for Bank Kerjasama Rakyat Malaysia, Lembaga Tabung Haji and Jabatan Kemajuan Islam Malaysia (JAKIM). Currently he is also a member of Selangor and Pahang Fatwa Council. In addition, he is also the member of the Majlis Ugama Islam dan Adat Resam Melayu Negeri Pahang.

77 SHARIAH COMMITTEE MEMBERS’ PROFILE

DR. MUHAMMAD NAIM OMAR, aged ASSOC. PROF. DR. SHAMSIAH BINTI forty-three (43). Shariah Committee MOHAMAD, aged forty-four (44). member of Takaful IKHLAS since 2009. Shariah Committee member of Takaful He is an Assistant Professor of Islamic IKHLAS since 2009. She is an Associate Law at Ahmad Ibrahim Kulliyyah of Professor at the Department of Fiqh and Laws, International Islamic University of Usul, Academy of Islamic Studies of Malaysia. Graduated with a degree in University of Malaya. Currently, she is a Shariah Law from Al-Azhar University in member of Shariah Committee of the 1992. In 1999, he received a Master Standard Chartered Saadiq Berhad and degree from Cairo University in Shariah also a member of Shariah Advisory Law and later received his PhD from Council of Securities Commission University of Wales, Lampeter in 2006. Malaysia. Besides that, she is also a member of Shariah Council of Jabatan Kemajuan Islam Malaysia (JAKIM) and a member of Shariah Advisory Council of Association of Islamic Banking Institutions Malaysia (AIBIM). Both her degree and Master are from University of Malaya. She received her PhD from University of Jordan. Her expertise is in ‘Fiqh Muamalat’.

78 Takaful Ikhlas Sdn. Bhd. MANAGEMENT TEAM

President & Chief Executive Officer : Actuarial Services - Pricing : Dato’ Syed Moheeb Syed Kamarulzaman, AMII Mohd Nor Azman Mohd Yassin, M.Sc Actuarial Science, BBA

Executive Vice President, Business Operations : Actuarial Services - Property & Casualty :

Wan Mohd Fadzlullah Wan Abdullah, Nor Ailis Sumedi, B.Sc. Actuarial Science IKHLAS TAKAFUL B.Sc. Computer Science (Hons.) Actuarial Services - Corporate : Appointed Actuary : Noor Nashriq Dadameah Noor Nikman, Muhammad Jamalul Alam @ Jefferey Zain Mohd Isa M.Sc Actuarial Science Fellow – Society of Actuaries, MBA (Finance), B.Sc. Actuarial Science Finance - Investment : Ahmad Kamal Bidin, CA (M), Bachelor of Accounting, CFP

SENIOR VICE PRESIDENTS Finance - Family Fund & Taxation : Ghazalee Mahiddin, MIA, Bachelor of Finance Chief Financial Officer : Zainurin Julaihi, CA(M), MIBM, MBA Finance - General & Shareholders’ Fund & Credit Control : Fauziah Md Hasan, Bachelor of Finance Corporate & Foreign Business : Saiful Bahri Saroni, M.Sc. ASA Medical/Health : Sh. Abd Rahman Sh. Abdullah, M.Sc. Insurance, BBA Agency Business Development : Wan Rosli Shaharuddin Wan Yaacob, MBA in Management Broking & Corporate Business : Fadzil Rahman Kallahan, Diploma in Insurance New Market Business Development & Medical / Health Kenny Ong Chun Eng, Bachelor in Computer Science Financial Institution : Jeffry Shah Abdul Wahab, Cert. in MII Operations : Rozhan Yusof, Bachelor of Economics, ASA General Agency Business Development : Leaguat Ali Khan Abdul Jabbar, Diploma in Insurance Corporate Services : Yushida Husin, B.Sc. Statistics Branch Business Development & Operations : Khairuddin Ibrahim Information System & Services : Andrew Lim Kean Kee, Dip. Computer Studies, Dip. MII Underwriting - Commercial Risks : Muhammad Noor Sukaimi, Adv. Diploma in Business Studies, ACII

VICE PRESIDENTS Underwriting - Retail & Personal Lines : Ahmad Nasaruddin Ishaudin, Bachelor of Engineering (Hons.), AMII Human Resource Management : Norizan Oyob, MBA, BBA, Dip. AII Customer Relationship Management : Zanida Zahrah Zakaria, B.Sc. Industrial Engineering Corporate Communications : Raihan Abd Rahim, MBA, BBA (HRM) Family Operations : Syed Omar Syed Aznal, Diploma in Insurance Risk Management : Zulkepli Shariff Abdullah, B.Sc. Liberal Arts & Science Family & Health Claims : Salina Hamdan, ACII, AMII Compliance Management : Mohd Ramli Ab Rashid, MBA, Bachelor of Arts Channel Administration : Rozlin Mohd Isa, MBA Shariah Compliance : Wan Jemizan W. Deraman, Bachelor of Islamic Studies IKHLAS Academy : Ismail Basar, Bachelor of Public Administration Information Systems & Services : Raymond Wong Chee Siang, Bachelor of IT Channel Training & Development Specialist : Ong Yng Pung, Cert. in Computing Hamidon Abu Bakar, BBA Marketing

79 SENIOR MANAGEMENT TEAM’S PROFILE

The President & Chief Executive Officer, WAN MOHD FADZLULLAH WAN MUHAMMAD JAMALUL ALAM @ DATO’ SYED MOHEEB SYED ABDULLAH is the Executive Vice JEFFERY ZAIN MOHD ISA is the KAMARULZAMAN, leads the day-to- President, Business Operations of Appointed Actuary of Takaful IKHLAS. day operations of Takaful IKHLAS Takaful IKHLAS. He graduated from Graduated with a Bachelor of Science in together with the key management staff Universiti Sains Malaysia with a Bachelor Actuarial Science and later with a which includes: of Science majoring in Computer MBA in Finance, both from St John’s Science and commissioned as 2nd University, New York, United States of Lieutenant of the Army Reserve Unit America. He has over nineteen (19) (ROTU) in 1985 and 1984. Prior to his years of practical experience in the current appointment, he was the insurance and financial services industry Assistant General Manager responsible and is a Fellow of the Society of for business development with Amal Actuaries. He served a stint with BNM‘s Assurance Bhd (now known as CIMB Insurance Regulation Department before Aviva Assurance Berhad) for two (2) joining Malaysian National Insurance years. He started his career with Aetna Berhad where he stayed for six (6) years. Universal Insurance Bhd. (now known as He then joined IPP Advisors Sdn. Bhd, ING) and spent fifteen (15) years with the a financial planning firm as Executive Company, serving in various capacities Director. After a brief stint as Research such as Agency Trainer, Life Claims Fellow at the National University of Executive, Branch Manager, Regional Malaysia where he supervised and Branch Manager, Regional Sales delivered the Actuarial Science Degree Manager, Assistant Vice President in course for undergraduates, he joined General Division and ending his career ASH Resources Sdn. Bhd., a freelance with ING in 2000 as Vice President of management consulting firm, where Bumi Marketing Division and Regional he carried out contractual actuarial Vice President of Life Division. He joined consulting work for numerous Takaful IKHLAS in September 2002. major insurance corporations, both conventional and takaful. He is currently the Appointed Actuary for Takaful IKHLAS since October 2009.

80 Takaful Ikhlas Sdn. Bhd. SENIOR MANAGEMENT TEAM’S PROFILE TAKAFUL IKHLAS TAKAFUL

ZAINURIN JULAIHI is the Senior SAIFUL BAHRI SARONI is the Senior WAN ROSLI SHAHARUDDIN WAN Vice President & Chief Financial Officer of Vice President, Corporate & Foreign YAACOB is the Senior Vice President, Takaful IKHLAS. He obtained his Business of Takaful IKHLAS. He Agency Business Development of Master in Business Administration graduated with a Master and Bachelor of Takaful IKHLAS. Graduated with a from UiTM. He is a member of the Science from University of Iowa (1988 Bachelor of Science (Business MIA and Member of the Institute of and 1986). In addition, he has been the Administration) and Master in Business Bankers Malaysia (MIBM). Prior to his Associate Member of the Society of Administration from the United States current appointment, he was the Actuaries (ASA) since 1985. He has International University (USIU), San Vice President, Policy and Control eighteen (18) years of experience in the Diego, United States of America with Bumiputra Commerce Finance insurance industry, six (6) years in the respectively. He has eighteen (18) years Bhd. He joined Takaful IKHLAS in conventional insurance and twelve (12) experience in the insurance industry, September 2004. years in the Takaful industry. He joined having served in The People’s Insurance Takaful IKHLAS in September 2002. Co. (M) Bhd. (Technical Service Some of the projects that he had Division), Malaysia National Insurance undertaken were the development of the Berhad (Total Quality Management Singapore Takaful Model Proposal Department) and AMI Insurans Bhd. (NTUC) and Organisation and HR Due (Internal Audit Department). Prior to his Diligence in his previous company. In current appointment, he served BNM addition, he was also the Head of and was attached to the Insurance Website Design and Reconstruction & Examination Department. He was a Set-up as well as heading the Member of the PIAM Motor Sub- Compliance department in his previous Committee (2001 - 2002). He joined company. Besides that, he was involved Takaful IKHLAS in October 2002. with the Qatar Takaful project scheduling and development, BAJ-Jeddah Takaful project arrangement and Tokio Marine- Jeddah business setup milestone.

81 SENIOR MANAGEMENT TEAM’S PROFILE

KENNY ONG CHUN ENG - Senior ROZHAN YUSOF is the Senior Vice Vice President, New Market Business President, Operations of Takaful IKHLAS. Development & Medical/Health Division. Graduated with a Bachelor of Economics Graduated with a Bachelor Degree (1986) from Macquarie University, (Hons) in Computer Science from the Australia and is an Associate of the University of Manchester, United Society of Actuaries, United States of Kingdom. His career began as an Analyst America. He started his career with MCIS with ICC Consultant Centre, which Berhad (now known as MCIS ZURICH provided strategic consulting to Insurance Berhad) in 1986 and has Directors, CEOs and Top Management served in various capacities such as of various medium and large Manager New Business, Senior corporations. In 2000, he was appointed Manager, Actuarial and Senior Manager, as a Principal Consultant and Head of Annuity and Investment-Linked. Prior to Decision Support Systems of ICC before his current appointment, he was Senior he joined CNI Holdings Bhd in 2003, a Vice President, Actuarial and Research public listed consumer goods group as of Tahan Insurance Malaysia Berhad. Senior Manager - Strategy, Marketing & He joined Takaful IKHLAS in June 2004. Development. Here he was involved in Group Strategic Planning, Business Development & Market Research, Succession Planning & Talent Management, Human Resource Management, Information & Communications Technology and Training & Development. In 2009, he was made Country Manager for CNI Singapore and CNI Brunei as well as being the Vice President, Group Strategy & Development Division for CNI Holdings Bhd. He joined Takaful IKHLAS in June 2011.

82 Takaful Ikhlas Sdn. Bhd. SENIOR MANAGEMENT TEAM’S PROFILE TAKAFUL IKHLAS TAKAFUL

YUSHIDA HUSIN is the Senior Vice ANDREW LIM KEAN KEE is the President, Corporate Services of Takaful Senior Vice President, Information IKHLAS. Graduated with a Bachelor of System and Services of Takaful Science in Statistics Degree from the IKHLAS. Graduated with a Diploma in University of Illinois at Urbana- Computer Science from International Champaign. Before joining Takaful Computers Limited (1991). In addition IKHLAS, She served six (6) years with the he also graduated with a Diploma in multi-national consultancy firm Accenture Insurance from MII (DMII) (1999). Prior (previously known as Andersen to his current appointment, he has held Consulting) where she was involved in various positions in several companies both local and international business including six (6) years with Chung process re-engineering and system Khiaw Bank, five (5) years with Aetna implementation projects for insurance as as a System Analyst supporting the well as other financial institutions in the General Division, four (4) years with Asian region. She was also involved in SEA Insurance as Head of IT, one (1) several government initiatives by the year with Fujitsu System Business Economic Planning Unit and Malaysia Malaysia as Senior Vice President - Administrative and Modernisation Product Development & Software Planning Unit (MAMPU). She was one (1) Engineering and one (1) year with of the pioneer members involved in the PanGlobal Insurance Berhad as Head formation of Takaful IKHLAS. She joined of IT. He joined Takaful IKHLAS in Takaful IKHLAS in January 2003. October 2002.

83

A tree does not know its limitations, nor does it make excuses for not growing. Its desire to reach the sky, outweighs the challenges it faces.

MNRB RETAKAFUL BERHAD CORPORATE PROFILE

MNRB Retakaful Berhad (MRT) was incorporated in December 2006, as a wholly-owned subsidiary of MNRB Holdings Berhad and was registered as the first Retakaful Operator in Malaysia by Bank Negara Malaysia on 1 August 2007. The setting up of MRT is another effort by the MNRB Group as a significant player in the global takaful industry and to assist in promoting Malaysia as a leading centre for the development of the Islamic finance industry.

VISION STATEMENT

“To be a leading Retakaful operator worldwide”

MISSION STATEMENT

“To be a significant player in the Takaful and Retakaful industry by offering solutions and added values to stakeholders”

CORPORATE OBJECTIVES

• To be a reliable earning stream to the MNRB Group; • To assist in promoting the MIFC (Malaysia International Islamic Financial Centre) aspiration; • To be a complete retakaful solutions provider; and • To develop retakaful professionals

CAPITAL STRUCTURE

Authorised Capital RM 500 million Paid-Up Capital RM 100 million

PRODUCT LINES & SERVICES

General Retakaful Business • Treaty - Proportional (All Classes) - Non Proportional (All Classes)

• Facultative - Proportional (All Classes) - Non Proportional (All Classes)

Life/ Family Retakaful Business • Individual & Group Family Retakaful • Individual & Group Medical Retakaful • Critical Illness Retakaful • Mortgage Retakaful • Annuity Retakaful

Value Added Services • Market Training • Product Development • Medical Underwriting • Risk/PML Surveys & Consultancy

86 MNRB Retakaful Berhad CORPORATE INFORMATION

BOARD OF DIRECTORS NOMINATION COMMITTEE

SHARKAWI ALIS Dato’ Syed Ariff Fadzillah Syed Awalluddin (Chairman) Non Independent Non-Executive Director Sharkawi Alis Chairman Datuk Mohd Khalil Dato’ Mohd Noor MNRB RETAKAFUL Dr. Syed Musa Syed Jaafar Alhabshi ISMAIL MAHBOB President & Chief Executive Officer Non Independent Executive Director RISK MANAGEMENT COMMITTEE

ANUAR MOHD HASSAN Yahaya Besah (Chairman) Non Independent Non-Executive Director Dato’ Syed Ariff Fadzillah Syed Awalluddin (Retired on 31 March 2011) Datuk Mohd Khalil Dato’ Mohd Noor

DATO’ SYED ARIFF FADZILLAH SYED AWALLUDDIN Independent Non-Executive Director REMUNERATION COMMITTEE

MEGAT DZIAUDDIN MEGAT MAHMUD Dr. Syed Musa Syed Jaafar Alhabshi (Chairman) Independent Non-Executive Director Megat Dziauddin Megat Mahmud Dato’ Syed Ariff Fadzillah Syed Awalluddin DATUK MOHD KHALIL DATO’ HAJI MOHD NOOR Yahaya Besah Non Independent Non-Executive Director

YAHAYA BESAH INVESTMENT COMMITTEE Independent Non-Executive Director Datuk Mohd Khalil Dato’ Mohd Noor (Chairman) DR. SYED MUSA SYED JAAFAR ALHABSHI Megat Dziauddin Megat Mahmud Independent Non-Executive Director Ismail Mahbob

COMPANY SECRETARY AUDITORS

Norazman Hashim (MIA 5817) Ernst & Young Lena Abdul Latif (LS 8766) Level 23A, Menara Millenium Jalan Damanlela Pusat Bandar Damansara AUDIT COMMITTEE Damansara Heights 50490 Kuala Lumpur, Malaysia Megat Dziauddin Megat Mahmud (Chairman) Tel : +603 7495 8000 Dato’ Syed Ariff Fadzillah Syed Awalluddin Fax : +603 2098 5332 Yahaya Besah Dr Syed Musa Syed Jaafar Al-Habshi REGISTERED OFFICE

SHARIAH COMMITTEE 9th Floor, Bangunan Malaysian Re No.17, Lorong Dungun Prof. Dr. Mohamad Sado Al-Jarf Damansara Heights Assoc. Prof. Dr. Said Bouheraoua 50490 Kuala Lumpur, Malaysia Ir. Dr. Muhamad Fuad bin Abdullah Tel : +603 2096 7007 Dr. Syed Musa Syed Jaafar Alhabshi Fax : +603 2096 8007 Email : [email protected] Website : www.mnrb-retakaful.com.my

87 DIRECTORS’ PROFILE

SHARKAWI ALIS, aged sixty-four (64). ISMAIL MAHBOB, aged sixty (60). DATO’ SYED ARIFF FADZILLAH Malaysian. Non-Independent Non- Malaysian. Non-Independent Executive SYED AWALLUDDIN, aged sixty-seven Executive Chairman of MRT since Director. Member of the Investment (67). Malaysian. Independent Non- 24 December 2007. Member of the Committee. He joined MRT in May 2007 Executive Director since 6 August 2007. Nomination Committee. as its first President & Chief Executive Chairman of the Nomination Committee. Officer. He started his insurance career in Member of the Audit Committee, the Other information on Sharkawi Alis is 1977 as an Accounts Executive with a Remuneration Committee and the Risk disclosed in the Directors’ Profile broker. Since then he has been with Management Committee. section of MNRB on page 12 of this insurance and reinsurance companies at Annual Report. various senior management positions. Other information on Dato’ Syed Ariff Prior to MRT, he served as Senior Vice Fadzillah Syed Awalluddin is disclosed in President of Labuan Re, where he was the Directors’ Profile section of MNRB on responsible for developing new markets page 12 of this Annual Report covering countries of the Indian Sub- Continent, Africa and the MENA region. He also oversaw Labuan Re’s business involvement at Llyod’s and headed its Retakaful division.

Ismail is active in industry activities and spearheads many initiatives at both national and global levels. He is also a frequent speaker in conferences and industry forums.

88 MNRB Retakaful Berhad DIRECTORS’ PROFILE MNRB RETAKAFUL

MEGAT DZIAUDDIN MEGAT DATUK MOHD KHALIL DATO’ MOHD MAHMUD, aged sixty-five (65). NOOR, aged seventy (70). Malaysian. Malaysian. Independent Non-Executive Non-Independent Non-Executive Director Director since 6 August 2007. Chairman since 21 March 2008. Chairman of the of the Audit Committee and member of Investment Committee. Member of the the Remuneration Committee and Nomination Committee and the Risk Investment Committee. Management Committee.

Other information on Megat Dziauddin Other information on Datuk Mohd Khalil Megat Mahmud is disclosed in the Dato’ Mohd Noor is disclosed in the Directors’ Profile section of MNRB on Directors’ Profile section of MNRB on page 14 of this Annual Report page 13 of this Annual Report.

89 DIRECTORS’ PROFILE

YAHAYA BESAH, aged sixty (60). DR. SYED MUSA SYED JAAFAR Independent Non-Executive Director ALHABSHI, aged fifty (50), Independent since 4 July 2008. Chairman of the Risk Non-Executive Director since 23 July Management Committee. Member of the 2008. Chairman of the Remuneration Audit Committee and the Remuneration Committee. Member of the Audit, Committee. Nomination Committee and Shariah Committee. Other information on Yahaya Besah is disclosed in the Directors’ Profile section Other information on Dr. Syed of Takaful IKHLAS on page 76 of this Musa Syed Jaafar Alhabshi is Annual Report. disclosed in the Directors’ Profile section of Takaful IKHLAS on page 76 of this Annual Report.

90 MNRB Retakaful Berhad SHARIAH COMMITEE MEMBERS’ PROFILE MNRB RETAKAFUL

PROF. DR. MOHAMMAD SADO AL- ASSOCIATE PROFESSOR DR. SAID JARF, aged fifty-two (52). Shariah BOUHERAOUA, aged fifty (50). Committee member of MRT since Shariah Committee member of MRT 1 August 2007. Holds a B.A in Islamic since 1 April 2011. Holds a Bachelor Shariah (Fiqh & Usul Fiqh) from King Degree in Fiqh and Usul Al-Fiqh from Abdul Aziz University, Makkah, Saudi University of Algiers in 1991. In 1998, Arabia in 1978. Obtained his M.A in he obtained his Masters Degree from Islamic Economics from Umm Al-Qura the International Islamic University of University, Makkah, Saudi Arabia in 1983 Malaysia (IIUM) and in 2002, he and completed his Ph.D in Islamic completed his PhD from the Economics from the same university Department of Fiqh and Usul al-Fiqh of in 1989. the same university.

He started his career with Umm Al-Qura He started his career with University University since 1988 as an Assistant Sains Islam Malaysia (USIM) as a Professor in the Department of Islamic Lecturer in 2003. After two (2) years, he Economics. Prior to his current then became an Assistant Professor appointment as a Professor in the Dr. & Associate Professor Dr. at the Department of Islamic Economics, he Ahmad Ibrahim Kulliyyah of Laws in was an Associate Professor in the Umm IIUM, from year 2004 to 2009. He then Al-Qura University until 2001. His areas resumed his career path as a Senior of expertise are Insurance, Micro & Researcher at the International Shari’ah Macro Economics, Money, Financing & Research Academy for Islamic Finance. Banking and E-business. Actively He is also a member of the Shari’ah involved in writing books, articles and Committee for Affin Islamic Bank since speaks for various international March 2008. conferences and symposiums. He has written several books as well as He is currently the Professor of Islamic contributes for chapters in books and Economics at the Faculty of Islamic articles. Prior to his achievements and Shariah, Umm Al-Qura University in contributions towards the industry, he Makkah, Saudi Arabia. had won the Lamya al-Faruqi Award for Academic Excellence in 1999, organized by International Institute of Islamic Thought & International Islamic University Malaysia.

91 SHARIAH COMMITEE MEMBERS’ PROFILE

IR. DR. MUHAMAD FUAD BIN DR. SYED MUSA SYED JAAFAR AL- ABDULLAH, aged fifty-eight (58). HABSHI, aged fifty (50). Shariah Shariah Committee member of MRT Committee member of MRT since since 1 June 2011. Holds a Bachelor 1 June 2011. Independent Non-Executive Degree in Electrical Engineering from Director since 23 July 2008. University of Southampton in 1977. In 1982, he obtained his Master’s Degree Other information on Dr. Syed from the same university and in 1994, he obtained the second degree in Shariah. Musa Syed Jaafar Alhabshi is In 1996, he completed his PhD in Muslim disclosed in the Directors’ Profile section Civilisation from University of Aberdeen. of Takaful IKHLAS on page 76 of this Annual Report. He started his career with Jabatan Kerja Raya as an Electrical Engineer in 1977. After six (6) years, he then became a logistic engineering manager at Uniphone Sdn. Bhd. from 1983 to 1992. He then resumed his career as a tutor in Universiti Kebangsaan Malaysia (UKM), before resigning in 1996. In 1996, he became a vice president of Kolej Uniti before holding the position as a managing director at Five-H Associates Sdn. Bhd. from the same year until year 2006. He is currently a sole proprietor of Muhamad Fuad Consulting.

He also holds a position as International Observer in Board of Engineers Malaysia (BEM). He was also appointed as a Chairman of the Shariah Committee for MIDF Group of Companies since April 2005 and member of Shariah Advisory Board for Halal (Labuan) Foundation since August 2010. He is also a Certified Shariah Individual by the Securities Commission of Malaysia and a Registered Shariah Lawyer by Majlis Agama Islam Negeri Perak. He has written and presented several papers on various topics related to Islam, Economics and Banking.

92 MNRB Retakaful Berhad MANAGEMENT TEAM

President & Chief Executive Officer : Ismail Mahbob, Diploma in Marketing, CIFP

ASSISTANT VICE PRESIDENTS MNRB RETAKAFUL

Corporate Services and Risk Management & Compliance : Zaharan Abdul Aziz, MBA (Finance), CFP CERT TM

Underwriter, Treaty Retakaful (General) : Abdul Aziz Hasan, ACII (UK), AMII

Underwriter, Facultative Retakaful (General) : Shahril Jefry Jaafar, B. Eng. (Electrical Engineering)

Underwriter, Family Retakaful : Zulrashidi Mohamed, BBA (Hons.) Insurance

Underwriter, Family Retakaful : Huszaidey Thamby Hussain, MBA (Business and Management), BA (Hons.) Arts

93 SENIOR MANAGEMENT TEAM’S PROFILE

The President & Chief Executive Officer, ISMAIL MAHBOB, leads the day-to- day operations of MRT.

Other information on Ismail Mahbob is disclosed in the Director’s Profile section of MNRB Retakaful on page 88 of this Annual Report.

94 MNRB Retakaful Berhad MRT’S PORTFOLIO OF BUSINESS

(a) General

2011 2010 Class RM’000 % RM’000 % MNRB RETAKAFUL Fire 28,763 66 20,750 56 Motor 4,021 9 3,774 10 Miscellaneous Accidents 7,063 16 9,879 26 Marine 3,925 9 2,882 8

Total 43,772 100 37,285 100

8% 9% Marine Marine

56% Fire 66% 16% 2011 Fire 2010 Miscellaneous Accident 26% Miscellaneous Accident

9% Motor 10% Motor

(b) Family

2011 2010 Class RM’000 % RM’000 %

Gross Contribution 12,897 - 8,074 100

95

A tree does not grow to be good timber without challenges. The stronger the wind the stronger the tree.

MALAYSIAN RE (DUBAI) LTD CORPORATE PROFILE

Incorporated in December 2006, Malaysian Re (Dubai) Ltd. (MRDL) is a wholly-owned subsidiary of MNRB Holdings Berhad. MRDL is licensed under the laws of the Dubai International Financial Centre (DIFC) and regulated by the Dubai Financial Services Authority (DFSA).

Since its inception, MRDL has been focusing on developing Malaysian Re’s business in the Middle East and North Africa (MENA) region. It functions primarily to develop relationships with clients in these regions, provide servicing and underwriting support for them. All reinsurance businesses of MRDL would be fully underwritten by Malaysian Re, an “A-” rated company by both A.M. Best Co. and Fitch Ratings.

MRDL will continue to expand its market presence in the MENA region and is committed in being at the forefront of strong leadership in the region.

CAPITAL STRUCTURE

The Company has an Authorised Capital of USD 5 million and Paid-up Capital of USD 2 million.

98 Malaysian Re (Dubai) Ltd. CORPORATE INFORMATION

BOARD OF DIRECTORS BANKERS

SHARKAWI ALIS Standard Chartered Bank Non-Independent Non-Executive Precinct Building 1 Chairman DIFC Branch Dubai, United Arab Emirates HASHIM HARUN Tel : +971 4 508 3043 Non-Independent Non-Executive Fax : +971 4 4282 502

Director RE (DUBAI) LTD. MALAYSIAN

REGISTERED OFFICE COMPANY SECRETARY Unit 101, Level 1 Norazman Hashim (MIA 5817) Gate Village 4, The Gate District Dubai International Financial Centre P. O. Box 506571 AUDITORS Dubai, United Arab Emirates Tel : +971 4 3230388 Moore Stephens Fax : +971 4 3230288 Chartered Accountants Website : www.malaysian-re.com.my Suite M5-A, Zalfa Building Al Garhoud Area P. O. Box 28817 Dubai, United Arab Emirates Tel : +971 4 2820811 Fax : +971 4 2820812

99 DIRECTORS’ PROFILE

SHARKAWI ALIS, aged sixty-four (64), HASHIM HARUN, aged fifty-seven (57), Malaysian. Non-Independent Non- Malaysian. Non-Independent Non- Executive Chairman since 17 December Executive Director since 29 June 2010. 2007. Other information on Hashim Harun is Other information on Sharkawi Alis is disclosed in the Directors’ Profile section disclosed in the Directors’ Profile of Malaysian Re on page 60 of this section of MNRB on page 12 of this Annual Report. Annual Report.

100 Malaysian Re (Dubai) Ltd. SENIOR MANAGEMENT TEAM’S PROFILE

Senior Executive Officer : Mohd Sahimy Man

VICE PRESIDENTS

Senior Underwriter : Avinash Anant Bagul, B.Sc. Chemistry and AIII (India) MALAYSIAN RE (DUBAI) LTD. MALAYSIAN Underwriter : Hassanal Bukhari Abdullah, B. Management

MOHD SAHIMY MAN is the Senior AVINASH ANANT BAGUL joined HASSANAL BUKHARI ABDULLAH Executive Officer of MRDL. He has MRDL in June 2008 as Vice President & joined MRDL in June 2008 as Vice twenty-eight (28) years experience in Senior Underwriter. He graduated with a President & Underwriter. He graduated general insurance and reinsurance Bachelor of Science (Chemistry) Degree from Concordia University, Wisconsin industry and has held various senior from the University of Mumbai and holds with a Bachelors Degree in Business positions in leading local and a Diploma from Insurance Institute of Management. His reinsurance career international insurance and reinsurance India. He started his career in the started in 1998 when he joined companies. Prior to joining MRDL in Reinsurance Department of General Cameron Richard & Smith Insurance October 2006, he was the Senior Insurance Corporation (GIC) of India in Services in London and came back to Manager/Alternate Chief Executive 1988 and rose to Senior Manager cadre Malaysia to join its subsidiary. He has Officer of Swiss Reinsurance Company, before joining MRDL. During his twenty vast experience in various aspects of Kuala Lumpur Branch and the General (20) years with the Reinsurance reinsurance treaty business. Manager of Etiqa Offshore Insurance (L) Department of GIC, he handled various Ltd. (formerly known as MNI Offshore portfolios including Treaty and Facultative Insurance (L) Limited). Business of Indian Domestic Companies as well as Foreign Inward Business from the advanced European Market.

101 CORPORATE PROFILE

The Malaysian Motor Insurance Pool (MMIP), established in 1992 by insurance companies registered under the Insurance Act 1996, was formed to provide motor insurance to vehicle owners who are unable to obtain insurance protection for their vehicles. Malaysian Re was appointed as the Administration Manager for the Pool.

MMIP Services Sdn. Bhd. (MSSB), a subsidiary of MNRB Holdings Berhad, was incorporated in March 2006. Following the incorporation, the duties and functions of the Administration Manager were transferred from Malaysian Re to MSSB on 12 April 2006.

The duties and functions of MSSB, include inter alia, dealing with the administration, accounts, investment of the Pool’s fund and claims settlements.

102 MMIP Services Sdn. Bhd. CORPORATE INFORMATION

BOARD OF DIRECTORS BANKERS

HASHIM HARUN Malayan Banking Berhad Director CIMB Bank Berhad MMIP SERVICES

NORAZMAN HASHIM Director REGISTERED OFFICE

6th Floor, Bangunan Malaysian Re COMPANY SECRETARY No. 17, Lorong Dungun Damansara Heights Lena Abd Latif (LS 8766) 50490 Kuala Lumpur Tel : +603-2096 8006 Fax : +603-2096 7006 AUDITORS

Ernst & Young Level 23A, Menara Millenium Jalan Damanlela Pusat Bandar Damansara Damansara Heights 50490 Kuala Lumpur Tel : +603-7495 8000 Fax : +603-2095 5332

103 CALENDAR OF SIGNIFICANT EVENTS

8 May 2010 19 July 2010 TAKAFUL IKHLAS FAMILY DAY: NIGHT OF FLOWER TAKAFUL IKHLAS WINS ANOTHER AWARD: THE BEST TAKAFUL PRODUCT AWARDS AT THE INTERNATIONAL Takaful IKHLAS Family Day which was held at the Legend TAKAFUL AWARD 2010 International Water House and Chalet, Port Dickson, Negeri Sembilan drew an overwhelming response from both staff and Takaful IKHLAS was awarded the prestigious Best Takaful family members. All participants enjoyed the various activities Product award at the International Takaful Award 2010 held in and games lined up for the outing. conjunction with the Fourth International Takaful Summit 2010 in London recently. The award was presented to Takaful IKHLAS by a member of the House of Lords, Lord Mohamed Sheikh who 31 May 2010 is also the Head of the Muslim Conservative Forum. ANALYSTS’ BRIEFING The award was received through its IKHLAS Medic Assist Takaful (IMAT), a unique medical plan designed to relieve MNRB Analysts’ Briefing is seen as one of the platforms for participants of major hospital bills. IMAT provides comprehensive the Company to announce and highlight its financial result to coverage for hospitalization and surgery, where the policy the industry. The results were announced and delivered by charges for necessary treatment is based on reasonable and Norazman Hashim, Executive Vice President & Group Chief customary charges at the locality where treatment is received. Financial Officer/Company Secretary to attendees from various Investment Analysts, Fund Managers and members of the media. 31 July 2010 AGENCY AWARD NIGHT 2009/2010

Takaful IKHLAS organized the Annual Agency Award Night for its financial year 2010/2011. Over 800 attendees and award recipients attended the event held at Putrajaya Convention Centre. The event saw recipients receiving awards and acknowledgement for highest achievement in various business production categories.

104 MNRB Holdings Berhad CALENDAR OF SIGNIFICANT EVENTS MNRB

6 - 7 August 2010 20 August 2010 RENEWAL SURVEILLANCE AUDIT BY SIRIM FOR TAKAFUL IKHLAS AND BANK RAKYAT LAUNCHED RECERTIFICATION MS ISO 9001: 2008 QUALITY TAKAFUL AMANI MANAGEMENT SYSTEMS CERTIFICATION Takaful IKHLAS and Bank Rakyat launched Takaful Amani Following a reassessment audit conducted by SIRIM, Malaysian recently. The policy offers a comprehensive twenty-four (24) hour Re was reaffirmed the MS ISO 9001:2008 Quality Management accident protection for Bank Rakyat's customers, especially System certification. The reaffirmation was a testament of those with Peribadi-i Aslah loan. Malaysian Re’s commitment to continuously improve the delivery process and provide the best service to all its clients.

3 September 2010 16 August 2010 TAKAFUL IKHLAS SIGNED MEMORANDUM OF MAJLIS BERBUKA PUASA UNDERSTANDING WITH SIX OPERATORS OF SUBSTITUTE HAJJ PILGRIMAGE The annual “Majlis Berbuka Puasa” was held at Bangunan Malaysian Re for all invitees from the Insurance industry as In a continuing effort to provide an attractive product, Takaful well as the Group’s Board of Directors, Senior Management, IKHLAS signed another memorandum of understanding with six staff and their families. Ustaz Faisal Hamid from Jabatan (6) operators of substitute Hajj pilgrimage applicable to Sejarah dan Tamadun Islam, Universiti Malaya, commenced customers of SAVINGS TAKAFUL products. The memorandum the event by giving a talk on “Ikhlas dan Amanah Dalam of understanding that took place signed by Dato' Syed Moheeb Melaksanakan Tanggungjawab”. Syed Kamarulzaman, President & CEO of Takaful IKHLAS with, six (6) representatives from Harmony Excellence Travel & Tours, CS Holiday Sdn Bhd, Capaian Aspirasi Sdn Bhd, Utas Travel & Tours Sdn. Bhd., Al-Quds Travel Sdn Bhd dan Andalusia Travel & Tours Sdn. Bhd.

105 CALENDAR OF SIGNIFICANT EVENTS

23 September 2010 25 September 2010 ANNUAL GENERAL MEETING MALAYSIAN RE’S ANNUAL GOLF TOURNAMENT

The 37th Annual General Meeting was held at Bangunan The Malaysian Re’s 21st Annual Golf Tournament 2010 was Malaysian Re and it drew a large number of shareholders as well successfully organized by the Golf Committee. The as representatives from the Media. The shareholders took the tournament was held at the Sungai Long Golf & Country Club opportunity to be updated on the Company’s current activities in Sungai Long, Cheras, Kuala Lumpur. A total of ninety-five and to also build a stronger rapport with both the Management (95) golfers from local insurance and brokers participated in and Board members. this year’s event. Malaysian Re hosts this annual event as a token of appreciation to its business associates and as an avenue to keep abreast of the latest news in the insurance 24 September 2010 industry. The overall winner of the golf tournament was Sabri MNRB GROUP HARI RAYA OPEN HOUSE Ismail from Etiqa Insurance Berhad.

MNRB Group Hari Raya Open House was celebrated at Sime Darby Convention Centre. Business associates, clients and key 16 October 2010 players of the insurance and reinsurance industries were invited TAKAFUL IKHLAS IDULFITRI OPEN HOUSE 2010 to the feast. The annual event enhances good working relationship and fosters closer ties with our guests. It also Takaful IKHLAS organized a special Idulfitri Open House updates everyone on current market issues. gathering for its agents and staff in an astounding event that took place at Takaful IKHLAS’ new office, IKHLAS Point. Over 800 guests attended the gathering.

106 MNRB Holdings Berhad CALENDAR OF SIGNIFICANT EVENTS MNRB

28 & 29 October 2010 12 January 2011 TAKAFUL IKHLAS HOSTED THE ICMIF TAKAFUL TAKAFUL IKHLAS WINS ‘BRANDLAUREATE-SMES NETWORK SEMINAR CHAPTER’ AWARDS FOR 3 CONSECUTIVE YEARS

"Back to Basics: Mutuality in Takaful" was the theme of the third The brand Takaful IKHLAS once again received the accolades ICMIF Takaful Network seminar held in October 2010 in Kuala from ‘BrandLaureate SMEs Chapter Awards 2010’. The awards Lumpur, Malaysia. With almost seventy (70) delegates from won by Takaful IKHLAS were for its excellence in the categories takaful providers across the region attending, the seminar of Corporate Branding - The Best Brands - Islamic Financial highlighted the linkages and opportunities for working together Protection Services (two (2) consecutive years) and Product between the takaful and mutual/cooperative insurance sectors. Branding – The Best Brands – Health Insurance Services (three (3) consecutive years). The awards were presented by the former Prime Minister of Malaysia, Tun Datuk Seri Dr. Mahathir 31 October 2010 Mohamad, in a presentation ceremony held at Shangri La Hotel, OFFICIAL OPENING OF TERENGGANU REGIONAL Kuala Lumpur. OFFICE

Takaful IKHLAS officially launched its new regional office in the Terengganu state which was officiated by the Honorable Dato’ Seri Ahmad Bin Said, Chief Minister of Terengganu. Also present at the ceremony held at a leading hotel in Kuala Terengganu was the Chairman, Takaful IKHLAS, Sharkawi Alis and Dato’ Syed Moheeb bin Syed Kamarulzaman, President & CEO, Takaful IKHLAS.

107 CALENDAR OF SIGNIFICANT EVENTS

28 February 2011 21 March 2011 TAKAFUL IKHLAS WINS BEST ISLAMIC FINANCE NEWS TAKAFUL INDUSTRY’S CORPORATE SOCIAL PROVIDER AWARDS (IFN2010) FOR THE THIRD TIME RESPONSIBILITY AWARD BELONGS TO TAKAFUL IKHLAS Takaful IKHLAS holds strong by winning the Takaful Provider Award in Islamic Finance News Awards 2010 for the third year An eight year old Takaful IKHLAS achieved another accolade in succession.The award obtained by Takaful IKHLAS is the recently when it managed to grab the award for Corporate Social result of a voting among practitioners and Islamic financial Responsibility category for the Company’s social work at the industry observers. Islamic Finance News 2010 Awards Polls, Takaful Awards Night organized for the second time by the held for the sixth time, are the most transparent, definitive and Malaysian Takaful Association. During the night, Takaful IKHLAS competitive awards in the Islamic finance industry. had successfully won four (4) more awards namely: BancaTakaful: Top Person Producer Award, BancaTakaful: Top Person Producer Award - Investment-Link Regular, BancaTakaful: Top Person Producer Award – Investment - Link Single and Young Takaful Manager Award.

108 MNRB Holdings Berhad Financial Statements

110 Directors’ Report 113 Statement by Directors 113 Statutory Declaration 114 Independent Auditors’ Report 116 Income Statements 117 Statements of Comprehensive Income 118 Statements of Financial Position 120 Statements of Changes in Equity 121 Statements of Cash Flows 123 Notes to the Financial Statements 277 Supplementary Information 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

DIRECTORS’ REPORT 31 MARCH 2011

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 March 2011.

PRINCIPAL ACTIVITIES

The principal activities of the Company are investment holding and provision of management services to its subsidiaries.

The principal activities of the subsidiaries have been disclosed in Note 18 to the financial statements. There have been no significant changes in the nature of the principal activities of the Group and of the Company during the financial year.

RESULTS

Group Company RM'000 RM'000

Net profit / (loss) for the year 122,942 (14,793)

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.

In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature other than the effects arising from the recognition of impairment loss on Qard to general retakaful fund and the consequential impairment on the Company's investment in its retakaful subsidiary as disclosed in Notes 20(d) and 18 respectively.

DIVIDENDS

No dividend has been paid or declared by the Company since the end of the previous financial year.

DIRECTORS

The names of the directors of the Company in office since the date of the last report and at the date of this report are:

Sharkawi bin Alis Anuar bin Mohd. Hassan (retired on 31 March 2011) P. Raveenderen Y. Bhg. Dato' Syed Ariff Fadzillah bin Syed Awalluddin Yusoff bin Yaacob Y. Bhg. Datuk Mohd. Khalil bin Dato' Mohd. Noor Megat Dziauddin bin Megat Mahmud Paisol bin Ahmad

In accordance with Article 86 of the Articles of Association of the Company, Encik Sharkawi bin Alis and Y. Bhg. Dato’ Syed Ariff Fadzillah bin Syed Awalluddin retire by rotation and, being eligible, offer themselves for re-election.

Y. Bhg. Datuk Mohd. Khalil bin Dato' Mohd Noor retires pursuant to Section 129 of the Companies Act, 1965 and a resolution is being proposed for his re-appointment as director under the provision of Section 129(6) of the said Act to hold office until the next Annual General Meeting of the Company.

110 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

DIRECTORS’ REPORT 31 MARCH 2011

DIRECTORS' BENEFITS

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of acquisition of shares in the Company or any other body corporate.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors as shown in Notes 9, 10 and 38 to the financial statements as well as the fixed salary and benefits receivable as a full-time employee of the Company) by reason of a contract made by the Company with any director or with a firm of which the director is a member, or with a company in which the director has a substantial

DIRECTORS' INTERESTS

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company during the financial year were as follows:

Number of ordinary shares of RM1.00 each 1 April 31 March 2010 Acquired Sold 2011

Direct Interest: Anuar bin Mohd. Hassan (retired 31 March 2011) 300,000 - - 300,000 P. Raveenderen 10,000 - - 10,000 Y. Bhg. Datuk Mohd. Khalil bin Dato' Mohd. Noor 5,000 - - 5,000

Other than as stated above, none of the directors in office at the end of the financial year had any interest in shares in the Company or in its related corporations during the financial year.

SUBSEQUENT EVENTS

The subsequent events that arose after the financial year are as disclosed in Note 39 to the financial statements.

OTHER STATUTORY INFORMATION

(a) Before the income statements and statements of financial position 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 provision for doubtful debts, and had satisfied themselves that all known bad debts had been written off and that adequate provision 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:

(i) require any amount to be written off as bad debts or render the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; and

(ii) render the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

111 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

DIRECTORS’ REPORT 31 MARCH 2011

OTHER STATUTORY INFORMATION (CONTD.)

(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.

(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or in the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

(e) As at the date of this report, there does not exist:

(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.

(f) In the opinion of the directors:

(i) no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

For the purpose of paragraphs (e)(ii) and (f)(i) above, contingent or other liabilities do not include liabilities arising from reinsurance, takaful and retakaful contracts underwritten in the ordinary course of business of the reinsurance, takaful and retakaful subsidiaries.

(g) Before the income statement and statement of financial position of the reinsurance subsidiary were made out, the Directors took reasonable steps to ascertain that there was adequate provision for its insurance liabilities in accordance with the valuation methods prescribed under Part D of the Risk-based Capital ("RBC") Framework for insurers issued by Bank Negara Malaysia ("BNM").

AUDITORS

The auditors, Ernst & Young, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors.

Sharkawi bin Alis P. Raveenderen

Kuala Lumpur, Malaysia 19 July 2011

112 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

We, Sharkawi bin Alis and P. Raveenderen, being two of the directors of MNRB Holdings Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 116 to 277 are drawn up in accordance with the Companies Act, 1965 and Financial Reporting Standards 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 March 2011 and of the results and the cash flows of the Group and of the Company for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the directors dated 19 July 2011.

Sharkawi bin Alis P. Raveenderen

Kuala Lumpur, Malaysia

STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965

I, Norazman bin Hashim, being the officer primarily responsible for the financial management of MNRB Holdings Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 116 to 277 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 Norazman bin Hashim ) at Kuala Lumpur in Wilayah Persekutuan ) on 19 July 2011. ) Norazman bin Hashim

Before me,

113 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF MNRB HOLDINGS BERHAD

Report on the financial statements

We have audited the financial statements of MNRB Holdings Berhad, which comprise the statements of financial position as at 31 March 2011 of the Group and of the Company, and the income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 116 to 276.

Directors’ responsibility for the financial statements

The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with the Companies Act 1965 and Financial Reporting Standards in Malaysia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with the Companies Act 1965 and Financial Reporting Standards 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 March 2011 and of their financial performance and cash flows for the year then ended.

114 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF MNRB HOLDINGS BERHAD

Report on other legal and regulatory requirements

In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ report of the subsidiary of which we have not acted as auditors, which is indicated in Note 18 to the financial statements, being financial statements that have been included in the consolidated financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.

Other reporting responsibilities

The supplementary information set out in Note 46 on page 277 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ("MIA Guidance") and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young Abraham Verghese A/L T. V. Abraham AF: 0039 No. 1664/10/12 (J) Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia 19 July 2011

115 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

INCOME STATEMENTS FOR THE YEAR ENDED 31 MARCH 2011

Group Company Note 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000 (Restated) (Restated)

Operating revenue 3 1,463,262 1,341,798 37,262 24,917

Gross earned premiums 4 1,151,889 1,235,123 - - Premiums ceded to reinsurers 4 (125,949) (146,994) - -

Net earned premiums 4 1,025,940 1,088,129 - -

Investment income 5 71,041 58,760 15,299 10,596 Realised gains and losses 6 25,311 23,625 - 435 Fair value gains and losses 7 16,318 (48,589) 227 (44,485) Fee and commission income 8 235,568 216,992 21,963 14,321 Other operating revenue 2,234 8,732 95 24

Other revenue 350,472 259,520 37,584 (19,109)

Gross claims paid (596,618) (602,931) - - Claims ceded to reinsurers 40,188 65,927 - - Gross change in contract liabilities (58,289) (177,856) - - Change in contract liabilities ceded to reinsurers 5,176 (21,859) - -

Net claims (609,543) (736,719) - -

Fee and commission expense 8 (401,941) (366,104) - - Management expenses 9 (173,075) (158,302) (34,687) (30,592) Finance cost (7,125) (7,125) (9,500) (9,500) Other operating expenses 11 (26,654) (14,962) (7,005) (586)

Other expenses (608,795) (546,493) (51,192) (40,678)

Share of results of associates 6,878 14,824 - -

Profit/(loss) before zakat and tax 164,952 79,261 (13,608) (59,787) Zakat (372) (386) - - Tax expense 12 (41,638) (28,162) (1,185) 194

Net profit/(loss) for the year attributable to equity holders of the Company 122,942 50,713 (14,793) (59,593)

Basic earnings/(loss) per share attributable to equity holders of the Company (sen) 35 57.7 23.8 (6.9) (28.0)

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

116 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2011

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000 (Restated) (Restated)

Net profit/(loss) for the year 122,942 50,713 (14,793) (59,593)

Other comprehensive (loss)/income:

Effects of post acquisition foreign exchange translation reserve on investment in associate (7,413) (11,205) - -

Effects of foreign exchange translation reserve on investment in subsidiary (380) (344) - -

Revaluation of land and building 3,184 - - -

Net gain on Available-for-sale ("AFS") financial assets: Gain/(loss) on fair value changes 7,228 46,275 (1,650) 2,003 Realised gain transferred to income statement (24,136) (23,272) - (353) Deferred tax relating to components of other comprehensive income 4,777 (5,300) - -

Total comprehensive income/(loss) for the year 106,202 56,867 (16,443) (57,943)

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

117 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2011

Group Company Note 2011 2010 1 April 2009 2011 2010 1 April 2009 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 (Restated) (Restated) (Restated) (Restated)

Assets

Property, plant and equipment 13 101,887 117,523 113,025 1,469 1,750 1,300 Investment properties 14 28,600 34,600 32,400 - - - Prepaid land lease payments 15 - 5,021 5,116 - - - Intangible assets 16 12,969 13,101 12,951 1,231 911 967 Deferred tax 17 5,474 10,333 21,163 3,098 3,337 1,993 Investment in subsidiaries 18 - - - 794,501 801,370 781,370 Investment in associates 19 117,542 122,268 121,890 1,957 1,957 1,957 Financial assets at fair value through profit or loss 20(a) 14,912 51,315 46,805 - - - Held-to-maturity investments 20(b)(i) 329,758 297,049 345,083 6,967 6,967 7,403 Available-for-sale financial assets 20(c) 736,632 535,345 476,093 2,602 5,025 46,922 Loans and receivables 20(d) 1,034,574 1,024,849 864,729 10,759 21,229 52,905 Reinsurance assets 21 146,597 152,652 189,798--- Insurance receivables 22 138,173 148,909 137,606--- Tax recoverable 11,476 13,290 21,429 8,379 5,952 4,601 Cash and bank balances 9,483 5,997 1,096 75 148 148 Non-current asset held for sale 23 34,173-----

Total general reinsurance business and shareholders’ fund assets 2,722,250 2,532,252 2,389,184 831,038 848,646 899,566

General takaful fund assets 45 350,197 285,018 203,423--- Family takaful fund assets 45 1,300,836 950,777 735,034--- General retakaful fund assets 45 76,853 64,108 40,418 - - - Family retakaful fund assets 45 16,320 13,828 10,860 - - -

Total assets 4,466,456 3,845,983 3,378,919 831,038 848,646 899,566

118 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2011

Group Company Note 2011 2010 1 April 2009 2011 2010 1 April 2009 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 (Restated) (Restated) (Restated) (Restated)

Liabilities

Islamic medium term notes 24 150,000 150,000 150,000 200,000 200,000 200,000 Insurance and takaful contract liabilities 21 1,412,707 1,333,402 1,302,860 - - - Insurance and takaful payables 24 65,394 78,992 63,789 - - - Other payables 26 94,859 76,946 36,767 13,926 15,091 8,068 Provision for zakat 574 399 122 - - -

Total general reinsurance business and shareholders’ fund liabilities 1,723,534 1,639,739 1,553,538 213,926 215,091 208,068

General takaful fund liabilities 45 339,704 278,825 201,501 - - - Family takaful fund liabilities 45 1,108,260 864,872 704,115 - - - General retakaful fund liabilities 45 76,783 62,463 39,712 - - - Family retakaful fund liabilities 45 14,974 12,873 10,457 - - -

Total liabilities 3,263,255 2,858,772 2,509,323 213,926 215,091 208,068

Equity

Share capital 27 213,070 213,070 213,070 213,070 213,070 213,070 Reserves 785,646 679,443 622,576 404,042 420,485 478,428

Total equity attributable to equity holders of the Company 998,716 892,513 835,646 617,112 633,555 691,498

Takaful and retakaful funds

General takaful fund 45 10,493 6,193 1,922 - - - Family takaful fund 45 192,576 85,905 30,919 - - - General retakaful fund 45 70 1,645 706 - - - Family retakaful fund 45 1,346 955 403 - - -

Total takaful and retakaful funds 204,485 94,698 33,950 - - -

Total liabilities, equity, takaful and retakaful funds 4,466,456 3,845,983 3,378,919 831,038 848,646 899,566

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

119 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2011

< Attributable to equity holders of the company > < Reserves > < Non-distributable >Distributable Foreign exchange Avalaible- Share Share translation for-sale Revaluation Retained capital premium reserve reserve reserve profits Total Note RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Group

At 1 April 2009, previously stated 213,070 105,051 34,450 5,584 - 496,166 854,321 Effects of adopting FRS 4 2.34(a) - - - - - (18,675) (18,675)

At 1 April 2009, restated 213,070 105,051 34,450 5,584 - 477,491 835,646 Total comprehensive (loss)/ income for the year - - (11,549) 17,703 - 50,713 56,867

At 31 March 2010, restated 213,070 105,051 22,901 23,287 - 528,204 892,513

At 31 March 2010, previously stated 213,070 105,051 22,901 23,287 - 544,333 908,642 Effects of adopting FRS 4 2.34(a) - - - - - (16,128) (16,128)

At 31 March 2010, restated 213,070 105,051 22,901 23,287 - 528,205 892,514 Total comprehensive (loss)/ income for the year - - (7,793) (12,131) 3,184 122,942 106,202

At 31 March 2011 213,070 105,051 15,108 11,156 3,184 651,147 998,716

Company

At 1 April 2009 213,070 105,051 - - - 373,377 691,498 Total comprehensive income/ (loss) for the year - - - 1,650 - (59,593) (57,943)

At 31 March 2010 213,070 105,051 - 1,650 - 313,784 633,555 Total comprehensive loss for the year - - - (1,650) - (14,793) (16,443)

At 31 March 2011 213,070 105,051 - - - 298,991 617,112

120 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2011

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

Cash flows from operating activities Profit/(loss) before zakat and tax 164,952 79,261 (13,608) (59,787) Adjustments for: Net fair value gains on financial assets at FVTPL (605) (5,158) - - (Reversal of)/impairment loss on AFS financial assets (10,360) 50,416 21 44,485 Impairment loss on HTM investments - 962 - - Impairment loss on Qard 14,633 - - - Impairment loss on property 328 - - - (Reversal of)/impairment loss on insurance receivables and reinsurance assets (4,034) 3,828 - - Impairment loss on investment in subsidiary - - 6,869 - Depreciation of property, plant and equipment 8,735 7,169 678 576 Amortisation of intangible assets 3,077 2,636 241 209 Amortisation of prepaid land lease payments 55 95 - - Property, plant and equipment written off 855 7 - - Loss/(gain) on fair value adjustments of investment properties 2,317 (24,735) - - Loss/(gain) on disposal of property, plant and equipment 834 (95) (1) (82) Increase/(decrease) in premium and contribution liabilities 59,751 (122,656) - - Increase in AFS reserves 10,430 - 1,650 Interest/profit income (98,678) (74,818) (246) (397) Dividend income (4,411) (3,751) (15,052) (10,200) Rental income (6,857) (6,432) - - Gain on disposal of investments (35,092) (23,255) - - Net accretion of discounts on investments (1,990) (3,297) - - Share of profits of associates (6,878) (14,824) - - Results of general takaful fund 4,445 10,812 - - Results of family takaful fund 238,512 196,342 - - Results of general retakaful fund (14,369) (22,019) - - Results of family retakaful fund 1,095 1,348 - -

(Loss)/profit from operations before changes in operating assets and liabilities 316,315 62,266 (21,098) (23,546) (Increase)/decrease in placements with licensed financial institutions and marketable securities (39,479) (120,611) 9,018 30,627 Purchase of other investments (642,539) (442,446) (1,650) (2,154) Proceeds from disposal of investments 297,008 169,184 2,402 - Decrease in placements in Islamic investment accounts 47,210 - - - Decrease in staff loans - 286 - - Increase in insurance and takaful receivables (34,940) (18,651) - - (Increase)/decrease in other receivables (67,027) (47,720) 697 (831) Net change in balances with subsidiaries (3,808) - (802) 3,427 Increase in claims liabilities 122,900 277,575 - - Increase/(decrease) in expense liabilities 519 (3,378) - Increase in insurance and takaful payables 2,517 14,587 - - Increase in other payables 48,508 55,223 9,896 14,947

47,184 (53,685) (1,537) 22,470

121 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2011

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

Taxes and zakat paid (32,098) (6,909) (42) - Interest/profit received 100,441 81,096 244 409 Hibah (received)/paid to participants (1) 80 - - Dividend received 10,331 7,072 11,719 7,700 Rental received 6,797 6,388 - -

Net cash generated from operating activities (Note 39) 132,654 34,042 10,384 30,579

Cash flows from investing activities Subscription of shares in subsidiaries - - - (20,000) Purchase of property, plant and equipment (10,312) (11,809) (397) (1,146) Purchase of intangible assets (2,945) (2,786) (561) (135) Purchase of investment properties (1,008) (17,499) - - Proceeds from disposal of property, plant and equipment 22 230 1 202

Net cash used in investing activities (Note 39) (14,243) (31,864) (957) (21,079)

Cash flow from financing activities Interest paid on Islamic Medium Term Notes (7,125) (7,125) (9,500) (9,500)

Net cash used in financing activities (Note 39) (7,125) (7,125) (9,500) (9,500)

Cash and bank balances Net increase/(decrease) during the year (Note 39) 111,286 (4,947) (73) - Effects of changes in foreign exchange rate (380) (310) - - At beginning of year 9,199 14,456 148 148

At end of year 120,105 9,199 75 148

Cash and cash equivalents comprise: Cash and bank balances of: Shareholders' fund and general reinsurance business 9,483 5,997 75 148 General takaful fund 47,511 226 - - Family takaful fund 62,916 2,832 - - General retakaful fund 14 135 - - Family retakaful fund 181 9 - -

120,105 9,199 75 148

Note: There are no usage restrictions placed on the cash and bank balances of the Group and of the Company.

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

122 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

1. CORPORATE INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at 12th Floor, Bangunan Malaysian Re, No. 17, Lorong Dungun, Damansara Heights, 50490 Kuala Lumpur, Malaysia.

The principal activities of the Company are investment holding and provision of management services to its subsidiaries.

The principal activities of the subsidiaries have been disclosed in Note 18 to the financial statements. There have been no significant changes in the nature of the principal activities of the Group and of the Company during the financial year.

The number of employees in the Group and in the Company at the end of the financial year were 788 and 172 (2010: 738 and 152) respectively.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 19 July 2011.

2. SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The financial statements of the Group and of the Company have been prepared under the historical cost convention, unless otherwise stated in the accounting policies. The financial statements comply with the Companies Act 1965 and Financial Reporting Standards ("FRSs") in Malaysia.

The financial statements of the Group also comply with the Insurance Act and Regulations 1996, the Takaful Act 1984 and Guidelines and Circulars issued by BNM and where applicable are modified to comply with the principles of Shariah.

The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM'000) except when otherwise indicated.

2.2 Accounting period

For the general reinsurance business, the Group adopts quarterly accounting periods ending on 31 March, 30 June, 30 September and 31 December, insofar as the underwriting income and outgo for Market Cessions business is concerned. This is to correspond with the ceding companies' accounting periods.

Underwriting income and outgo in respect of other business classes and all other income and expenditure are for the 12 months ended 31 March 2011.

2.3 Subsidiaries and basis of consolidation

(i) Subsidiaries

Subsidiaries are entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their activities.

In the Company’s separate financial statements, investments in subsidiaries are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in the income statement.

123 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.3 Subsidiaries and basis of consolidation (Contd.)

(ii) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. In preparing the consolidated financial statements, intragroup balances, transactions and unrealised gains or losses resulting from intragroup transactions are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances.

Acquisitions of subsidiaries are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition.

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in the income statement.

(iii) Associates

Associates are entities in which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not in control or joint control over those policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting. Under the equity method, the investment in associate is carried in the consolidated statement of financial position at cost adjusted for post-acquisition changes in the Group’s share of net assets of the associate. The Group’s share of the net profit or loss of the associate is recognised in the consolidated income statement. Where there has been a change recognised directly in the equity of the associate, the Group recognises its share of such changes.

In applying the equity method, unrealised gains and losses on transactions between the Group and the associate are eliminated to the extent of the Group’s interest in the associate. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associate. The associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associates.

Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profit or loss in the period in which the investment is acquired.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any long-term interests that, in substance, form part of the Group’s net investment in the associates, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associates.

124 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.3 Subsidiaries and basis of consolidation (Contd.)

(iii) Associates (Contd.)

The most recent available audited financial statements of the associates are used by the Group in applying the equity method. Where the dates of the audited financial statements used are not coterminous with those of the Group, the share of results is arrived at from the last audited financial statements available and management financial statements to the end of the accounting period. Uniform accounting polices are adopted for like transactions and events in similar circumstances.

In the Company’s separate financial statements, investments in associates are stated at cost less any accumulated impairment losses.

On disposal of such investments, the difference between net disposal proceeds and the carrying amount is included in the income statement.

2.4 General reinsurance underwriting results

The general reinsurance underwriting results are determined for each class of business after taking into account premiums, movements in premium and claim liabilities and acquisition costs.

(i) Premium recognition

Gross premiums are recognised in a financial period in respect of risks assumed during the particular financial period. Gross premium income include premium income in relation to inwards facultative business, inwards proportional treaty reinsurance and inwards non-proportional treaty reinsurance.

Inwards facultative reinsurance premiums are recognised in the financial period in respect of the facultative risk assumed during the particular financial period, as in the case of direct policies, following individual risks' inception dates.

Inwards proportional treaty reinsurance premiums are recognised on the basis of periodic advices received from cedants given that the periodic advices reflect the individual underlying risks being incepted and reinsured at various inception dates of these risks and contractually accounted for under the terms of the proportional reinsurance treaty.

Premium income on inward non-proportional treaties, which cover losses occurring during a specified treaty period, are recognised based on the contractual premiums already established at the start of the treaty period under the terms and conditions of each contract.

(ii) Premium liabilities

Premium liabilities represent the reinsurance subsidiary's 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 reinsurance subsidiary's unexpired risk reserves ("URR") at the end of the financial year and a provision of risk margin for adverse deviation ("PRAD") calculated at 75% confidence level at the overall reinsurance subsidiary's level.

125 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.4 General reinsurance underwriting results (Contd.)

(ii) Premium liabilities (Contd.)

(a) Unexpired risk reserves

The URR is a prospective estimate of the expected future payments arising from future events insured under policies in force as at the end of the financial year and also includes allowance for expenses, including overheads and cost of reinsurance, expected to be incurred during the unexpired period in administering these policies and settling the relevant claims, and expected future premium refunds.

URR is estimated via an actuarial valuation performed by a qualified actuary, using a mathematical method of estimation similar to incurred but not reported claims ("IBNR").

(b) Unearned premium reserves

The UPR represent the portion of the net premiums of reinsurance policies written that relate to the unexpired periods of the policies at the end of the financial period. The methods of computation of UPR are as follows:

- For inward proportional treaty business, UPR is computed on the 1/8th method commencing from the quarter corresponding to the reporting quarter of the treaty statement;

- For inward non proportional treaty business, UPR is computed at 1/2 of the last quarter Minimum Deposit Premiums received; and

- For inward facultative policies, UPR is computed on the 1/8th method commencing from the date of inception.

(iii) Claims liabilities

The amount of outstanding claims is the best estimate value of claim liabilities, which include provision for claims reported, claims incurred but not enough reserved ("IBNER"), claims incurred but not reported ("IBNR") together with related expenses less recoveries to settle the present obligation at the end of the financial year as well as a PRAD calculated at 75% confidence level at the overall reinsurance subsidiary's level. Liabilities for outstanding claims are recognised as advised by the ceding companies. IBNER and IBNR claims are based on an actuarial valuation by a qualified actuary, using a mathematical method of estimation based on, amongst others, actual claims development pattern.

(iv) Liability adequacy test

At each reporting date, the Group reviews 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 the income statement.

The estimation of claim and premium liabilities performed at reporting date is part of the liability adequacy tests performed by the Group. Based on this, all insurance contract liabilities as at the reporting date are deemed to be adequate.

(v) Acquisition cost

The cost of acquiring and renewing reinsurance business net of income derived from ceding reinsurance premiums is recognised as incurred and properly allocated to the periods in which it is probable they give rise to income.

126 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.5 General takaful fund

The general takaful fund is maintained in accordance with the Takaful Act 1984 and consists of AFS reserves and the accumulated surplus / deficit in the fund. Underwriting deficit will be made good by the shareholder's fund via a benevolent loan or Qard.

Surplus is distributable to the shareholder and participants in accordance with the terms and conditions prescribed by the Shariah Committee of the takaful subsidiary. The general takaful fund surplus or deficit is determined after deducting retakaful, net claims incurred, wakalah fees, other operating expenses, taxation and surplus administration charges transferred to the shareholder's fund, and adjusting for contribution liabilities and impairment of trade receivables.

General takaful revenue consists of gross takaful contributions and investment income. Revenue is accounted for on an accrual basis as approved by the takaful subsidiary's Shariah Committee. Unrealised income is deferred and receipts in advance are treated as liabilities in the statement of financial position.

(i) Takaful contribution income

Direct and inwards facultative takaful contributions are recognised as soon as the amount of contribution can be reliably measured in accordance with the principles of Shariah. Contributions are recognised in a financial period in respect of risks assumed during that particular financial period. Inward treaty retakaful contributions are recognised on the basis of periodic advices received from ceding takaful operators.

(ii) Takaful contribution liabilities

Contribution liabilities represent the general takaful fund's future obligations on takaful contracts as represented by contributions received for risks that have not yet expired. The movement in contribution liabilities is released over the terms of the takaful contracts and recognised as contribution.

Contribution liabilities are reported at the higher of the aggregate of the unearned contribution reserves ("UCR") for all lines of business or the best estimate value of the takaful fund's unexpired risk reserves ("URR") at the end of the reporting period.

(a) Unearned contribution reserves

The Unearned Contribution Reserves ("UCR") represent the portion of net contribution income of takaful contracts written that relate to the unexpired periods of the contracts at the end of the reporting period. The UCR is calculated on net contribution income with a further deduction for Wakalah fee expenses to reflect the Wakalah business principle. In determining the UCR at the end of the financial year, the method that most accurately reflects the actual unearned contribution is used as follows:

- Time apportionment method for all classes of general takaful business within Malaysia except Marine and Aviation cargo; and

- 25% method for Marine and Aviation Cargo.

(b) Unexpired risk reserves

The URR is a prospective estimate of the expected future payments arising from future events covered under contracts in force as at the end of the financial year and also includes allowance for expenses, including overheads and cost of retakaful, expected to be incurred during the unexpired period in administering these policies and settling the relevant claims, and expected future contribution refunds. The URR is estimated via an actuarial valuation performed by a qualified actuary, using a mathematical method of estimation similar to incurred but not reported ("IBNR") claims.

127 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.5 General takaful fund (Contd.)

(iii) Claims liabilities

The amount of outstanding claims is the best estimate value of claim liabilities, which include provision for claims reported, claims incurred but not enough reserved ("IBNER"), claims incurred but not reported ("IBNR") together with related expenses less recoveries to settle the present obligation at the end of the financial year as well as a PRAD calculated at 70% confidence level at the overall takaful subsidiary level. IBNER and IBNR claims are derived from an actuarial valuation by a qualified actuary, using a range of standard actuarial claim projection techniques based on empirical data and current assumptions that may include a margin for adverse deviation. The liability is not discounted for the time value of money.

(iv) Liability adequacy test

At each reporting date, the Group reviews all general takaful 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 general takaful contract issued. In performing this review, the Group compares all contractual cash flows against the carrying value of general takaful contract liabilities. Any deficiency is recognised in the income statement.

The estimation of claim and contribution liabilities performed at reporting date is part of the liability adequacy tests performed by the Group. Based on this, all general takaful contract liabilities as at the reporting date are deemed to be adequate.

(v) Commission earned

Commission earned net of expense paid from retakaful in the course of ceding/accepting contributions to/from retakaful operators are recognised in the income statement, as incurred and properly allocated to the periods in which it is probable they give rise to income. This is in accordance with the principles of Wakalah as approved by the Shariah Committee and as agreed between the participants and the takaful subsidiary.

2.6 Family takaful fund

The family takaful fund is maintained in accordance with the requirements of the Takaful Act, 1984 and includes the amount attributable to participants.

The family takaful fund surplus/deficit is determined by an annual actuarial valuation of the family takaful fund. Any actuarial deficit in the family takaful fund will be made good by the shareholders' fund via a benevolent loan or Qard. Surplus distributable to the participants is determined after deducting benefits paid and payable, retakaful, provisions, reserves, wakalah fees, taxation and surplus administration charges transferred to the shareholders' fund. The surplus may be distributed to the shareholder and participants in accordance with the terms and conditions prescribed by the Shariah Committee of the takaful subsidiary.

Family takaful revenue consists of gross takaful contributions and investment income. Revenue is accounted for on an accrual basis and as approved by the takaful subsidiary’s Shariah Committee. Unrealised income is deferred and receipts in advance are treated as liabilities on the statement of financial position.

(i) Takaful contribution income

Takaful contribution is recognised as soon as the amount of contribution can be reliably measured in accordance with the principles of Shariah. First takaful contribution is recognised on assumption of risks and subsequent takaful contributions are recognised on due dates. Takaful contributions outstanding at balance sheet date is recognised as income for the period provided they are within the grace period allowed for payment and there are sufficient funds available in the participants' accounts to cover such contributions due.

128 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.6 Family takaful fund (Contd.)

(ii) Provision for outstanding claims

Claims and settlement costs that are incurred during the financial year are recognised when a claimable event occurs and / or the takaful subsidiary is notified.

Claims and provisions for claims arising on family takaful contract, including settlement costs, are accounted for using the case basis method, and for this purpose, the benefits payable under a takaful contract are recognised as follows:

(a) maturity or other contract benefit payments due on specified dates are treated as claims payable on due dates; and

(b) death, surrender and other benefits without due dates are treated as claims payable on receipt of intimation of death of the contract holder or occurrence of contingency covered.

(iii) Creation/cancellation of units

Amounts received for units created represent contributions paid by participants/unitholders as payment for new contracts or subsequent payments to increase the amount of the contracts. Creation/cancellation of units are recognised in the financial statements at the next valuation date, after the request to purchase/sell units are received from the unitholders.

(iv) Investments of the investment-linked funds

All investments of the investment-linked funds are stated at closing market prices or indicative market prices as at financial year end.

Any increase or decrease in value of investments is taken into the investment linked funds income statement.

(v) Family takaful contract liabilities

Family takaful contract liabilities are recognised when contract are in-force and contributions are charged.

These liabilities, with the exception of Mortgage Term Takaful and Group Credit contracts, are measured using the unexpired reserve of the gross monthly tabarru' (risk charges). For Mortgage Term Takaful and Group Credit contracts, the liability is determined by the Net Contribution Valuation method using the statutory mortality table adjusted for retakaful arrangements and discounted at the appropriate risk discount rate.

In the case of family contracts with a duration of one year, covering contingencies other than death or survival, such as the group health & surgical contracts, the liability for such family takaful contracts comprises the provision for unearned contributions and expired risks, as well as claims outstanding, which includes an estimate of the incurred claims that have not yet been reported to the takaful subsidiary.

The family contract liabilities are derecognised when the contract expires, is discharged or is cancelled. At each reporting date, an assessment is made of whether the recognised family takaful contract liabilities are adequate by using an existing liability adequacy test.

Surplus arising from the difference between the value of the family fund and the liabilities, if any, will be distributed in equal proportion to the participants and the contingency (special) fund after deducting the takaful subsidiary's surplus administration charge.

If the difference between the value of the family fund and the liabilities results in a deficit, the takaful subsidiary will arrange a Qard (benevolent loan) which will be repaid when the fund returns to a surplus position.

129 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.6 Family takaful fund (Contd.)

(vi) Liability adequacy test

At each reporting date, the Group reviews family all takaful 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 family takaful contract issued. In performing this review, the Group compares all contractual cash flows against the carrying value of family takaful contract liabilities. Any deficiency is recognised in the income statement.

The annual actuarial valuation of the family takaful contract liabilities performed at reporting date is part of the liability adequacy tests performed by the Group. Based on this, all family takaful contract liabilities as at the reporting date are deemed to be adequate.

2.7 Shareholder's fund of takaful subsidiary

(i) Commission expenses

Commission expenses, which are costs directly incurred in securing contributions on takaful contracts, are recognised as incurred and properly allocated to the periods in which it is probable they give rise to income. Commission expenses are borne by the shareholder's fund in the shareholder's fund income statement at an agreed percentage for each contract underwritten. This is in accordance with the principles of Wakalah as approved by the Shariah Committee and as agreed between the participants and the takaful subsidiary.

(ii) Expense liabilities

The expense liabilities of the shareholders' fund consist of expense liabilities of the general takaful fund and the family takaful fund which are based on estimations performed by a qualified actuary. The movement in expense liabilities is released over the term of the takaful contracts and recognised as wakalah fees.

(a) Expense liabilities of General Takaful Fund

The expense liabilities of the general takaful fund are reported at the higher of the aggregate of the reserve for unearned wakalah fees ("UWF") or the best estimate value of the provision for unexpired expense reserve ("UER") at the end of the financial year.

Reserve for unearned wakalah fees

The UWF represents the portion of wakalah fee income allocated for management expenses of general takaful contracts that relate to the unexpired periods of contracts at the end of the reporting period. The method used in computing UWF is consistent with the calculation of UCR under Note 2.5(ii)(a). In determining the UWF at the end of the financial year, 70% of the wakalah fee income is recognised in the financial year in which the contracts are issued. The remaining 30% of the wakalah fee income is transferred to the UWF and is recognised in the following financial year.

Unexpired expense reserve

The UER is determined based on the expected future expenses payable by the shareholder's fund in managing the general takaful fund for the full contractual obligation of the takaful contracts as at the end of the financial year, less any expected cash flows from future wakalah fee income, and any other income due to the shareholder's fund that can be determined with reasonable certainty, calculated at 70% confidence level at the overall takaful subsidiary level. The method used to value the UER is consistent with the method used in estimating the URR as disclosed in Note 2.5(ii)(b).

130 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.7 Shareholder's fund of takaful subsidiary (Contd.)

(ii) Expense liabilities (Contd.)

(b) Expense liabilities of Family Takaful Fund

The UER is determined based on the expected future expenses payable by the shareholder's fund in managing the family takaful fund for the full contractual obligation of the takaful contracts as at the end of the financial year, less any expected cash flows from future wakalah fee income, and any other income due to the shareholder's fund that can be determined with reasonable certainty, calculated at 70% confidence level at the overall takaful subsidiary level. The method used to value expense liabilities shall be consistent with the method used to value takaful liabilities of the corresponding family takaful contract.

Liability Adequacy Test

At each financial year end, the takaful subsidiary reviews the expense liabilities of the shareholder's fund to ensure that the carrying amount is sufficient or adequate to cover the obligations of the shareholder's fund for all managed takaful contracts. In performing this review, the takaful subsidiary considers all contractual cashflows and compares this against the carrying value of expense liabilities. Any deficiency is recognised in the income statement.

2.8 General retakaful fund

The general retakaful fund is maintained in accordance with the Takaful Act 1984 and consists of AFS reserves and the accumulated surplus / deficit in the fund. Any underwriting deficit will be made good by the shareholder's fund via a benevolent loan or Qard.

Surplus distributable to the participants is determined after deducting retrotakaful costs, commissions, contribution liabilities, net claims incurred, wakalah fees, expenses and taxation. The surplus may be distributed to the shareholder and participants in accordance with the terms and conditions of the respective contracts.

Revenue of the general retakaful fund consists of gross retakaful contributions and investment income. Unrealised income is deferred and receipts in advance are treated as liabilities in the statement of financial position.

(i) Retakaful contribution income

Contributions are recognised in respect of risks assumed during a particular financial period. Inward treaty retakaful contributions are recognised on the basis of statements received from ceding companies.

Inwards facultative retakaful contributions are recognised in the financial period in respect of the facultative risk assumed during the particular financial period, as in the case of direct policies, following individual risks' inception dates.

Inwards proportional treaty retakaful contributions are recognised on the basis of periodic advices received from cedants given that the periodic advices reflect the individual underlying risks being incepted and reinsured at various inception dates of these risks and contractually accounted for under the terms of the proportional retakaful treaty.

Contribution income on inward non-proportional treaties, which cover losses occurring during a specified treaty period, are recognised based on the contractual contributions already established at the start of the treaty period under the terms and conditions of each contract.

131 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.8 General retakaful fund (Contd.)

(ii) Contribution liabilities

Contribution liabilities represent the general retakaful fund's future obligations on takaful contracts as represented by contributions received for risks that have not yet expired. The movement in contribution liabilities is released over the term of the takaful contracts and recognised as contribution.

Contribution liabilities are reported at the higher of the aggregate of the unearned contribution reserves ("UCR") for all lines of business or the best estimate value of the retakaful fund's unexpired risk reserves ("URR") at the end of the reporting period.

(a) Unexpired risk reserves

The URR is a prospective estimate of the expected future payments arising from future events insured under contracts in force as at the end of the reporting period and also includes allowance for expenses, including overheads and cost of retakaful, expected to be incurred during the unexpired period in administering these contracts and settling the relevant claims, and expected future contribution refunds. The URR is estimated via an actuarial valuation performed by a qualified actuary, using a mathematical method of estimation similar to incurred but not reported ("IBNR") claims.

(b) Unearned contribution reserves

The UCR represent the portion of the net contribution of retakaful business written that relate to the unexpired periods of the contracts at the end of the reporting period.

In determining the UCR as at the reporting date, the method that most accurately reflects the actual liability is used. UCR is computed using the 1/8th method, applied to contributions with a deduction for actual wakalah fee.

(iii) Claim liabilities

Liabilities for outstanding claims are recognised as advised by ceding companies. The amount of outstanding claims is the best estimate of the expenditure required together with related expenses less recoveries to settle the obligation at the end of the reporting period.

Provision is also made for the cost of claims together with related expenses incurred but not reported ("IBNR") at the end of the reporting period based on estimations performed by a qualified actuary.

(iv) Liability adequacy test

At each reporting date, the retakaful subsidiary reviews all general takaful contract liabilities to ensure that the carrying amount of the liabilities is sufficient or adequate to cover the obligations of the fund, contractual or otherwise, with respect to general takaful contract issued. In performing this review, the retakaful subsidiary compares all contractual cash flows against the carrying value of general takaful contract liabilities. Any deficiency is recognised in the income statement.

The estimation of claim and contribution liabilities performed at reporting date is part of the liability adequacy tests performed by the retakaful subsidiary. Based on this, all general takaful contract liabilities as at the reporting date are deemed to be adequate.

132 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.8 General retakaful fund (Contd.)

(v) Commission expenses

Commission expenses, which are costs directly incurred in securing contributions on retakaful business, are recognised as incurred and properly allocated to the periods in which it is probable they give rise to income.

Commission expenses are borne by the general retakaful fund in the general retakaful income statement at an agreed percentage of the gross contribution.

2.9 Family retakaful fund

The family retakaful fund is maintained in accordance with the requirements of the Takaful Act, 1984 and consists of AFS reserves and the accumulated surplus/deficit in the fund.

The family retakaful fund surplus/deficit is determined by an annual actuarial valuation of the family retakaful fund. Any actuarial deficit in the family retakaful fund will be made good by the shareholder's fund via a benevolent loan or Qard. Surplus distributable to the participants is determined after deducting benefits paid and payable, retrotakaful, provisions, reserves, commissions, wakalah fee, taxation and any surplus administration charges transferred to the shareholder's fund. The surplus may be distributed to the shareholder and participants in accordance with the terms and conditions of the respective contracts.

Revenue of the family retakaful fund consists of gross retakaful contributions and investment income. Unrealised income is deferred and receipts in advance are treated as liabilities in the statement of financial position.

(i) Retakaful contribution income

Contributions are recognised in respect of risks assumed during a particular financial period. Inward treaty retakaful contributions are recognised on the basis of statements received from ceding companies.

(ii) Benefits payable and actuarial liabilities

Liabilities for benefits payable are recognised as advised by ceding companies. The actuarial liabilities of the family retakaful fund is the best estimate of the expenditure required together with related expenses less recoveries to settle the obligation at the end of the financial year. The valuation of the actuarial liabilities is performed by a qualified actuary.

(iii) Liability adequacy test

At each reporting date, the retakaful subsidiary reviews all family takaful contract liabilities to ensure that the carrying amount of the liabilities is sufficient or adequate to cover the obligations of the fund, contractual or otherwise, with respect to family takaful contract issued. In performing this review, the retakaful subsidiary compares all contractual cash flows against the carrying value of family takaful contract liabilities. Any deficiency is recognised in the income statement.

The estimation of actuarial liabilities performed at reporting date is part of the liability adequacy tests performed by the retakaful subsidiary. Based on this, all family takaful contract liabilities as at the reporting date are deemed to be adequate.

(iv) Commission expenses

Commission expenses, which are costs directly incurred in securing contributions on retakaful business, are recognised as incurred and properly allocated to the periods in which it is probable they give rise to income.

Commission expenses are borne by the family retakaful fund in the family retakaful income statement at an agreed percentage of the gross contribution.

133 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.10 Shareholders' fund of retakaful subsidiary

Expense liabilities

The expense liabilities of the shareholders' fund consists of expense liabilities of the general retakaful fund and the family retakaful fund which are based on estimations performed by a qualified actuary. The movement in expense liabilities is released over the term of the retakaful contracts and recognised as wakalah fees.

(i) Expense liabilities of general retakaful fund

The expense liabilities of the general retakaful fund are reported at the higher of the aggregate of the reserve for unearned wakalah fees ("UWF") or the best estimate value of the unexpired expense reserves ("UER") at the end of the reporting period.

(a) Reserve for unearned wakalah fees

The UWF represents the portion of wakalah fee income allocated for expenses expected to be incurred in managing general retakaful contracts that relate to the unexpired periods of the contracts at the end of the reporting period. In determining the UWF, the method used is consistent with the methods used in the calculation of the UCR of the general retakaful fund as disclosed in Note 2.8(ii)(b).

(b) Unexpired expense risk

The UER is determined based on the expected future expenses payable by the shareholder's fund in managing the general retakaful fund for the full contractual obligation of unexpired retakaful contracts as at the end of the reporting period. The method used to value the UER is consistent with the method used in estimating the URR as disclosed in Note 2.8(ii)(a).

(ii) Expense liabilities of family retakaful fund

The valuation of expense liabilities in relation to contracts of the family retakaful fund is conducted separately by the Appointed Actuary in the shareholders' fund. The method used to value expense liabilities is consistent with the method used to value retakaful liabilities of the corresponding family retakaful contract. In valuing the expense liabilities, the present value of expected future expenses payable by the shareholders' fund in managing the retakaful fund for the full contractual obligation of the retakaful contract less any expected cash flows from future wakalah fee income, and any other income due to the shareholders' fund that can be determined with reasonable certainty, are taken into consideration.

(iii) Liability adequacy test

At each financial year end, the retakaful subsidiary reviews the expense liabilities of the shareholders' fund to ensure that the carrying amount is sufficient or adequate to cover the obligations of the shareholders' fund for all managed retakaful contracts. In performing this review, the retakaful subsidiary considers all contractual cashflows and compares this against the carrying value of expense liabilities. Any deficiency is recognised in the income statement.

134 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.11 Product classification

Financial risk is the risk of a possible future change in one or more of a specified interest/profit rate, financial instrument price, commodity price, foreign exchange rate, index of price or rate, credit rating or credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract. Insurance/underwriting risk is the risk other than financial risk.

An insurance/takaful contract is a contract under which the reinsurance, takaful and retakaful subsidiaries have accepted significant insurance/underwriting risk from another party by agreeing to compensate the party if a specified uncertain future event adversely affects the party. As a general guideline, the reinsurance, takaful and retakaful subsidiaries determine whether significant insurance/underwriting risk has been accepted by comparing claims/benefits paid on the occurrence of an insured event with claims/benefits payable if the event had not occurred.

Conversely, investment contracts are those contracts that transfer financial risk with no significant insurance/underwriting risk.

Once a contract has been classified as an insurance/takaful contract, it remains an insurance/takaful contract for the remainder of its life-time, even if the insurance/underwriting risk reduces significantly during the period, unless all rights and obligations are extinguished or expire.

Based on the definition above and the product classification review performed by the Group, all contracts issued during the year fall under the classification of insurance/takaful contracts as at the reporting date.

2.12 Reinsurance/retakaful

The reinsurance, takaful and retakaful subsidiaries cede insurance/underwriting risk in the normal course of business for all its business. Ceded reinsurance/retakaful arrangements do not relieve the reinsurance, takaful and retakaful subsidiaries from their obligations to cedants/participants. For both ceded and assumed reinsurance/retakaful, premiums/contributions and claims / benefits are presented on a gross basis.

Reinsurance/retakaful arrangements entered into by the reinsurance, takaful and retakaful subsidiaries that meet the classification requirements of insurance/takaful contracts as described in Note 2.11 are accounted for as noted below. Arrangements that do not meet these classification requirements are accounted for as financial assets. As at the reporting date, all reinsurance/retakaful arrangements entered into by the reinsurance, takaful and retakaful subsidiary during the year met the classification requirements of insurance/takaful contracts.

Reinsurance/retakaful assets represent amounts recoverable from reinsurers/retakaful operators for insurance/takaful contract liabilities which have yet to be settled at the reporting date. Amounts recoverable from reinsurers/retakaful operators are measured consistently with the amounts associated with the underlying insurance/takaful contracts and the terms of the relevant reinsurance/retakaful arrangement.

At each reporting date, or more frequently, the reinsurance, takaful and retakaful subsidiaries assess whether objective evidence exists that reinsurance/retakaful assets are impaired. Objective evidence of impairment for reinsurance/retakaful assets are similar to those noted for insurance/takaful receivables. If any such evidence exists, the amount of the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate. The impairment loss is recognised in the income statement.

Reinsurance/retakaful assets are derecognised when the contractual rights are extinguished or expire or when the contract is transferred to another party.

135 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.13 Property, plant and equipment and depreciation

(i) Recognition and measurement

All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition, property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset.

On disposal of property, plant and equipment, the difference between net proceeds and the carrying amount is recognised in the income statement and the unutilised portion of the revaluation surplus on that item is taken directly to retained profits.

(ii) Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred.

(iii) Depreciation

Freehold land has an unlimited useful life and therefore is not depreciated. Leased properties are depreciated over the shorter of the lease term and their useful lives.

Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over its estimated useful life, at the following annual rates:

Buildings 2% Computer equipment 20% to 33.3% Office equipment 5% to 15% Furniture and fittings 3.3% to 15% Motor vehicles 20% Significant parts of buildings 5% to 20%

The residual values, useful life and depreciation method are reviewed at the end of each reporting period to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

2.14 Investment properties

Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value.

Fair value is arrived at by reference to market evidence of transaction prices for similar properties and is performed by registered independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued.

Gains and losses arising from changes in the fair values of investment properties are recognised in the income statement in the year in which they arise.

136 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.14 Investment properties (Contd.)

Investment properties are derecognised when either they have been disposed of 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 the income statement in the year in which they arise.

Transfers are made to or from investment property only when there is a change in use. For a transfer from owner-occupied property to investment property, any excess of the property's carrying value over its fair value is accounted for as a revaluation surplus which is recognised in other comprehensive income. Any deficit between the property's carrying value and its fair value is recognised as an impairment loss in income statement. Subsequent to the date of change in use, the property is measured similar to other investment property. Any revaluation surplus previously recognised in other comprehensive income is transferred to income statement only upon disposal of property.

2.15 Intangible assets

All intangible assets are initially recorded at cost. Subsequent to recognition,intangible assets are stated at cost less accumulated amortisation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset.

On disposal of intangible assets, the difference between net proceeds and the carrying amount is recognised in the income statement.

The useful lives of intangible assets are assessed to be 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 at the end of each reporting period.

Amortisation is charged to the income statement.

Intangible assets with indefinite useful lives are not amortised but tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. The useful life of an intangible asset with an indefinite life is also reviewed annually to determine whether the useful life assessment continues to be supportable.

(i) Software development in progress

Software development in progress are tested for impairment annually and represent development expenditure on software. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future use. During the period in which the asset is not yet in use, it is tested for impairment annually.

(ii) Computer software and licences

The useful lives of computer software and licenses are considered to be finite because computer software and licenses are susceptible to technological obsolescence.

The acquired computer software and licenses are amortised using the straight line method over their estimated useful lives not exceeding 6 years. Impairment is assessed whenever there is indication of impairment and the amortisation period and method are also reviewed at least at the end of each reporting

137 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.16 Financial assets

(i) Initial recognition and measurement

Financial assets are recognised in the financial statements when, and only when, the Group and the Company becomes a party to the contractual provisions of the instrument.

A financial asset is recognised initially, at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset.

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with the policy applicable to the nature of the host contract.

(ii) Classification and subsequent measurement

The Group and the Company determine the classification of its financial assets at initial recognition and this depends on the purpose for which the investments were acquired or originated. The following classifications are used by the Group and the Company in categorising its financial assets:

(a) Financial assets at FVTPL

Financial assets are classified as financial assets at FVTPL if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at FVTPL are measured at fair value. Any gains or losses arising from changes in fair value are recognised in the income statement. Net gains or net losses on FVTPL do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on FVTPL are recognised in the income statement as part of investment income.

(b) HTM investments

Financial assets with fixed or determinable payments and fixed maturity are classified as HTM when the Group and the Company has the positive intention and ability to hold the investments to maturity.

Subsequent to initial recognition, HTM investments are measured at amortised cost using the effective interest / yield method. Gains and losses are recognised in the income statement when the HTM investments are derecognised or impaired, and through the amortisation process.

(c) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest / yield method. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, and through the amortisation process.

138 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.16 Financial assets (Contd.)

(ii) Classification and subsequent measurement (Contd.)

(d) AFS financial assets

AFS financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.

After initial recognition, AFS financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest / yield method are recognised in the income statement. The cumulative gain or loss previously recognised is reclassified from other comprehensive income to the income statement as a reclassification adjustment when the financial asset is derecognised. Interest / profit income calculated using the effective interest / yield method is recognised in the income statement.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less accumulated impairment losses.

(iii) Derecognition

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in the income statement.

2.17 Fair value of financial instruments

The fair value of financial assets that are actively traded in organised financial markets is determined by reference to quoted market bid prices for assets and offer prices for liabilities, at the close of business at the end of each reporting period.

The fair value of investments in unit and real estate investment trusts is determined by reference to published bid prices.

For financial assets where an active market may not exist, the fair value is determined by using valuation techniques. Such techniques include using recent arm’s length transactions, reference to the current market value of another asset which is substantially the same, discounted cash flow analysis and / or option pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs. For discounted cash flow techniques, estimated future cash flows are based on management’s best estimates and the discount rate used is a market related rate for a similar asset. Certain financial assets are valued using pricing models that consider, among other factors, contractual and market prices, co-relation, time value of money, credit risk, yield curve volatility factors and / or prepayment rates of the underlying positions. The use of different pricing models and assumptions could produce materially different estimates of fair values.

The fair value of floating rate and over-night deposits with financial institutions is their carrying value. The carrying value is the cost of the deposit / placement and accrued interest / profit. The fair value of fixed interest / profit / yield-bearing deposits is estimated using discounted cash flow techniques. Expected cash flows are discounted at current market rates for similar instruments at the reporting date.

If the fair value of a financial asset cannot be measured reliably, the asset is measured at cost, being the fair value of the consideration paid for the acquisition of the asset. All transaction costs directly attributable to the acquisition are also included in the cost of the financial asset.

139 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.18 Impairment of assets

(a) Financial assets

The Group and the Company assesses at the end of each reporting period whether there is any objective evidence that a financial asset or a group of financial assets is impaired.

(i) Financial assets carried at amortised cost

The Group and the Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed 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 impairment assessment is performed at the end of each reporting period.

If there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate / yield. The carrying amount of the asset is reduced and the loss is recorded in the income statement.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in the income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

(ii) AFS financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as AFS financial assets are impaired.

If an AFS financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the income statement, is transferred from other comprehensive income to the income statement.

Impairment losses on AFS equity investments are not reversed in the income statement in subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For AFS debt investments, impairment losses are subsequently reversed in the income statement if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in the income statement.

(b) Non-financial assets

The carrying amounts of assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash- generating units that are expected to benefit from the synergies of the combination.

140 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.18 Impairment of assets (Contd.)

(b) Non-financial assets (Contd.)

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.

Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash generating units are allocated first to reduce the carrying amount of the other assets in the unit (groups of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to the income statement in the year in which the reversals are recognised.

2.19 Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary.

Immediately before classification as held for sale, the non-current assets are measured in accordance with applicable FRSs. On initial classification as held for sale, non-current assets are then measured at the lower of its carrying amount and fair value less costs to sell. Any difference is included in the income statement. Non-current assets classified as held for sale are not depreciated.

2.20 Measurement and impairment of Qard

Any deficits arising in the takaful / retakaful funds are made good via a benevolent loan, or Qard, granted by the shareholder's funds to the takaful / retakaful funds. The Qard is stated at cost less any impairment losses at the shareholders' funds. In the takaful / retakaful funds, the Qard is stated at cost.

The Qard shall be repaid from future surpluses of the takaful / retakaful funds.

The Qard is tested for impairment at each reporting date via an assessment of the estimated surpluses or cashflows from the takaful / retakaful funds to determine whether there is objective evidence of impairment. If the Qard is impaired, an amount comprising the difference between its cost and its recoverable amount, less any impairment loss previously recognised, is recognised in the income statement.

Impairment losses are subsequently reversed in the income statement if objective evidence exists that the Qard is no longer impaired.

141 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.21 Share capital and dividend expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

2.22 Cash and cash equivalents

Cash and cash equivalents include cash in hand and at banks, excluding fixed and call deposits with licensed financial institutions, which have an insignificant risk of changes in value. The statement of cash flows has been prepared using the indirect method.

2.23 Insurance and takaful receivables

Insurance / takaful receivables are amounts receivable under the contractual terms of an insurance / takaful contract. On initial recognition, insurance / takaful receivables are measured at fair value based on the consideration receivable. Subsequent to initial recognition, insurance / takaful receivables are measured at amortised cost, using the effective yield method.

Insurance / takaful receivables are assessed at each reporting date for objective evidence of impairment. If any such evidence exists, the amount of impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the insurance / takaful receivable's original effective yield rate. The impairment loss is recognised in the income statement. The basis for recognition of such impairment loss is as described in Note 2.18(a)(i).

Insurance / takaful receivables are derecognised when the rights to receive cash flows from them have expired or when they have been transferred and the Group has also transferred substantially all risks and rewards of ownership.

2.24 Islamic medium terms notes ("IMTN")

IMTN are recognised at the amount of proceeds received less directly attributable transaction costs. The IMTN are classified as non-current liabilities in the statement of financial position and the profits payable are recognised as finance costs in the income statement in the period in which they are incurred.

2.25 Leases

(i) Classification

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets. The land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating leases, with the following exceptions:

- Property held under operating leases that would otherwise meet the definition of an investment property is classified as an investment property on a case-by-case basis and, if classified as investment property, is accounted for as if held under a finance lease, as disclosed in Note 2.14; and

- Land held for own use under an operating lease, the fair value of which cannot be measured separately from the fair value of a building situated thereon at the inception of the lease, is accounted for as being held under a finance lease, unless the building is also clearly held under an operating lease.

142 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.25 Leases (Contd.)

(ii) Finance leases - the group as lessee

Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the statement of financial position as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Group and the Company’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets.

Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in the income statement over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

The depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment as described in Note 2.13(iii).

(iii) Operating Leases - the group as lessee

Operating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

In the case of a lease of land and buildings, the minimum lease payments or the up-front payments made are allocated, whenever necessary, between the land and the buildings elements in proportion to the relative fair values of leasehold interests in the land element and buildings element of the lease at the inception of the lease. The up-front payment represents prepaid lease payments and are amortised on a straight-line basis over the lease term.

(iv) Operating Leases - the group as lessor

Assets leased out under operating leases are presented on the statement of financial position according to the nature of the assets. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease, as disclosed in Note 2.31(ii). Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

2.26 Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of FRS 139, are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.

143 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.26 Financial liabilities (Contd.)

(a) Financial liabilities at FVTPL

Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in the income statement. Net gains or losses on derivatives include exchange differences.

The Group and the Company have not designated any financial liabilities as at FVTPL nor were there any financial liabilities held for trading.

(b) Other financial liabilities

The Group and the Company's other financial liabilities include insurance / takaful payables and other payables.

Insurance / takaful and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest / yield method.

For other financial liabilities, gains and losses are recognised in the income statement when the liabilities are derecognised, and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. 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 a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.

2.27 Provisions for liabilities

Provisions for liabilities are recognised when the Group has 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. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of provision is the present value of the expenditure expected to be required to settle the obligation.

2.28 Income tax

Income tax on profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the end of the reporting period.

Deferred tax is provided for, using the liability method, on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

144 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.28 Income tax (Contd.)

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the end of the financial year. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in other comprehensive income, in which case the deferred tax is also charged or credited directly in other comprehensive income.

2.29 Employee benefits

(i) 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 of the Group. 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 balances. Short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Defined contribution plan

As required by law, the Group makes contributions to the national pension scheme, the Employees Provident Fund ("EPF"). The Group also makes additional contributions to the EPF for eligible employees by reference to their length of service and earnings. Such contributions are recognised as an expense in the income statement as incurred.

(iii) Employees' terminal benefits

As required by law in the United Arab Emirates, the Group makes provision for terminal benefits for employees of its Dubai subsidiary, based on the employees’ salaries and number of years of service. The terminal benefits are paid to the employees on termination or completion of their terms of employment.

2.30 Foreign currencies

(i) Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.

(ii) Foreign currency transactions

In preparing the financial statements, transactions in currencies other than the functional currency ("foreign currencies") are recorded in the functional currency using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the income statement for the period except for exchange differences arising on monetary items that form part of the Company’s net investment in foreign operations. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operations, where that monetary item is denominated in either the functional currency of the reporting entity or the foreign operation, are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in the income statement. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operations, where that monetary item is denominated in a currency other than the functional currency of the Company or the foreign operation, are recognised in the income statement for the period. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operations, regardless of the currency of the monetary item, are recognised in the income statement.

145 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.30 Foreign currencies (Contd.)

(ii) Foreign currency transactions (Contd.)

Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the income statement for the period except for the differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in other comprehensive income. Exchange differences arising from such non-monetary items are also recognised directly in other comprehensive income.

(iii) Foreign operations

The results and financial position of foreign operations that have a functional currency different from the presentation currency (RM) of the consolidated financial statements are translated into RM as follows:

- Assets and liabilities for each statement of financial position presented are translated at the closing rate prevailing at the reporting date;

- Income and expenses for each income statement are translated at average exchange rates for the year, which approximates the exchange rates at the dates of the transactions;

- All resulting exchange differences are taken to the foreign currency translation reserve within equity; and

- The results of an associate, Labuan Reinsurance (L) Limited, are translated at the closing rate prevailing at the reporting date with respect to the carrying amount of investments in associate, and at the exchange rate at the date of the transactions with respect to the share of profits or losses. All resulting translation differences are included in the foreign exchange translation reserve in shareholders' equity.

2.31 Other revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits flow to the Group and the Company and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

(i) Interest and profit income are recognised using the effective interest/yield.

(ii) Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.

(iii) Dividend income is recognised when the right to receive payment is established.

(iv) Management fees are recognised when services are rendered.

(v) Wakalah fees are recognised as soon as the amount of contribution can be reliably measured in accordance with the principles of Shariah.

2.32 Zakat

This represents an obligatory amount payable by the takaful and retakaful subsidiaries to comply with the principles of Shariah. Zakat for the takaful subsidiary is computed using the “net-asset” method, whilst zakat for the retakaful subsidiary is computed based on 2.5% of profit before tax, as approved by the respective Shariah Committees. Only the zakat that is attributable to the individual Muslim shareholders of the holding company is provided for in the financial statements. The zakat computation is reviewed by the Shariah Committee. The Board has the discretion to pay additional zakat above the obligatory amount payable.

146 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.33 Adoption of new and revised FRSs, Amendments to FRSs and Issues Committee ("IC") Interpretations

The accounting policies adopted by the Group and the Company are consistent with those of the previous financial year except for the adoption of new and revised FRSs. On 1 April 2010, the Group and the Company adopted the following new and revised FRSs, Amendments to FRS and IC Interpretations mandatory for financial periods beginning on or after 1 January 2010:

FRS 4 Insurance Contracts FRS 7 Financial Instruments: Disclosures FRS 101 Presentation of Financial Statements (Revised) FRS 123 Borrowing Costs FRS 139 Financial Instruments: Recognition and Measurement Amendments to FRS 1 First-time Adoption of Financial Reporting Standards and FRS 127 Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate Amendments to FRS 2 Share-based Payment - Vesting Conditions and Cancellations Amendments to FRS 132 Financial Instruments: Presentation Amendments to FRS 139 Financial Instruments: Recognition and Measurement, FRS 7 Financial Instruments: Disclosures and IC Interpretation 9 Reassessment of Embedded Derivatives Improvements to FRS issued in 2009 IC Interpretation 9 Reassessment of Embedded Derivatives IC Interpretation 10 Interim Financial Reporting and Impairment IC Interpretation 11 FRS 2: Group and Treasury Share Transactions IC Interpretation 13 Customer Loyalty Programmes IC Interpretation 14 FRS 119: The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

The adoption of the above FRSs, Amendments to FRS and IC Interpretations did not have any significant effect on the financial performance and position of the Group and the Company except as discussed below:

(i) FRS 101 Presentation of Financial Statements (Revised)

The revised FRS 101 introduces changes in the presentation and disclosures of financial statements. The revised Standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with all non-owner changes in equity presented as a single line.

The Standard also introduces the statement of comprehensive income, with all items of income and expense recognised in profit or loss, together with all other items of recognised income and expense recognised directly in equity, either in one single statement, or in two linked statements. The Group and the Company have elected to present this statement as two linked statements.

In addition, a statement of financial position is required at the beginning of the earliest comparative period following a change in accounting policy, the correction of an error or the classification of items in the financial statements.

The revised FRS 101 also requires the Group and the Company to make new disclosures to enable users of the financial statements to evaluate the Company's objectives, policies and processes for managing capital as disclosed in Note 41.

The revised FRS 101 was adopted retrospectively by the Company.

(ii) FRS 8 Operating Segments

FRS 8, which replaces FRS 114 Segment Reporting, specifies how an entity should report information about its operating segments, based on information about the components of the entity that is available to the chief operating decision maker for the purposes of allocating resources to the segments and assessing their performance. The Group concluded that the reportable operating segments determined in accordance with FRS 8 are the same as the business segments previously identified under FRS 114. The Group has adopted FRS 8 retrospectively. These revised disclosures, including the related revised comparative information, are shown in Note 40 to the financial statements.

147 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.33 Adoption of new and revised FRSs, Amendments to FRSs and Issues Committee ("IC") Interpretations (Contd.)

(iii) FRS 7 Financial Instruments: Disclosures

Prior to 1 April 2010, information about financial instruments was disclosed in accordance with the requirements of FRS 132 Financial Instruments: Disclosure and Presentation. FRS 7 introduces new disclosures to improve the information about financial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk.

In accordance with the transitional provisions of FRS 7, the Group and the Company have applied the disclosure requirements of the Standard prospectively and, hence, comparative disclosures have not been provided. The new disclosures are included throughout the notes to the financial statements for the year ended 31 March 2011.

(iv) FRS 4 Insurance Contracts

This Standard specifies the financial reporting requirements for insurance / takaful contracts by any entity that issues such contracts. The key changes arising from the adoption of this Standard is summarised as follows:

- Gross presentation

The Standard requires that assets, liabilities, income and expenses arising from insurance / takaful contracts be presented on a gross basis separately from assets, liabilities, income and expenses arising from the related reinsurance / retakaful arrangements. The impact arising from the grossing up of such balances is described in Note 2.34(b).

- Qualitative and quantitative disclosures

The Standard also requires additional disclosures to assist users of financial statements in understanding the amounts, timing and uncertainty of future cash flows arising from insurance / takaful contracts including a reconciliation between the opening and closing balances of insurance / takaful contract liabilities and a sensitivity analysis on insurance / underwriting risk. The new disclosures are included throughout the notes to the financial statements for the year ended 31 March 2011.

- Liability adequacy tests ("LAT")

The Standard also introduces the need to perform a liability adequacy test by considering current estimates of future cash flows under its insurance / takaful contracts. Accordingly, liability adequacy tests are performed in Notes 2.4 to 2.10. The impact arising from liability adequacy test has been reflected as an accounting policy change as it affects the basis of measurement of insurance / takaful contract liabiities. The impact of such change in accounting policy has hence been adjusted retrospectively and the relevant adjustments made to brought forward reserves and prior year results are as disclosed in Note 2.34(a).

- Impairment of reinsurance/retakaful assets and insurance/takaful receivables

Prior to 1 April 2010, provision for doubtful debts was made in the financial statements for any balances from agents, brokers, reinsurers and retakaful operators which remain oustanding for more than six months from the date on which they become receivable and for all debts which are considered doubtful. In addition, for the takaful subsidiary, any outstanding debts related to Motor takaful business outstanding for a period in excess of 30 days are provided for as doubtful debts.

Upon the adoption of FRS 4, if there is objective evidence that reinsurance / retakaful assets and by extension, insurance / takaful receivables are impaired, the carrying amount of the assets is reduced accordingly and an impairment loss is recognised in the income statement. This change has been reflected as an accounting policy change as it affects the basis of measurement of impairment losses for insurance / takaful receivables. The impact of such change in accounting policy has hence, been adjusted retrospectively and the relevant adjustments made to brought forward reserves and prior year financial position / results are as disclosed in Note 2.34(a).

148 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.34 Summary of effects of changes in accounting treatment on the financial statements

(a) Effects of changes on opening reserves

The following tables present the changes to the related statement of financial position items, arising from the adoption of new and revised FRSs as diclosed in Note 2.33. The adjustments to the carrying amount of the affected items have been accounted for retrospectively as at 1 April 2009 and 31 March 2010. These adjustments are detailed as follows:

Restated As at Increase/ as at 1 April 2009 (decrease) 1 April 2009 RM'000 RM'000 RM'000

General reinsurance and shareholders' funds

Retained profits: 496,166 (18,675) 477,491

Impairment of insurance receivables (895) Recognition of expense liabilities of shareholders' funds: (i) General takaful fund (4,611) (ii) Family takaful fund (16,878) (iii) General retakaful fund (1,998) Deferred tax effect 5,707

Insurance receivables 138,501 (895) 137,606 Expense liabilities - 23,487 23,487 Deferred tax asset 15,456 5,707 21,163

General takaful fund

General takaful fund: 4,017 (2,059) 1,958

Impairment of Takaful contracts receivables (2,746) Deferred tax 687

Takaful receivables 20,065 (2,746) 17,319 Deferred tax 2,629 687 3,316

Family takaful fund

Family takaful fund: 531,032 1,638 532,670

Impairment of Takaful contracts receivables 1,638

Takaful receivables 28,829 1,638 30,467

General retakaful fund

General retakaful fund: - 706 706

Impairment of takaful receivables 706

Takaful receivables 3,227 706 3,933

149 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.34 Summary of effects of changes in accounting treatment on the financial statements (Contd.)

(a) Effects of changes on opening reserves (Contd.)

Restated As at as at 31 March Increase/ 31 March 2010 (decrease) 2010 RM'000 RM'000 RM'000

General reinsurance and shareholders' fund

Retained profits: 544,333 (16,128) 528,205

Impairment of insurance receivables (473) Recognition of expense liabilities of shareholders' funds: (i) General takaful fund (5,957) (ii) Family takaful fund (9,793) (iii) General retakaful fund (4,360) Deferred tax effect 4,455

Insurance receivables 149,382 (473) 148,909 Expense liabilities - 20,110 20,110 Deferred tax asset 5,878 4,455 10,333

General takaful fund

General takaful fund: 8,794 (2,602) 6,192

Impairment of Takaful contracts receivables (3,470) Deferred tax 868

Takaful receivables 39,626 (3,470) 36,156 Deferred tax asset 1,473 868 2,341

Family takaful fund

Family takaful fund: 738,781 1,495 740,276

Impairment of Takaful contracts receivables 1,495

Takaful receivables 37,266 1,495 38,761

General retakaful fund

General retakaful fund: - 1,633 1,633

Impairment of takaful receivables 1,809 Movement in contribution liabilities (176)

Takaful receivables 5,665 1,809 7,474 Contribution liabilities 11,958 176 12,134

150 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.34 Summary of effects of changes in accounting treatment on the financial statements (Contd.)

(b) Reclassification of comparatives

Certain comparative figures in the income statement for the year ended 31 March 2010 and statement of financial position as at 1 April 2009 and 31 March 2010 have been reclassified to conform with current year's presentation.

As previously Re- As reported classfication restated RM'000 RM'000 RM'000

General reinsurance and shareholders' fund

Income statement

Gross premium 1,091,186 (1,091,186) - Reinsurance (131,707) 131,707 - Change in premium liabilities 128,650 (128,650) - Gross earned premiums - 1,235,123 1,235,123 Premiums ceded to reinsurers - (146,994) (146,994)

Net claims incurred (736,719) 736,719 - Gross claims paid - (602,931) (602,931) Claims ceded to reinsurers - 65,927 65,927 Gross change to contract liabilities - (126,069) (126,069) Change in contract liabilities ceded to reinsurers - (73,646) (73,646)

Wakalah fees income 190,136 (190,136) - Surplus administration charges 8,852 (8,852) - Investment income 58,760 (58,760) - Management fees 1,716 (1,716) - Net other operating expenses (26,632) 26,632 - Management and commission expenses (512,680) 512,680 - Finance cost (7,125) 7,125 - Investment income - 58,760 58,760 Realised gains and losses - 23,625 23,625 Fair value gains and losses - (48,589) (48,589) Fee and commission income - 216,992 216,992 Other operating revenue - 8,732 8,732 Fee and commission expense - (366,104) (366,104) Management expenses - (158,302) (158,302) Finance cost - (7,125) (7,125) Other operating expenses - (14,962) (14,962)

151 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.34 Summary of effects of changes in accounting treatment on the financial statements (Contd.)

(b) Reclassification of comparatives (Contd.)

As previously Re- As reported classfication restated RM'000 RM'000 RM'000

General reinsurance and shareholders' fund

Statement of financial position

31 March 2010

Claim liabilities (950,125) 950,125 - Premium liabilities (210,515) 210,515 -

Reinsurance assets - 152,652 152,652 Insurance contract liabilities - (1,313,292) (1,313,292)

The effects on the income statement and the statement of financial position in respect of grossing-up as described in Note 2.33(iv) have not been disclosed as these are primarily reclassification adjustments.

1 April 2009

Deposits and placements with financial institutions 687,891 (687,891) - Other investments 901,996 (901,996) - Loans and receivables 142,853 (142,853) -

Financial assets at FVTPL - 46,805 46,805 HTM investments - 345,083 345,083 AFS financial assets - 476,093 476,093 Loans and receivables - 864,729 864,729

Claim liabilities (698,623) 698,623 - Premium liabilities (339,669) 339,669 - Reinsurance assets - 189,798 189,798 Insurance contract liabilities - (1,279,373) (1,279,373)

152 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.34 Summary of effects of changes in accounting treatment on the financial statements (Contd.)

(b) Reclassification of comparatives (Contd.)

As previously Re- As reported classfication restated RM'000 RM'000 RM'000

General takaful fund

Income statement

Gross contribution 217,230 (217,230) - Retakaful (25,525) 25,525 - (Increase) / decrease in unearned contribution reserves (633) 633 -

Gross earned contribution - 216,319 216,319 Earned contribution ceded to retakaful operators - (25,247) (25,247)

Net claims incurred (122,462) 122,462 -

Gross claims paid - (87,591) (87,591) Claims ceded to retakaful operators - 9,360 9,360 Gross change to contract liabilities - (40,625) (40,625) Change in contract liabilities ceded to retakaful operators - (3,605) (3,605)

Net commission earned 4,505 (4,505) -

Fee and commission income - 4,505 4,505

Net other operating expenses (869) 869 - Investment income 6,153 (389) 5,764 Provision for doubtful debts (869) 869 - Realised gains and losses - 308 308 Fair value gains and losses - (1,005) (1,005) Other operating expenses - (1,376) (1,376) Wakalah fees (55,931) 55,931 - Surplus administration charges transferred to shareholders' fund (8,095) 8,095 - Fee expenses - (64,026) (64,026) Taxation (2,692) 181 (2,511)

153 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.34 Summary of effects of changes in accounting treatment on the financial statements (Contd.)

(b) Reclassification of comparatives (Contd.)

As previously Re- As reported classfication restated RM'000 RM'000 RM'000

General takaful fund (Contd.)

Statement of financial position

31 March 2010

Trade receivables 39,626 (39,626) -

Takaful contracts receivables - 36,156 36,156

Retakaful contracts assets - 29,669 29,669

Deferred tax assets 1,474 868 2,342

Provision for outstanding claims (125,726) 125,726 -

Trade payables (5,641) 5,641 -

Takaful contracts payables - (5,641) (5,641)

Takaful contracts liabilities - (228,254) (228,254)

Other payables (31,321) (23,637) (54,958)

Due to shareholder's fund (11,594) 11,594 -

General takaful fund (8,794) 14,645 5,851

Unearned contribution reserves (72,859) 72,859 -

154 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.34 Summary of effects of changes in accounting treatment on the financial statements (Contd.)

(b) Reclassification of comparatives (Contd.)

As previously Re- As reported classfication restated RM'000 RM'000 RM'000

General takaful fund (Contd.)

Statement of financial position

1 April 2009

Trade receivables 20,064 (20,064) -

Takaful contract receivables - 17,319 17,319

Retakaful contract assets - 30,842 30,842

Deferred tax assets 2,642 674 3,316

Provision for outstanding claims (81,495) 81,495 -

Trade payables (4,786) 4,786 -

Takaful contract payables - (4,786) (4,786)

Takaful contract liabilities - (184,563) (184,563)

Other payables (10,850) (1,293) (12,143)

Due to shareholder's fund (1,293) 1,293 -

General takaful fund (3,976) 2,054 (1,922)

Unearned contribution reserves (72,226) 72,226 -

155 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.34 Summary of effects of changes in accounting treatment on the financial statements (Contd.)

(b) Reclassification of comparatives (Contd.)

As previously Re- As reported classfication restated RM'000 RM'000 RM'000

Family takaful fund (Contd.)

Income statement

Benefits paid and payable (87,092) 87,092 -

Gross benefits paid - (92,780) (92,780) Benefits ceded to retakaful operators - 14,049 14,049 Gross change to contract liabilities - (11,607) (11,607) Change in contract liabilities ceded to retakaful operators - 3,246 3,246

Investment income 18,401 1,819 20,220

Realised gains and losses - 2,024 2,024

Fair value gains and losses - 27,302 27,302

Net commission earned 63 (63) -

Fee and commission income - 63 63

Wakalah fees (120,139) 120,139 - Surplus administration charges transferred to shareholders' fund (732) 732 -

Fee expenses - (125,339) (125,339)

Net other operating income / (expenses) 22,142 (22,142) -

Allowance for doubtful debts (96) 96 -

Other operating expenses - (4,774) (4,774)

156 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.34 Summary of effects of changes in accounting treatment on the financial statements (Contd.)

(b) Reclassification of comparatives (Contd.)

As previously Re- As reported classfication restated RM'000 RM'000 RM'000

Family takaful fund (Contd.)

Statement of financial position

31 March 2010

Retakaful contracts assets - 105,811 105,811

Takaful contracts receivables 37,266 1,495 38,761

Investment-linked business assets 43,991 (600) 43,391

Provision for outstanding claims (22,158) 22,158 -

Takaful contracts liabilities - (846,087) (846,087)

Trade payables (19,464) 19,464 -

Takaful contracts payables - (19,464) (19,464)

Other payables (25,085) (13,400) (38,485)

Due to shareholders' fund (13,400) 13,400 -

Investment-linked business liabilities (1,284) (42,107) (43,391)

Family takaful fund (716,623) 716,623 -

Investment-linked fund (42,707) 42,707 -

1 April 2009

Retakaful contract assets - 4,609 4,609

Takaful contract receivables 28,829 1,638 30,467

Provision for outstanding claims (13,797) 13,797 -

Takaful contract liabilities - (846,087) (846,087)

Other payables (20,551) (28,528) (49,079)

Due to shareholder's fund (28,528) 28,528 -

Family takaful fund (514,331) (4,542) (518,873)

157 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.34 Summary of effects of changes in accounting treatment on the financial statements (Contd.)

(b) Reclassification of comparatives (Contd.)

As previously Re- As reported classfication restated RM'000 RM'000 RM'000

General Retakaful Fund

Income statement

Gross contribution 37,285 (37,285) - Retakaful (9,847) 9,847 - (Increase) / decrease in contribution liabilities (5,536) 5,536 -

Gross earned contributions - 31,624 31,624 Contributions ceded to retakaful operators - (9,722) (9,722)

Net claims incurred (26,647) 26,647 -

Gross claims paid - (13,788) (13,788) Claims ceded to retakaful operators - 2,390 2,390 Gross change to contract liabilities - (11,414) (11,414) Change in contract liabilities ceded to retakaful operators - (3,835) (3,835)

Wakalah fees (7,822) 7,822 - Net commission (7,644) 7,644 - Investment income 427 (427) - Net other operating expenses (470) 470 - Allowance for doubtful debts (838) 838 -

Investment income - 427 427 Fee and commission income - 1,312 1,312 Other operating revenue - 4 4

Fee and commission expense - (16,842) (16,842) Other operating expenses - (1,248) (1,248)

158 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.34 Summary of effects of changes in accounting treatment on the financial statements (Contd.)

(b) Reclassification of comparatives (Contd.)

As previously Re- As reported classfication restated RM'000 RM'000 RM'000

General Retakaful Fund (Contd.)

Statement of Financial Position

31 March 2010

Loans and receivables (15,435) (15,435) - Due from shareholder's fund 23,410 (23,410) -

LAR - 38,845 38,845

General retakaful fund (13,779) 13,779 - Provision for outstanding claims (33,482) 33,482 -

Retakaful assets - 11,363 11,363 General retakaful fund - (1,645) (1,645) Takaful contract liabilities - (56,979) (56,979)

1 April 2009

Investments 21,328 (21,328) - LAR 110 (110) - Due from shareholder's fund 3,129 (3,129) -

HTM investments - 5,001 5,001 LAR - 19,566 19,566

General retakaful fund (7,304) 7,304 - Provision for outstanding claims (18,233) 18,233 -

Retakaful assets - 11,817 11,817 General retakaful fund - (706) (706) Takaful contract liabilities - (36,648) (36,648)

159 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.34 Summary of effects of changes in accounting treatment on the financial statements (Contd.)

(b) Reclassification of comparatives (Contd.)

As previously Re- As reported classfication restated RM'000 RM'000 RM'000

Family Retakaful Fund

Income Statement

Gross contribution 8,074 (8,074) - Retakaful (3,884) 3,884 -

Gross earned contributions - 8,074 8,074 Contributions ceded to retakaful operators - (3,884) (3,884)

Benefits paid and payable (2,355) 2,355 -

Gross claims paid - (5,366) (5,366) Claims ceded to retakaful operators - 3,011 3,011

Wakalah fees (683) 683 - Net commission (3) 3 - Investment income 256 (256) - Surplus administration charges (25) 25 Net other operating expenses (32) 32 -

Investment income - 256 256

Fee and commission expense - (742) (742) Other operating expenses - (1) (1)

Statement of Financial Position

1 April 2009

Investments 10,489 (10,489) - LAR 73 (73) -

HTM investments - 2,000 2,000 LAR - 8,562 8,562

160 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.34 Summary of effects of changes in accounting treatment on the financial statements (Contd.)

(c) Current year effects

The following tables provide estimates of the extent to which each of the line items in the statement of financial position and income statement for the financial year ended 31 March 2011 are higher or lower than it would have been had the previous policies been applied in the current year.

Increase/ (decrease) 2011 RM'000

General reinsurance and shareholders' fund

Effects on Statement of Financial Position

Assets Insurance receivables 576 Deferred tax assets 4,311

Liabilities and equity Expense liabilities 20,630 Retained profits (15,743)

Effects on Income Statement

Other operating expenses: Change in expense liabilities (605) Impairment loss on insurance receivables 103

Taxation (126)

General takaful fund

Effects on Statement of Financial Position

Assets Takaful receivables 322 Deferred tax assets (80)

Participants' fund General takaful fund 242

Effects on Income Statement

Writeback of impairment 3,792 Taxation 948

161 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.34 Summary of effects of changes in accounting treatment on the financial statements (Contd.)

(c) Current year effects (Contd.)

Increase/ (decrease) 2011 RM'000

Family takaful fund

Effects on Statement of Financial Position

Assets Takaful receivables (114) Deferred tax assets

Liabilities Takaful contract liabilities Unallocated surplus (114)

Effects on Income Statement

Allowance for impairment 1,609

General takaful fund

Effects on Statement of Financial Position

Assets Takaful receivables 1,740 Retakaful assets 195

Liabilities Takaful contract liabilities 391

General takaful fund 1,544

Effects on Income Statement

Allowance for impairment (69) Increase in contribution liabilities 196

162 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.35 Standards issued but not yet effective

As at the date of authorisation of these financial statements, the following FRSs, Amendments to FRS and IC Interpretations have been issued by the Malaysian Accounting Standards Board ("MASB") but are not yet effective at 31 March 2011 and have not been adopted by the Group and the Company.

Effective for financial periods beginning on or after 1 July 2010

FRS 1 First-time Adoption of Financial Reporting Standards FRS 3 Business Combinations (Revised) Amendments to FRS 2 Share-based Payment Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued Operations Amendments to FRS 127 Consolidated and Separate Financial Statements Amendments to FRS 138 Intangible Assets Amendments to IC Interpretation 9 Reassessment of Embedded Derivatives IC Interpretation 12 Service Concession Arrangements IC Interpretation 15 Agreements for the Construction of Real Estate IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation IC Interpretation 17 Distributions of Non-cash assets to Owners

Effective for financial periods beginning on or after 1 January 2011

Amendments to FRS 1 Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters Amendments to FRS 1 Additional Exemptions for First-time Adopters Amendments to FRS 2 Group Cash-settled Share-based Payment Transactions Amendments to FRS 7 Improving Disclosures about Financial Instruments Amendments to FRSs contained in the document entitled 'Improvements to FRSs (2010)' Amendments to IC Interpretation 14 Prepayments of a Minimum Funding Requirement IC Interpretation 4 Determining whether an Arrangement contains a Lease IC Interpretation 18 Transfers of Assets from Customers TR 3 Guidance on Disclosures of Transition to IFRSs TR i -4 Shariah Compliant Sale Contracts

Effective for financial periods beginning on or after 1 July 2011

IC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments

Effective for financial periods beginning on or after 1 January 2012

FRS 124 Related Party Disclosures (Revised) IC Interpretation 15 Agreements for the Construction of Real Estate

The Group plans to adopt the above pronouncements when they become effective in the respective financial periods. These pronouncements are expected to have no significant impact to the financial statements of the Group and the Company upon their initial application.

2.36 Significant accounting estimates and judgements

The preparation of the Group and the Company's financial statements requires management to make judgements, estimates and assumptions that affect the reported amount of revenues, expenses, assets and liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

163 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.36 Significant accounting estimates and judgements (Contd.)

(i) Critical judgment made in applying accounting policies

The following is the judgement made by management in the process of applying the Group's accounting policies that have the most significant effect on the amount recognised in the financial statements. Judgements are continually evaluated and are based on historical experiences and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Classification between investment properties and property, plant and equipment

The Group has developed certain criteria based on FRS 140 in making judgement whether a property qualifies as an investment property. Investment property is a property held to earn rentals or for capital appreciation or both. Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a finance lease), the Group would account for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes. Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as investment property.

(ii) Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Depreciation and amortisation

Depreciation and amortisation is based on management’s estimates of the future estimated average useful lives and residual values of property, plant and equipment and intangible assets. Estimates may change due to technological developments, expected level of usage, competition, market conditions and other factors, and could impact the estimated average useful lives and the residual values of these assets.

This may result in future changes in the estimated useful lives and in the depreciation or amortisation expenses. Accordingly, at the end of each reporting period, the residual values and estimated useful lives of property, plant and equipment and intangible assets are assessed to determine that they continue to be consistent as disclosed in Notes 2.13(iii) and 2.15, respectively.

As at the reporting date, management has determined that the estimated useful lives of property, plant and equipment and intangible assets of the Group and of the Company remain consistent and there are no residual values.

(b) General reinsurance business

The principal uncertainty in the general reinsurance business arises from the technical provisions which include the provisions of premium and claim liabilities. Premium liabilities are recorded as the higher of UPR or URR while claim liabilities are mainly comprise of provision for claims reported, IBNER and IBNR.

Generally, claim liabilities are determined based upon previous claims experience, existing knowledge of events, the terms and conditions of the relevant policies and interpretation of circumstances. Particularly relevant is past experience with similar cases, historical claims development trends, legislative changes, judicial decisions and economic conditions. It is certain that actual future premium and claim liabilities will not exactly develop as projected and may vary from the reinsurance subsidiary's projection.

164 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.36 Significant accounting estimates and judgements (Contd.)

(ii) Key sources of estimation uncertainty (Contd.)

(b) General reinsurance business (Contd.)

The estimates of premium and claim liabilities are therefore sensitive to various factors and uncertainties. The establishment of technical provisions is an inherently uncertain process and, as a consequence of this uncertainty, the eventual settlement of premium and claim liabilities may vary from the initial estimates.

At each reporting date, the estimates of premium and claim liabilities are re-assessed for adequacy by an appointed actuary and changes will be reflected as adjustments to these liabilities. The appointment of the actuary is approved by BNM.

(c) General takaful and retakaful business

The principal uncertainty in the general takaful and retakaful businesses arises from the technical provisions which include the contribution liabilities and claim liabilities.

There may be significant reporting lags between the occurrence of an insured event and the actual time of event. Following the identification and notification of an insured loss, there may still be uncertainty as to the magnitude of the claim.

Generally, claim liabilities on reported claims or case reserves are estimated based upon historical claims experience, existing knowledge of events, the terms and conditions of the relevant policies and interpretation of circumstances. Particularly relevant is past experience of similar cases, historical claims development trends, legislative changes, judicial decisions and economic conditions. It is certain that final claim liabilities may vary from current projection. The uncertainty is also inherent in the projected contribution liabilities as it is correlated to the projected claim liabilities.

The estimates of contribution and claim liabilities are therefore sensitive to various factors and uncertainties. The establishment of technical provisions is an inherently uncertain process and, as a consequence of this uncertainty, the eventual settlement of contribution and claim liabilities may vary from the initial estimates. At the end of each reporting period, the estimates are re-assessed for adequacy by an appointed actuary and changes will be reflected as adjustments to these liabilities. The appointment of the actuary is approved by BNM.

(d) Family takaful and retakaful business

The estimation of the ultimate liability arising from claims made under the family takaful and retakaful businesses is a critical accounting estimate. There are several sources of uncertainty that need to be considered in the estimation of the liabilities that the family takaful and retakaful funds will ultimately be required to pay as claims.

For family takaful and retakaful contracts, estimates are made for future deaths, disabilities, maturities, investment returns, voluntary terminations and expenses in accordance with contractual and regulatory requirements. The Family takaful and retakaful funds base the estimate of expected number of deaths on statutory mortality tables, adjusted where appropriate to reflect the funds' unique risk exposures. The estimated number of deaths determines the value of possible future benefits to be paid out, which will be factored into ensuring sufficient cover by reserves, which in return is monitored against current and future contributions.

For those contracts that cover risks related to disability, estimates are made based on recent past experience and emerging trends. However epidemics, as well as wide ranging changes to life style, could result in significant changes to the expected future exposures.

165 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.36 Significant accounting estimates and judgements (Contd.)

(ii) Key sources of estimation uncertainty (Contd.)

(d) Family takaful and retakaful business (Contd.)

All of this will give rise to estimation uncertainties of projected ultimate liability of the family takaful and retakaful funds.

At each reporting date, these estimates are reassessed for adequacy and changes will be reflected as adjustments to the liability.

(e) Expense liabilities of shareholders' funds

The estimation of the expense liabilities of the shareholders' funds of the takaful and retakaful subsidiaries are subject to the same degree of estimation uncertainties due primarily to the valuation methods used which are consistent with those used to measure the liabilities associated with the general and family takaful and retakaful funds.

Accordingly, similar to the general and family takaful and retakaful funds, the estimates of expense liabiltiies are reassessed at each reporting date to ensure they remain adequate and changes are reflected as adjustments to the liability.

(f) Impairment of non-financial assets

Assets are tested for impairment when indications of potential impairment exist. Indicators of impairment which could trigger an impairment review include evidence of obsolescence or physical damage, significant fall in market values, significant underperformance relative to historical or projected future operating results, significant changes in the use of assets or the strategy of the business, significant adverse industry or economic changes. Recoverable amounts of assets are based on management’s estimates and assumptions of the net realisable value, cash flows arising from the future operating performance and revenue generating capacity of the assets and CGUs, and future market conditions. Changes in circumstances may lead to changes in estimates and assumptions, and result in changes to the recoverable amounts of assets and impairment losses needed.

It is also recognised that an initial decline in fair value of investments in new start-up investee companies, which is deemed temporary, may arise due to development and operational losses in the initial years. Based on an assessment performed at the reporting date, the Board of Directors and Management of the Company are of the opinion that there is no further indication of impairment in the Company's investment in unquoted corporations at this juncture.

(g) Impairment of unquoted equity investments

The Group and the Company follows the guidance of the applicable FRS in Malaysia in determining whether there is a decline other than temporary in the fair value of its investment in unquoted corporations. This determination requires significant judgement. In making this judgement, the Group and the Company evaluates the quantitative and qualitative factors affecting the market position of the investee including the regulatory support it receives and its longer term business outlook and financial standing. Appropriate considerations are given to the investee's financial gestation period, financial projections, business prospects and the proprietary technology involved.

166 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

2. SIGNIFICANT ACCOUNTING POLICIES (CONTD.)

2.36 Significant accounting estimates and judgements (Contd.)

(ii) Key sources of estimation uncertainty (Contd.)

(h) Impairment of insurance / takaful receivables and reinsurance / retakaful assets

The Group reviews its insurance and takaful receivables on a regular basis to assess whether an allowance for impairment should be recorded in the income statement. In particular, judgement by management is required in the estimation of the amount and timing of future cash flows when determining the level of impairment required. Such estimates are necessarily based on assumptions about the probability of default and probable losses in the event of default, the value of the underlying security, and realisation costs.

These estimates are revisited by management on a frequent basis, at least once a year, to determine if certain assumptions continue to be reasonable. As at the reporting date, the impairment losses recognised on insurance / takaful receivables and reinsurance / retakaful assets reflect the expected recoverable values of these assets.

(i) Deferred tax

Deferred tax liabilities are recognised for all taxable temporary differences.

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based on the likely timing and level of future taxable profits together with future tax planning strategies.

Assumptions about generation of future taxable profits depend on management’s estimates of future cash flows. These depends on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statement of financial position and the amount of unrecognised tax losses and unrecognised temporary differences.

The judgements and assumptions used in the estimates of deferred tax liabilities / assets are reassessed at least once a year to determine that they continue to be appropriate.

As at the reporting date, the total carrying value of recognised temporary differences arising from AFS reserves, UPR, allowance for doubtful debts, net amortisation of premium on investments and other items of the Group was RM5,474,000 (2010: RM10,333,000).

The total carrying value of unrecognised temporary deductible differences of the retakaful subsidiary are disclosed in Note 17 to the financial statements.

Management is of the view that recognised deferred tax assets represent a fair estimate of the Group's deductible temporary differences.

167 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

3. OPERATING REVENUE

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

General reinsurance and shareholders' funds

Gross premiums 1,172,385 1,091,186 - - Investment income 71,041 58,760 15,299 10,596 Management fees 2,742 1,716 21,963 14,321 Wakalah fees: General takaful fund 56,157 55,931 - - Family takaful fund 150,378 125,700 - - General retakaful fund 9,365 7,822 - - Family retakaful fund 1,194 683 - -

1,463,262 1,341,798 37,262 24,917

Group 2011 2010 RM'000 RM'000

General takaful fund

Gross contributions 224,196 217,230 Investment income 8,560 5,764

232,756 222,994

Family takaful fund

Gross contributions 486,530 357,610 Investment income 31,121 20,220

517,651 377,830

General retakaful fund

Gross contributions 43,772 37,285 Investment income 761 427

44,533 37,712

Family retakaful fund

Gross contributions 12,897 8,074 Investment income 446 256

13,343 8,330

168 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

4. NET EARNED PREMIUMS

Group 2011 2010 RM'000 RM'000

General reinsurance and shareholders' funds

(a) Gross earned premiums

Insurance contracts 1,172,385 1,091,186 Change in premium liabilities (20,496) 143,937

1,151,889 1,235,123

(b) Premiums ceded to reinsurers

Insurance contracts (114,718) (131,707) Change in premium liabilities (11,231) (15,287)

(125,949) (146,994)

Net Earned Premiums 1,025,940 1,088,129

Group General takaful fund General retakaful fund 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

General takaful and retakaful funds

(a) Gross earned contribution

Takaful contracts 224,196 217,230 43,772 37,285 Change in contribution liabilities (13,670) (911) (4,203) (5,661)

210,526 216,319 39,569 31,624

(b) Contributions ceded

Takaful contracts (22,398) (25,525) (6,898) (9,847) Change in contribution liabilities (10,151) 278 (2,060) 125

(32,549) (25,247) (8,958) (9,722)

Net Earned Contribution 177,977 191,072 30,611 21,902

169 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

5. INVESTMENT INCOME

< Group > Company General reinsurance and General Family General Family shareholders' takaful takaful retakaful retakaful Shareholders’ fund fund fund fund fund fund RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2011

Financial assets at FVTPL Interest/profit income 2,527 - - - - - Dividend income - quoted shares in Malaysia 16 16 380 - - - HTM investments Interest/profit income 10,961 97 6,643 135 95 123 AFS financial assets Interest/profit income 24,912 2,559 11,856 225 83 - Dividend income: - quoted shares in Malaysia 4,615 858 1,149 28 27 15,052 - quoted shares outside Malaysia 81 - - - - - Loans and receivables Interest/profit income 19,879 5,014 6,958 362 251 124 Dividend income on institutional trusts 318 - 897 - - - Rental income 6,857 - 3,866 - - - Net accretion of discounts on investments 878 16 1,094 11 (10) - Investment expenses (3) - (1,722) - - -

71,041 8,560 31,121 761 446 15,299

2010

Financial assets at FVTPL Interest/profit income 2,511 - - - - - Dividend income on quoted shares in Malaysia 13 14 1,026 - - - HTM investments Interest/profit income 10,486 1,436 5,308 7 80 256 AFS financial assets Interest/profit income 18,145 1,592 8,508 14 7 - Dividend income on quoted shares in Malaysia 3,922 382 - 1 1 10,200 Loans and receivables Interest/profit income 14,927 2,231 3,615 322 167 140 Dividend income on institutional trusts 240 - 668 - - - Rental income 6,432 - 600 - - - Net accretion of discounts on investments 2,087 109 1,018 83 1 - Investment expenses (3) - (523) - - -

58,760 5,764 20,220 427 256 10,596

170 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

6. REALISED GAINS AND LOSSES

< Group > General reinsurance and General Family General Family shareholders' takaful takaful retakaful retakaful fund fund fund fund fund RM'000 RM'000 RM'000 RM'000 RM'000

2011

Financial assets at FVTPL Realised gains on quoted shares in Malaysia 1,175 239 615 11 9 AFS financial assets Realised gains: Quoted shares in Malaysia 24,045 2,467 3,483 113 114 Shariah approved unit trust funds - - 931 - - Unquoted corporate debt securities 91 - - - - Unquoted Islamic private debt securities - - 3,044 - -

25,311 2,706 8,073 124 123

< Group > Company General reinsurance and General Family shareholders' takaful takaful Shareholders’ fund fund fund fund RM'000 RM'000 RM'000 RM'000

2010

Property, plant and equipment Realised gains 94 - - 82 Financial assets at FVTPL Realised gains on quoted shares in Malaysia 259 78 1,501 - AFS financial assets Realised gains Quoted shares in Malaysia 21,475 230 51 353 Unquoted corporate debt securities 1,797 - - - Shariah approved unit trust funds - - 472 -

23,625 308 2,024 435

171 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

7. FAIR VALUE GAINS AND LOSSES

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

General reinsurance and shareholders' funds

Investment properties (Note 14) 5,173 2,200 - - Financial assets at FVTPL 536 589 - - Impairment of HTM investments - (962) - - Reversal of/(Impairment) of AFS financial assets 10,609 (50,416) 227 (44,485)

16,318 (48,589) 227 (44,485)

Group 2011 2010 RM'000 RM'000

General takaful fund

Financial assets at FVTPL (19) 199 Impairment of AFS financial assets - 389

(19) 588

Family takaful fund

Investment properties (Note 14) (7,490) 22,535 Financial assets at FVTPL 61 4,659 Impairment of AFS financial assets - 347

(7,429) 27,541

General retakaful fund

Financial assets at FVTPL 1-

Family retakaful fund

Financial assets at FVTPL 1-

172 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

8. FEE AND COMMISSION

2011 2010 RM'000 RM'000

Group

General reinsurance and shareholders' funds

Fee and commission income Management fees 2,742 1,716 Commission income 8,205 11,726 Wakalah fee income 217,094 190,136 Investment fee 3,104 4,562 Surplus administration charges 4,423 8,852

235,568 216,992

Fee and commission expense Commission expense (400,719) (365,023) Brokerage (1,222) (1,081)

(401,941) (366,104)

General takaful fund

Fee and commission income Commission income 3,938 4,505

Fee and commission expense Wakalah fee expense (56,157) (55,931) Surplus administration charges - (8,095)

(56,157) (64,026)

Family takaful fund

Fee and commission income Commission income -63

Fee and commission expense Wakalah fee expense (143,008) (120,139) Investment fee expense (2,377) (4,468) Surplus administration charges (4,341) (732)

(149,726) (125,339)

173 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

8. FEE AND COMMISSION (CONTD.)

2011 2010 RM'000 RM'000

Group (Contd.)

General retakaful fund

Fee and commission income Commission income 977 2,054

Fee and commission expense Commission expense (9,998) (9,698) Wakalah fee expense (9,365) (7,822) Investment fee expense (443) (64)

(19,806) (17,584)

Family retakaful fund

Fee and commission income Commission income 103 -

Fee and commission expense Commission expense (9) (3) Wakalah fee expense (1,194) (683) Investment fee expense (285) (31) Surplus administration charges (45) (25)

(1,533) (742)

Company

Fee and commission income Management fee 21,963 14,321

174 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

9. MANAGEMENT EXPENSES

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

General reinsurance and shareholders' funds

Staff costs: Salaries, bonus and other related costs 72,049 75,612 18,705 17,327 Directors' remuneration (Note 10) 10,102 11,595 4,098 4,409 Pension costs - EPF 13,293 10,144 2,904 2,712 Social security costs 163 153 92 84 Retirement benefits 7,576 1,735 3,914 723 Short term accumulating compensated absences 127 140 (29) 13 Depreciation of property, plant and equipment 8,735 7,169 678 576 Amortisation of intangible assets 3,077 2,636 241 209 Amortisation of prepaid land lease payments 55 95 - - Property, plant and equipment written off 855 7 - - Auditors' remuneration: - statutory audit 347 302 29 17 - other services 137 38 19 3 Insurance levy 1,816 1,688 - - Share of acquisition costs on quota share retakaful 4,367 4,152 - - Marketing and communications 10,197 5,956 - 310 Agency expenses 5,962 4,613 - - Electronic data processing costs 3,420 3,446 - - Donation 39 123 - 58 Market training expenses 235 33 8 17 Office rental 5,569 2,532 1,004 1,006 Professional and legal fees 878 739 345 461 Advertising and promotion 435 1,157 272 1,027 Other expenses 23,641 24,237 2,407 1,640

173,075 158,302 34,687 30,592

10. DIRECTORS' REMUNERATION

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

General reinsurance and shareholders' funds

Non-executive directors:

Fees 2,322 2,203 685 725 Allowances 566 428 131 130

2,888 2,631 816 855

175 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

10. DIRECTORS' REMUNERATION (CONTD.)

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

General reinsurance and shareholders' funds (Contd.)

Executive directors:

Salaries and bonus 4,185 4,850 1,560 1,800 Pension costs - EPF 730 796 312 360 Retirement benefits 60 266 60 120 Benefits-in-kind 395 233 79 37

5,370 6,145 2,011 2,317

Directors of another subsidiary:*

Salaries and bonus 1,505 2,282 877 1,024 Pension costs - EPF 284 393 168 164 Social security costs 1 1 1 1 Allowances 449 376 304 85 Benefits-in-kind 97 52 46 15

2,336 3,104 1,396 1,289

Total directors’ remuneration 10,594 11,880 4,223 4,461

Total directors’ remuneration excluding benefits-in-kind 10,102 11,595 4,098 4,409

* The directors of another subsidiary refer to management personnel, who are employed by the holding company and reinsurance subsidiary, respectively.

11. OTHER OPERATING EXPENSES

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

General reinsurance and shareholders' funds

Loss on foreign exchange 9,367 11,690 136 586 Impairment loss on investment in subsidiary - - 6,869 - Impairment loss on Qard to general retakaful fund 14,633 - - - Impairment loss on insurance receivables 52 501 - - Impairment loss on property, plant and equipment 328 - - - Write off of property, plant and equipment 855 - - - Increase in expense liabilities 1,124 2,362 - - Sundry expenses 295 409 - -

26,654 14,962 7,005 586

176 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

12. TAXATION

(a) General reinsurance and shareholders' funds

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

Income tax: Malaysian income tax 33,214 28,631 946 62 (Over)/under provision in prior years (1,212) (5,999) - 1,088

32,002 22,632 946 1,150

Deferred tax: Relating to origination and reversal of temporary differences 9,636 3,947 239 (1,684) Underprovision in prior year - 1,583 - 340

9,636 5,530 239 (1,344)

41,638 28,162 1,185 (194)

Domestic income tax for general business and shareholders’ fund is calculated at the Malaysian statutory tax rate of 25% (2010: 25%) of the estimated assessable profit for the year. Income tax on the Group's offshore insurance / takaful business is calculated at a tax rate of 5% (2010: 5%) of the estimated assessable profit on the Group's offshore insurance / takaful business for the year. A reconciliation of income tax expenses applicable to profit before zakat and tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company are as follows:

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

Profit/(loss) before zakat and tax 164,952 79,261 (13,608) (59,787)

Taxation at Malaysian statutory tax rate of 25% 41,238 19,815 (3,402) (14,947) Effects of different tax rate in respect of offshore insurance (7,920) (5,506) - - Income not subject to tax (7,759) (1,677) - - Expenses not deductible for tax purposes 5,209 14,989 4,348 13,325 Change in unrecognised temporary differences 4,989 100 - - Transfer of deferred tax 9,636 5,530 239 - Utilisation of current year losses of the general retakaful fund (2,613) (673) - - (Over)/under provision of tax expense in prior years (1,212) (5,999) - 1,088 Under provision of deferred tax expense in prior years 70 1,583 - 340

Tax expense for the year 41,638 28,162 1,185 (194)

177 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

12. TAXATION (CONTD.)

(b) General takaful fund

Group 2011 2010 RM'000 RM'000

Income tax: Malaysian income tax 474 2,005 Under provision of tax in previous years 146 -

620 2,005 Deferred tax: Relating to origination and reversal of temporary differences 807 506

1,427 2,511

Domestic income tax of the general takaful fund is calculated at the Malaysian statutory tax rate of 25% (2010: 25%) of the estimated assessable profit for the year. A reconciliation of income tax expense applicable to surplus/(deficit) before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the funds are as follows:

Group 2011 2010 RM'000 RM'000

Surplus before taxation 5,872 13,504

Taxation at Malaysian statutory tax rate of 25% 1,468 3,376 Income not subject to tax (182) - Expenses not deductible for tax purposes 216 1 Utilisation of capital allowances (279) (1,514) Under provision of deferred tax in prior years 58 649 Under provision of tax expense in prior years 146 -

Tax expense for the year 1,427 2,512

178 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

12. TAXATION (CONTD.)

(c) Family takaful fund

Group 2011 2010 RM'000 RM'000

Income tax: Malaysian income tax 2,830 843 Under provision of tax in previous years 497 -

3,327 843 Deferred tax: Relating to origination and reversal of temporary differences (344) 1,779

2,983 2,622

Domestic income tax of the family takaful fund is calculated at the preferential tax rate of 8% (2010: 8%) of taxable investment income for the year. A reconciliation of income tax expense applicable to surplus before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the funds are as follows:

Group 2011 2010 RM'000 RM'000

Surplus for the year 241,348 198,821 Surplus administration charges transferred to shareholders' fund - 732

Surplus before taxation 241,348 199,553

Taxation at tax rate of 8% 19,308 15,964 Income not subject to tax (16,628) (12,682) Expenses not deductible for tax purposes (132) 30 Utilisation of capital allowances allocated from the Shareholder's fund (193) (283) Under/(over) provision of deferred tax in prior years 131 (407) Under provision of tax expense in prior years 497 -

Tax expense for the year 2,983 2,622

(d) General retakaful fund

Income tax: Malaysian income tax --

179 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

12. TAXATION (CONTD.)

(d) General retakaful fund (Contd.)

Domestic income tax of the general retakaful fund is calculated at the Malaysian statutory tax rate of 25% (2010: 25%) of the estimated assessable profit for the year. A reconciliation of income tax expense applicable to deficit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the funds are as follows:

Group 2011 2010 RM'000 RM'000

Deficit before taxation (14,369) (21,092)

Taxation at Malaysian statutory tax rate of 25% (3,592) (5,273) Change in unrecognised temporary differences 24 274 Current year losses for which no deferred tax asset was recognised 682 3,985 Utilisation of current year business loss by shareholders' fund and family retakaful fund 2,886 1,014

Tax expense for the year --

(e) Family retakaful fund

Income tax: Malaysian income tax --

Domestic income tax of the family retakaful fund is calculated at the Malaysian statutory tax rate of 25% (2010: 25%) of the estimated assessable profit for the year. A reconciliation of income tax expense applicable to surplus before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the funds are as follows:

Group 2011 2010 RM'000 RM'000

Surplus before taxation 1,095 1,348

Taxation at Malaysian statutory tax rate of 25% 274 337 Expenses not deductible for tax purposes - 6 Change in unrecognised temporary differences (1) - Utilisation of current year business loss of general retakaful fund (273) (341) Utilisation of previously unrecognised deferred tax assets - (2)

Tax expense for the year --

180 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

13. PROPERTY, PLANT AND EQUIPMENT

General reinsurance and shareholders' funds

Furniture, Significant fittings Freehold parts of Computer and office Motor land Buildings buildings equipment equipment vehicles Total Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Cost

At 1 April 2009 15,886 77,649 20,252 9,190 22,335 3,054 148,366 Additions - - - 840 10,095 874 11,809 Disposals -----(678) (678) Write-offs - - - (51) (23) - (74)

At 31 March 2010 15,886 77,649 20,252 9,979 32,407 3,250 159,423 Additions - 1,588 1,178 897 4,989 480 9,132 Disposals - - - (227) - - (227) Revaluation surplus - 3,184----3,184 Transfer to investment properties * (Note 14) - (14,580) (3,454) - - - (18,034) Elimination of accumulated depreciation on revaluation - (1,396) (3,118) - - - (4,514) Write-offs - - - (1,017) (3,700) - (4,717) Reclassifications - - - 1,042 (1,042) - -

At 31 March 2011 15,886 66,445 14,858 10,674 32,654 3,730 144,247

Accumulated depreciation and impairment loss

At 1 April 2009 - 5,056 6,017 7,366 15,758 1,144 35,341 Depreciation charge for the year - 1,751 1,838 968 1,887 725 7,169 Disposals -----(543) (543) Write-offs - - - (50) (17) - (67)

At 31 March 2010 - 6,807 7,855 8,284 17,628 1,326 41,900 Depreciation charge for the year - 1,634 1,490 1,487 3,528 596 8,735 Disposals - - - (227) - - (227) Elimination of accumulated depreciation on revaluation - (1,396) (3,118) - - - (4,514) Write-offs - - - (1,015) (2,847) - (3,862) Impairment loss for the year - 328----328

At 31 March 2011 - 7,373 6,227 8,529 18,309 1,922 42,360

Net Carrying Amount

At 31 March 2011 15,886 59,072 8,631 2,145 14,345 1,808 101,887

At 31 March 2010 15,886 70,842 12,397 1,695 14,779 1,924 117,523

* The transfer of property, plant and equipment to investment properties amounting to approximately RM18 million represents the fair value of a building previously classified as self-occupied properties but has now been classified as investment property subsequent to the vacation of the premises by a subsidary of the Group. The transfer at fair value has been performed in accordance with the requirements of FRS 140 as described in Note 2.14.

181 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

13. PROPERTY, PLANT AND EQUIPMENT (CONTD.)

Furniture, fittings Computer and office Motor equipment equipment vehicles Total Company RM'000 RM'000 RM'000 RM'000

Cost

At 1 April 2009 3,150 1,705 1,059 5,914 Additions 195 77 874 1,146 Disposals - - (602) (602)

At 31 March 2010 3,345 1,782 1,331 6,458 Additions 329 68 - 397 Disposals (227) - - (227)

At 31 March 2011 3,447 1,850 1,331 6,628

Accumulated depreciation

At 1 April 2009 2,705 1,434 475 4,614 Charge for the year 203 68 305 576 Disposals - - (482) (482)

At 31 March 2010 2,908 1,502 298 4,708 Charge for the year 323 89 266 678 Disposals (227) - - (227)

At 31 March 2011 3,004 1,591 564 5,159

Net carrying amount

At 31 March 2011 443 259 767 1,469

At 31 March 2010 437 280 1,033 1,750

182 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

14. INVESTMENT PROPERTIES

Group 2011 2010 RM'000 RM'000

General reinsurance and shareholders' funds

At fair value:

At beginning of year 34,600 32,400 Fair value gains recognised in income statement (Note 7) 5,173 2,200 Transfer from property, plant and equipment (Note 13) 18,034 - Transfer from prepaid land lease payments (Note 15) 4,966 - Transfer to non-current asset held for sale (Note 23) (34,173) -

At end of the year 28,600 34,600

Family takaful fund

At fair value:

At beginning of the year 110,000 69,966 Additions 1,008 17,499 Fair value (loss)/gain recognised in income statement (Note 6) (7,490) 22,535

At end of the year 103,518 110,000

These properties are carried at their fair values in accordance with the accounting policy disclosed in Note 2.14.

15. PREPAID LAND LEASE PAYMENTS

Group 2011 2010 RM'000 RM'000

General reinsurance and shareholders' funds

Long term leasehold land:

At beginning of year 5,021 5,116 Amortisation for the year (55) (95) Transfer to investment properties (Note 14) (4,966) -

At end of year - 5,021

183 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

16. INTANGIBLE ASSETS

General reinsurance and shareholders' funds Software Computer development software cost in and progress licenses Total Group RM'000 RM'000 RM'000

Cost

At 1 April 2009 1,596 24,496 26,092 Additions 1,881 905 2,786 Write-offs - (11) (11)

At 31 March 2010 3,477 25,390 28,867 Additions 1,583 1,362 2,945 Reclassification (392) 392 -

At 31 March 2011 4,668 27,144 31,812

Accumulated amortisation

At 1 April 2009 - 13,141 13,141 Amortisation for the year - 2,636 2,636 Write-offs - (11) (11)

At 31 March 2010 - 15,766 15,766 Amortisation for the year - 3,077 3,077

At 31 March 2011 - 18,843 18,843

Net carrying amount

At 31 March 2011 4,668 8,301 12,969

At 31 March 2010 3,477 9,624 13,101

184 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

16. INTANGIBLE ASSETS (CONTD.)

General reinsurance and shareholders' funds (Contd.) Software Computer development software cost in and progress licenses Total Company RM'000 RM'000 RM'000

Cost

At 1 April 2009 483 5,677 6,160 Additions 26 109 135 Transferred from reinsurance subsidiary 18 - 18

At 31 March 2010 527 5,786 6,313 Additions 373 188 561

At 31 March 2011 900 5,974 6,874

Accumulated amortisation

At 1 April 2009 - 5,193 5,193 Amortisation for the year - 209 209

At 31 March 2010 - 5,402 5,402 Amortisation for the year - 241 241

At 31 March 2011 - 5,643 5,643

Net carrying amount

At 31 March 2011 900 331 1,231

At 31 March 2010 527 384 911

185 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

17. DEFERRED TAX

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

General reinsurance and shareholders' funds

At beginning of year - As previously stated 5,878 15,456 3,337 1,993 - Effect of adopting FRS 4 (Note 2.34(a)) 4,455 5,707 - -

At beginning of year (as restated) 10,333 21,163 3,337 1,993 Recognised in income statement (9,636) (5,530) (239) 1,344 Recognised in other comprehensive income 4,777 (5,300) - -

At end of year 5,474 10,333 3,098 3,337

Presented after appropriate offsetting as follows: - Deferred tax assets 11,335 22,034 3,511 3,608 - Deferred tax liabilities (5,861) (11,701) (413) (271)

5,474 10,333 3,098 3,337

Group 2011 2010 RM'000 RM'000

General takaful fund

At beginning of year, previously stated 1,474 2,629 Effect of adopting FRS 4 867 687

At beginning of year, restated 2,341 3,316 Recognised in income statement (807) (507) Recognised in general takaful fund (Note 29) 36 (467)

At end of year (Note 45) 1,570 2,342

Family takaful fund

At beginning of year (2,304) (253) Recognised in income statement 344 (1,779) Recognised in family takaful fund (Note 30) (175) (272)

At end of year (Note 45) (2,135) (2,304)

186 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

17. DEFERRED TAX (CONTD.)

Group 2011 2010 RM'000 RM'000

General retakaful fund

At beginning of year (4) - Recognised in general retakaful fund (Note 31) (19) (4)

At end of year (Note 45) (23) (4)

Family retakaful fund

At beginning of year (4) - Recognised in family retakaful fund (Note 32) (5) (4)

At end of year (Note 45) (9) (4)

The following deferred tax assets of the retakaful subsidiary have not been recognised as the probability of recognition cannot be determined with certainty given the recent history of losses recorded:

2011 2010 RM'000 RM'000

Shareholders' fund

Temporary differences: - net accretion of discounts 75 55 - impairment of investments 16 16 - provisions for bonus 108 168 - expense liabilities 3,658 - - impairment of Qard 1,371 1,090

5,228 1,329

General retakaful fund

Unutilised business losses 9,122 5,827 Unabsorbed capital allowances 65 54 Temporary differences: - net accretion of discounts 20 18 - contribution liabilities 120 120 - property, plant and equipment - (1) - impairment loss on takaful receivables 386 302

9,713 6,320

Family retakaful fund

Temporary differences: - net amortisation of premiums (2) (1)

187 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

17. DEFERRED TAX (CONTD.)

The components and movements of deferred tax assets/(liabilities) during the financial year are as follows:

General reinsurance and shareholders' funds

Unabsorbed Property, Impairment capital plant and Premium losses on Financial allowances equipment Receivables liabilities investments assets Others Total Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2011

At 31 March 2010, previously stated 441 (4,663) 293 5,338 7,183 (7,038) 4,324 5,878 Effects of adoption of FRS 4 - - 4,029 - - - 426 4,455

At 31 March 2010, restated 441 (4,663) 4,322 5,338 7,183 (7,038) 4,750 10,333 Recognised in: Income statement 153 1,202 (1,119) (5,321) (3,463) (139) (949) (9,636) Other comprehensive income - - - - - 4,777 - 4,777

At 31 March 2011 594 (3,461) 3,203 17 3,720 (2,400) 3,801 5,474

2010

At 1 April 2009, previously stated 211 (1,100) 733 6,981 7,921 (1,582) 2,292 15,456 Effects of adoption of FRS 4 - - 5,372 - - - 335 5,707

At 1 April 2009, restated 211 (1,100) 6,105 6,981 7,921 (1,582) 2,627 21,163 Recognised in: Income statement 230 (3,563) (1,783) (1,643) (738) (156) 2,123 (5,530) Other comprehensive income - - - - - (5,300) - (5,300)

At 31 March 2010 441 (4,663) 4,322 5,338 7,183 (7,038) 4,750 10,333

188 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

17. DEFERRED TAX (CONTD.)

The components and movements of deferred tax assets/(liabilities) during the financial year are as follows (Contd.):

General reinsurance and shareholders' funds (Contd.)

Unabsorbed Property, Impairment capital plant and losses on allowances equipment Receivables investments Others Total Company RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2011

At 1 April 2010 441 (271) - - 3,167 3,337 Recognised in income statement 153 (142) 52 218 (520) (239)

At 31 March 2011 594 (413) 52 218 2,647 3,098

2010

At 1 April 2009 211 (260) - 351 1,691 1,993 Recognised in income statement 230 (11) - (351) 1,476 1,344

At 31 March 2010 441 (271) - - 3,167 3,337

General takaful fund

Financial Receivables assets Total Group RM'000 RM'000 RM'000

2011

At 31 March 2010, previously stated 1,080 394 1,474 Effect of adoption of FRS 4 867 - 867

At 31 March 2010, restated 1,947 394 2,341 Recognised in: Income statement (812) 5 (807) Other comprehensive income - 36 36

At 31 March 2011 1,135 435 1,570

2010

At 1 April 2009, previously stated 1,716 924 2,640 Effect of adoption of FRS 4 687 - 687

At 1 April 2009, restated 2,403 924 3,327 Recognised in: Income statement (456) (50) (506) Other comprehensive income - (480) (480)

At 31 March 2010 1,947 394 2,341

189 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

17. DEFERRED TAX (CONTD.)

The components and movements of deferred tax assets/(liabilities) during the financial year are as follows (Contd.):

Family takaful fund

Financial Receivables assets Total Group RM'000 RM'000 RM'000

2011

At 1 April 2010 (1,803) (501) (2,304) Recognised in: Income statement 599 (255) 344 Other comprehensive income - (175) (175)

At 31 March 2011 (1,204) (931) (2,135)

2010

At 1 April 2009 - (253) (253) Recognised in: Income statement (1,803) 24 (1,779) Other comprehensive income - (272) (272)

At 31 March 2010 (1,803) (501) (2,304)

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 income taxes relate to the same fiscal authority.

18. INVESTMENT IN SUBSIDIARIES

Company 2011 2010 RM'000 RM'000

Shareholders' fund

Unquoted shares, at cost: In Malaysia 795,000 795,000 Less: Impairment loss (6,869) -

788,131 795,000 Outside Malaysia 6,370 6,370

794,501 801,370

190 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

18. INVESTMENT IN SUBSIDIARIES (CONTD.)

Details of the subsidiaries are as follows:

Name of Country of Effective Subsidiaries incorporation Principal activities ownership interest 2011 2010 %%

Malaysian Reinsurance Malaysia Underwriting of all classes of 100 100 Berhad general reinsurance business

Takaful Ikhlas Sdn. Bhd. Malaysia Management of family, general and 100 100 takaful investment-linked business

MNRB Retakaful Berhad Malaysia Management of family and 100 100 general retakaful business

MMIP Services Sdn. Bhd. Malaysia Managing the Malaysian Motor Insurance Pool 100 100 to provide motor insurance to vehicle owners who are unable to obtain insurance protections for their vehicles

Malaysian Re (Dubai) Ltd.* Dubai, Marketing and promotional activities 100 100 United Arab and servicing of clients on Emirates behalf of Malaysian Re

* Audited by a firm of chartered accountants other than Ernst & Young.

The impairment loss of RM6,869,000 was made in respect of retakaful subsidiary, which has recorded a net loss in the current year, due mainly to the impairment of Qard provided to the general retakaful fund. The impairment loss also resulted in the total shareholder's equity of the retakful subsidiary being lower than issued and paid-up share capital.

19. INVESTMENT IN ASSOCIATES

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

General reinsurance and shareholders' funds

Unquoted shares in Malaysia, at cost 77,615 77,615 1,957 1,957 Share of post acquisition retained profits 24,808 22,120 - - Post acquisition foreign exchange translation reserve* 15,119 22,533 - -

117,542 122,268 1,957 1,957

Represented by: Share of net assets 117,542 122,268 1,957 1,957

191 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

19. INVESTMENT IN ASSOCIATES (CONTD.)

Details of the associates which are all incorporated in Malaysia are as follows:

Proportion of Name of ownership interest associates Year end Principal activities and voting power 2011 2010 % %

Held by the Company:

Motordata Research 31 December Development and provision of a centralised 40 40 Consortium Sdn. Bhd. motor parts price database for the Malaysian insurance industry

Held by Malaysian Re:

Labuan Reinsurance 31 December Underwriting of all classes of general reinsurance 20 20 (L) Ltd. business in the Federal Territory of Labuan ("Labuan Re")

* This is in respect of retranslation of the cost of the investment in Labuan Re at the rate of exchange prevailing at the reporting date.

The financial statements of the above associates are not co-terminous with those of the Group. For the purpose of applying the equity method of accounting, the audited financial statements of the associates for the year ended 31 December 2010 and management financial statements to the end of the accounting period of 31 March 2011 have been used.

The summarised financial information of the associates are as follows:

2011 2010 RM'000 RM'000

Assets and liabilities: Current assets 1,481,973 1,510,064 Non-current assets 36,965 39,409

Total assets 1,518,938 1,549,473

Current liabilities 24,213 23,734 Non-current liabilities 907,387 897,751

Total liabilities 931,600 921,485

Results: Revenue 773,901 907,505 Profit for the year 32,671 69,299

192 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

20. FINANCIAL ASSETS

The following table summarises the carrying values of financial assets of the Group and the Company:

< Group > Company General reinsurance and General Family General Family shareholders' takaful takaful retakaful retakaful Shareholder's fund fund fund fund fund fund RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2011

At carrying value:

Malaysian government securities 100,414 -- - - - Government investment issues 87,653 50,940 163,241 4,004 3,007 - Islamic BNM monetary notes 4,996 - - - - - Debt securities 764,400 106,933 328,174 6,369 4,349 6,967 Equity securities 111,820 9,757 17,820 70 35 2,602 Institutional trust deposit 58,595 - 18,592 - - - Shariah approved unit trust funds - 5,888 8,585 - - - Structured products 12,019 -- - - - Fixed and call deposits 560,810 -- - - 4,069 Islamic investment accounts 230,444 50,826 150,869 10,562 7,706 3,813 Islamic repo placements 12,668 5,814 113,967 - - - Units held in investment-linked fund 10,000 - - - - - Other loans and receivables 162,057 3,809 18,861 34,531 118 2,877

2,115,876 233,967 820,109 55,536 15,215 20,328

2010

At carrying value:

Malaysian government securities 117,770 -- - - - Government investment issues 46,689 38,719 173,836 - 3,014 - Islamic BNM monetary notes 5,998 - - - - - Debt securities 507,718 44,765 221,485 5,995 500 6,967 Equity securities 159,278 11,661 29,610 297 297 5,025 Institutional trust deposit 55,887 - 17,732 - - - Shariah approved unit trust funds - - 3,850 - - - Structured products 46,256 -- - - - Fixed and call deposits 527,929 -- - - 16,900 Islamic investment accounts 245,210 68,724 141,612 15,418 8,783 - Islamic repo placements 37,689 51,202 57,234 - - - Units held in investment-linked fund 5,000 -- - - - Other loans and receivables 153,134 1,555 4,623 23,427 51 4,329

1,908,558 216,626 649,982 45,137 12,645 33,221

193 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

20. FINANCIAL ASSETS (CONTD.)

< Group > General reinsurance and General Family General Family shareholders' takaful takaful retakaful retakaful fund fund fund fund fund RM'000 RM'000 RM'000 RM'000 RM'00

2011

(a) Financial assets at FVTPL

At fair value:

Quoted Shariah approved equities in Malaysia 2,878 1,090 1,832 70 35 Structured products 12,019 - - - - Warrants 15 15 - - -

14,912 1,105 1,832 70 35

< Group > Company General reinsurance and General Family General Family shareholders' takaful takaful retakaful retakaful Shareholders' fund fund fund fund fund fund RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

(b) HTM investments

(i) At amortised cost/cost:

Islamic BNM monetary notes 4,996 - - - - - Malaysian government securities 100,414 -- - - - Unquoted corporate debt securities: Government guaranteed 65,041 -- - - - Secured 37,719 - - - 701 6,967 Government investment issues 87,653 50,940 163,241 4,004 3,007 - Short term commercial papers 14,534 -- - - - Islamic commercial papers 2,992 -- - - - Unquoted Islamic private debt securities: Government guaranteed 15,026 14,324 24,103 - - - Unsecured 1,383 2,004 25,043 - - -

329,758 67,268 212,387 4,004 3,708 6,967

194 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

20. FINANCIAL ASSETS (CONTD.)

< Group > Company General reinsurance and General Family General Family shareholders' takaful takaful retakaful retakaful Shareholders' fund fund fund fund fund fund RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2011 (Contd.)

(b) HTM investments (Contd.)

(ii) At fair value:

Islamic BNM Monetary notes 4,996 - - - - - Malaysian government securities 100,842 - - - - - Unquoted corporate debt securities: Government guaranteed 65,602 - - - - - Secured 38,115 - - - 704 6,967 Government investment issues 88,092 51,521 164,112 4,062 2,998 - Short term commercial papers 14,545 - - - - - Islamic commercial papers 2,993 - - - - - Malaysian Islamic treasury bills ------Unquoted islamic private debt securities: Government guaranteed 15,087 14,383 24,164 - - - Unsecured 1,495 2,036 25,542 - - -

331,767 67,940 213,818 4,062 3,702 6,967

(c) AFS financial assets

At fair value:

Unquoted secured corporate debt securities 571,948 - - - - - Islamic private debt securities - - - 6,369 3,648 - Unquoted shares in Malaysia(i) 46,152 - - - - 1,649 Golf club memberships 228 -- - - 50 Quoted shares in Malaysia: Shariah approved equities 38,383 8,652 15,988 - - - Others 23,823 -- - - 903 Quoted shares outside Malaysia 341 -- - - - Shariah approved unit trust funds - 5,888 8,585 - - - Unquoted unsecured Islamic private debt securities 55,757 90,605 279,028 - - -

736,632 105,145 303,601 6,369 3,648 2,602

195 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

20. FINANCIAL ASSETS (CONTD.)

< Group > Company General reinsurance and General Family General Family shareholders' takaful takaful retakaful retakaful Shareholders' fund fund fund fund fund fund RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2011 (Contd.)

(d) Loans and receivables

At amortised cost/cost/fair value:

Fixed and call deposits with licensed: Commercial banks 129,776 - - - - 3,069 Investment banks 431,034 - - - - 1,000 Islamic investment accounts with licensed: Co-operative bank 81,451 - - - 3,618 - Islamic banks 127,252 32,249 90,006 10,562 4,088 3,813 Investment banks - - 1,507 - - - Development bank 13,472 18,577 59,356 - - - Building society 8,269 - - - - - Institutional trust deposit 58,595 - 18,592 - - - Islamic repo placements 12,668 5,814 113,967 - - - Units held in investment-linked fund 10,000 - - - - - Secured staff loans 12,618 - - - - 2,334 Qard given to (ii): General takaful fund 12,043 - - - - - General retakaful fund (iii) (net of impairment loss of RM14.6 million) 36,295 - - - - - Due from (iv): General takaful fund 2,739 - 12,970 - - - Family takaful fund 29,110 - - - - - Family retakaful fund 11,120 - - - - - Shareholder's fund - - - 34,343 - - Subsidiaries - - -- - 459 Holding company - - 5,247 - - - Income due and accrued 16,213 2,160 199 188 118 26 Due from insurance Pool accounts 19,971 - - - - - Other receivables and deposits 21,948 1,649 445 - - 58

1,034,574 60,449 302,289 45,093 7,824 10,759

196 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

20. FINANCIAL ASSETS (CONTD.)

< Group > General reinsurance and General Family shareholders' takaful takaful fund fund fund RM'000 RM'000 RM'000

2010

(a) Financial assets at FVTPL

At fair value:

Quoted shares in Malaysia: Shariah approved equities 4,265 1,411 17,923 Others 564 - - Structured products 46,256 - - Warrants 230 118 -

51,315 1,529 17,923

< Group > Company General reinsurance and General Family General Family shareholders' takaful takaful retakaful retakaful Shareholders' fund fund fund fund fund fund RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2010 (Contd.)

(b) HTM investments

At amortised cost/cost:

Islamic BNM Monetary notes 5,998 - - - - - Malaysian government securities 117,770 - - - - - Unquoted corporate debt securities: Government guaranteed 45,057 - - - - - Secured 57,677 - - - - 6,967 Government investment issues 46,689 38,719 173,836 - 3,014 - Short term commercial papers 19,480 - - - - - Islamic commercial papers 2,994 - - - - - Malaysian Islamic treasury bills 999 - - 4,995 - - Unquoted islamic private debt securities: Government guaranteed - - 8,933 - - - Unsecured 385 2,006 23,027 - - -

297,049 40,725 205,796 4,995 3,014 6,967

197 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

20. FINANCIAL ASSETS (CONTD.)

< Group > Company General reinsurance and General Family General Family shareholders' takaful takaful retakaful retakaful Shareholders' fund fund fund fund fund fund RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2010 (Contd.)

(b) HTM investments (Contd.)

At fair value:

Islamic BNM monetary notes 5,997 -- - - - Malaysian government securities 118,684 - - - - - Unquoted corporate debt securities: Government guaranteed 45,325 - - - - - Secured 58,307 - - - - 6,967 Government investment issues 47,004 38,904 174,248 - 3,013 - Short term commercial papers 19,478 -- - - - Islamic commercial papers 2,994 -- - - - Malaysian Islamic treasury bills 999 - - 4,993 - - Unquoted islamic private debt securities: Government guaranteed - - 8,795 - - - Unsecured 385 2,032 23,490 - - -

299,173 40,936 206,533 4,993 3,013 6,967

(c) AFS financial assets

At fair value:

Unquoted secured corporate debt securities 353,601 - - - - - Islamic private debt securities - - - 1,000 500 - Quoted shares outside Malaysia 343 - - - - - Unquoted shares in Malaysia(i) 49,478 -- - - 4,975 Golf club memberships 110 - - - - 50 Quoted shares in Malaysia: Shariah approved equities 33,402 10,132 11,687 297 297 - Others 70,886 -- - - - Shariah approved unit trust funds - - 3,850 - - - Unquoted unsecured Islamic private debt securities 27,525 42,759 189,525 - - -

535,345 52,891 205,062 1,297 797 5,025

198 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

20. FINANCIAL ASSETS (CONTD.)

< Group > Company General reinsurance and General Family General Family shareholders' takaful takaful retakaful retakaful Shareholders' fund fund fund fund fund fund RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2010 (Contd.)

(d) Loans and receivables

At amortised cost/cost/fair value:

Fixed and call deposits with licensed: Commercial banks 357,548 - - - - 16,900 Investment banks 170,381 - - - - - Islamic investment accounts with licensed: Co-operative bank 60,192 - - 1,500 1,817 - Islamic banks 148,024 35,100 63,150 13,918 6,966 - Investment banks 13,039 7,960 72,425 - - - Development bank 4,631 4,926 6,037 - - - Building society 19,324 20,738 - - - - Institutional trust deposit 55,887 - 17,732 - - - Islamic repo placements 37,689 51,202 57,234 - - - Units held in investment-linked fund 5,000 - - - - - Secured staff loans 14,692 - - - - 2,787 Qard given to (ii): - General takaful fund 12,043 ------General retakaful fund 38,190 - - - - - Due from (iv): General takaful fund 11,594 - 522 - - - Family takaful fund 13,469 - - - - - Family retakaful fund 10,856 - - - - - Shareholder's fund - - - 23,410 - - Subsidiaries - - - - - 1,219 Holding company - - 363 - - - Income due and accrued 12,419 1,152 3,724 17 51 23 Due from insurance Pool accounts 16,995 - - - - - Other receivables and deposits 22,876 403 14 - - 300

1,024,849 121,481 221,201 38,845 8,834 21,229

199 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

20. FINANCIAL ASSETS (CONTD.)

(d) Loans and receivables (Contd.)

The carrying values of loans and receivables approximate their fair values as they are either receivable within 12 months from the date of recognition or are issued at interest / profit rates comparable to those for similar instruments issued in the market.

(i) The pertinent information of the investments in unquoted shares in Malaysia are as follows:

2011 2010 RM'000 RM'000

- 27,500,000 ordinary shares of RM1.00 each of Financial Park (Labuan) Sdn. Bhd. ("FPL"), representing an equity shareholding of 9%. 28,283 28,283 Less: Impairment loss (4,759) (4,759)

23,524 23,524 20,000,000 redeemable preference shares of RM1.00 each of FPL 20,569 20,569

44,093 44,093

- 410,000 ordinary shares of Malaysian Rating Corporation Berhad ("MARC") of RM1.00 each, representing an equity shareholding of 4%. 410 410

44,503 44,503

(ii) Qard represents a loan to the general takaful and general retakaful funds to make good any underwriting deficit experienced during a financial period. The amount is unsecured, not subject to any profit elements and has no fixed terms of repayment. The management expects to recover the balance from the future profits of general takaful and general retakaful funds.

(iii) The impairment loss on Qard given to the general retakaful fund was made during the current financial year on account of continued underwriting losses being experienced. The impaired amount represents the balance that is expected not to be recoverable, based on future business projections of the general retakaful fund, by the directors of the company.

(iv) These amounts are non-trade in nature, are unsecured, not subject to any interest/profit elements and repayable on demand.

200 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

20. FINANCIAL ASSETS (CONTD.)

The following tables show financial assets recorded at fair value analysed by the different bases of fair values as follows:

2011 2010 Financial AFS Financial AFS assets at financial assets at financial FVTPL assets Total FVTPL assets Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Group

General reinsurance and shareholders' funds

Quoted market price 2,893 62,547 65,440 5,059 104,631 109,690 Valuation techniques - market observable inputs 12,019 627,705 639,724 46,256 381,126 427,382 At cost less impairment - 46,380 46,380 - 49,588 49,588

14,912 736,632 751,544 51,315 535,345 586,660

General takaful fund

Quoted market price 1,105 8,652 9,757 1,529 10,132 11,661 Valuation techniques - market observable inputs - 96,493 96,493 - 42,759 42,759

1,105 105,145 106,250 1,529 52,891 54,420

Family takaful fund

Quoted market price 1,832 15,988 17,820 17,923 11,687 29,610 Valuation techniques - market observable inputs - 287,613 287,613 - 193,375 193,375

1,832 303,601 305,433 17,923 205,062 222,985

201 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

20. FINANCIAL ASSETS (CONTD.)

2011 2010 Financial AFS Financial AFS assets at financial assets at financial FVTPL assets Total FVTPL assets Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Group (Contd.)

General retakaful fund

Quoted market price 70 - 70 - 297 297 Valuation techniques - market observable inputs - 6,369 6,369 - 1,000 1,000

70 6,369 6,439 - 1,297 1,297

Family retakaful fund

Quoted market price 35 - 35 - 297 297 Valuation techniques - market observable inputs - 3,648 3,648 - 500 500

35 3,648 3,683 - 797 797

Company

Shareholders' funds

Quoted market price - 903903--- At cost less impairment - 1,699 1,699 - 5,025 5,025

- 2,602 2,602 - 5,025 5,025

202 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

21. INSURANCE/TAKAFUL CONTRACT LIABILITIES

(a) General reinsurance and shareholders' funds

2011 2010 Gross Reinsurance Net Gross Reinsurance Net RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Claim liabilities (i) 1,131,439 (128,201) 1,003,238 1,073,150 (123,025) 950,125 Premium liabilities (ii) 260,638 (18,396) 242,242 240,142 (29,627) 210,515 Expense liabilities (iii) 20,630 - 20,630 20,110 - 20,110

1,412,707 (146,597) 1,266,110 1,333,402 (152,652) 1,180,750

2009 Gross Reinsurance Net RM'000 RM'000 RM'000

Claim liabilities (i) 895,294 (144,884) 750,410 Premium liabilities (ii) 384,079 (44,914) 339,165 Expense liabilities (iii) 23,487 - 23,487

1,302,860 (189,798) 1,113,062

The movement of insurance / takaful contract liabilities of the General reinsurance and shareholders' funds of the Group are as follows:

2011 2010 Gross Reinsurance Net Gross Reinsurance Net RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

(i) Claim liabilities

At beginning of the year 1,073,150 (123,025) 950,125 895,294 (144,884) 750,410 Adjustment to claims incurred: - Outstanding reserves for current underwriting year 140,486 (26,973) 113,513 103,720 (2,570) 101,150 - Movements in outstanding reserve from prior underwriting years 514,534 (19,441) 495,093 659,946 (148,173) 511,773 - Movement in IBNR and PRAD (113) 1,050 937 17,121 106,675 123,796 - Claims paid during the year (596,618) 40,188 (556,430) (602,931) 65,927 (537,004)

At end of the year 1,131,439 (128,201) 1,003,238 1,073,150 (123,025) 950,125

203 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

21. INSURANCE/TAKAFUL CONTRACT LIABILITIES (CONTD.)

(a) General reinsurance and shareholders' funds (Contd.)

The movement of insurance / takaful contract liabilities of the General reinsurance and shareholders' funds of the Group are as follows:

2011 2010 Gross Reinsurance Net Gross Reinsurance Net RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

(ii) Premium liabilities

At beginning of the year 240,142 (29,627) 210,515 384,079 (44,914) 339,165 Premiums written in the year 1,172,385 (114,718) 1,057,667 1,091,186 (131,707) 959,479 Premiums earned during the year (1,151,889) 125,949 (1,025,940) (1,235,123) 146,994 (1,088,129)

At end of the year 260,638 (18,396) 242,242 240,142 (29,627) 210,515

2011 2010 Gross/net Gross/net RM'000 RM'000

(iii) Expense liabilities

At beginning of the year, previously stated - - Effect of adoption of FRS 4 20,110 23,487

At beginning of the year, restated 20,110 23,487 General takaful and retakaful funds: - Wakalah fee received during the year 65,522 63,753 - Wakalah fee earned during the year (64,161) (61,254) - Movement in provision for expense deficiency 1,630 1,209 Family takaful fund: - Movement in provision for UER (2,471) (7,085)

At end of the year 20,630 20,110

2011 2010 2009 Gross Retakaful Net Gross Retakaful Net Gross Retakaful Net RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

(b) General takaful fund

Provision for claims reported by contract holders 116,482 (23,418) 93,064 82,766 (10,170) 72,596 66,888 (13,775) 53,113 Provision for IBNR 66,597 (7,789) 58,808 46,852 (5,954) 40,898 33,635 (5,253) 28,382 Provision for PRAD 10,033 (1,203) 8,830 13,685 (1,453) 12,232 - - -

Claim liabilities (i) 193,112 (32,410) 160,702 143,303 (17,577) 125,726 100,523 (19,028) 81,495 Contribution liabilities (ii) 98,621 (1,941) 96,680 84,951 (12,092) 72,859 84,040 (11,814) 72,226

291,733 (34,351) 257,382 228,254 (29,669) 198,585 184,563 (30,842) 153,721

204 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

21. INSURANCE/TAKAFUL CONTRACT LIABILITIES (CONTD.)

(b) General takaful fund (Contd.)

The movement of the general takaful contract liabilities of the Group are as follows:

2011 2010 Gross Retakaful Net Gross Retakaful Net RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

(i) Claim liabilities of general takaful fund

At beginning of year 143,303 (17,577) 125,726 100,523 (19,028) 81,495 Claims incurred in the current accident year 172,075 (23,637) 148,438 137,296 (12,492) 124,804 Adjustment to claims incurred in prior accident years due to changes in assumptions: Change in PRAD (3,655) 250 (3,405) 13,685 (1,453) 12,232 Change in Expected Ultimate Loss Ratio (17,330) 741 (16,589) (20,606) 5,289 (15,317) Movements in claims incurred in prior accident years 3,155 818 3,973 (4) 747 743 Claims paid during the year (104,436) 6,995 (97,441) (87,591) 9,360 (78,231)

At end of the year 193,112 (32,410) 160,702 143,303 (17,577) 125,726

(ii) Contribution liabilities of general takaful fund

At beginning of the year 84,951 (12,092) 72,859 84,040 (11,814) 72,226 Contributions written in the year 224,196 (22,398) 201,798 217,230 (25,525) 191,705 Contributions earned during the year (210,526) 32,549 (177,977) (216,319) 25,247 (191,072)

At end of the year 98,621 (1,941) 96,680 84,951 (12,092) 72,859

2011 2010 2009 Gross Retakaful Net Gross Retakaful Net Gross Retakaful Net RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

(c) Family takaful fund (iii)

Provision for claims reported by contract holders 33,668 (24,395) 9,273 30,013 (7,855) 22,158 18,406 (4,609) 13,797 Participants' Account ("PA") 916,304 (91,770) 824,534 683,746 (60,015) 623,731 609,830 (128,704) 481,126 Participants' Special Account ("PSA") 51,868 (21,218) 30,650 89,141 (37,941) 51,200 13,092 - 13,092

1,001,840 (137,383) 864,457 802,900 (105,811) 697,089 641,328 (133,313) 508,015

205 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

21. INSURANCE/TAKAFUL CONTRACT LIABILITIES (CONTD.)

(c) Family takaful fund (Contd.)

The movement of the family takaful contract liabilities of the Group are as follows:

2011 2010 Gross Retakaful Net Gross Retakaful Net RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

(i) Family takaful fund

At beginning of the year 802,900 (105,811) 697,089 641,328 (133,313) 508,015 Increase in PA reserve 232,558 (31,755) 200,803 73,916 68,689 142,605 Benefits and claims experience variation 3,655 (16,540) (12,885) 11,607 (3,246) 8,361 Increase/(decrease) in participants' risk fund (252,036) 64,622 (187,414) (63,442) (60,797) (124,239) Contributions received 486,530 (44,244) 442,286 357,610 8,807 366,417 Benefits paid for death, maturities, surrenders, benefits and claims (117,700) (3,655) (121,355) (92,780) 14,049 (78,731) Fees deducted (149,726) - (149,726) (124,607) - (124,607) Transfer to shareholder's fund (4,341) - (4,341) (732) - (732)

1,001,840 (137,383) 864,457 802,900 (105,811) 697,089

(d) General retakaful fund

2011 2010 Gross Retakaful Net Gross Retakaful Net RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Claim liabilities (i) 54,582 (6,837) 47,745 42,254 (8,772) 33,482 Contribution liabilities (ii) 18,928 (531) 18,397 14,725 (2,591) 12,134

73,510 (7,368) 66,142 56,979 (11,363) 45,616

2009 Gross Retakaful Net RM'000 RM'000 RM'000

Claim liabilities (i) 27,584 (9,351) 18,233 Contribution liabilities (ii) 9,064 (2,466) 6,598

36,648 (11,817) 24,831

206 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

21. INSURANCE/TAKAFUL CONTRACT LIABILITIES (CONTD.)

(d) General retakaful fund (Contd.)

The movement of the general retakaful contract liabilities of the Group are as follows:

2011 2010 Gross Retakaful Net Gross Retakaful Net RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

(i) Claim liabilities

At beginning of the year 42,254 (8,772) 33,482 27,584 (9,351) 18,233 Adjustment to claims incurred in prior accident years due to changes in assumptions: - Movements in outstanding reserves 20,941 1,21922,160 24,429 (1,617) 22,812 - Movement in IBNR 4,023 (143) 3,880 4,029 (194) 3,835 - Claims paid during the year (12,636) 859 (11,777) (13,788) 2,390 (11,398)

At end of the year 54,582 (6,837) 47,745 42,254 (8,772) 33,482

(ii) Contribution liabilities

At beginning of the year 14,725 (2,591) 12,134 9,064 (2,466) 6,598 Contributions written in the year 43,772 (6,898) 36,874 37,285 (9,847) 27,438 Contributions earned during the year (39,569) 8,958 (30,611) (31,624) 9,722 (21,902)

At end of the year 18,928 (531) 18,397 14,725 (2,591) 12,134

(e) Family retakaful fund

Actuarial liabilities of the family retakaful fund

Gross Retakaful Net RM'000 RM'000 RM'000

At 1 April 2009 341 (32) 309

At 31 March 2010 1,778 (661) 1,117

At 31 March 2011 2,494 (656) 1,838

207 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

21. INSURANCE/TAKAFUL CONTRACT LIABILITIES (CONTD.)

(e) Family retakaful fund (Contd.)

The movement of the family retakaful contract liabilities of the Group are as follows:

2011 2010 Gross Retakaful Net Gross Retakaful Net Takaful contract liabilities RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At beginning of the year 1,778 (661) 1,117 341 (32) 309 Adjustments due to changes in assumptions: Mortality 564 33597 1,406(630) 776 Dread diseases 116 (31) 85 - - - Personal accident / disability (1) - (1) (2) 1 (1) Others 2 3 5 (8) - (8) Movement in special reserve 35 - 35 41 - 41

2,494 (656) 1,838 1,778 (661) 1,117

22. INSURANCE AND TAKAFUL RECEIVABLES Group 2011 2010 RM'000 RM'000

General reinsurance and shareholders' funds

Amount due from brokers and ceding companies 143,993 154,893 Less: Allowance for impairment (5,820) (5,984)

138,173 148,909

Included in amount due from brokers and ceding companies is an amount of RM551,000 (2010: RM356,000) due from an associate, Labuan Reinsurance (L) Ltd. The amount receivable is subject to settlement terms stipulated in the reinsurance contracts.

General takaful fund

Group 2011 2010 RM'000 RM'000

Contributions receivables 33,525 45,388 Due from agents, retakaful operators and brokers 7,328 1,877 Less: Allowance for impairment (8,055) (11,109)

32,798 36,156

Family takaful fund

Contributions receivables 84,700 39,007 Less: Allowance for impairment (882) (246)

83,818 38,761

208 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

22. INSURANCE AND TAKAFUL RECEIVABLES (CONTD.)

Group 2011 2010 RM'000 RM'000

General retakaful fund

Due from ceding companies and brokers 15,474 8,683 Less: Allowance for impairment (1,545) (1,209)

13,929 7,474

Family retakaful fund

Due from ceding companies and brokers 942 1,174 Less: Allowance for impairment (22) -

920 1,174

23. NON-CURRENT ASSET HELD FOR SALE

Group 2011 RM'000

General reinsurance and shareholders' funds

Freehold land and building transferred from investment properties (Note 14) 34,173

On 23 March 2011, a letter of offer was received and the reinsurance subsidiary entered into negotiations to dispose of a building previously classified as investment property. As at 31 March 2011, a draft sale and purchase agreement has been agreed to by management of the reinsurance subsidiary and the buyer. At the date of authorisation of these financial statements, the disposal has yet to be completed.

24. ISLAMIC MEDIUM TERM NOTES

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

At amortised cost:

RM200.0 million IMTN due in 2012 150,000 150,000 200,000 200,000

209 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

24. ISLAMIC MEDIUM TERM NOTES (CONTD.)

2011 2010 RM'000 RM'000

IMTN held by subsidiaries: Malaysian Reinsurance Berhad 40,000 40,000 MNRB Retakaful Berhad 10,000 10,000

50,000 50,000

Upon obtaining the approval of the Securities Commission on 21 September 2007, the Company issued RM200.0 million in nominal value of Islamic Medium Term Notes (“IMTN”) under an IMTN Programme on 10 December 2007.

The IMTN Programme was issued under the Islamic financing principle of Musyarakah and has a tenure of 5 years from the date of first issuance. The tenure of the IMTN is for a period of more than 1 year up to 5 years as the Company may elect, provided that the IMTN mature prior to the expiry of the IMTN Programme. The IMTN are unsecured and carry a profit rate of 4.75% per annum. Profit is payable semi-annually in arrears from the date of issue of the IMTN with the last profit payment on the maturity date of the IMTN.

At 31 March 2011, the subsidiaries, Malaysian Reinsurance Berhad and MNRB Retakaful Berhad had invested in a total of RM50.0 million nominal value of the Company’s IMTN.

25. INSURANCE AND TAKAFUL PAYABLES

Group 2011 2010 RM'000 RM'000

General reinsurance and shareholders' funds

Due to brokers and retrocessionaires 51,896 63,119 Due to agents, retakaful operators and brokers 13,498 15,873

65,394 78,992

Included in amount due to brokers and retrocessionaires is an amount of RM183,000 (2010: RM672,000) due to an associate, Labuan Reinsurance (L) Ltd. The amount payable is subject to settlement terms stipulated in the reinsurance contracts.

210 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

25. INSURANCE AND TAKAFUL PAYABLES (CONTD.) Group 2011 2010 RM'000 RM'000

General takaful fund

Due to agents and retakaful operators 7,932 5,641

Family takaful fund

Due to agents and retakaful operators 34,406 19,464

General retakaful fund

Due to agents, retakaful operators and co-insurers 3,250 5,480

Family retakaful fund

Due to agents, retakaful operators and co-insurers 2,007 895

26. OTHER PAYABLES

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

General reinsurance and shareholders' funds

Due to general retakaful fund * 34,343 23,410 - - Outstanding commissions 15,457 6,031 - - Provisions 34,076 22,798 10,562 9,898 Amount due to subsidiaries * - - - 1,560 Sundry payables and accruals 10,983 24,707 3,364 3,633

94,859 76,946 13,926 15,091

* The amount due to subsidiaries are non-trade in nature, unsecured, not subject to any profit / interest elements and have no fixed terms of repayment.

211 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

26. OTHER PAYABLES (CONTD.)

Group 2011 2010 RM'000 RM'000

General takaful fund

Deposit contributions - 11,181 Advance contributions - 2,844 Amount due to shareholders' fund * 2,739 11,594 Amount due to family takaful fund * 12,970 522 Other accruals and payables 23,765 16,773

39,474 42,914

Family takaful fund

Deposit contributions 30,232 20,881 Amount due to shareholders' fund * 28,932 13,400 Amount due to takaful investment-linked fund * 3 118 Other accruals and payables 6,587 4,086

65,754 38,485

Family retakaful fund

Amount due to shareholders' fund * 11,120 10,857

* These amounts are non-trade in nature, unsecured, not subject to any interest / profit elements and are repayable upon demand.

27. SHARE CAPITAL

Number of ordinary shares of RM1.00 each Amount 2011 2010 2011 2010 ‘000 ‘000 RM'000 RM'000

Authorised 500,000 500,000 500,000 500,000

Issued and fully paid: At beginning and end of the year 213,070 213,070 213,070 213,070

212 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

28. RETAINED PROFITS Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividends paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders ("single tier system"). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard their accumulated tax credits under Section 108 of the Income Tax Act, 1967 ("Section 108 balance") and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the Section 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007. The Company did not elect for the irrevocable option to disregard the Section 108 balance. Accordingly, during the transitional period, the Company may utilise the credits in the Section 108 balance as at 31 December 2007 to distribute cash dividend payments to ordinary shareholders as defined under the Finance Act 2007. The Company also has tax exempt income available for distribution of approximately RM60,461,000 (2010: RM60,251,000) as at 31 March 2011. As at 31 March 2011, the Company has sufficient tax credits in the Section 108 balance to pay franked dividends out of its entire retained earnings.

29. GENERAL TAKAFUL FUND Group 2011 2010 RM'000 RM'000

Accumulated deficit At beginning of the year, previously stated (4,730) (14,102) Effects of adoption of FRS 4 (2,602) (2,059)

At beginning of the year, restated (7,332) (16,161) Net surplus of the general takaful fund 4,445 10,270 Transfer from special fund - (1,361) Hibah (profit) paid to participants during the year (1) (80)

At end of the year (2,888) (7,332)

Qard At beginning of the year 12,043 18,043 Decrease in Qard - (6,000)

At end of the year 12,043 12,043

AFS reserves At beginning of the year 1,482 40 Net gain on fair value changes 2,287 2,152 Realised gain transferred to income statement (2,467) (230) Deferred tax on fair value changes 36 (480)

At end of the year 1,338 1,482

General takaful fund at end of the year Accumulated deficit (2,888) (7,332) Qard 12,043 12,043 AFS reserves 1,338 1,482

10,493 6,193

213 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

29. GENERAL TAKAFUL FUND (CONTD.)

Qard is a benevolent loan provided by the shareholders' fund to the general takaful fund. It does not have any profit elements, is unsecured and is repayable out of future surpluses of the fund.

30. FAMILY TAKAFUL FUND

Group 2011 2010 RM'000 RM'000

At beginning of the year 43,187 2,981 Effect of adopting FRS 4 (Note 2.27) - 1,495

At beginning of the year, as restated 43,187 4,476 Available-for-sale net gains on fair value changes 9,482 3,927 Deferred tax effect on fair value changes on AFS financial assets (175) (272) Realised loss on AFS financial assets transferred to other comprehensive income (7,458) (523) Transfer to special fund (698) (87) Surplus for the year 238,365 196,199 Increase in reserve (180,354) (160,533)

At end of the year 102,349 43,187

31. GENERAL RETAKAFUL FUND

Group 2011 2010 RM'000 RM'000

Accumulated deficit At beginning of the year, previously stated (38,190) (16,171) Effects of adoption of FRS 4 1,633 706

At beginning of the year, restated (36,557) (15,465) Net deficit of the general retakaful fund (14,369) (21,092)

At end of the year (50,926) (36,557)

Qard At beginning of the year 38,190 16,171 Increase in Qard 12,736 22,019

At end of the year 50,926 38,190

214 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

31. GENERAL RETAKAFUL FUND (CONTD.)

Group 2011 2010 RM'000 RM'000

AFS reserves At beginning of the year 12 - Net (loss)/gain on fair value changes (36) 16 Realised gain transferred to income statement 113 - Deferred tax on fair value changes (19) (4)

At end of the year 70 12

General retakaful fund at end of the year Accumulated deficit (50,926) (36,557) Qard* 50,926 38,190 AFS reserves 70 12

70 1,645

* Qard is a benevolent loan provided by the shareholders’ fund to make good the current year underwriting deficit experienced by the general retakaful fund. It does not have any profit elements, is unsecured and is repayable out of future surpluses of the fund.

32. FAMILY RETAKAFUL FUND

Group 2011 2010 RM'000 RM'000

Accumulated surplus At beginning of the year 943 403 Net surplus of the family retakaful fund 1,095 1,348 Increase in takaful contract liabilities (721) (808)

At end of the year 1,317 943

AFS reserves At beginning of the year 12 - Net (loss)/gain on fair value changes (92) 16 Realised gain transferred to income statement 114 - Deferred tax on fair value changes (5) (4)

At end of the year 29 12

Family retakaful fund at end of the year Accumulated surplus 1,317 943 AFS reserves 29 12

1,346 955

215 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

33. INVESTMENT-LINKED FUND

(a) Income statement

2011 2010 RM'000 RM'000

Income Investment income (Note (c)) 516 227 Realised gains and losses (Note (d)) 4,660 2,471 Financial assets at FVTPL's fair value gains and losses 3,342 1,067 Retakaful commission income 21 -

8,539 3,765

Outgo Gross benefits paid representing net claims (6,255) (1,112) Fee expenses (Note (e)) (7,407) (5,561) Other operating expenses (966) (255)

(14,628) (6,928)

Deficit of income over outgo before tax (6,089) (3,163)

Taxation (Note (h)) (614) (161)

Deficit of income over outgo after tax (6,703) (3,324)

(b) Statement of financial position

2011 2010 RM'000 RM'000

Assets Financial instruments (Note (f)): Financial assets at fair value through statement of comprehensive income 86,949 33,648 Loans and receivables 3,216 6,474 Takaful contracts receivables 87 64 Cash and bank balances 2,840 3,205

Total Investment-linked business assets 93,092 43,391

Liabilities Tax payable 505 175 Deferred tax liabilities 362 95 Other payables (Note (g)) 1,998 403

Total Investment-linked business liabilities 2,865 673

Participants' fund 90,227 42,718

Total liabilities and participants' fund 93,092 43,391

216 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

33. INVESTMENT-LINKED FUND (CONTD.)

(c) Investment income

2011 2010 RM'000 RM'000

Financial assets at FVTPL: Profit income 217 109 Dividend income - quoted shares in Malaysia 175 89

Loans and receivables: Profit income 124 29

516 227

(d) Realised gains and losses

2011 2010 RM'000 RM'000

Financial assets at FVTPL: Unquoted Islamic private debt securities: Unsecured 44 4 Quoted shares in Malaysia 227 168 Shariah approved unit trust funds 4,389 2,299

4,660 2,471

(e) Fee expense

2011 2010 RM'000 RM'000

Wakalah fees (7,370) (5,561) Surplus administrative charges (37) -

(7,407) (5,561)

217 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

33. INVESTMENT-LINKED FUND (CONTD.)

(f) Financial assets/investments

(i) Financial assets at FVTPL 2011 2010 RM'000 RM'000 At amortised cost/cost:

Unquoted Islamic private debt securities: Government guaranteed 259 - Unsecured 4,229 3,881 Government investment issues 701 - Quoted shares in Malaysia: Shariah approved equities 8,423 2,923 Shariah approved unit trust funds 68,777 22,839

82,389 29,643

At fair value:

Unquoted Islamic private debt securities: Government guaranteed 251 - Unsecured 4,236 1,855 Government investment issues 698 - Quoted shares in Malaysia: Shariah approved equities 8,751 4,396 Shariah approved unit trust funds 73,013 27,397

86,949 33,648

(ii) Loans and receivables

2011 2010 RM'000 RM'000

At cost: Islamic repo placements 3,237 1,694 Due from: General takaful fund 42 Family takaful fund - 118 Income due and accrued (25) 4,660

3,216 6,474

At fair value: Islamic repo placements 3,237 1,694 Due from: General takaful fund 42 Family takaful fund - 118 Income due and accrued (25) 4,660

3,216 6,474

218 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

33. INVESTMENT-LINKED FUND (CONTD.)

2011 2010 RM'000 RM'000

(g) Other payables

Deposit contributions 340 285 Amount due to shareholders' fund* 174 69 Amount due to family takaful fund* 3 - Other accruals and payables 1,481 49

1,998 403

* The amounts due to shareholders' fund and family takaful fund are non-trade in nature, unsecured, not subject to any profit elements and has no fixed terms of repayment.

(h) Taxation

2011 2010 RM'000 RM'000

Current year's provision 347 161 Deferred tax relating to origination and reversal of temporary differences 267 -

Tax expense for the year 614 161

Investment-linked business is taxed at the preferential tax rate of 8% of taxable investment income for the period.

A reconciliation of income tax expense applicable to surplus before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the fund is as follows:

2011 2010 RM'000 RM '000

Surplus before taxation (6,089) (3,163)

Taxation at Malaysian statutory tax rate of 8% (487) (253) Income not subject to tax (3,331) (2,866) Expenses not deductible for tax purposes 487 99 Overprovision of prior year deferred tax 7 -

Tax expense for the year (3,324) (3,020)

34. DIVIDENDS

No dividend has been paid or declared by the Company since the end of the previous financial year.

219 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

35. EARNINGS/(LOSS) PER SHARE

The basic earnings/(loss) per share [EPS/(LPS)] is calculated by dividing the net profit/(loss) for the year by the number of ordinary shares in issue during the year.

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

Net profit/(loss) for the year (RM’000) 122,942 50,713 (14,793) (59,593)

Number of ordinary shares in issue ('000) 213,070 213,070 213,070 213,070

Basic EPS/(LPS) (sen) 57.7 23.8 (6.9) (28.0)

36. OPERATING LEASE ARRANGEMENTS

(a) The Group as lessee

The Group has entered into non-cancellable operating lease agreements for the use of office premises. This lease is for a period of 5 years and subject to review every 2 years. There are no restrictions placed upon the Group by entering into this lease.

The future aggregate minimum lease payments under non-cancellable operating leases contracted for as at the reporting date but not recognised as liabilities, are as follows:

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

Future minimum rental payments:

Not later than 1 year 4,902 5,569 1,151 1,004 Later than 1 year and not later than 5 years 20,381 20,174 2,195 3,346

25,283 25,743 3,346 4,350

(b) The Group as lessor

The Group has entered into non-cancellable operating lease agreements on its portfolio of investment properties. These leases have remaining non-cancellable lease terms of between 5 and 10 years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions and certain contracts include contingent rental arrangements computed based on sales achieved by tenants.

220 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

36. OPERATING LEASE ARRANGEMENTS (CONTD.)

(b) The Group as lessor (Contd.)

The future minimum lease payments receivable under non-cancellable operating leases contracted for as at the reporting date but not recognised as receivables, are as follows:

Group

Future minimum rental receipts:

2011 2010 General reinsurance and shareholders' funds RM'000 RM'000

Not later than 1 year 7,337 6,857 Later than 1 year and not later than 5 years 11,152 9,257

18,489 16,114

Family takaful fund

Not later than 1 year 4,204 3,866 Later than 1 year and not later than 5 years 17,046 16,988

21,250 20,854

37. COMMITMENTS

The commitments of the Group and of the Company as at the financial year-end are as follows:

General reinsurance and shareholders' funds

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

Authorised and contracted for: - software development costs 6,146 6,865 - - - rooftop constructions 5,800 6,750 - -

11,946 13,615 - -

Family takaful fund

Group 2011 2010 RM'000 RM'000

Authorised and contracted for: - outstanding payment on new office building, payable within 12 months 543 2,015

221 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

38. RELATED PARTY DISCLOSURES

For the purposes of these financial statements, parties are considered to be related to the Group and the Company if the Group and the Company have the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Company either directly or indirectly. The key management personnel include all the Directors of the Group and the Company, and certain members of senior management of the Group and the Company.

(a) The significant transactions with related parties are as follows:

Group Company 2011 2010 2011 2010 Income/(expenses): RM'000 RM'000 RM'000 RM'000

Transactions with subsidiaries: Management fees received - - 21,963 14,321 Net dividend received - - 11,508 7,500 Rental paid - - 1,004 (941) Profit on IMTN payable - - (2,375) (2,375)

Transactions with takaful funds of a subsidiary: Takaful contributions paid (476) (1,398) - (565) Net reinsurance inwards - 66 - -

Transactions with retakaful funds of a subsidiary: Net reinsurance inwards 492 1,061 - - Net reinsurance outwards (5,019) (2,657) - -

Transactions with an associate, Labuan Reinsurance (L) Ltd: Net reinsurance inwards 1,421 1,288 - - Net reinsurance outwards (715) (897) - - Net dividend received 3,980 3,042 - - Rental received 746 710 - -

Transactions with an associate, Motordata Research Consortium Sdn Bhd: Net dividend received - - 210 200

The directors are of the opinion that all the transactions above have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.

Outstanding balances arising from the transactions above as at 31 March have been disclosed in Notes 22 and 24 of the financial statements as well as on the face of statements of financial position.

222 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

38. RELATED PARTY DISCLOSURES (CONTD.)

(b) The key management personnel compensations are as follows:

Group Company 2011 2010 2011 2010 RM'000 RM'000 RM'000 RM'000

General reinsurance and shareholders' funds

Directors' fees 2,322 2,203 685 725 Directors' allowances 566 428 131 130 Directors' remuneration: Salaries and bonus 5,690 7,132 2,437 2,824 Pension costs - EPF 1,014 1,189 480 524 Social security cost 1 1 1 1 Retirement benefits 203 266 60 120 Allowances 449 376 304 85 Benefits-in-kind 349 285125 52

Other key management personnel's remuneration: Salary and bonus 9,502 9,487 2,856 2,903 Pension costs - EPF 1,640 1,470 519 488 Social security cost 4 4 2 2 Allowances 2,257 1,158 822 381 Benefits-in-kind 365 285 92 33

24,362 24,284 8,514 8,268

39. SUBSEQUENT EVENTS

Subsequent to the financial year end, on 6 April 2011, MNRB had obtained a short term revolving credit facility ("facility") of up to RM120 million from MIDF Amanah Investment Bank Berhad. RM10 million of the facility was retained by the Company for working capital purposes. The remainder of the facility was utilised as follows:

(i) MNRB's investment in Malaysian Re was increased by RM10 million, via the issuance of 10 million new ordinary shares of RM1.00 each in Malaysian Re at an issue price of RM1.00 per share; and

(ii) MNRB's investment in Takaful Ikhlas was increased by RM100 million, via the issuance of 100 million new ordinary shares of RM1.00 each in Takaful Ikhlas at an issue price of RM1.00 per share.

The new ordinary shares issued by Malaysian Re and Takaful IKHLAS rank pari passu with the ordinary shares of the two subsidiaries in existence as at the issue date above.

223 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

40. SEGMENT INFORMATION

Investment Reinsurance Takaful Retakaful Holding Business Operator Operator Elimination Consolidated Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2011

Revenue External 247 1,238,093 211,910 13,012- 1,463,262 Inter-segment 37,015 11,342 - 475 (48,832) -

1,463,262

Results Net earned premiums - 1,025,940 - - - 1,025,940 Interest/profit income 247 53,369 4,514 2,524 (2,375) 58,279 Other revenue 37,337 75,381 215,255 12,730 (49,345) 291,358 Net claims - (609,542) - - - (609,542) Other expenses (40,773) (360,344) (200,388) (24,647) 37,129 (589,023) Depreciation (678) (3,195) (4,101) (96) (665) (8,735) Amortisation (241) (1,653) (1,169) (14) - (3,077) Finance cost (9,500) - - - 2,375 (7,125)

(Loss)/profit from operations (13,608) 179,956 14,111 (9,503) (12,881) 158,075 Share of results of associates 278 6,600 - - - 6,878

(Loss)/profit before zakat and tax (13,330) 186,556 14,111 (9,503) (12,881) 164,953 Zakat - - (400) 28 - (372) Tax expense (1,185) (39,017) (4,770) - 3,333 (41,639)

Net (loss)/profit for the year (14,515) 147,539 8,941 (9,475) (9,548) 122,942

224 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

40. SEGMENT INFORMATION (CONTD.)

Investment Reinsurance Takaful Retakaful Holding Business Operator Operator Elimination Consolidated Group (Contd.) RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2010

Revenue External 396 1,145,210 190,190 10,469 - 1,346,265 Inter-segment 24,521 10,981 - 475 (35,977) -

1,346,265

Results Net earned premiums - 1,088,129 - - - 1,088,129 Interest/profit income 396 42,477 3,529 2,042 (2,375) 46,069 Other revenue (19,505) 54,360 198,546 9,435 (29,385) 213,451 Net claims - (736,719) - - - (736,719) Other expenses (30,393) (328,893) (178,378) (9,197) 17,298 (529,563) Depreciation (576) (3,101)(2,250) (104)(1,138) (7,169) Amortisation (209) (1,633)(781) (13) - (2,636) Finance cost (9,500) - - - 2,375 (7,125)

(Loss)/profit from operations (59,787) 114,620 20,666 2,163 (13,225) 64,437 Share of results of associates 511 14,313 - - - 14,824

(Loss)/profit before zakat and tax (59,276) 128,933 20,666 2,163 (13,225) 79,261 Zakat - - (385) (1) - (386) Tax expense 194 (24,346) (6,510) - 2,500 (28,162)

Net (loss)/profit for the year (59,082) 104,587 13,771 2,162 (10,725) 50,713

225 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

40. SEGMENT INFORMATION (CONTD.)

Investment Reinsurance Takaful Retakaful Holding Business Operator Operator Elimination Consolidated Group (Contd.) RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2011

Assets Segment assets 828,561 2,198,417 1,792,926 227,129 (811,107) 4,235,926 Investment in associates 1,957 75,658 - - - 77,615 Add: Consolidation adjustments on investment in associates 520 39,407 - - - 39,927

831,038 2,313,482 1,792,926 227,129 (811,107) 4,353,468

Liabilities Segment liabilities Borrowings 200,000 - - - (56,383) 143,617 Insurance and takaful contract liabilities - 1,392,077 15,146 5,486 - 1,412,709 Other liabilities 13,926 72,467 525,354 127,011 - 738,758

213,926 1,464,544 540,500 132,497 (56,383) 2,295,084

Equities Segment equities General reinsurance and shareholders' funds 616,592 809,531 194,173 93,216 (754,724) 958,788 Add: Consolidation adjustments 520 39,407 - - - 39,927 Takaful funds - - 1,058,253 - - 1,058,253 Retakaful funds - - - 1,416 - 1,416

617,112 848,938 1,252,426 94,632 (754,724) 2,058,384

831,038 2,313,482 1,792,926 227,129 (811,107) 4,353,468

226 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

40. SEGMENT INFORMATION (CONTD.)

Investment Reinsurance Takaful Retakaful Holding Business Operator Operator Elimination Consolidated Group (Contd.) RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2010

Assets Segment assets 846,237 2,001,499 1,381,579 210,104 (813,659) 3,625,760 Investment in associates 1,957 75,658 - - - 77,615 Add: Consolidation adjustments on investment in associates 452 44,200 - - - 44,652

848,646 2,121,357 1,381,579 210,104 (813,659) 3,748,027

Liabilities Segment liabilities Borrowings 200,000 - - - (54,406) 145,594 Insurance and takaful contract liabilities - 1,313,292 15,750 4,360 - 1,333,402 Other liabilities 15,091 78,068 413,407 100,323 - 606,889

215,091 1,391,360 429,157 104,683 (54,406) 2,085,885

Equities Segment equities General reinsurance and shareholders' funds 633,103 685,797 185,393 102,821 (759,253) 847,861 Add: Consolidation adjustments 452 44,200 - - - 44,652 Takaful funds - - 767,029 - - 767,029 Retakaful funds - - - 2,600 - 2,600

633,555 729,997 952,422 105,421 (759,253) 1,662,142

848,646 2,121,357 1,381,579 210,104 (813,659) 3,748,027

227 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

41. RISK MANAGEMENT FRAMEWORK

(a) Risk governance framework

The Group's Risk Management Framework is designed to determine the level of risk acceptable to the Group relating to its core operations by setting the appropriate Board approved limits for adherence by management after taking into account the risk parameters, the nature, the size, mix and complexity of business and operations. An enterprise risk management process is adopted to identify and evaluate key business risks that may affect the organisation and to establish and implement an appropriate system of internal controls to manage these risks while ensuring full and effective control over significant strategic, financial, organisational and compliance matters.

The key objectives of the risk management framework are to:

(i) provide information on risk governance and accountabilities; (ii) provide guidance to a standard approach to managing risks; (iii) create a risk awareness culture; and (iv) enhance professionalism, increase profitability and value for shareholders.

The Risk Management Governance structure is as follows:

(i) The Board of Directors is responsible for the management of risks. The Risk Management Committee of the Board ("RMCB") assesses the adequacy of risk management policies and the risk management framework for identifying, measuring, monitoring and controlling risks; ensures adequate infrastructure, resources and systems for effective management of risks are in place; and is also responsible to review and recommend to the Board proposed risk management strategies, policies and risk tolerance limits;

(ii) The Operational Risk Management Committee ("ORMC") which comprises the President/Group Chief Executive Officer and senior management assists the RMCB in identifying, measuring, monitoring and controlling risks within the Group to ensure the adequacy and effectiveness of infrastructure, resources and systems in place;

(iii) The Risk Management Department assists the RMCB and ORMC in developing and maintaining the Risk Management Framework in consultation with stakeholders;

(iv) Other Departments in the Group implement risk management policies, that are consistent with the Risk Management Framework, to address specific Departmental requirements and ensure that they are in compliance with day-to-day operations; and

(v) The Line Managers of each Department in the Group are responsible for using the various components of the Risk Management Framework as an integral part of their normal processes and procedures.

The Group has an Investment Committee to further manage risks associated with investments and asset allocation.

(b) Capital Management Objectives, Policies and Approach

The Capital Management Plan (“CMP”) of MNRB is designed to ensure effective capital management so as to maximise the Group’s value by optimising capital structure in place and enhancing capital efficiency. It is also designed to address the funding requirements of the Group to meet its various financial obligations.

The CMP also includes descriptions of triggers and action plans in place for the Group to monitor the Capital Adequacy Ratio ("CAR") and Solvency Margin Ratio ("SMR") of its subsidiaries and to carry out corrective measures when necessary to maintain the financial health of the Group. It is intended that capital will be utilised more efficiently in a controlled manner so that the Group will be able to manage its capital position above the internal target of its subsidiaries.

228 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

41. RISK MANAGEMENT FRAMEWORK (CONTD.)

(b) Capital Management Objectives, Policies and Approach (Contd.)

Capital Management Objectives

The main objective of capital management is to monitor and maintain, at all times, an appropriate level of capital which is commensurate with the Group's risk profile. The key objective of the CMP is to trigger appropriate action plans to be taken by the Board and the management of the Group in event of internal capital levels falling below the internal target requirement. This includes remedial actions that must be undertaken by the Board and the management to improve the Group’s capital position.

Capital Management Policies

The key capital management policies are as follows:

(i) Ensure the Group has adequate capital within a range that supports stakeholders' objectives; and

(ii) Establish responsibility of the Board and Group’s management in developing an internal capital adequacy assessment process and setting capital targets that are commensurate with its risk profile and control environment.

Approach to capital management

The Group conducts stress test and in the case of its relevant subsidiaries, the stress tests are in compliance with BNM/RH/GL 003-23: Guidelines of Stress Testing for Insurer and BNM/RH/GL 004-16: Guidelines of Stress Testing for Takaful Operators. The impact of the adverse scenarios on the capital position of the Group on the SMR / CAR is assessed quarterly focusing on short to medium term views.

(c) Regulatory framework

The reinsurance subsidiary and the takaful and retakaful subsidiaries are required to comply with the Insurance Act and Regulations 1996 and the Takaful Act 1984, respectively, which are administered by Bank Negara Malaysia (BNM). BNM is primarily interested in protecting the rights of policyholders and participants and monitoring the subsidiaries closely to ensure prudent management of its business operations. At the same time, BNM is also interested in ensuring that the subsidiaries maintain an appropriate solvency position to meet unforeseen liabilities arising from economic cycle or natural disasters.

In addition, the Company is required to comply with the Listing Requirements of Bursa Malaysia Securities Berhad, Guidelines issued by the Securities Commission and the Capital Markets and Services Act 2007 as a result of its status as a listed company on the Main Market of Bursa Malaysia Securities Berhad.

229 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

42. UNDERWRITING RISK

(a) General reinsurance

(i) Nature of risk

The reinsurance subsidiary principally underwrites the following main classes of general reinsurance business: Fire, Motor, Marine, and Miscellaneous. Risks under these contracts usually cover a twelve month duration other than some long term contracts which may cover up to 3 years or more. For general reinsurance, the most significant risks arise from adverse development of the loss ratios and catastrophic loss events. These risk vary significantly in relation to economic conditions and territories from which the risk originates.

The above risks are mitigated by diversification across a large portfolio of business to ensure a balanced mix and spread of business as required by underwriting policies. Diversification through the implementation of underwriting strategies and claim management policies reduces the volatility of risks and improves the overall portfolio experience, and also ensures that conservative estimates are secured on its insurance contract liabilities.

The reinsurance subsidiary also manages its loss exposure through the use of retrocession programmes which are reviewed annually by the ORMC and RMCB, and subsequently approved by the Board. Prudent standards are applied in the assessment of the security of the Company's key retrocessionaires. To manage its underwriting risk, the reinsurance subsidiary also complies with guidelines imposed by BNM in conducting the underwriting of business.

(ii) Concentration of risk by type of business

The table below measures the concentration of contracts by liabilities exposure:

Gross Retrocession Net RM'000 RM'000 RM'000

2011

Fire 457,190 (41,635) 415,555 Motor 424,694 120 424,814 Marine 211,699 (94,162) 117,537 Miscellaneous 298,494 (10,920) 287,574

1,392,077 146,597 1,245,480

Local 1,083,270 (144,333)938,937 Overseas 308,807 (2,264) 306,543

1,392,077 (146,597) 1,245,480

230 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

42. UNDERWRITING RISK (CONTD.)

(a) General reinsurance (Contd.)

(iii) Reserving risk

The reinsurance subsidiary's claim liabilities -- and consequently, some of the inputs used in determining its premium liabilities -- are based upon previous claims experience, existing knowledge of events, the terms and conditions of relevant policies and interpretation of circumstances. Upon notification of a claim by its cedants, the reinsurance subsidiary sets aside reserves to meet the expected ultimate loss arising from this claim. These claim reserves are updated periodically for further developments via advice from cedants.

At each reporting date, the reinsurance subsidiary performs a test on the adequacy of its liabilities via the services of an independent qualified external actuary engaged for the purpose of ensuring that claim and premium liabilities are objectively assessed and adequately provided for. Any such deficiency is recognised in the financial statements.

(iv) Impact on liabilities, profit and equity

Key Assumptions

Liabilities are determined based upon previous claims experience, existing knowledge of events, the terms and conditions of the relevant contracts and interpretation of circumstances. Particularly relevant are past experiences with similar cases, historical claims development trends, legislative changes, judicial decisions and economic conditions.

The inherent uncertainties in estimating liabilities can arise from a variety of factors such as the range and quality of data available, underlying assumptions made and random volatility in future experience.

Sensitivity analysis

As a general reinsurer, the insurance contract liabilities of the reinsurance subsidiary are sensitive to various key factors which are both internal and external. External factors to which the reinsurance subsidiary is sensitive to include:

(i) Claims practices of ceding companies; (ii) Frequency and severity of claims incurred by cedants; (iii) Changes in premium rates in insurance and reinsurance markets; and (iv) Legislative and regulatory changes.

In general, due to the number of cedants providing business to the reinsurance subsidiary, the impact of changes to such variables cannot be reliably predicted. Accordingly, Management believes that an analysis to provide an accurate reflection of the sensitivity of the general reinsurance business to changes in these factors cannot be reliably performed.

The main internal factors to which the reinsurance subsidiary is sensitive to pertain to the loss ratios observed from its claims experience. The most significant component of this would be large or catastrophic claims reported by cedants to the reinsurance subsidiary. Based on historical trends and claims performance, large losses reported by cedants are increasing in terms of frequency and severity. Accordingly, the sensitivity analysis is performed by determining the estimated large losses that Management believes would reasonably occur over the next 12 months as noted below.

231 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

42. UNDERWRITING RISK (CONTD.)

(a) General reinsurance (Contd.)

(iv) Impact on liabilities, profit and equity (Contd.)

Sensitivity analysis (Contd.)

This analysis assumes that other factors relevant, but not significant, to the valuation of claim liabilities are constant.

Impact on Impact on Impact on Gross Net Profit Impact on Liabilities Liabilities before Tax Equity* RM'000 RM'000 RM'000 RM'000 2011

Fire 26,799 14,543 14,543 10,908 Marine 16,656 9,0399,039 6,779 Motor 91 9191 69 Miscellaneous 6,297 3,418 3,418 2,563

49,843 27,091 27,091 20,319

* The impact on the equity reflects the after tax impact.

(v) Claims development table

The following tables show the estimate of cumulative ultimate incurred claims, including both claims provisions and IBNR for each successive underwriting year at each financial year end, along with cumulative claim payments to-date.

In setting provisions for claims, the reinsurance subsidiary relies on advice by its cedants and exercises discretion where the claim may develop more adversely than advised. An estimate will be made in the absence of a reported figure or in the event the loss is still preliminary and has not been fully assessed.

The estimates of the ultimate incurred claims are subject to significant uncertainty in the early stages as claims are still being intimated and developed, particularly so for large and catastrophic claims. These uncertainties reduce over time as the claims develop and progress towards the ultimate cost.

Beginning 1 April 2009, the methodology used in the valuation of general reinsurance liabilities was changed. This change involved a more granular segregation of the business of the reinsurance subsidiary into specific portfolios with the intention of achieving greater accuracy in the estimation process. Accordingly, data pertaining to the gross general reinsurance liabilities prior to underwriting year 2009 was not available and hence only post underwriting year 2009 developments in gross general reinsurance liabilities are disclosed.

232 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

42. UNDERWRITING RISK (CONTD.)

(v) Claims Development table (Contd.)

Gross General Reinsurance Liabilities for 2011:

Before Sub Underwriting Year 2003 2003 2004 2005 2006 2007 2008 2009 2010 Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At the end of accident year -----418,389 573,070 640,777 One year later ----408,945 496,009 570,029 - Two year later - - - 403,736 448,593 493,161 - - Three year later - - 334,075 417,448 464,785--- Four year later - 352,998 338,991 399,937 ---- Five year later 322,570 357,333 326,336 ----- Six year later 288,868 345,542 ------Seven year later 271,056 ------

Current estimate of booked ultimate claims incurred (a) 271,053 345,528 326,144 399,062 461,086 483,090 533,575 365,939

At the end of accident year 42,452 69,606 45,677 42,356 53,719 63,614 92,548 81,664 One year later 139,587 210,770 178,766 217,724 224,029 256,339 301,430 - Two year later 200,142 263,625 240,126 294,220 333,537 358,844 - - Three year later 219,409 291,312 265,782 335,359 379,990--- Four year later 232,395 308,433 290,901 355,014 ---- Five year later 246,072 321,954 303,512 ----- Six year later 255,423 331,801 ------Seven year later 261,529 ------

Cumulative payments to-date (b) 261,529 331,801 303,512 355,014 379,990 358,844 301,430 81,664

Local and Overseas Portfolio (a) - (b) 68,314 9,524 13,727 22,632 44,048 81,096 124,246 232,145 284,275 880,007

Other portfolios 164,327

Best Estimate of Claim Liabilities 1,044,334 Claim handling expenses 3,657 Fund PRAD at 75% Confidence Interval 83,448

Net General Reinsurance Claim Liabilities 1,131,439

233 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

42. UNDERWRITING RISK (CONTD.)

(v) Claims Development table (Contd.)

Net General Insurance Contract Liabilities for 2011:

Before Sub Accident year 2003 2003 2004 2005 2006 2007 2008 2009 2010 Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At the end of accident year 325,527 310,161 310,464 305,287 317,442 496,557 537,097 579,606 One year later 315,177 313,641 309,925 328,514 418,288 480,442 545,438 - Two year later 315,154 305,092 316,181 366,752 439,019 476,491 - - Three year later 293,606 304,165 331,467 371,474 441,533--- Four year later 295,676 333,395 325,088 350,415 ---- Five year later 259,441 332,761 309,569 - ---- Six year later 259,935 320,117 ------Seven year later 248,997------

Current estimate of booked ultimate claims incurred (a) 248,994 320,103 309,402 349,553 438,230 467,130 510,989 320,132

At the end of accident year 41,485 67,623 44,469 40,581 52,635 62,609 91,038 70,948 One year later 132,552 199,078 172,437 194,490 219,484 251,249 296,382 - Two year later 183,084 246,603 230,790 257,795 324,757 350,613 - - Three year later 201,411 269,840 255,442 288,807 368,751--- Four year later 213,811 286,358 276,466 307,552 ---- Five year later 227,010 299,224 288,622 - ---- Six year later 235,949 308,687 ------Seven year later 241,768------

Cumulative payments to-date (b) 241,768 308,687 288,622 307,552 368,751 350,613 296,382 70,948

Local and Overseas Portfolio (a) - (b) 59,673 7,226 11,416 20,780 42,001 69,479 116,517 214,607 249,184 790,883

Other portfolios 148,489

Best Estimate of Claim Liabilities 939,372 Claim handling expenses 3,657 Fund PRAD at 75% Confidence Interval 75,260 Less: Retrocession recoveries (15,052)

Net General Reinsurance Claim Liabilities 1,003,237

234 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

42. UNDERWRITING RISK (CONTD.)

(b) General takaful fund

(i) Nature of risk

The takaful subsidiary principally issues the following types of general takaful contracts: motor, household and commercial fire, business interruption, personal accident, and other miscellaneous commercial contracts. Risks under these contracts usually cover a twelve month duration other than long term fire which may cover durations up to thirty years or more. For general takaful business, the risk arises from the frequency and severity of loss events. These risks vary significantly in relation to the location of risks, type of risks covered and industry.

The above risks are mitigated by diversification across a large portfolio of business. The portfolio experience is improved via the implementation of underwriting strategies and claim management policies which attempt to minimise losses.

The takaful subsidiary also manages its loss exposure by the use of retakaful arrangements. The retakaful treaty arrangements are reviewed annually by the RMCB and approved by the Board.

(ii) Concentration of risk by type of contracts

The table below sets sets out the concentration of takaful contracts liabilities by class:

Gross Retakaful Net 2011 RM'000 RM'000 RM'000

Fire 30,727 (5,443) 25,284 Motor 217,398 (2,594) 214,804 Marine, Aviation & Transit 5,217 (1,785) 3,432 Miscellaneous 38,391 (24,529) 13,863

291,733 (34,351) 257,382

All business of the general takaful fund is derived from participants in Malaysia; accordingly, disclosure of concentration risk by geographical region is not relevant to the general takaful fund.

(iii) Impact on liabilities, profit and equity

Key Assumptions

The principal assumptions underlying the estimation of liabilities is that the takaful subsidiary's future claims development will follow a similar pattern to past claims development experience.

Additional qualitative judgments 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 attitudes to claims notification and reporting, economic conditions, as well as internal factors, such as portfolio mix, policy conditions and claims handling procedures. Judgment is further used to assess the extent to which external factors, such as judical decisions and government legislation affect the estimates.

Other key circumstances affecting the reliability of assumptions include variation in profit rates and delays in settlement.

235 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

42. UNDERWRITING RISK (CONTD.)

(b) General takaful fund (Contd.)

(iii) Impact on liabilities, profit and equity (Contd.)

Sensitivity analysis

The general takaful claim liabilities are sensitive to the key assumptions shown below. It has not been possible to quantify the sensitivity of certain assumptions, such as, legislative changes or uncertainty in the estimation process.

The analysis below is performed for reasonably possible movements in key assumptions with all other assumptions held constant, showing the impact on Gross and Net liabilities, profit before Tax and the general takaful fund. The correlation of assumptions have a significant effect in determining the ultimate claims liabilities; however, for purposes of the sensitivity analysis, changes in assumptions are considered individually. It should be noted that movements in these assumptions are non-linear.

The sensitivity analysis has been performed for the major classes only which are the Motor Act and Motor Others class by considering the ultimate loss ratio with an extra charge for the provision in adverse deviation.

Impact on Change in Impact on Impact on Impact on General assumption of Gross Net Surplus Takaful Ultimate Claims Liabilities Liabilities before Tax fund* Ratio RM'000 RM'000 RM'000 RM'000

2011

Motor Act Average Severity +5% 85,673 69,312 (64,867) (72,201) Motor Others Expected Loss Ratio +10% 21,424 21,095 (16,650) (23,984)

* The impact on the general takaful fund reflects the after tax impact.

A downward change in assumption would have an equivalent, but opposite, impact on the gross and net liabilties, surplus before tax and the general takaful fund.

(iv) 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 financial year end, together with cumulative payments to-date.

In setting provisions for claims, the takaful subsidiary 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 ensure adequacy of provision is relatively at its highest. As claims develop and the ultimate cost of claims becomes more certain, the relative level of margin maintained would decrease.

236 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

42. UNDERWRITING RISK (CONTD.)

General takaful fund (Contd.)

(v) Claims Development table (Contd.)

Gross General Takaful Contract Liabilities for 2011:

Accident year Note 2004 2005 2006 2007 2008 2009 2010 2011 Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At the end of accident year - - - - - 87,138 121,715 151,688 360,541 One year later - - - - 51,010 93,829 137,789 - 282,628 Two year later - - - 34,384 51,674 89,238 - - 175,296 Three year later - - 25,802 33,823 50,688 - - - 110,313 Four year later - 8,145 25,451 33,071 - - - - 66,667 Five year later 782 8,031 24,949 - - - - - 33,762 Six year later 742 7,900 ------8,642 Seven year later 740 ------740

Current estimate of cumulative claims incurred (a) 740 7,900 24,949 33,071 50,688 89,238 137,789 151,688 1,038,589

At the end of accident year 203 3,957 8,984 13,366 17,599 29,070 43,215 48,128 164,522 One year later 610 6,632 18,976 25,083 34,059 64,212 83,077 - 232,649 Two year later 614 7,123 20,128 27,784 39,159 72,939 - - 167,747 Three year later 687 7,436 21,967 30,245 44,893 - - - 105,228 Four year later 714 7,728 23,560 31,292 - - - - 63,294 Five year later 730 7,807 24,474 - - - - - 33,011 Six year later 730 7,826 ------8,556 Seven year later 734 ------734

Cumulative payments to-date (b) 734 7,826 24,474 31,292 44,893 72,939 83,077 48,128 775,741

Gross general takaful contracts liabilities per Statement of Financial Position: 23 Best Estimate of Claims Liabilities (incl. ALAE) (a) - (b) 6 74 475 1,779 5,795 16,299 54,712 103,560 Fund PRAD at 70% Total

237 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

42. UNDERWRITING RISK (CONTD.)

General takaful fund (Contd.)

(v) Claims Development table (Contd.)

Net General Takaful Contract Liabilities for 2011:

Accident year Note 2004 2005 2006 2007 2008 2009 2010 2011 Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At the end of accident year - - - 33,895 47,452 83,588 114,776 134,955 414,666 One year later - - 26,062 34,140 47,361 82,112 119,456 - 309,131 Two year later - 8,675 25,794 33,195 48,106 78,446 - - 194,216 Three year later 736 8,488 24,073 31,725 47,484 - - - 112,506 Four year later 737 7,398 23,580 31,341 - - - - 63,056 Five year later 721 7,084 23,128 - - - - - 30,933 Six year later 679 6,903 ------7,582 Seven year later 674 ------674

Current estimate of acumulative claims incurred (a) 674 6,903 23,128 31,341 47,484 78,446 119,456 134,955 1,132,764

At the end of accident year 203 3,121 8,406 11,984 16,995 27,613 40,682 44,714 153,718 One year later 544 5,636 18,391 23,422 32,713 56,404 79,479 - 216,589 Two year later 548 6,128 19,542 23,422 37,616 64,559 - - 154,410 Three year later 621 6,440 21,101 28,199 42,202 - - - 98,563 Four year later 648 6,732 22,694 29,091 - - - - 59,165 Five year later 665 6,811 22,968 - - - - - 30,444 Six year later 665 6,831 ------7,496 Seven year later 668 ------668

Cumulative payments to-date (b) 668 6,831 22,968 29,091 42,202 64,559 79,479 44,714 721,053

Net general takaful contracts liabilities per Statement of Financial Position Best Estimate of Claims Liabilities (incl. ALAE) (a) - (b) 6 72 160 2,250 5,282 13,887 39,977 90,241 Fund PRAD at 70% Total

238 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

42. UNDERWRITING RISK (CONTD.)

(c) Family takaful fund

(i) Nature of risk

The takaful subsidiary principally issues the following types of family takaful contracts: Family Takaful Plans, Mortgage Takaful Plans, Group Takaful Plans and Investment-linked Takaful Plans.

Family takaful underwriting risk arises when actual claims experience is different from the assumptions used in setting the prices for products and establishing the technical provisions and liabilities for claims. Sources of risk include contract lapses and contract claims such as mortality, morbidity and expenses.

The takaful subsidiary utilises retakaful to manage mortality and morbidity risks. The takaful subsidiary’s retakaful management strategy and policy are reviewed by the ALCO and RMCB, and approved by the Board. Retakaful structures are set based on the type of risk to be recovered.

The takaful subsidiary reviews the actual mortality, morbidity, lapsation and surrender experience, as well as expense experience to ensure that the policies, guidelines and limits put in place to manage these risks remain adequate and appropriate.

For investment-linked funds, the risk exposure for the participant's risk fund is limited only to the underwriting aspect as all investment risks are borne by the participant.

Stress Testing (“ST”) is performed twice a year. The purpose of the ST is to test the solvency of the family takaful fund under the various scenarios according to regulatory guidelines, simulating drastic changes in major parameters such as new business volume, investment environment, mortality/morbidity patterns and lapse rates.

(ii) Concentration of risk by type of contracts

Gross Retakaful Net 2011 RM'000 RM'000 RM'000

Family takaful plans 255,843 - 255,843 Investment-linked takaful plans 563 - 563 Mortgage takaful plans 368,534 (68,936) 299,598 Group credit takaful plans 126,764 (8,986) 117,778 Risk Fund 78,272 (21,218) 57,054 Special Fund 68,192 - 68,192 Others 173,125 (13,848) 159,277

1,071,293 (112,988) 958,305

All business of the family takaful fund is derived from participants in Malaysia; accordingly, disclosure of concentration risk by geographical region is not relevant to the family takaful fund.

239 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

42. UNDERWRITING RISK (CONTD.)

(c) Family takaful fund

(iii) Key Assumptions

Judgement is required in determining the liabilities of the family takaful fund and in the selection of assumptions used in the estimation of those liabilities. Assumptions in use are based on past experience, current internal data, external market indices and benchmarks which reflect current observable market prices and other published information. Assumptions and estimates are determined at the date of valuation and no credit is taken for the possible beneficial effects of voluntary withdrawals. Assumptions are further evaluated on a continuous basis in order to ensure realistic and reasonable valuations.

The key assumptions to which the estimation of liabilities is particularly sensitive are as follows:

(i) Mortality and Morbidity rates

Assumptions on mortality rates are based on those rates detailed in the Actuarial Contract submitted to Bank Negara Malaysia. They reflect the historical experience in the market and are adjusted, when appropriate, to reflect the Participants' own experience. Assumptions are differentiated by gender, occupational class and product group.

An increase in rates will lead to a larger number of claims (as claims could occur sooner than anticipated), which will reduce the surplus from the Risk Fund and subsequently reduce profits for the shareholders in terms of lower surplus administration charge income.

(ii) Discount rates

Family takaful liabilities of credit-related products (Mortgage Reducing Term Takaful ("MRTT") and Group Credit Takaful ("GCT")) are determined as the sum of the discounted value of the expected benefits less the discounted value of the expected tabarru' (risk charge) that would be required to meet these future cash outflows. Discount rates are based on the Family Fund's historical investment performance and adjusted downwards for conservatism.

A decrease in the discount rate will increase the value of the family takaful liability and therefore reduce profits for the shareholders in terms of lower surplus administration charge income.

The assumptions that have a significant effect on the statement of financial position and income statement of the family takaful fund are listed below by portfolio assumptions impacting net liabilities:

Type of Discount 1 Business Mortality and morbidity rates rates

2011 Credit related (MRTT Base mortality and adjusted for 2 and GCT) retakaful rates 3%

Others Base mortality 3%

1 These rates are obtained from the various industry mortality and morbidity experience tables that were used to determine the contribution rates.

2 Retakaful rates are derived from the fund's retakaful arrangements with respect to the MRTT and GCT business.

240 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

42. UNDERWRITING RISK (CONTD.)

(c) Family takaful fund (Contd.)

(iv) Sensitivity analysis

The analysis below is performed for reasonably possible movements in key assumptions with all other assumptions held constant, showing the impact on gross and net liabilities, profit before tax and equity. The correlations of assumptions will have a significant effect in determining the ultimate claims liabilities, but to demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual basis. It should be noted that movements in these assumptions are non-linear. Sensitivity information will also vary according to the current economic assumptions.

Impact Impact Impact Impact Change in on Gross on Net on Surplus on Family Assumptions Liabilities liabilities Before Tax takaful fund *

Family Takaful Contracts

2011

Mortality/morbidity + 10% 9,548 9,548 (915) (668) Discount rates + 1% (1,378) (1,378) 93 68

* Impact on Family takaful fundreflects adjustments for tax, where applicable.

A downward change in assumption would have an equivalent, but opposite, impact on the gross and net liabilties, surplus before tax and the general takaful fund.

(d) General retakaful fund

(i) Nature of risk

The retakaful subsidiary principally writes facultative and proportional and non proportional treaty businesses accepted from Takaful and Retakaful operators. Portfolios are segregated by class and by domestic and overseas businesses.

For general retakaful, the most significant risks arise from adverse development of the loss ratios and catastrophic loss events. These risks vary significantly in relation to economic conditions and territories from which the risk originates.

The retakaful subsidiary also manages its loss exposure by the use of retrotakaful arrangements. The retrotakaful arrangements are reviewed annually by the RMCB and approved by the Board.

241 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

42. UNDERWRITING RISK (CONTD.)

(d) General retakaful fund (Contd.)

(ii) Concentration of risk

The table below sets sets out the concentration of takaful contract liabilities by classes of business and by local and overseas:

Gross Retakaful Net 2011 RM'000 RM'000 RM'000

Fire 40,921 (4,580) 36,341 Motor 5,197 - 5,197 Marine, Aviation & Transit 9,365 (2,686) 6,679 Miscellaneous 18,027 (102) 17,925

73,510 (7,368) 66,142

Local 47,685 (1,346) 46,339 Overseas 25,825 (6,022) 19,803

73,510 (7,368) 66,142

(iii) Impact on liabilities, profit and equity

Key Assumptions

The principal assumptions underlying the estimation of liabilities is that the retakaful subsidiary's future claims development will follow a similar pattern to past claims development experience.

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 attitudes to claims notification and reporting, economic conditions, as well as internal factors, such as portfolio mix, policy conditions and claims handling procedures. Judgement is further used to assess the extent to which external factors, such as judical decisions and government legislation affect the estimates.

Other key circumstances affecting the reliability of assumptions include variation in profit rates and delays in settlement.

Sensitivity analysis

The general retakaful fund's claim liabilities are sensitive to changes in the loss ratio especially in the event of large or catastropic claims. However, as the business is still relatively new, the amount of information available to conduct a sensitivity analysis is limited.

Due to limited information, the analysis below is carried out by assuming the IBNR provision is insufficient and that the ultimate loss requires a 5% top-up. The top-up is applied to all classes of business and does not have any impact on the retrotakaful programme.

242 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

42. UNDERWRITING RISK (CONTD.)

(d) General retakaful fund (Contd.)

(iii) Impact on liabilities, profit and equity (Contd.)

Sensitivity analysis (Contd.)

This analysis assumes all other parameters are held constant.

Impact on Impact on Impact on Impact on Surplus General Gross Net before retakaful Liabilities Liabilities Tax fund* RM'000 RM'000 RM'000 RM'000 2011

Fire 1,544 1,544 1,544 1,544 Motor 288 288 288 288 Marine, Aviation & Transit 259 259 259 259 Miscellaneous 968 968 968 968

* The impact on the general retakaful fund reflects the after tax impact.

(iv) Claims Development table

As this is only the fourth financial year since the incorporation of the retakaful subsidiary, it is not meaningful to present the claims development table in the financial statements.

(e) Family retakaful fund

(i) Nature of risk

The retakaful subsidiary principally issues the following types of family retakaful treaty: Individual Family Retakaful Plans, Group Family Retakaful Plans and Individual Medical Retakaful Plans.

Family Retakaful underwriting risk relates to the pricing and loss ratios arising from family Retakaful products. The risks arise when actual claims experience is different from the assumptions used in setting the yearly renewable term fees for retakaful products. Deviations in actual claims experience compared to the assumptions used may be due to deviations in actual mortality, morbidity and expense experience.

The retakaful subsidiary utilises retrotakaful to manage the mortality and morbidity risks. The retakaful subsidiary’s retrotakaful strategy and policy are reviewed annually by the ORMC and RMCB, and approved by the Board. Retrotakaful structures are established based on the type of risk covered.

The retakaful subsidiary reviews the actual experience of mortality, morbidity and expense experience to ensure that appropriate policies, guidelines and limits put in place to manage these risks remain adequate and appropriate.

Stress Testing (“ST”) is performed twice a year. The purpose of the ST is to test the solvency of the family retakaful fund under various scenarios. These scenarios are based on regulatory guidelines and simulate drastic changes in major parameters such as new business volume, investment environment and mortality / morbidity patterns.

243 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

42. UNDERWRITING RISK (CONTD.)

(e) Family retakaful fund (Contd.)

(ii) Concentration of risk

The table below sets out the concentration of retakaful contract liabilities by local and overseas treaties:

Gross Retakaful Net RM'000 RM'000 RM'000 2011

Local Treaties 2,265 (619) 1,646 Overseas Treaties 154 (37) 117

2,419 (656) 1,763

Business of the family retakaful fund is derived from Malaysia and overseas risks. Accordingly, liabilities of the family retakaful fund are mainly spread along these regions namely Malaysia, Brunei and Indonesia.

(iii) Impact on liabilities, profit and equity

Key Assumptions

Material judgement is required in determining the liabilities and in the choice of assumptions. Assumptions in use are based on past experience, current internal data, external market indices and benchmarks which reflect current observable market prices and other published information. Assumptions and prudent estimates are determined at the date of valuation and no credit is taken for possible beneficial effects of voluntary withdrawals. Assumptions are further evaluated on a continuous basis in order to ensure realistic and reasonable valuations.

The estimation of liabilities is particularly sensitive to the assumption of loss ratios due to the nature of the pricing of family retakaful products which are based on yearly renewable terms.

Sensitivity analysis

Impact on Surplus Impact on Change in before actuarial assumptions Tax reserve RM'000 RM'000

2011

Loss ratio -20% (430) (430) Loss ratio +20% 650 650

244 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK

Transactions in financial instruments may result in the Group assuming financial risks. These include credit risk, liquidity risk and market risk. This note presents information about the Group’s exposure to each of the above risks and the Group’s objectives, policies and processes for measuring and managing such risks.

(a) Credit Risk

Credit risk is the risk of financial loss resulting from the failure of counterparties to reinsurance, takaful, retakaful and investment transactions to meet their contractual obligations.

Credit risk includes the following major elements:

(i) Investment credit risk which is the risk of financial loss arising from a change in the value of an investment due to a rating downgrade, default, or widening of credit spreads. Changes in credit spreads are also affected by the liquidity of the stock, but since the liquidity is usually closely related to credit risk, the risk is managed as credit risk;

(ii) Derivative counterparty risk which is the risk of financial loss arising from a derivative counterparty’s default, or the deterioration of the derivative counterparty’s financial position. As at the reporting date, the Group does not transact in derivatives and is not exposed to this risk; and

(iii) Reinsurance/retakaful counterparty risk which is the risk of financial loss arising from a default by the retrocessionaire/retakaful operator, or the deterioration of the solvency position of the retrocessionaire/retakaful operator.

The Group is exposed to investment credit risk on its investment portfolio, primarily from investments in corporate bonds. A creditworthiness assessment for new and existing investments is undertaken by the Group in accordance with the Investment Policy as approved by the Investment Committee. In addition, the credit ratings of the bond portfolio are regularly monitored and any downgrade in credit ratings will be evaluated to determine the required actions. As at the reporting date, the Group's bond portfolio has no material exposure below investment grade.

The Group is exposed to reinsurance/retakaful counterparty risks of three different types:

(i) as a result of recoveries owing from the retrocessionaire/retakaful operators for

(ii) from the advance settlement of premiums/contributions to the reinsurer/retakaful operator; and

(iii) as a result of reserves held by the reinsurer/retakaful operator which would have to be met by the reinsurance/takaful/retakaful subsidiary in the event of default.

Management of credit risk

In order to manage and mitigate credit risk, the following policies and procedures were set in place:

(i) Investment policies prescribe the minimum credit rating for bonds that may be held. In addition, the policies are further aimed at investing in a diverse portfolio of bonds in order to reduce the potential impact that may arise from individual companies defaulting;

(ii) Counterparty limits are set for investments, cash deposits and foreign exchange trade exposure to ensure that there is no concentration of credit risk;

(iii) The Group's investment portfolio is managed to ensure diversification and focuses on high quality investment grade fixed income securities. For the financial year ended 31 March 2011, the average credit quality of the Group's investment portfolio was AAA as determined by Rating Agency Malaysia ("RAM") or Malaysian Rating Corporation Berhad ("MARC"); and

245 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(a) Credit Risk (Contd.)

Management of credit risk (Contd.)

(iv) To mitigate reinsurance/retakaful counterparty risk, the Group will give due consideration to the credit quality of a reinsurer/retakaful operator. To facilitate this process, a list of acceptable reinsurer/retakaful operator based on their rating is maintained within the Group. The Group regularly reviews the financial security of its reinsurers/retakaful operators.

Credit exposure by credit rating

The table below provides information regarding the credit risk exposures of the Group by classiying assets according to the Group's credit ratings of counterparties.

General reinsurance and shareholders' funds Not subject to credit risk RM'000

2011

Financial assets at FVTPL

At fair value:

Quoted shares in Malaysia: Shariah approved equities 2,878 Structured products 12,019 Warrants 15

14,912

Government BBB guaranteed to AAA C to BB Not rated Total RM'000 RM'000 RM'000 RM'000 RM'000 2011

HTM investments

At amortised cost/cost:

Islamic Bank Negara Monetary notes 4,996---4,996 Malaysian government securities 100,414---100,414 Unquoted corporate debt securities: Government guaranteed 65,041---65,041 Secured - 30,074 - 7,645 37,719 Government investment issues 87,653---87,653 Short term commercial papers - 14,534 - - 14,534 Islamic commercial papers - 2,992 - - 2,992 Unquoted islamic private debt securities: Government guaranteed 15,026---15,026 Unsecured - 998 385 - 1,383

273,130 48,598 385 7,645 329,758

246 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(a) Credit Risk (Contd.)

Credit exposure by credit rating (Contd.)

General reinsurance and shareholders' funds (Contd.)

Not Government BBB subject to guaranteed to AAA credit risk Total RM'000 RM'000 RM'000 RM'000 2011 (Contd.)

AFS financial assets

At fair value:

Unquoted corporate debt securities 3,014 568,934 - 571,948 Islamic private debt securities - - - - Unquoted shares in Malaysia - - 46,152 46,152 Golf club memberships - - 228 228 Quoted shares in Malaysia: Shariah approved equities - - 38,383 38,383 Others - - 23,823 23,823 Quoted shares outside Malaysia - - 341 341 Shariah approved unit trust funds - - - - Unquoted Islamic private debt securities: Unsecured - 55,757 - 55,757

3,014 624,691 108,927 736,632

Not BBB subject to to AAA credit risk Not rated Total RM'000 RM'000 RM'000 RM'000

2011 (Contd.)

Loans and receivables

At amortised cost/cost:

Fixed and call deposits with licensed: Commercial banks - 129,776 - 129,776 Investment banks - 431,034 - 431,034 Islamic investment accounts with licensed: Co-operative bank - 81,451 - 81,451 Islamic banks - 127,252 - 127,252 Development bank - 13,472 - 13,472 Building society - 8,269 - 8,269 Institutional trust deposit - 58,595 - 58,595 Islamic repo placements 5,000 - 7,668 12,668 Units held in investment-linked fund - - 10,000 10,000 Staff loans - - 12,618 12,618 Qard: General takaful fund - - 12,043 12,043 General retakaful fund - - 36,295 36,295

247 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(a) Credit Risk (Contd.)

Credit exposure by credit rating (Contd.)

General reinsurance and shareholders' funds (Contd.)

Not BBB subject to to AAA credit risk Not rated Total RM'000 RM'000 RM'000 RM'000

2011 (Contd.)

Loans and receivables (Contd.)

At amortised cost/cost:

Due from: General takaful fund - - 2,739 2,739 Family takaful fund - - 29,110 29,110 Family retakaful fund - - 11,120 11,120 Subsidiaries - - - - Income due and accrued - - 16,213 16,213 Due from insurance Pool accounts - - 19,971 19,971 Other receivables, deposits and prepayments - - 21,952 21,952

- - 907,985 1,034,578

General takaful fund

Government Not subject to guaranteed BBB to AAA C to BB Not Rated credit risk Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2011 (Contd.)

Financial investments at FVTPL Quoted shares in Malaysia: Shariah approved equities - -- - 1,090 1,090 Warrants - -- - 15 15 HTM financial investments Unquoted Islamic private debt securities: Government guaranteed 14,324 -- - - 14,324 Unsecured - - - 2,004 - 2,004 Government investment issues 50,940 -- - - 50,940 AFS financial investments Unquoted Islamic private debt securities: Unsecured - 38,509 - 52,096 - 90,605 Quoted shares in Malaysia: Shariah approved equities - -- - 8,652 8,652 Shariah approved unit trust funds - -- - 5,888 5,888

* Based on public ratings assigned by external rating agencies including Rating Agency Malaysia ("RAM") and Malaysian Rating Corporation ("MARC")

248 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(a) Credit Risk (Contd.) Credit exposure by credit rating (Contd.) General takaful fund (Contd.)

Government Not subject to guaranteed BBB to AAA C to BB Not Rated credit risk Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2011 (Contd.)

Loans and receivables Islamic investment accounts with licensed: Islamic banks - 4,085 - 28,164 - 32,249 Development bank - - - 18,577 - 18,577 Islamic repo placements - 4,978 - 836 - 5,814 Income due and accrued - -- - 2,160 2,160 Other receivables, deposits and prepayments - -- - 1,649 1,649 Cash and bank balances - 47,437 - 74 - 47,511

65,264 105,479 - 124,079 53,805 348,627 Family takaful fund

Financial investments at FVTPL Quoted shares in Malaysia: Shariah approved equities - - - - 1,832 1,832 HTM financial investments Unquoted Islamic private debt securities: Government guaranteed 24,103 - - - - 24,103 Unsecured - 25,043 - - - 25,043 Government investment issues 163,241 - - - - 163,241 AFS financial investments Unquoted Islamic private debt securities: Unsecured - 279,028 - - - 279,028 Quoted shares in Malaysia: Shariah approved equities - - - - 15,988 15,988 Shariah approved unit trust funds - - - 8,585 - 8,585 Loans and receivables Islamic investment accounts with licensed: Islamic banks - 68,564 - 21,442 - 90,006 Investment banks - 1,507 - - - 1,507 Development bank - 40,496 - 18,860 - 59,356 Islamic repo placements - 97,244 - 16,723 - 113,967 Institutional trust fund - - - 18,592 - 8,592 Due from: General takaful fund - - - - 12,967 12,967 Investment-linked fund - - - 3 - 3 Amount due from holding company - - - - 5,247 5,247 Income due and accrued - - - - 199 199 Other receivables, deposits and prepayments - - - - 445 445 Retakaful contract assets - - - 137,383 - 137,383 Takaful contract receivables - 2,648 - 81,170 - 83,818 Cash and bank balances - 62,163 - 754 - 62,917

187,344 576,693 - 303,512 36,678 1,104,227

249 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(a) Credit Risk (Contd.)

Credit exposure by credit rating (Contd.)

The table below provides information regarding the credit risk exposure of the retakaful funds by classifying assets according to the credit ratings of counterparties:

Not Government BBB to subject to Not guaranteed AAA credit risk Rated Total RM '000 RM '000 RM '000 RM '000 RM '000

General retakaful fund

2011

Financial assets at FVTPL Shariah approved equities - - 70 - 70 HTM investments Government investment issues 4,004---4,004 AFS financial assets Unquoted secured corporate debt securities 502 5,867 - - 6,369 Loans and receivables Islamic investment accounts with licensed: Islamic banks - - 10,562 - 10,562 Income due and accrued - - - 188 188 Due from Shareholder's fund - - - 35,568 35,568 Retakaful assets - - - 7,368 7,368 Takaful receivables - 214 - 13,715 13,929 Cash and bank balances - - 14 - 14

4,506 6,081 10,646 56,839 78,072

Family retakaful fund

2011

Financial assets at FVTPL Shariah approved equities - - 35 - 35 HTM investments Unquoted secured corporate debt securities 701---701 Government investment issues 3,007---3,007 AFS financial assets Unquoted secured corporate debt securities 1,507 2,141 - - 3,648 Loans and receivables Islamic investment accounts with licensed: Co-operative bank - - 3,618 - 3,618 Islamic banks - - 4,088 - 4,088 Income due and accrued - - - 118 118 Takaful receivables - - - 920 920 Cash and bank balances - - 181 - 181

5,215 2,141 7,922 1,038 16,316

250 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(a) Credit Risk (Contd.)

Loan

The fair values of loans receivable are equivalent to their carrying value as they are either receivable within 12 months from the date of recognition or are issued at interest rates comparable to those for similar instruments in the market.

Movement of allowance for impairment losses on receivables

General reinsurance and General Family General Family shareholders' takaful takaful retakaful retakaful fund fund fund fund fund RM'000 RM'000 RM'000 RM'000 RM'000

2011

At beginning of year 5,984 11,109 246 1,209 - Charge for the year 52 - 636 336 22 Recoveries - (3,054) - - - Written-off (216) - - - -

At end of year 5,820 8,055 882 1,545 22

(b) Liquidity Risk

Liquidity risk is the risk that the Group will not have available sufficient cash resources to meet its payment obligations without incurring material additional costs.

The Group assesses its liquidity risk by ensuring the following:

(i) the Group is able to meet its payment obligations under normal and stressed operating environments without suffering any loss;

(ii) additions/withdrawals from the Group’s investment funds are managed efficiently;

(iii) appropriate measures are in place to respond to liquidity risk.

As part of its liquidity management strategy, the Group has in place a framework capable of measuring and reporting on:

(i) daily cash flows;

(ii) minimum liquidity holdings;

(iii) cash flow forecasts covering a minimum period of 2 months and up to a maximum of 1 year;

(iv) the composition and market values of company’s investment portfolios, including liquid holdings; and

(v) the holding of liquid assets in the respective reinsurance, takaful and retakaful funds.

In order to manage the liquidity of the reinsurance/takaful/retakaful funds, the investment mandate requires that a certain proportion of the fund is maintained as liquid assets. Accordingly, the Group is required to maintain a minimum holding of low risk assets of 10% and no maximum limit on its placements in fixed and call deposits.

251 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(b) Liquidity Risk (Contd.)

Maturity Profiles

The table below summarises the maturity profile of the financial assets and liabilities of the Group based on remaining undiscounted contractual obligations, including interest payable and receivable.

For insurance contracts/takaful and retakaful contracts liabilities and reinsurance/retakaful contract assets, maturity profiles are determined based on estimated timing of net cash outflows from the recognised insurance/takaful liabilities.

Unearned premiums/contributions and the reinsurers'/retakaful operator's share of unearned premiums/contributions have been excluded from the analysis as they are not contractual obligations.

The table below summarise the maturity profile of the Group's and the Company's assets and liabilities at the reporting date based on undiscounted contractual cashflows:

General reinsurance and shareholders' funds

Carrying Up to 1 - 5 Over No maturity value 1 year years 5 years date Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

2011

(a) Financial assets at FVTPL

At fair value:

Quoted shares in Malaysia: Shariah approved equities 2,878 - - - 2,878 2,878 Structured products 12,019 - 12,019 - - 12,019 Warrants 15 - - - 15 15

14,912 - 12,019 - 2,893 14,912

(b) HTM investments

At amortised cost/cost:

Islamic Bank Negara Monetary notes 4,996 5,000 - - - 5,000 Malaysian government securities 100,414 59,286 45,968 - - 105,254 Unquoted corporate debt securities: Government guaranteed 65,041 22,319 44,849 5,193 - 72,361 Secured 37,719 12,245 29,006 - - 41,251 Government investment issues 87,653 7,822 42,829 57,462 - 108,113 Short term commercial papers 14,534 15,001 - - - 15,001 Islamic commercial papers 2,992 3,001 - - - 3,001 Unquoted islamic private debt securities: Government guaranteed 15,026 612 3,054 15,550 - 19,216 Unsecured 1,383 1,000 - 383 - 1,383

329,758 126,286 165,706 78,588 - 370,580

252 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(b) Liquidity Risk (Contd.)

Maturity profiles (Contd.)

Carrying Up to 1 - 5 Over No maturity value 1 year years 5 years date Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

(c) AFS financial assets

At fair value:

Unquoted corporate debt securities 571,948 82,753 405,041 191,980 - 679,774 Islamic private debt securities ------Unquoted shares in Malaysia 46,152 - - - 46,152 46,152 Golf club memberships 228 - - - 228 228 Quoted shares in Malaysia: Shariah approved equities 38,383 - - - 38,383 38,383 Others 23,823 - - - 23,823 23,823 Quoted shares outside Malaysia 341 - - - 341 341 Shariah approved unit trust funds ------Unquoted Islamic private debt securities: Unsecured 55,757 7,507 33,212 27,856 - 68,575

736,632 90,260 438,253 219,836 108,927 857,276

(d) Loans and receivables

At amortised cost/cost:

Fixed and call deposits with licensed: Commercial banks 129,776 130,109 - - - 130,109 Investment banks 431,034 432,692 - - - 432,692 Islamic investment accounts with licensed: Co-operative bank 81,451 81,915 - - - 81,915 Islamic banks 127,252 127,733 - - - 127,733 Investment banks ------Development bank 13,472 13,472 - - - 13,472 Building society 8,269 8,269 - - - 8,269 Institutional trust deposi 58,595 2,607 57,068 - 6,592 66,267 Islamic repo placements 12,668 12,668 - - - 12,668 Units held in investment-linked fund 10,000 - - - 10,000 10,000 Staff loans 12,618 3,281 9,337 - - 12,618 Qard: General takaful fund 12,043 - - - 12,043 12,043 General retakaful fund 36,295 - - 36,295 - 36,295

253 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(b) Liquidity Risk (Contd.)

Maturity Profiles (Contd.)

Carrying Up to 1 - 5 Over No maturity value 1 year years 5 years date Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

(d) Loans and receivables (Contd.)

At amortised cost/cost:

Due from: General takaful fund 2,739 - - - 2,739 2,739 Family takaful fund 29,110 - - - 29,109 29,109 Family retakaful fund 11,120 1,118 - - 10,002 11,120 Income due and accrued 16,213 15,191 - - 1,022 16,213 Due from insurance Pool accounts 19,971 - 19,971 - 19,971 Other receivables, deposits and prepayments 21,952 16,593 - - 5,359 21,952

1,034,578 845,648 86,376 36,295 76,866 1,045,185

Carrying Up to 1 - 5 Over No maturity value 1 year years 5 years date Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Company

HTM investment Unquoted, secured corporate debt securities 6,967 130 7,011 - - 7,141 AFS financial assets Unquoted shares in Malaysia 1,649 - - - 1,649 1,649 Quoted shares in Malaysia 903 - - - 903 903 Golf club memberships 50 - - - 50 50 Loans and receivables Fixed and call deposits with: Commercial banks 3,069 3,069 - - - 3,069 Investment banks 1,000 1,000 - - - 1,000 Islamic investment accounts with licensed Islamic banks 3,813 3,813 - - - 3,813 Secured staff loans 2,334 2,334 - - - 2,334 Due from subsidiaries 459 459 - - - 459 Income due and accrued 26 26 - - - 26 Other receivables and deposits 58 58 - - - 58

Total assets 20,328 10,889 7,011 - 2,602 20,502

Islamic medium term notes 200,000 9,500 209,500 - - 219,000 Other payables 13,926 13,926 - - - 13,926

Total liabilities 213,926 23,426 209,500 - - 232,926

254 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(b) Liquidity Risk (Contd.)

Maturity Profiles (Contd.)

General takaful fund

Carrying Up to Over 1-5 Over 5 No value 1 year years years maturity Total RM' 000 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000

2011

(a) Financial assets at FVTPL

At fair value:

Quoted shares in Malaysia: Shariah approved equities 1,090 - - - 1,090 1,090 Warrants 15 - - - 15 15

1,105 - - - 1,105 1,105

(b) HTM investments

At amortised cost/cost:

Unquoted Islamic private debt securities: Government guaranteed 14,324 584 2,912 14,825 - 18,321 Unsecured 2,004 97 2,106 - - 2,203 Government investment issues 50,940 3,990 20,669 41,146 - 65,805

67,268 4,671 25,687 55,971 - 86,329

(c) AFS financial assets

At fair value:

Unquoted Islamic private debt securities: Unsecured 90,605 6,156 78,557 23,756 - 108,469 Quoted shares in Malaysia: Shariah approved equities 8,652 - - - 8,652 8,652 Shariah approved unit trust funds 5,888 - - - 5,888 5,888

105,145 6,156 78,557 23,756 14,540 123,009

255 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(b) Liquidity Risk (Contd.)

Maturity Profiles (Contd.)

General takaful fund (Contd.)

Carrying Up to Over 1-5 Over 5 No value 1 year years years maturity Total RM' 000 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000

2011

(d) Loans and receivables

At amortised cost/cost:

Islamic investment accounts with licensed: Islamic banks 32,249 32,249 - - - 32,249 Development bank 18,577 18,577 - - - 18,577 Islamic repo placements 5,814 5,814 - - - 5,814 Income due and accrued 2,160 - - - 2,160 2,160 Other receivables, deposits and prepayments 1,649 - - - 1,649 1,649 Retakaful contract assets 34,351 1,710 111 120 32,410 34,351 Takaful contract receivables 32,798 21,300 3,868 7,630 - 32,798 Cash and bank balances 47,511 - - - 47,511 47,511

Total Assets 175,109 79,650 3,979 7,750 83,730 175,109

Takaful contract liabilities 291,733 - 1,610 18,406 193,112 213,128 Takaful contract payables 7,932 - - - 7,932 7,932 Other payables 39,475 - - - 39,475 39,475

Total Liabilities 339,140 - 1,610 18,406 240,519 260,535

Family takaful fund

2011

(a) Financial assets at FVTPL

At fair value:

Quoted shares in Malaysia: Shariah approved equities 1,832 - - - 1,832 1,832

1,832 - - - 1,832 1,832

256 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(b) Liquidity Risk (Contd.)

Maturity Profiles (Contd.)

Family takaful fund (Contd.)

Carrying Up to Over 1-5 Over 5 No value 1 year years years maturity Total RM' 000 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000

2011

(b) HTM investments

At amortised cost/cost:

Unquoted Islamic private debt securities: Government guaranteed 24,103 805 13,430 15,550 - 29,785 Unsecured 25,043 12,814 9,721 5,387 - 27,922 Government investment issues 163,241 45,431 63,357 88,323 - 197,111

212,387 59,050 86,508 109,260 - 254,818

(c) AFS financial assets

At fair value:

Unquoted Islamic private debt securities: Unsecured 279,028 12,917 162,630 194,998 - 370,545 Quoted shares in Malaysia: Shariah approved equities 15,988 - - - 15,988 15,988 Shariah approved unit trust funds 8,585 - - - 8,585 8,585

303,601 12,917 162,630 194,998 24,573 395,118

257 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(b) Liquidity Risk (Contd.)

Maturity Profiles (Contd.)

Family takaful fund (Contd.)

Carrying Up to Over 1-5 Over 5 No value 1 year years years maturity Total RM' 000 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000

2011

(d) Loans and receivables

At amortised cost/cost:

Islamic investment accounts with licensed: Islamic banks 90,006 86,458 3,548 - - 90,006 Investment banks 1,507 1,507 - - - 1,507 Development bank 59,356 59,082 274 - - 59,356 Islamic repo placements 113,967 113,967 - - - 113,967 Institutional trust fund 18,592 - - - 18,592 18,592 Due from: - General takaful fund 12,967 - - - 12,967 12,967 Investment-linked fund 3 - - - 3 3 Amount due from holding company 5,247 - - - 5,247 5,247 Income due and accrued 199 - - - 199 199 Other receivables, deposits and prepayments 445 - - - 445 445 Retakaful contract assets 137,383 - - 563 136,820 137,383 Takaful contract receivables 83,818 76,801 7,017 - - 83,818 Cash and bank balances 62,917 - - - 62,917 62,917

Total Assets 586,407 337,815 10,839 563 237,190 586,407

Takaful contract liabilities 1,104,189 4,434 21,617 806,445 271,693 1,104,189 Takaful contract payables 34,406 - - - 34,406 34,406 Other payables 65,754 - - - 65,754 65,754

Total Liabilities 1,204,349 4,434 21,617 806,445 371,853 1,204,349

258 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(b) Liquidity Risk (Contd.)

Maturity profiles

Carrying Up to Over 1-5 Over No maturity value 1 year years 5 years date Total RM' 000 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000

General retakaful fund

2011

Financial assets at FVTPL Shariah approved equities 70 - - - 70 70 HTM investments Government investment issues 4,004 172 857 4,554 - 5,583 AFS financial assets Unquoted secured corporate debt securities 6,369 296 6,437 1,215 - 7,948 Loans and receivables Islamic investment accounts with licensed Islamic banks 10,562 10,583 - - - 10,583 Income due and accrued 188 188 - - - 188 Due from Shareholder's fund 34,343 - - - 34,343 34,343 Retakaful assets 7,368 - - - 7,368 7,368 Takaful receivables 13,929 13,929 - - - 13,929 Cash and bank balances 14 14 - - - 14

Total Assets 76,847 25,182 7,294 5,769 41,781 80,026

Takaful contract liabilities 73,510 73,510 - - - 73,510 Takaful payables 3,250 2,818 432 - - 3,250 Other payables ------

Total Liabilities 76,760 76,328 432 - - 76,760

259 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(b) Liquidity Risk (Contd.)

Maturity profiles

Carrying Up to Over 1-5 Over No maturity value 1 year years 5 years date Total RM' 000 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000

Family retakaful fund

2011

Financial assets at FVTPL Shariah approved equities 35 - - - 35 35 HTM investments Unquoted secured corporate debt securities 701 28 142 727 - 897 Government investment issues 3,007 93 3,010 - - 3,103 AFS financial assets Unquoted secured corporate debt securities 3,648 165 3,670 788 - 4,623 Loans and receivables Islamic investment accounts with licensed: Co-operative bank 3,618 3,627 - - - 3,627 Islamic banks 4,088 4,092 - - - 4,092 Income due and accrued 118 118 - - - 118 Retakaful assets 7,368 7,368 - - - 7,368 Takaful receivables 920 920 - - - 920 Cash and bank balances 181 181 - - - 181

Total Assets 23,684 16,592 6,822 1,515 35 24,964

Other financial liabilities 9 - - - 9 9 Takaful payables 2,007 - - - 2,007 2,007 Other payables 11,120 11,120 - - - 11,120

Total Liabilities 13,136 11,120 - - 2,016 13,136

(c) Market Risk

Market risk is the risk of loss arising from a change in the values of, or the income from, assets. A risk of loss also arises from volatility in asset prices, interest / profit rates, or exchange rates. Market risk includes the following elements:

(i) Equity price risk which is the risk of fluctuations in the fair value or future cash flows of a financial instrument arising from stock market dynamics impacting equity prices;

(ii) Foreign exchange risk which is the risk of fluctuations in the fair value or future cash flows of a financial instrument arising from a movement of or volatility in exchange rates; and

(iii) Interest/profit rate risk which is the risk of fluctuations in the fair value or future cash flows of a financial instrument arising from variability in interest/profit rates.

260 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(c) Market Risk (Contd.)

Equity risk

Equity price risk is the risk that the fair value of future cash flows of a financial instrument fluctuates because of changes in market prices (other than those arising from interest rate/profit yield risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer or factors affecting similar financial instruments traded in the market.

The Group's equity risk exposures relates to financial assets and financial liabilities whose values will fluctuate as a result of changes in market prices.

The Group's price risk policy requires it to manage such risks by setting and monitoring objectives and constraints on investments, diversification plans, limits on investments in each country, sector, market and issuer, having regard also to such limits as stipulated by BNM for its reinsurance, takaful and retakaful subsidiaries. The Group complied with such limits as stipulated by BNM during the financial year and has no significant concentration of price risk.

The analysis below is performed for reasonably possible movements in key variables with all other variables held constant, showing the impact on profit before tax and equity (inclusive of the impact on other comprehensive income). The correlation of variables have a significant effect in determining the ultimate impact on price risk, but to demonstrate the impact due to changes in variables, changes in variables are considered individually. It should be noted that movements in these variables are non-linear.

Sensitivity analysis

Group Impact on Profit/ Changes in Surplus Impact on market before Equity/ indices Tax Funds RM'000 RM'000

2011

General reinsurance and shareholders' funds Bursa Malaysia +5% 777 4,330 Bursa Malaysia -5% (777) (4,330)

General takaful fund Bursa Malaysia +5% 153 641 Bursa Malaysia -5% (153) (641)

Family takaful fund Bursa Malaysia +5% 260 1,004 Bursa Malaysia -5% (260) (1,004)

General retakaful fund Bursa Malaysia +5% 4 37 Bursa Malaysia -5% (4) (37)

Family retakaful fund Bursa Malaysia +5% 3 34 Bursa Malaysia -5% (3) (34)

261 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(c) Market Risk (Contd.)

Foreign exchange risk/currency risk

Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to volatility in foreign exchange rates.

As the Group’s business is conducted primarily in Malaysia, the Group’s functional and presentation currency is Malaysian Ringgit. The Group's main foreign exchange risk from recognised assets and liabilities are resulting from reinsurance and retakaful transactions of the reinsurance and retakaful subsidiaries. These balances are expected to be settled and realised on net basis within 12 months; accordingly the impact arising from sensitivity in foreign exchange rates is deemed to be minimal.

Interest/Profit rate risk

The Group is exposed to fair value interest/profit rate risk where changes to interest/profit rates result in changes to fair values rather than cash flows on assets such as fixed interest income assets. Conversely, floating rate loans expose the Group to cash flow interest/profit rate risk.

The earnings of the Group are affected by changes in market interest/profit rates due to the impact such changes have on interest/profit income from cash and cash equivalents, including investments in fixed/Islamic deposits. In addition, changes in market interest/profit rates will have an inverse relationship on the value of the Group's and the Company's fixed income portfolio.

The Group manages its interest/profit rate risk by matching, where possible, the duration and profile of assets and liabilities to minimise the impact of mismatches between the value of assets and liabilities from interest/profit rate movements.

The nature of the Group's exposure to interest/profit rate risk and its objectives, policies and processes for managing interest/profit rate risk have not changed significantly from the previous financial year.

The following tables set out the carrying amount, by maturity, of the Group’s financial instruments that are exposed to interest/profit rate risk.

Sensitivity analysis

A change of 25 basis points ("bp") in interest/profit rates at the reporting date would have increased/(decreased) the value of the portfolio of fixed-income investment by the amounts shown below.

262 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

43. FINANCIAL RISK (CONTD.)

(c) Market Risk (Contd.)

Interest/Profit rate risk (Contd.)

Impact on Changes in Equity/ variable Funds RM'000

2011

General reinsurance and shareholders' funds Interest/profit rates +25 bp (7,008) Interest/profit rates -25 bp 6,262

General takaful fund Interest/profit rates +25 bp (912) Interest/profit rates -25 bp 928

Family takaful fund Interest/profit rates +25 bp (4,049) Interest/profit rates -25 bp 4,146

General retakaful fund Interest/profit rates +25 bp (94) Interest/profit rates -25 bp 68

Family retakaful fund Interest/profit rates +25 bp (42) Interest/profit rates -25 bp 41

44. OTHER RISKS

Property Risk

Property risk is the risk associated with the Group’s investment in property or real estate for own occupancy, investment or rental purpose. The Operational Risk of the Group’s Property is controlled by having detailed operation manual. The manual describes the responsibilities in relation to management of the properties to maintain quality and satisfied tenants.

The financial risk of declining tenant’s are managed through careful selection of properties, having quality tenants with long term tenancies and continuously maintaining and upgrading facilities.

The Group has no significant exposure of property risk.

Operational Risk

Operational Risk is the risk of loss arising from system failure, human error, fraud or external events. When controls fail to perform, operational risks can cause damage to reputation, have legal or regulatory implications or can lead to financial loss. The Group cannot expect to eliminate all operational risks, but by initiating a rigorous control framework and by monitoring and responding to potential risks, the Group is able to manage risks. Controls include effective segregation of duties, access controls, authorisation and reconciliation procedures, staff education and assessment processes, including the use of internal audit. Business risks such as changes in environment, technology and the industry are monitored through the Group's strategic planning and budgeting process.

263 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

44. OTHER RISKS (CONTD.)

Shariah Non-Compliance Risk

Shariah Non-Compliance risk refers to possible failure to meet the obligation of Shariah principles. When controls fail to perform, Shariah non-compliance risk can cause reputational and operational damage, have regulatory implications or can even lead to financial loss and finally, impediment from Allah’s barakah or blessing. The takaful and retakaful subsidiaries expect to mitigate such risk by intitiating, monitoring and responding to robust Shariah control framework. Controls include effective oversight of the Shariah Committee, supported by internal Shariah Compliance Department in all aspects of the takaful and retakaful subsidiaries' operations. Other relevant controls include staff awareness training and internal operating guidelines, including the use of internal and external Shariah audit.

Compliance Risk

Compliance risk is the risk arising from violations of, or non conformance with business principles, internal policies and procedures, related laws, rules and regulations governing the Group's products, services and activities.

Consequently, the exposure to this risk can damage the Group's reputation, lead to legal or regulatory sanctions and/or financial loss.

The Group has established a Compliance Department at the Group and subsidiary level to oversee and monitor all compliance aspects in observing regulatory requirements. In this respect, it has developed internal policies and procedures to ensure compliance with all applicable laws and guidelines issued by the regulatory authorities.

264 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

45. TAKAFUL AND RETAKAFUL FUNDS

GENERAL TAKAFUL INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2011

Note 2011 2010 RM'000 RM'000 (Restated)

Operating revenue 3 232,756 223,383

Gross earned contribution 4(a) 210,526 216,319 Earned contribution ceded to retakaful operators 4(b) (32,549) (25,247)

Net earned contribution 177,977 191,072

Investment income 5 8,560 5,764 Realised gains and losses 6 2,706 308 Fair value gains and losses 7 (19) 588 Fee and commission income 8 3,938 4,505

Other revenue 15,185 11,165

Gross claims paid (104,436) (87,591) Claims ceded to retakaful operators 6,995 9,360 Gross change to contract liabilities (48,224) (40,625) Change in contract liabilities ceded to retakaful operators 13,248 (3,605)

Net claims (132,417) (122,461)

Fee expenses 8 (56,157) (64,026) Other operating income / (expenses) 1,284 (2,969)

Other expenses (54,873) (66,995)

Surplus before taxation 5,872 12,781

Taxation 12(b) (1,427) (2,511)

Net surplus for the year 4,445 10,270

265 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

45. TAKAFUL AND RETAKAFUL FUNDS (CONTD.)

GENERAL TAKAFUL STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2011

2011 2010 RM'000 RM'000

Net surplus for the year 4,445 10,270

Other comprehensive income:

AFS financial assets: Net gains on fair value changes 2,287 2,152 Deferred tax on fair value changes 36 (480) Realised gain transferred to income statement (2,467) (230)

Total comprehensive income for the year 4,301 11,712

266 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

45. TAKAFUL AND RETAKAFUL FUNDS (CONTD.)

GENERAL TAKAFUL STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2011

Note 2011 2010 1 April 2009 RM'000 RM'000 RM'000 (Restated) (Restated)

Assets Financial assets: Financial assets at FVTPL 20(a) 1,105 1,529 329 HTM investments 20(b) 67,268 40,725 32,456 AFS financial assets 20(c) 105,145 52,891 21,293 Loans and receivables 20(d) 60,449 121,481 93,170 Retakaful contract assets 21(b) 34,351 29,669 30,842 Takaful contract receivables 22 32,798 36,156 17,319 Deferred tax 17 1,570 2,341 3,316 Cash and bank balances 47,511 226 4,698

Total general takaful assets 350,197 285,018 203,423

Liabilities Takaful contract liabilities 21(b) 291,733 228,254 184,563 Takaful contract payables 24 7,932 5,641 4,786 Tax payable 565 2,016 9 Other payables 26 39,474 42,914 12,143

Total general takaful liabilities 339,704 278,825 201,501

General takaful fund 10,493 6,193 1,922

Total general takaful liabilities and participants' fund 350,197 285,018 203,423

267 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

45. TAKAFUL AND RETAKAFUL FUNDS (CONTD.)

FAMILY TAKAFUL INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2011

Note 2011 2010 RM'000 RM'000 (Restated)

Operating revenue 569,270 419,835

Gross contribution 486,530 357,610 Contribution ceded to retakaful operators (44,244) 8,807

Net contribution 442,286 366,417

Investment income 5 31,121 20,220 Realised gains and losses 6 8,073 2,024 Fair value gains and losses 7 (7,429) 27,541 Fee and commission income 8 - 63

Other revenue 31,765 49,848

Gross benefits paid (117,700) (92,780) Benefits ceded to retakaful operators 25,303 14,049 Gross change to contract liabilities (3,655) (11,607) Change in contract liabilities ceded to retakaful operators 16,540 3,246

Net claims (79,512) (87,092)

Fee expenses 8 (149,726) (125,339) Other operating expenses (3,465) (5,013)

Other expenses (153,191) (130,352)

Surplus before taxation 241,348 198,821

Taxation 12(c) (2,983) (2,622)

Net surplus for the year 238,365 196,199

268 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

45. TAKAFUL AND RETAKAFUL FUNDS (CONTD.)

FAMILY TAKAFUL STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2011

Note 2011 2010 RM'000 RM'000

Net surplus for the year 238,365 196,199

Other comprehensive income:

AFS financial assets: Net gains on fair value changes 9,482 3,927 Deferred tax on fair value changes (175) (272) Realised gain transferred to income statement (7,458) (523)

Total comprehensive income for the year 240,214 199,331

269 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

45. TAKAFUL AND RETAKAFUL FUNDS (CONTD.)

FAMILY TAKAFUL STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2011

Note 2011 2010 1 April 2009 RM'000 RM'000 RM'000 (Restated) (Restated)

Assets Investment properties 14 103,518 110,000 69,966 Financial assets: Financial assets at FVTPL 20(a) 1,832 17,923 17,090 HTM investments 20(b) 212,387 205,796 133,123 AFS financial assets 20(c) 303,601 205,062 143,185 Loans and receivables 20(d) 302,289 221,201 192,668 Retakaful contract assets 21(c) 137,383 105,811 133,313 Takaful contract receivables 22 83,818 38,761 30,467 Cash and bank balances 62,916 2,832 8,559 Investment-linked business assets 93,092 43,391 6,663

Total family takaful assets 1,300,836 950,777 735,034

Liabilities Takaful contracts liabilities 21(c) 1,001,840 802,900 641,328 Takaful payables 24 34,406 19,464 13,104 Tax payable 1,260 1,046 205 Deferred tax 17 2,135 2,304 - Other payables 26 65,754 38,485 49,079 Investment-linked business liabilities 2,865 673 399

Total family takaful liabilities 1,108,260 864,872 704,115

Participants' Fund Family takaful fund 102,349 43,187 24,655 Investment-linked fund 90,227 42,718 6,264

192,576 85,905 30,919

Total family takaful liabilities and participants' fund 1,300,836 950,777 735,034

270 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

45. TAKAFUL AND RETAKAFUL FUNDS (CONTD.)

GENERAL RETAKAFUL INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2011

Note 2011 2010 RM'000 RM'000

Operating revenue 3 44,533 37,712

Gross earned contribution 4(a) 39,569 31,624 Contribution ceded to retakaful operators 4(b) (8,958) (9,722)

Net earned contribution 30,611 21,902

Investment income 5 761 427 Realised gains and losses 6 124 - Fair value gains and losses 7 1 - Fee and commission income 8 977 2,054 Other operating revenue 94

Other revenue 1,872 2,485

Gross claims paid (12,636) (13,788) Claims ceded to reinsurers 859 2,390 Gross change to contract liabilities (12,328) (14,670) Change in contract liabilities ceded to reinsurers (1,935) (579)

Net claims (26,040) (26,647)

Fee and commission expense 8 (19,806) (17,584) Other operating expenses (1,006) (1,248)

Other expenses (20,812) (18,832)

Surplus before taxation (14,369) (21,092) Taxation 12(d) - -

Net surplus for the year (14,369) (21,092)

271 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

45. TAKAFUL AND RETAKAFUL FUNDS (CONTD.)

GENERAL RETAKAFUL STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2011

2011 2010 RM'000 RM'000

Net surplus for the year (14,369) (21,092)

Other comprehensive income:

AFS financial assets: (Loss)/gain on fair value changes (35) 16 Realised gain transferred to income statement 113 - Deferred tax relating to components of other comprehensive income (19) (4)

Total comprehensive income for the year (14,310) (21,080)

272 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

45. TAKAFUL AND RETAKAFUL FUNDS (CONTD.)

GENERAL RETAKAFUL STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2011

Note 2011 2010 1 April 2009 RM'000 RM'000 RM'000 (Restated) (Restated)

Assets

Financial assets: Financial assets at FVTPL 20(a) 70 - - HTM investments 20(b) 4,004 4,995 5,001 AFS financial assets 20(c) 6,369 1,297 - Loans and receivables 20(d) 45,093 38,845 19,566 Retakaful assets 21(d) 7,368 11,363 11,817 Takaful receivables 22 13,929 7,474 3,933 Tax recoverable 6-- Cash and bank balances 14 134 101

Total general retakaful fund assets 76,853 64,108 40,418

Liabilities

Deferred tax 17 23 4 - Takaful contract liabilities 21(d) 73,510 56,979 36,648 Takaful payables 25 3,250 5,480 3,064

Total general retakaful fund liabilities 76,783 62,463 39,712

General retakaful fund 31 70 1,645 706

Total liabilities and general retakaful fund 76,853 64,108 40,418

273 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

45. TAKAFUL AND RETAKAFUL FUNDS (CONTD.)

FAMILY RETAKAFUL INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2011

Note 2011 2010 RM'000 RM'000

Operating revenue 3 13,343 8,330

Gross earned contribution 12,897 8,074 Contribution ceded to retakaful operators (4,163) (3,884)

Net earned contribution 8,734 4,190

Investment income 5 446 256 Realised gains and losses 6 123 - Fair value gains and losses 7 1 - Fee and commission income 8 103 - Other operating revenue 15 -

Other revenue 688 256

Gross benefits paid (11,036) (5,366) Claims ceded to reinsurers 4,263 3,011 Gross change to contract liabilities (716) (1,438) Change in contract liabilities ceded to reinsurers (5) 630

Net claims (7,494) (3,163)

Fee and commission expense 8 (1,533) (742) Other operating expenses (21) (1)

Other expenses (1,554) (743)

Surplus before taxation 374 540 Taxation 12(e) - -

Net surplus for the year 374 540

274 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

45. TAKAFUL AND RETAKAFUL FUNDS (CONTD.)

FAMILY RETAKAFUL STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2011

2011 2010 RM'000 RM'000

Net surplus for the year 374 540

Other comprehensive income:

AFS financial assets: (Loss)/gain on fair value changes (92) 16 Realised gain transferred to income statement 114 - Deferred tax relating to components of other comprehensive income (5) (4)

Total comprehensive income for the year 391 552

275 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

45. TAKAFUL AND RETAKAFUL FUNDS (CONTD.)

FAMILY RETAKAFUL STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2011

Note 2011 2010 1 April 2009 RM'000 RM'000 RM'000 (Restated) (Restated)

Assets

Financial assets: Financial assets at FVTPL 20(a) 35 - - HTM investments 20(b) 3,708 3,014 2,000 AFS financial assets 20(c) 3,648 797 - Loans and receivables 20(d) 7,824 8,834 8,562 Takaful receivables 22 920 1,174 296 Tax recoverable 4-- Cash and bank balances 181 9 2

Total family retakaful fund assets 16,320 13,828 10,860

Liabilities

Deferred tax liabilities 17 9 4 - Takaful contract liabilities 21 1,838 1,117 309 Takaful payables 24 2,007 895 53 Other payables 26 11,120 10,857 10,095

Total family retakaful fund liabilities 14,974 12,873 10,457

Family retakaful fund 32 1,346 955 403

Total liabilities and family retakaful fund 16,320 13,828 10,860

276 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2011

46. SUPPLEMENTARY INFORMATION - BREAKDOWN OF RETAINED PROFITS INTO REALISED AND UNREALISED PROFITS OR LOSSES

The breakdown of the retained profits of the Group and of the Company as at 31 March 2011 into realised and unrealised profits or losses is presented in accordance with the directives issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and 20 December 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Group Company 2011 2011 RM'000 RM'000

Realised and unrealised profits/(losses) of the Company and its subsidiaries: - Realised 634,986 295,893 - Unrealised 13,098 3,098

648,084 298,991

Share of retained profits from associated Company: - Realised 18,067 - - Unrealised 6,741 -

672,892 298,991 Less: Consolidation adjustments (21,745) -

Total retained profits 651,147 298,991

277 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

ADDITIONAL COMPLIANCE INFORMATION

The information set out below is disclosed in compliance with the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities):

(1) Utilisations of proceeds raised from corporate proposal

There were no proceeds raised from corporate proposals during the financial year ended 31 March 2011.

(2) Share buy-back

There was no proposal by the Company to carry out a share buy-back during the financial year ended 31 March 2011.

(3) Options or convertible securities

No options or convertible securities were issued by the Company during the financial year ended 31 March 2011 and there are no options or convertible securities outstanding and exercisable at the end of the financial year ended 31 March 2011.

(4) Depository receipt programme

The Company did not sponsor any depository receipt programme during the financial year ended 31 March 2011.

(5) Sanctions and/or penalties

There was no sanction and/or penalty imposed on the Company and its subsidiary companies, directors or management by the relevant regulatory bodies during the financial year ended 31 March 2011.

(6) Non-audit fees

The amount of non-audit fees paid to external auditors by the Group and the Company for the financial year ended 31 March 2011 amounted to RM68,000 and RM3,000 respectively.

(7) Variation in results

There were no significant variations between the audited results for the financial year ended 31 March 2011 and the unaudited results previously announced.

There were no profit estimate, forecast or projection issued by the Company and its subsidiary companies during the financial year ended 31 March 2011.

(8) Profit guarantee

There was no profit guarantee given by the Company and its subsidiary companies during the financial year ended 31 March 2011.

(9) Material contracts

There were no material contracts entered into by the Company and its subsidiary companies involving directors’ and major shareholders’ interests, which subsisted at the end of the financial year ended 31 March 2011 or, if not then subsisting, entered into since the end of the previous financial year.

(10) Revaluation policy

The revaluation policy on landed properties classified as Investment Properties are as disclosed in Note 2.14 to the financial statements.

(11) Recurrent related party transaction of revenue or trading nature

MNRB did not seek any mandate from its shareholders under Paragraph 10.09(2)(b), Part E of Chapter 10 of the Listing Requirements of Bursa Securities as the recurrent related party transactions of a revenue or trading nature entered into by the MNRB Group qualified as exempted transactions as defined under Paragraph 10.08(11)(e), Part E of Chapter 10 of the Listing Requirements of Bursa Securities.

278 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

ANALYSIS OF SHAREHOLDINGS AS AT 22 JULY 2011

Share Capital

Authorised capital : 500,000,000 ordinary shares Issued and fully paid-up : 213,069,500 ordinary shares of RM1.00 each No. of shareholders : 4,502 Class of shares : RM1.00 ordinary shares Voting right : 1 vote per ordinary share

ANALYSIS BY SIZE OF SHAREHOLDINGS AS AT 22 JULY 2011

Share Capital No. of Holders Percentage of No. of Shares Percentage of Size of Shareholdings Shareholders Shareholders Share Capital (%) (%) less than 100 86 1.91 1,213 0.00 100 to 1,000 1,743 38.71 1,632,221 0.76 1,001 to 10,000 2,011 44.67 8,433,411 3.96 10,001 to 100,000 568 12.62 16,896,200 7.93 100,001 to less than 5% of issued shares 90 2.00 29,783,155 13.98 5% and above of issued shares 4 0.09 156,323,300 73.37

TOTAL 4,502 100.00 213,069,500 100.00

LIST OF SUBSTANTIAL SHAREHOLDERS (5% AND ABOVE) AS AT 22 JULY 2011

Names Shareholdings Percentage (%)

1. AMANAHRAYA TRUSTEES BERHAD 104,571,500 49.08 < SKIM AMANAH SAHAM BUMIPUTERA >

2. PERMODALAN NASIONAL BERHAD 24,926,300 11.70

3. AMANAHRAYA TRUSTEES BERHAD 14,348,600 6.73 < AMANAH SAHAM MALAYSIA >

4. AMANAHRAYA TRUSTEES BERHAD 12,476,900 5.86

279 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

ANALYSIS OF SHAREHOLDINGS AS AT 22 JULY 2011

LIST OF THIRTY (30) LARGEST SHAREHOLDERS AS AT 22 JULY 2011

Names Shareholdings Percentage (%)

1 AMANAHRAYA TRUSTEES BERHAD 104,571,500 49.08

2 PERMODALAN NASIONAL BERHAD 24,926,300 11.70

3 AMANAHRAYA TRUSTEES BERHAD 14,348,600 6.73

4 AMANAHRAYA TRUSTEES BERHAD 12,476,900 5.86

5 AMANAHRAYA TRUSTEES BERHAD 2,250,000 1.06

6 JOHAN ENTERPRISE SDN BHD 2,230,000 1.05

7 HONG LEONG ASSURANCE BERHAD 1,992,149 0.93

8 MALAYSIAN ASSURANCE ALLIANCE BERHAD 1,805,800 0.85

9 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 1,250,000 0.59

10 CITIGROUP NOMINEES (ASING) SDN BHD 1,150,800 0.54

11 MAYBAN NOMINEES (TEMPATAN) SDN BHD 950,000 0.45 ETIQA INSURANCE BERHAD (GENERAL FUND)

12 NEOH CHOO EE & COMPANY, SDN. BERHAD 750,000 0.35

13 SIVA KUMAR A/L M JEYAPALAN 690,500 0.32

14 GAN CHUN HUI 684,500 0.32

15 AMANAHRAYA TRUSTEES BERHAD 655,500 0.31

280 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

ANALYSIS OF SHAREHOLDINGS AS AT 22 JULY 2011

LIST OF THIRTY (30) LARGEST SHAREHOLDERS AS AT 22 JULY 2011 (CONTD.)

Names Shareholdings Percentage (%)

16 HONG LEONG ASSURANCE BERHAD 550,000 0.26 AS BENEFICIAL OWNER (LIFE PAR)

17 YUET KAM ALICE LIN 510,000 0.24

18 HLG NOMINEE (TEMPATAN) SDN BHD 500,000 0.23

19 HLG NOMINEE (TEMPATAN) SDN BHD 500,000 0.23

20 CITIGROUP NOMINEES (ASING) SDN BHD 497,100 0.23

21 LABUAN REINSURANCE (L) LTD 478,500 0.22

22 LIM YEE BEE 435,500 0.20

23 MULTI-PURPOSE INSURANS BHD 369,753 0.17

24 ANUAR BIN MOHD HASSAN 300,000 0.14

25 HLB NOMINEES (TEMPATAN) SDN BHD 300,000 0.14

26 CHOW SONG KUANG 272,600 0.13

27 LYE CHIN SIN 258,500 0.12

28 HLB NOMINEES (TEMPATAN) SDN BHD 253,200 0.12

29 MAH YOKE LIAN 250,000 0.12

30 MAYBAN SECURITIES NOMINEES (ASING) SDN BHD 250,000 0.12

TOTAL 176,457,702 82.81

281 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

ANALYSIS OF SHAREHOLDINGS AS AT 22 JULY 2011

MNRB HOLDINGS BERHAD INFORMATION ON DIRECTORS SHAREHOLDINGS AS AT 22 JULY 2011

Names of Directors Shareholdings Percentage (%)

1. SHARKAWI ALIS 0 0.00

2. RAVEENDEREN A/L PADMANATHAN 10,000 0.01

3. DATO' SYED ARIFF FADZILLAH SYED AWALLUDDIN 0 0.00

4. YUSOFF YAACOB 0 0.00

5. DATUK MOHD KHALIL DATO' MOHD NOOR 5,000 0.00

6. PAISOL AHMAD 0 0.00

7. MEGAT DZIAUDDIN MEGAT MAHMUD 0 0.00

CATEGORY OF SHAREHOLDERS AS AT 22 JULY 2011

Type of Ownership Shareholders Percentage Shareholdings Percentage (%) (%)

Government Agencies 1 0.02 10 0.00 Individual 3807 84.56 28,459,276 13.36 Companies 117 2.6 170,928,108 80.22 Nominees Company 577 12.82 13,682,106 6.42

GRAND TOTAL 4,502 100.00 213,069,500 100.00

282 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

LIST OF PROPERTIES 31 MARCH 2011

Tenure / Land area Net Book Existing use / (sq.ft) value as at Date of Date of Description of Age of Build-up area 31/3/2011 Address Acquisition Revaluation Properties buildings (sq.ft.) (RM)

INVESTMENT PROPERTIES

No. 15, Jalan Sri Hartamas 7 14 July 1984 22 October 2009 1 unit of 4 storey Freehold / 1,600 / 6,150 2,700,000 Taman Sri Hartamas shophouse rented out / 50480 Kuala Lumpur 27 years

No. 17, Jalan Sri Hartamas 7 14 July 1984 22 October 2009 1 unit of 4 storey Freehold / 1,600 / 6,150 2,900,000 Taman Sri Hartamas shophouse rented out / 50480 Kuala Lumpur 27 years

No. 14, Jalan 19/1 23 June 2000 25 January 2011 1 unit of 6 storey Leasehold 130,860 17,800,000 46300 Petaling Jaya factory / office expiring in Selangor building with September 2063 / 2 storey rented out as basement office premises / car park 17 years

No. 14, Jalan 19/1 23 June 2000 25 January 2011 Leasehold land Leasehold expiring 44,812 5,200,000 46300 Petaling Jaya in September Selangor 2063 / 15 years

Total Investment Properties 28,600,000

SELF OCCUPIED PROPERTIES

No. C420 26 August 1982 21 January 2011 1 unit of apartment Freehold / staff & Not applicable / 77,077 Tanjung Biru Condominium guest holiday 820 Port Dickson accommodation Negeri Sembilan / 27 years

No. D130 4 April 1984 21 January 2011 1 unit of apartment Freehold / staff & Not applicable / 98,984 Tanjung Biru Condominium guest holiday 820 Port Dickson accommodation Negeri Sembilan / 29 years

No. 30, Ground Floor 2 June 1984 24 January 2011 1 unit of 4 storey Freehold / store / 2,000 / 7,160 380,362 Jalan SS6/8, Kelana Jaya shophouse 27 years 47301 Petaling Jaya Selangor

No. 17, Lorong Dungun 17 February 1995 25 January 2011 1 unit of 12 storey Freehold / Office 61,300 / 358,676 77,915,965 Damansara Heights building with premises / 50490 Kuala Lumpur 2 storey basement rented out / car park 16 years

283 13487-A MNRB Holdings Berhad (Incorporated in Malaysia)

LIST OF PROPERTIES 31 MARCH 2011

Tenure / Land area Net Book Existing use / (sq.ft) value as at Date of Date of Description of Age of Build-up area 31/3/2011 Address Acquisition Revaluation Properties buildings (sq.ft.) (RM)

SELF OCCUPIED PROPERTIES (CONT’D)

No. F41 & F45 18 June 1984 21 January 2011 2 unit of Leasehold Not applicable / 293,774 Frasers Pine Resort apartments expiring in 3,585 Frasers Hill May 2082 / Pahang Darul Makmur staff & guest holiday accommodation / 27 years

Manchester Tower 28 July 2008 Not applicable 1 unit of Freehold / Not applicable / 1,889,573 Apartment 2406 apartment occupied by 1,011 Dubai Marina staff / Dubai, UAE 4 years

Apt. 507 29 July 2008 Not applicable 1 unit of Freehold / Not applicable / 1,363,427 Marina Diamond 5 apartment occupied by 1,084 Dubai Marina staff / Dubai, UAE 4 years

Yansoon 4 30 September 2010 Not applicable 1 unit of Freehold / Not applicable / 1,569,804 Apartment 204 apartment occupied by 1,475 Burj Khalifa staff / Dubai Downtown 1 year UAE

Total Self Occupied Properties 83,588,966

NON-CURRENT ASSET HELD FOR SALE

No. 45, Block A 30 April 2003 31 March 2011 5 storey Freehold / 33,540 / 97,179 34,173,000 Medan Setia Satu purpose build rented out / Plaza Damansara office / with as office Bukit Damansara 2 storey premises / 50490 Kuala Lumpur basement 15 years car park

Total non-current asset held for sale 34,173,000

284 PROXY FORM No. of Shares Held

I/We ______of ______being a member/members of MNRB HOLDINGS BERHAD hereby appoint ______of ______or failing him ______of ______as my/our proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held at the Auditorium, 3rd Floor, Bangunan Malaysian Re, No. 17, Lorong Dungun, Damansara Heights, 50490 Kuala Lumpur on Friday, 23 September 2011 at 10.00 a.m. and at any adjournment thereof, on the following resolutions referred to in the Notice of Annual General Meeting.

NO. RESOLUTIONS FOR AGAINST

ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 31 March 2011 and the Reports of the Directors and Auditors thereon

2. To approve the payment of a First and Final Dividend

3. To re-elect Sharkawi Alis as Director

4. To re-elect Dato’ Syed Ariff Fadzillah Syed Awalluddin as Director

5. To approve the payment of Directors’ fees

6. To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorize the Directors to fix their remuneration

SPECIAL BUSINESS

7. To re-appoint Datuk Mohd Khalil Dato’ Mohd Noor as Director

8. To amend Article 140 of the Articles of Association of the Company

(Please indicate with a cross (X) in the spaces provided whether you wish your votes to be casted for or against the resolutions above. In the absence of specific instructions, your proxy will vote or abstain as he/they may think fit.)

Dated ______day of ______2011 ______Signed NOTE A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy to attend and vote in his behalf. A proxy need not be a member of the Company. A member may appoint more than two (2) proxies to attend the meeting provided the member shall specify in each proxy the proportion of the member’s shareholdings to be represented by each proxy and only one (1) proxy shall be entitled to vote on a show of hands. Where a member is an authorized nominee, it may appoint at least one (1) proxy in respect of each securities account it holds. An Instrument appointing a proxy shall be in writing, and in the case of an individual shall be signed by the appointor or by his attorney duly authorized in writing, and in the case of a Corporation shall be either given under its common seal or signed on its behalf by its attorney or an officer of the Corporation so authorised. All proxies must be deposited at the office of the Share Registrar of the Company, Symphony Share Registrars Sdn. Bhd., Level 6, Symphony House, Block D13, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor, not less than 48 hours before the time set for the Annual General Meeting or any adjournment thereof. 1st fold

Please affix Stamp

Symphony Share Registrars Sdn. Bhd. Level 6, Symphony House Block D13, Pusat Dagangan Dana 1 Jalan PJU 1A/46 47301 Petaling Jaya Selangor

2nd fold COMPLAINT AGAINST PUBLIC LISTED COMPANY

This form is intended to facilitate the lodgement of complaints with the Bursa Malaysia Berhad (Bursa Malaysia), by investors against Public Listed Companies (PLCs) in Malaysia. Investors are encouraged, in the first instance, to amicably settle any differences directly with the PLC concerned.

1. How to lodge a complaint? 3. What happens after a complaint is filed? You can lodge a complaint by downloading and completing the Each complaint will be reviewed and evaluated for referral to the Complaint Form and faxing or sending it to: appropriate unit within Bursa Malaysia. Where a possible violation is detected, the matter will be referred to the Investigation Department. Customer Care Centre Investigation into a complaint would be made on a confidential basis Bursa Malaysia Berhad to preserve the investigative process and would not be disclosed to Lower Ground Floor, Exchange Square the complainant. Bukit Kewangan 50200 Kuala Lumpur 4. What is the timeframe for resolution? The investigation into your complaint may take anytime from a few 2. What should be in the complaint? days to several months, depending on the complexity of the case. Complainant should furnish information that enable proper Towards ensuring speedy resolutions, please ensure that all available evaluation of the complaint which includes the following: documentation with regard to your complaint is enclosed with the • Name of the complainant, address, email and telephone standard complaint form. number. • The name, address, email, telephone number and website Complainants are encouraged to call Customer Care Hotline address (if any) of the party(ies) mentioned in the complaint. at 03-2732 0067 should you have any queries in the interim. • Specific details of how, why and when the subject matter of complaint occurred.

COMPLAINT FORM

A. Particulars of Complainant Name : ______(As per NRIC/ Passport/ ______Registration document)

NRIC No. :

-- New NRIC No. : Nationality : ______Registered Address : ______(As per NRIC/ Passport/ ______Registration document) ______Correspondence Address : ______Telephone No. (Home) : ______Telephone No. (Office) : ______Handphone No. : ______Fax No. : ______E-mail : ______

B. Nature of Complaint (Cross (x) where applicable)

Against stock /futures broking companies Against Bursa Malaysia

Against Dealers/ Remisers Against Share Registrars /Issuing house

Against Public Listed Companies Others, please specify C. Action Taken (Cross X where applicable)

Have you lodged a report or complaint to the police, other government agency or statutory/ regulatory authority?

No

Yes. I have lodged a complaint/report with:

Police Date : ______Report ref. no.: ______

Registrar of Companies Date : ______Report ref. no.: ______

Stock/futures Broking Company: (please indicate)

Company : ______Date : ______Report ref. no.: ______

Bursa Malaysia Date : ______Report ref. no.: ______

Others: (please indicate)

______Date : ______Report ref. no.: ______

D. Supporting Documents (Cross X where applicable)

Do you have any documents or letters in support of your complaint?

No

Yes, I will forward them to the Bursa Malaysia in due course

Yes, the following documents are attached with this complaint form: i) ______v) ______ii) ______vi) ______iii) ______vii) ______iv) ______vx) ______

E. Particulars of Complaint Complaint Against : ______Details of Complaint : ______

Notes: i. Please attach supporting documents if available. ii. Please continue in other sheet if there is insufficient space.

Signature : ______

Date : ______

Please forward this form and any additional information to:

Customer Care Centre Bursa Malaysia Berhad Lower Ground Floor Bukit Kewangan FOR OFFICE USE ONLY 50200 Kuala Lumpur Tel: 03-2732 0067 Received by: Fax: 03-2732 5258 E-mail: [email protected]/ Date: [email protected] MNRB HOLDINGS BERHAD (13487-A)

12th Floor, Bangunan Malaysian Re No. 17, Lorong Dungun, Damansara Heights 50490 Kuala Lumpur

Tel : (603) 2096 8000 Fax : (603) 2096 7000 Email : [email protected] www.mnrb.com.my