AIOS, CME SERIES (No. 23) Age Related Macular B. L. Sujata Rathod P. Manohar ALL INDIA OPHTHALMOLOGICAL SOCIETY This CME Material has been supported by the funds of the AIOS, but the views expressed therein do not reflect the official opinion of the AIOS. (As part of the AIOS CME Programme)
Mission and Philisophy 3
Management Team 6
Corporate Information 7
Chairman's Statement 10
Summary of operations for five years 12
Corporate Social Responsibility 13
F I N A N C I A L S T A T E M E N T S
Director's Report 14
Auditor's Report 16
Profit and Loss Account 17
Revenue Account 18
Balance Sheet 19
Statement Pursuant to Section 125 20
Statement of Changes in Equity 21
Statement of Cash Flows 22
Notes to the Accounts 23
Detailed Profit and Loss Account 30
National Insurance Company Berhad was incorporated in 1969 and is the market leader in conventional general
insurance in Brunei Darussalam. The Allianz Insurance Company of Singapore Pte. Ltd., MSIS Pte. Ltd. (formerly
known as Mitsui Sumitomo Insurance (S) Pte. Ltd.), and the Baiduri Holdings Berhad acquired interests in National
Insurance in January 1998. These investments were a display of confidence in National Insurance and the Brunei
economy and are aimed to strengthen the company's competitive position in Brunei Darussalam and regionally.
These strategic relationships facilitate the transfer of international insurance expertise to Brunei Darussalam and
enable the company to explore new areas of opportunity in insurance. The company plays an active role in the
Brunei business community and is a member of the General Insurance Association of Brunei Darussalam, the
Brunei Darussalam International Chamber of Commerce and Industry and the East Asia Insurance Congress.
MISSION AND PHILOSOPHY
Our mission is to be the preferred insurer in Brunei Darussalam. We are committed to provide a range of insurance services which continuously meets the requirements of our customers. In doing so, we seek to excel in the following key areas: Market Leadership. We seek market leadership in our preferred niche market. We will define market leadership
in terms of our market share and the quality of the services we provide in these market segments. Although we will
aggressively seek market share we will not do so at the expense of quality and profitability.
Outstanding Services. We seek to provide outstanding services to our clients. We will measure service in terms
of the extent to which we anticipate and meet the needs of our customers in the critical areas of security, coverage,
cost and claims settlement and we will constantly compare ourselves with the best companies within the region.
Outstanding People. We seek to employ the most suitable people in the local insurance industry. We seek
people who are honest, team players, willing to learn, committed to high work standards and to achieve results.
Excellent Results. We seek to produce excellent financial results for our shareholders. We will define the financial
results in terms of a return on investment which is above average and which is the product of aggressive marketing,
prudent underwriting and investment management.
First Class Management. We seek distinction as an insurance company with first class management not just
relative to the local industry but also in regional terms. Our management will be evaluated in terms of how
successful they are in directing and organising the Company towards continual improvement in the management
Training and Development. We believe that training and development is a key to NIC's continued success.
The company's focus is on providing professional insurance training to bring the skills level of staff and agents
to international standards and on continued improvement to quality service. In undertaking our mission we will
adopt the following approach:
• We believe excellence comes from focusing our energies and our resources. Our business is insurance underwriting and we will seek to grow and develop as an insurance company. Our interest in other areas will only be to the extent that they directly strengthen our competitive advantage in our core business. • We believe that without customers, we would have no business. We must therefore ensure that the customer comes first in every aspect of our work and organization. • We believe that our people are our key resources. We must therefore seek to recruit the most suitable people available and to provide them with opportunities for development, worthwhile careers and a satisfying work environment. We want people we can be proud of and we want them to view this Company as a challenging yet an enjoyable place to work in. • We believe that our continued growth depends on our ability to anticipate and adapt to change in a disciplined manner. We must therefore always seek to be proactive and to innovate but within the context of thorough planning. • We believe that we have social responsibilities to the local industry and the community of which we are a part. We must therefore seek to contribute to the good standing of the local industry and to be good corporate citizens of Brunei Darussalam. National Insurance Company Berhad achieved ISO 9002 certification on 15th April 1996, and was recertified to thenew ISO 9001 : 2008 standard on 28th April 2011. It is currently the only insurance company in Brunei Darussalam and amongst the few in the region to have achieved this prestigious certification. The Management Review Team (MRT) meets at least once a month to set specific objectives, arrange for implementation and monitor progress. Internal audits are carried out on a regular basis by members of the Audit Team, while an external audit by certified ISO external auditors is carried out once a year to determine the fitness of our quality management system.
Certificate Number THA000349
YAM Pengiran Muda Abdul Qawi Datin Hjh Edah bte Hj Mohd Noor YAM Pengiran Kerma Raja Pengiran Hj Kamarulzaman bin Pengiran Pekerma Setia DiRaja Sahibul Bandar Pengiran Hj Ali Dato Paduka Timothy Ong Teck Mong Kevin Leong Mun Hoe DIRECTORS
YAM Pengiran Muda Abdul Qawi (Chairman) YAM Pengiran Kerma Raja Pengiran Hj Kamarulzaman bin Pengiran Pekerma Setia DiRaja Sahibul Bandar Pengiran Hj Ali Dato Paduka Timothy Ong Teck Mong (Deputy Chairman) Datin Hjh Edah bte Hj Mohd Noor Stephen Ong Teck Soon Hideyuki Tanaka (appointed on 1st April 2010) Kevin Leong Mun Hoe (appointed on 1st August 2010) Stephen Ong Teck Soon (alternate director to Dato Paduka Timothy Ong Teck Mong) Karl-Heinz Jung (resigned on 31st July 2010) Kiyomi Udagawa (resigned on 31st March 2010) MANAGEMENT TEAM
The day to day management of the company is supervised by a management review team led by the General Manager, Mr Kolja Klawunn. The Management Review Team meets at least once a month to discuss operational and marketing issues, setting and monitoring specific objectives as well as monitoring our Quality Management System. The Management Review Team comprise the following : General ManagerKolja KlawunnSenior ManagerDenis Buyok (Underwriting & Claims)ManagersChristine Ho (Accounts & Finance)Emily Chong (Reinsurance)Ignatius Lau (Business Development)Aminuddin Nasuha (Underwriting)Dk Kemariah Pg Duraman (Human Resources & Administration) (resigned on 27th Dec 2010)Assistant ManagersKatherine Teo (Underwriting)Chen Choon Foong (Business Development)Wilfred Lungga (Claims)Alexander Akaw (Underwriting)Nanetta Jordana K. Ghani (Human Resources & Administration) (joined on 1st Dec 2010) Amongst Brunei companies, National Insurance is unique in its ownership structure. It has approximately 153 shareholders of which 141 comprise of Bruneian investors. Of its B$8 million share capital, 70% is held by Brunei citizens or companies owned by Brunei nationals. The two largest local shareholders are Sumber Mulia Holdings Sdn Bhd (29%) and Baiduri Holdings Bhd (10%). The Allianz Insurance Company of Singapore Pte. Ltd. owns 25% while MSIS Pte. Ltd. (formerly known as Mitsui Sumitomo Insurance (S) Pte. Ltd.) owns 5% of the company.
Sumber Mulia Holdings : 29% Baiduri Holdings : 10% CORPORATE INFORMATION
24-hour Hotline NATIONAL INSURANCE COMPANY BERHAD Place and Date of Incorporation Tow-truck Service Brunei Darussalam 223 4567, 877 4033, 871 8977, 817 7777 (KB) 24th December 1969 Correspondence Address Paid-up Capital P O Box 1251, BSB BS8672, Brunei Darussalam P O Box 1336, KB KA1189, Brunei Darussalam Head Office Units 12 & 13, Block A, Regent Square, Spg 150, Kg Kiarong, BE 1318 Room 309A, 3rd Floor, Wisma Jaya, Brunei Darussalam Jalan Pemancha, Bandar Seri Begawan BS8811,Brunei Darussalam Telephone Telephone: 223 9139, 223 9140 222 6222, 223 3999 Facsimile: 223 9142Email: [email protected] Facsimile 242 9888 - Administration & Claims 245 4277 - Underwriting245 4303 - Accounts Tricor (B) Sdn BhdRoom 308B, 3rd Floor, Wisma Jaya, Jalan Pemancha, Bandar Seri Begawan BS8811, Brunei DarussalamTelephone: 223 2780, 223 2781 Facsimile: 223 2783 www.national.com.bn NATIONAL INSURANCE NETWORK
National Insurance is served throughout Brunei Darussalam by a network of branches and agency offices.
INSURANCE SERvICES COUNTER
Land Transport Dept, Gadong Unit 20, Block C, Lot 8989 Jalan Pandan Tujuh, Kuala Belait Tel: 333 6468, 333 6469, 333 1222Fax: 334 2191Email: [email protected] ON-LINE AGENCY OFFICES
ADAMAS ENTERPRISE CANTUMAN BAHAGIA DELTRA MARKETING SERVICES 02-E, Lot nos. 39 & 40, MARKETING COMPANY Block A, Unit 10, First Floor Jalan Sultan Omar Ali, No 6, 1st Floor, Block A Bangunan Pengkalan Gadong Jalan Tutong, Kg Bunut Bandar Seri Begawan BE4119 Bandar Seri Begawan BF1120 Tel: 265 4366, 265 4370 No.5, Ground Floor GALORE ENTERPRISE Scout's Headquarters Building, DAVID HIEW SWEE KUAN No. 9, 2nd Floor, Block A Urairah Complex, Kg Kiulap Bandar Seri Begawan BE1118 Kompleks Delima Jaya Bandar Seri Begawan BE1518 Tel: 245 1974, 245 7260 Spg 62, Lot 53068, Jalan Muara Tel: 222 8619, 222 8621 Brunei Darussalam BRIGHT FUTURE MARKETING Suite 02, 3rd Floor Unit B10, Mezzanine Floor DAVID LIAW YUN KONG Shakirin Complex, Simpang 88 1st Floor, No. 5, Block F Km 1, Jalan Tutong Kg Kiulap BE1518 Pengkalan Gadong Complex Bandar Seri Begawan BA1712 Tel: 223 7016, 223 7018 Jalan Batu Bersurat BE3519 Tel: 222 1423, 222 1424 Brunei Darussalam Tel: 245 6308Fax: 245 6308 CORPORATE INFORMATION
ON-LINE AGENCY OFFICES
PROINSURE ENTERPRISE SHIPPING AGENCY SDN BHD No 8, Ground Floor No. 65, Jalan McKerron Kompleks Sumbangsih Bahagia Kuala Belait, KA1189 Perindustrian Beribi II Simpang 5, Jalan Gadong BE 4119 Tel: 242 2211, 242 3770 U.M.S. ENTERPRISE KANG & KENT ENTERPRISE RICHLAND INSURANCE SERVICES Lot 846, Jalan Bunga Simpur F-106A, Kompleks Harapan Kuala Belait KA2331 Jalan Setia DirajaKuala Belait KA3131 Unit 11, 1st Floor, Block J Abdul Razak Complex Jalan Gadong, BE4119Tel: 242 7112 VINCENT & ASSOCIATES MIRAGE ENTERPRISE Unit 10, 1st Floor, Block AQ-Lap Complex No 10, 2nd Floor, Block B ROBE & HING ENTERPRISE Simpang 88, Kampong Kiulap PAP Hjh Norain BuildingKm 1, Jalan Tutong 45, Jalan Tengah, Bandar Seri Begawan BE1518 Bandar Seri Begawan BA1712 Kuala Belait, KA2331 Tel: 223 6196, 223 6197 Tel: 222 4080, 222 4081 CHAIRMAN'S STATEMENT
Bismillahir Rahmanir RahimAssalamu Alaikum Warahmatullahi Wabarakatuh On behalf of the Board of Directors, I am pleased to present the Annual Report and Accounts of National Insurance Company Berhad for the financial year ended 31 December 2010.
Despite an increase in business costs, our company recorded an improvement in profitability in 2010. Gross written premium increased by 33% from B$ 21.0 million in 2009 to B$ 27.9 million mainly due to endorsements of fronting policies.
At the same time, net acquisition costs increased significantly due to a change in the treaty reinsurance structure whereby commissions received were greatly reduced.
In compliance with the Insurance Order and Regulations 2006, provisions for doubtful debt were increased by B$ 1.7 million to cover all receivables outstanding by 6 months or more.
Investment income continued to be negatively affected by low fixed deposit interest rates. However, there was a significant improvement in the net claims ratio which was 29% in 2010 compared to 40% in 2009. Overall National Insurance Company Berhad recorded a 22% increase in net profit after tax of B$ 1.1 million in 2010 compared to B$ 0.9 million in 2009. Market share
National Insurance continues to be the market leader in the Brunei conventional insurance market, with a market share of 40% in 2010.
Financially, our company remains strong. Surplus of assets over liabilities of B$ 10.6 million was 32% above the minimum margin required under the Insurance Order and Regulations, 2006.
The directors propose a dividend per share of 4 cents amounting to a total payment to shareholders of B$320,000 for the year ended 31 December 2010.
Corporate Social Responsibility
In 2010, the company was active in fund raising for charity. Funds raised from the company's 40th Anniversary celebration and 1st Golf Charity and other events were used to help underprivileged students to continue with their studies in line with our belief that our youth are our future.
On behalf of the Board of Directors, I would like to extend my sincere thanks to the management and staff of the company for their dedication and commitment, as well as our valued clients, agents and brokers for their continued support in making the company a success. I would also like to express my appreciation to the Autoriti Monetari Brunei Darussalam (Monetary Authority of Brunei Darussalam) and the General Insurance Association of Brunei Darussalam for their guidance and contribution to the development of the local insurance industry.
Wabillahit taufit wal-Hidayah Wassalamualaikum Warahmatullahi Wabarakatuh PENGIRAN MUDA ABDUL QAWI Chairman SUMMARY OF OPERATIONS FOR FIvE YEARS
Gross written premium Net written premium Underwriting profit Investment & other income Profit before tax Profit after tax Shareholders' funds Net technical reserve Dividend per share [cents] INDUSTRY GROSS WRITTEN PREMIUM OvER FIvE YEARS [B$]
National Insurance Co. Bhd.
(excluding Takaful Companies) Source: General Insurance Association of Brunei Darussalam MARKET SHARE BY PORTFOLIO MIX FOR 2010
Source: General Insurance Association of Brunei Darussalam (excluding Takaful Companies) CORPORATE SOCIAL RESPONSIBILITY
40th Anniversary Celebration
Milestone event to mark the fortieth Anniversary of the company
was held in Chung Hwa Middle School BSB on Sunday, 17
January 2010. Commemorating the event with various activities
organized such as launching the revamp of company website,
fun for the family games & bazaar. Proceeds from the event were
channeled through CSR donations throughout the year.
1st Charity Golf
In May 2010, our 1st Charity Golf was held at RBGCC. Some 85
golfers took part in the event with staff as golf volunteering that
made the event a huge success. Funds raised from the event
were channeled through CSR donation throughout the year.
Give blood and save a life was held on Saturday, 31 July 2010 for
employees, friends, family members, agents, and customers at
the company premise. It is a yearly charitable event conducted
by National Insurance to promote awareness of "make lifesaving
Bursary Awards to CHMS
The Bursary Awards for school fees sponsorship was given
to several students in Bandar & Tutong of Chung Hwa School.
More than twenty schools were visited in 2010 throughout
Brunei Darussalam & donation was provided to underprivileged
students to purchase text books, uniforms, stationeries and
other basic school necessities.
Donation in the forms of text books, uniforms, stationeries
and other basic school necessities were also provided to Pusat
Bahagia Pulaie, Tutong and Pusat Bahagia Eric Goh.
The directors have pleasure in submitting their report together with the audited financial statements of the Company for the year ended 31st December 2010.
The principal activity of the Company is to underwrite fire, marine, motor and general insurances. There has been
no significant change in the nature of this activity during the year.
Profit for the year after taxation
Share of loss in subsidiary company (19,909) In the opinion of the directors, the results of the operations of the Company during the financial year have not been affected by any item, transaction or event of a material and unusual nature.
The directors propose a final dividend of 4 cents per share amounting to B$320,000 for the year ended
31st December 2010.
The directors in office at the date of this report are:-
YAM Pengiran Muda Abdul Qawi (Chairman) YAM Pengiran Kerma Raja Pg Hj Kamarulzaman bin Pengiran Pekerma Setia DiRaja Sahibul Bandar Pengiran Haji Ali Dato Paduka Timothy Ong Teck Mong (Deputy Chairman) Datin Hjh Edah bte Hj Mohd Noor Kevin Leong Mun Hoe Stephen Ong Teck Soon (alternate director to Dato Paduka Timothy Ong Teck Mong) The following directors who held office at the end of the financial year had, according to the register required to be kept under Section 95, of the Companies Act, an interest in shares of the Company, as stated below:- Name of director Shares of $1 each At the beginning of the year At the end of the year YAM Pengiran Muda Abdul Qawi Dato Paduka Timothy Ong Teck Mong Datin Hjh Edah Bte Hj Mohd Noor Auditors
The auditors, Ernst & Young, have expressed their willingness to accept re-appointment.
On behalf of the Board, YAM PENGIRAN MUDA ABDUL QAWI Director YAM PENGIRAN KERMA RAJA PG HJ KAMARULZAMAN BIN PENGIRAN PEKERMA SETIA DIRAJA SAHIBUL BANDAR PENGIRAN HAJI ALI Director AUDITOR'S REPORT
To The Members of NATIONAL INSURANCE COMPANY BERHAD
We have audited the accompanying financial statements of National Insurance Company Berhad, which comprise the balance sheet as at 31st December 2010 and the profit and loss account, statement of changes in equity and statement of cash flow for the year then ended, and a summary of significant accounting policies and other explanatory notes.
Directors' Responsibility for the Financial Statements
The directors are responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Companies Act, Cap. 39 and accounting principles general y accepted in Brunei Darussalam. 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 er or; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or er or. In making those risk assessments, the auditor considers 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 ef ectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as wel as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is suf icient and appropriate to provide a basis for our audit opinion.
a) the financial statements give a true and fair view of the financial position of National Insurance Company Berhad as of 31st December 2010, and of its financial performance and its cash flows for the year then ended in accordance with the provisions of the Companies Act, Cap. 39 and accounting principles general y accepted in Brunei Darussalam according to the best of our information and the explanations given to us and as shown by the books of the Company.
b) we have obtained al the information and explanations we required.
Certified Public Accountants Brunei Darussalam Authorised Auditor PROFIT AND LOSS ACCOUNT
For The Year Ended 31st December 2010
Underwriting profit transferred from Insurance Revenue Account Profit for the year before taxation 1,479,009 1,261,568 (354,873) (337,000) Profit for the year after taxation Share of loss in subsidiary company Retained profit for the year The notes on pages 23 to 29 form an integral part of the financial statements.
For The Year Ended 31st December 2010
Gross premium writ en Reinsurance premium writ en 1,913,044 14,356,923 27,934,657 20,968,557
Less: Reinsurance (258,690) (2,571,723) (407,009) (1,132,948) (198,140) (9,185,621) (13,754,131) (8,948,702) Net premium writ en Movement in unearned Net premium earned Add: Administrative income 1,730,685 5,106,274 14,756,327 12,988,295
Net acquisition costs Net claims paid and Movement in provision for claims incur ed but not Management expenses 1,522,990 5,380,170 13,547,279 12,004,190
transfer ed to profit and The notes on pages 23 to 29 form an integral part of the financial statements.
As At 31st December 2010
INVESTMENT IN SUBSIDIARY COMPANY Amount due from clients, agents and reinsurance companies Sundry debtors and prepayments Short-term deposits Cash and bank balances CURRENT LIABILITIES Claims incurred but not reported Claims admitted or intimated but not paid Unearned premium reserve Amount due to agents and reinsurance companies Other creditors and accrued charges Provision for taxation NET CURRENT ASSETS CAPITAL AND RESERVES YAM PENGIRAN MUDA ABDUL QAWI Director YAM PENGIRAN KERMA RAJA PG HJ KAMARULZAMAN BIN PENGIRAN PEKERMA SETIA DIRAJA SAHIBUL BANDAR PENGIRAN HAJI ALI Director The notes on pages 23 to 29 form an integral part of the financial statements.
STATEMENT PURSUANT TO SECTION 125
of The Brunei Companies Act
The profit as shown in the financial statements of the Company for the year ended 31st December 2010 includes the share of loss in the subsidiary company, Araco Sdn Bhd.
In the opinion of the Directors, no further provision is required to be made for any losses either in the financial statements of the subsidiary company or of the holding company. YAM PENGIRAN MUDA ABDUL QAWI Director YAM PENGIRAN KERMA RAJA PG HJ KAMARULZAMAN BIN PENGIRAN PEKERMA SETIA DIRAJA SAHIBUL BANDAR PENGIRAN HAJI ALI Director STATEMENT OF CHANGES IN EqUITY
For The Year Ended 31st December 2010
As at 31st December 2008 Payment of dividend in respect of previous financial year Net profit for the year As at 31st December 2009 Payment of dividend in respect of previous financial year Net profit for the year As at 31st December 2010 The notes on pages 23 to 29 form an integral part of the financial statements.
STATEMENT OF CASH FLOWS
For The Year Ended 31st December 2010
CASH FLOW FROM OPERATING ACTIVITIES:
Profit for the year before taxation
Adjustment for:Depreciation of fixed assets Gain on disposal of fixed assets Profit for the year before reinvestment in working capital
(Increase)/decrease in amount due from clients, agents and reinsurance companies Decrease in sundry debtors and prepayments Increase in claims incurred but not reported (Decrease)/increase in claims admitted or intimated but not paid (Decrease) in unearned premium reserve Increase/(decrease) in amount due to agents and reinsurance companies Increase/(decrease) in other creditors and accrued charges Cash provided by operating activities
Net cash provided by/(used in) operating activities
CASH FLOW FROM INVESTING ACTIVITIES:Purchase of fixed assets Proceeds from disposal of fixed assets Net cash used in investing activities
CASH FLOW FROM FINANCING ACTIVITY:Dividend paid in respect of previous financial year Net cash used in financing activity
Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year (note 11) CASH AND CASH EqUIvALENTS AT END OF YEAR (NOTE 11)
The notes on pages 23 to 29 form an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
For The Year Ended 31st December 2010
1. CORPORATE INFORMATION The Company is incorporated in Negara Brunei Darussalam and its registered office is located at Units 12 & 13, Block A, Regent Square, Simpang 150, Kampong Kiarong, Bandar Seri Begawan BE1318, Negara Brunei Darussalam.
The principal activity of the Company is to underwrite fire, marine, motor and general insurances. There has been no significant change in the nature of this activity during the year.
The Company operates in one country and employed 38 employees as at 31st December 2010 (31st December 2009: 36 employees).
2. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of accounting The financial statements of the Company are prepared under the historical cost convention and are expressed in Brunei dollars.
(b) Recognition of income (i) Premium income - Premium is taken up as income at the time a policy is issued, regardless of the period covered by the policy.
(ii) Interest - Interest is taken up in the profit and loss account on an accrual basis.
(c) Unearned premium reserve Unearned premium reserve is made so as to match approximately the premium income with the period during which the risks are outstanding. The ratio used in the calculation is applied to the premium income after deducting premiums on reinsurance outwards and commission. The Company uses the 365th method of calculating unearned premium reserve. (d) Claims admitted or intimated but not paid Full provision is made for the estimated costs of all claims admitted or intimated but not paid at the date of the balance sheet using the best information available at that time.
(e) Claims incurred but not reported Provision is made for claims incurred but not reported based on the average of the Cumulative Accident Year Statistics computed over the past 3 years.
Depreciation is calculated on the straight line basis to write off the cost of the fixed assets over the expected useful lives of the assets concerned. The annual rates used are as follows:- Leasehold improvements Office equipment, furniture and fittings Leasehold building Over the lease term Fully depreciated assets are retained in the financial statements until they are no longer in use or disposed off.
(g) Foreign Currencies Assets and liabilities expressed in foreign currencies are translated into Brunei dollars at the rates of exchange ruling at the balance sheet date. Transactions during the year are translated into Brunei dollars at the rates of exchange ruling at the transaction dates. Differences in exchange are included in the profit and loss account.
(h) Bad and Doubtful Debts Bad debts are written off and provisions are made for those debts which are considered to be doubtful.
Investments held on a long-term basis are stated at cost, unless, in the opinion of the directors, there has been a permanent diminution in value when they are written down to a valuation determined by the directors.
(j) Subsidiary Company Shares in the subsidiary company are stated at cost and accounted for under the equity method of accounting.
(k) Deferred Taxation Deferred taxation is provided under the liability method at current rates on the difference between the net book value of assets eligible for capital allowances and the tax written down value of those assets and on any other timing differences existing at year end. Deferred tax benefits are recognised only when there is a reasonable chance of realisation in due course.
3. PROFIT FOR THE YEAR BEFORE TAXATION This is stated after charging/(crediting):- Auditors' remuneration Bad debts written off Directors' remuneration Doubtful debts recovered Gain on disposal of fixed assets Provision for doubtful debts Taxation in respect of current year's profit Overprovision of income tax in previous year Relationship between tax expense and accounting profit:-The reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate is as follows:- Profit before taxation Tax calculated at the rate of 22% (2009: 23.5% )on the first B$100,000 (2009: B$50,000) at one-quarter of the full rate, the next B$150,000 (2009: B$50,000) at one-half of the full rate and the remaining profit at the full rate (2009: 23.5%) Non-deductible expenses Capital allowances Overprovision of income tax in previous year Income tax expense e & fittings
Leasehold impr B$
Office equipment furnitur B$
Leasehold building B$
ACCUMULATED DEPRECIATION Charge for the year 6. INVESTMENT IN SUBSIDIARY COMPANY Unquoted shares at cost Share of losses brought forward Share of loss for the year The subsidiary company is:- Country of incorporation Brunei Darussalam Principal activities Repairs and maintenance of motor vehicles Place of business Brunei Darussalam Percentage of equity held by Company 7. AMOUNT DUE FROM CLIENTS, AGENTS AND REINSURANCE COMPANIES Amount due from clients, agents and reinsurance companies Less: Provision for bad and doubtful debts 8. CLAIMS ADMITTED OR INTIMATED BUT NOT PAID Workmen's Compensation and Public Liability 9. UNEARNED PREMIUM RESERVE Workmen's Compensation 10. SHARE CAPITAL 100,000,000 ordinary shares of B$1.00 each Issued and fully paid:- 8,000,000 ordinary shares of B$1.00 each 11. CASH AND CASH EQUIVALENTS Short-term deposits Cash and bank balances 12. CONTINGENT LIABILITIES Gross contingent liabilities not provided for in the financial statements are gross of facultative and treaty reinsurance underlining protection:- Performance bonds and banker's guarantees provided on behalf of third parties Other contingent liabilities:-Banker's guarantee in respect of statutory deposit requiredby Section 5(1) of the Motor Vehicles Insurance (Third PartyRisks) Act, Cap. 90 Banker's guarantee to Commissioner of Labour provided inrespect of the Company's employees' repatriation expenses The performance bonds and banker's guarantees are secured by the Company's short-term deposits placed with various financial institutions amounting to B$1,988,027 (2009: B$2,474,533).
13. RELATED PARTY TRANSACTIONS Included in the amount due to agents and reinsurance companies is a balance of B$40,436 (2009: B$13,326) due to the subsidiary company, Araco Sdn Bhd. Significant transactions with the subsidiary company during the year include workshop expenses on claims made of B$177,743 (2009: B$182,393).
14. DIVIDENDS PROPOSED The directors have proposed a final dividend of 4 cents per share amounting to B$320,000 which will be submitted for formal approval at the forthcoming Annual General Meeting. As such, the dividend has not been recognised as a liability as at 31st December 2010.
15. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Company's financial risk management policy seeks to ensure that adequate resources are available for the development of the Company's business whilst managing its insurance, credit, liquidity, interest rate and foreign exchange risks. The Company operates within defined guidelines that are approved by the Board of Directors.
(a) Insurance risk The principal risk the Company faces under insurance contracts is that the actual claims and benefit payments or the timing thereof, differ from expectations. This is influenced by the frequency of claims, severity of claims, actual benefits paid and subsequent development of long-term claims. Therefore the objective of the Company is to ensure that sufficient reserves are available to cover these liabilities. The above risk exposure is mitigated by diversification across a large portfolio of insurance contracts. The variability of risks is also improved by careful selection and implementation of underwriting strategy guidelines, as well as the use of reinsurance arrangements.
The Company purchases reinsurance as part of its risks mitigation programme. Reinsurance ceded is placed on both a proportional and non-proportional basis. The placements of proportional reinsurance are quota-share and surplus treaties reinsurance which are taken out to reduce the overall exposure of the Company to certain classes of business. Non-proportional reinsurance is primarily excess-of-loss reinsurance designed to mitigate the Company's net exposure to catastrophe losses. Retention limits for the excess-of-loss reinsurance are consistent across all product lines.
Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision and are in accordance with the reinsurance contracts. Although the Company has reinsurance arrangements, it is not relieved of its direct obligations to its policyholders and thus a credit exposure exists with respect to ceded insurance, to the extent that any reinsurer is unable to meet its obligations assumed under such reinsurance agreements. The Company's current reinsurance arrangements are placed via a reinsurance broker, Guy Carpenter & Co. Private Limited (incorporated in United States of America), Singapore Branch, with Allianz AG Reinsurance Branch Asia Pacific and Munich Reinsurance Company Singapore Branch as lead treaty reinsurers for proportional and non-proportional treaties respectively.
Credit risk is controlled by the application of credit approval, limit and monitoring procedures. Credit risk is minimized and monitored via strictly limiting the Company's associations to business partners with high creditworthiness.
The Company does not have any significant exposure to any individual customer nor does it have any major concentration of credit risk related to any financial instrument.
(c) Liquidity risk The Company actively manages its operating cash flows and the availability of funding so as to ensure that all repayment and funding needs are met. As part of its overall prudent liquidity management, the Company maintains sufficient levels of cash to meet its working capital requirements.
(d) Interest rate risk Income from short-term fixed deposits is substantially dependent on changes in market interest rates.
The Company's exposure to interest rate risk is not considered significant and is monitored on an on-going basis. The Company places its short-term fixed deposits with established financial institutions.
(e) Foreign exchange risk Foreign exchange risk is the risk to earnings and value of financial instruments caused by fluctuations in foreign currency exchange rates.
Foreign exchange risk is managed through risk limits and policies approved by the Board of Directors and foreign exchange exposures are kept to an acceptable level.
16. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of the Company's financial assets and liabilities at the balance sheet date approximate their fair values due to their short-term nature.
DETAILED PROFIT AND LOSS ACCOUNT
For The Year Ended 31st December 2010
UNDERWRITING INCOME LESS: MANAGEMENT EXPENSES Advertising and public relations Computer, communication and travel Professional fees Bad debts written off Provision for doubtful debts Doubtful debts recovered Depreciation and amortisation UNDERWRITING PROFIT Loss on foreign exchange Gain on disposal of fixed assets PROFIT FOR THE YEAR This detailed profit and loss account does not form part of the statutory audited financial statements.
Many Thanks to all those contributors who take the time to send Business news of Irish Jewel ery interest to 2010. If your foto is here and you would like the original (better quality, suitable for printing etc., and with al the other fotos from the relevant occasion, just ask). We can do DVD's now and can fit a lot on it. Free. Foto at left of Aine