142 Factors or Events that Might Significantly Affect Future Financial Position or Operations Factors or events which may significantly affect the financial position or operations of life assurance business in the future are as follows: 1. Macroeconomic Conditions Life assurance business is mainly concerned with long-term assurance policies. Once the products are sold to customers, the proceeds from the assurance policies will be used for investing not only in a wide range of vehicles including debt instruments, equity instruments and derivatives but also in various real sectors which are permitted by the compliance unit. The purpose is to give part of the returns on the investments to customers in accordance with the policy obligations while the remaining part of the returns will contribute to the performance of MBK LIFE itself. As a result, changes in the economic conditions will directly affect the value of such investment assets. On the liabilities side, it is necessary to set aside provision to be paid to customers in accordance with the assurance policies, based on the accounting standards. In particular, the changes have direct impacts on MBK LIFE’s financial status in both ways. On one hand, the changes may benefit the company’s businesses, but on the other hand, they may cause significant instability to the financial status of the businesses. 2. New Emerging Risks The COVID-19 pandemic has direct impacts on financial positions of customers. While retail customers delay spending, institutional customers in many groups cut insurance costs related to staff welfare. The pandemic also affects marketing activities of MBK LIFE itself and the life assurance industry as a whole. It remains uncertain when the COVID-19 situation will improve and life will return to normal. As well, it is uncertain whether there will be any additional unexpected incidents. 3. Change in the regulations governing life assurance business The financial reporting framework applicable to the life assurance industry is undergoing a significant change with the adoption of a new reporting standard, IFRS 17 ‘Insurance Contracts’, which will provide better transparency to consumers and investors. However, in making such a change, the whole industry has to make a significant investment in supporting the new standard. In view of the current economic conditions, the change will basically have to depend on each company’s preparedness. 4. Corporate Social Responsibility (CSR) and the Environment MBK LIFE has implemented its corporate governance, anti-corruption policy, sustainability principles and approach as a business driver, work practices which reduce risks to customers, trading partners, and staff. For example, it has adopted work from home practice, which is considered as one of the basic methods of risk management at present. MBK LIFE and its shareholders have regularly implemented the above policy and approaches for risk management. In particular, the capital adequacy standards are met to ensure not only that MBK LIFE is able to deliver services to customers in accordance with assurance policy obligations but also that the services are of good quality and in compliance with the rules and regulations imposed by the regulators concerned. Moreover, MBK LIFE has put in place an internal work unit and a number of committees responsible for controlling risks and implementing its product and investment strategies. As regards its internal operations, the company ensures that the operations are in compliance with the policies of both MBK LIFE and Thanachart Group.
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