26 5.19 Reinsurance assets and liabilities a) Reinsurance assets represent amounts due from reinsurers (consisting of reinsurance receivable, commission and brokerage expense and various other items receivable from reinsurers), amounts deposited on reinsurance and insurance reserve refundable from reinsurers. Insurance reserve refundable from reinsurers is estimated based on the related reinsurance contract of loss reserve and outstanding claims made in accordance with the law regarding insurance reserve calculation and unearned premium reserves. When indication of impairment incurred, the subsidiaries record allowance for doubtful accounts for estimated loss that may be incurred due to inability to make collection, taking into account collection experience, aged of balance and the status of receivables from reinsurers as at the end of reporting period. Increase (decrease) in allowance for doubtful accounts is recognised as expenses during the year. b) Amounts due to reinsurers are stated at the outstanding balances payable to reinsurance and amounts withheld on reinsurance. Amounts due to reinsurers consist of reinsurance premiums and other items payable to reinsurers. 5.20 Insurance contract liabilities a) Life insurance reserve Life insurance reserve is the cumulative reserve amount from the start of insurance coverage until the end of the reporting period for the policies in force. The subsidiary record life insurance reserves under the Gross Premium Insurance (GPV) method, which is actuarial method, calculated using a method consistent with the criteria specified in the Notification of the Office of Insurance Commission (“OIC”) regarding the valuation of assets and liabilities of life insurance companies. The main assumptions use in the calculation is relate to mortality rates, lapse and surrender rates, selling and administrative expenses and discount rates. b) Loss reserves and outstanding claims Outstanding claims are recorded at the amount to be actually paid. Loss reserves are provided upon receipt of claim advices from the insured based on the claims notified by the insured and estimates made by the subsidiaries’ management. The maximum value of claims estimate shall not exceed the sum-insured of the related insurance policies. 242
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