106 45.3 Contingent liabilities/litigation As at 31 December 2021, the Company and its subsidiaries have contingent liabilities amounting to approximately Baht 195 million (separate financial statements: Baht 44 million) in respect of litigation. However, the Company and its subsidiaries have already made certain provisions for contingent loss, and for the remaining portion the Company’s and its subsidiaries’ management believes that no loss will result and therefore no liabilities are currently recorded. 46. Financial instruments 46.1 Credit risk Credit risk is the risk that receivables or the party to a financial instrument will fail to fulfill an obligation, causing the Company and its subsidiaries to incur a financial loss. The maximum amount of credit risk exposure is the carrying amount of the financial assets less allowance for expected credit loss as stated in the statements of financial position. Credit Risk Guidelines The Company and its subsidiaries manage the credit risk related to receivables, insurance and investment assets as follows: 1. Credit risk for insurance 1.1 Credit risk for reinsurance: The subsidiaries attach importance to the distribution of insurance risk. In transferring risk to reinsurers, the subsidiaries therefore take into account the financial strength of the reinsurers and their ability to meet their obligations when due, with reinsurance to be made with Thai reinsurers with a capital adequacy ratio of at least 150% (Risk Grade 3) and with overseas reinsurers with credit ratings of at least A-. 1.2 Credit risk from collection of premium receivable: The subsidiaries maintain the proportion of outstanding premiums at an appropriate level, in accordance with the guidelines of the OIC, and submit regular risk status reports to the Board of Directors for the information of and to facilitate action by the relevant departments. 322
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