Annual Report 2011

Transcription

Annual Report 2011

Kurnia Asia Berhad 539435-K
Kurnia Asia Berhad 539435-K
10th Floor, Bangunan Kurnia,
No. 32, Jalan Yap Ah Shak,
50300 Kuala Lumpur
T: 603 2693 1668
F: 603 2697 0067
E: [email protected]
B
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T o g e t h e r
www.kurnia.com
annual report 2011
annual report 2011
A Special Tribute
To Our Staff.
Kurnia Asia Berhad has come a long way since its establishment and is still the forerunner in
the general insurance business. The Group owes much of its success to its dedicated team of
staff who has worked together over the years to uphold and raise the brand name above its
peers. Their undivided commitment and loyalty towards the Company’s performance has built
a strong and dynamic force to be reckoned with. Innovation coupled with professionalism and
integrity, the team will continue to join hands in “Building Strength Together” to achieve
greater heights.
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1
Kurnia Asia Berhad
annual report 2011
VISION & MISSION
TO BE A LEADING FINANCIAL
SERVICES GROUP IN THE
ASEAN REGION
To expand regionally into
neighbouring countries and
become a leading insurer in
the ASEAN region
To provide quality services
to customers
To generate reasonable
returns to shareholders
consistently
Contents
page
Notice of Annual General Meeting
Corporate Information
Branch Network
Financial Highlights
Corporate Milestones
Chairman’s Statement
Board of Directors’ Profile
Management Team
Statement on Corporate Governance
Audit Committee Report
Statement on Internal Control
Products & Services
Analysis on the Financial Statements
Financial Statements
Additional Compliance Information
List of Top 10 Properties
Analysis of Shareholdings
Form of Proxy
2
4
6
8
10
12
18
22
23
27
29
32
36
39
135
136
138
143
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2
Kurnia Asia Berhad
annual report 2011
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the ELEVENTH ANNUAL GENERAL MEETING of Kurnia
Asia Berhad (“KAB”) will be held at 9th Floor, Training Auditorium, Menara Kurnia, Block B4,
Leisure Commerce Square, No. 9 Jalan PJS 8/9, 46150 Petaling Jaya, Selangor Darul Ehsan
on Wednesday, 27 June 2012 at 10.00 a.m. to transact the following businesses :AGENDA
1.
To receive the Audited Financial Statements for the financial year ended 31 December 2011 and the
Reports of Directors and Auditors thereon.
2.
To re-elect the following Directors who retire pursuant to Article 110 of the Company’s Articles of
Association :(a)
(b)
Dato’ Wira Othman bin Abdul
Datuk Kua Chung Sen
3.
To re-appoint Messrs. KPMG as Auditors of the Company and to authorise the Directors to fix their
remuneration.
4.
AS SPECIAL BUSINESS
RESOLUTION 1
RESOLUTION 2
RESOLUTION 3
RESOLUTION 4
To consider and if thought fit, to pass the following resolutions:4.1 Ordinary Resolution
Authority to Issue Shares
RESOLUTION 5
“THAT subject always to the Companies Act, 1965 (“the Act”) and the approvals of the relevant
governmental and/or regulatory authorities, the Directors be and are hereby authorised pursuant to
Section 132D of the Act to issue shares in the Company at any time until the conclusion of the next
Annual General Meeting upon such terms and conditions and for such purposes that the Directors
may in their absolute discretion deem fit provided that the aggregate number of shares to be issued
pursuant to this Resolution does not exceed 10% of the issued share capital of the Company for the
time being.”
4.2 Special Resolution
Proposed Change of Name from Kurnia Asia Berhad to KSK Group Berhad
“THAT the name of the Company be changed from “Kurnia Asia Berhad” to “KSK Group Berhad”
with effect from the date of the Certificate of Incorporation on Change of Name of the Company to
be issued by the Companies Commission of Malaysia, AND THAT all references in the Memorandum
and Articles of Association to the name “Kurnia Asia Berhad”, wherever the same may appear, shall
be deleted and substituted with “KSK Group Berhad”.
AND THAT the Directors and/or Company Secretary of the Company be and are hereby authorised to
carry out all necessary formalities to effect the Proposed Change of Name of the Company.”
5.
To transact any other business for which due notice shall have been received.
RESOLUTION 6
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Kurnia Asia Berhad
annual report 2011
3
Notice of Annual General Meeting (cont’d)
Notes:
1.
In respect of deposited securities, only depositors whose names appear in the Record of Depositors as at 21June 2012 be regarded as
members and entitled to attend, speak and vote at the Meeting,
2.
A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a Member
of the Company and a Member may appoint any persons to be his proxy. The provisions of Section 149(1)(b) of the Companies Act, 1965 shall
not apply to the Company.
3.
A Member shall be entitled to appoint not more than three (3) proxies to attend and vote at the Meeting. Where a Member appoints more than
one (1) proxy, the appointment shall be invalid unless the Member specifies the proportions of his holding to be represented by each proxy.
4.
The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing, or if the appointer
is a corporation, either under its Common Seal or under the hand of its attorney duly authorised.
5.
The instrument appointing a proxy and the power of attorney or other authority (if any), under which it is signed or a notarially certified copy
thereof, must be deposited at the Registered Office of the Company at 10th Floor, Bangunan Kurnia, No. 32 Jalan Yap Ah Shak, 50300 Kuala
Lumpur not less than forty eight (48) hours before the time for holding the Meeting or any adjournment thereof.
6.
Explanatory Notes on Special Business:
Resolution 5
Authority to Issue Shares
At last year’s Annual General Meeting (“AGM”), mandate was given to the Directors of the Company to issue and allot not more than 10% of the
issued share capital of the Company. However, the mandate was not utilised and accordingly will lapse at this forthcoming AGM. As such, the
Board would like to seek for a renewal of the mandate.
The proposed Ordinary Resolution 5, if passed, will empower the Directors of the Company to issue and allot not more than 10% of the issued
share capital of the Company subject to the approvals of all the relevant governmental and/or other regulatory bodies and for such purposes as
the Directors consider would be in the interest of the Company.
The authority will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares,
for purpose of funding future investment project(s), working capital and/or acquisitions.
This authorisation will, unless revoked or varied by the Company in a general meeting, expire at the next AGM of the Company.
Resolution 6
Proposed Change of Name
The Board proposed to change the Company’s name from “Kurnia Asia Berhad” to “KSK Group Berhad” (Proposed Change of Name).
The proposed change of name is to facilitate the terms of the Sale and Purchase Agreement (“SPA”) dated 12 April 2012 in relation to the
proposed disposal by the Company of its 100% equity interest in Kurnia Insurans (Malaysia) Berhad to AmG Insurance Berhad, to be approved
at the EGM of the Company to be held on a date to be announced.
The approval of the Companies Commission of Malaysia (“CCM”)for the proposed name “KSK Group Berhad” had been obtained on
23 May 2012. The proposed Change of Name is now subject to the shareholders’ approval to be obtained at the forthcoming AGM.
The proposed Change of Name, if approved by the shareholders of the Company, will be effective from the date of issuance of the Certificate
of Incorporation on Change of Name by CCM. The Memorandum and Articles of Association of the Company will be amended accordingly to
reflect the change of name.
BY ORDER OF THE BOARD
CHUNG PEI PEI
SEOW FEI SAN
Secretaries
Kuala Lumpur
Date : 5 June 2012
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Kurnia Asia Berhad
annual report 2011
Corporate Information
Board of Directors
Tan Sri Dato’ Paduka Kua Sian Kooi
(Executive Chairman/ Non-Independent Executive Director)
Dato’ Wira Othman Bin Abdul
(Independent Non-Executive Director)
Datuk Kua Chung Sen
(Deputy Executive Chairman/ Non-Independent Executive Director)
Leow Ming Fong @ Leow Min Fong
Dato’ Quah Teong Moo
(Non-Independent Non-Executive Director)
Dato’ Dr. Sharifuddin bin Abdul Wahab
Audit Committee
Registered Office
Auditors
(Chairman)
(Member)
Kurnia Asia Berhad
10th Floor, Bangunan Kurnia
No. 32, Jalan Yap Ah Shak
50300 Kuala Lumpur
Tel No. : 603 2693 1668
Fax No. : 603 2697 0067
E-mail : [email protected]
Website : www.kurnia.com
KPMG (Firm No. AF0758)
Chartered Accountants
KPMG Tower
No. 8 First Avenue
Bandar Utama
47800 Petaling Jaya
Selangor Darul Ehsan
Tel No. : 603 7721 3388
Fax No. : 603 7721 3399
Company Secretary
Principal Banker
Chung Pei Pei
(F) (MAICSA 7014594)
Malayan Banking Berhad
Bandar Sunway Branch
No. 31-32, Jalan PJS 11/28A
Bandar Sunway
46150 Petaling Jaya
Tel No. : 603 5637 0871
Fax No. : 603 5637 0869
(Member)
Registrar
Seow Fei San
(F) (MAICSA 7009732)
Symphony Share Registrars Sdn Bhd
Level 6, Symphony House
Block D13, Pusat Dagangan Dana 1
Jalan PJU 1A/46
47301 Petaling Jaya
Tel No. : 603 7841 8000
Fax No. : 603 7840 8008
In n o vati v e
T h i nk i n g
Creative ideas come from innovative thinking.
At Kurnia, we pride ourselves as innovators of various
valuable protection plans. We constantly come up with
new ideas to enhance our products and services to meet
the ever-changing needs of our customers.
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Kurnia Asia Berhad
annual report 2011
KURNIA ASIA BERHAD
(539435-K)
10th Floor
Bangunan Kurnia
No 32, Jalan Yap Ah Shak
50300 Kuala Lumpur
Malaysia
Tel
: 603 2693 1668
Fax : 603 2697 0067
E-mail: [email protected]
Web : www.kurnia.com
ALOR SETAR
Wisma Kurnia
No. 18, Lebuhraya Darul Aman
05100 Alor Setar, Kedah
Tel : 04 731 1320
Fax : 04 731 0888
BATU PAHAT
No. 12, Jalan Maju Barat
Taman Maju
83000 Batu Pahat, Johor
Tel : 07 432 6199
Fax : 07 432 5396
BUTTERWORTH
No. 9, Jalan Todak 1
Pusat Bandar Sunway
13700 Seberang Jaya
Prai, Butterworth, Penang
Tel : 04 397 5085
Fax : 04 397 8226
CENTRAL
Menara Kurnia
No. 9, Jalan PJS 8/9
46150 Petaling Jaya, Selangor
Tel : 03 7875 3333
Fax : 03 7875 9933
Branch Network
KURNIA INSURANS
(MALAYSIA) BERHAD
(44191-P)
Menara Kurnia
46150 Petaling Jaya
Malaysia
Tel
: 603 7875 3333
Fax : 603 7875 9933
E-mail: [email protected]
Web : www.kurnia.com
PT. KURNIA INSURANCE
INDONESIA
Plaza GRI, 12th Floor
JI. H. R. Rasuna Said
Blok X-2, No. 1 Jakarta
12950 Indonesia
Tel
: (62) 21 520 3003
Fax : (62) 21 520 3002
Web : www.kurnia.com/
indonesia
IPOH
No. 16 & 18,
Persiaran Greentown 6
Pusat Perdagangan Greentown
30450 Ipoh, Perak
Tel : 05 255 4097
Fax : 05 255 6020
KURNIA INSURANCE
(THAILAND) CO., LTD.
9th-10th FL.
Vorawat Building
849, Silom Road
Silom, Bangrak
Bangkok 10500
Tel
: 0 2635 1555
Fax : 0 2635 1298 9
Web : www.kurnia.com/
thailand
KANGAR
No. 58, Jalan Penjara
Medan Syed Alwi
01000 Kangar, Perlis
Tel : 04 976 8905
Fax : 04 977 3636
JOHOR BAHRU
No. 12, 12A & 12B
Jalan Padi Satu
Bandar Baru Uda
81200 Johor Bahru, Johor
Tel : 07 238 9872
Fax : 07 238 7625
KEPONG
No. 4-G To 4-3, Block B
Lot B2, Jalan Prima 5
Pusat Niaga Metro Prima
52100 Kuala Lumpur
Wilayah Persekutuan
Tel : 03 6257 7623
Fax : 03 6257 8249
JOHOR JAYA
No. 110, Jalan Ros Merah 2/17
Taman Johor Jaya
81100 Johor Bahru, Johor
Tel : 07 355 2970
Fax : 07 358 4754
KLANG
No. 27, Jalan Tiara 3
Bandar Baru Klang
41150 Klang, Selangor
Tel : 03 3341 0559
Fax : 03 3342 6890
KAJANG
No. 31, Jalan Ria Satu (1)
Kawasan Perindustrian Ria
Off Jalan Semenyih
43000 Kajang, Selangor
Tel : 03 8737 9236
Fax : 03 8734 1467
KLUANG
No. 8, Jalan Persiaran Yayasan
86000 Kluang, Johor
Tel : 07 772 2182
Fax : 07 773 3993
page
Kurnia Asia Berhad
annual report 2011
Branch Network (cont’d)
KOTA BHARU
Lot 358 & 359, Seksyen 27
Jalan Sri Cemerlang
15300 Kota Bharu, Kelantan
Tel : 09 744 3312
Fax : 09 744 9633
KOTA KINABALU
Lot 47, Lrg Bandaran Berjaya 5
Bandaran Berjaya, Jalan Padang
88000 Kota Kinabalu, Sabah
Tel : 088 232 200
Fax : 088 232 204
KUALA LUMPUR
Bangunan Kurnia
50300 Kuala Lumpur
Wilayah Persekutuan
Tel : 03 2693 2937
Fax : 03 2693 8431
KUALA TERENGGANU
No. 26, Jalan Sultan Mahmud
20400 Kuala Terengganu
Terengganu
Tel : 09 624 6561
Fax : 09 624 6531
KUANTAN
B-344, Jalan Beserah
25300 Kuantan, Pahang
Tel : 09 566 4527
Fax : 09 566 1164
KUCHING
No. 246 & 247
Jalan Datuk Wee Kheng Chiang
93450 Kuching, Sarawak
Tel : 082 247 288
Fax : 082 422 914
MELAKA
No. 162, Jalan Taman Melaka Raya
75000, Melaka
Tel : 06 281 3707
Fax : 06 288 3090
MIRI
Lot 665, Jalan Permaisuri
98000 Miri, Sarawak
Tel : 085 420 102
Fax : 085 420 924
PENANG
2F, Lorong Selamat
10400, Penang
Tel : 04 229 7181
Fax : 04 228 9191
SEGAMAT
No. 55, Jalan Genuang Kampung
85000 Segamat, Johor
Tel : 07 932 9303
Fax : 07 932 1701
SELANGOR
Wisma Kurnia, No. 149-151
Jalan Maharajalela
50150 Kuala Lumpur
Wilayah Persekutuan
Tel : 03 2148 1528
Fax : 03 2145 9949
SEREMBAN
No. 32, Beta Ria Business Centre
Jalan Durian Emas 4
Off Jalan Dato’ Siamang Gagap
70100 Seremban, Negeri Sembilan
Tel : 06 767 2158
Fax : 06 763 8462
SIBU
Lot 438, Block 5
1st Floor, Town District
No. 16-E, Lane 4, Lanang Road
96000 Sibu, Sarawak
Tel : 084 348 333
Fax : 084 317 766
SITIAWAN
No. 11, Taman Sentosa Dua
Jalan Lumut
32000 Sitiawan, Perak
Tel : 05 691 0515
Fax : 05 691 2341
SUNGAI PETANI
No. 9, Jalan Cempaka 1/1
Bandar Aman Jaya
08000 Sungai Petani, Kedah
Tel : 04 442 8218
Fax : 04 442 8217
TAIPING
No. 408, Taman Saujana
Jalan Kamunting
34600 Kamunting
Taiping, Perak
Tel : 05 807 2254
Fax : 05 808 8922
TAWAU
TB311, 1st Floor
Block 36, Fajar Complex
Jalan Haji Karim
91000 Tawau, Sabah
Tel : 089 762 633
Fax : 089 762 533
TEMERLOH
27, Jalan Sudirman 3
Bandar Sri Semantan
28000 Temerloh, Pahang
Tel : 09 296 0933
Fax : 09 296 6933
7
page
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Kurnia Asia Berhad
annual report 2011
Financial Highlights
For the
6 months
ended
31 December
For the financial year
ended 30 June
Kurnia Asia Berhad
2008
RM Million
2009
Restated
For the financial year
ended 31 December
2009
2010
2011
Restated
1
2
Gross premium written
1,120.0
1,052.1
473.9
1,058.8
1,109.7
Net premium
1,009.5
923.6
416.2
838.4
772.0
Earned premium
1,013.9
983.1
435.4
852.3
774.6
(377.3)
(4.3)
3.6
(51.0)
(4.8)
Underwriting (deficit) / surplus
Investment & other income
93.2
47.8
58.9
115.7
104.0
Profit / (Loss) before tax
(290.0)
14.0
51.3
29.6
60.8
Profit / (Loss) for the year / period
(277.4)
31.9
43.1
15.0
47.8
Total assets
2,115.3
2,296.9
2,580.6
2,584.4
2,761.2
Insurance contract liabilities
1,807.2
1,519.7
1,775.4
1,669.2
1,690.8
226.1
255.9
300.1
327.8
401.4
Shareholders’ fund
Restated1
Prior year figures have been restated to reflect the effect of change in accounting policies in respect of insurance claims liabilities arising from the adoption of the
Risk-Based Capital Framework by the Malaysian insurance subsidiary.
Restated2
31 December 2009 figures have been restated to conform with FRS 4 Insurance Contracts, whereby the element of deferred acquisition cost has been excluded from the
earned premium in income statements; and reinsurance recovery of insurance contract liabilities were reclassed to be presented as reinsurance assets in statement of
financial position. Prior years (financial year ended 30 June 2008 to 2009) were not restated as it is impractical to carry out recomputation.
^
08R1
09R1^
*
09R2
772.0
416.2
838.4
923.6
1,009.5
1,109.7
473.9
1,058.8
Net Premium
(RM Million)
1,052.1
1,120.0
Gross Premium
(RM Million)
10**
11**
08^R1
09R1^
*
09R2
10**
11**
page
Financial Highlights (cont’d)
10**
11**
327.8
300.1
*
09R2
10**
11**
10**
11**
47.8
60.8
*
09R2
15.0
29.6
09R1^
09R1^
*
09R2
10**
11**
(277.4)
51.3
^
08R1
09R1^
Profit/(Loss) for The Year/Period
(RM Million)
14.0
Profit/(Loss) Before Tax
(RM Million)
^
08R1
43.1
09R1^
31.9
08^R1
255.9
226.1
401.4
2,584.4
*
09R2
2,761.2
2,580.6
Shareholders’ Fund
(RM Million)
2,296.9
2,115.3
Total Assets
(RM Million)
(290.0)
Kurnia Asia Berhad
annual report 2011
^
For 12 months ended 30 June
* For 6 months ended 31 December 2009
** For 12 months ended 31 December
^
08R1
9
page
10
Kurnia Asia Berhad
annual report 2011
Corporate Milestones
KURNIA INSURANS (MALAYSIA) BERHAD
1991
Assumed present name as Kurnia Insurans (Malaysia) Berhad
1993
Gross premium surpassed RM200 million
1995
Total assets surpassed RM500 million
1996
Pre-tax profit surpassed RM100 million; Attained MS ISO 9002
1997
Gross premium surpassed RM500 million
1998
Paid-up capital increased to RM100 million
1999
Total assets surpassed RM1 billion; “A” Rating for Claims Paying Ability by
MARC
2000
Launch of Kurnia Auto Assist (KAA)
2001
Paid-up capital increased to RM200 million; Corporate Head Office
moved to the 25-storey Menara Kurnia
2002
“A” Rating for General Insurance Financial Strength, accredited by MARC;
Attained MS ISO 9000:2000
2003
Total assets surpassed RM1.5 billion; Launch of Kurnia Express (KE)
2004
Gross premium surpassed RM1 billion; “A+” Rating for General Insurance
Financial Strength, upgraded by MARC; Launch of MediGuard and
MediGuard Express
2005
KURNIA ASIA BERHAD
Assumed present name as Kurnia Asia
Berhad (KAB)
Acquisition of Kurnia Insurans (Malaysia)
Berhad; Formation of Kurnia Asia Berhad
Group
Listing on the then Main Board of Bursa
Securities (KURASIA 5097); Inclusion in the
MSCI Malaysia Index; Inclusion in the then
Kuala Lumpur Composite Index (KLCI)
2006
“A” Rating for General Insurance Financial Strength re-affirmed by MARC;
Launch of 2 new divisions - Property & Casualty Division & Motor Division;
Launched 8 new medical insurance policies - MediGuard Junior, Grads,
Family, Senior, Biz, Lady, Premier and Value
Declaration of Interim Dividend of 9.027
sen per share for Financial Year Ended
30 June 2006
2007
Total assets surpassed RM2 billion
Completed acquisition of effective 100%
equity interest in PT. Kurnia Insurance
Indonesia; Launch of TOP (Transformation
of Operations & Performance) Programme
2008
Launch of “Auto Shield” plan; Awarded Malaysia’s Most Valuable Brand
(MMVB) 2007; Partnership with Microsoft Malaysia to become the first user
of Microsoft Dynamics CRM 4.0; Won Bronze in Brand Leadership Award
under Life and General Insurance Category by Malaysia Brand Equity
Further capitalisation of existing
subsidiaries, Kurnia Insurans (Malaysia)
Berhad and PT. Kurnia Insurance Indonesia
(KII); Acquisition of 25% of Kurnia Insurance
Thailand (KIT)
2009
Launch of “Perfect 10” personal accident plan, KAA Riders & enhanced
KE services; Introduced Compensation for Assessed Repair Time (CART)
extension service; SMS alerts & notifications; Awarded MMVB 2008 and
2009; Launch of “Perfect Rider”; Launch of “One Touch Campaign”;
Upgraded compliance certification to MS ISO 9001:2008
KII was awarded 2009 Third Best Insurer
with equity below IDR 50 billion by Media
Asuransi
2010
Launch of “Perfect 10 Plus”, “Pet Insurance” and “Student Personal
Accident” plans; KAA Riders service extended to Johor, Penang and
Malacca; Launch of KurniaInsurance Facebook and Twitter pages; First
general insurer to adopt the Insurance Services Malaysia (ISM) – Automotive
Business Intelligence system, which is an independent vehicle valuation
system; Integrated its sales systems with the ISM – No Claims Discount
(NCD) system for reference of eligible NCD for motor insurance
Incorporated Kurnia (Cambodia)
Incorporated Co., Ltd (KCI) with
60% equity interest in KCI; Further
capitalisation of associated company,
KIT
2011
Launch of Kurnia Mobile iPhone application; Launch of “MediGuard
Supreme”; Launch of “AutoGuard Warranty and “PA Supreme”; Launch
of Kurnia Mobile One Touch application
KAB won “Industry Excellence Award”
based on the Malaysia 1000 ranking
exercise.
N u rt uri ng
P ote nti a l
People are the core component of a successful and sustainable
business. We believe in nurturing individuals’ abilities and potential,
recognising talents and rewarding achievements to strengthen the
team in sustaining the Company’s growth. This is a testimonial of
several milestones that we have achieved in the past.
page
12
Kurnia Asia Berhad
annual report 2011
Chairman’s Statement
Dear Shareholders,
On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial
Statements of Kurnia Asia Berhad (KAB or Group) for the financial year ended 31 December 2011
(FYE 2011).
FINANCIAL REVIEW
Stronger Net Earnings and Growth in Non-Motor Segment
The year 2011 was a significant year for us as it marked the 20th
anniversary of our main subsidiary, Kurnia Insurans (Malaysia)
Berhad (KIMB). From its humble beginnings two decades ago,
KIMB has grown to become a household brand and is now a
leading general insurer in the country. Throughout the years,
together, we have upheld the spirit of strengthening the company’s
operations and performance, and we are delighted to see the
resilient and commendable growth in our non-motor business as
we grow and diversify our business.
We are pleased to announce that for the year under review, the
Group’s overall gross premiums grew by a healthy 4.8% year-onyear (y-o-y), driven by the non-motor segment, which posted a
strong growth rate of 20.2%. This was mainly attributed to KIMB,
whose overall gross premium registered a 3.8% growth y-o-y, led
by its non-motor gross premium, which expanded by 18.7%. As
a result, KIMB’s portfolio mix of motor and non-motor continued
to improve to 80%: 20% ratio (2010 – 82%: 18%).
We achieved a net profit of RM47.8 million for the year under
review, a significant increase of 218%, from the RM15.0 million
recorded last year. This was mainly due to stronger underwriting
performance, from a deficit of RM51.0 million recorded last year
to a small deficit of RM4.8 million, almost a breakeven.
KIMB’s investment income for the FYE 2011 stood at RM103.7
million, 9.7% or RM11.2 million lower than previous year’s
performance. This was mainly attributable to the weaker
investment environment in particular during the third quarter of
2011. Nevertheless, the prudent and defensive nature of KIMB’s
investment portfolio continued to be the driving force for a
sustained income contribution. Net investment yield for the FYE
2011 stood at 5.8% vis-à-vis 6.3% last year.
The net asset value of the Group improved to RM401.4 million as
at 31 December 2011 from RM327.8 million as at 31 December
2010. The increase was primarily due to the surplus on revaluation
of properties amounting to RM30.7 million, as well as RM47.8
million net profits recorded during the period.
Aside from KIMB, we are also pleased to report that KAB’s two
other insurance operations recorded encouraging growth for the
FYE 2011. PT. Kurnia Insurance Indonesia (KII) grew by 50% in
terms of gross premium compared to the same period last year,
while Kurnia Insurance (Thailand) Co., Ltd. (KIT) achieved a 48%
gross premium growth during the same period.
The Group is optimistic about the growth potential in both
Indonesia and Thailand. The potential to grow in these two
markets is undeniable, as these economies have remained
resilient despite the external turbulent economic conditions – In
2011, Indonesia enjoyed an economic growth of over 6% while
the economic growth in Thailand was in excess of 4%. Nonlife insurance product led by motor insurance is set to grow
significantly in these two markets in the coming years.
Taking cue from the successful transformation programme
at KIMB, KII and KIT have since last year embarked on their
own transformation programmes, which aim to strengthen the
companies’ fundamentals and operational platform to prepare
for rapid growth in the years to come. In line with the Group’s
direction, KIT is projected to achieve gross premium income of
THB2 billion for the year ending 31 December 2012, while KII’s
gross premium target is IDR300 billion for the same period.
We are happy that our strategy to accelerate the growth of our
non-motor business continues to show positive and improving
trend while prudent underwriting and cost control measures have
helped the Group to improve its underwriting results without
compromising on the quality of our service to customers.
Moving forward, the Group will continue to build on its strengths,
and focus on its business goals and strategies to enhance
shareholders’ value. On the same note, the Group will also
explore various opportunities to grow and expand its business.
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Kurnia Asia Berhad
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13
Chairman’s Statement (cont’d)
OPERATIONS REVIEW
While we continue to maintain our market leadership in the motor
insurance industry, we have also stamped a strong footing in
the non-motor sector. KIMB has aggressively strived towards
achieving stronger growth in its non-motor business. The growth
in the non-motor segment has been the key driver to achieve
a more balanced portfolio during the recent years, including the
year under review.
In pursuit of diversification, we have taken several initiatives to
increase our capability and competency in underwriting nonmotor business. Some of these include driving agency sales,
developing alternative distribution channels to achieve bigger
market reach, strengthening our non-motor team’s underwriting
and technical knowledge, and enhancing our service level.
Committed to excellence and guided by the high standards of
business ethics in the insurance industry, KAB was awarded the
“Industry Excellence Award” in the Insurance category at the
launching ceremony of the 5th Edition of Malaysia 1000, Directory
of Top Malaysian Companies on 14 September 2011. The award
further reaffirmed the strong “Kurnia” brand value and its position
as one of the leading general insurers in the country.
Value Added Products and Services
To remain competitive, we recognise the need for innovation,
via the introduction of new non-motor products in profitable
segments and provision of continuous enhancements to our
existing products and value-added services. This is also in line
with our customer service commitment to offer quality products
and excellent services to our customers. Over the last 15 months,
KIMB has strengthened its product development teams, which
focused on introducing innovative and value-added products to
meet customers’ needs and expectations.
The Malaysian medical and health insurance sector is expected
to sustain strong growth, driven by upward trends in consumer
awareness coupled with an increasing need for cover against
escalating healthcare costs. During the first half of 2011, KIMB
launched a new medical product, MediGuard Supreme, an
enhanced comprehensive medical insurance protection until the
age of 85 years. This yearly renewable hospital and surgical policy
added extra features for the benefits of its policyholders, such as
double overall annual limit upon diagnosis of critical illnesses, noclaim bonus, medical second opinion, family discount, renewable
until age 85, high annual limits for both outpatient kidney dialysis
or cancer treatment, and in-hospital physician visitation. The
enhanced extended coverage provides relief to customers in view
of the rising healthcare costs when the unexpected hospitalisation
takes place due to an accident or illness.
The introduction of the health insurance plan designated
for foreign workers will also bode well and drive growth for
KIMB’s foreign workers insurance products. KIMB has been
appointed by the Human Resource Ministry and Health Ministry
of Malaysia to provide insurance coverage for employment
accidents, surgical and hospitalisation to foreign workers. Foreign
Worker Compensation Scheme (FWCS) and Foreign Worker
Hospitalisation and Surgical Insurance Scheme (SKHPPA) are
designed to reduce the financial burden of the foreign workers’
employers in the event of an accident or illness. We are pleased
that KIMB has garnered strong support from its industrial clients
for these two products.
In March 2011, KIMB became the first general insurer in Malaysia
to launch its very own mobile application for iPhone users called
Kurnia Mobile, which offers ease and convenience to customers
and agents alike. This significant initiative is part of the company’s
continuous effort in providing the best customer service as well
as keeping up with the advancement in mobile technology.
Following the successful launch of Kurnia Mobile, KIMB continues
to further enhance its mobile technology through the launch of its
second mobile application called Kurnia One Touch in October
2011. Living up to its name, Kurnia One Touch aims to reach
out to our policyholders with just a click away, to further assist
them in the event of any road emergency and to expedite our
claims service. Kurnia One Touch is a free mobile application and
is currently available for major mobile platforms such as iPhone,
Android and BlackBerry, making it relevant for the vast majority of
data capable smartphones.
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Kurnia Asia Berhad
annual report 2011
The new features of the application include the ability to:
• Locate users through GPS,
• Store and send user’s information, such as name, car plate
number and contact details,
• Notify claim by allowing user to take, attach and send photos
of damaged vehicle, accident scene or third-party’s details
using the mobile camera function,
• Locate nearest Kurnia branches and workshops,
• Access emergency numbers listing, and
• Provide more information about Kurnia Insurans.
In August 2011, KIMB continued to roll out two new innovative
products, namely AutoGuard Warranty, a warranty plan that
covers unforeseen mechanical and electrical breakdown of the
vehicle, and PA Supreme, a personal accident plan that covers
beyond accidental injuries. While standard personal accident
policies are triggered only in the case of accidents, PA Supreme
provides extra features for the benefits of its policyholders,
covering:
• Medical expenses caused by Dengue, Malaria, Japanese
Encephalitis (JE), and Chikungunya
• Expenses related to trauma counseling, physiotherapy,
psychotherapy or rehabilitation
• Cashless hospital admission and discharge from panel
hospitals
• Actual costs of orthopedic equipment for permanent
disablement
• Renewal bonus on accidental death and permanent
disablement benefit
• Other benefits and free extensions.
This policy also provides peace of mind as KIMB partnered with
internationally acclaimed service provider, International SOS
to provide overseas medical advice, referral, evacuation and
repatriation for PA Supreme policyholders.
As for the new motor insurance product, AutoGuard Warranty
protects unforeseen mechanical and electrical breakdown
of the vehicle, and provides savings for major repairs. The
plan is available through selected secondhand car dealers for
unregistered reconditioned vehicles below 6 years old from
the date of manufacturer, or with mileage of less than 100,000
kilometres at the point of registration.
In early 2012, KIMB was among the six insurance companies
being appointed as official travel insurance service providers to
provide the mandatory travel insurance for members of Malaysian
Association of Tour & Travel Agents (MATTA). The move is to ensure
consumers’ welfare is protected when traveling. The insurance will
cover all or most of the eight critical points that are crucial, which
include medical, hospitalisation and travel expenses, emergency
medical evacuation and repatriation, reimbursement of deposits
or full payment of air tickets or tour packages, repatriation of
mortal remains, compassionate visitation benefits, accidental
death, permanent disability and 24-hour emergency hotline.
As part of our non-motor expansion initiatives, KIMB signed
a Memorandum of Understanding (MoU) with Yayasan Guru
Malaysia Berhad (YGMB) on 17 February 2012 to underwrite
Group Personal Accident for a total of 79,000 members/teachers
of YGMB.
On the international front, the Group has embarked on the
Information Technology (IT) platform to enhance operational
efficiency and make it easy for business partners to conduct
business with the companies. KII recently launched an industry
first e-policy system, which is a business portal designed for
KII agents to issue policies to customers on the spot. At KIT,
an e-surveyor system has been launched to improve claims
service to policyholders, where loss surveying is conducted on
the spot after an accident occurs. Going forward, KIT and KII will
continue to be IT savvy for the benefit of its business partners
and customers.
To this end, the Group’s strategy has served it well, and moving
ahead, KAB remains committed to drive business growth and
profitability to ensure that its headline numbers remain strong for
the benefit of all stakeholders.
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Kurnia Asia Berhad
annual report 2011
15
Corporate Social Responsibility
The Group believes in giving back to the community as it endeavors
to create a more caring community and make a significant
difference in the lives of many in the society. As a responsible
corporate citizen, we are committed to serve and support the
community through various events and campaigns.
In April 2011, KIMB sponsored RM10,000 in support of the
8th Annual Blind Leading the Blind Charity Walk, organised by
The Lions Club of Petaling Jaya. This charitable cause, which
was held at Civic Hall, Petaling Jaya gathered more than 2,500
participants for the 3km walk. It was a memorable experience
for our 200 employees who took part in the event. Walkers
are to take off in pairs with one completely blindfolded and the
other leading. The campaign gave the sighted the opportunity to
experience blindness, to value sight and appreciate teamwork.
Most importantly, to raise the much needed fund.
KIMB continued such charitable supports by sponsoring the 10th
Hospis Malaysia Charity Treasure Hunt in May 2011. The hunters
flagged off from Cheras and headed up north to Miami Beach on
the renowned Batu Ferringhi stretch. Other than goodies bags
and bottles of drinking water, KIMB also provided auto assist
breakdown and towing services to the treasure hunt participants
during the hunt.
It was KIMB’s day of sharing with 27 underprivileged children when
the company organised a visitation to Rumah Shalom in August
2011. Themed “A Day We Share,” the objective of this corporate
social responsibility initiative was to share our blessings with the
less fortunate children and raise awareness on the importance of
sharing, giving and caring. We received overwhelming response
for this charitable event, with donations in cash and kind from
our kindhearted employees. The funds collected were use to buy
provisions for the home and items for the children to use in their
daily life.
In sports, KIMB once again co-hosted the Kurnia Saujana
Amateur Championship with Saujana Golf and Country Club for
the 3rd consecutive year. This annual amateur golf tournament
is to acknowledge and applaud outstanding young talents in the
golf fraternity. We believe that this event will continue to serve
as a platform to encourage more aspiring young Malaysians
golfers to test their skills against other international talents and
excel in the game. We are honoured to be the preferred choice
insurance provider for the local golfing community. Our aim is to
strengthen our customer base by reaching out to more golfers in
the country.
As part of our community projects, KIMB recently donated
RM35,000 for Taman Pusat Kepong Residents Association to
build a basketball court. Sharing the vision and enthusiasm of such
community project, KIMB is happy to be given the opportunity
to be associated and be part of the Taman Pusat Kepong
community in contributing to the well-being of the neighbourhood
and fostering a healthy lifestyle among the younger generation.
KIMB trusts that the new basketball court will serve as a platform
to encourage more youths to get active and take up the game.
The court can also be an avenue for other sports or recreational
activities, as well as to gather the residents.
Acknowledging Staff Contribution
The Group has a passion to excel, a desire to bring the best out
of its people and a commitment to take the Group to greater
heights. These have been the very spirit and values that drove
us to what we are today and will continue to take us to higher
levels in time to come. While we celebrate our 20th anniversary
last year, we are deeply honoured for the series of successes and
milestones that we have accomplished throughout the years with
the support of all our stakeholders.
As we expand our business, we continue to grow our people.
It has always been the Group’s philosophy to enrich its
employees’ welfare, expertise and performance. Various staff
benefits and incentives have been introduced and put in place
to ensure that employees’ contribution are acknowledged and
rewarded accordingly. Some of these include promotions,
salary adjustments, bonus payments, free motor/group term life
insurance, complementary lunches, low interest rates for car/
housing loans, and more. We also continue to invest in staff
training and development by organising series of workshops
and seminars throughout the year to further enhance our human
capital capabilities.
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Kurnia Asia Berhad
annual report 2011
On 20 May 2011, in the spirit of camaraderie, our staff and their
families came together to celebrate our Family Day at Taman
Botani, Putrajaya. With the theme, 1Kurnia, the event gathered
a total of over 600 staff and their family members for a fun-filled
Sunday. This event was significant as it brought staff and their
families together, which not only strengthens the family ties and
co-worker relationships, but also gave an opportunity for us to
get to know one another. It was also our token of appreciation
in recognition of staff’s contributions towards the company’s
growth.
I would like to take this opportunity to thank all staff for working
together as a family, with mutual respect and consideration for
one another. Let’s continue to provide a harmonious working
environment in which our employees’ contributions and ideas
are both recognised and valued. We definitely look forward to
continuing our meaningful and fruitful journey with you.
Celebrating Agents Achievements
KIMB celebrated its agents’ achievements in its Annual Agency
Convention and Awards Night at Genting International Convention
Centre on 30 July 2011. The 3-day event, which gathered a total
of over 437 agents nationwide, was organised to pay tribute
to KIMB’s agency force for their hard work and productivity in
2010/2011. In total, over 100 top agents strode up the stage
to accept awards in various categories, which included Million
Ringgit Producers, Top Profitable Agents, Top Rookie of the Year,
Top Medical Producer, Top Overall Producers, Top Non Motor
Producers and Chairman’s Challenge Trophy.
KIMB has, for the past 20 years undertaken various initiatives
to arrive at where it is today in terms of its distribution network.
Such initiatives involved the collective efforts and dedication from
employees, agents, distributors and partners who work together
for the mutual benefit of our customers. With this synergy,
we continue to develop long-term partnerships, increase our
agency network and share knowledge and experiences to move
forward.
Industry Outlook
According to the Fitch Ratings Outlook for Malaysia’s insurance
report, the industry in 2012 is stable, supported by sound operating
profitability, steady market growth and manageable exposure to
investment risks. The growth of the Malaysian insurance market
will be driven by various government measures, a low penetration
rate, as well as improving product reach through bancassurance
and direct distribution.
The General Insurance Association of Malaysia (PIAM) also
foresees the outlook for the general insurance industry this year
to be positive with an increased demand for insurance products
and services. In addition, the Government backed Economic
Transformation Program (ETP) is expected to lead growth in
demand for insurance products and services.
In addition, as Bank Negara plans to de-tariff motor insurance
premiums by 2016, there will be gradual increments to motor
insurance premiums with the new motor cover framework. This
bodes well for KIMB, as being the largest motor insurer in the
market, the revised tariff structure is expected to improve its
profitability. There will be more emphasis now on speedy and
quality customer service, as customers will be expecting more
from insurance companies due to the gradual increase in
motor insurance premiums. Hence, we seize this opportunity
to differentiate ourselves from our peers by providing superior
customer service coupled with more value-added services to
attract and satisfy customers.
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Kurnia Asia Berhad
annual report 2011
17
MOVING FORWARD
APPRECIATION
It has always been our vision to project the “Kurnia” brand to
prevail as a household name in Malaysia, a name built to last.
Over the past 20 years, despite lacking an advantage of being
associated with a bank or corporate group franchise, KIMB has
leapt ahead of its peers, and has built a strong agency network
and sizeable customer base. In the midst of intense competition
and stringent regulatory framework, KIMB has grown to reach a
size and market position whereby it would benefit from a merger
with a strong and strategic insurance operator to spur its next
phase of growth. To this end, on 12 April 2012, KAB has entered
into a sale and purchase agreement with AmG Insurance Berhad
(AmG) for the proposed disposal of 100% equity interest in KIMB
for a total cash consideration of RM1.55 billion.
On behalf of the Board of Directors, I would like to take this
opportunity to extend my heartfelt and deepest gratitude to all
our loyal shareholders, valued policyholders, agents, brokers,
business associates, reinsurers and media for their continuous
support and faith in our Group. We also extend our gratitude to
Bank Negara Malaysia, Persatuan Insurans Am Malaysia (PIAM)
and all other relevant authorities for their continuous support and
guidance.
We are excited about this prospect to accelerate the growth of
the “Kurnia” brand and are proud to undertake this exercise for
the mutual benefit of all stakeholders of the Group and to create
a win-win situation for all parties. For KIMB, the merger with AmG
will create Malaysia’s largest general and motor insurance player
giving an opportunity for KIMB to grow to the next level with
the experience of AmG. For KAB, the disposal will enable the
Group to focus on driving the business growth potential of the
Indonesian and Thailand insurance operations. It will also give the
Group an opportunity to diversify into other investment potentials
for the continued growth of the Group, and at the same time,
reward its shareholders.
As we look towards the next financial year and beyond, the
Group is confident and positive of the future given its solid
foundation that has been laid over the years, strong economy
and a disciplined and robust strategy that will ensure continued
growth and sustainable shareholders’ value.
Finally, I would also like to express my sincere appreciation to
our employees, who represent the backbone of our Group.
The success of the Group during the last two decades is the
consequence of your hard work, team spirit and dedication.
I thank you for your contribution and look forward to celebrate
another exciting chapter of success in the decades to come.
Executive Chairman
Kurnia Asia Berhad
29 May 2012
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Kurnia Asia Berhad
annual report 2011
Tan Sri Dato’ Paduka
Kua Sian Kooi
(Executive Chairman/
Non-Independent Executive
Director)
Board of Directors’ Profile
Tan Sri Dato’ Paduka Kua Sian Kooi, Malaysian, 59 years of age was appointed as Director of
Kurnia Asia Berhad (“KAB”) on 12 April 2004 and is currently the Executive Chairman of KAB.
Tan Sri Dato’ Paduka Kua is also currently a Director of Kurnia Insurans (Malaysia) Bhd (“KIMB”),
a subsidiary of KAB, which underwrites general insurance. He has over 30 years of vast insurance
experience and in the later years appointed as the director and chairman of KIMB. Through
determination and diligence, he engineered the transformation of KIMB into the indisputable leader
of the general insurance industry in Malaysia, whether measured in terms of profits, policyholders,
premiums or assets. His other directorship in a public company is Kurnia Foundation.
Tan Sri Dato’ Paduka Kua has attended six (6) out of the seven (7) Board meetings held during the
financial year. Save for Datuk Kua Chung Sen and Dato’ Quah Teong Moo, who are his brothers,
he has no other relationships with any Directors of KAB. He has no conflict of interest with KAB
and has no convictions of any offences within the past ten (10) years.
Datuk Kua Chung Sen
(Deputy Executive Chairman/
Non-Independent Executive
Director)
Datuk Kua Chung Sen, Malaysian, 52 years of age was appointed as Director of KAB on 12 April
2004. He is currently the Deputy Executive Chairman of KAB and also serves as a member of the
Remuneration Committee.
Together with Tan Sri Dato’ Paduka Kua Sian Kooi, he has served in the top management position
of KIMB since 1991 when the then present management took over which was then an insolvent
insurer, Industrial & Commercial Insurance (M) Bhd. He was also instrumental in turning around the
company into the leader in the general insurance industry. He was responsible for overseeing the
establishment and strengthening of the financial and investment division of KIMB in the early years.
He also led in the re-engineering of operational procedures of critical processes. Following that,
he spearheaded the implementation of ISO procedures, resulting in KIMB being ISO accredited
in 1996. He is also very much involved in the strategic direction of the company as well as in
ensuring that business strategies are accurately and effectively implemented. Under his guidance,
KIMB has strengthened all aspects of its operations. His other directorship in a public company
is Kurnia Foundation.
Datuk Kua has attended six (6) out of the seven (7) Board meetings held during the financial year.
Save for Tan Sri Dato’ Paduka Kua Sian Kooi and Dato’ Quah Teong Moo, who are his brothers,
he has no other relationships with any Directors of KAB. He has no conflict of interest with KAB
and has no convictions of any offences within the past ten (10) years.
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Kurnia Asia Berhad
annual report 2011
(Independent Non-Executive
Director)
19
Board of Directors’ Profile (cont’d)
Dato’ Wira Othman bin Abdul, Malaysian, 61 years of age was appointed Director of KAB on 13
April 2004. He serves as the Chairman of the Nominating and Remuneration Committee and is
also a member of the Audit Committee. He was the Chairman of KIMB from March 2005 to June
2008 and served as a member of the Audit Committee of KIMB until June 2008.
Dato’ Wira Othman is an alumnus of University Kebangsaan Malaysia, majoring in sociology. Upon
graduation in 1978, he served with the Family Planning Board and the Kedah State Development
Corporation. From 1980 to 1983, he was the Assistant District Officer of Pendang. He was
elected as a Member of Parliament from April 1983 to 2004 and he was appointed twice as
Parliamentary Secretary in the Prime Minister’s Department from 1987 to 1995 and subsequently
his second appointment was from 1997 to 1999. Thus, Dato’ Wira Othman has 10 years of
experience as a Parliamentary Secretary in the Prime Minister’s Department. He was appointed
as MARA’s Chairman from 1995 to 1997. Subsequently, he was also Chairman of Westport from
1996 to 1998. During the same period from 1996 to 1998, he was also the Director for MBF Cards
Services Sdn Bhd, MBF Discount Card and MBF Pacific Rent-A-Car Sdn Bhd.
Dato’ Wira Othman has attended all of the seven (7) Board meetings held during the financial year.
He has no family relationship with any Director and/or major shareholder of KAB. He has no conflict
of interest with KAB and has no convictions of any offences within the past ten (10) years.
(Non-Independent NonExecutive Director)
Dato’ Quah Teong Moo, Malaysian, 56 years of age was appointed Director of KAB on 29 June
2004.
Dato’ Quah was a director of KIMB from April 2004 until June 2008 before he was appointed
to his current post as Advisor to KIMB. Dato’ Quah has over 15 years of insurance experience,
starting his career with KIMB as an entry-level executive, and has been steadily promoted through
the ranks to senior management position. During this period, he has accumulated vast marketing
experience and an in-depth knowledge of the general insurance industry in Malaysia.
Dato’ Quah has attended all of the seven (7) Board meetings held during the financial year. Save
for Tan Sri Dato’ Paduka Kua Sian Kooi and Datuk Kua Chung Sen, who are his brothers, he has
no other relationships with any Directors of KAB. He has no conflict of interest with KAB and has
no convictions of any offences within the past ten (10) years.
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Kurnia Asia Berhad
annual report 2011
Leow Ming Fong @
Leow Min Fong
Director)
Leow Ming Fong @ Leow Min Fong, Malaysian, 62 years of age was appointed Director of KAB
on 16 June 2006. He is the Chairman of the Audit Committee and a member of the Remuneration
Committee and Nominating Committee.
Leow Min Fong brings with him over more than 30 years of experience in the accounting/auditing
field, having served as an audit partner and concurring partner for several portfolio of clients
including several public listed companies and multinational companies. Upon graduation, he
commenced his articleship with a firm of Chartered Accountants in London, United Kingdom.
Prior to his appointment with the company, he joined KPMG Malaysia until his retirement as one of
the senior partners after a period of 32 years. During his KPMG experience, he has been posted
to various KPMG branches as audit partner inclusive of short-term assignments in Singapore,
British Guinea in South America and Vietnam. He has also acted as partner in charge of KPMG
Cambodia for 3 1/2 years from late 1995 to early 1999. In addition, he has been involved in special
work for fraud investigation, due diligence for merger and acquisitions, reporting accountant for
various corporate exercises for public listed companies.
He is a fellow of the Institute of Chartered Accountants in England and Wales and member of
the Malaysian Institute of Certified Public Accountants and Malaysian Institute of Chartered
Accountants. His other directorships in public listed companies in Malaysia is Focus Point Holdings
Berhad. He is also a director in Canadia Bank PLC, a bank incorporated in Cambodia.
Leow Min Fong has attended all of the seven (7) Board meetings held during the financial year. He
has no family relationship with any Director and/or major shareholder of KAB. He has no conflict of
interest with KAB and has no convictions of any offences within the past ten (10) years.
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Kurnia Asia Berhad
annual report 2011
Dato’ Dr. Sharifuddin bin
Abdul Wahab
Director)
21
Dato’ Dr. Sharifuddin bin Abdul Wahab, Malaysian, 56 years of age was appointed Director of KAB
on 7 May 2010. He is also a member of the Audit, Remuneration and Nominating Committee.
Dato’ Dr. Sharifuddin started his career in the education field as a lecturer in University Pertanian
Malaysia in 1982. Besides lecturing, he was also active in various research and development work.
Subsequently, he left the education field in 1989 and joined Schmidt Scientific Sdn Bhd from 1989
to 2005. In 1995, he was appointed the Executive Director of Schmidt Vietnam Co. Ltd and later
appointed as the Regional Managing Director of Schmidt Singapore & Malaysia in 1999 to 2000.
He was promoted to head the newly restructured organization of Schmidt BioMedTech Asia Ltd in
April 2000 as the President and CEO. During his stint with Schmidt group of companies, he has
demonstrated continous growth, achievements and remarkable leadership in the management
of complex activities within the Bio Science, Technology and Medical field. He left Schmidt
BioMedTech Asia Ltd in 2007 and joined Naim Holdings Berhad in 2008 as Deputy Managing
Director. He was also assigned to head the overseas business development operations in Naim,
until his resignation in January 2010.
Dato’ Dr. Sharifuddin holds a doctorate in Veterinary Medicine from the University of Agriculture,
Faisalabad, Pakistan and a Masters of Science in Animal Reproduction from University Pertanian
Malaysia. For his achievement in the animal reproduction research work, he was given a
commendation award from the former Prime Minister, Tun Dr. Mahathir Mohammad. He was also
awarded the Darjah Utama Yang Amat Mulia Bintang Kenyalang Sarawak which carries the title
Pegawai Bintang Kenyalang (PBK) in 2009 from Tuan Yang Terutama Tun Datuk Patinggi Abang
Haji Muhammad Salahuddin. He was recently awarded the Darjah Dato’ Paduka Mahkota Perak,
DPMP which carries the title Dato’ by His Royal Highness, Paduka Sultan Perak Darul Ridzuan,
Sultan Azlan Muhibbudin Shah ibni Almarhum Sultan Yussuf Izzuddin Shah Ghafarullahu-lah on
19 April 2010.
Dato’ Dr. Sharifuddin has attended all of the seven (7) Board meetings during the financial year. He
has no family relationship with any Director and/or major shareholder of KAB. He has no conflict of
interest with KAB and has no convictions of any offences within the past ten (10) years.
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Kurnia Asia Berhad
annual report 2011
Management Team
KURNIA ASIA BERHAD (KAB)
Board of Directors
Group Executive Chairman
Datuk Kua Chung Sen
Executive Committee (EXCO)
Datuk Kua Chung Sen
Joanne Kua Ying Fei
Management Team
Executive Chairman
Datuk Kua Chung Sen
Deputy Executive Chairman
Joanne Kua Ying Fei
Director,
Group Executive Chairman’s Office
Rachel Ho
Director, Corporate Finance / Strategy &
Planning / Operations
Chung Pei Pei
Company Secretary
Belinda Cheah Sze Yun
Associate Director, Accounts
KURNIA INSURANS
(MALAYSIA) BERHAD (KIMB)
PT KURNIA INSURANCE INDONESIA
(KII)
Board of Directors
Chairman
Raymond Fam Chye Soon
Lian Gee Meng
Wong Kim Teck
Silvius von Lindeiner Genannt von Wildau
Board of Commissioners
Datuk Kua Chung Sen
President Commissioner
Kua Sian Ten
Benny Haryanto Djie
KURNIA INSURANCE THAILAND (KIT)
Board of Directors
Eugene Foong Jun Seong
Pol Gen Watcharapol Prasarnrajkit
Norawat Suwan
Kitti Pusittisak
Rawat Bhudhatham
Chaweng Tatha
Theodor Schupbach
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Kurnia Asia Berhad
annual report 2011
23
Statement on Corporate Governance
The Board of Directors of Kurnia Asia Berhad (“KAB”) is committed to ensure that the highest standard
of corporate governance is practiced throughout the Group as a fundamental objective of protecting
and enhancing the interest of all stakeholders.
The Board is pleased to report to shareholders the manner in which the Principles of corporate
governance contained in the Malaysian Code on Corporate Governance (“Code”) are applied and
the extent of compliance thereof during the financial year under review.
A. BOARD OF DIRECTORS
Board Meetings
Board Balance
The Board currently has six (6) members comprising an
Executive Chairman, Deputy Executive Chairman, three
(3) Independent Non Executive Directors and one (1) NonIndependent Non Executive Director. The Board composition
is in line with Bursa Malaysia Securities Berhad (“Bursa
Securities”) Main Market Listing Requirements (“Main LR”)
that requires one-third (1/3) of the Board members to be
Independent Directors to ensure independence of judgment.
During the financial year under review from 1 January 2011 to
31 December 2011, the Board met on seven (7) occasions.
The Board’s meeting main focus of deliberation is on financial
performance and corporate developments of the Group.
Prior to each Board meeting, the Board members are given
appropriate documentation in advance of each meeting.
These documents include the agenda and reports covering
the areas of corporate, financial and operational matters.
The Board has full access to the senior management of the
Group and the advice and services of the company secretary.
In addition, the Directors, whether as a full board or in their
individual capacity, in furtherance of their duties may seek
independent professional advice at the Company’s expense.
The attendance of the Directors at the Board meetings is set
out in the Director’s Profile, which appear on pages 18 to 21
of this Annual Report.
Appointment of Directors
The appointment of new directors is under the purview of
the Nominating Committee comprised exclusively of nonexecutive directors, majority of whom are independent
which is responsible for identifying and proposing new
candidates for the Board and for assessing directors on an
on-going basis. Any new appointment to the Board must
be upon recommendation by the Nominating Committee
after assessment is done with the consideration of mix skills,
experiences and other qualities that the new candidate should
bring to the Board. As a holding company of an insurance
company, Bank Negara Malaysia’s approval is sought after
approval from the Board is obtained for any new appointment
to the Board of the Company.
The present size and composition of the Board is optimum
and well balanced. As presently constituted, the Board has
the stability, continuity and commitment as well as capacity to
discharge its responsibilities effectively.
At the Company’s level, the Executive Chairman is primarily
responsible for the working of the Board and at Group
level he is responsible to oversee the group’s business and
performance.
Decisions of the Board of Directors are based upon majority
decisions and no single Board member can make decisions
for and on behalf of the Board unless duly authorised by the
Board of Directors. This is to ensure that no individual or
small group of individuals can dominate the Board’s decision
making. The involvement and participation of Independent
Non Executive Directors further provide an element of
independent judgment to bear on the issues of strategy,
performance, resources and standards of conduct in the
Board’s decision making and deliberation. Furthermore, the
three (3) Independent Directors in effect represent minority
shareholders’ interests in the Company by virtue of their roles
and responsibilities as Independent Directors.
page
24
Kurnia Asia Berhad
annual report 2011
Statement on Corporate Governance (Cont’d)
Re-election of Directors
In accordance with the Company’s Articles of Association, one-third (1/3) or the number nearest to one-third (1/3) shall retire from
office at each Annual General Meeting. A retiring Director is eligible for re-appointment. Article 100 of the Company’s Articles of
Association provides that any new or additional Director appointed by the Board during the year shall hold office until the next
Annual General Meeting and shall then be eligible for re-election. The election of each Director is voted on separately.
Directors’ Training
The Directors have participated in and benefitted from conferences, seminars and training programmes on areas pertinent to the
enhancement of their roles and responsibilities as Directors. During the financial year ended 31 December 2011, the Directors in
office had attended the following conferences, seminars and training:
Members of the Board
Conferences, seminars and training
Making Sense of the Auditors Report and its Impact
Datuk Kua Chung Sen
Making Sense of the Auditors Report and its Impact
Assessing the Risk and Control Environment
Failed Business : Deriving Sound Strategic Insights
MIA Conference 2011
Law Governing Directors in a Nutshell: Malaysia Companies Act 1965
Board Committees
In discharging its fiduciary duties, the Board has delegated certain responsibility to the following committees and each committee
operates under their respective approved terms of reference.
a. Audit Committee
The Committee members are as follows :
Chairman
Members
• Leow Ming Fong @ Leow Min Fong
Independent Non Executive Director
• Dato’ Wira Othman bin Abdul
Independent Non-Executive Director
• Dato’ Dr. Sharifuddin bin Abdul Wahab
Independent Non-Executive Director
Terms of reference of the Committee are disclosed in the Audit Committee Report which appear on pages 27 to 28 of this
Annual Report.
b. Nominating Committee
The Committee appointed by the Board of Directors consists of not less than 2 members comprising exclusively of independent
non-executive directors.
The Committee’s members are:
• Dato’ Wira Othman bin Abdul (Chairman)
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Kurnia Asia Berhad
annual report 2011
25
The primary functions of the Nominating Committee are as follows:
a. To recommend the nomination of a person or persons for all directorships to be filled by the shareholders or the board;
b. To consider, in making its recommendations, candidates for directorships proposed by the Managing Director/Chief
Executive Officer and, within the bounds of practicability, by any other senior executive or any director or shareholder;
c. To recommend to the board, directors to fill the seats on board committees;
d. To identify, evaluate and recommend candidates for appointment as Company Secretary;
e. To assess annually the effectiveness of the board as a whole, the committees of the board and the contribution of each
existing individual director and thereafter, recommend its findings to the board; and
f. To review annually the required mix of skills and experience and other qualities, including core competencies which nonexecutive directors should bring to the board and thereafter, recommend its findings to the board.
c. Remuneration Committee
The Committee appointed by the Board of Directors consists of not less than two (2) members comprising mainly of nonexecutive directors.
The Committee members are as follows:
• Dato’ Wira Othman bin Abdul (Chairman)
• Datuk Kua Chung Sen
The Committee is responsible for recommending to the Board the remuneration packages of managing directors, executive
directors and senior management of the Company in all its forms, drawing from outside advice as necessary. The remuneration
packages of non executive directors shall be determined by the Board of Directors as a whole.
The number of directors of the Company who served during the financial year ended 31 December 2011 whose remuneration
falls into the following bands:No. of Directors
Range of Remuneration
Executive
Non-Executive
RM50,001-100,000
-
2
RM100,001 - 150,000
-
1
RM150,001 - 400,000
-
-
RM400,001 - 450,000
-
1
RM450,001 – 1,750,000
-
-
RM1,750,001 – RM1,800,000
1
-
RM1,800,001 – RM4,150,000
-
-
RM4,150,001 – RM4,200,000
1
-
Aggregate Remuneration of the Director of the Company receivable from the group for serving on the Board of the
Company:-
Directors Fee
Salaries and other emoluments
Executive Directors
(RM’000)
Non Executive Directors
(RM’000)
-
240
5,988
434
page
26
Kurnia Asia Berhad
annual report 2011
B. RELATIONSHIP
WITH
SHAREHOLDERS
AND
INVESTORS RELATION
The Board appreciates feedback from their valued
shareholders and consistent with this, it is the intention of
the Board that the shareholders are well informed of all major
developments that have an impact on the Group.
Announcements of quarterly financial results, corporate
proposals and other required announcements were
released on time to ensure fast and efficient dissemination
of information to the shareholders. The Company’s website,
www.kurnia.com provides a comprehensive avenue for up-todate information dissemination, such as dedicated sections
on corporate information including financial information, press
releases and company news.
The Annual General Meeting is used as another forum to
inform the shareholders of current developments with an
opportunity for shareholders to seek clarifications and provide
feedback and comments to the Directors and Management
for consideration.
Internal Control
The Board recognizes that it is responsible for the Group’s
internal control systems and for reviewing its effectiveness.
The Board also maintains a sound internal control system
to safeguard the shareholders’ investments and the Group’s
assets. The overview of the state of the Group’s internal
control is spelt out in the Statement on Internal Control set
out on pages 29 to 30 of this Annual Report.
Relationship with the Auditors
The Board through the Audit Committee has an appropriate
and transparent relationship with the external auditors and the
external auditors are given access to books and records of
the Group.
A summary of the activities of the Audit Committee during the
year are set out under the Audit Committee Report on this
Annual Report.
The amount of non-audit fees paid to the external auditors
and it’s affiliated company during the financial year was
RM335,219.00 for review of RBC Forms, tax and IT advisory
services and divestiture services.
C. ACCOUNTABILITY AND AUDIT
Financial Reporting
Compliance with the Code
In submitting the annual audited financial statements, the
Board is aware of its responsibilities and the requirement to
present a balanced, clear as well as meaningful assessment
of the Group’s performance and future prospects. The
Company’s Financial Statements are prepared in accordance
with the requirements of the provisions of the Companies
Act, 1965 and applicable approved accounting standards in
Malaysia. The Board strives to ensure that the Company complies with
the Principles and Best Practices of the Code. The Board will
endeavour to improve and enhance the procedures from time
to time. The Group has complied with the Best Practice of the
Code.
In discharging its responsibilities, the Board is assisted by the
Audit Committee in scrutinizing information for disclosure to
ensure accuracy, adequacy and completeness. The Statement
of Responsibility by Directors in respect of the preparation of
the annual audited financial statements is set out on page 40
of this Annual Report.
D. BOARD COMMITTEES OF SUBSIDIARY COMPANY
As a measure of good corporate governance, Kurnia Insurans
(Malaysia) Berhad (“KIMB”), the subsidiary of the Company
has formed the following committees:•
•
•
•
Audit Committee
Risk Management Committee
Remuneration Committee
Nominating Committee
page
Kurnia Asia Berhad
annual report 2011
27
Audit Committee Report
Membership and Attendance
During the financial year ended 31 December 2011, a total of five (5) Audit Committee meetings were held. The details of attendance
of the Audit Committee (Committee) members are as follows:Composition of Audit Committee
Attendance of Meetings
Chairman/Independent Non-Executive Director
5/5
Member/Independent Non-Executive Director
5/5
Member/Independent Non-Executive Director
5/5
COMPOSITION
FUNCTIONS AND DUTIES
The Audit Committee shall be appointed by the directors from
amongst themselves and its number shall not be less than three
(3) members and all members must be non-executive directors,
with a majority of whom shall be independent non-executive
directors. The Chairman of the Audit Committee shall be an
independent director.
The functions of the Audit Committee are as follows:-
RIGHTS
The Audit Committee shall, in accordance with the procedure
determined by the Board and at the cost of the Company have
authority to investigate any matter within its terms of reference,
full and unrestricted access to any information pertaining to the
Company and all the resources required to perform its duties. The
Audit Committee shall have direct communication channels with
the external auditors and person(s) carrying out the internal audit
function or activity and be able to obtain independent professional
or other advice and to secure the attendance of outsiders with
relevant experience and expertise if it considers necessary.
(1) to review the following and report the same to the Board of
Directors:(a) with the external auditor, the audit plan, the evaluation of
the system of internal controls, the audit report and the
assistance given by the employees of the company to the
external auditors;
(b) 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;
(c) the internal audit plan, the results of the internal audits or
investigation undertaken and whether or not appropriate
action is taken on the recommendations of the internal
audit function;
(d) the quarterly results and year end financial statements,
prior to the approval by the board of directors. and
(e) any related party transaction and conflict of interest
situation that may arise within the company or group
including any transaction, procedure or course of conduct
that raises questions of management integrity.
(2) to meet with the external auditors, the internal auditors or
both without the presence of the senior management.
(3) to recommend the re-appointment/nomination of auditors and
to review any letter of resignation from the external auditors of
the company; and
page
28
Kurnia Asia Berhad
annual report 2011
Audit Committee Report (Cont’d)
(4) to report promptly to Bursa Securities where the Committee
is of the view that a matter reported by it to the Board of
Directors has not been satisfactorily resolved resulting in a
breach of the Listing Requirements.
MEETINGS
The Committee shall meet at least four (4) times in a year subject
to the quorum of at least two (2) independent directors or more
frequently as circumstances required or upon the request of
any member of the Committee, the external auditors or the
internal auditors with due notice of issues to be discussed
and shall record its conclusions in discharging its duties and
responsibilities. The Committee may invite any Board member or
any member of management or any employee of the Company
who the Committee deems fit to attend its meetings to assist and
to provide pertinent information as necessary.
PROCEDURE OF AUDIT COMMITTEE
The Audit Committee may regulate its own procedures, in
particular:(a) the calling of meetings;
(b) the notice to be given of such meetings;
(c) the voting and proceedings of such meetings;
(d) the keeping of minutes; and
(e) the custody, production and inspection of such minutes.
c. Reviewed the financial statements of the Group on a quarterly
basis;
d. Reviewed 34 branches audit reports, 32 departmental audit
reports and 10 investigative audit reports as well as the
audit recommendation and management response to these
recommendations; and
e. Met with the external auditors twice during the financial year
without the presence of the executive Board members.
THE INTERNAL AUDIT FUNCTION
The principal subsidiary company, Kurnia Insurans (Malaysia)
Berhad has a well-established Internal Audit Department (IAD),
which reports to the Audit Committee (AC) in the monitoring and
managing of risks and internal controls of the Group.
The IAD is independent of the activities or operations of other
departments and is guided by its Audit Charter. Audit assignments
are prioritised based on audit risk assessment where the audit
plan is reviewed and approved by the AC. The IAD also performs
ad-hoc assignments as directed by the AC.
The IAD’s primary role is to assist the AC to discharge its duties
and responsibilities by independently reviewing and reporting:
• on the adequacy and integrity of the company’s system of
internal controls on various departments,
• to provide reasonable assurance that such system continue
to operate satisfactorily and effectively, and
• on the compliance with the established policies and
procedures as well as relevant statutory requirements.
SECRETARY
The Company Secretary or other appropriate senior official shall
be the Secretary to the Audit Committee.
SUMMARY OF ACTIVITIES
During the financial year, the activities undertaken by the
Committee include the following:a. Reviewed the external auditors’ scope of work and audit
plans for the year;
b. Reviewed the internal auditors’ scope of work and audit plans
for the year;
Upon completion of each audit, audit reports together with the
recommended action plans and its implementation status are
presented to the Management and AC. The IAD will monitor
closely the implementation progress of its audit recommendations
to obtain assurance that all major risks and controls have been
addressed by the Management. The IAD also follow-up on the
findings reported by Bank Negara Malaysia / External Auditors.
The Head of the IAD has regular meetings with the AC during
the financial year in order for the audit findings to be raised and
addressed promptly.
The cost of the IAD in respect of the financial year ended 31
December 2011 is RM699,041.65
page
Kurnia Asia Berhad
annual report 2011
29
Statement on Internal Control
The Malaysian Code on Corporate Governance stipulates that the Board of Directors of listed
companies should maintain a sound system of internal control to safeguard shareholders’
investments and Group assets. The Statement on Internal Control is prepared under the requirement
of Paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities
Berhad and in accordance with the “Statement on Internal Control: Guidance for Directors of Public
Listed Companies” issued by the Institute of Internal Auditors Malaysia and as adopted by Bursa
Malaysia Securities Berhad. The Board recognises the importance of a sound system of internal
control to safeguard shareholders’ investments and the Group’s assets, enhance accountability and
monitoring function, minimise fraud and ensure the accuracy and reliability of information reporting
to management.
Responsibility
Key internal control processes
The Board affirms its overall responsibility for the Group’s system
of internal control. This includes reviewing the adequacy and
integrity of financial, operational and compliance controls and
risk management procedures. In view of the limitations that are
inherent in any system of internal control, this system is designed
to manage rather than eliminate the risk of failure to achieve
business objectives. Accordingly, it can only provide reasonable
but not absolute assurance against material misstatement or
error.
The key processes that have been established in reviewing the
adequacy of the system of internal controls of the Group include
the following:
The Group structure
The Group comprises Kurnia Asia Berhad (KAB), its subsidiaries,
Kurnia Insurans (Malaysia) Berhad (KIMB), PT. Kurnia Insurance
Indonesia, Premier Assist Sdn. Bhd., Kurnia Asia Pte. Ltd.,
Kurnia (Cambodia) Incorporated Co. Ltd and its associate,
Kurnia Insurance (Thailand) Co. Ltd. Premier Assist Sdn. Bhd. is
a company involved in the provision of car breakdown assistance
services, Kurnia Asia Pte. Ltd. is an investment holding company
and Kurnia (Cambodia) Incorporated Co. Ltd. is a dormant
company.
The principal operating subsidiary of the Group, KIMB, is regulated
by Bank Negara Malaysia. KIMB’s internal control processes
constitute a major part of the Group’s system of internal control.
In addition, two committees were established at the holding
company, KAB level, namely an Executive Committee (EXCO)
and an Audit Committee to enhance the internal control function
of the Group as a whole.
At holding company level,
• KAB’s EXCO was established by the Board to implement policy
decisions made by the Board and to monitor the Group’s
business direction formulated by the Board. The EXCO is also
to set corporate philosophy /direction, strategy, goals and
targets for the Group, and to review the performance of the
Group on a monthly basis, together with other functions as
stipulated in its terms of reference. The EXCO receives monthly
reports on the performance of the respective subsidiaries and
associate company.
• The Audit Committee of KAB, together with the Audit
Committee of KIMB, are responsible for reviewing the internal
control issues identified by the Internal Audit Department and
the external auditors, as well as to improve the Group’s business
efficiency, the quality of the accounting function, the system of
internal controls and internal audit function. The committee’s
function also includes reviewing the annual and quarterly
financial results and making appropriate recommendation to
the KAB Board for its approval. During the financial year, the
Audit Committee of KAB met 5 times. Further details of the
activities undertaken by the Audit Committee are set out in
the Audit Committee Report.
page
30
Kurnia Asia Berhad
annual report 2011
Statement on Internal Control (Cont’d)
At the principal insurance subsidiary, KIMB level,
• The Audit Committee of KIMB is responsible for reviewing
the internal control issues identified by the Internal
Audit Department and the external auditors, and their
recommendations to improve the company’s business
efficiency, the quality of the accounting function, the
system of internal controls and internal audit function. It is
also responsible for reviewing the adequacy of the scope,
functions and resources of the Internal Audit Department.
The Audit Committee of KIMB held 13 meetings during the
financial year ended 31 December 2011 and had met with the
external auditors twice during the year without the presence
of the management.
• The Internal Audit Department of KIMB reviews compliances
with selected operational policies and procedures and the
effectiveness of the internal control systems and highlights
significant findings in respect of any non-compliance. Audits
are carried out on the selected operating units and branches
as approved by the Audit Committee, focusing on their critical
operational and management activities. The frequency of the
audits is determined by the level of risk assessed. The annual
audit plan is reviewed and approved by the Audit Committee
of KIMB. The annual audit plan is subject to a half yearly
review and any changes to the audit plan is approved by
the Audit Committee of KIMB.The findings of the audits are
submitted to the Audit Committee of KIMB for review at its
regular meetings.
• The Risk Management Committee of KIMB is responsible for
reviewing and approving the company’s Risk Management
Policy and Framework annually so that they remain relevant
and effective. The Committee is also responsible for
overseeing the implementation of the risk management
process. The Committee met 6 times during the financial
year to receive and review reports on risk management
activities of the company as submitted by the Enterprise
Risk Management Department, which is independent from
the management or operational units. The Committee also
reviews and monitors the related risk exposures and ensures
that there are appropriate and adequate internal controls to
actively manage these risks.
• An Investment Committee is also in place with the following
responsibilities:- to review KIMB’s portfolio and strategic investments and
supervise KIMB’s Investment Department on investment
strategies, and major investment evaluations, decisions
and recommendations, with due consideration to and in
compliance with KIMB’s Capital Adequacy management
framework;
- to determine the investment objectives of each fund
and appropriate benchmarks to evaluate investment
performance;
- to monitor the performance returns of the fund;
- to approve all counter party risk exposures – stockbrokers,
counter party, financial institutions and depository banks;
- As necessary, to enter into any agreements with third
parties that have appropriate skills and experience to
provide direct or ancillary services relating to the investment
arrangement of the investment funds of the company;
- to undertake and decide on any matters, including
establishing investment guidelines, from time to time that
are aimed at establishing a framework for, and pertaining
to, the prudent management of investment funds of
KIMB.
• Annual business plans are prepared by the Management and
reviewed and approved by the Board of Directors of KIMB.
Year-to-date performance and results are regularly presented
at the KIMB Board meetings.
• There are Human Resource management guidelines within
KIMB for hiring and terminating of staff, formal training
programs and annual performance appraisals to ensure that
staffs are competent and appropriately motivated in carrying
out their responsibilities.
• Policies and procedures for compliance with internal controls
and the relevant laws and regulations are set out in the various
operations manuals of KIMB. These are updated as and when
the need arises.
Bu ild in g
H u ma n
Ca p i ta l
Unlike paid-up capital, human capital cannot be quantified
in ringgits and cents. But it is human capital that determines
the real worth of the Company and its brand.
page
32
Kurnia Asia Berhad
annual report 2011
Products & Services
At Kurnia Insurans, we anticipate the needs of our extensive
customer base through a diverse range of general insurance
products and services. We are committed to fulfilling the
needs of our customers by providing them with the best
possible financial protection tools.
Motor
When you buy a motor vehicle, you need to have
a motor insurance. Kurnia’s comprehensive
motor policy protects against losses or damages
to vehicles, third party bodily injuries and
properties. Kurnia’s Private Car Comprehensive
policy includes Kurnia Auto Assist (KAA), a
free 24-hour service for breakdowns and
accidents and Kurnia Express (KE), a 1-hour
motor claims service, where you will receive
immediate settlement* at our designated Kurnia
Express Centers. This service is extended to
windscreen claim for policyholders who have
their insurance coverage for windscreen. The
KAA service is also further enhanced with the
deployment of ‘KAA Riders’ on motorcycles
in the Klang Valley. These riders will arrive at
breakdown scene within 15 minutes in the
Klang Valley area to carry out repair if possible.
Otherwise, alternative arrangements will be
made through the KAA call center. The ‘KAA
Riders’ service is also available in the major
towns of Penang, Johor and Malacca.
Under the KAA service, policyholders are
entitled to a free towing service up to 50km,
while for policyholders who purchase the
Personal Accident plan, ‘Perfect Rider’ will
enjoy free towing service for unlimited distance.
For motorcyclists, Kurnia’s Motorcyclist
Personal Accident policy provides 24-hour
worldwide coverage against accidental death
or total permanent disablement.
In 2009, Kurnia launched a product extension,
Compensation for Assessed Repair Time
(CART), which provides compensation to
policyholder for the number of days the car is
being repaired at the workshop according to
the loss adjuster’s assessment.
In 2010, Kurnia has introduced the “Agreed
Value” concept for vehicles below 10 years. The
car models include Perodua, Proton, Toyota,
Honda, Nissan and Mitsubishi. The “Agreed
Value” concept is deemed the best avenue,
as the car owners need not worry about
underinsurance or overinsurance, and will be
compensated as per the agreed Sum Insured.
*cheque or direct deposit into your bank account
page
Kurnia Asia Berhad
annual report 2011
Personal Accident
Kurnia offers a wide range of Personal Accident products that cater to the different needs and demands of our customers.
Personal Accident insurance provides compensation in the event of death or disablement caused by accidental, violent,
external and visible means. Coverage is available for individual, family or on group basis by employers, associations, clubs
and similar groups. In general, the period of insurance coverage is on annual basis.
Home
Insures home, property and personal effects against fire, theft,
natural disasters and accidental physical loss or damage. Available
to private dwellings, houses, flats, garages and out-buildings
depending on the type of coverage. Kurnia’s home protection plans
include Fire Insurance, Houseowner and Householder Insurance
as well as Householder Plus Insurance. Insurance for maids is
also available to cover personal accident, repatriation expenses,
hospital and surgical expenses, weekly benefits for temporary total
disablement, fidelity guarantee and personal liability.
Engineering
Kurnia’s various engineering insurance protection plans are
designed to cover projects involving construction and other civil
engineering works, and includes comprehensive protection for
machinery and equipment.
33
page
34
Kurnia Asia Berhad
annual report 2011
Products & Services (cont’d)
Fire with Risk Management
Kurnia’s fire insurance plans protect your property against material damage
caused by fire or lightning. In fact, it is more than just fire insurance. With an
additional premium, it also protects you against damages resulting from other
causes, such as riot, strike, malicious damage, flood and landslide. Kurnia also
conducts Fire Risk Management Surveys to assess the fire hazards, standard
of fire safety and evaluation of loss potential of the insured property with a view
to recommend measures for loss control and risk management.
Medical
Proper healthcare is no longer a privilege, but a right for everyone
as health insurance coverage is one of the key components of
a sound financial plan and a necessity in view of the escalating
medical cost. Kurnia’s MediGuard medical policy guarantees
hassle-free admission and discharge for a covered condition
at any of our panel hospitals nationwide. Alternatively, insured
can opt for the reimbursement plan, with a lower premium,
where the insured settles the bill upon discharge and submit for
reimbursement for a covered condition. Kurnia has individual
medical insurance products that are specially designed for
everyone and anyone from all walks of life. In addition, Kurnia also
customize Group Medical Insurance plan to cover employees’
medical expenses that suit the needs of the company.
page
Kurnia Asia Berhad
annual report 2011
35
Asia
Europe
AfriCa
America
Travel
Marine
Kurnia Care Travel and Traveller’s Personal Accident
safeguard the insured while they are on a vacation,
excursion or a business trip. The policies extend from local
activities to overseas travels, be it individually or in groups.
Marine Cargo Insurance policies provides cover against
physical loss or damage to cargoes whilst in the course
of transit by air, sea and/or overland. Generally the
cover ceases once the cargoes are delivered to the final
destination. Whereas, Goods In Transit Insurance policies
provides cover for goods conveyed by land whether by
lorry, train or other mode of land conveyance licensed to
carry goods throughout the year.
BizGuard
Your business is your achievement and pride. But should
a fire, theft or any unfortunate event occur, you could lose
everything that you have established in a single instant.
Kurnia BizGuard is a comprehensive insurance package
that allows you to find the best solution from 3-easy plans;
allowing you to focus on growing your business.
Employee Benefits
The policy gives protection to an employer against any
compensation amount they may be liable to pay to any
employee or their dependents for personal injuries sustained
by accident or disease arising out of and in the course of
his employment.
Liability
Kurnia’s range of liability insurance policies indemnifies the
insured in respect of its legal liability to pay compensation for
accidental bodily injury to or accidental property damage
of Third Party caused by or through the negligence of the
insured or his/her employees. The policies also pay for
legal fees and litigation expenses incurred with the written
consent of the Company.
page
36
Kurnia Asia Berhad
annual report 2011
Analysis on the Financial Statements
Balance Sheet
Net assets value (NAV)
Total Assets
The Group’s net assets value (NAV) improved to RM401.4 million
as at 31.12.2011 (2010: RM327.8 million) which mainly resulted
from the revaluation surplus of RM30.7 million and net profit of
RM47.8 million recorded for the financial year. This translates into
NAV per share of 26.97 sen as at 31.12.2011 (2010: 22.02 sen).
The Group’s total assets stood at RM2,761.2 million as at
31.12.2011, reflecting a 6.8% growth from RM2,584.4 million
as at 31.12.2010. Investments made up 59.2% (2010: 65.9%)
of the Group’s total assets, followed by reinsurance assets and
property and equipment that accounted for 20.0% and 8.4%
(2010: 14.4% and 7.8%) respectively.
Investments
The Group’s investment portfolio stood at RM1.635 billion as at
31.12.2011 (2010: RM1.703 billion), and the composition is as
follows:
727,789
800
469,171
(excluding
insurance assets)
522,158
Loan &
receivables
156,298
141,482
Held for
trading
62,123
63,278
Analysed by types of investment
Held to
maturity
200
Available
for sales
11,443
20,322
Others
Unit Trust
19,055
43,420
Equities
10,179
399,300
327,236
Government
Securities
Fixed & Call
Deposits
200
600
400
Private Debt
Securities
457,728
400
501,836
600
800
947,342
1,000
819,472
1,000
31.12.2011 (RM’000) • Total: 1,634,934
975,928
31.12.2010 (RM’000) • Total: 1,702,846
Analysed by classifications
Reinsurance Assets
Insurance Receivables
As at 31.12.2011, Group’s reinsurance assets that consist of
reinsurers’ share of provision for outstanding claims and provision
for unearned premium increased by RM178.5 million or 47.9%
to RM551.3 million from RM372.8 million as at 31.12.2010.
The increase was driven by higher gross premium written and
reinsurance outwards during the current financial year.
The Group’s insurance receivables rose by 7.5% or RM4.0 million
to RM56.8 million from RM52.8 million as at 31.12.2010. The
increase was mainly attributed to growth in gross premium written
during the current financial year.
page
Kurnia Asia Berhad
annual report 2011
37
Analysis on the Financial Statements (cont’d)
Cash and Cash Equivalents
Other Financial Liabilities
The Group’s cash and cash equivalents are made up of cash in
hand, balance with banks and fixed deposits placed with licensed
financial institutions with maturities of three months or less. The
Group’s cash and cash equivalents stood at RM130.8 million,
increased slightly from RM129.6 million as at 31.12.2010.
The Group’s other financial liabilities increased by 3.5% or
RM15.3 million to RM450.6 million from RM435.3 million as at
31.12.2010, mainly due to the increase in deposits received from
reinsurers.
Other Payables
Total Liabilities
The Group’s total liabilities increased by 4.6% or RM103.2 million
to RM2,359.8 million from RM2,256.6 million as at 31.12.2010.
This increase was primarily due to higher insurance contract
liabilities which accounted for 71.6% (2010: 74.0%) of the Group’s
total liabilities.
Insurance Contract Liabilities
The Group’s insurance contract liabilities consist of:
- gross provision for outstanding claims which amounted to
RM1,136.4 million (2010: RM1,155.8 million) and
- gross provision for unearned premium which amounted to
RM554.5 million (2010: RM513.4 million)
Total insurance contract liabilities increased by RM21.7 million
or 1.3% mainly due to higher provision for unearned premium in
tandem with the expanded business portfolio.
Underwriting Performance Indicators
Retention ratio (Net premium / Gross premium)
The Group’s other payables increased by 13.5% or RM12.3
million to RM103.0 million from RM90.7 million as at 31.12.2010,
mainly due to the additional advance from a major shareholder.
Income Statement
The Group’s results are mainly derived from its insurance
subsidiary in Malaysia, Kurnia Insurans (M) Berhad (“KIMB”).
The contribution of PT Kurnia Insurance Indonesia (“KII”) and
the equity-accounted associated company, Kurnia Insurance
(Thailand) Co. Ltd. (“KIT”) to the performance of the Group was
not significant.
The Group recorded an improved net profit of RM47.844 million for
the financial year ended 31.12.2011 (2010: RM15.012 million).
The Group’s underwriting experience for the financial year was as
reflected by the performance indicators tabled below:
31.12.2011
31.12.2010
69.6%
79.2%
Net commission ratio (Net Commission / Net premium)
9.0%
9.5%
Net claims incurred ratio (Net claims inccurred / Earned premium)
70.8%
75.9%
Management expense ratio (Management expense / Net premium)
20.9%
21.0%
Underwriting margin (Underwriting margin / Earned premium)
-0.6%
-6.0%
page
38
Kurnia Asia Berhad
annual report 2011
Analysis on the Financial Statements (cont’d)
1,109,729
1,058,753
865,449
(78.0%)
855,564
(80.8%)
Motor/Non-Motor
(RM ‘000)
Business portfolio
Net claims incurred ratio
During the financial year under review,
the Group recorded RM1,109.7 million in
gross premium (2010: RM1,058.8 million),
which represented a 4.8% growth yearon-year. Based on this, 78.0% (2010:
80.8%) was derived from Motor business
whilst 22.0% (2010: 19.2%) was from
Non-Motor business.
The Group’s net claims incurred ratio
improved to 70.8% (2010: 75.9%), owing
to the more stringent risk selection and
better claims management and control.
203,189
(19.2%)
244,280
(22.0%)
Retention Ratio
31.12.2011
The Group recorded lower retention ratio
of 69.6% during the current financial year
(2010: 79.2%) as KIMB started to cede
out its 25% of motor premium via quota
share arrangement since the second half
of financial year 2010.
31.12.2010
Motor
Non-Motor
The Group recorded lower net commission
over net premium ratio of 9.0% during the
current financial year (2010: 9.5%) as the
commission received from reinsurance
premium increased.
Medical
24,068 (11.9%)
Fire
62,905 (25.8%)
Engineering
23,556 (9.7%)
Non-Motor
31.12.2011
Total: 244,280
During the financial year, the Group
recorded
net
investment
income
(including realised and unrealised gain /
(loss) recognised in income statement) of
RM104.0 million (2010: RM115.7 million).
This translated into a net investment yield
of 5.8% p.a. (2010: 6.3%p.a.).
Non-Motor
(RM’000)
Medical
35,233 (14.4%)
Personal
Accident
57,721(23.6%)
The Group’s management expenses
ratio maintained at 20.9% (2010: 21.0%),
despite the lower absolute amount of
management expense incurred during
the year, as the net premium base was
lower compared to previous year. The
lower management expense of RM161.6
million (2010: RM176.4 million) was
largely due to better cost management
and more efficient use of resources.
Net investment income
(insurance fund)
Net commission ratio
Non-Motor
(RM’000)
Management expense ratio
Non-Motor
31.12.2010
Marine
17,402 (7.1%)
Misceleneous
Accident
47,463 (19.4%)
Fire
47,979 (23.6%)
Engineering
15,960 (7.9%)
Personal
Accident
58,203 (28.6%)
Total: 203,189
Marine
16,067 (7.9%)
Misceleneous
Accident
40,912 (20.1%)
page
39
Kurnia Asia Berhad
annual report 2011
Financial Statements
page
Statement of Directors’ Responsibility
Directors’ Report
Statements of Financial Position
Income Statements
Statements of Comprehensive Income
Statements of Changes in Equity
Statements of Cash Flow
Notes to the Financial Statements
Statement by Directors
Statutory Declaration
Independent Auditors’ Report
40
41
46
48
49
50
52
55
130
131
132
page
40
Kurnia Asia Berhad
annual report 2011
Statement of Directors’ Responsibility
pursuant to paragraph 15.26(a) of the Listing Requirements of
Bursa Malaysia Securities Berhad
The Directors are responsible for ensuring that the audited financial statements of the Group and of the Company are drawn up in
accordance with the requirements of the applicable approved Financial Reporting Standards issued by the Malaysian Accounting
Standards Board as modified by Bank Negara Malaysia’s Guidelines, the Listing Requirements of Bursa Malaysia Securities Berhad
and the provisions of the Companies Act, 1965.
The Directors are also responsible for ensuring that the audited financial statements of the Group and of the Company are prepared
with reasonable accuracy from the accounting records of the Group and of the Company so as to give a true and fair view of the state
of affairs of the Group and of the Company as at 31 December 2011, and of the results of their operations and cash flows for the year
ended on that date.
In preparing the audited financial statements, the Directors have:
•
•
•
applied the appropriate and relevant accounting policies on a consistent basis;
made judgements and estimates that are reasonable and prudent; and
prepared the annual audited financial statements on a going concern basis.
The Directors and Management are also responsible for ensuring that the Group and the Company maintain proper accounting
records, which disclose with reasonable accuracy at any time the financial position of the Group and of the Company.
The Directors and Management also have a general responsibility for taking reasonable steps to safeguard the assets of the Group
and of the Company to prevent and detect fraud and other irregularities.
page
Kurnia Asia Berhad
annual report 2011
41
Directors’ Report
for the year ended 31 December 2011
The Directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year
ended 31 December 2011.
Principal activities
The Company is principally engaged in investment holding whilst the principal activities of the subsidiaries are stated in Note 7.2 to
the financial statements. There has been no significant change in the nature of these activities during the financial year, except as
disclosed in Note 7.2.
Results
Profit / (Loss) for the year
Group
Company
RM’000
RM’000
47,844
(10,593)
Reserves and provisions
There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed in the
financial statements.
Dividend
No dividend was paid during the financial year and the Directors do not recommend any dividend to be paid for the financial year
ended 31 December 2011.
Directors of the Company
Directors who served since the date of the last report are:
•
•
•
•
•
•
Datuk Kua Chung Sen
Dato’ Dr. Sharifuddin Bin Abdul Wahab
page
42
Kurnia Asia Berhad
annual report 2011
Directors’ Report
for the year ended 31 December 2011 (cont’d)
Directors’ interests
The interests and deemed interests in the ordinary shares of the Company and of its related corporations (other than wholly-owned
subsidiaries) of those who were Directors at the financial year end (including the interests of the spouses and children of the Directors
who themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows:
Number of ordinary shares at RM0.25 each
At
At
1.1.2011
Bought
Sold
31.12.2011
765,646,824
-
-
765,646,824
5,000,000
-
-
5,000,000
12,702,000
-
-
12,702,000
60,000,000
-
-
60,000,000
32,857,400
-
802,800
32,054,600
334,600
-
-
334,600
17,867,300
-
-
17,867,300
Interest in the Company
• Own
• Others #
Datuk Kua Chung Sen
• Own
Deemed interest in the Company
• Own
• Own
• Others #
• Own
#
Includes the spouse of Tan Sri Dato’ Paduka Kua Sian Kooi and children of Dato’ Wira Othman Bin Abdul respectively. In
accordance with Section 134(12)(c) of the Companies Act, 1965, the interests and deemed interests of the spouses and children
of the Directors in the ordinary shares of the Company and of its related corporations (other than wholly-owned subsidiaries) shall
be treated as the interests of the Directors respectively.
Leow Ming Fong @ Leow Min Fong and Dato’ Dr. Sharifuddin Bin Abdul Wahab did not have any interest in the ordinary shares of the
Company and of its related corporations during the financial year.
page
Kurnia Asia Berhad
annual report 2011
43
Directors’ Report
Directors’ benefits
Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other
than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial
statements of the Company and its related companies) by reason of a contract made by the Company or a related corporation with
the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest
except for those disclosed in Note 35 to the financial statements.
There were no arrangements during and at the end of the financial year, which had the object of enabling Directors of the Company
to acquire benefits by means of the acquisition of shares in the Company or any other body corporate.
Issue of shares
There were no changes in the authorised, issued and paid-up capital of the Company during the financial year.
Options granted over unissued shares
No options were granted to any person to take up unissued shares of the Company during the financial year.
Other statutory information
Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain
that:
(i)
all known bad debts have been written off and adequate provision had been made for doubtful debts;
(ii)
any current assets, which were unlikely to be realised in the ordinary course of business have been written down to an amount
which they might be expected so to realise; and
(iii) there was adequate provision for insurance contract liabilities in the Group in accordance with the valuation methods specified in
Part D of the Risk-Based Capital (“RBC”) Framework issued by Bank Negara Malaysia (“BNM”).
page
44
Kurnia Asia Berhad
annual report 2011
Directors’ Report
Other statutory information (cont’d)
At the date of this report, the Directors are not aware of any circumstances:
(i)
that would render the amount written off for bad debts, or the amount of the provision for doubtful debts in the Group and in the
Company inadequate to any substantial extent, or
(ii)
that would render the value attributed to the current assets in the financial statements of the Group and of the Company
misleading, or
(iii) which have arisen which render adherence to the existing method of valuation of assets and liabilities of the Group and of the
Company misleading or inappropriate, or
(iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements
of the Group and of the Company misleading.
At the date of this report, there does not exist:
(i)
any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures
the liabilities of any other person, or
(ii)
any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.
No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within
the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the
ability of the Group and of the Company to meet their obligations when they fall due.
For the purpose of this paragraph, contingent and other liabilities do not include liabilities arising from contracts of insurance underwritten
in the ordinary course of business of the Group.
In the opinion of the Directors, the financial performance of the Group and of the Company for the financial year ended 31 December
2011 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item,
transaction or event occurred in the interval between the end of the financial year and the date of this report.
Significant event
On 19 December 2011, the Company submitted an application to Bank Negara Malaysia (“BNM”) for the approval of the Minister of
Finance (“MOF”) pursuant to Section 67 of the Malaysian Insurance Act and Regulations, 1996, to review a proposal to enter into an
agreement with AmG Insurance Berhad (“AmG”) for the possible disposal of the Company’s 100% equity interest in Kurnia Insurans
(Malaysia) Berhad (“KIMB”) to AmG.
On 3 April 2012, the Company received written approval from MOF via BNM to enter into an agreement with AmG for the possible
disposal of the Company’s 100% equity interest in KIMB to AmG.
page
Kurnia Asia Berhad
annual report 2011
Directors’ Report
Auditors
The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Datuk Kua Chung Sen
Petaling Jaya, Selangor
Date: 9 April 2012
45
page
46
Kurnia Asia Berhad
annual report 2011
as at 31 December 2011
Group
Note
2011
2010
RM’000
RM’000
Assets
Property and equipment
4
231,161 202,236
Goodwill
5
- -
Investment property
6
7,713 7,500
Investments
9
1,634,934 1,702,846
Held-to-maturity
62,123 63,278
Available-for-sale
947,342 975,928
Held for trading
156,298 141,482
469,171 522,158
Investment in associate
8
14,668 13,279
Reinsurance assets
10
551,273 372,759
Insurance receivables
11
56,832 52,851
Other receivables, deposits and prepayments
12
80,333 35,207
Deferred acquisition costs
13
26,070 36,275
Deferred tax assets
20
3,670 1,172
Loans and receivables
Current tax assets
Cash and cash equivalents
14
Total assets
23,746 30,613
130,771 129,632
2,761,171 2,584,370
375,000
Equity
Share capital
21
375,000 Reserves
22
36,689 10,938
(10,303) (58,147)
Total equity attributable to owners of the Company
401,386 327,791
Non-controlling interests
6 6
Total equity
401,392 327,797
Accumulated losses
Liabilities
1,690,838
1,669,152
-
5,928
Insurance contract liabilities
15
Deferred tax liabilities
20
Other financial liabilities
16
450,630 435,322
Insurance payables
17
87,373 29,630
629 249
Current tax liabilities
Other payables
18
102,976 90,748
Provision for retirement benefits
19
27,333 25,544
Total liabilities
2,359,779 2,256,573
Total equity and liabilities
2,761,171 2,584,370
The accompanying notes form an integral part of these financial statements.
page
Kurnia Asia Berhad
annual report 2011
47
as at 31 December 2011 (cont’d)
Company
Note
2011
2010
RM’000
RM’000
Assets
4
273 414
Investments in subsidiaries
7
740,552 731,852
12
676 285
2,372 -
Current tax assets
14
Total assets
1,543 3,272
745,416 735,823
375,000 375,000
Equity
Share capital
21
Reserves
22
607 (40,951) 334,656 345,249
360,000 360,000
Accumulated losses
Total equity attributable to owners of the Company
607
(30,358)
Liabilities
16
- 195
Other payables
18
48,281 28,135
Provision for retirement benefits
19
Current tax liabilities
2,479 2,244
Total liabilities
410,760 390,574
Total equity and liabilities
745,416 735,823
page
48
Kurnia Asia Berhad
annual report 2011
Income Statements
Group
Company
2011
2010
2011
2010
RM’000
RM’000
RM’000
RM’000
23
1,161,263
1,096,936
22,451
21,538
15.2
1,109,729
1,058,753
-
-
-
-
Gross earned premiums
15.2
1,068,635
-
-
Gross written premiums ceded to reinsurers
15.2
Note
Operating revenue
Gross written premiums
(41,094)
Change in unearned premiums provision
Change in unearned premiums provision
(52,666)
1,006,087
(337,714)
(220,387)
-
-
43,697
66,575
-
-
Premiums ceded to reinsurers
15.2
(294,017)
(153,812)
-
-
Net earned premiums
15.2
774,618
852,275
-
-
Investment income
24
92,628
90,849
22,451
21,538
Realised gains and losses
25
6,773
14,356
-
-
Fair value gains and losses
26
4,590
10,544
-
-
Commission income
27
72,230
48,848
-
-
Other operating income
28
800
358
108
-
177,021
164,955
22,559
21,538
Other income
Gross claims paid
29
(805,496)
(858,953)
-
-
Claims ceded to reinsurers
29
171,054
86,092
-
-
Gross change in claims liabilities
29
19,408
158,930
-
-
Change in claims liabilities ceded to reinsurers
29
66,956
(33,006)
-
Net claims incurred
29
(548,078)
(646,937)
-
-
Commission expense
27
(141,944)
(128,772)
-
-
Management expenses
30
(175,681)
(187,912)
(11,221)
(9,052)
(22,451)
(21,193)
(22,451)
(21,193)
Finance costs
(2,109)
Other operating expenses
Other expenses
Share of loss of equity accounted associate
Profit/(Loss) before tax
Tax (expense)/credit
Net profit/(loss) for the year
32
-
(342,185)
(337,877)
(557)
(2,780)
60,819
29,636
(12,975)
(14,624)
47,844
15,012
(33,672)
(11,113)
520
(10,593)
(30,245)
(8,707)
(2,269)
(10,976)
page
Kurnia Asia Berhad
annual report 2011
49
Statements of Comprehensive Income
Group
Note
Net profit/(loss) for the year
Company
2011
2010
2011
2010
RM’000
RM’000
RM’000
RM’000
47,844
15,012
(10,593)
(10,976)
Other comprehensive income
Foreign currency translation differences for foreign
operations
Net (loss)/gain on fair value of available-for-sale
financial assets
Net gain on revaluation of property
463
(1,686)
-
-
7,844
-
-
9.5
(7,277)
4
32,364
-
-
-
25,550
6,158
-
-
(1,961)
-
-
-
-
201
Tax effects thereon
Total other comprehensive income for the year,
net of tax
25,751
4,197
Total comprehensive income/(loss) for the year
73,595
19,209
(10,593)
(10,976)
47,844
15,012
(10,593)
(10,976)
73,595
19,209
(10,593)
(10,976)
3.21
1.01
Profit/(Loss) attributable to:
Owners of the Company
Total comprehensive income/(loss) attributable to:
Owners of the Company
Earnings per share (sen)
Basic
33
page
50
Kurnia Asia Berhad
annual report 2011
Attributable to owners of the Company
Non-distributable
Distributable
Fair
Share
capital
Group
RM’000
At 1 January 2010
375,000
Treasury
Share
shares premium
RM’000
(11,971)
Property
value Translation revaluation Accumulated controlling
reserve
reserve
losses
RM’000
RM’000
RM’000
RM’000
RM’000
12,578
6,952
(818)
-
-
-
-
-
5,883
-
-
-
(1,686)
-
-
-
5,883
Foreign currency
translation differences
for foreign operations
-
-
-
-
(1,686)
(1,686)
Total other comprehensive
income for the year
-
-
-
5,883
Profit for the year
-
-
-
-
Total comprehensive
income for the year
-
-
-
5,883
Issuance of shares for
newly incorporated
subsidiary
-
-
-
-
12,578
12,835
Revaluation of property
375,000
-
(11,971)
-
-
-
Fair value of available-forsale financial assets
-
-
-
Foreign currency
translation differences
for foreign operations
-
-
-
Total other comprehensive
income for the year
-
-
-
Profit for the year
-
-
-
Total comprehensive
income for the year
-
-
-
At 31 December 2011
375,000
(11,971)
Note 21 Note 22.2
12,578
(1,686)
(2,504)
(5,458)
(5,458)
(5,458)
7,377
Note 22.3
equity
RM’000 RM’000
- 308,582
-
-
-
4,197
-
15,012
-
15,012
-
15,012
-
19,209
-
-
6
6
-
(58,147)
6 327,797
-
30,746
-
-
30,746
-
-
-
-
(5,458)
463
-
-
-
463
463
30,746
-
-
25,751
-
-
47,844
-
47,844
463
30,746
47,844
-
73,595
30,746
(10,303)
6 401,392
(2,041)
Note 22.1
(73,159)
interest
Total
reserve
Fair value of available-forsale financial assets
At 31 December 2010 /
1 January 2011
Non-
Note 22.4
page
Kurnia Asia Berhad
annual report 2011
51
Attributable to owners of the Company
Non-distributable
Share
Treasury
Distributable
Share Accumulated
Total
capital
shares
premium
losses
equity
Company
RM’000
RM’000
RM’000
RM’000
RM’000
At 1 January 2010
375,000
Loss and total comprehensive loss for the year
At 31 December 2010 / 1 January 2011
Loss and total comprehensive loss for the year
At 31 December 2011
(11,971)
375,000
(11,971)
375,000
Note 21
(11,971)
Note 22.2
12,578
(19,382)
-
(10,976)
12,578
(30,358)
356,225
(10,976)
345,249
-
(10,593)
(10,593)
12,578
(40,951)
334,656
page
52
Kurnia Asia Berhad
annual report 2011
Group
Note
Company
2011
2010
2011
2010
RM’000
RM’000
RM’000
RM’000
Operating activities
60,819
29,636
(11,113)
(8,707)
Investment income
(92,628)
(90,849)
(22,451)
(21,538)
Realised gains recorded in income statements
(6,773)
(14,356)
-
-
Fair value gains recorded in income statements
(4,590)
(10,544)
-
-
Purchase of held for trading financial investments
(114,982)
(82,534)
-
-
Proceeds from sale of held for trading financial
investments
109,424
122,233
-
-
(309,156)
(690,313)
-
-
197,256
568,771
-
-
Purchase of available-for-sale financial investments
9.5
Proceeds from sale of available-for-sale financial
investments
Maturity of available-for-sale financial investments
9.5
135,000
92,647
-
-
Maturity of held-to-maturity financial investments
9.5
900
21,701
-
-
Change in loans and receivables
9.5
53,267
(8,976)
28,537
(62,584)
13,534
16,312
141
108
310
-
-
-
(33,564)
(30,245)
Non-cash items:
Depreciation of property and equipment
Write off of property and equipment
Gain on disposal of property and equipment
(Reversal) / Allowance for impairment loss on
property and equipment
Allowance for impairment loss on reinsurance asset
(1,127)
(351)
1,445
(920)
(10)
(130)
1,383
-
-
-
-
-
Insurance receivables:
Reversal of allowance for impairment loss
(12,346)
(10,066)
-
-
Impairment loss written off
11,050
6,601
-
-
Impairment loss recovered
Retirement benefits expense
(118)
3,022
(29)
3,011
-
-
255
246
Impairment loss on goodwill
-
4,373
-
-
Impairment loss on investment in subsidiary
-
2,394
-
4,373
557
2,780
-
-
Finance costs
22,451
21,193
22,451
21,193
Total non-cash items
38,427
47,032
22,837
25,790
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Kurnia Asia Berhad
annual report 2011
53
Group
Company
2011
2010
RM’000
RM’000
2011
2010
RM’000 RM’000
Changes in working capital:
(179,959)
(33,569)
-
-
(2,567)
319
-
-
Change in other receivables
(40,176)
(11,213)
Change in deferred acquisition costs
10,205
Change in reinsurance assets
Change in insurance receivables
550
(391)
287
-
-
Change in insurance contract liabilities
21,686
(106,264)
-
-
Change in other financial liabilities
15,308
67,128
-
-
Change in insurance payables
57,743
3,325
-
-
Change in other payables
11,131
44,015
19,030
22,225
(106,629)
(35,709)
18,639
22,512
(39,665)
(51,261)
7,912
18,057
Net changes in working capital
Cash (used in)/ generated from operating activities
Dividend income received
46,814
44,122
-
-
Interest income received
40,914
52,936
-
-
(1,233)
(1,252)
(20)
(68)
Income tax paid
(13,921)
(16,513)
(2,047)
(1,721)
Net cash flows from operating activities
32,909
28,032
5,845
16,268
1,752
2,914
10
130
(10,650)
(8,900)
Retirement benefits paid
Investing activities
Proceeds from disposal of property and equipment
Purchase of property and equipment
Interest received
Investment in associate
Investment in a subsidiary
Net cash flows (used in)/from investing activities
(1,644)
(10,542)
371
(2,206)
(7,821)
-
(390)
22,451
21,563
-
-
(8,700)
13,761
21,303
Financing activities
Proceeds from issuance of shares in a subsidiary
Term loan interest paid
Repayment of term loan
Net cash flows used in financing activities
Net increase/(decrease) in cash and cash equivalents
(21,335)
-
6
(20,845)
(40,000)
(21,335)
-
(20,845)
(40,000)
(21,335)
(60,839)
(21,335)
(60,845)
1,032
(40,628)
(1,729)
(23,274)
107
474
-
-
Cash and cash equivalents at beginning of year
129,632
169,786
3,272
26,546
Cash and cash equivalents at end of year
130,771
129,632
1,543
3,272
Effect of exchange rate fluctuations on cash held
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54
Kurnia Asia Berhad
annual report 2011
Group
Company
2011
2010
RM’000
RM’000
37,436
38,818
Licensed financial institutions in Malaysia
82,741
Financial institutions outside Malaysia
10,594
130,771
2011
2010
RM’000 RM’000
Cash and cash equivalents comprise:
Cash and bank balances
1,543
3,272
90,814
-
-
-
-
-
129,632
1,543
3,272
Fixed and call deposits (with maturity of less than three months):
Included in the fixed and call deposits are RM6,487,000 (2010: RM6,708,000) held as cash collateral for guarantees issued on behalf
of policyholders (Note 16).
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Kurnia Asia Berhad
annual report 2011
55
Notes to the Financial Statements
1.
Principal activity and general information
The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of Bursa
Malaysia Securities Berhad. The address of the registered office and principal place of business of the Company is located at:
Menara Kurnia
Block B4, Pusat Dagang Setia Jaya
Leisure Commerce Square
46150 Petaling Jaya
Selangor
The consolidated financial statements of the Company as at and for the financial year ended 31 December 2011 comprise
the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interest in an associate. The financial
statements of the Company as at and for the financial year ended 31 December 2011 do not include other entities.
The Company is principally engaged in investment holding, whilst the principal activities of the subsidiaries are stated in Note 7.2
to the financial statements. There has been no significant change in the nature of these activities during the financial year, except
as disclosed in Note 7.2.
The financial statements were approved by the Board of Directors on 9 April 2012.
2.
Basis of preparation
2.1Statement of compliance
The financial statements of the Group and of the Company have been prepared in accordance with Financial Reporting
Standards (“FRSs”) as modified by Bank Negara Malaysia (“BNM”) Guidelines, generally accepted accounting principles in
Malaysia, the Companies Act, 1965 and the Insurance Act and Regulations, 1996.
The following are accounting standards, amendments and interpretations of the FRS framework that have been issued by
the Malaysian Accounting Standards Board (MASB) but have not been adopted by the Group and Company:
FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2011
• IC Interpretation 19, Extinguishing Financial Liabilities with Equity Instruments
• Amendments to IC Interpretation 14, Prepayments of a Minimum Funding Requirement
FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2012
• FRS 124, Related Party Disclosures (revised)
• Amendments to FRS 1, First-time Adoption of Financial Reporting Standards – Severe Hyperinflation and Removal of
Fixed Dates for First-time Adopters
• Amendments to FRS 7, Financial Instruments: Disclosures – Transfers of Financial Assets
• Amendments to FRS 112, Income Taxes – Deferred Tax: Recovery of Underlying Assets
FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2012
• Amendments to FRS 101, Presentation of Financial Statements – Presentation of Items of Other Comprehensive
Income
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Kurnia Asia Berhad
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2.
Notes to the Financial Statements (cont’d)
Basis of preparation (cont’d)
2.1Statement of compliance (cont’d)
• FRS 10, Consolidated Financial Statements
• FRS 11, Joint Arrangements
• FRS 12, Disclosure of Interests in Other Entities
• FRS 13, Fair Value Measurement
• FRS 119, Employee Benefits (2011)
• FRS 127, Separate Financial Statements (2011)
• FRS 128, Investments in Associates and Joint Ventures (2011)
• IC Interpretation 20, Stripping Costs in the Production Phase of a Surface Mine
• Amendments to FRS 7, Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities
• Amendments to FRS 7, Financial Instruments: Disclosures – Mandatory Date of FRS 9 and Transition Disclosures
• Amendments to FRS 132, Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities
• FRS 9, Financial Instruments (2009)
• FRS 9, Financial Instruments (2010)
The Group’s and the Company’s financial statements for annual period beginning on 1 January 2012 will be prepared in
accordance with the Malaysian Financial Reporting Standards (MFRSs) issued by the MASB that will also comply with
International Financial Reporting Standards (IFRSs). As a result, the Group and the Company will not be adopting the above
FRSs, Interpretations and amendments that are effective for annual periods beginning on or after 1 January 2012.
2.2 Basis of measurement
The financial statements have been prepared on the historical cost basis except as disclosed in the notes to the financial
statements, on the assumption that the Group and the Company are going concerns.
The Company incurred a net loss of RM10,593,000 during the year ended 31 December 2011, and as of that date,
the Company’s current liabilities exceeded its current assets by RM243,690,000 which may indicate the existence of a
significant uncertainty about the Company’s ability to continue as a going concern.
The Company has considered prospective cash flow information and events that may occur in the next twelve months and
the possible actions to be taken by the Company. In this regards, the Company had on 3 April 2012 obtained approval from
MOF via BNM, to enter into an agreement with AmG to dispose the Company’s 100% equity interest in KIMB.
The validity of the going concern assumption in the preparation of financial statements is dependent on the successful
outcome of the various initiatives being undertaken by the Company and the Company achieving future profitable operations.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset
amounts, and relating to amounts and classification of liabilities that may be necessary if the Company is unable to continue
as a going concern.
General business assets and liabilities relate to both general insurance fund and shareholders’ fund.
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Kurnia Asia Berhad
annual report 2011
2.
57
Basis of preparation (cont’d)
2.3Functional and presentation currency
These financial statements are presented in Ringgit Malaysia (RM), which is the Company’s functional currency. All financial
information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated.
2.4Use of estimates and judgements
The preparation of financial statements in conformity with FRSs requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised and in any future periods affected.
There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have a
significant effect on the amounts recognised in the financial statements other than those disclosed in the following notes:
•
•
•
•
•
Note 3.3
Note 3.6
Note 3.7
Note 3.14
Note 3.18
-
-
-
-
-
revaluation of property and equipment
determination of fair value of investment properties
financial instruments
valuation for retirement benefits
valuation of general insurance contract liabilities
3.Significant accounting policies
The accounting policies set out below have been applied consistently to the periods presented in these financial statements, and
have been applied consistently by the Group entities, except for:
i)
the change in accounting policy to adopt the revaluation model to measure freehold land and buildings and leasehold
land and buildings classified as property and equipment in accordance with FRS 116, Property, plant and equipment. This
change in accounting policy has been accounted for prospectively upon the initial application of the revaluation model in
accordance with FRS 116. Under the revaluation model, the properties are stated at revalued amounts, which are the fair
values at the date of the revaluation less subsequent accumulated depreciation (except for freehold land which has an
unlimited useful life and therefore is not depreciated) and any subsequent accumulated impairment losses. Any revaluation
surplus is credited to the revaluation reserve included within equity.
ii)
the change in accounting policy with respect to the subsequent measurement of investment property from the cost model
to the fair value model, with changes in fair value recognised in income statement, in accordance to FRS 140, Investment
Property. The Group applied the impact of adopting fair value model, which amounted to RM160,000, prospectively rather
than making an adjustment to the opening balance of retained earnings as required by FRS 140, since the impact is not
material to the Group’s financial results.
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Kurnia Asia Berhad
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3.Significant accounting policies (cont’d)
3.1
Basis of consolidation
3.1.1Subsidiaries
Subsidiaries are entities, including unincorporated entities, controlled by the Group. Control exists when the Group
has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into
account. Subsidiaries are consolidated using the purchase method of accounting.
Investments in subsidiaries are stated in the Company’s statement of financial position at cost less any impairment
losses. Investment in Irredeemable Convertible Subordinated Debt (“ICSD”) issued by the subsidiary of the
Company is treated as cost of investment in the subsidiary as the ICSD is non-redeemable and convertible during
the tenure of the ICSD. ICSD which has not been converted will be fully converted on maturity date.
3.1.2 Associates
Associates are entities, including unincorporated entities, in which the Group has significant influence, but not
control, over the financial and operating policies.
Associates are accounted for in the consolidated financial statements using the equity method less any impairment
losses, unless it is classified as held for sale or distribution. The consolidated financial statements include the
Group’s share of the profit or loss and other comprehensive income of the equity accounted associates, after
adjustments, if any, to align the accounting policies with those of the Group, from the date that significant influence
commences until the date that significant influence ceases.
When the Group’s share of losses exceeds its interest in an equity accounted associate, the carrying amount
of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is
discontinued except to the extent that the Group has an obligation or has made payments on behalf of the
investee.
3.1.3Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from
transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s
interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment.
3.1.4Accounting for business combinations
Business combinations are accounted for using the acquisition method from the acquisition date, which is the
date on which control is transferred to the Group.
The Group has changed its accounting policy with respect to the accounting for business combinations.
From 1 January 2011 the Group has applied FRS 3, Business Combinations (revised) in accounting for business
combinations. The change in accounting policy has been applied prospectively in accordance with the transitional
provisions provided by the standard and does not have impact on earnings per share.
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59
3.1
Basis of consolidation (cont’d)
3.1.4Accounting for business combinations (cont’d)
Acquisitions on or after 1 January 2011
For acquisition on or after 1 January 2011, the Group measures goodwill at the acquisition date as:
-
-
-
-
the fair value of the consideration transferred; plus
if the recognised amount of any non-controlling interests in the acquiree; plus
if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree;
less
the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in income statements.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships.
Such amounts are generally recognised in income statements.
Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the
Group incurs in connection with a business combination are expensed as incurred.
Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent
consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise,
subsequent changes to the fair value of the contingent consideration are recognised in income statements.
3.1.5Non-controlling interests
Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly
or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position
and statement of changes in equity within equity, separately from equity attributable to the owners of the Company.
Non-controlling interests in the results of the Group is presented in the consolidated statement of comprehensive
income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling
interests and the owners of the Company.
Since the beginning of the reporting period, the Group has applied FRS 127, Consolidated and Separate Financial
Statements (revised) where losses applicable to the non-controlling interests in a subsidiary are allocated to the
non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance. This
change in accounting policy is applied prospectively in accordance with the transitional provisions of the standard
and does not have impact on earnings per share.
In the previous years, where losses applicable to the non-controlling interests exceed the interest in the equity of a
subsidiary, the excess, and any further losses applicable to the non-controlling interests, were charged against the
Group’s interest except to the extent that the non-controlling interests had a binding obligation to, and was able
to, make additional investment to cover the losses. If the subsidiary subsequently reported profits, the Group’s
interest was allocated with all such profits until the non-controlling interests’ share of losses previously absorbed
by the Group had been recovered.
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3.2Foreign currency
3.2.1Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at
exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period date are
retranslated to the functional currency at the exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of reporting
date except for those that are measured at fair value are retranslated to the functional currency at the exchange
rates at the date that the fair value was determined.
Foreign currency differences arising on retranslation are recognised in the income statements.
3.2.2Operations denominated in functional currencies other than Ringgit Malaysia (“RM”)
3.3
The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill
and fair value adjustments, are translated to RM at exchange rates at the end of the reporting period, except for
goodwill and fair value adjustments arising from business combinations before 1 January 2006 which are reported
using the exchange rates at the dates of the acquisitions. The income and expenses of foreign operations in
functional currencies other than RM, are translated to RM at exchange rates at the dates of the transactions.
Foreign exchange differences are recognised in other comprehensive income and accumulated in the foreign
currency translation reserve.
On disposal of such operations, the accumulated translation differences are recognised in the consolidated income
statements as part of the gain or loss on disposal.
3.3.1Recognition and measurement
Items of property and equipment except for property under construction are stated at cost/ valuation less any
accumulated depreciation and any accumulated impairment losses. Property under construction is stated at
cost.
The Group revalues its properties comprising land and buildings every 5 years and at shorter intervals whenever
the fair value of the revalued assets is expected to differ materially from their carrying value.
The revalued amounts of property are determined by using comparison and investment methods. The comparison
method entails critical analysis of recent evidence of values of comparable properties in the neighborhood and
making adjustments for differences such as differences in location, size and shape of land, age and condition
of building, tenure, title restrictions if any and other relevant characteristics. The investment method entails the
determination of the probable gross annual rental the property is capable of producing and deducting there from
the outgoings to arrive at the annual net income. The annual net income is capitalised using a rate of interest to
arrive at the capital value of the property. Valuation of properties involves a degree of judgement before arriving at
the respective property’s revalued amount. As such, the revalued amount of the properties may be different from
its actual market price.
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annual report 2011
61
3.3
Property and equipment (cont’d)
3.3.1Recognition and measurement (cont’d)
Surpluses arising from revaluation are dealt with in the revaluation reserve account. Any deficit arising is offset
against the revaluation reserve to the extent of a previous increase for the same property. In all other cases, a
decrease in carrying amount is charged to income statements.
Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly
attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and
removing the items and restoring the site on which they are located. The cost of self-constructed assets also
includes the cost of materials and direct labour. Purchased software that is integral to the functionality of the
related equipment is capitalised as part of that equipment.
When significant parts of an item of property and equipment have different useful lives, they are accounted for as
separate items (major components) of property and equipment.
Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds
from disposal with the carrying amount of property and equipment and are recognised net within “management
expenses” in the income statements. When revalued assets are sold, the amounts included in the revaluation
reserve account are transferred to retained earnings / accumulated losses.
3.3.2Subsequent costs
The cost of replacing a part of an item of property 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 or the Company
and its cost can be measured reliably. The carrying amount of the replaced part is derecognised to income
statements. The costs of the day-to-day servicing of property and equipment are recognised in the income
statements as incurred.
3.3.3Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted
for cost, less its residual value.
Depreciation is recognised in the income statements on a straight-line basis over the estimated useful lives of
each part of an item of property and equipment. Freehold land is not depreciated. Property and equipment under
construction are not depreciated until the assets are ready for their intended use.
The estimated useful lives for the current and comparative periods are as follows:
Leasehold land
Buildings
Office improvements
Furniture and fittings Office equipment and computers
Motor vehicles Depreciation methods, residual values and useful lives are reviewed, and adjusted as appropriate at the end of the
reporting period.
over lease period
50 years
3 - 5 years
10 years
3 - 10 years
5 years
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3.4Leased assets
3.4.1Finance leases
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified
as finance leases. On initial recognition of the leased asset is measured at an amount equal to the lower of its
fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is
accounted for in accordance with the accounting policy applicable to the asset.
Minimum lease payments made under finance lease are apportioned between the finance expense and the
reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as
to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments
are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease
adjustment is confirmed.
Leasehold land which in substance is a finance lease is classified as property and equipment.
3.4.2Operating leases
Leases, where the Group does not assume substantially all the risk and rewards of ownership are classified as
operating leases and, except for property interest held under operating lease, the leased assets are not recognised
on the Group’s statement of financial position. Property interest held under an operating lease, which is held to
earn rental income or for capital appreciation or both, is classified as investment property.
Payments made under operating leases are recognised in the income statements on a straight-line basis over the
term of the lease. Lease incentives received are recognised in income statements as an integral part of the total
lease expense, over the term of the lease.
Leasehold land which in substance is an operating lease is classified as prepaid lease payments.
3.5 Intangible asset
3.5.1 Goodwill
Goodwill arises on business combinations is measured at cost less any accumulated impairment losses. In
respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the
investment and an impairment loss on such an investment is not allocated to any assets, including goodwill, that
forms part of the carrying amount of the equity accounted investee.
For acquisitions prior to 1 January 2006, goodwill represents the excess of the cost of the acquisition over the
Group’s interest in the fair values of the net identifiable assets and liabilities.
For business acquisition between 1 January 2006 and 1 January 2011, goodwill represents the 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 of the acquiree. Any excess of the Group’s interest in the net fair value of acquiree’s identifiable assets,
liabilities and contingent liabilities over the cost of acquisition is recognised immediately in income statements.
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63
3.6Investment properties
3.6.1Investment properties carried at fair value
Investment properties are properties which are owned or held under leasehold interest to earn rental income or for
capital appreciation or for both, but not for sale in the ordinary course of business. These include land held for a
currently undetermined future use.
Investment properties are measured initially at cost and subsequently at fair value with any change therein
recognised in income statements for the period in which they arise. Where the fair value of the investment property
under construction is not reliably determinable, the investment property under construction is measured at cost
until either its fair value becomes reliably determinable or construction is complete, whichever is earlier.
Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of
self-constructed investment property includes the cost of materials and direct labour, any other costs directly
attributable to bringing the investment property to a working condition for their intended use and capitalised
borrowing costs.
An investment property is derecognised on its disposal, or when it is permanently withdrawn from use and no
future economic benefits are expected from its disposal. The difference between the net disposal proceeds and
the carrying amount is recognised in the income statements in the period in which the item is derecognised.
3.6.2
Determining fair value
An external, independent valuation firm, having appropriate recognised professional qualifications and recent
experience in the location and category of property being valued is engaged to, value the Group’s investment
properties every 3 years and at shorter intervals whenever the fair value of the revalued asset is expected to differ
materially from their carrying value.
The fair value of the investment property is determined by using comparison and investment methods. The
comparison method entails critical analyses of recent evidence of values of comparable properties in the
neighbourhood and making adjustments for differences such as differences in location, size and shape of the land,
age and condition of building, tenure, title restrictions if any and other relevant characteristics. The investment
method entails the determination of the probable gross annual rental the property is capable of producing and
deducting therefrom the outgoings to arrive at the annual net income. The annual net income is capitalised using a
rate of interest to arrive at the capital value of the property. Valuation of properties involves a degree of judgement
before arriving at the respective property’s revalued amount. As such, the revalued amount of the properties may
be different from its actual market price.
Investment property under construction is valued by estimating the fair value of the completed investment
property and then deducting from that amount the estimated cost to complete construction, financing costs and
a reasonable profit margin.
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3.7Financial instruments
3.7.1Initial recognition and measurement
A financial instrument is recognised in the financial statements when, and only when, the Group and the Company
become a party to the contractual provisions of the instrument.
A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair
value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial
instrument.
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 policy applicable to the nature of the host contract.
3.7.2Financial instrument categories and subsequent measurement
The Group and the Company categorise and measure financial instruments as follows:
Financial assets
3.7.2.1 Financial assets at fair value through profit or loss (“FVTPL”)
Fair value through profit or loss category comprises financial assets that are held for trading (“HFT”) or
financial assets that are specifically designated into this category upon initial recognition.
A financial asset is classified as held for trading if it is acquired principally for the purpose of selling or
repurchasing in the near term or it is part of a portfolio of identified securities that are managed together
and for which there is evidence of a recent actual pattern of short-term profit taking.
Financial assets classified as HFT are subsequently measured at their fair values and any gain or loss
arising from a change in the fair value will be recognised in the income statements.
3.7.2.2 Held-to-maturity investments (“HTM”)
HTM investments category comprises debt instruments that are quoted in an active market and the
Group and the Company have the positive intention and ability to hold to maturity.
Financial assets categorised as HTM investments are subsequently measured at amortised cost using
the effective interest method.
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65
3.7Financial instruments (cont’d)
3.7.2Financial instrument categories and subsequent measurement (cont’d)
3.7.2.3 Loans and receivables (“LAR”)
Loans and receivables category comprises debt instruments that are not quoted in an active market and
include other receivables and cash and cash equivalents.
Financial assets categorised as loans and receivables are subsequently measured at amortised cost
using the effective interest method.
3.7.2.4 Available-for-sale financial assets (“AFS”)
AFS category comprises investments in equity and debt securities that are not held for trading or heldto-maturity.
Investments in equity instruments that do not have a quoted market price in an active market and
whose fair value cannot be reliably measured are measured at cost. Other financial assets classified as
AFS are subsequently measured at their fair values and any gain or loss arising from a change in the
fair value will be recognised in other comprehensive income, except for impairment losses and foreign
exchange gains and losses arising from monetary items which are recognised in the income statements.
On derecognition, the cumulative gain or loss previously recognised in other comprehensive income
is reclassified from equity into income statements. Interest calculated for a debt instrument using the
effective interest method is recognised in the income statements.
3.7.2.5 Insurance receivables
Insurance receivables are recognised when due and measured on initial recognition at the fair value of
the consideration received or receivable. Subsequent to initial recognition, insurance receivables are
measured at amortised cost, using the effective yield method.
If there is objective evidence that the insurance receivable is impaired, the Group reduces the carrying
amount of the insurance receivable accordingly and recognises that impairment loss in income
statements. The Group gathers the objective evidence that an insurance receivable is impaired using the
same process adopted for financial assets carried at amortised cost. The impairment loss is calculated
under the same method used for these financial assets. These processes are described in Note 3.9.
Insurance receivables are derecognised when the derecognition criteria for financial assets, as described
in Note 3.7.5, have been met.
All financial assets, except for those measured at fair value through profit or loss, are subject to review for
impairment (see Note 3.9).
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3.7Financial instruments (cont’d)
3.7.3A regular way purchase or sale of financial assets
A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require
delivery of the asset within the time frame established generally by regulation or convention in the market place
concerned.
A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date
accounting. Trade date accounting refers to:
-
-
the recognition of an asset to be received and the liability to pay for it on the trade date, and
derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a
receivable from the buyer for payment on the trade date.
All the financial assets are recognised using trade date except for debt instruments which are recognised using
settlement date.
3.7.4Financial liabilities
All financial liabilities are initially measured at fair value and subsequently measured at amortised cost other than
those categorised as fair value through profit or loss.
Fair value through profit or loss category comprises financial liabilities that are held for trading or financial liabilities
that are specifically designated into this category upon initial recognition.
Financial liabilities categorised as fair value through profit or loss is subsequently measured at their fair values with
the gain or loss recognised in income statements.
3.7.5Derecognition
A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the
financial asset expire or the financial asset is transferred to another party without retaining control or substantially
all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount
and the sum of the consideration received (including any new asset obtained less any new liability assumed) and
any cumulative gain or loss that had been recognised in equity is recognised in the income statements.
A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is
discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying
amount of the financial liability extinguished or transferred to another party and the consideration paid, including
any non-cash assets transferred or liabilities assumed, is recognised in the income statements.
3.8Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments
which have an insignificant risk of changes in value with original maturities of three (3) months or less.
Cash and cash equivalents are categorised and measured as loans and receivables in accordance with policy note
3.7.2.3.
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67
3.9Impairment
3.9.1Financial assets, excluding insurance receivables
All financial assets (except for financial assets categorised as fair value through profit or loss, investment in
subsidiaries, investment in associate and fixed and call deposits) are assessed at each reporting date whether there
is any objective evidence of impairment as a result of one or more events having an impact on the estimated future
cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised.
For an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence
of impairment.
3.9.1.1 Held-to-maturity (“HTM”) and loans and receivables (“LAR”)
An impairment loss in respect of HTM investments and LAR is recognised in income statements and is
measured as the difference between the financial asset’s carrying amount and the present value of the
estimated future cash flows discounted at the financial asset’s original effective interest rate. The amount
of the impairment loss is recognised in the income statement. The carrying amount of the assets is
reduced through the use of an allowance account.
Subsequent reversal in the impairment loss is recognised when the decrease can be objectively related
to an event occurring after the impairment was recognised, to the extent that the financial assets carrying
amount does not exceed its amortised cost if no impairment had been recognised. The reversal is
recognised in the income statements.
3.9.1.2 Available-for-sale (“AFS”)
An impairment loss in respect of available-for-sale financial assets is recognised in the income statements
and is measured as the difference between the asset’s acquisition cost (net of any principal repayment
and amortisation) and the asset’s current fair value, less any impairment loss previously recognised.
Where a decline in the fair value of an available-for-sale financial asset has been recognised in the other
comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity
and recognised to income statements.
An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in
income statements and is measured as the difference between the financial asset’s carrying amount and
the present value of estimated future cash flows discounted at the current market rate of return for a
similar financial asset.
Impairment losses recognised in income statements for an investment in an equity instrument classified
as available-for-sale is not reversed through the income statements.
If, in the subsequent period, the fair value of a debt instrument increases and the increase can be
objectively related to an event occurring after the impairment loss was recognised in income statements,
the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the
carrying amount would have been had the impairment not been recognised at the date the impairment is
reversed. The amount of the reversal is recognised in the income statements.
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3.9Impairment (cont’d)
3.9.2Insurance receivables
Insurance receivables are assessed at each reporting date whether there is any objective evidence of impairment
as a result of one or more events having an impact on the estimated future cash flows of the assets. Losses
expected as a result of future events, no matter how likely, are not recognised. An objective evidence of impairment
is deemed to exist where the principal or interest or both for insurance receivables is past due for more than 90
days or 3 months, as prescribed in the Guidelines on Financial Reporting for Insurers issued by BNM.
An impairment loss in respect of insurance receivables is recognised in income statements and is measured as
the difference between the financial asset’s carrying amount and the present value of estimated future cash flows
discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced
through the use of an allowance account.
If, in subsequent period, the fair value of insurance receivable increases and the increase can be objectively related
to an event occurring after the impairment loss was recognised in income statements, the impairment loss is
reversed, to the extent that the insurance receivables’ carrying amount does not exceed what the carrying amount
would have been had the impairment not been recognised at the date the impairment is reversed. The amount of
the reversal is recognised in the income statements.
3.9.3Other assets
The carrying amounts of other assets (except for deferred tax assets and investment property that is measured
at fair value) are reviewed at the end of each reporting period to determine whether there is any indication of
impairment. For goodwill that have indefinite useful lives, the recoverable amount is estimated each period at the
same time.
When indication of impairment exists, the asset’s recoverable amount is estimated. For the purpose of impairment
testing, assets are grouped together into the smallest group of assets (known as the “cash-generating unit”) that
generates cash inflows from continuing use that are largely independent of the cash flows of other assets or
groups of assets or cash-generating unit.
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 or cash-generating unit.
An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its
estimated recoverable amount.
Impairment losses are recognised in the income statements. Impairment losses recognised in respect of cashgenerating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating
unit or the group of cash-generating units and then to reduce the carrying amount of the other assets in the cashgenerating unit (or a group of cash-generating units) on a pro rata basis.
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69
3.9Impairment (cont’d)
3.9.3Other assets (cont’d)
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised
in prior periods are assessed at the end of each reporting date 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 income statements in the year in which the reversals are recognised.
3.10 Product classification
The Group issues contracts that transfer insurance risk.
Insurance contracts are those contracts that transfer significant insurance risk. An insurance contract is a contract under
which the Group (the insurer) has accepted significant insurance risk from another party (the policyholders) by agreeing to
compensate the policyholders if a specified uncertain future event (the insured event) adversely affects the policyholders.
As a general guideline, the Group determines whether it has significant insurance risk, by comparing benefits paid with
benefits payable if the insured event did not occur.
Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder of its lifetime, even if the insurance risk reduces significantly during this period, unless all rights and obligations are extinguished
or expired.
3.11Reinsurance
The Group cedes the insurance risk in the normal course of business for all its businesses. Reinsurance assets represent
balances due from reinsurance companies. Amounts recoverable from reinsurers are estimated in a manner consistent
with the outstanding claims provision or settled claims associated with the reinsurer’s policies and are in accordance with
the related reinsurance contracts.
Ceded reinsurance arrangements do not relieve the Group from its obligations to policyholders. Premiums and claims are
presented on a gross basis for both ceded and assumed reinsurance.
Reinsurance assets are reviewed for impairment at each reporting date or more frequently when an indication of
impairment arises during the reporting period. Impairment occurs when there is objective evidence as a result of an event
that occurred after initial recognition of the reinsurance asset that the Group may not receive all outstanding amounts due
under the terms of the contract and the event has a reliably measurable impact on the amounts that the Group will receive
from the reinsurer. The impairment loss is recorded in income statements.
Gains or losses on buying reinsurance, if any, are recognised in income statements.
The Group also assumes reinsurance risk in the normal course of business for general insurance contracts when
applicable.
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3.11Reinsurance (cont’d)
Premiums and claims on assumed reinsurance are recognised as revenue or expenses in the same manner as they would
be if the reinsurance were considered direct business, taking into account the product classification of the reinsured
business. Reinsurance liabilities represent balances due to reinsurance companies.
Amounts payable are estimated in a manner consistent with the related reinsurance contract.
Reinsurance assets or liabilities are derecognised when the contractual rights are extinguished or expire or when the
contract is transferred to another party.
Reinsurance contracts that do not transfer significant insurance risk are accounted for directly through the statements of
financial position. These are deposit assets or financial liabilities that are recognised based on the consideration paid or
received less any explicit identified premiums or fees to be retained by the reinsured.
3.12Commission agency expenses
Gross commission and agency expenses, which are costs directly incurred in securing premium on insurance policies,
and income derived from reinsurers in the course of ceding of premiums to reinsurers, are charged to income statements
in the period in which they are incurred or deferred where appropriate as set out in Note 3.17.3.
3.13Equity instruments
All equity instruments are stated at cost on initial recognition and are not remeasured subsequently.
3.13.1Issue expenses
Incremental costs directly attributable to the issue of equity instruments are recognised as a deduction from
equity.
3.13.2Repurchase of share capital
When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly
attributable costs, is recognised as a deduction from equity and is not re-valued for subsequent changes in the
fair value or market price of shares. Repurchased shares are classified as treasury shares in the statement of
changes in equity.
Where treasury shares are distributed as share dividends, the cost of the treasury shares is applied in the
reduction of the share premium account or distributable reserves, or both.
Where treasury shares are reissued by re-sale in the open market, the difference between the sales consideration
net of directly attributable costs and the carrying amount of the treasury shares is recognised in equity.
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71
3.14Employee benefits
3.14.1Short term employee benefits
Short term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave
are measured on an undiscounted basis and are expensed as the related service is provided.
The Group’s and the Company’s contributions to the Employees’ Provident Fund are charged to the income
statements in the period to which they relate. Once the contributions have been paid, the Group and the
Company have no further payment obligations.
3.14.2Defined benefit plan
The Group’s and the Company’s net obligation in respect of the defined benefit retirement plan is calculated by
estimating the amount of future benefit that employees have earned in return for their service in the current and
prior periods; that benefit is discounted to determine the present value. Any unrecognised past service costs and
the fair value of the plan assets are deducted. The discount rate is the yield at the end of the reporting period
on high quality corporate bonds or government bonds that have maturity dates approximating the terms of the
Group’s and the Company’s obligation and that are denominated in the same currency in which the benefits are
expected to be paid. The calculation is performed by a qualified actuary using the projected unit credit method.
When the calculation results in a benefit to the Group and the Company, the recognised asset is limited to the
net total of any unrecognised past service costs and the present value of any future refunds from the plan or
reductions in future contributions to the plan.
When the benefits of the plan are improved, the portion of the increased benefit relating to past service by
employees is recognised as an expense in the income statements on a straight-line basis over the average period
until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised
immediately in the income statements.
In calculating the Group’s and the Company’s obligation in respect of a plan, to the extent that any cumulative
unrecognised actuarial gain or loss exceeds ten percent of the greater of the present value of the defined benefit
obligation and the fair value of plan assets, if any, that portion is recognised in the income statements over the
expected average remaining working lives of the employees participating in the plan. Otherwise, the actuarial
gain or loss is not recognised.
The latest actuarial valuation on the Group’s and the Company’s obligations for their defined benefit plans was
carried out on 22 February 2011.
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3.15 Provisions
A provision is recognised if, as a result of a past event, the Group and the Company have a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle
the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the liability. The unwinding of discount is
recognised as finance cost.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably,
the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote.
Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more
future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.
Contingent liabilities do not include liabilities arising from contracts of insurance underwritten in the ordinary course of
business of the Group.
3.16Other financial liabilities and payables
Other financial liabilities and payables are recognised when due and measured on initial recognition at the fair value of the
consideration received less directly attributable transactions costs.
3.17 General insurance underwriting results
The general insurance underwriting results are determined for each class of business after taking into account inter alia
reinsurances, commissions, unearned premiums and claims incurred.
3.17.1 Premium income
Premium is recognised in a financial period in respect of risks assumed during that particular financial period
except for inwards treaty reinsurance premiums which are recognised on the basis of periodic advices / accounts
received from ceding insurers.
3.17.2Insurance contract liabilities
General insurance contract liabilities are recognised when contracts are entered into and premiums are
charged.
These liabilities comprise provision for unearned premiums and provision for outstanding claims.
3.17.2.1 Provision for unearned premiums
Provision for unearned premiums is the higher of the aggregate of the Unearned Premium Reserves
(“UPR”) for all lines of business and the best estimate value of the Unexpired Risk Reserves (“URR”)
at the required risk margin for adverse deviation.
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73
3.17 General insurance underwriting results (cont’d)
3.17.2Insurance contract liabilities (cont’d)
3.17.2.1 Provision for unearned premiums (cont’d)
Unearned premium reserves
The UPR represents the premiums received for risks that have not yet expired. Generally, the reserve
is released over the term of the contract and is recognised as premium income.
In determining the UPR at the end of the reporting period, the method that most accurately reflects
the actual unearned premium reserves is as follows:
-
-
-
-
25% method for marine cargo, aviation cargo and transit business of annual Malaysian general
policies
1/24th method for all other classes of annual Malaysian general policies
1/8th method for all other classes of annual overseas inward treaty business
non-annual policies are time-apportioned over the period of the risks
The UPR is adjusted for additional UPR in respect of premiums ceded to overseas reinsurers as
required under the guidelines issued by BNM.
Unexpired risk reserves
At each reporting date, the Group reviews its unexpired risks and a liability adequacy test is performed
to determine whether there is any overall excess of expected claims and deferred acquisition costs
over unearned premiums. This calculation uses current estimates of future contractual cash flows
(taking into consideration current loss ratios) after taking account of the investment return expected
to arise on assets relating to the relevant general insurance technical provisions. If these estimates
show that the carrying amount of the unearned premiums less related deferred acquisition costs is
inadequate, the deficiency is recognised in income statements by setting up a provision for liability
adequacy.
3.17.2.2 Provision for outstanding claims
Outstanding claims provision are based on the estimated ultimate cost of all claims incurred but
not settled at the end of the reporting period, whether reported or not, together with related claims
handling costs and reduction for the expected value of salvage and other recoveries. Delays can
be experienced in the notification and settlement of certain types of claims, therefore, the ultimate
cost of these claims cannot be known with certainty at the end of the reporting period. The liability is
calculated at the reporting date by an independent actuarial firm using projection techniques as set
out in Note 3.18 that included a regulatory risk margin for adverse deviation. The liability is discounted
for the time value of money. No provision for equalisation or catastrophe reserves is recognised. The
liabilities are derecognised when the contract expires, is discharged or is cancelled.
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Kurnia Asia Berhad
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3.17 General insurance underwriting results (cont’d)
3.17.3 Acquisition costs and deferred acquisition costs (“DAC”)
The gross cost of acquiring and renewing insurance policies 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. Acquisition costs or ceding income which are not recoverable, or not payable in the event of a
termination of the policy to which they relate, are not deferred but are recognised in the period in which they
occur.
Those costs are deferred to the extent that these costs are recoverable out of future premiums. All other
acquisition costs are recognised as an expense when incurred.
Subsequent to initial recognition, these costs are amortised on a straight-line basis based on the term of expected
future premiums. Amortisation is recognised in income statements.
An impairment review is performed at each reporting date or more frequently when an indication of impairment
arises. When the recoverable amount is less than the carrying value, an impairment loss is recognised in income
statements. DAC is also considered in the liability adequacy test for each accounting period.
DAC is derecognised when the related contracts are either settled or disposed of.
3.18Valuation of general insurance contract liabilities
For general insurance contracts, estimates have to be made for both the expected ultimate cost of claims reported at the
end of the reporting period and for the expected ultimate cost of claims incurred but not yet reported (“IBNR”) at the end
of the reporting period.
It can take a significant period of time before the ultimate claims costs can be established with certainty and for some type
of policies, IBNR claims form the majority of the statements of financial position liability. The ultimate cost of outstanding
claims is estimated by using a range of standard actuarial claims projection techniques, such as Chain Ladder and
Bornheutter-Ferguson methods.
The main assumption underlying these techniques is that a company’s past claims development experience can be
used to project future claims development and hence, the ultimate claims costs. As such, these methods extrapolate
the development of paid and incurred losses, average costs per claim and claims numbers based on the observed
development of earlier years and expected loss ratios. Historical claims development is mainly analysed by accident
years, but can also be further analysed by significant business lines and claims type. Large claims are usually separately
addressed, either by being reserved at the face value of loss adjustor estimates or separately projected in order to reflect
their future development. In most cases, no explicit assumptions are made regarding their future rates of claims inflation
or loss ratios. Instead, the assumptions used are implicit in the historic claims development data on which the projections
are based.
Additional qualitative judgement is used to assess the extent to which past trends may not apply in future, (for example,
to reflect one-off occurrences, changes in external or market factors such as public attitudes to claiming, economic
conditions, level of claims inflation, judicial decisions and legislation, as well as internal factors such as portfolio mix, policy
features and claims handling procedures) in order to arrive at the estimated ultimate cost of claims that present the likely
outcome for the range of possible outcomes, taking account of all the uncertainties involved.
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75
3.19Other revenue recognition
3.19.1Interest income
Interest income is recognised as it accrues, using the effective interest method except where an interest bearing
investments is considered non-performing, i.e. where repayments are in arrears for more than six months, in
which case recognition of such interest is suspended. Subsequent to suspension, interest income is recognised
on the receipt basis until all arrears have been paid.
3.19.2Dividend income
Dividend income represents gross dividends from quoted and unquoted investments and is recognised in the
income statements when the right to receive payment is established.
3.19.3Rental income
Rental income is recognised on an accrual basis except where default in payment of rent has already occurred
and rent due remains outstanding for over six months, in which case recognition of rental income is suspended.
Subsequent to suspension, rental income is recognised on the receipt basis until all arrears have been paid.
3.19.4Realised gains and losses on investments
Realised gains and losses recorded in income statements on investments include gains and losses on financial
assets and investment properties. Gains and losses on the sale of investments are calculated as the difference
between net sales proceeds and the original or amortised costs and are recorded on occurrence of the sale
transaction.
3.20Tax expense
Tax expense comprises current and deferred tax. Tax expense is recognised in the income statements except to the
extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using liability method, providing for temporary differences between the carrying amounts of
assets and liabilities in the statements of financial position and their tax bases. Deferred tax is not recognised for the
temporary differences in relation to the initial recognition of goodwill, the initial recognition of assets or liabilities in a
transaction that is not a business combination and that affects neither accounting, nor taxable profit or loss. Deferred tax
is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on
the laws that have been enacted or substantively enacted at the end of the reporting period.
Deferred tax liability is recognised for all taxable temporary differences.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against
which temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
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3.21Earnings per share
The Group presents basic earnings per shares (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the
profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares
outstanding during the period. No diluted EPS is disclosed in these financial statements as there are no dilutive potential
ordinary shares.
3.22Operating segments
4.
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and
incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components.
An operating segment’s operating results are reviewed regularly by the chief operating decision maker, which in the case
is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and assess
its performance, and for which discrete financial information is available.
Office
Long term
Group
Freehold
land
Cost/ valuation
At 1 January 2010
Office Furniture equipment
leasehold
improve-
land Buildings
ments
and
Property
and
Motor
under
fittings computers vehicles construction
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
Total
RM’000
RM’000
17,123
33,137
137,367
9,042
37,738
75,979
9,013
7,049
326,448
Additions
-
-
-
27
352
1,601
1,066
5,854
8,900
Disposals
-
(312)
(1,460)
(7)
(6)
(1,451)
(2,748)
-
(5,984)
Effect of movements
in exchange rates
-
-
(31)
(1)
(17)
(101)
(71)
-
(221)
17,123
32,825
135,876
9,061
38,067
76,028
7,260
12,903
329,143
-
-
-
146
512
3,683
1,175
5,134
10,650
1 January 2011
Additions
Disposals
-
-
-
(85)
(110)
(3,400)
(4,003)
-
(7,598)
Written off
-
-
-
(7,304)
(19,812)
(42,337)
-
(264)
(69,717)
Elimination of
accumulated
depreciation on
revaluation
-
(2,762)
(18,783)
-
-
-
-
-
(21,545)
7,371
4,351
20,642
-
-
-
-
-
32,364
-
-
(58)
66
15
39
24
-
86
24,494
34,414
137,677
1,884
18,672
34,013
4,456
17,773
273,383
Revaluation surplus
Effect of movements
in exchange rates
At 31 December 2011
page
Kurnia Asia Berhad
annual report 2011
4.
77
Long term
Group
Freehold
leasehold
land
Depreciation
Office
Property
Office Furniture equipment
under
improve-
land Buildings
and
ments
Motor
con-
fittings computers vehicles
and
struction
Total
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
At 1 January 2010
-
2,180
14,662
6,315
22,320
56,291
6,538
-
108,306
Depreciation for the year
-
417
2,955
854
3,580
7,619
887
-
16,312
Disposals
-
(27)
(283)
(2)
(5)
(1,418)
(2,243)
-
(3,978)
(2)
(9)
(61)
(62)
-
(138)
Effect of movements in
exchange rates
- At 31 December 2010 /
1 January 2011
-
2,570
17,330
7,165
25,886
62,431
5,120
-
120,502
-
455
3,196
564
2,944
5,519
856
-
13,534
-
(4)
Disposals
-
-
-
(53)
(89)
(3,336)
Written off
-
-
-
(6,724)
(17,832)
(41,717)
Elimination of
accumulated
depreciation on
revaluation
-
(2,762)
(18,783)
-
-
-
(3,474)
-
(6,952)
-
-
(66,273)
-
-
(21,545)
Effect of movements in
exchange rates
-
-
12
13
27
20
-
57
At 31 December 2011
-
263
1,728
964
10,922
22,924
2,522
-
39,323
-
1,867
577
1,974
616
-
-
5,034
460
105
818
-
-
-
-
-
1,383
-
-
-
-
-
(12)
-
-
2,685
577
1,974
604
-
-
-
-
-
-
-
(15)
Impairment loss
At 1 January 2010
Impairment loss for the year
Disposal
- At 31 December 2010 /
1 January 2011
460
105
Impairment loss/ (reversal)
for the year
447
83
(881)
Disposal
-
-
-
Written off
-
-
-
907
188
1,804
-
-
17,123
30,957
120,838
2,150
13,444
At 31 December 2011
(12)
(577)
6,405
(351)
(16)
(5)
-
-
(21)
(1,958)
(599)
-
-
(3,134)
-
-
-
2,899
19,072
2,475
7,049
213,108
Carrying amounts
At 1 January 2010
1 January 2011
16,663
30,150
115,861
1,319
10,207
12,993
2,140
12,903
202,236
At 31 December 2011
23,587
33,963
134,145
920
7,750
11,089
1,934
17,773
231,161
page
78
Kurnia Asia Berhad
annual report 2011
4.
Revaluation of land and buildings
The Group’s land and buildings have been revalued during the year based on valuations performed by independent professional
qualified valuers. The fair value of the land and buildings are the estimated market value of the property derived using the market
value of properties in the vicinity and past transaction prices.
Had the land and buildings of the Group been carried under cost model, their carrying amounts would have been as follows:Group
2011
2010
RM’000
RM’000
Freehold land
16,512
16,663
Leasehold land
29,578
30,150
Buildings
112,820
115,441
At 31 December
158,910
162,254
Impairment loss and subsequent reversal
The Group performed an impairment assessment on its property and equipment during the year ended 31 December 2010. As
a result of the assessment, impairment loss of RM1,383,000 was recognised in the income statement. In 2011, impairment loss
of RM351,000 was reversed as a result of the revaluation of land and buildings.
Motor
Company
vehicles
Total
RM’000
RM’000
Cost
At 1 January 2010
1,308 1,308
Additions
390 390
Disposals
(415) (415)
1,283 (96)
Disposals
At 31 December 2011
1,283
(96)
1,187
1,187
1,176 1,176
Depreciation
At 1 January 2010
108 108
Disposals
(415) (415)
869 869
141
141
Disposals
(96)
(96)
At 31 December 2011
914
914
page
Kurnia Asia Berhad
annual report 2011
4.
79
Motor
Company
vehicles
Total
RM’000
RM’000
132
132
Carrying amounts
At 1 January 2010
5.
414
414
At 31 December 2011
273
273
Goodwill
Group
2011
2010
RM’000
RM’000
At 1 January
-
5,061
Impairment loss
-
(4,373)
Effect of movements in exchange rates
-
(688)
At 31 December
-
Carrying amounts
-
The entire carrying amount of goodwill was allocated to the general insurance business unit in Indonesia, PT Kurnia Insurance
Indonesia (“KII”), which represents the lowest level within the Group at which the goodwill is monitored for internal management
purposes.
The goodwill was fully impaired in 2010, after management had considered the past historical financial track record and the
uncertainties over the profitability of the cash-generating unit in the immediate future.
6.Investment property
Group
At 1 January
Change in fair value – income statement
At 31 December
2011
2010
RM’000
RM’000
7,500
7,500
213
-
7,713
7,500
The fair value of the investment property is the estimated market value of the property derived using the market value of properties
in the vicinity and past transaction prices. Valuation is performed by independent professional qualified valuers.
page
80
Kurnia Asia Berhad
annual report 2011
6.Investment property (cont’d)
The following are recognised in the income statement in respect of investment property:
Group
2011
2010
RM’000
RM’000
Rental income
78 65
Direct operating expenses
(31) (31)
7.Investments in subsidiaries
Company
Unquoted ordinary shares, at cost
2010
RM’000
519,925
511,225
(9,373)
Less: Accumulated impairment losses
Irredeemable Convertible Subordinated Debt
2011
RM’000
7.1
(9,373)
510,552
501,852
230,000
230,000
740,552
731,852
7.1 On 10 September 2008, the Company subscribed for RM400,000,000 nominal value of Irredeemable Convertible
Subordinated Debt (“ICSD”) issued by the Company’s subsidiary, Kurnia Insurans (Malaysia) Berhad (“KIMB”).
The ICSD has a tenure of 5 years from the date of issuance, and bears interest at the rate of 1.5% per annum above the
cost of fund of CIMB Bank Berhad or such other amended rates at the discretion of the Company.
The ICSD shall be convertible into fully paid ordinary shares of KIMB at the conversion price of RM1.00 per ordinary share
(“Conversion Price”) at any time during the tenure of the ICSD. All ICSD not converted during the tenure of the ICSD shall
be automatically converted on the maturity date.
On 19 September 2008, RM400,000,000 nominal value of ICSD was issued to the Company, and on even date,
RM170,000,000 nominal value of ICSD was converted into ordinary shares of KIMB at the Conversion Price.
page
Kurnia Asia Berhad
annual report 2011
81
7.Investments in subsidiaries (cont’d)
7.2 Details of the subsidiaries are as follows:
Country of
Name of subsidiary
incorporation
Effective ownership
Principal activities
interest
2011
2010
Malaysia
Underwriting of
general insurance
100%
100%
Kurnia Asia Pte. Ltd. #
Singapore
Investment holding
100%
100%
PT Kurnia Insurance Indonesia #
Indonesia
Underwriting of
general insurance
100%
100%
Premier Assist Sdn. Bhd.
(formerly known as Kurnia Auto Assist Sdn. Bhd.) *
Malaysia
Auto assists service
100%
100%
Dormant
60%
-
Kurnia Insurans (Malaysia) Berhad
Kurnia Cambodia Incorporated Co. Ltd. #
Cambodia
#
Not audited by KPMG
*
The subsidiary was incorporated on 26 December 2001 and commenced business on 1 April 2011.
8.Investment in associate
Group
Unquoted shares outside Malaysia, at cost
2011
2010
RM’000
RM’000
21,181
19,235
(2,394)
Less: Accumulated impairment losses
18,787
(4,119)
Share of post acquisition loss
14,668
(2,394)
16,841
(3,562)
13,279
Summary financial information for associate, not adjusted for the percentage ownership held by the Group:
Effective
Kurnia Insurance (Thailand) Co. Ltd.
Country of
ownership
incorporation
interest
Thailand
25%
Revenue
Loss
Total
Total
assets
liabilities
(100%)
(100%)
(100%)
(100%)
RM’000
RM’000
RM’000
RM’000
75,316
2,228
74,429
59,902
page
82
Kurnia Asia Berhad
annual report 2011
9.Investments
The Group’s investments are categorised as follow:
Group
Malaysian government securities
2010
RM’000
RM’000
-
10,179
Cagamas bonds
1,006
1,012
Government guaranteed bonds
5,062
20,177
Debt securities
321,168
378,111
Equity securities
19,055
43,420
Quoted unit and property trust funds
138,704
99,523
Collective investment funds
680,768
628,266
2011
469,171
522,158
1,634,934
1,702,846
The following investments mature after 12 months:
2011
2010
RM’000
RM’000
Held-to-maturity financial assets
58,059
63,278
Available-for-sale financial assets
820,863
900,378
149,066
516,173
1,027,988
1,479,829
2011
2010
RM’000
RM’000
62,123
63,278
63,290
60,531
Group
9.1 Held-to-maturity
Group
Amortised cost
Debt securities
- Unquoted in Malaysia
Fair value
Debt securities
page
Kurnia Asia Berhad
annual report 2011
83
9.Investments (cont’d)
9.2 Available-for-sale
Group
2011
2010
RM’000
RM’000
680,768
628,266
-
10,179
265,113
336,022
1,430
1,430
31
31
947,342
975,928
Fair value
Debt securities
Cost
Equity securities
- Unquoted outside Malaysia
9.3 Held for trading
Group
2011
2010
RM’000
RM’000
17,594
41,959
Fair value
Quoted equity securities in Malaysia
Quoted unit and property trust funds in Malaysia
138,704
99,523
156,298
141,482
2011
2010
RM’000
RM’000
457,728
472,427
-
29,409
9.4 Loans and receivables
Group
Amortised cost
Fixed and call deposits
- Licensed banks
Negotiable instruments of deposits (“NID”)
Commercial loans
-
6,590
- Non-performing loan
6,000
6,000
Mortgage loans
5,408
7,683
- Performing loan
Other loans
35
49
469,171
522,158
page
84
Kurnia Asia Berhad
annual report 2011
9.4 Loans and receivables (cont’d)
Group
2011
2010
RM’000
RM’000
457,728
472,427
-
29,409
Fair value
- Licensed banks
Negotiable instruments of deposits (“NID”)
Commercial loans
-
6,590
- Non-performing loan
6,000
6,000
Mortgage loans
5,408
7,683
35
49
469,171
522,158
- Performing loan
Other loans
9.5 Carrying values of financial instruments
Group
At 1 January 2010
HTM
LAR
AFS
HFT
Total
RM’000
RM’000
RM’000
RM’000
RM’000
85,224
513,390
924,856
159,934
1,683,404
Effect of adopting FRS 139
-
-
9,269
1,545
10,814
Purchases
-
16,213
690,313
82,534
789,060
Maturities
Disposals
(21,701)
-
(7,237)
(92,647)
(568,771)
(122,233)
(114,348)
(698,241)
Realised gains recorded in:
- Income statements
-
-
5,195
9,161
14,356
Fair value gains recorded in:
- Income statements
-
-
-
10,544
10,544
- Other comprehensive income
-
-
7,844
-
7,844
Amortisation net of accretion
Translation difference
At 31 December 2010
(187)
714
40
-
(58)
(922)
(171)
(3)
63,278
522,158
975,928
141,482
567
(1,154)
1,702,846
page
Kurnia Asia Berhad
annual report 2011
85
9.5 Carrying values of financial instruments (cont’d)
Group
At 31 December 2010
Purchases
Maturities
Disposals
HTM
LAR
AFS
HFT
Total
RM’000
RM’000
RM’000
RM’000
RM’000
63,278
522,158
975,928
141,482
1,702,846
309,156
114,982
(900)
-
(14,700)
(135,000)
(38,567)
(197,256)
(109,424)
424,138
(150,600)
(345,247)
Realised gains recorded in:
- Income statements
-
-
1,892
4,881
-
4,377
6,773
Fair value gains/(losses) recorded in:
- Income statements
-
-
- Other comprehensive income
-
-
Amortisation net of accretion
At 31 December 2011
(255)
62,123
280
469,171
(7,277)
(101)
-
4,377
(7,277)
(76)
947,342
156,298
1,634,934
2011
2010
Note
RM’000
RM’000
- Claims liabilities
15.1
385,576
250,759
- Premium liabilities
15.2
165,697
122,000
551,273
372,759
10.Reinsurance assets
Group
Reinsurance of insurance contracts
page
86
Kurnia Asia Berhad
annual report 2011
11.Insurance receivables
Group
Note
2011
2010
RM’000
RM’000
60,955
59,288
Due from reinsurers and cedants
11.1
13,652
23,684
74,607
82,972
Allowance for impairment
11.2
(17,775)
(30,121)
56,832
52,851
Due premiums including agents / brokers and co-insurers balances
11.1Amount due from associate company
Included in the amount due from reinsurers and cedants is an amount of RM122,000 (2010: Nil) due from associate
company. The transaction is based on normal trade terms and the balance outstanding is unsecured.
11.2Allowance for impairment
During the year, impairment loss of RM11,050,000 (2010: RM6,601,000) was written off against the allowance for
impairment.
12.Other receivables, deposits and prepayments
Group
Note
Income due and accrued
Amount due from subsidiaries
Malaysian Institute of Insurance bond (“MII”)
Advance premium ceded to reinsurers
Commission paid to agents on advance premium
Receivable after 12 months
12.1
Company
2011
2010
2011
2010
RM’000
RM’000
RM’000
RM’000
16,857
9,492
-
-
59,478
18,724
336
249
-
-
340
36
200
200
-
-
2,624
5,194
-
-
1,174
1,597
80,333
35,207 18,783
13,845
-
-
676
285
-
-
page
Kurnia Asia Berhad
annual report 2011
87
12.Other receivables, deposits and prepayments (cont’d)
Estimation of fair values
The carrying amount of other receivables approximates its fair value due to the relatively short term nature of the financial
instruments.
The fair value of other receivables after 12 months was determined to approximate the carrying amounts as it is immaterial in the
context of the financial statements.
12.1Amounts due from subsidiaries
The amounts due from subsidiaries are unsecured, interest-free and repayable on demand.
13.Deferred acquisition costs
Group
Note
2011
2010
RM’000
RM’000
41,646
43,151
Gross of reinsurance
At 1 January
Movement during the year
27
At 31 December
(4,639)
37,007
(1,505)
41,646
Reinsurance
At 1 January
At 31 December
(5,371)
27
(5,566)
(10,937)
(6,326)
955
(5,371)
Net of reinsurance
At 1 January
36,275
(10,205)
At 31 December
26,070
36,825
(550)
36,275
page
88
Kurnia Asia Berhad
annual report 2011
14.Cash and cash equivalents
Group
Cash and bank balances
Deposits placed with licensed banks in Malaysia
Deposits placed with licensed banks outside Malaysia
Company
2011
RM’000
2010
RM’000
2011
RM’000
2010
RM’000
37,436
82,741
10,594
130,771
38,818
90,814
129,632
1,543
1,543
3,272
3,272
The carrying amounts approximate their fair values due to the relatively short term nature of these financial instruments.
15.Insurance contract liabilities
General insurance contract liabilities consist of:
Group
Note
Provision for claims reported by
policyholders
Provision for incurred but not
reported claims (“IBNR”)
Provision for outstanding claims
Provision for unearned premiums
15.1
15.2
2011
Gross Reinsurance
RM’000
RM’000
802,024
334,360
1,136,384
554,454
1,690,838
Net
RM’000
2010
Gross Reinsurance
RM’000
RM’000
Net
RM’000
544,308
861,845
691,290
(127,860)
206,500
(385,576)
750,808
(165,697)
388,757
(551,273) 1,139,565
293,947
1,155,792
513,360
1,669,152
(257,716)
(170,555)
(80,204)
213,743
(250,759)
905,033
(122,000)
391,360
(372,759) 1,296,393
15.1 Provision for outstanding claims
Group
At 1 January
Loss portfolio transfer
Claims incurred in the current
accident year (direct and
facultative)
Adjustment to claims incurred
in prior accident years (direct
and facultative)
Claims incurred during the year
(treaty inwards claims)
Claims paid during the year
At 31 December
2011
Gross Reinsurance
RM’000
RM’000
Net
RM’000
2010
Gross Reinsurance
RM’000
RM’000
905,033 1,314,722
(67,861)
-
Net
RM’000
1,155,792
-
(250,759)
(67,861)
469,924
(60,511)
409,413
587,820
(67,842)
519,978
298,448
(177,499)
120,949
108,898
14,756
123,654
17,716
(805,496)
1,136,384
171,054
(385,576)
17,716
3,305
(634,442)
(858,953)
750,808 1,155,792
86,092
(250,759)
3,305
(772,861)
905,033
(283,765) 1,030,957
-
page
Kurnia Asia Berhad
annual report 2011
89
15.Insurance contract liabilities (cont’d)
15.2 Provision for unearned premiums
2011
2010
Gross Reinsurance
Group
RM’000
At 1 January
RM’000
Net
Gross Reinsurance
RM’000
RM’000
RM’000
Net
RM’000
513,360
(122,000)
391,360
460,694
(55,425)
405,269
1,109,729
(337,714)
772,015
1,058,753
(220,387)
838,366
Premiums earned during the year (1,068,635)
294,017
(774,618) (1,006,087)
153,812
(852,275)
At 31 December
(165,697)
388,757
(122,000)
391,360
Premiums written during the year
554,454
513,360
16.Other financial liabilities
Group
Note
Company
2011
2010
2011
2010
RM’000
RM’000
RM’000
RM’000
84,143
68,614
-
-
Performance bond deposits
16.1
6,487
6,708
-
-
Term loan
16.2
360,000
360,000
360,000
360,000
450,630
435,322
360,000
360,000
Treaty deposits from reinsurers
16.1 Performance bond deposits
Performance bond deposits are collateral deposits received from policyholders for guarantees issued on behalf of
policyholders.
The carrying amounts disclosed above approximate fair values at the end of the reporting period.
All amounts, except for term loan, are payable within one year.
16.2Term loan
16.2.1Security
On 11 September 2008, the Company entered into an agreement with CIMB Bank Berhad (“CIMB”) for a term
loan facility of up to RM400,000,000 for a tenure of 5 years from the date of first drawing. The term loan facility
is for the purpose of subscribing for RM400,000,000 nominal value Irredeemable Convertible Subordinated Debt
(“ICSD”) of its subsidiary, Kurnia Insurans (Malaysia) Berhad (“KIMB”).
The term loan is secured by the entire issued and paid up share capital and the entire ICSD of KIMB held by the
Company.
page
90
Kurnia Asia Berhad
annual report 2011
16.Other financial liabilities (cont’d)
16.2Term loan (cont’d)
16.2.2Term and repayment schedule
Year of
Carrying
maturity
amount
1 year
years
years
RM’000
RM’000
RM’000
RM’000
2012 to 2013
360,000
220,000
140,000
-
2011 to 2013
360,000
80,000
140,000
140,000
Group and Company
Under
1-2
2-5
2011
Term loan
2010
Term loan
The effective interest rate on the term loan during the year is 5.91% per annum (2010: 5.40%).
During the financial year, CIMB agreed to extend the principal repayment of RM80,000,000 which was due in
September 2011 to May 2012. Given that the Company had on 3 April 2012 obtained the approval from MOF via
BNM to enter into an agreement with AmG to dispose the Company’s 100% equity interest in KIMB to AmG, the
Board of Directors intends to seek further extension of time from CIMB to repay the RM80,000,000 to facilitate
the completion of the proposed disposal.
17.Insurance payables
Group
2011
2010
RM’000
RM’000
Due to agents, brokers, co-insurers and insured
10,824
10,890
Due to reinsurers and cedants
76,549
18,740
87,373
29,630
page
Kurnia Asia Berhad
annual report 2011
91
18.Other payables
Group
Note
Company
2011
2010
2011
2010
RM’000
RM’000
RM’000
RM’000
Accrued expenses and deposits
26,007
18,487
2,733
177
Advance premium written
11,302
14,356
-
-
Commission received on advance premium
ceded to reinsurers
Other payables
Term loan interest
Amount due to shareholders
18.1
Amount due to subsidiaries
18.2
657
687
-
-
33,264
34,400
16
27
718
783
718
783
31,028
22,035
31,028
22,035
-
-
13,786
5,113
102,976
90,748
48,281
28,135
The carrying amounts disclosed above approximate fair values at the end of the reporting period.
All amounts, except for the amount due to shareholders, are payable within one year.
18.1Amount due to shareholders
Included in the amount due to shareholders is a loan amounting to RM27,371,000 extended by Tan Sri Dato’ Paduka Kua
Sian Kooi to the Company, for the purpose of enabling the Company to meet its obligation under the term loan to repay
CIMB and for working capital purposes. RM20,000,000 of the RM27,371,000 is unsecured and subordinated to the term
loan from CIMB (Note 16.2). The effective interest rate on this amount during the year is 5.91% per annum (2010: 5.67%).
The remaining balance of RM7,371,000 is unsecured, interest free and repayable on demand.
18.2 Amount due to subsidiaries
Amount due to subsidiaries is unsecured, interest-free and repayable on demand.
page
92
Kurnia Asia Berhad
annual report 2011
19. Provision for retirement benefits
19.1 The movements in the present value of the defined benefit obligation recognised in the statements of financial
position are as follows:
Group
Company
2011
2010
2011
2010
RM’000
RM’000
RM’000
RM’000
Defined benefit obligation at 1 January
25,544
23,785
2,244
2,066
Benefits paid
(1,233)
(1,252)
(20)
(68)
3,022
3,011
255
246
31 December
27,333
25,544
2,479
2,244
Present value of unfunded obligation
27,333
25,544
2,479
2,244
Recognised liability for defined benefit obligation
27,333
25,544
2,479
2,244
Current service costs and interest
19.2 Expenses recognised in income statements as retirement benefits (Note 30):
Group
Company
2011
2010
2011
2010
RM’000
RM’000
RM’000
RM’000
Current service cost
1,962
1,941
148
153
Interest cost
1,060
1,070
107
93
3,022
3,011
255
246
page
Kurnia Asia Berhad
annual report 2011
93
19. Provision for retirement benefits (cont’d)
19.3Actuarial assumptions
Principal actuarial assumptions at the end of the reporting period (expressed as weighted average):
Group
2011
Company
2010
2011
2010
Discount rate at 31 December (per annum)
4.50%
4.50%
4.50%
4.50%
Future salary increases (per annum)
6.00%
6.00%
6.00%
6.00%
The discount rate used is based on market yields at the end of the reporting period on high quality corporate bonds. The
amount and terms of the corporate bonds are consistent with the current and estimated future post-employment benefit
obligation.
Assumption regarding future mortality is based on the experience of Malaysian insured lives between 1983 and 1988 with
allowance for improvement in mortality rates allowed for by applying a 25% reduction to the standard rate. The average
expected future working lives has been estimated at 7.9 years.
Calculation of the unfunded defined retirement benefits involves the projection of the present value for unfunded obligations
using certain principal actuarial assumptions such as the rate of interest at which to discount the future retirement benefits
payments at the valuation date and the assumed rate of growth of liabilities, namely the rate of salary escalation. There
are elements of uncertainty on the assumptions used and thus the projected future retirement benefits payable may be
different from the actual retirement benefits paid.
Under the scheme, eligible employees who have completed a minimum of 10 years of service are entitled to retire at 56
years of age or optional retirement age of 50 years. Employees who leave before the attainment of the normal retirement
age or optional retirement age, are not entitled to the benefit.
All new employees who are hired after 18 March 2011 will cease to be entitled for the retirement benefit.
page
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Kurnia Asia Berhad
annual report 2011
20.Deferred tax assets / (liabilities)
20.1 Recognised deferred tax assets and (liabilities) are attributable to the following:
Assets
2011
2010
RM’000
RM’000
Group
8,884
1,814
144
10,842
10,842
Provisions
Unutilised tax losses carry forward
Other items
Revaluation surplus
Fair value reserve of securities available-for-sale
3,830
811
20
4,661
4,661
Liabilities
2011
2010
RM’000
RM’000
(2,916)
(179)
(3,095)
(1,618)
(2,459)
(7,172)
(5,139)
(5,139)
(4,278)
(9,417)
Net
2011
RM’000
2010
RM’000
(2,916)
8,884
1,814
(35)
7,747
(1,618)
(2,459)
3,670
(5,139)
3,830
811
20
(478)
(4,278)
(4,756)
20.2 Movement in temporary differences during the year:
Group
Property and
equipment
Provisions
Unutilised tax
losses carry
forward
Other items
Tax assets /
(liabilities)
Revaluation
surplus
Fair value
reserve of
securities
available-forsale
Net tax assets /
(liabilities)
Recognised Recognised
Effect of
Recognised Recognised
Effect of
in income
in equity movements
in income
in equity movements
At statements statements in exchange
At statements statements in exchange
At
1.1.2010
(Note 32)
(Note 32)
rates 31.12.2010
(Note 32)
(Note 32)
rates 31.12.2011
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
(6,865)
6,525
1,797
(2,695)
-
(71)
-
(5,139)
3,830
9,184
75
(8,373)
(55)
-
-
811
20
8,919
(9,326)
-
(71)
(478)
-
-
-
-
-
-
8,919
(9,326)
-
2,121
5,699
-
102
(645)
(2,916)
8,884
249
124
-
754
(179)
1,814
(35)
8,193
-
32
7,747
-
(1,618)
-
(1,618)
(4,278)
-
(4,278)
-
1,819
-
(2,459)
(4,278)
(71)
(4,756)
8,193
201
32
3,670
The estimation of the recognised deferred tax assets involves the projection of the Group’s future profits. There are
elements of uncertainty in the projection, which comprise of the global economic condition and market volatility among
others. Thus the projected future profits may be different from its actual profits.
page
Kurnia Asia Berhad
annual report 2011
95
21.Share capital
Group and Company
2011
2010
No. of
No. of
shares
Amount
shares
Amount
‘000
RM’000
‘000
RM’000
5,000,000
1,250,000
5,000,000
1,250,000
1,500,000
375,000
1,500,000
375,000
Authorised:
Ordinary shares of RM0.25 each
Issued and fully paid:
Ordinary shares of RM0.25 each
22.Reserves
The reserves as shown in the statements of changes in equity are as follows:
22.1 Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements
of foreign operations.
22.2 Treasury shares
In 2008, the Company repurchased 11,577,400 of its issued shares from the open market. The average price paid for the
shares purchased was approximately RM1.03 per ordinary share. The repurchase transactions were financed by internal
funds. The repurchased shares are held as treasury shares and carried at cost.
As at 31 December 2011, the Company held 11,577,400 of the Company’s shares. The number of outstanding shares
in issue after deducting treasury shares held was 1,488,422,600 ordinary shares of RM0.25 each.
There were no shares repurchased during the financial year ended 31 December 2011.
22.3 Fair value reserve
The fair value reserve is in respect of the cumulative change in the fair value on securities available-for-sale, net of deferred
taxation until the investments are derecognised or impaired.
22.4 Property revaluation reserve
The property revaluation reserve relates to the revaluation of property and equipment, net of deferred taxation.
page
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annual report 2011
23. Operating revenue
Group
Gross earned premiums
Investment income
2011
RM’000
2010
RM’000
2011
RM’000
Company
2010
RM’000
1,068,635
92,628
1,161,263
1,006,087
90,849
1,096,936
22,451
22,451
21,538
21,538
24.Investment income
2011
RM’000
Group
2010
RM’000
2011
RM’000
Company
2010
RM’000
700
637
-
-
Financial assets at FVTPL – Held for trading
Dividend / distribution income
- equity securities quoted in Malaysia
- equity securities quoted outside Malaysia
- quoted unit and property trust funds
1,502
4
7,257
2,758
7
6,513
-
-
Held-to-maturity financial assets
Interest income
Amortisation of premiums, net of accretion of discounts
3,922
(255)
4,999
(187)
-
-
Rental income
Available-for-sale financial assets
Interest income
Dividend / distribution income
- equity securities unquoted in Malaysia
- collective investment funds
Interest income
Deposits with financial institutions
Interest income
Amortisation of premiums, net of accretion of discounts on NID
Interest income
Irredeemable Convertible Subordinated Debt
Interest income
Total investment income
14,782
18,623
-
-
490
43,957
98
35,091
-
-
494
998
-
-
15,769
591
16,481
714
-
-
3,415
4,117
-
345
92,628
90,849
22,451
22,451
21,193
21,538
page
Kurnia Asia Berhad
annual report 2011
97
25. Realised gains and losses
Group
2011
2010
RM’000
RM’000
4,864
6,910
17
2,251
4,881
9,161
-
129
HFT financial assets
Realised gains
- equity securities quoted in Malaysia
- unit and property trust fund quoted in Malaysia
Total realised gains for HFT financial assets
AFS financial assets
Realised gains
- unit and property trust fund quoted in Malaysia
1,892
4,897
- debt securities quoted outside Malaysia
-
169
Total realised gains for AFS financial assets
1,892
5,195
6,773
14,356
- debt securities quoted in Malaysia
26. Fair value gains and losses
Group
2011
2010
RM’000
RM’000
4,377
10,544
213
-
4,590
10,544
Financial investments
- held for trading
Fair value gain on investment property
Total fair value gains
page
98
Kurnia Asia Berhad
annual report 2011
27. Commission income / expense
Group
Note
2011
2010
RM’000
RM’000
77,796
47,893
Commission income
Commission income
Movement in deferred acquisition costs
13
(5,566)
955
72,230
48,848
(137,305)
(127,267)
Commission expense
Commission expense
Movement in deferred acquisition costs
13
(4,639)
(1,505)
(141,944)
(128,772)
28. Other operating income
Group
Company
2011
2010
2011
2010
RM’000
RM’000
RM’000
RM’000
Transfer fees and other contract fees
417
315
-
-
Other income
383
43
108
-
800
358
108
-
page
Kurnia Asia Berhad
annual report 2011
99
29. Net claims incurred
Group
Gross claims paid less salvage
Claims ceded to reinsurers
Net claims paid
Gross change in claims liabilities
At 31 December
At 1 January
Change in claims liabilities ceded to reinsurers
At 31 December
Loss portfolio transfer *
At 1 January
*
2011
RM’000
2010
RM’000
805,496
(171,054)
634,442
858,953
(86,092)
772,861
1,136,384
(1,155,792)
(19,408)
1,155,792
(1,314,722)
(158,930)
(385,576)
67,861
250,759
(66,956)
548,078
(250,759)
283,765
33,006
646,937
During the financial year, a subsidiary, KIMB entered into a Loss Portfolio Transfer with Adverse Deviation Cover Reinsurance
Agreement (“LPT”) for 25% of all incurred claims after all inuring reinsurance protection in respect of the year of occurrence
from 1 July 1998 to 30 June 2008 which have not been paid as at 31 December 2010. The incurred claims include case
estimates, incurred but not reported (“IBNR”) and incurred but not enough reported (“IBNER”) claims, subject to a maximum
aggregate losses paid of 144% of the undiscounted central estimate of claims liability.
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Kurnia Asia Berhad
annual report 2011
30. Management expenses
Group
Company
2011
2010
2011
2010
RM’000
RM’000
RM’000
RM’000
9,380
8,730
904
116
Personnel expenses (including key management
personnel):
Contributions to Employees Provident Fund
Expenses related to defined benefit plan
Wages, salaries and others
3,022
3,011
255
246
94,284
88,491
7,042
1,476
400
375
65
50
Auditors’ remuneration
KPMG Malaysia - current year
- prior year
- non-audit fees
Subsidiaries’ auditors
13
20
298
13
69
219
8
82
46
-
-
(1)
Reversal of allowance for impairment loss
(12,346)
(10,066)
-
-
11,050
6,601
-
-
-
-
(118)
(29)
13,534
16,312
141
108
Rental of office and premises
1,293
1,215
-
-
IGSF levies
1,376
2,572
-
-
Advertisement expenses
1,859
2,023
-
-
10,515
10,684
-
-
310
-
-
-
Bank charges
Gain on disposal of property and equipment
(1,127)
Allowance for impairment loss on reinsurance assets
1,445
(Reversal)/Allowance for impairment loss on property
and equipment
Allowance for impairment loss on investment in subsidiary
Allowance for impairment loss on goodwill
Other expenses
Total management expenses
(351)
(920)
(10)
-
-
(130)
-
1,383
-
-
-
2,394
-
4,373
-
4,373
-
-
40,762
50,649
2,592
2,785
175,681
187,912
11,221
9,052
page
Kurnia Asia Berhad
annual report 2011
101
31. Key management personnel compensation
The key management personnel compensations are as follows:
Group
Company
2011
2010
2011
2010
RM’000
RM’000
RM’000
RM’000
5,162
4,676
4,172
385
Executive Directors
Remuneration
Other short term employee benefits (including estimated
monetary value of benefits-in-kind)
1,865
1,145
1,816
197
7,027
5,821
5,988
582
Fees
966
943
600
579
Other short term employee benefits (including estimated
monetary value of benefits-in-kind)
147
140
74
65
1,113
1,083
674
644
8,140
6,904
6,662
1,226
Non-executive Directors
Total short term employee benefits
The Group and the Company provide non-cash benefits to Executive Directors and other key management personnel. The
estimated non-cash benefits received by Executive Directors of the Group and of the Company amounted to RM302,000 (2010:
RM280,000) and RM277,000 (2010: RM28,000) respectively.
In addition to their non-cash benefits, Executive Directors and other key management personnel in Malaysia are also eligible to
the Group’s and the Company’s retirement benefits as disclosed in Note 19.
32.Tax expense
32.1 Recognised in the income statements
Group
Company
2011
2010
2011
2010
RM’000
RM’000
RM’000
RM’000
21,823
4,178
135
2,096
1,120
(655)
173
5,298
(520)
2,269
Current tax expense
- Current year
- (Over) / Under provision in prior years
(655)
21,168
Deferred tax expense
Origination and reversal of temporary differences
Total tax expense
(8,193)
9,326
12,975
14,624
(520)
2,269
page
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Kurnia Asia Berhad
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32.Tax expense (cont’d)
32.2 Income tax recognised directly in other comprehensive income
Group
2011
2010
RM’000
RM’000
4,278
-
-
2,317
Fair value reserve
At 1 January
Effect of adopting FRS139
Net (loss) / gain arising from change in fair value of securities available-for-sale
(1,819)
1,961
At 31 December
2,459
4,278
-
-
Net gain arising from change in revaluation surplus
1,618
-
At 31 December
1,618
-
Property revaluation reserve
At 1 January
32.3 Reconciliation of tax expense
Group
2010
2011
2010
RM’000
RM’000
RM’000
RM’000
Profit / (Loss) before tax
60,819
29,636
(11,113)
(8,707)
Tax at Malaysian tax rate of 25%
15,205
7,409
(2,778)
(2,177)
6,472
8,602
2,851
4,028
(13,739)
(9,001)
-
-
Non-deductible expenses
Tax exempt income
Non-deductible interest expense on ICSD
Others
(Over) /Under provision in prior years
Total tax recognised in the income statements
Company
2011
5,613
5,298
-
-
79
1,196
62
245
13,630
13,504
135
2,096
1,120
(655)
173
14,624
(520)
2,269
(655)
12,975
With effect from year of assessment 2009, the corporate tax rate is at 25%. Consequently, deferred tax assets and
liabilities are measured using this tax rate.
page
Kurnia Asia Berhad
annual report 2011
103
32.Tax expense (cont’d)
32.4 Unrecognised deferred tax assets
Deferred tax has not been recognised for the following items:
2011
2010
Company
RM’000
RM’000
Provisions
620
630
Deferred tax assets in respect of the above items have not been recognised because it is not probable that future taxable
profit will be available against which the Company can utilise the benefits therefrom.
33. Basic earnings per ordinary share
Basic earnings per ordinary share is calculated based on the profit for the year of RM47,844,000 (2010: RM15,012,000) divided
by the weighted average number of ordinary shares in issue of 1,488,422,600 during the year.
Group
Profit for the year attributable to ordinary shareholders
2011
2010
RM’000
RM’000
47,844
15,012
Weighted average number of ordinary shares:
Issued ordinary shares at beginning of the year
Effect of treasury shares
Weighted average number of ordinary shares
Basic earnings per ordinary share
1,500,000,000 1,500,000,000
(11,577,400)
(11,577,400)
1,488,422,600 1,488,422,600
Sen
Sen
3.21
1.01
Diluted earnings per share are not presented as there were no dilutive potential ordinary shares as at the end of the reporting
period.
There have been no other transactions involving ordinary shares between the reporting date and the date of completion of these
financial statements.
page
104
Kurnia Asia Berhad
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34.Capital and other commitments
Capital expenditure and other commitments approved by the Directors but not provided for in the financial statements amounted
to approximately:
Group
2011
2010
RM’000
RM’000
4,196
7,600
Contracted but not provided for
35. Related parties
Identity of related parties
For the purpose of these financial statements, parties are considered to be related to the Group or the Company if the Group
or the Company has 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 or 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 Group or the Company either directly or indirectly. The key management personnel include all the Directors of
the Group and the Company. Compensation of key management personnel have been disclosed in Note 31.
The significant transactions and balances with related parties other than key management personnel compensation are as
follows:
Group
2011
2010
Transaction
Transaction
amount
amount
RM’000
RM’000
A company in which Tan Sri Dato’ Paduka Kua Sian Kooi is a common director
and has indirect interest:
Reinsurance inwards premium
(187)
(169)
60
52
1,182
329
A company in which Dato’ Wira Othman Bin Abdul is a common director and
Dato’ Wira Othman Bin Abdul and Tan Sri Dato’ Paduka Kua Sian Kooi
have indirect interest:
Rental expense
Shareholder
Interest expense on loan
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Kurnia Asia Berhad
annual report 2011
105
35. Related parties (cont’d)
Company
2011
2010
Transaction
Transaction
amount
amount
RM’000
RM’000
Subsidiaries
Share of common expenses
ICSD coupon payment
Reimbursement of extension fee on term loan
(22,451)
(1,600)
(10,466)
(21,193)
-
Shareholder
Interest expense on loan
1,182
329
The terms and conditions for the above transactions are based on normal trade terms or on a negotiated basis. Significant
related party balances related to the above transactions are disclosed in Note 12 and Note 18. No allowance for impairment was
made during the year.
36.Operating segments
The Group has one reportable segment, namely the general insurance business in Malaysia, for which the Group Executive
Chairman reviews internal management reports on at least a monthly basis. Other non-reportable segments comprise general
insurance business unit in Indonesia and investment holdings.
Performance is measured based on segment profit before tax, interest, depreciation and amortisation, as included in the internal
management reports that are reviewed by the Group Executive Chairman, who is the Group’s chief operating decision maker.
Segment profit or loss is used to measure performance as management believes that such information is the most relevant in
evaluating the results of certain segments relative to other entities that operate within these industries.
Segment assets and liabilities
The total of segment assets and liabilities is measured based on all assets and liabilities of a segment, as included in the internal
management reports that are reviewed by the Group Executive Chairman. Segment total assets and liabilities are used to
measure financial health of the segment.
page
106
Kurnia Asia Berhad
annual report 2011
36.Operating segments (cont’d)
General
insurance in
Malaysia
Others Consolidated
RM’000
RM’000
RM’000
1,133,537
27,726
1,161,263
2011
Segment revenue
Segment results
100,094
(38,718)
61,376
Operating profit/(loss) before finance cost
100,094
(16,267)
83,827
-
(22,451)
(22,451)
100,094
(38,718)
61,376
Finance costs
Operating profit/(loss)
-
(557)
100,094
(39,275)
(557)
60,819
Tax expense
(12,975)
Profit for the year
47,844
2010
Segment revenue
1,063,301
33,635
1,096,936
Segment results
68,797
(36,381)
32,416
Operating profit/(loss) before finance cost
68,797
(15,188)
53,609
-
(21,193)
(21,193)
68,797
(36,381)
32,416
Finance costs
Operating profit/(loss)
-
(2,780)
68,797
(39,161)
(2,780)
29,636
Tax expense
(14,624)
Profit for the year
15,012
page
Kurnia Asia Berhad
annual report 2011
107
General
insurance in
Malaysia
Others Consolidated
RM’000
RM’000
RM’000
2,682,032
51,723
2,733,755
2011
Segment assets
27,416
Unallocated assets
Total assets
Segment liabilities
2,761,171
1,926,136
433,014
2,359,150
629
Unallocated liabilities
Total liabilities
2,359,779
2010
Segment assets
2,492,965
59,620
Unallocated assets
31,785
Total assets
Segment liabilities
2,552,585
2,584,370
1,829,110
421,286
Unallocated liabilities
2,250,396
6,177
Total liabilities
2,256,573
General
insurance in
Malaysia
Others Consolidated
RM’000
RM’000
RM’000
9,302
1,348
10,650
12,959
575
13,534
2011
Capital expenditure – property and equipment
Amortisation of premiums net of accretion of discounts
336
-
336
(4,591)
1
(4,590)
(Reversal)/ allowance for impairment loss
(14,248)
1,902
(12,346)
11,050
Fair value (gains) /losses
(118)
-
11,050
(118)
2,767
255
3,022
Allowance for impairment loss on reinsurance assets
1,445
-
1,445
Reversal of impairment loss on property and equipment
(351)
-
(351)
310
-
310
page
108
Kurnia Asia Berhad
annual report 2011
General
insurance in
Malaysia
Others Consolidated
RM’000
RM’000
RM’000
2010
Capital expenditure – property and equipment
8,460
440
8,900
15,849
463
16,312
527
-
527
10,544
-
10,544
1,383
-
1,383
Allowance for impairment loss on goodwill
-
4,373
4,373
Allowance for impairment loss on investments in subsidiary
-
2,394
2,394
Amortisation of premiums net of accretion of discounts
Fair value gains and losses
Allowance for impairment loss on property and equipment
2,765
246
3,011
Reversal for allowance for impairment loss on insurance receivables
(9,796)
(270)
(10,066)
37.Risk management framework
Risk management overview
The Board is committed to implement Enterprise Risk Management (“ERM”) to drive towards maintaining good governance and
internal control system. The role of risk management is to ensure the risks are properly identified, evaluated and managed as to
protect and increase the Group’s long-term value to its shareholders and other stakeholders.
Risk management strategy
The risk management strategy formulated by the Risk Management Committee (“RMC”) and approved by the Board, serves to
ensure the risk management framework, processes and internal control system are in place to identify, monitor, evaluate and
manage the material risk consistently across all activities.
Role and responsibility
The RMC’s responsibility is to oversee the activities in risk management and legal compliance. These include matters relating to
the identification, assessment, monitoring and management of risks associated with the operations of the Group.
The focus of the RMC is to support the Board to fulfill its duties in the oversight of activities in risk and business continuity
management and legal compliance.
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Kurnia Asia Berhad
annual report 2011
109
37.Risk management framework (cont’d)
Role and responsibility (cont’d)
The roles of the RMC are:
•
To approve risk management strategies and policies, monitor their implementation and review them at least once a year, to
ensure they remain relevant and effective;
•
Periodically assess the adequacy of these risk management policies and framework, inclusive of Business Continuity
Management and Compliance Management framework;
•
To define the risk appetite or the level of risk tolerance of the Group based on internal capacity and business objectives;
•
To monitor the risk exposures regularly to ensure there is satisfactory level of internal control;
•
To ensure that all significant risk factors and impact have been duly considered before approving new business initiatives or
strategic changes;
•
To ensure that the infrastructure is adequate and resources are sufficiently in place for ERM personnel to perform their roles
effectively;
•
To ensure ERM personnel are adequately trained and are performing their duties independently from the Group’s risk taking
activities;
•
To monitor compliance risk with regards to legal and regulatory requirements; and
•
To receive reports on risk management activities, review them and make recommendation to the Board when necessary.
38.Insurance risk
The general insurance contracts written by the Group are mostly on annual coverage and annual premium basis, with the
exception of short term policies such as Travel Insurance which covers only the travel period and Marine cargo which covers the
duration in which the cargo is being transported.
The majority of the general insurance business is motor insurance. Other insurance business includes Fire, Marine, Personal
Accident, Engineering, Liabilities, Workmen Compensation and Employer Liabilities and other miscellaneous classes.
The objectives of managing insurance risks are to enhance the financial performance of the business and limit any excessive
variability of the insurance results.
Insurance risk includes the risk of incurring higher claims cost than expected owing to the random nature of claims and their
frequency and severity and the risk of change in legal or economic conditions of insurance or reinsurance cover. This may result
in the insurer having either received too little premium for the risks it has agreed to underwrite and hence has not enough funds
to invest and pay claims, or that claims are in excess of those expected.
page
110
Kurnia Asia Berhad
annual report 2011
38.Insurance risk (cont’d)
Underwriting insurance contracts involves the pooling of a large number of uncorrelated risks to reduce relative variability. The
Group adopts the following measures to manage the general insurance risk:
•
•
•
•
Underwriting standards, by performing risk selection to control the exposure in accordance to the Group’s established
guidelines;
Claims management, to pay claims fairly and control claims leakages and fraud;
Pricing and reserve standards, to ensure adequate premium charge for risk and valuation of insurance liabilities; and
Reinsurance protection, to limit exposure to large insurance contracts and catastrophe exposure.
Concentration risk is particularly relevant in the case of natural disasters and other catastrophes. The Group’s concentration
risk is negligible as the Group’s insurance contracts mostly cover perils and risks in Malaysia and Malaysia is hardly exposed to
natural disasters.
The table below sets out the concentration of general insurance business by type of product.
2011
Reinsurance
Net
Gross
Reinsurance
Net
Group
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
Motor
865,449
(242,424)
623,025
855,564
(146,925)
708,639
Fire
62,905
(42,745)
20,160
47,979
(29,564)
18,415
Marine Cargo, Aviation Cargo and Transit
17,402
(8,618)
8,784
16,067
(10,457)
5,610
Miscellaneous
2010
Gross
163,973
(43,927)
120,046
139,143
(33,441)
105,702
1,109,729
(337,714)
772,015
1,058,753
(220,387)
838,366
The table below sets out the concentration of general insurance claims liabilities by type of product.
2011
2010
Gross
Reinsurance
Net
Gross
Reinsurance
Net
Group
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
Motor
964,571
(269,873)
694,698
996,940
(139,994)
856,946
63,085
(52,319)
10,766
65,663
(57,272)
8,391
Fire
Marine Cargo, Aviation Cargo and Transit
20,110
(13,664)
6,446
14,941
(10,052)
4,889
Miscellaneous
88,618
(49,720)
38,898
78,248
(43,441)
34,807
1,136,384
(385,576)
750,808
1,155,792
(250,759)
905,033
page
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annual report 2011
111
38.1Insurance claims liabilities for general insurance
The insurance contract liabilities comprised claims and premium liabilities and are computed in accordance with sound
actuarial principles and regulatory guidelines.
These liabilities comprise:
•
•
•
best estimate of the premium liabilities;
best estimate of the claims liabilities; and
margins for adverse deviation with no less than a 75% probability of adequacy.
38.1.1Valuation methodology
Various actuarial techniques are used to project the provision for claims and loss adjustment expenses and
provision for unexpired risk (claims and premium liabilities). These methods include:
•
•
•
•
paid chain-ladder method (inflation and non-inflation adjusted, operational time and standard time,
Bornhuetter Ferguson (BF) adjustments);
reported chain-ladder method (operational time and standard time, Bornhuetter Ferguson (BF) adjusted);
projected case estimates; and
frequency/severity method.
The valuation process involves using the Group’s gross claims and policies data and net claims and policies
data to estimate future claims experience. These insurance liabilities have been derived on a gross basis and are
subsequently adjusted for reinsurance and other recoveries for a net basis.
38.1.2 Key assumptions
The principal assumptions underlying the estimation of liabilities is that the Group’s future claims development will
follow a similar pattern to past claims development experience. This includes assumptions in respect of average
claim cost, claim handling costs, claims inflation factors and average number of claims for each accident year.
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 attitude to claiming, economic
conditions, as well as internal factors, such as portfolio mix, policy conditions and claims handling procedures.
In this regards, an analysis performed on the claims data on an individual claims basis indicated that:•
Part of the value in the case estimates relates to claims that will be settled with no further payment, which
amount is expected to more than offset the future development required on claims that will settle for more
than current case estimates and so lead to a reduction in the average size of claims to be settled;
•
Despite annual reviews, there are a number of claims cases with no further development after the initial
provision that will be closed after 6 years, or earlier upon due verification of no claims from third parties,
which will result in a reduction in case estimates in the subsequent years. There are also a number of claims
where liability may be in question but the reserves are held assuming a 100% liability.
page
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38.1Insurance claims liabilities for general insurance (cont’d)
38.1.2 Key assumptions (cont’d)
This has led to a key assumption that the high probability of claims continuing to settle for no additional cost will
in turn lead to a reduction in the average amount per open claim to a level which is lower than the current average
case estimates across most accident years for the Motor Act classes.
Other key circumstances affecting the reliability of assumptions include variation of interest rates, delays in
settlement and changes in foreign currency rates.
The key assumptions of the actuarial valuation models include:
•
•
•
•
chain-ladder claim development factors
loss ratios
expense ratios
reinsurance recovery ratios
These assumptions are based on the Group’s historical underwriting experience.
For the valuation as at 31 December 2011, the basis of liability valuation assumptions has not been changed as
compared to 31 December 2010.
38.1.3 Margin for adverse deviation
In accordance with the insurance regulations, the insurance liabilities include a risk margin with no less than a
75% probability of adequacy.
The risk margin is determined to allow for the uncertainty and volatility of the claims experience. Effects of
diversification on the risk margin, arising from writing diversified lines of business, are also taken into account.
38.1.4Discounting
The insurance liabilities have been discounted using the risk-free discount rate derived from a yield curve as
follows:
•
•
for durations of less than 15 years, zero-coupon spot yield of MGS with matching duration, and
for durations of 15 years or more, zero-coupon spot yield of MGS with 15 years term to maturity.
page
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annual report 2011
113
38.1.5 Sensitivities
The general insurance claim liabilities are sensitive to 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 reasonable 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 correlation 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.
Impact on
gross
liabilities
RM’000
Impact
on net
liabilities
RM’000
+5%
-5%
+5%
-5%
Improved by
6 months
54,407
(54,407)
54,407
(54,407)
35,759
(35,759)
35,759
(35,759)
(35,759)
35,759
(35,759)
35,759
(26,819)
26,819
(26,819)
26,819
13,291
9,243
(9,243)
(6,932)
+5%
-5%
+5%
-5%
Improved by
6 months
55,485
(55,485)
55,485
(55,485)
43,890
(43,890)
43,890
(43,890)
(43,890)
43,890
(43,890)
43,890
(32,918)
32,918
(32,918)
32,918
22,640
18,793
(18,793)
(14,095)
Change in
assumptions
Group
2011
Average claims cost
Average claims cost
Average number of claims
Average claim settlement period
2010
Average claims cost
Average claims cost
Average claim settlement period
*
Impact on
profit
before tax
RM’000
Impact on
equity*
RM’000
Impact on equity reflects adjustments for tax, where applicable. The method used for deriving sensitivity
information and significant assumptions did not change from the previous period.
38.1.6Claims development table
The following tables show the estimate of cumulative incurred claims, including both claims notified and IBNR for
each successive accident year at the end of each reporting period, together with cumulative payment to date.
While the information in the tables provides a historical perspective on the adequacy of the unpaid claims
estimate established in previous years, users of these financial statements are cautioned against extrapolating
redundancies or deficiencies of the past on current unpaid loss balances.
The management of the Group believes that the estimates of total claims outstanding as of 31 December 2011
are adequate. However, due to the inherent uncertainties in the reserving process, it cannot be assured that such
balances will ultimately prove to be adequate.
page
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38.1.6Claims development table (cont’d)
38.1.6.1 Gross general insurance claims liabilities as at 31 December 2011
Group
Accident year
At end of accident year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Current estimate of
cumulative claims incurred
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Cumulative payments
to-date
Gross general insurance claims
liabilities (direct and facultative)
Before
2004
2005
2006
2007
2008
2009
2010
2011
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
615,757
639,896
666,813
727,528
798,830
807,041
831,085
854,906
643,764
671,628
701,146
775,072
805,459
818,971
815,705
-
663,938
691,106
733,987
765,116
788,850
777,987
-
717,727
742,073
758,404
796,651
822,061
-
Total
RM’000
702,117 595,236 566,810 660,000
746,799 616,375 604,649
772,749 649,587
789,389
-
854,906 815,705 777,987 822,061 789,389 649,587 604,649 660,000
195,354
417,241
502,311
582,871
686,468
739,171
781,122
815,477
815,477
193,933
424,270
501,656
642,092
711,249
760,546
777,346
777,346
198,629
405,633
555,957
642,597
708,157
735,919
735,919
204,490
477,415
599,995
698,485
750,619
750,619
39,429
38,359
42,068
71,442
232,479
507,214
626,401
703,687
703,687
214,699 197,287 231,053
407,737 415,751
522,919
522,919 415,751 231,053
85,702 126,668 188,898 428,947 1,021,513
Gross general insurance claims liabilities (treaty inwards)
Best estimates of claims liabilities
Claims handling expenses
PRAD at 75% confidence level
Discounting
Gross general insurance claims liabilities pertaining to principal subsidiary in Malaysia
Gross general insurance claims liabilities pertaining to other subsidiary
Gross general insurance claims liabilities per statements of financial position
20,886
1,042,399
26,106
108,375
(45,282)
1,131,598
4,786
1,136,384
page
Kurnia Asia Berhad
annual report 2011
115
38.1.6Claims development table (cont’d)
38.1.6.2 Net general insurance claims liabilities as at 31 December 2011
Group
Accident year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Current estimate of
cumulative claims
incurred
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Cumulative payments
to-date
Net general insurance claims
Before
2004
2005
2006
2007
2008
2009
2010
2011
550,490
572,071
596,135
650,414
714,159
732,483
731,683
752,352
594,322
620,046
647,296
715,544
745,385
754,254
740,931
-
613,361
638,459
678,074
709,193
726,323
705,178
-
658,402
680,735
695,443
731,089
716,759
-
Total
RM’000
626,108 534,795 516,673 479,585
660,822 555,515 522,142
694,403 571,797
698,051
-
752,352 740,931 705,178 716,759 698,051 571,797 522,142 479,585
180,520
386,765
464,555
535,209
629,476
677,046
713,953
735,541
183,890
399,634
471,636
602,227
666,939
712,768
723,992
-
188,335
381,650
523,962
603,575
664,332
681,472
-
192,907
446,026
560,350
650,071
685,604
-
217,938 201,741 180,785 178,304
465,821 381,232 371,773
576,397 485,047
640,942
-
735,541 723,992 681,472 685,604 640,942 485,047 371,773 178,304
16,811
16,939
23,706
31,155
57,109
Net general insurance claims liabilities (treaty inwards)
Discounting
Net general insurance claims liabilities pertaining to principal subsidiary in Malaysia
Net general insurance claims liabilities pertaining to other subsidiary
Net general insurance claims liabilities per statements of financial position
86,750 150,369 301,281
684,120
20,886
705,006
19,585
55,828
(30,845)
749,574
1,234
750,808
page
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Kurnia Asia Berhad
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38.1.6 Claims development table (cont’d)
38.1.6.3 Gross general insurance claims liabilities as at 31 December 2010
Group
Before
2003
2004
2005
2006
2007
2008
2009
2010
Accident year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Current estimate of
615,757
639,896
666,813
727,528
798,830
807,041
831,085
663,938
691,106
733,987
765,116
788,850
-
717,117 702,117 595,236 566,810
742,073 746,799 616,375
758,404 772,749
796,651
-
831,085 818,971 788,850 796,651 772,749 616,375 566,810
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Cumulative payments
to-date
Gross general insurance claims
643,764
671,628
701,146
775,072
805,459
818,971
-
Total
RM’000
195,354
417,241
502,311
582,871
686,468
739,171
781,122
193,933
424,270
501,656
642,092
711,249
760,546
-
198,629
405,633
555,957
642,597
708,157
-
204,490 232,479 214,699 197,287
477,415 507,214 407,737
599,995 626,401
698,485
-
781,122 760,546 708,157 698,485 626,401 407,737 197,287
36,818
49,963
58,425
80,693
98,166 146,348 208,638 369,523 1,048,574
Gross general insurance claims liabilities (treaty inwards)
Discounting
General insurance claims liabilities pertaining to principal subsidiary in Malaysia
General insurance claims liabilities pertaining to other subsidiary
General insurance claims liabilities per statements of financial position
7,219
1,055,793
26,059
127,204
(71,251)
1,137,805
17,987
1,155,792
page
Kurnia Asia Berhad
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117
38.1.6 Claims development table (cont’d)
38.1.6.4 Net general insurance claims liabilities as at 31 December 2010
Group
Before
2003
2004
2005
2006
2007
2008
2009
2010
Accident year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Current estimate of
550,490
572,071
596,135
650,414
714,159
732,483
731,683
613,361
638,459
678,074
709,193
726,323
-
658,402 626,108 534,795 516,673
680,735 660,822 555,515
695,443 694,403
731,089
-
731,683 754,254 726,323 731,089 694,403 555,515 516,673
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Cumulative payments
to-date
Net general insurance claims
594,322
620,046
647,296
715,544
745,385
754,254
-
Total
RM’000
180,520
386,765
464,555
535,209
629,476
677,046
713,953
183,890
399,634
471,636
602,227
666,939
712,768
-
188,335
381,650
523,962
603,575
664,332
-
192,907 217,938 201,741 180,785
446,026 465,821 381,232
560,350 576,397
650,071
-
713,953 712,768 664,332 650,071 576,397 381,232 180,785
14,712
17,730
41,486
61,991
81,018 118,006 174,283 335,888
Net general insurance claims liabilities (treaty inwards)
Discounting
Net general insurance claims liabilities pertaining to principal subsidiary in Malaysia
Net general insurance claims liabilities pertaining to other subsidiary
Net general insurance claims liabilities per statements of financial position
845,114
7,219
852,333
21,396
86,786
(57,726)
902,789
2,244
905,033
page
118
Kurnia Asia Berhad
annual report 2011
39.Financial risk
39.1Financial risk management objectives and policies
Exposure to credit, liquidity, market (currency risk, interest rate yield risk and price risk) and operational risk arises in the
normal course of the Group’s and the Company’s business. The Board of Directors assumes overall responsibility for the
Group’s and the Company’s financial risk management and has established certain committees to address these risks on
an ongoing basis.
39.2Credit risk
Credit risk represents the potential losses that may result due to the inability of the counterparties to insurance, reinsurance
and investment transactions in meeting their contractual obligations.
The Group has a credit control department and a credit policy in place and the exposure of credit risk is monitored on
an ongoing basis. Investments are made based on appropriate evaluations, in accordance with Guidelines / Circulars
issued by BNM, whereby all bond investments must carry a minimum rating of BBB or P3 by rating agencies established
in Malaysia.
At the end of the reporting period, there were no significant concentrations of credit risk. The maximum exposure to credit
risk for the Group is represented by the carrying amount of each financial asset.
The Group considers rating BBB and above as investment grades. Financial assets which are not rated by rating agencies
are classified as non- rated.
39.3Credit exposure
The table below shows the maximum exposure to credit risks for the financial assets components on the statements of
financial position.
Group
2011
2010
RM’000
RM’000
62,123
63,278
11,443
20,322
457,728
501,836
-
10,179
HTM financial investments
Debt securities
Loans and receivables (“LAR”)
Loans
AFS financial investments
Debt securities
265,113
336,022
Reinsurance assets
385,576
250,759
56,832
52,851
130,771
129,632
1,369,586
1,364,879
page
Kurnia Asia Berhad
annual report 2011
119
39.Financial risk (cont’d)
39.3Credit exposure (cont’d)
39.3.1Credit exposure by credit rating
The table below provides information regarding the credit risk exposure of the Group by classifying assets
according to the Group’s credit rating of counterparties.
Neither
past due nor
Group
impaired /
Past-due
Investment
but
grade
Non- rated
not impaired
Total
RM’000
RM’000
RM’000
RM’000
2011
62,123
-
-
62,123
-
463,171
6,000
469,171
Debt securities
265,113
-
-
265,113
Reinsurance assets
220,720
164,856
-
385,576
8,685
36,641
11,506
56,832
-
130,771
-
130,771
556,641
795,439
17,506
1,369,586
Debt securities
2010
Debt securities
63,278
-
-
63,278
29,410
486,748
6,000
522,158
Debt securities
346,201
-
-
346,201
Reinsurance assets
138,749
112,010
-
250,759
7,035
32,466
13,350
52,851
-
129,632
-
129,632
584,673
760,856
19,350
1,364,879
page
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Kurnia Asia Berhad
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39.3.2Credit exposure by credit rating
The table below provides information regarding the credit risk exposure of the Group by classifying assets
according to the Rating Agency of Malaysia’s (“RAM”) or MARC’s credit ratings of counterparties. AAA is the
highest possible rating.
AAA
AA
A
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
14,833
43,226
-
4,064
-
62,123
Loans
-
-
-
-
11,443
11,443
-
-
-
-
457,728
457,728
Debt securities
77,666
177,136
10,311
-
-
265,113
Reinsurance assets
13,144
29,232
178,226
118
164,856
385,576
832
524
7,329
-
48,147
56,832
Group
BBB Non- rated
Total
2011
Debt securities
LAR
-
-
-
-
130,771
130,771
106,475
250,118
195,866
4,182
812,945
1,369,586
14,777
43,516
-
4,985
-
63,278
-
-
-
-
20,322
20,322
29,410
-
-
-
472,426
501,836
Debt securities
88,165
247,946
10,090
-
-
346,201
Reinsurance assets
8,079
33,346
96,761
563
112,010
250,759
691
1,005
5,339
-
45,816
52,851
2010
Debt securities
LAR
Loans
-
-
-
-
129,632
129,632
141,122
325,813
112,190
5,548
780,206
1,364,879
page
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121
39.3.3Age analysis of insurance receivables past-due but not impaired
The Group maintains an ageing analysis in respect of insurance receivables only. The ageing of insurance
receivables that are past due as at the reporting date but not impaired is as follow:
Group
< 30 days
31 to 60 days
61 to 90 days
> 90 days
Total
RM’000
RM’000
RM’000
RM’000
RM’000
1,366
-
2,805
7,335
11,506
7,398
-
2,360
3,592
13,350
31 December 2011
31 December 2010
39.3.4Other receivable past due but not impaired
Included in other receivables is a non-performing loan of RM6,000,000 (2010: RM6,000,000). The Group does
not specifically monitor the ageing of the loan. Nevertheless, this amount has been overdue for more than 1
year.
At the end of the reporting period, there was no indication that the loan is not recoverable as it is secured by land
charged by the borrower with carrying value of approximately RM12,000,000 (2010: RM12,000,000) determined
based on valuation performed by an independent professional qualified valuer.
39.3.5Impaired financial assets
At 31 December 2011, based on collective and individual assessment of receivables, there are impaired
insurance receivables of RM17,775,000 (2010: RM30,121,000). No collateral is held as security for any past
due or impaired assets. The Group records impairment allowance for loans and receivables and insurance
receivables in separate Allowance for impaired loss accounts. A reconciliation of the allowance for impairment
losses for loans and receivables and insurance receivables is as follows:
Other receivables
2011
2010
2011
2010
RM’000
RM’000
RM’000
RM’000
At 1 January
30,121
40,187
720
720
(12,346)
(10,066)
At 31 December
17,775
30,121
Group
-
-
720
720
page
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Kurnia Asia Berhad
annual report 2011
39.4Liquidity risk
Liquidity risk is the risk whereby the Group entities are unable to meet their obligations at a reasonable cost or at any time.
The Group and the Company manage this risk by monitoring its daily and monthly estimated and actual cash flows. The
Group and the Company also hold a sufficient quantity of liquid investments that can be readily converted to cash.
The following policies and procedures are in place to mitigate the Group’s and the Company’s exposure to liquidity risk:
•
The Group and the Company set guidelines on asset allocations, portfolio limit structures and maturity profiles of the
assets, in order to ensure sufficient funding is available to meet insurance and investment contracts obligations.
•
The Group and the Company monitor their liquidity risk and maintain a level of cash and cash flow deemed adequate
by management to finance their operations and to mitigate the effect of fluctuations in cash requirements.
•
The Group’s catastrophe excess-of-loss reinsurance contracts contain clauses permitting the immediate draw down
of funds to meet claims payments should claim events exceed a certain amount.
39.4.1 Maturity profiles
The table below summarises the maturity profile of the financial liabilities of the Group and the Company based
on remaining undiscounted contractual obligations, including interest / profit payable.
For insurance claims liabilities, maturity profiles are determined based on estimated timing of net cash outflows
from the recognised insurance liabilities.
The carrying value of the insurance claims liabilities have been discounted using the risk-free discount rate
derived from a yield curve as follows:
•
•
for durations of less than 15 years, zero-coupon spot yield of MGS with matching duration, and
for durations of 15 years or more, zero-coupon spot yield of MGS with 15 years term to maturity.
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123
39.4Liquidity risk (cont’d)
39.4.1 Maturity profiles (cont’d)
No
Group
Carrying
Up to a
1-3
3-5
5 - 15
Over 15
maturity
value
year
years
years
years
years
date
Total
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
1,136,384
660,166
351,292
89,187
37,418
-
450,630
327,104
146,103
-
-
-
-
473,207
87,373
87,373
-
-
-
-
-
87,373
102,976
84,192
21,216
-
-
-
-
105,408
1,777,363 1,158,835
518,611
89,187
37,418
-
- 1,804,051
2011
Insurance claims
liabilities
Insurance payables
Other payables
Total liabilities
- 1,138,063
2010
Insurance claims
liabilities
1,155,792
498,481
401,264
196,364
122,345
-
- 1,218,454
435,322
174,450
299,328
-
-
-
-
473,778
Insurance payables
29,630
29,630
-
-
-
-
-
29,630
Other payables
90,728
71,862
2,268
20,000
-
-
-
94,130
Total liabilities
1,711,472
774,423
702,860
216,364
122,345
-
- 1,815,992
360,000
236,474
146,103
-
-
-
-
382,577
Other payables
48,281
29,497
21,216
-
-
-
-
50,713
Total liabilities
408,281
265,971
167,319
-
-
-
-
433,290
360,000
99,128
299,328
-
-
-
-
398,456
Company
2011
2010
Other payables
28,115
9,249
2,268
20,000
-
-
-
31,517
Total liabilities
388,115
108,377
301,596
20,000
-
-
-
429,973
page
124
Kurnia Asia Berhad
annual report 2011
39.5 Market risk
Market risk is the risk of loss arising from uncertainty concerning movements in the market prices and rates, including
observable variables such as interest rates and others that may be only indirectly observable such as volatilities and
correlations. Market risk includes factors such as changes in economic environment, consumption pattern and investor’s
expectation which may have significant impact on the value of the investments.
The Group’s investment portfolio is generally exposed to fluctuation in market prices. Risk and returns are constantly
monitored and reviewed by the Investment Committee Members.
The Group and the Company distinguish market risk as follows:
•
•
•
Currency risk
Interest rate risk
Price risk
39.5.1Foreign currency risk
The Group and the Company are exposed to foreign currency risk on gross direct premiums, reinsurance
outwards, claims and intra-group borrowings that are denominated in a currency other than the respective
functional currencies of the Group’s entities. The currencies giving rise to this risk are primarily Singapore Dollar
(SGD), Indonesian Rupiah and Thai Baht.
In respect of monetary assets and liabilities held in currencies other than RM, the Group entities ensure that the
net exposure is kept to an acceptable level. The exposure to currency risk of the Group entities is not material,
and hence sensitivity analysis is not presented.
39.5.2Interest rate risk
Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rate/profit yield.
Floating rate/yield instruments expose the Group and the Company to cash flow interest/profit risk, whereas
fixed rate/yield instruments expose the Group and the Company to fair value interest/profit risk.
The Group’s earnings are affected by changes in market interest rates as the impact of such changes has an
effect on interest income from deposit placements and fixed income securities. To mitigate the interest rate risk,
the deposit placements are made with various financial institutions at varying maturity dates and rates. Hence,
the Group has no significant concentration of interest rate/profit yield risk.
The Company’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest
rates.
page
Kurnia Asia Berhad
annual report 2011
125
39.5 Market risk (cont’d)
39.5.2Interest rate risk (cont’d)
The analysis below is performed for reasonable possible movements in key variables with all other variable held
constant, showing the impact on profit before tax (due to changes in fair value of floating rate/yield financial
instruments) and equity (that reflects adjustments to profit before tax and re-valuing fixed rate/yield AFS financial
assets). The correlation of variables will have a significant effect in determining the ultimate impact on interest
rate/profit yield risk but to demonstrate the impact due to changes in variables, variables had to be changed on
an individual basis. It should be noted that movements in these variables are non-linear.
2011
2010
Impact
Change in
on profit
variables
Group
Impact
Impact on
on profit
Impact on
before tax
equity*
before tax
equity*
RM’000
RM’000
RM’000
RM’000
Parallel shift in yield curves
+ 100 basis points
(2,910)
(5,385)
(3,574)
(8,087)
- 100 basis points
2,910
5,507
3,574
8,289
+ 100 basis points
(2,910)
(2,182)
(3,574)
(2,680)
- 100 basis points
2,910
2,182
3,574
2,680
Company
*
impact on equity reflects adjustments for tax, where applicable.
The method used for deriving sensitivity information and significant variables did not change from the previous
period.
39.5.3 Price risk
Equity price risk is the risk that the fair value of future cash flows of financial instruments will fluctuate because of
changes in market prices (other than those arising from interest/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 price risk exposure relates to financial assets and financial liabilities whose values will fluctuate
as result of changes in market prices.
The Group’s price risk policy requires it to manage such risk 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 stipulated by BNM. The Group complies with BNM stipulated limits during the financial
year and has no significant concentration of price risk.
page
126
Kurnia Asia Berhad
annual report 2011
39.5 Market risk (cont’d)
39.5.3 Price risk (cont’d)
The analysis below is performed for reasonable possible movements in key variables with all other variables held
constant, showing the impact on profit before tax (due to changes in fair value of financial assets and liabilities
whose changes in fair value are recorded in income statements) and equity (that reflects adjustments to profit
before tax and changes in fair value of AFS financial assets). The correlation of variables will have a significant
effect in determining the ultimate impact on price risk, but to demonstrate the impact due to changes in variables,
variables had to be changed on an individual basis. It should be noted that movements in these variables are
non-linear.
2011
2010
Impact
Change in
on profit
variables
Group
on profit
Impact on
before tax
equity*
before tax
equity*
RM’000
RM’000
RM’000
RM’000
Market price
+5%
5,654
29,769
3,874
25,186
Market price
-5%
(5,654)
(29,769)
(3,874)
(25,186)
*
Impact
Impact on
impact on equity reflects adjustments for tax, where applicable.
The method used for deriving sensitivity information and significant variables did not change from the previous
period.
39.6Fair value of financial instruments
The fair value of negotiable instruments of deposits is based on indicative market price as determined by the issuer at the
end of the reporting period.
The fair values of quoted shares of corporations, unit and property funds trust are based on quoted closing market prices
at the end of the reporting period.
The fair values of collective investment funds are based on the net asset values of the unit trusts as at the date of the
statements of assets and liabilities obtained from fund managers.
The estimated fair values of Malaysian government securities, Cagamas bonds, Government guaranteed bonds and
unquoted corporate debt securities are based on the average indicative market yields obtained from three financial
institutions which involve projections of the market yields based on past transactions. There are elements of significant
uncertainty in projecting the expected market yield and these uncertainties arise from changes in the underlying risk
and overall economic conditions. As such, the projected market yields may be different from the actual market yields in
future.
page
Kurnia Asia Berhad
annual report 2011
127
39.6Fair value of financial instruments (cont’d)
The carrying amount of secured short term loans and fixed and call deposits with a maturity period less than one year are
assumed to approximate their fair values.
The mortgage loans with variable rates are considered to approximate their fair values. For mortgage and other loans
with fixed rates, fair values are derived by discounting future cash flows, using interest rates for similar instruments,
where applicable, taking into consideration the nature and contracted terms of these loans. Based on management’s
assessment as at 31 December 2011, the estimated fair values of the loans approximate their carrying values.
It was not practical to estimate the fair value of the Group’s investment in unquoted shares of corporations due to the lack
of comparable quoted market price and the inability to estimate fair value without incurring excessive costs.
39.7Fair value hierarchy
Comparative figures have not been presented for 31 December 2010 by virtue of the exemption provided in paragraph
44G of FRS7.
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been
defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Group
Level 1
Level 2
Level 3
Total
RM’000
RM’000
RM’000
RM’000
2011
Financial assets
Debt securities
Quoted equity securities
Quoted unit and property trust funds
-
265,113
-
265,113
17,594
-
-
17,594
-
680,768
-
680,768
138,704
-
-
138,704
156,298
945,881
-
1,102,179
page
128
Kurnia Asia Berhad
annual report 2011
39.8Operational risks
Operational risk is the risk of loss arising from system failure, human error, fraud or external events. When controls fail to
perform, operational risk 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 the risks. Controls include effective segregation of duties,
access controls, authorisation and reconciliation procedures, staff training and evaluation procedures, 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.
40.Capital management
The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue
as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business.
The Directors monitor and are determined to maintain an optimal debt-to-equity ratio that complies with debt covenants and
regulatory requirements.
There were no changes in the Group’s approach to capital management during the year.
Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated
shareholders’ equity equal to or not less than the 25% of the issued and paid up capital (excluding treasury shares) and such
shareholders’ equity is not less than RM40 million. The Company has complied with this requirement.
The Malaysian insurance subsidiary of the Group is subject to the RBC Framework which came into effect on 1 January 2009.
Under the RBC Framework, insurance companies need to maintain a capital adequacy level that commensurate with their risk
profiles. All insurance companies are required to maintain a minimum Capital Adequacy Ratio (“CAR”) of 130%.
The Malaysian insurance subsidiary of the Group has met its regulatory requirement and has a CAR in excess of the minimum
requirement.
page
Kurnia Asia Berhad
annual report 2011
129
41.Supplementary financial information on the breakdown of realised and unrealised profits
or losses
The breakdown of the retained profits of the Group and of the Company as at 31 December, into realised and unrealised profits,
pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements are as follows:
Group
Company
2011
2010
2011
2010
RM’000
RM’000
RM’000
RM’000
Total accumulated (losses)/ profits of Kurnia Asia Berhad
and its subsidiaries
- realised
(34,241)
(65,334)
- unrealised
25,633
10,749
(8,608)
(54,585)
(1,695)
(3,616)
(40,951)
(40,951)
(30,358)
(30,358)
Total share of accumulated (losses)/ profits from
associates
- realised
- unrealised
Total accumulated losses as per statements of financial
position
(10,303)
54
(58,147)
-
-
-
-
(40,951)
(30,358)
The determination of realised and unrealised profits is based on the Guidance of 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,
issued by the Malaysian Institute of Accountants on 20 December 2010.
page
130
Kurnia Asia Berhad
annual report 2011
Statement by Directors
pursuant to Section 169(15) of the Companies Act, 1965
In the opinion of the Directors, the financial statements set out on pages 46 to 128 are drawn up in accordance with Financial
Reporting Standards as modified by Bank Negara Malaysia Guidelines and the Companies Act, 1965 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 December 2011 and of their financial performance
and cash flows for the financial year then ended on that date.
In the opinion of the Directors, the information set out in Note 41 on page 129 to the financial statements has been compiled in
accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of
Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants,
and presented based on the format prescribed by Bursa Malaysia Securities Berhad.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Datuk Kua Chung Sen
Date: 9 April 2012
page
Kurnia Asia Berhad
annual report 2011
131
Statutory Declaration
pursuant to Section 169(16) of the Companies Act, 1965
I, Belinda Cheah Sze Yun, the officer primarily responsible for the financial management of Kurnia Asia Berhad, do solemnly and
sincerely declare that the financial statements set out on pages 46 to 129 are, to the best of my knowledge and belief, 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 above named in Petaling Jaya, Selangor on 9 April 2012.
Belinda Cheah Sze Yun
Before me:
Radziah Binti Abdul Rahman
Commissioner for Oaths
page
132
Kurnia Asia Berhad
annual report 2011
to the members of Kurnia Asia Berhad
We have audited the financial statements of Kurnia Asia Berhad, which comprise the statements of financial position as at 31 December
2011 of the Group and of the Company, and the income statements, statements of comprehensive income, changes in equity and
cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other
explanatory information, as set out on pages 46 to 128.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of these financial statements that give a true and fair view in
accordance with Financial Reporting Standards as modified by Bank Negara Malaysia Guidelines and the Companies Act, 1965 in
Malaysia, and for such internal control as the Directors determine are necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
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 judgement, 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 of
financial statements that give a true and fair view 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 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 Financial Reporting Standards as modified by
Bank Negara Malaysia Guidelines and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of
the Group and of the Company as of 31 December 2011 and of their financial performance and cash flows for the year then ended.
page
Kurnia Asia Berhad
annual report 2011
133
to the members of Kurnia Asia Berhad (cont’d)
Emphasis of Matter
Without qualifying our opinion, we draw attention to Note 2.2 in the financial statements which discloses the premise upon which
the Company has prepared its financial statements by applying the going concern assumption, notwithstanding that the Company
incurred a net loss of RM10,593,000 during the year ended 31 December 2011, and as of that date, the Company’s current liabilities
exceeded its current assets by RM243,690,000 which may indicate the existence of a significant uncertainty about the Company’s
ability to continue as a going concern.
The Company has considered prospective cash flow information and events that may occur in the next twelve months and the
possible actions to be taken by the Company. In this regards, the Company had on 3 April 2012 obtained approval from Minister of
Finance via Bank Negara Malaysia, to enter into an agreement with AmG Insurance Berhad to dispose the Company’s 100% equity
interest in Kurnia Insurans (Malaysia) Berhad.
The validity of the going concern assumption in the preparation of financial statements is dependent on the successful outcome of the
various initiatives being undertaken by the Company and the Company achieving future profitable operations. The financial statements
do not include any adjustments relating to the recoverability and classification of recorded asset amounts, and relating to amounts and
classification of liabilities that may be necessary if the Company is unable to continue as a going concern.
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 accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which
are indicated in Note 7.2 to the financial statements.
(c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial statements are in
form and content appropriate for the purposes of the preparation of the financial statements of the Group and we have received
satisfactory information and explanations required by us for those purposes.
(d) The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under
Section 174(3) of the Act.
Other Reporting Responsibilities
Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information set out in
Note 41 on page 129 to the financial statements has been compiled by the Company as required by the Bursa Malaysia Securities
Berhad Listing Requirements and is not required by the Financial Reporting Standards. We have extended our audit procedures to
report on the process of compilation of such information. In our opinion, the information has been properly compiled, in all material
respects, in accordance with the Guidance of Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in
the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of
Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad.
page
134
Kurnia Asia Berhad
annual report 2011
to the members of Kurnia Asia Berhad (cont’d)
Other Matter
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.
KPMG Foong Mun Kong
Firm Number: AF 0758
Approval Number: 2613/12/12(J)
Chartered Accountants
Chartered Accountant
Date: 9 April 2012
page
Kurnia Asia Berhad
annual report 2011
135
Additional Compliance Information
1.Share Buy-Back
There was no share buy-back by the Company during the financial year.
2.Option, warrants or convertible securities
The Company did not issue any options, warrants or convertible securities during the financial year.
3.American Depository Receipt (ADR) or Global Depository Receipt (GDR)
The Company did not sponsor an ADR or GDR programme during the financial year.
4.Imposition of sanctions and / or penalties.
There was no material public sanction and / or penalty imposed on the Company and / or its subsidiaries, Directors or the
Management by the relevant regulatory bodies during the financial year.
5.Variation in results
There were no variation of 10% or more in results for the fourth quarter and year ended 31 December 2011.
6.
Profit guarantee
There was no profit guarantee given by the Company during the financial year.
7.
Material contracts
Save as disclosed below, there was no material contract entered into by the Company / or its subsidiaries involving Directors’
and major shareholders’ interest which were still subsisting as at the end of the financial year or if not then subsisting, entered
into since the end of the previous financial year.
(i)
Loan Agreement with Tan Sri Dato’ Paduka Kua Sian Kooi, dated 31/12/2010
The Company entered into a loan agreement with its major shareholder, Tan Sri Dato’ Paduka Kua Sian Kooi for a loan
amounting RM20,000,000, for the purpose of enabling the Company to meet its obligation on a scheduled term loan
repayment to CIMB Bank Berhad (“CIMB”). The loan is unsecured and subordinated to the term loan from CIMB. The
effective interest rate of the loan during the financial year was 5.91% (2010: 5.67%) per annum.
page
136
Kurnia Asia Berhad
annual report 2011
No. Location
List of Top 10 Properties
Existing
use
Tenure
Land area
(Sq.meters)
Type of
building
Age of
building
Latest date of
revaluation(#)/
acquisition
Carrying
amounts as
at 31.12.2011
(RM)
1
Menara Kurnia, No. 9, Jalan PJS
8/9, 46150 Petaling Jaya held
under issue document of title
H.S. (D) 63219, P.T. No. 54435,
Mukim Damansara, Daerah
Petaling, Selangor Darul Ehsan.
Office
Leasehold
Expiring17 July 2091
26,759.66
25-storey office
building
11+
28 February
2011(#)
90,994,751.96
2
No. 32, Jalan Yap Ah Shak,
Bangunan Kurnia, 50300
Kuala Lumpur held under
issue document of title Grant
No. 42162 Lot 2485 Seksyen
41, Bandar Kuala Lumpur,
Daerah Kuala Lumpur, Wilayah
Persekutuan Kuala Lumpur.
Office
Freehold
682.00
10 ½ -storey
terraced corner
office building
15+
01 March
2011(#)
30,698,436.22
3
Lot No. 14, Jalan Teknologi,
Taman Sains Selangor 1,
47810 Kota Damansara,
Daerah Petaling,
Selangor Darul Ehsan.
Archive
Storage
Leasehold
Expiring11 September
2062
21,779
A data
information
resource centre
consisting of a
3-storey office
building
Not
available
10 February
2011(#)
19,794,846.34
4
No. 18, 18A, 18B, 18C, 18D,
18E & 18F, Leboh Raya Darul
Aman, 05100 Alor Setar,
Kedah Darul Aman held
under title Grant No. 37915,
Lot No. 62, Section 9,
Town of Alor Setar,
District of Kota Setar,
Kedah Darul Aman.
Office
Freehold
2,519
1 unit 6-storey
terraced corner
office block,
5 units 3-storey
terraced
intermediate
shoplots &
1 unit 3-storey
terraced end-lot
shoplots
9+
26 January
2011(#)
8,864,294.62
5
Lot 1246 to 1255, Seksyen 41,
Lorong Haji Hussein 2, 50300
Kuala Lumpur on Grant No.
26312, 26313, 26314, 26315,
28311 to 28316, Lot No.1246 to
1255, Section 41, Bandar Kuala
Lumpur, Daerah Kuala Lumpur,
Wilayah Persekutuan
Kuala Lumpur.
Investment
(Currently
rented out
as parking
facilities)
Freehold
2,047.24
10 pieces of
Not
land applicable
17 February
2011(#)
7,713,000.00
page
Kurnia Asia Berhad
annual report 2011
No. Location
137
List of Top 10 Properties (Cont’d)
Latest date of
revaluation(#)/
acquisition
Carrying
amounts as
at 31.12.2011
(RM)
Existing
use
Tenure
Land area
(Sq.meters)
Type of
building
Age of
building
Office
Freehold
342.00
9-storey
terraced
corner office
building
13+
27 January
2011(#)
5,929,502.46
4 pieces
Not
of land applicable
09 February
2011(#)
4,800,000.00
6
No. 2F, Lorong Selamat, 10400
Pulau Pinang held under issue
document of title Grant No.
61391, Lot No. 1296, Section
16 Daerah Timor Laut, Bandar
George Town, Pulau Pinang.
7
No. 28, 30, 32 & 34, Jalan
Kamunting, 50300 Kuala Lumpur
on Grant No. 29792, 29793,
29794 & 29795, Lot No. 575 to
578, Seksyen 41, Bandar Kuala
Lumpur, Daerah Kuala Lumpur,
Wilayah Persekutuan
Kuala Lumpur.
Private
parking
for staff
Freehold
594.56
8
No. 149-151, Jalan Maharajalela,
Wisma Kurnia, 50150 Kuala
Lumpur, held under issue
document of title Grant No. 4594
& 4595, Lot 956 & 957 Seksyen
69, Bandar Kuala Lumpur,
Daerah Kuala Lumpur, Wilayah
Persekutuan Kuala Lumpur.
Office
Freehold
251.30
2 units 5 ½
storey terraced
intermediate
shopoffice
Not
available
17 February
2011(#)
3,964,638.94
9
Lot 47, Lorong Berjaya 5,
Bandaran Berjaya, 88000
Kota Kinabalu, Sabah
Office
Leasehold
Expiring -21
January 2901
157.93
4(+1)-storey
corner
shopoffice
Not
available
21 February
2011(#)
2,177,902.48
10
No. 16A-C & 18A-C, Persiaran
Greentown 6, Greentown
Business Centre, 30450 Ipoh,
Perak Darul Ridzuan held
under issue document of title
PN147559 9393N & PN147560
9394N, Bandar Ipoh, Daerah
Kinta, Perak Darul Ridzuan.
Office
Leasehold
Expiring21 November
2094
334
2 units 4-storey
intermediate
shopoffice
12+
01 February
2011(#)
2,174,940.88
page
138
Kurnia Asia Berhad
annual report 2011
as at 21 May 2012
Analysis of Shareholdings as at 21/05/2012
Authorised Share Capital
Issued & Paid Up Share Capital
Class of Shares
Voting rights
Size of Holdings
1 - 99
: RM1,250,000,000
: RM375,000,000
: Ordinary shares of RM0.25 each
: One vote per ordinary share
No. of Holders
No. of Holdings
M’sian
Foreign
M’sian
%
Foreign
M’sian
Foreign
15
0
535
0
0.00
0.00
785
3
718,597
2,300
0.05
0.00
1,001 – 10,000
3,445
32
18,700,047
182,700
1.26
0.01
10,001 – 100,000
1,746
33
61,977,300
1,453,100
4.16
0.10
381
22
583,790,187
55,951,010
39.22
3.76
100 – 1,000
100,001 – 74,421,129*
74,421,130 and above**
Total
2
0
765,646,824
0
51.44
0.00
6,374
90
1,430,833,490
57,589,110
96.13
3.87
No. of Holders
No. of Holdings
% of Holdings
6,464
1,488,422,600***
100.00
Grand Total
Remark : * - Less than 5% of Issued Holdings
** - 5% and above of Issued Holdings
***- Excluding 11,577,400 treasury shares
Top Thirty Securities Account Holders as at 21/05/2012
No.
Name
No. of
Shares Held
%
1.
Kua Sian Kooi
413,999,600
27.81
2.
Cimsec Nominees (Tempatan) Sdn Bhd CIMB for Kua Sian Kooi (PB)
351,647,224
23.63
3.
C S Kua Sdn Bhd
60,000,000
4.03
4.
Damai Asset Management Sdn Bhd
42,966,068
2.89
5.
Kenanga Nominees (Tempatan) Sdn Bhd Pledged Securities Account for
Epic Portfolio Sdn Bhd
40,000,000
2.69
6.
JF Apex Nominees (Tempatan) Sdn Bhd Pledged Securities Account for
Harta Rigap Sdn Bhd (Margin)
38,011,800
2.55
7.
Cimsec Nominees (Tempatan) Sdn Bhd Siew Lee Guan
37,000,000
2.49
8.
Othman bin Abdul
31,904,600
2.14
9.
Kenanga Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Damai Asset
Management Sdn Bhd
30,711,400
2.06
10.
Cartaban Nominees (Asing) Sdn Bhd Government of Singapore Investment
Corporation Pte Ltd for Government of Singapore (C)
28,743,700
1.93
page
Kurnia Asia Berhad
annual report 2011
139
as at 21 May 2012 (cont’d)
Top Thirty Securities Account Holders as at 21/05/2012 (cont’d)
No.
Name
No. of
Shares Held
%
11.
Modal Sekata Sdn Bhd
22,700,000
1.53
12.
Quah Teong Moo
17,867,300
1.20
13.
15,403,200
1.03
14.
13,036,100
0.88
15.
Harta Rigap Sdn Bhd
12,904,800
0.87
16.
Kua Chung Sen
12,702,000
0.85
17.
JF Apex Nominees (Tempatan) Sdn Bhd Pledged Securities Account for
Teh Siew Wah (Margin)
11,678,800
0.78
18.
Corporation Pte Ltd for Monetary Authority of Singapore (H)
9,299,300
0.62
19.
Law Ah Moy
8,000,000
0.54
20.
Cimsec Nominees (Tempatan) Sdn Bhd CIMB Bank for Harta Rigap Sdn Bhd
(MP0117)
7,000,300
0.47
21.
Cimsec Nominees (Tempatan) Sdn Bhd CIMB Bank for Modal Sekata Sdn Bhd
(MP0116)
7,000,000
0.47
22.
Siew Toh Ee
5,000,000
0.34
23.
Citigroup Nominees (Tempatan) Sdn Bhd Exempt An For
OCBC Securities Private Limited (Client A/C-R ES)
4,991,200
0.34
24.
Maybank Nominees (Tempatan) Sdn Bhd Pledged Securities Account for
Teh Siew Wah
4,700,000
0.32
25.
Cimsec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for
Law Ah Moy (Penang-CL)
4,553,019
0.31
26.
Corporation Pte Ltd for Monetary Authority of Singapore (B)
3,838,400
0.26
27.
M.I.T Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Ong Saw Peng
(MG0067-188)
3,349,600
0.23
28.
AIBB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For
Cheong Chen Yue
3,295,500
0.22
29.
Citigroup Nominees (Asing) Sdn Bhd CBNY For
DFA Emerging Markets Small Cap Series
3,263,700
0.22
30.
HRH Sultan Hj Abdul Halim Muadzam Shah
3,046,400
0.20
page
140
Kurnia Asia Berhad
annual report 2011
as at 21 May 2012 (cont’d)
Directors’ Direct and Indirect Interest in the Company and its related corporations
Direct Interest
Indirect Interest
No. of
Shares Held
%
No. of
Shares Held
%
765,646,824
51.44
5,000,000
0.33
Datuk Kua Chung Sen
12,702,000
0.85
60,000,000
4.03
31,904,600
2.14
334,600
0.02
17,867,300
1.20
-
-
-
-
-
-
-
-
-
-
Substantial Shareholders
Direct Interest
Indirect Interest
Total Interest
Name
No. of
Shares Held
%
No. of
Shares Held
%
No. of
Shares Held
%
765,646,824
51.44
5,000,000
0.33
770,646,824
51.77
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Form of Proxy
(539435-K)
No. of Shares Held
I/We
(Full name in block capitals)
of
(Full address)
being *a member(s) of KURNIA ASIA BERHAD (539435-K) (“KAB”) , hereby appoint(s)
of
or failing him
of
as my/our proxy to attend and vote for me/us on my/our behalf at the Eleventh Annual General Meeting of the Company to be held
at 9th Floor, Training Auditorium, Menara Kurnia, Block B4, Leisure Commerce Square, No. 9, Jalan PJS 8/9, 46150 Petaling Jaya,
Selangor Darul Ehsan on Wednesday, 27 June 2012 at 10.00 a.m. or any adjournment thereof.
Please indicate with an “X” in the space provided below as to how you wish your votes to be cast. If no specific direction as to voting
is given, the proxy will vote or abstain at his/her discretion.
Resolutions
For
Resolution 1
To receive the Audited Financial Statements for the financial year ended 31 December
2011 and the Reports of Directors and Auditors thereon.
Resolution 2
To re-elect Dato’ Wira Othman bin Abdul who retires by rotation pursuant to Article
110 of the Company’s Articles of Association as Director.
Resolution 3
To re-elect Datuk Kua Chung Sen who retires by rotation pursuant to Article 110 of
the Company’s Articles of Association as Director.
Resolution 4
To re-appoint Messrs. KPMG as Auditors of the Company and to authorise the
Directors to fix their remuneration.
Resolution 5
Authority to issue shares.
Resolution 6
Proposed Change of Name from Kurnia Asia Berhad to KSK Group Berhad.
Dated this
Against
, 2012
Signature of Member or Affix Common Seal
Notes :
1. In respect of deposited securities, only depositors whose names appear in the Record of Depositors as at 21 June 2012 be regarded as members and entitled to attend, speak and
vote at the Meeting.
2.
A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a Member of the Company and a Member
may appoint any persons to be his proxy. The provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
3.
A Member shall be entitled to appoint not more than three (3) proxies to attend and vote at the Meeting. Where a Member appoints more than one (1) proxy, the appointment shall
be invalid unless the Member specifies the proportions of his holding to be represented by each proxy.
4.
The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing, or if the appointer is a corporation, either under its
Common Seal or under the hand of its attorney duly authorised.
5.
The instrument appointing a proxy and the power of attorney or other authority (if any), under which it is signed or a notarially certified copy thereof, must be deposited at the
Registered Office of the Company at 10th Floor, Bangunan Kurnia, No. 32 Jalan Yap Ah Shak, 50300 Kuala Lumpur not less than forty eight (48) hours before the time for holding
the Annual General Meeting or any adjournment thereof.
1st fold here
Affix
Stamp
Here
KURNIA ASIA BERHAD (539435-K)
10th Floor, Bangunan Kurnia
50300 Kuala Lumpur
2nd fold here
Fold this flap to seal

Annual Report 2011

Transcription

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