4.19 Securities and derivatives business payables Securities and derivatives business payables are the obligations of the subsidiary in respect of its securities and derivatives business with the outside parties. 4.20 Loss reserve and outstanding claims/Benefits payment to life policy Non-life insurance business Outstanding claims are recorded at the amount to be actually paid. Loss reserve is provided upon the receipt of the claims advice from the insured based on the claims notified by the insured and estimates made by a subsidiary company’s management. The estimated value of losses is limited to not more than the sum insured of the related insurance policies. In addition, a subsidiary company set up additional provision for losses incurred but not yet reported (IBNR) based on historical experience but at no less than 2.5 percent of the total net written premiums in the twelve months prior to the allocation date, in compliance with the Notification of the Ministry of Commerce governing the appropriation of unearned premium reserves and loss reserve by non-life insurance companies. However, from 1 January 2009, a subsidiary company set up provision for IBNR at the higher of the reserve calculated using standard actuarial claims techniques and 2.5 percent of total net written premiums in the previous twelve months. Life insurance business Benefits paid under life policies are provided for upon receipt of the claims advices from the insured or in accordance with the conditions of the policy. 4.21 Related party transactions Related parties comprise enterprises and individuals that control, or are controlled by, the Bank and its subsidiaries, whether directly or indirectly, or which are under common control with the Bank and its subsidiaries. They also include associated company and individuals which directly or indirectly own a voting interest in the Bank and its subsidiaries that give them significant influence over the Bank and its subsidiaries, key management personnel, directors and officers with authority in the planning and direction of the Bank’s and its subsidiaries’ operations. 4.22 Impairment of assets The Bank and its subsidiaries assess at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Bank and its subsidiaries realise loss on impairment when the asset’s recoverable amount is less than the book value. An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. Fair value less costs to sell reflects the amount that the Bank and its subsidiaries could obtain at the balance sheet date from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. 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. The Bank and its subsidiaries recognise impairment losses in the income statement. The Bank and its subsidiaries assess at each reporting date whether there is an indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Bank and its subsidiaries estimate the asset’s recoverable amount and the impairment loss recognised in prior periods for assets other than goodwill is reversed.
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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED
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