Tokio Marine Sri Muang Insurance Co., Ltd. Us/Financial Information...Operation of Non-Life...

Tokio Marine Sri Muang Insurance Co., Ltd.

Annual financial statements and

Audit Report of Certified Public Accountant

For the years ended 31 December 2011 and 2010

Audit Report of Certified Public Accountant To the Shareholders of Tokio Marine Sri Muang Insurance Co., Ltd. I have audited the accompanying statements of financial position of Tokio Marine Sri Muang Insurance Co., Ltd. as at 31 December 2011 and 2010, and the related statements of comprehensive income, changes in equity and cash flows for the years then ended. The Company’s management is responsible for the correctness and completeness of information presented in these financial statements. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial positions of Tokio Marine Sri Muang Insurance Co., Ltd. as at 31 December 2011 and 2010, and the results of its operations and its cash flows for the years then ended in accordance with generally accepted accounting principles. Without qualifying my opinion, I draw attention to the following notes to these financial statements for the year ended 31 December 2011; (1) As explained in notes 2, 4, 16 and 24 to the accompanying financial statements, with effect from 1

January 2011 the Company has adopted certain new and revised financial reporting standards, and the Notification of the Office of Insurance Commission regarding “Rules Procedures Condition and Timing Period for Preparation and Submission of the Financial Statements and Reporting the Operation of Non-Life Insurance No. 2 B.E. 2553”, dated 27 May 2010. The financial statements for the year ended 31 December 2010, for comparative purposes, have been restated accordingly.

(2) As explained in note 3, the Company and its policyholders have suffered losses from the severe floods

in parts of Thailand, and the Company has recorded losses for this flood event of Baht 81 billion, of which Baht 77 billion is expected to be recoverable from reinsurers, resulting in a net loss incurred from the flood events of Baht 4 billion being recorded in the financial statements for the year ended 31 December 2011. The Company’s management has estimated such loss reserves and loss recoveries based upon survey reports from professional loss adjusters, representing the best estimate from the information available at present. Actual results may significantly differ from these estimates.

Assets Note 2011 2010

(Restated)

Cash and cash equivalents 6 3,148,594,513 452,124,369

Accrued investment income 9,914,195 14,893,368

Premiums due and uncollected 7 744,993,923 545,089,720

Reinsurance receivables and assets 8 77,223,329,092 1,195,335,617

Investment assets

Investments in securities 9, 30

Trading securities - 330,067,950

Available-for-sale securities 115,085,856 739,238,726

Held-to-maturity securities 2,048,159,464 2,460,912,815

General investments 9,766,510 9,766,510

Loans 817,972 446,000

Leasehold improvement and equipment 10 72,434,258 76,736,902

Intangible assets 11 119,473,470 130,869,524

Income tax refundable 110,055,407 -

Other assets 12, 29 99,064,254 117,329,465Total assets 83,701,688,914 6,072,810,966

Tokio Marine Sri Muang Insurance Co., Ltd.Statements of financial positionAs at 31 December 2011 and 2010

(in Baht)

The accompanying notes are an integral part of these financial statements.

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Liabilities and (deficit in) equity Note 2011 2010

(Restated)

Liabilities

Income tax payable - 24,340,728

Due to reinsurers 13, 29 550,638,185 524,709,175

Insurance contract liabilities

Loss reserves and outstanding claims 14 80,500,791,877 1,665,234,782

Premium reserve 15 2,095,089,547 1,875,908,957

Employee benefit obligations 4, 16, 29 72,979,816 51,007,589

Commission payable 29 118,038,336 126,862,388

Short-term loans from related party 17, 29 2,000,000,000 -

Other liabilities 18, 29 249,134,700 195,895,008

Total liabilities 85,586,672,461 4,463,958,627

(Deficit in) equity

Share capital 19 Authorised share capital 20,000,000 20,000,000

Issued and paid-up share capital 20,000,000 20,000,000

Retained earnings (deficits)

Appropriated

Legal reserve 20 8,600,000 8,600,000

Other reserve 20 1,006,200,000 1,006,200,000

Unappropriated (deficits) (2,940,169,340) 512,987,092

Other components of (deficit in) equtiy

Fair value changes on available-for-sale securities 9, 20 27,356,321 61,065,247

Actuarial loss on defined employee benefit plans 16 (6,970,528) -

Total (deficit in) equity (1,884,983,547) 1,608,852,339

Total liabilities and (deficit in) equity 83,701,688,914 6,072,810,966

As at 31 December 2011 and 2010

(in Baht)

Tokio Marine Sri Muang Insurance Co., Ltd.Statements of financial position


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Note 2010

(Restated)

Revenues 22

Net premiums earned 29 3,385,344,580 2,788,103,322

Commission and brokerage income 29 304,826,140 326,886,872

Total revenues 3,690,170,720 3,114,990,194

Expenses 22

Underwriting

Claim expenses

Insurance claims and loss adjustment expenses 16, 29 5,793,430,169 1,794,426,719

Commissions and brokerage expenses 29 691,990,070 611,419,479

Other underwriting expenses 16, 29 56,446,455 70,145,342

Contribution to Road Victims Protection

Company Limited 14,104,240 11,230,803

Operating expenses 16, 23, 29 708,184,749 606,418,955

Total expenses 7,264,155,683 3,093,641,298

Profit (loss) on underwriting (3,573,984,963) 21,348,896

Net investment income 125,984,019 74,852,229

(Loss) on investment (26,372,985) (47)

Gain (loss) on fair value change 2,931,985 (2,931,985)

Other income 29 57,594,517 46,129,314

Profit (loss) from operating (3,413,847,427) 139,398,407

Contribution to Office of Insurance Commission 11,882,727 10,217,439

Contribution to Non - Life Insurance Fund 10,193,745 6,826,205

Contribution to Motor Complusory Fund 1,151,366 916,800

Finance cost 17, 29 3,375,342 -

Profit (loss) before income tax expense (3,440,450,607) 121,437,963

Income tax expense 25 (1,305,426) (120,371,714)

Profit (loss) for the year (3,441,756,033) 1,066,249

Tokio Marine Sri Muang Insurance Co., Ltd.Statements of comprehensive income

2011

(in Baht)


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Note 2010

(Restated)

Other comprehensive income Net change in fair value of available-for-sale securities (33,708,926) 9,893,716

Actuarial loss on defined employee benefit plans 16 (6,970,528) -

Other comprehensive income for the year (40,679,454) 9,893,716 Total comprehensive income (loss) for the year (3,482,435,487) 10,959,965

Basic earnings (loss) per share 26 (1,720.88) 0.53

2011

(in Baht)

Tokio Marine Sri Muang Insurance Co., Ltd.Statements of comprehensive income


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For the years ended 31 December 2011 and 2010 (Restated)

Other components

of equity

Issued and Fair value changes

paid-up Legal Other on available-for Total

Note share capital reserve reserve Unappropriated -sale securities equity

Balance at 1 January 2010 20,000,000 8,600,000 1,006,200,000 631,920,843 51,171,531 1,717,892,374

Transactions with shareholders, recorded directly in equity

Distributions to shareholders of the Company

Dividends to shareholders of the Company 27 - - - -120,000,000 - -120,000,000

Total distributions to shareholders of the Company - - - -120,000,000 - -120,000,000

Comprehensive income for the year

Profit - - - 1,066,249 - 1,066,249

Other comprehensive income

Available-for-sale investments

Net change in fair value recognised in equity - - - - 9,893,716 9,893,716

Total comprehensive income for the year - - - 1,066,249 9,893,716 10,959,965Balance at 31 December 2010 20,000,000 8,600,000 1,006,200,000 512,987,092 61,065,247 1,608,852,339

(in Baht)

Tokio Marine Sri Muang Insurance Co., Ltd.Statements of changes in equity

Retained earnings


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For the years ended 31 December 2011 and 2010 (Restated)

Issued and Fair value changes Actuarial loss on Total

paid-up Legal Other Unappropriated on available-for defined employee (deficit in)

Note share capital reserve reserve (deficits) -sale securities benefit plans equity

Balance at 1 January 2011 as reported 20,000,000 8,600,000 1,006,200,000 512,987,092 61,065,247 - 1,608,852,339

Impact of changes in acccounting policies

Employee benefit obligations 4 - - - (11,400,399) - - (11,400,399)

Balance at 1 January 2011 as restated 20,000,000 8,600,000 1,006,200,000 501,586,693 61,065,247 - 1,597,451,940

Comprehensive income for the year

Loss - - - (3,441,756,033) - - (3,441,756,033)

Other comprehensive income

Available-for-sale investments

Net change in fair value recognised in equity - - - - (34,777,951) - (34,777,951)

Net change in fair value transferred to profit or loss - - - - 1,069,025 - 1,069,025

Actuarial loss on defined employee benefit plans 16 - - - - - (6,970,528) -6,970,528

Total comprehensive income (loss) for the year - - - (3,441,756,033) (33,708,926) (6,970,528) (3,482,435,487)Balance at 31 December 2011 20,000,000 8,600,000 1,006,200,000 (2,940,169,340) 27,356,321 (6,970,528) (1,884,983,547)

Retained earnings (deficits)

(in Baht)

Tokio Marine Sri Muang Insurance Co., Ltd.

Other components of (deficit in) equity

Statements of changes in (deficit in) equity


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Note 2011 2010(Restated)

Cash flows from operating activitiesPremium received from direct insurance 4,350,719,750 4,003,486,515 Cash received (paid) for reinsurance 621,518,367 (515,314,798)

Losses incurred from direct insurance (4,012,268,685) (1,455,976,350)

Loss adjustment expenses from direct insurance (111,895,888) (80,785,443)

Commissions and brokerage from direct insurance (665,034,667) (585,665,626)

Other underwriting expenses (5,142,803) -15,095,374Interest received 67,123,735 66,286,385

Dividend received 17,032,433 5,290,923

Other income 57,594,659 53,112,796

Operating expenses (823,066,791) (851,468,154)

Income tax expense (135,701,560) (161,560,306)

Net cash provided by (used in) operating activities -639,121,450 462,310,568

Cash flows from investing activitiesCash flows provided by: Investments in securities 1,356,631,268 74,811,888

Leasehold improvement and equipment 28,117 115,686

Cash provided by investing activities 1,356,659,385 74,927,574

Cash flows used in: Investments in securities - (324,585,099)

Loans to staff (371,971) (333,300)

Leasehold improvement and equipment (15,156,032) (39,271,925)

Computer software (5,539,788) (10,074,905)

Cash used in investing activities (21,067,791) (374,265,229)

Net cash provied by (used in) investing activities 1,335,591,594 (299,337,655)

Cash flows from financing activities Proceeds from short-term loans from related party 2,000,000,000 -

Dividends paid - (120,000,000)

Net cash provided by (used in) financing activities 2,000,000,000 (120,000,000)

Net increase in cash and cash equivalents 2,696,470,144 42,972,913

Cash and cash equivalents at beginning of year 452,124,369 409,151,456

Cash and cash equivalents at end of year 6 3,148,594,513 452,124,369

Tokio Marine Sri Muang Insurance Co., Ltd.Statements of cash flows

(in Baht)


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Tokio Marine Sri Muang Insurance Co., Ltd. Notes to the financial statements For the years ended 31 December 2011 and 2010

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Note Contents 1 General information 2 Basis of preparation of the financial statements 3 Impact of severe flooding in Thailand 4 Changes in accounting policies 5 Significant accounting policies 6 Cash and cash equivalents 7 Premiums due and uncollected 8 Reinsurance receivables and assets 9 Investments in securities 10 Leasehold improvement and equipment 11 Intangible assets 12 Other assets 13 Due to reinsurers 14 Loss reserves and outstanding claims 15 Premium reserve 16 Employee benefit obligations 17 Short-term loans from related party 18 Other liabilities 19 Share capital 20 Reserves 21 Segment information 22 Reporting information classified by type of insurance underwriting 23 Operating expenses 24 Employee benefit expenses 25 Income tax expense 26 Basic earnings (loss) per share 27 Dividends 28 Financial instruments 29 Related parties 30 Securities and assets pledged with the Registrar 31 Contribution to Non-Life Insurance Fund 32 Commitments with non-related parties 33 Contingent liabilities 34 Thai Financial Reporting Standards (TFRS) not yet adopted 35 Events after the reporting period 36 Reclassification of accounts


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These notes form an integral part of the financial statements. The financial statements issued for Thai statutory and regulatory reporting purposes are prepared in the Thai language. These English language financial statements have been prepared from the Thai language statutory financial statements, and were approved and authorized for issue by the directors on 18 April 2012.

1 General information

Tokio Marine Sri Muang Insurance Co., Ltd., the “Company”, is incorporated in Thailand and has its registered office at 40th Floor, Empire Tower, 195 South Sathorn Road, Yannawa, Sathorn, Bangkok. The Company’s major shareholders during the financial year were Tajapaibul Co., Ltd. (26.7% shareholding), TMF Holding (Thailand) Limited (34.9% shareholding). These two companies were incorporated in Thailand. Tokio Marine Asia Pte. Ltd. (17.5% shareholding) was incorporated in Singapore and Aioi Nissay Dowa Insurance Co., Ltd. (formerly name: Nissay Dowa General Insurance Co., Ltd.) (7.5% shareholding) was incorporated in Japan. The principal activities of the Company is the provision of non-life insurance.

2 Basis of preparation of the financial statements

(a) Statement of compliance

The financial statements are prepared in accordance with Thai Financial Reporting Standards (TFRS) and guidelines promulgated by the Federation of Accounting Professions (“FAP”). In addition, the financial statements are prepared in accordance with the Notification of the Office of Insurance Commission, regarding “Rules Procedures Condition and Timing Period for Preparation and Submission of the Financial Statements and Reporting the Operation of Non-Life Insurance No. 2 B.E. 2553”, dated 27 May 2010. During 2010 and 2011, the FAP issued the following new and revised Thai Financial Reporting Standards (TFRS) relevant to the Company’s operations and effective for accounting periods beginning on or after 1 January 2011 as follow: TFRS Topic

TAS 1 (revised 2009) Presentation of Financial Statements TAS 7 (revised 2009) Statement of Cash Flows TAS 8 (revised 2009) Accounting Policies, Changes in Accounting Estimates and Errors TAS 10 (revised 2009) Events after the Reporting Period TAS 16 (revised 2009) Property, Plant and Equipment TAS 17 (revised 2009) Leases TAS 18 (revised 2009) Revenue


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TFRS Topic

TAS 19 Employee Benefits TAS 24 (revised 2009) Related Party Disclosures TAS 33 (revised 2009) Earnings per Share TAS 34 (revised 2009) Interim Financial Reporting TAS 36 (revised 2009) Impairment of Assets TAS 37 (revised 2009) Provisions, Contingent Liabilities and Contingent Assets TAS 38 (revised 2009) Intangible Assets TAS 40 (revised 2009) Investment Property TFRS 5 (revised 2009) Non-current Assets Held for Sale and Discontinued Operations FAP’s announcement Transitional Procedures for Other Long-term Employee Benefits no. 17/2554 FAP’s announcement Accounting Guidance for Condominiums no. 19/2554 The adoption of these new and revised TFRS has resulted in changes in the Company’s accounting policies. The effects of these changes are disclosed in note 4. In addition to the above new and revised TFRS, the FAP has issued during 2010 a number of other TFRS which are expected to be effective for financial statements beginning on or after 1 January 2013 and have not been adopted in the preparation of these financial statements. These new and revised TFRS are disclosed in note 34. As at 31 December 2011, the Company had a total deficit in equity of Baht 1,885 million, deficit of Baht 2,940 million and total liabilities exceeding total assets of Baht 1,885 million, as a result, the Capital Adequacy Ratio of the Company was lower than that required under the Risk Based Capital regulations issued by the Office of the Insurance Commission. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. However, managements of the Company believe that it is appropriate to adopt a going concern basis in the preparation of the financial statements based on the confirmation of financial support from its shareholders and lender assuring the future of the Company. These financial statements have been prepared on a going concern basis which assumes that the Company will continue in existence. The validity of this assumption is dependent upon the Company’s ability to meet its financial requirements on a continuing basis, the financial support from the lender or its shareholders and business plan to maintain its capital reserves.

(b) Basis of measurement The financial statements have been prepared on the historical cost basis except for the following material items in the statements of financial position: - Trading and available-for-sale financial assets are measured at fair value;


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(c) Presentation currency

The financial statements are prepared and presented in Thai Baht. All financial information presented in Thai Baht has been rounded in the notes to the financial statements to the nearest thousand unless otherwise stated.

(d) Use of estimates and judgements

The preparation of financial statements in conformity with TFRS 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 estimates are revised and in any future periods affected. Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements is included in the following notes: Note 3 Impact of severe flooding in Thailand Note 5 (p) Current tax Note 7 Premiums due and uncollected Note 8 Reinsurance receivables and assets Note 9 Investments in securities Note 10 Leasehold improvement and equipment Note 11 Intangible assets Note 14 Loss reserves and outstanding claims Note 15 Premium reserve Note 16 Employee benefit obligations Note 28 Financial instruments Note 33 Contingent liabilities

3 Impact of severe flooding in Thailand

The Company and its policyholders have suffered losses from the severe floods in parts of Thailand, and the Company has recorded losses for this flood event of Baht 81 billion of which Baht 77 billion is expected to be recoverable from reinsurers, resulting in a net loss incurred of Baht 4 billion being recorded as a part of insurance claims and loss adjustment expenses in the financial statements for the year ended 31 December 2011. The related loss reserves and expected reinsurance recoveries are included in loss reserves and outstanding claims (see note 14) and reinsurance assets (see note 8) respectively. The Company’s management has estimated such loss reserves and loss recoveries based upon survey reports from professional loss adjusters, representing the best estimate from the information available at present. Actual results may significantly differ from these estimates.


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4 Changes in accounting policies (a) Overview From 1 January 2011, consequent to the adoption of new and revised TFRS as set out in note 2, the

Company has changed its accounting policies in the following areas: ● Presentation of financial statements ● Accounting for employee benefits Details of the new accounting policies adopted by the Company and the impact of the changes on the financial statements are included in notes 4(b) to (c) below. Other new and revised TFRS did not have any significant impact on the accounting policies, financial position or performance of the Company. The impact on the financial statements for the year ended 31 December 2011 is summarised as follows:

Note 2011 (in thousand Baht) Statement of financial position Equity at 31 December 2010 - as reported 1,608,852 Impact of the adoption prospectively of: TAS 19 Employee Benefits 4 (c) (11,400) Equity at 1 January 2011 - as restated 1,597,452

Note 2011 (in thousand Baht) Statement of comprehensive income for the year ended 31 December 2011 Net loss before changes in accounting policies (3,430,370) TAS 19 Employee Benefits 4 (c) (11,386) Net loss - as restated (3,441,756) Increase in loss per share: Basic loss per share (in Baht) (5.69)

(b) Presentation of financial statements

From 1 January 2011, the Company has applied TAS 1 (revised 2009). (Presentation of Financial Statements) Under the revised standard, a set of financial statements comprises: ● Statement of financial position; ● Statement of comprehensive income; ● Statement of changes in equity; ● Statement of cash flows; and ● Notes to the financial statements. As a result, the Company presents all shareholders changes in equity in the statement of changes in equity and all non-shareholders changes in equity in the statement of comprehensive income. Previously, all such changes were included in the statement of changes in equity.


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Comparative information has been re-presented so that it also is in conformity with the revised accounting standard and the Notification of the Office of Insurance Commission regarding the presentation of the financial statements of non-life insurance companies No. 2 B.E. 2553, dated 27 May 2010. Since the change in accounting policy only impacts presentation aspects, there is no impact on reported profit (loss) or earnings (loss) per share.

(c) Accounting for employee benefits

From 1 January 2011, the Company has applied TAS 19 Employee Benefits. Under the new policy, the Company’s obligation in respect of post-employment benefits is recognised in the financial statements based on calculations performed annually by using the projected unit credit method. Previously, this obligation was recognised as provisions. The Company’s liability for post-employment benefit and other long-term benefit obligations as at 1 January 2011 has been determined to be Baht 62.4 million. As the Company has a reserve for severance pay as at 31 December 2010 amounted Baht 51.0 million, so the Company has opted to record the increasing amount of this liability Baht 11.4 million as an adjustment to retained earnings as at 1 January 2011, in accordance with the transitional provisions of TAS 19. The impact on the 2011 financial statements was as follows: Note 2011 (in thousand Baht) Statement of financial position Retained earnings at 31 December 2010 - as reported 512,987 Increase in employee benefit obligations 16 (11,400) Retained earnings at 1 January 2011 - as restated 501,587

Note 2011 (in thousand Baht) Statement of comprehensive income for the year ended 31 December 2011 Increase in employee expenses resulting in: (Increase) in loss adjustment expenses (2,895) (Increase) in other underwriting expenses (1,768) (Increase) in operating expenses (6,723) (Increase) in loss 16 (11,386) (Increase) in loss per share Basic loss per share (in Baht) (5.69)

5 Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements except as explained in note 4, which addresses changes in accounting policies.


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(a) Foreign currency transactions Transactions in foreign currencies are translated to Thai Baht at the foreign exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to Thai Baht at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognised in profit or loss.

(b) Cash and cash equivalents

Cash and cash equivalents comprise cash balances, call deposits and highly liquid short-term investments.

(c) Premiums due and uncollected, due from reinsurers and other accounts receivable

Premiums due and uncollected, due from reinsurers and other accounts receivable are stated at their invoice value less allowance for doubtful accounts. The allowance for doubtful accounts is assessed primarily on analysis of payment histories and future expectations of customer payments. Bad debts are written off when incurred.

(d) Investments in securities Investments in debt and equity securities Debt securities and marketable equity securities held for trading are stated at fair value, with any resultant gain or loss recognised in profit or loss. Debt securities that the Company has the positive intent and ability to held-to-maturity are classified as held-to-maturity investments. Held-to-maturity investments are stated at amortised cost, less any impairment losses. The difference between the acquisition cost and redemption value of such debt securities is amortised using the effective interest rate method over the period to maturity. Debt securities and marketable equity securities, other than those securities held for trading or intended to be held-to-maturity, are classified as available-for-sale investments. Available-for-sale investments are, subsequent to initial recognition, stated at fair value, and changes therein, other than impairment losses and foreign currency differences on available-for-sale monetary items, are recognised directly in equity. Impairment losses and foreign exchange differences are recognised in profit or loss. When these investments are derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in profit or loss. Where these investments are interest-bearing, interest calculated using the effective interest method is recognised in profit or loss. Equity securities which are not marketable are stated at cost less any impairment losses. The fair value of investments in securities classified as trading and available-for-sale is determined as the quoted bid price at the reporting date.


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Disposal of investments On disposal of an investment, the difference between net disposal proceeds and the carrying amount together with the associated cumulative gain or loss that was reported in equity is recognised in profit or loss. If the Company disposes of part of its holding of a particular investment, the deemed cost of the part sold is determined using the weighted average method applied to the carrying value of the total holding of the investment.

(e) Leasehold improvement and equipment

Recognition and measurement Owned assets Leasehold improvement and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of leasehold improvement and equipment have different useful lives, they are accounted for as separate items (major components) of leasehold improvement and equipment. Gains and losses on disposal of an item of leasehold improvement and equipment are determined by comparing the proceeds from disposal with the carrying amount of leasehold improvement and equipment, and are recognised net within other income in profit or loss. Subsequent costs The cost of replacing a part of an item of leasehold improvement 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 Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of leasehold improvement and equipment are recognised in profit or loss as incurred. Depreciation Depreciation is calculated based on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.


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Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each component of an item of assets. The estimated useful lives are as follows:

Leasehold improvement 10 years Furniture, fixtures and equipment 5 years Computer equipment 3 and 5 years Vehicles 5 years No depreciation is provided on assets under construction and installation. Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

(f) Intangible assets

Computer software Computer software acquired by the Company is stated at cost less accumulated amortisation and accumulated impairment losses. Subsequent expenditure Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. And all other expenditure is recognised in profit or loss as incurred. Amortisation Amortisation is calculated over the cost of the asset, or other amount substituted for cost, less its residual value. Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful lives are as follows: Computer software 5 and 10 years Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

(g) Impairment

The carrying amounts of the Company’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in profit or loss.


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When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the value of the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in profit or loss even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in profit or loss is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss. Calculation of recoverable amount The recoverable amount of held-to-maturity securities and receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate. Receivables with a short duration are not discounted. The recoverable amount of available-for-sale financial assets is calculated by reference to the fair value. The recoverable amount of a non-financial assets is the greater of the asset’s value in use and 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. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Reversals of impairment An impairment loss in respect of a financial asset is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised in profit or loss. For financial assets carried at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognised directly in other comprehensive income. Impairment losses recognised in prior periods in respect of non-financial assets are assessed at 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. 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.

(h) Interest-bearing liabilities Interest-bearing liabilities are recognised initially at fair value less attributable transaction charges. Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in profit or loss over the period of the borrowings on an effective interest basis.


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(i) Unearned premium reserves The Company set aside part of its premium income as unearned premium reserve as follows: Fire, marine (hull), motor and miscellaneous - Monthly average basis from net premium written (the one-twenty fourth basis) Cargo - Net premium written for the last ninety days Travelling accident - Net premium written for the last thirty days

(j) Loss reserves and outstanding claims

Loss reserves are taken up in the accounts upon receipt of claim advices from the insured, at the value appraised by an independent appraiser or the Company’s appraiser, depending on the particular case. In addition, the Company set up a provision for losses incurred but not yet reported (IBNR) based upon estimates made by a qualified actuary.

(k) Due to reinsurers and other accounts payable

Due to reinsurers and other accounts payable are stated at cost.

(l) Employee benefits

The Company operates a number of employees’ benefit plans as follows: Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. Other short-term employee benefit Other short-term employee benefit represents unused annual leave carry forward. The Company allows a permission to the Company’s employee to carry forward unused annual leave in the current calendar year to the following calendar year but the unused leave shall not exceed 20 days. Total unused annual leave carry forward, however, shall not exceed 40 days including the annual leave in following calendar year. The unused annual leave is paid upon termination based on the latest salary rate. Post-employment benefits The Company provides post-employment benefits to eligible employees under the following arrangements:


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Defined benefit plan A defined benefit plan is a post-employment benefit plan. The Company’s net obligation in respect of defined benefit plans is calculated separately for each plan 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 its present value and adjust for any past service cost. The discount rate is the yield at the reporting date on the yield curve of government bonds that have maturity dates approximating the average terms of the Company’s obligations. Other long-term employee benefit Other long-term employee benefit is Long-Service Award. The Company grants Long-Service Award to any qualified Company’s employees for those who serve the Company for 10, 20, and 30 years. The company’s obligation for this benefits is recognised in the financial statements based on calculations performed using the projected unit credit method. Previously, this obligation was recognised as and when payments were made. The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in an employee benefit to the Company, the recognised asset is limited to the total of any unrecognised past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Company. An economic benefit is available to the Company if it is realisable during the life of the plan, or on settlement of the plan liabilities. When the benefits of a plan are improved, the portion of the increased benefit relating past service by employees is recognised in profit or loss 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 profit or loss. The Company recognises all actuarial gains and losses arising from defined benefit plans in other comprehensive income and all expenses related to defined benefit plans in profit or loss.

(m) Provisions

A provision is recognised if, as a result of a past event, the Company has 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 the discount is recognised as finance cost.

(n) Revenue

Premiums Premium income is recognised on the date the insurance policy comes into effect after deducting premium ceded and cancelled.


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The Company records premium income from long-term insurance policies for the coverage periods longer than 1 year as unearned revenue, and records related revenues and expenses as unearned and prepaid items. The Company recognised unearned and prepaid items as income and expenses over the coverage period. Reinsurance premium income is recognised upon receipt of written advice from the reinsurer. Interest and dividend income Interest income is recognised in the statement of comprehensive income as it accrues. Dividend income is recognised in the statement of comprehensive income on the date the Company’s right to receive payments is established.

(o) Expenses

Commissions and brokerages Commissions and brokerages are charged to current operations as incurred. Other expenses Other expenses are recognised in the statement of comprehensive income as it accrues. Operating lease Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. 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.

(p) Income tax

Income tax expense on the profit or loss for the year comprises current tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the reputing date, and any adjustment to the tax payable in respect of previous years. In determining the amount of current tax, the Company takes into account the impact of uncertain tax provisions and whether additional taxes and interest may be due. The Company believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Company to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made.

(q) Earnings (loss) per share The Company presents basic earnings (loss) per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit (loss) attributable to ordinary shareholders of the Company by the number of ordinary shares outstanding during the year.


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6 Cash and cash equivalents

2011 2010 (in thousand Baht) Cash 11,651 12,011 Deposits at banks - call deposits 177,730 154,769 Total cash and deposits at financial institutions 189,381 166,780 Add Debt securities with maturities less than 3 months 2,959,214 285,344 Cash and cash equivalents 3,148,595 452,124


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7 Premiums due and uncollected As at 31 December 2011 and 2010, the aging analyses for premiums due and uncollected were as follows: 2011 2010 Agents and Inward Agents and Inward Insured brokers insurance Total Insured brokers insurance Total (in thousand Baht) Within credit terms 2,889 376,714 - 379,603 6,818 347,825 4,827 359,470 Over due Less than 30 days 2,618 113,457 - 116,075 1,852 - - 1,852 30 - 60 days 1,344 143,294 3,210 147,848 8,924 18,277 - 27,201 60 - 90 days 38 40,899 1 40,938 83 146,894 90 147,067 90 days - 1 year 3,954 58,723 467 63,144 968 12,647 223 13,838 Over 1 year 935 2,551 (269) 3,217 272 666 (41) 897 Total premiums due and uncollected 11,778 735,638 3,409 750,825 18,917 526,309 5,099 550,325 Less allowance for doubtful accounts (989) (4,842) - (5,831) 136 (5,371) - (5,235) Premiums due and uncollected, net 10,789 730,796 3,409 744,994 19,053 520,938 5,099 545,090


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2011 2010 (in thousand Baht) Doubtful debts expense for the year 2,083 2,366

8 Reinsurance receivables and assets

2011 2010 (in thousand Baht) Deposits on reinsurance 4,096 3,926 Due from reinsurers 1,144,124 33,798 Reinsurers’ share of insurance contract liabilities 76,075,109 1,157,373Other due from reinsurers - 239 Total reinsurance receivables and assets 77,223,329 1,195,336 Recoverable losses from reinsurers from the severe flooding in Thailand have been included in reinsurers’s share of insurance contract liabilities as at 31 December 2011 (see note 3). As at 31 December 2011 and 2010, aging analyses for due from reinsurers were as follows: 2011 2010 (in thousand Baht) Within credit terms - Over due Less than 1 year 1,131,197 28,673 1 - 2 years 9,327 4,114 Over 2 years 3,600 1,011 Total due from reinsurer 1,144,124 33,798

9 Investments in securities

2011 2010 Cost / Cost / amortised Fair amortised Fair cost value cost value (in thousand Baht) Trading securities Equity securities - - 332,565 329,570 Warrant - - 435 498 Total - - 333,000 330,068 (Less) unrealised surpluses (deficits) from fair value changes on investments - - (2,932) - Total trading securities - - 330,068 330,068

Available-for-sale securities Government and state enterprise debt securities 39,651 39,851 201,170 201,417 Private debt securities 36,700 36,681 465,625 467,039 Equity securities 11,379 38,554 11,379 70,783 Total 87,730 115,086 678,174 739,239 Add unrealised surpluses from fair value changes on investments 27,356 - 61,065 - Total available-for-sale securities 115,086 115,086 739,239 739,239


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2011 2010 Cost / Cost / amortised Fair amortised Fair cost value cost value (in thousand Baht) Held-to-maturity securities Government and state enterprise debt securities 2,048,159 2,231,976 2,070,112 2,070,157 Private debt securities - - 390,801 390,801 Total held-to-maturity securities 2,048,159 2,231,976 2,460,913 2,460,958 General investments Equity securities 9,767 9,767 Total general investments 9,767 9,767 As at 31 December 2011 investment in government bonds with a face value of Baht 5.5 million (2010: Baht 6 million), have been pledged with certain government agencies.

2011 Cost Unrealised Unrealised Fair Percentage surpluses deficits value of total assets

(in thousand Baht) Trading securities Private enterprise securities Equity - - - - - Warrant - - - - - Total trading securities - - - - - Available for sale securities Government and state enterprise securities Thai government bonds 37,047 162 - 37,209 0.04 State enterprise bonds 2,604 38 - 2,642 0.01 Total 39,651 200 - 39,851 0.05 Private enterprise securities Debentures - convertible 36,700 - (19) 36,681 0.04 Equity 11,379 27,175 - 38,554 0.05 Total 48,079 27,175 (19) 75,235 0.09 Total available for sale securities 87,730 27,375 (19) 115,086 0.14


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2010 Cost Unrealised Unrealised Fair Percentage surpluses deficits value of total assets

(in thousand Baht) Trading securities Private enterprise securities Equity 332,565 - (2,995) 329,570 5.43 Warrant 435 63 - 498 0.01 Total trading securities 333,000 63 (2,995) 330.068 5.44 Available for sale securities Government and state enterprise securities Thai government bonds 119,882 366 - 120,248 1.98 State enterprise bonds 81,288 - (119) 81,169 1.34 Total 201,170 366 (119) 201,417 3.32 Private enterprise securities Debentures-convertible 465,625 1,414 - 467,039 7.69 Equity securities 11,379 59,404 - 70,783 1.17 Total 477,004 60,818 - 537,822 8.86 Total available for sale securities 678,174 61,184 (119) 739,239 12.18

2011 2010 Amortised

Cost Percentage

of total assets Amortised

cost Percentage

of total assets (in thousand Baht) (in thousand Baht) Held to maturity securities Government and state enterprise securities Thai government bonds 143,459 0.17 227,330 3.74 State enterprise bonds 1,564,700 1.87 1,520,782 25.04 Promissory notes 340,000 0.41 322,000 5.30 Total 2,048,159 2.45 2,070,112 34.08 Private enterprise securities Bill of exchange - - 390,801 6.44 Total - - 390,801 6.44 Total held to maturity securities 2,048,159 2.45 2,460,913 40.52

2011 2010 Cost

Percentage

of total assets Cost

Percentage

of total assets (in thousand Baht) (in thousand Baht) General investments Domestic non-marketable securities 9,767 0.01 9,767 0.16 Total general investments 9,767 0.01 9,767 0.16


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As at 31 December 2011 and 2010, investments in debt securities which were classified as available-for-sale and held-to-maturity securities were classified by the remaining maturity as follows: 2011 2010 Maturities Maturities 1 year 1 - 5 years Over 5 years Total 1 year 1 - 5 years Over 5 years Total (in thousand Baht) Available for sale debt securities Government and state enterprise debt securities Thai government bonds 29,990 7,057 - 37,047 20,518 99,364 - 119,882 State enterprise bonds 604 2,000 - 2,604 48,604 32,684 - 81,288 Total 30,594 9,057 - 39,651 69,122 132,048 - 201,170 Add (less) unrealized surpluses (deficits) from fair value changes in investments 93 107 - 200 229 (17) - 246 Total 30,687 9,164 - 39,851 69,351 132,065 - 201,416 Private debt securities Debentures-convertible 5,000 31,700 - 36,700 167,240 297,340 1,045 465,625 Total 5,000 31,700 - 36,700 167,240 297,340 1,045 465,625 Add (less) unrealied surpluses (deficits) from fair value changes in investments 67 (86) - (19) 2,258 (831) (13) 1,414 Total 5,067 31,614 - 36,681 169,498 296,509 1,032 467,039 Total available for sale debt securities 35,754 40,778 - 76,532 238,849 428,574 1,032 668,455


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2011 2010 Maturities Maturities 1 year 1 - 5 years Over 5 years Total 1 year 1 - 5 years Over 5 years Total (in thousand Baht) Held-to-maturity debt securities Government and state enterprise debt securities Thai government bonds - 143,459 - 143,459 82,439 119,256 25,635 227,330 State enterprise bonds 1,316,396 248,304 - 1,564,700 1,389,138 131,644 - 1,520,782 Promissory notes 340,000 - - 340,000 322,000 - - 322,000 Total 1,656,396 391,763 - 2,048,159 1,793,577 250,900 25,635 2,070,112 Private debt securities Bill of exchange - - - - 390,801 - - 390,801 Total - - - - 390,801 - - 390,801 Total held-to-maturity debt securities 1,656,396 391,763 - 2,048,159 2,184,378 250,900 25,635 2,460,913 Total investment in debt securities 1,692,150 432,541 - 2,124,691 2,424,030 678,659 26,680 3,129,369


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10 Leasehold improvement and equipment

Assets under Furniture, construction Leasehold fixtures and Computer and improvement equipment equipment Vehicles installation Total (in thousand Baht) Cost At 1 January 2010 64,408 45,016 51,991 89 141 161,645 Additions 21,781 10,006 7,625 - - 39,412 Disposals (10,690) (150) (3,018) - (141) (13,999) At 31 December 2010 and 1 January 2011 75,499 54,872 56,598 89 - 187,058 Additions 3,371 2,910 10,763 - - 17,044 Disposals (1,888) (38) (11,169) - - (13,095) At 31 December 2011 76,982 57,744 56,192 89 - 191,007 Accumulated depreciation At 1 January 2010 23,057 31,236 42,952 21 - 97,266 Depreciation charge for the year 6,869 6,668 6,259 18 - 19,814 Disposals (3,690) (119) (2,950) - - (6,759) At 31 December 2010 and 1 January 2011 26,236 37,785 46,261 39 - 110,321 Depreciation charge for the year 7,618 6,011 5,783 18 - 19,430 Disposals - (10) (11,169) - - (11,179) At 31 December 2011 33,854 43,786 40,875 57 - 118,572

Net book value At 1 January 2010 41,351 13,780 9,039 68 141 64,379 At 31 December 2010 and 1 January 2011 49,263 17,087 10,337 50 - 76,737 At 31 December 2011 43,128 13,958 15,317 32 - 72,435

The gross carrying amount of the Company’s fully depreciated leasehold improvement and equipment that was still in use as at 31 December 2011 amounted to Baht 63 million (2010: Baht 57 million).

11 Intangible assets

Computer Computer software under software development Total (in thousand Baht) Cost At 1 January 2010 139,838 27,820 167,658 Additions 1,240 8,835 10,075 Transfer 19,024 (19,024) - At 31 December 2010 and 1 January 2011 160,102 17,631 177,733 Additions 842 4,697 5,539 Transfer 17,631 (17,631) - At 31 December 2011 178,575 4,697 183,272


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Computer Computer software under software development Total (in thousand Baht) Accumulated amortisation At 1 January 2010 31,933 - 31,933 Amortisation charge for the year 14,931 - 14,931 At 31 December 2010 and 1 January 2011 46,864 - 46,864 Amortisation charge for the year 16,935 - 16,935 At 31 December 2011 63,799 - 63,799 Net book value At 1 January 2010 107,905 27,820 135,725 At 31 December 2010 and 1 January 2011 113,238 17,631 130,869 At 31 December 2011 114,776 4,697 119,473

12 Other assets

Note 2011 2010 (in thousand Baht) Advance of premium ceded 14,330 6,422 Suspense input value added tax 18,457 48,649 Deposits 12,996 13,370 Other receivables 29 42,391 38,457 Others 10,890 10,431 Total 99,064 117,329

13 Due to reinsurers

2011 2010 (in thousand Baht) Premium ceded payables 314,228 185,389 Amount withheld on reinsurances 236,410 339,320 Total due to reinsurers 550,638 524,709

14 Loss reserves and outstanding claims

2011 2010 (in thousand Baht) As at 1 January 1,665,235 846,496 Losses incurred and loss adjustment expenses during the year - Incurred but not reported (99,268) 13,411 - Reported but not yet agreed 78,862,114 804,404 - Reported and agreed 4,197,651 1,537,153 Losses paid and loss adjustment expenses paid during the year (4,124,940) (1,536,229) As at 31 December 80,500,792 1,665,235 As at 31 December 2011, loss reserves and outstanding claims include estimated losses from the severe floods in parts of Thailand. (see note 3)


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15 Premium reserve 15.1 Unearned premium reserve

2011 2010 (in thousand Baht) As at 1 January 1,875,909 1,705,089 Premium written during the year 4,663,854 4,003,471 Earned premium during the year (4,444,673) (3,832,651) As at 31 December 2,095,090 1,875,909

15.2 Unexpired risk reserve

As at 31 December 2011, no additional reserve for unexpired risk reserve has been established as the unexpired risk reserve estimated by the Company of Baht 1,097 million (2010: Baht 972 million) is lower than the unearned premium reserve.

16 Employee benefit obligations

2011 2010 (in thousand Baht) Statements of financial position obligation for: Defined benefit plan - Post-employment benefits 67,787 51,008 - Other long-term employee benefit 5,193 - Total 72,980 51,008

For the years ended 31 December 2011 2010 (in thousand Baht) Presented in statement of comprehensive income: Defined benefit plan - Post-employment benefits 10,247 14,602 - Other long-term employee benefit 1,139 - Total 11,386 14,602 The Company adopted TAS 19 - Employee Benefits with effect from 1 January 2011; the effect on the financial statements is discussed in note 4 (c). Post-employment benefits The Company operates a number of post-employment benefit plans including defined benefit plans. All defined benefit plans are unfunded.


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Present value of unfunded obligations as at 31 December 2011 is as follows:

31 December 2011 (in thousand Baht)

Defined benefit plan - Post-employment benefits 67,787 - Other long-term employee benefit 5,193 Total present value of unfunded obligations 72,980 Movement in the present value of the defined benefit obligations: Post-employment benefits Note 2011 2010 (in thousand Baht) At 31 December 2010 / 2009 - as reported 51,008 43,457 Increase in employee benefit obligations 4 (c) 6,519 - Obligations at 1 January 2011 / 2010 - restated 57,527 43,457 Current service cost during the year 7,614 14,602 Interest cost during the year 2,633 - Benefits paid during the year (7,785) (7,051) Actuarial losses on defined employee benefit plan 7,798 - Obligations at 31 December 2011 / 2010 67,787 51,008 Other long-term employee benefit - Long-Service Award Note 2011 (in thousand Baht) At 31 December 2010 - as reported - Increase in employee benefit obligations 4 (c) 4,881 Obligations at 1 January 2011 - restated 4,881 Current service cost during the year 960 Interest cost during the year 179 Benefits paid during the year - Actuarial gains on defined other long-term employee benefit plan (827) Obligations at 31 December 2011 5,193


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Expense is recognised in the following line items in the statement of comprehensive income: For the years ended 31 December 2011 2010 (in thousand Baht) Post-employment benefits Loss adjustment expenses 2,451 3,266Other underwriting expenses 1,647 2,132Operating expenses 6,149 9,204Total 10,247 14,602 For the years ended 31 December 2011 2010 (in thousand Baht) Other long-term employee benefit Loss adjustment expenses 444 - Other underwriting expenses 121 - Operating expenses 574 - Total 1,139 - As at 31 December 2011, the Company has recognized actuarial losses on defined employee benefit plans of Baht 7 million in the other comprehensive income due to the changes in the Thai Mortality Ordinary table from 1997 to 2008 and other assumptions. The principal actuarial assumptions used to calculate the obligations under the defined benefit plans at 31 December 2011 are as follows:

31 December 2011 (%)

Discount rate 3.83 Future salary increase rate 4 Staff turnover rate 6.3 - 21.2 Estimation of future gold price (period 1 year to 30 years) (Baht) 24,737 - 67,082

Assumptions regarding future mortality are based on published statistics and Thai Mortality ordinary table 2008.


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17 Short-term loans from related party

On 8 December 2011, the Company “the Borrower” entered into a short-term loan agreement with Tokio Marine & Nichido Fire Insurance Co., Ltd. “the Lender”, a related company, for a financial indebtedness facility of Baht 12,000 million, bearing interest at 3.85% per annum. The loan was an unsecured loan and utilised for the Company’s general working capital. The drawdown period of the loan was on or before 31 March 2012. The full amount of principal and interest payables will be due for repayment on 30 September 2012. If the Borrower receives any proceeds from the Borrower’s reinsurance contracts in connection with the loss incurred from the severe floods in Thailand, the Borrower shall allocate the total amount of such proceeds for the loan repayment. The default interest rate was at 14% per annum. The Borrower shall pay all taxes, duty stamp or public charges in respect of this agreement. The Lender’s lending obligation will be extinguished and the loan automatically would become immediately due and payable when any event of default has occurred: (1) the Borrower suspends/fails payments or petition is made for specific conciliation, commencement of bankruptcy procedures or civil rehabilitation procedures or corporate reorganisation procedures or specifiable liquidation or any other similar legal procedures against the Borrower; (2) the Borrower adopts a dissolution (3) the Borrower ceases its business; (4) the business or financial condition of the Borrower deteriorates or is threatened with deterioration (5) Service of an order or notice of provisional or preservation is made with respect to the deposit or other claims (included rights to claim damages based on insurance contracts) of the Borrower againsts the Lender (6) An event occurs in relation to the Borrower in any jurisdiction (including Thailand) which corresponds with any of the events as mentioned above. The Lender would net of any obligation include owed by the Borrower as provided by Law. This agreement was governed by Japanese law. On 16 December 2011, the Borrower has a first drawdown the loan of Baht 2,000 million. As at 31 December 2011, the Company has utilised an outstanding short-term loan with the related party of Baht 2,000 million and accrued interest payable of Baht 3.4 million and has unutilised financial indebtedness facility of this loan totalling Baht 10,000 million.

18 Other liabilities

Note 2011 2010 (in thousand Baht) Accrued operating expenses 115,780 84,408 Premium received in advance 50,869 16,677 Other payables 29 48,925 60,206 Others 33,561 34,604 Total 249,135 195,895


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19 Share capital

Par value 2011 2010 per share Number Amount Number Amount (in Baht) (thousand shares / thousand Baht) Authorised At 1 January - ordinary shares 10 2,000 20,000 2,000 20,000 At 31 December Ordinary shares 10 2,000 20,000 2,000 20,000

Issued and paid-up At 1 January - ordinary shares 10 2,000 20,000 2,000 20,000 At 31 December Ordinary shares 10 2,000 20,000 2,000 20,000

20 Reserves Reserves comprise: Appropriations of retained earnings

Legal reserve The legal reserve is set up under the provisions of the Civil and Commercial Code, which requires that a company shall allocate not less than 5% of its net profit to a reserve account (“legal reserve”) upon each dividend distribution, until the balance reaches an amount not less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution. General reserve

The general reserve was appropriated according to the resolution of shareholders for the Company’s general purposes.

Other components of equity Fair value changes The fair value changes account within equity comprises the cumulative net change in the fair value of

available-for-sale financial assets until the investments are derecognised or impaired. 21 Segment information

The Company’s operation involves a single business segment in the non-life insurance business and a single geographic area in Thailand. Accordingly, no business/geographical area segmental information has been presented other than the format required by the Office of Insurance Commission.


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22 Reporting information classified by type of insurance underwriting For the year ended 31 December 2011 Personal Other Fire Marine Motor accident miscellaneous Total (in thousand Baht) Underwriting income Gross premiums written 86,163 633,006 2,802,515 68,763 1,073,407 4,663,854 Less premiums ceded (39,804) (186,760) (7,214) (9,603) (797,835) (1,041,216) Net premiums written 46,359 446,246 2,795,301 59,160 275,572 3,622,638 Less unearned premium reserve 12,657 52,178 (301,480) (9,084) 8,436 (237,293) Net premiums earned 59,016 498,424 2,493,821 50,076 284,008 3,385,345 Commission and brokerage income 15,295 40,198 (79) 2,029 247,383 304,826 Total income 74,311 538,622 2,493,742 52,105 531,391 3,690,171 Underwriting expenses Insurance claims and loss adjustment expenses 158,039 189,796 1,529,783 14,810 3,901,002 5,793,430 Commission and brokerage expenses 27,001 80,225 396,454 11,418 176,892 691,990 Other underwriting expenses 1,043 7,661 33,919 832 12,992 56,447 Contribution to Road Victims Protection Company Limited - - 14,104 - - 14,104 Total underwriting expenses 186,083 277,682 1,974,260 27,060 4,090,886 6,555,971 Other operating expenses 13,084 96,119 425,549 10,441 162,992 708,185 Total expenses 199,167 373,801 2,399,809 37,501 4,253,878 7,264,156


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For the year ended 31 December 2010 Personal Other Fire Marine Motor accident miscellaneous Total (in thousand Baht) Underwriting income Gross premiums written 91,350 665,049 2,125,560 51,801 1,069,710 4,003,470 Less premiums ceded (36,052) (173,151) (6,750) (5,272) (785,007) (1,006,232) Net premiums written 55,298 491,898 2,118,810 46,529 284,703 2,997,238 Less unearned premium reserve (971) (5,809) (181,837) (15,199) (5,319) (209,135) Net premiums earned 54,327 486,089 1,936,973 31,330 279,384 2,788,103 Commission and brokerage income 14,714 44,545 26 1,151 266,451 326,887 Total income 69,041 530,634 1,936,999 32,481 545,835 3,114,990 Underwriting expenses Insurance claims and loss adjustment expenses 20,932 178,405 1,274,393 12,842 307,855 1,794,427 Commission and brokerage expenses 29,385 84,146 311,162 8,468 178,258 611,419 Other underwriting expenses 1,600 11,653 37,242 908 18,743 70,146 Contribution to Road Victims Protection Company Limited - - 11,231 - - 11,231 Total underwriting expenses 51,917 274,204 1,634,028 22,218 504,856 2,487,223 Other operating expenses 13,837 100,737 321,965 7,847 162,032 606,418 Total expenses 65,754 374,941 1,955,993 30,065 666,888 3,093,641


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23 Operating expenses

2011 2010 (in thousand Baht) Personnel expense, not relating to underwriting and loss adjustment 196,975 187,783 Premises and equipment expense, not relating to underwriting 118,800 114,962 Taxes and duties 3,599 1,151 Doubtful debts expense 2,265 2,624 Other operating expenses 386,546 299,899 Total 708,185 606,419

24 Employee benefit expenses

Note 2011 2010 (in thousand Baht) Management Wages, salaries, bonuses and director’s remuneration 32,386 33,974Post-employment benefits and other long-term employee benefit 2,217 1,246Total 29 34,603 35,220 Other employees Wages, salaries and bonuses 279,784 261,855Post-employment benefits and other long-term employee benefits 9,169 13,356Total 288,953 275,211 Total 323,556 310,431

25 Income tax expense

The current tax expense in the statements of comprehensive income is different from the amount determined by applying the Thai corporation tax rate to the accounting profit for the year principally due to the different treatment for accounting and taxation purposed of certain items of income and expense, in particular, unrealised gain (loss) on trading securities, allowance for doubtful accounts, unearned premium reserve, loss reserves and employee benefit obligations.


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26 Basic earnings (loss) per share The calculations of basic earnings (loss) per share for the years ended 31 December 2011 and 2010 were based on the profit (loss) for the year attributable to equity holders of the Company and the number of ordinary shares outstanding during the years as follows: 2011 2010 (in thousand Baht / thousand shares) Profit (loss) attributable to equity holders of the Company (basic) (3,441,756) 1,066 Number of ordinary shares outstanding 2,000 2,000 Basic earnings (loss) per share (in Baht) (1,720.88) 0.53

27 Dividends

At the annual general meeting of the shareholders of the Company held on 30 April 2010, the shareholders approved the appropriation of dividends of Baht 60 per share, amounted to Baht 120 million. The dividend was paid to shareholders in May 2010.

28 Financial instruments

Financial risk management policies The Company is exposed to normal business risks from changes in market interest rates and from non-performance of contractual obligations by counterparties. The Company does not hold or issue derivative financial instruments for speculative or trading purposes. Risk management is integral to the whole business of the Company. The Company has a system of controls in place to create an acceptable balance between the cost of risk occurring and the cost of managing the risks. The management continually monitors the Company’s risk management process to ensure that an appropriate balance between risk and control is achieved. Capital management

The Board’s policy is to maintain a capital base so as to maintain investor, policy holders, reinsurers, creditors and market confidence and to presence the ability to continue its business as a going concern and to maintain capital reserve in accordance with Notifications of the Office of Insurance Commission. The board of directors monitors the return on capital, which the Company defines as results from operating activities divided by total equity, and also monitors the level of dividends to ordinary shareholders. Interest rate risk Interest rate risk refers to the risk of changes in future market interest rates which will affect the interest income from investments. The investments include both short-term and long-term investments that have floating and fixed interest rates. The Company manages the risk by considering the risk of investments together with the return on such investments.


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As at 31 December 2011and 2010 significant financial assets classified by type of interest rate are as follows : 2011 2010 Non- Non- Floating Fixed interest Floating Fixed interest interest rate interest rate bearing interest rate interest rate bearing (in thousand Baht) Cash and cash equipment 177,730 2,959,214 11,651 154,769 285,344 12,011 Investments in securities Government and state enterprise debt securities - 2,088,010 - - 2,271,529 - Private debt securities - 36,681 - - 857,840 - Equity securities - - 48,321 - - 410,120 Warrant - - - - - 498 Loans 818 - - 446

The financial instruments carrying fixed interest rates are here under classified by the length of time from the reporting date to the dates of their maturity:

2011 Average fixed interest rate per Within 1 year Over 1 year Total annum (in thousand Baht) (%)

Cash and cash equivalents 2,959,214 - 2,959,214 3.12 Investments in securities

Government and state enterprise debt securities 1,687,083 400,927 2,088,010 3.49 Private debt securities 5,067 31,614 36,681 3.79

Total 4,651,364 432,541 5,083,905

2010 Average fixed interest rate per Within 1 year Over 1 year Total annum (in thousand Baht) (%)

Cash and cash equivalents 285,344 - 285,344 1.59 Investments in securities

Government and state enterprise debt securities 1,863,731 407,798 2,271,529 2.49 Private debt securities 560,299 297,541 857,840 3.29

Total 2,709,374 705,339 3,414,713


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Credit risk Credit risk is the potential financial loss resulting from the failure of a customer or a counterparty to settle its financial and contractual obligations to the Company as and when they fall due. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. At the reporting date there were no significant of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position. However, due to the large number of parties comprising the Company’s customer base, Management does not anticipate material losses from its debt collection. Concentrations of credit risk derives from premiums due and uncollected which were no significant due to the policy holders of the Company were derivate variance industries and geographical areas of Thailand. Liquidity risk The Company monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Company’s operations and to mitigate the effects of fluctuations in cash flows. Determination of fair values A number of the Company’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. The fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. The fair value of due from reinsurers, reinsurers’ share of insurance contract liabilities and premiums due and uncollected and other short-term receivables are taken to approximate the carrying value. The fair value of investments in equity and debt securities, which are held for trading, held-to-maturity and available for sales, are determined by reference to their quoted bid price at the reporting date. The fair value of held-to-maturity investments is determined for disclosure purposes only.


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The fair values of general investments are not able to estimate appropriately, as a result of undisclosed fair values. The fair values of deposits at financial institutions and notes with remaining terms to maturity of less than 90 days are based on the carrying values presented in the statement of financial position. The fair values of the deposits and notes with remaining terms to maturity over 90 days are determined using the discounted cash flow method based on the current interest rates and remaining terms to maturity. As at 31 December 2011 and 2010, the carrying amounts of financial assets (held-to-maturity debt securities) which were significantly different from the estimated fair values were as follows: 2011 2010 Carrying

value

Fair value Carrying

value

Fair value (in thousand Baht) Financial assets

Government and state enterprise debt securities 2,048,159 2,231,976 2,070,112 2,070,157

29 Related parties

For the purposes of these financial statements, parties are considered to be related to the Company if the Company has the ability, directly or indirectly, to control or joint control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. Relationships with related parties were as follows: Country of Incorporation/ Name of entities nationality Nature of relationships

Tokio Marine & Nichido Fire Japan Related by way of common parent company Insurance Co., Ltd. TMF Holding (Thailand) Limited Thailand Major shareholder, 34.9% shareholding Tokio Marine Asia Pte. Ltd. Singapore Major shareholder, 17.5% shareholding Aioi Nissay Dowa Insurance Japan Major shareholder, 7.5% shareholding Co., Ltd. (Formerly: Nissay Dowa General Insurance Co., Ltd) Tokio Management Services Thailand Related by way of common parent company (Thailand) Co., Ltd. Tokio Marine Europe Insurance United Kingdom Related by way of common parent company Co., Ltd. Tokio Marine South East Thailand Related by way of common parent company Servicing Co., Ltd. Tokio Marine Life Insurance Thailand Related by way of common parent company (Thailand) Public Company Limited Tokio Marine Global Re Limited Malaysia Related by way of common parent company (Malaysia) Tokio Marine Global Re Limited Ireland Related by way of common parent company (Ireland)


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Country of Incorporation/ Name of entities nationality Nature of relationships

TM Claims Service Asia Pte. Ltd. Singapore Related by way of common parent company Kawasaki-Dowa Agency Ltd. Thailand Related by way of common parent company Tokio Marine Compania De Mexico Related by way of common parent company Seguros S.A. De C.V. Tokio Marine Management Australia Related by way of common parent company (Australia) Pty. Ltd. In Budget Company Limited Thailand A significant management held common

97% shareholding Smarter Planet Limited Thailand A significant management held common Partnership 70% shareholding Key management personnel Thailand/

Foreigners Persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including and director (whether executive or otherwise) of the Company

The pricing policies for particular types of transactions are explained further below: Transactions Pricing policies Commission and brokerage income At market rates Service income As specified in the memorandum Loss adjustment income At agreed prices Premiums ceded At market prices Loss adjustment expenses As specified in the agreement Commission and brokerage expenses At market rates Other underwriting expenses At agreed prices Operating expenses At agreed prices Finance cost At interest rate of 3.85% per annum Directors’ compensation As approved by shareholders Significant transactions for the years ended 31 December 2011 and 2010 with related parties were as follows: For the years ended 31 December 2011 2010 (in thousand Baht) Revenues

Premiums ceded Related parties Tokio Marine Europe Insurance Co., Ltd. 61 -

Commission and brokerage income Related parties Tokio Marine & Nichido Fire Insurance 84,876 78,965 Co., Ltd. Tokio Marine Global Re Limited (Malaysia) 81,997 119,012 Aioi Nissay Dowa Insurance Co., Ltd. - 5,180 Tokio Marine Europe Insurance Co., Ltd. - 237 Total 166,873 203,394


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For the years ended 31 December 2011 2010 (in thousand Baht) Service income Related parties Tokio Marine South East Servicing Co., Ltd. 5,287 4,776 Nissay Dowa General Insurance Co., Ltd. - 1,200 Others 630 824 Total 5,917 6,800 Loss adjustment income Related parties Tokio Marine & Nichido Fire Insurance Co., Ltd. 45,235 39,924

Expenses

Premiums ceded Related parties Tokio Marine & Nichido Fire Insurance Co., Ltd. 310,296 283,154 Tokio Marine Global Re Limited (Malaysia) 236,878 297,293 Aioi Nissay Dowa Insurance Co., Ltd. 490 16,146 Tokio Marine Europe Insurance Co., Ltd. - 862 Total 547,664 597,455

Loss adjustment expenses Related parties Tokio Marine Life Insurance (Thailand) Public Company Limited 7,293 6,703 Commission and brokerage expenses Related parties Tokio Marine South East Servicing Co., Ltd. 218,912 209,719 Kawasaki - Dowa Agency Ltd. 13,063 21,863 Tokio Marine Global Re Limited (Ireland) - 200 Aioi Nissay Dowa Insurance Co., Ltd. 65 - Tokio Marine Europe Insurance Co., Ltd. 17 - Total 232,057 231,782

Other underwriting expenses Related parties TM Claims Service Asia Pte. Ltd. 20 235Tokio Marine Asia Pte. Ltd. 514 1,328Others 13 74Total 547 1,637

Operating expenses Related parties Tokio Marine Life Insurance (Thailand) Public Company Limited 5,137 4,890Others - 70Total 5,137 4,960


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For the years ended 31 December 2011 2010 (in thousand Baht) Finance cost Related parties Tokio Marine & Nichido Fire Insurance Co., Ltd. 3,375 -

Key management and director compensation Related parties Short term benefits 32,386 33,974Post-employment benefits 2,209 1,246Other long-term employee benefit 8 - Total 34,603 35,220 Balances as at 31 December 2011 and 2010 with related parties were as follows: 2011 2010 (in thousand Baht) Other assets Related parties Tokio Marine & Nichido Fire Insurance Co., Ltd. 22,468 17,441 Tokio Marine South East Servicing Co., Ltd. 1,114 853 Kawasaki-Dowa Agency Ltd. 109 352 Others - 1 Total 23,691 18,647 Amount withheld on reinsurance treaties Related parties Tokio Marine Global Re Limited (Malaysia) 113,392 161,237 Tokio Marine & Nichido Fire Insurance Co., Ltd. 120,029 100,629 Aioi Nissay Dowa Insurance Co., Ltd. 148 8,024 Tokio Marine Europe Insurance Co., Ltd. (24) 345 Total 233,545 270,235 Due to reinsurers Related parties Tokio Marine & Nichido Fire Insurance Co., Ltd. 95,371 60,935 Tokio Marine Global Re Limited (Malaysia) 60,859 47,382 Aioi Nissay Dowa Insurance Co., Ltd. 3,412 5,852 Tokio Marine Europe Insurance Co., Ltd. 24 625 Total 159,666 114,794 Commission payables Related parties Tokio Marine South East Servicing Co., Ltd. 53,130 42,478 Kawasaki - Dowa Agency Ltd. 2,613 2,983 Total 55,743 45,461 Short-term loans Related parties Tokio Marine & Nichido Fire Insurance Co., Ltd. 2,000,000 -


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2011 2010 (in thousand Baht) Other liabilities Related parties Tokio Marine Asia Pte. Ltd. 1,417 3,779 Tokio Marine Life Insurance (Thailand) Public Company Limited 479 525 Tokio Marine South East Servicing Co., Ltd. 4,378 6,228 Kawasaki - Dowa Agency Ltd. 115 199 Tokio Marine & Nichido Fire Insurance Co., Ltd. 3,375 74 Others - 32 Total 9,764 10,837 Significant agreements with related parties Short-term loan with the related party The Company has a short-term loan agreement with Tokio Marine & Nichido Fire Insurance Co., Ltd. (see note 17). Service agreements The Company entered into agreements with 3 related companies whereby the Company will provide the supporting service functions such as human resources, accounting and finance, general affairs and information technology. The Company charges total monthly service fees of Baht 0.5 million. The term of the agreements is for 1 year. Either party may terminate the agreements at any time by giving 30 days prior written notice to other party. On 1 April 2011, the Company entered into an agreement with a related company where by the related company will provide the service related to management of health insurance claims. The Company was charged a service fee at 5% of total premium received under the insurance policies of policyholders. The term of the agreements is for 1 year. Either party may terminate this agreement at any time by giving not less than 30 days prior written notice to other party.

30 Securities and assets pledged with the Registrar

30.1 As at 31 December 2011 and 2010, investments in debt securities were pledged with the

registrar in accordance with the Non-Life Insurance Act No. 2 B.E. 2551 at face values as follows:

2011 2010 (in thousand Baht) State enterprise bonds 14,000 14,000


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30.2 As at 31 December 2011 and 2010, the Company’s investments in debt securities were allocated to be the reserve fund in accordance with the Notification of the Office of Insurance Commission regarding “Rates, Rules and Procedures for pledge of unearned premium reserve of Non - Life Insurance Company B.E.2552” at face values as follows:

2011 2010 (in thousand Baht) Government and Bank of Thailand bonds 344,000 237,000

31 Contribution to Non-Life Insurance Fund

As at 31 December 2011 and 2010, the accumulated Contribution to Non-Life Insurance Fund were as follows:

2011 2010 (in thousand Baht) Contribution to Non-Life Insurance Fund 23,040 12,846

32 Commitments with non-related parties (a) Commitments under office rental and service agreements

2011 2010 (in thousand Baht) Operating lease commitments Within one year 34,521 30,842 After one year but within three years 46,418 10,693 Total 80,939 41,535

(b) Commitments under car rental agreements

2011 2010 (in thousand Baht) Operating lease commitments Within one year 17,427 13,644 After one year but within four years 20,508 16,549 Total 37,935 30,193

(c) Commitments under service agreements

2011 2010 (in thousand Baht) Service commitments Within one year 270 270 After one year but within two years 135 405 Total 405 675

(d) As at 31 December 2011, the Company had a commitment under “Master License Agreement” with

another company to pay an annual fee amounted of Baht 12 million.


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(e) As at 31 December 2011, the Company had signed agreements with 2 software vendors for the purchase of 3 new softwares amounting to Baht 10 million. As at 31 December 2011, the Company has paid Baht 7.2 million to the software vendors.

33 Contingent liabilities

(a) As at 31 December 2011, lawsuits have been brought against the Company, in relation to insurance

claims in the normal course of business, totalling approximately Baht 88 million (2010: Baht 61 million). The Company’s management believes that the recorded amount of provision in the financial statements for potential losses in respect of those claims is adequate.

(b) As at 31 December 2011, the Company had letters of credit with a foreign bank amounted to Baht 5

million (2010: Baht 5 million). (c) As at 31 December 2011, the Company had letters of guarantee with a foreign bank amounted to Baht

0.4 million (2010: Baht 0.4 million). 34 Thai Financial Reporting Standards (TFRS) not yet adopted

The Company has not adopted the following new and revised TFRS that have been issued as of the reporting date but are not yet effective. The new and revised TFRS are expected to become effective for annual financial periods beginning on or after 1 January in the year indicated in the following: TFRS Topic Year effective TAS 12 Income Taxes 2013 TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rates 2013 Management expects to adopt and apply these new and revised TFRS in accordance with the FAP’s announcement and has made a preliminary assessment of the potential initial impact on the Company’s financial statements of those standards assessed to have the greatest potential impact on the financial statements in the period of initial application. These standards are as follows: TAS 12 - Income taxes The principal change introduced by TAS 12 is the requirement to account for deferred tax liabilities and assets in the financial statements. Deferred tax liabilities and assets are the amounts of income taxes payable and recoverable, respectively, in future periods in respect of temporary differences between the carrying amount of the liability or asset in the statement of financial position and the amount attributed to that liability or asset for tax purposes; and the carryforward of unused tax losses. Currently, the Company does not recognise deferred tax in the financial statements. The Company will adopt TAS 12 with effect from 1 January 2013. The effects of the change will be recognised retrospectively in the financial statements. At presently, Management is in the process of evaluating the impact on the Company’s financial statements to adopt TAS 12 with effective from 1 January 2013.


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TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rates The principal change introduced by TAS 21 is the introduction of the concept of functional currency, which is defined as the currency of the primary economic environment in which the entity operates. TAS 21 requires the entity to determine its functional currency and translate foreign currency items into its functional currency, reporting the effects of such translation in accordance with the provisions of TAS 21. Foreign currencies are defined by TAS 21 as all currencies other than the entity’s functional currency. Management has determined that the functional currency of the Company is Thai Baht. Accordingly, the adoption of TAS 21 from 1 January 2013 is not expected to have a signification impact on the Company’s reported assets, liability or retained earnings (deficits).

35 Events after the reporting period

1. The Company has suffered losses from the severe floods in parts of Thailand and as at 31

December 2011 the Company has a deficit in equity of Baht 1,885 million. As a result, the Capital Adequacy Ratio of the Company was lower than that required under the Risk Based Capital regulations issued by the Office of the Insurance Commission. To rectify the capital fund of the Company to comply with the regulations, on 29 March 2012, the Company has entered into a loan agreement with a related party Tokio Marrine & Nichido Fire Insurance Co., Ltd. The loan was an unsecured ten-year long-term loan of Baht 2,300 million bearing interest at 8% per annum. The loan was approved by the letter dated 30 March 2012 from the Office of Insurance Commission to count as Tier 2 capital. There are the specific conditions restricting any repayment of the loan before the maturity date unless the Company would increase its share capital by not less than the loan amount and would maintain the Capital Adequacy Ratio of the Company at not less than 140%.

2. On 29 March 2012, the Company has a repayment of short-term loan from a related party which

was Tokio Marine & Nichido Fire Insurance Co., Ltd. entire amount of Baht 2,000 million. 3. Since January 2012 to April 2012, the Company has entered a call loan agreement in term of

promissory notes with The Bank of Tokyo-Mitsubishi UFJ Ltd. Bangkok Branch of Baht 9,700 million to support its working capital related to payment of insurance claims and increase the liquidity of the Company.

4. At the extra-ordinary meeting of the shareholders of the Company held on 20 January 2012 had

an agenda to consider increasing the authorised share capital of the Company to Baht 3,000 million by issuing 298 million new ordinary shares with a par value of Baht 10, and had an expected 3-year business plan. However the meeting of shareholders did not issue a resolution on the increasing share capital agenda.


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36 Reclassification of accounts

Certain accounts in the 2010 financial statements have been reclassified to conform to the presentation in the 2011 financial statements. These reclassifications have principally been made following changes in accounting policies consequent to the adoption of new and revised TFRS as disclosed in note 4 and in conformity with the Notification of the Office of Insurance Commission regarding the presentation of the financial statements. Other significant reclassifications were as follows: 2010 Before After Reclassification Reclassification Reclassification

(in thousand Baht) Statement of financial position as at 31 December 2010 Assets Cash and deposits at financial institutions 166,780 (166,780) - Cash and cash equivalents - 452,124 452,124 Accrued investment income 14,893 - 14,893 Premiums due and uncollected 539,990 5,100 545,090 Deposits on reinsurance treaties 3,926 (3,926) - Due from reinsurers 3,486 (3,486) - Reinsurance receivables and assets - 1,195,336 1,195,336 Investments assets Investments in securities Bonds 2,085,070 (2,085,070) - Notes 862,604 (862,604) - Common shares 410,617 (410,617) - Debentures 467,040 (467,040) - Trading securities - 330,068 330,068 Available-for-sale securities - 739,239 739,239 Held-to-maturity securities - 2,460,913 2,460,913 General investments - 9,767 9,767 Loans 446 - 446 Leasehold improvement and equipment 76,737 - 76,737 Intangible assets 130,869 - 130,869 Other assets 116,075 1,254 117,329 Total assets 4,878,533 1,194,278 6,072,811 Liabilities Income tax payable - 24,341 24,341 Due to reinsurers - 524,709 524,709 Insurance contract liabilities Loss reserves and outstanding claims 992,434 672,801 1,665,235 Premium reserve 1,390,083 485,826 1,875,909 Amount withheld on reinsurance treaties 339,320 (339,320) - Premium ceded payables 149,739 (149,739) - Employee benefit obligations - 51,008 51,008 Commission payable 126,862 - 126,862 Other liabilities 271,243 (75,348) 195,895


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2010 Before After Reclassification Reclassification Reclassification

(in thousand Baht) Total liabilities 3,269,681 1,194,278 4,463,959 Equity Issued and paid-up share capital 20,000 - 20,000 Retained earnings Appropriated Legal reserve 8,600 - 8,600 Other reserve 1,006,200 - 1,006,200 Unappropriated 512,987 - 512,987 Other components of equity Fair value changes on available-for-sale securities 61,065 - 61,065 Total equity 1,608,852 - 1,608,852 Total liabilities and equity 4,878,533 1,194,278 6,072,811


(in thousand Baht) Statement of comprehensive income for the year ended 31 December 2010 Revenue Net premium earned 2,788,103 - 2,788,103 Commission and brokerage income - 326,887 326,887 Total revenues 2,788,103 326,887 3,114,990 Expenses Underwriting Insurance claims and loss adjustment expenses 1,668,931 125,496 1,794,427

Commission and brokerage expenses 284,532 326,887 611,419 Other underwriting expenses 15,095 55,051 70,146 Contribution to Road Victims Protection Company Limited - 11,231 11,231

Operating expenses - 606,418 606,418 Personnel expenses 310,430 (310,430) - Premises and equipment expenses 163,441 (163,441) - Taxes and duties 2,796 (2,796) - Doubtful debts expense 2,624 (2,624) - Directors’ remuneration 2,180 (2,180) - Service fee 118,821 (118,821) -

Other operating expenses 222,848 (222,848) - Total expenses 2,791,698 310,943 3,093,641


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(in thousand Baht) Profit (loss) from underwriting (3,595) 24,944 21,349 Net investment income 74,852 - 74,852 Loss on fair value change (2,932) - (2,932) Other income 53,113 (6,984) 46,129 Profit from operating 121,438 17,960 139,398 Contribution to Office of Insurance Commission - 10,217 10,217 Contribution to Non-life Insurance Fund - 6,826 6,826 Contribution to Motor Complusory Fund - 917 917 Profit before income tax expense 121,438 - 121,438 Income tax expense (120,372) - (120,372) Profit for the year 1,066 - 1,066 Other comprehensive income Net change in fair value of available-for-sale securities - 9,894 9,894 Other comprehensive income for the year - 9,894 9,894 Total comprehensive income for the year 1,066 9,894 10,960 The reclassifications have been made to comply with the classification in accordance with the Notification of the Office of Insurance Commission, regarding “Rules Procedures Condition and Timing Period for Preparation and Submission of the Financial Statements and Reporting the Operation of Non-Life Insurance” No. 2 B.E. 2553, dated 27 May 2010.

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