PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2013 AND 2012
Expressed in millions of Rupiah, unless otherwise stated
Appendix 537 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
y. Deposits from Other Banks continued
Included in the deposits from other banks are sharia deposits in form of wadiah deposits, and Certificates Mudharabah Investment Bank SIMA. SIMA is an investment certificate issued by the
BSM which adopts profit sharing practice and in form of placement among banks. SIMA financing period ranges from 1 - 6 months.
Deposits from other banks are classified as financial liabilities at amortised cost. Incremental costs directly attributable to acquistion of deposits from other banks are included in the amount of deposits
and amortised over the expected life of the deposits. Refer to Note 2c for the accounting policy for financial liabilities at amortised cost.
z. Insurance Contract Insurance contracts is a contract under which the insurer accepts significant insurance risk from the
policyholders. Significant insurance risk is defined as the possibility of paying significantly more benefit to the policyholder upon the occurrence of insured event compared to the minimum benefit
payable in a scenario where the insured event does not occur. Scenarios considered are those with commercial substance.
The Subsidiary issues insurance contracts that accepted siginificant insurance risk from the policyholders. The Subsidiary defines significant insurance risk as the possibility of having to pay
benefits on the occurence of an insured event of at least 10 more than the benefits payable if the insured event did not occur.
Investment contracts are those contracts without significant insurance risk. Once a contract has been classified as an insurance contract, no reclassification is subsequently
performed unless the terms of the agreement are later amended.
The Subsidiary unbundles the deposit component of unit-linked contract when required by SFAS 62 when both the following conditions are met:
- The Subsidiary can measure separately the “deposit” component including any embedded
surrender option, i.e. w ithout taking into account the “insurance” component;
- The Subsidiary’s accounting policies do not otherwise require to recognise all obligations and
rights arising from the “deposit” component. No such condition currently exists within the Subsidiary. In accordance with SFAS 62, the Subsidiary
continues to use the accounting principles previously applied by the Subsidiary related to unit-linked contracts.
Liability adequacy tests Liability adequacy testing is performed at reporting date for contract individually or group of products
determined in accordance with the Subsidiary’s manner of acquiring, servicing and measuring the profitability of its insurance contracts.
For life insurance, the liabilities to policyholder in particular the liabilities for future claim is tested to determine whether they are sufficient to cover all related future cash out flow include all benefit
guaranteed and guaranteed embedded additional benefit, non guaranteed participation benefit feature if any, all the expense for policies issuance and maintaining the policies, as well as
reflecting the future cash inflow, i.e. premium receipt in the future. The liabilities are calculated based on discounted cash flow basis for all related cash flow i.e. both of cash outflow and cash
inflow as mentioned above using a set of most recent best estimate actuarial assumptions which is
set by the Subsidiary’s appointed actuary, include discount rate assumptions, mortalitymorbidity assumptions, lapse assumptions, expense assumptions and inflation assumptions as well as margin
for adverse deviation assumptions.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2013 AND 2012
Expressed in millions of Rupiah, unless otherwise stated
Appendix 538 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
z. Insurance Contract continued
Liability adequacy tests continued For loss insurance, Subsidiary performs liability adequacy testing on the reporting date by using
present value of future cash flow based on insurance contracts. If the testing shows deficiency between insurance liabilities deducted withdeffered acquisition lost
for loss insurance and estimation of future cash flow, the deficiency will be recorded to the consolidated statement of comprehensive income.
Reinsurance The Subsidiary reinsures a portion of its risk with reinsurance companies. The amount of premium
paid or portion of premium from prospective reinsurance transactions is recognised over the reinsurance contract in proportion with the protection received.
Reinsurance assets include balances expected to be recovered from reinsurance companies for ceded liability for future policy benefits, ceded estimated claim liabilities and ceded unearned
premiums. Amounts recoverable from reinsurers are estimated in a manner consistent with the liability associated with the reinsured policy.
Subsidiary presents separately reinsurance asset as asset of the insurance liability. If a reinsurance asset is impaired, the Subsidiary reduces the carrying amount accordingly and
recognises that impairment loss in the statement of income. A reinsurance asset is impaired if there is objective evidence, as a result of an event that occurred after initial recognition of the reinsurance
asset, that the Subsidiary may not receive all amounts due to it under the terms of the contract, and the impact on the amounts that the Subsidiary will receive from the reinsurer can be reliably
measured. Liability for future policy benefit
The liabilities for future policy benefits represent the present value of estimated future policy benefits to be paid to policyholders or their heirs less present value of estimated future premiums to be
received from the policyholders and recognised consistently with the recognition of premium income. The liabilities for future policy benefits are determined and computed based on certain formula by
the Subsidiary’s actuary or registered independent actuary. Starting 1 January 2013, the Subsidiary calculates the liability for future policy benefits using Gross
Premium Reserve method that reflect the present value of estimated payments throughout the guaranteed benefits including all the embedded options available, the estimated present value of all
handling costs incurred and also considering the future premium receipt. Prior to 1 January 2013, the Subsidiary used Net Level Premium to calculate liabilities for future policy benefits. This change
is deemed as a change in accounting estimates, therefor applied prospectively. Increase decrease in
future policy benefits is recognised in the current year’s statement of comprehensive income.
Liability to unit-linked policyholders classified as insurance liability. The liability to unit-linked policyholders is recognised at the time the funds received are converted
into units, net of related expenses and will increase or decrease in accordance with effective net asset value.
