PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2014 AND 2013
Expressed in millions of Rupiah, unless otherwise stated
Appendix 540 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
x. Deposits from Customers continued
Included in demand deposits are wadiah demand and saving deposits. Wadiah demand deposits can be used as payment instruments and can be withdrawn any time using cheque and bilyet
giro. Wadiah demand and saving deposits earn bonus based on Bank’s policy. Wadiah saving and demand deposits are stated at the Bank’s liability amount.
Deposits from customers are classified as financial liabilities at amortised cost. Incremental costs directly attributable to acquistion of deposits from customers 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.
y. Deposits from Other Banks
Deposits from other banks represent liabilities to local and overseas banks, in the form of demand deposits, saving deposits, inter-bank call money with original maturities of 90 days or
less and time deposits. Deposits from other banks are recorded as liability to other banks.
Included in the deposits from other banks are sharia deposits in form of wadiah deposits, and Certificates Mudharabah Investment Bank SIMA.
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 Subsidiaries issue 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. When an insurance contract does not have significant insurance
risk, it is classified as Investment contracts.
Once a contract has been classified as an insurance contract, no reclassification is subsequently performed unless the terms of the agreement are later amended. All insurance products issued
by the subsidiary has significant insurance risk.
The Subsidiary unbundles the deposit component of unit-linked contract as 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. without 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.
- The Subsidiary does not separate the deposit component because only one of the above
condition is met.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2014 AND 2013
Expressed in millions of Rupiah, unless otherwise stated
Appendix 541 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
z. Insurance Contract continued
Liability adequacy test 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
guaranteed benefit and guaranteed additional benefit, non guaranteed participation benefit feature if any, all expenses for policies issuance and maintainance, as well as reflecting the
future cash inflow, i.e. future premium receipt. The liabilities are calculated based on discounted cash flow basis for all related cash flows i.e. both of cash outflows and cash inflows as mentioned
above using a set of most recent best estimate assumptions set by the Subsidiary’s appointed actuary, included discount rate assumptions, mortalitymorbidity assumptions, lapse assumptions,
expense assumptions and inflation assumptions as well as margin for adverse deviation assumptions. Subsidiary operates in life insurance use Gross Premium Reserve with best
estimate and margin for adverse deviation therefore liability adequacy test is not required.
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 a deficiency between insurance liabilities carrying amount deducted with deffered acquisition cost for loss insurance and estimation of future cash flows, the deficiency
will be charged in the consolidated statement of comprehensive income.
Reinsurance The Subsidiaries reinsure 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. Recovery amount from reinsurers are estimated in a manner consistent with the liability associated with the reinsured policy.
Subsidiaries present separately reinsurance asset as asset of the insurance liability. If a reinsurance asset is impaired, the Subsidiaries comprehensive the carrying amount
accordingly and recognises that impairment loss in the consolidated 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.
