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.
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 539 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES continued
z. Insurance Contract continued
Liability for future policy benefit continued Funds received from customers for non-sharia unit-linked products are reported as gross premiums
in the consolidated statements of comprehensive income. Liabilities to unit-linked policyholders are recognised in the consolidated statement of financial position computed based on unearned
premium reserves using daily method from the cost of insurance to cover mortality risk plus reserves for the accumulated invested fund of unit-linked policyholders. Prior to 1 January 2013, the liabilities
to unit-linked policyholders are recognised in the statements of financial position computed based on unearned premium reserves using aggregate basis at a minimum 40 of the cost of insurance to
cover mortality risk plus reserves for the accumulated invested fund of unit-lined policyholders. Any interest, gain or loss due to increases or decreases in market value of investments are recorded
as income or expense, with a corresponding recognition of increase in liability to unit-linked policyholders in the consolidated statements of comprehensive income and liability to unit-linked
policyholders in the consolidated statement of financial position. Funds received from customers for unit-linked products is recognised as liabilities to unit-linked
policyholders in the consolidated statement of financial position for the amount received net of the
portion representing the Subsidiary’s fees in managing the unit-linked product revenue.
aa. Marketable Securities Issued
Marketable securities issued by the Bank and its Subsidiaries, include bonds, subordinated notes, medium
term notes and travelers’ cheques, are initially measured at fair value plus directly attributable transaction costs. Subsequently transactions costs are amortised using the effective
interest rate up to the maturity of marketable securities issued. Marketable securities issued are classified as financial liabilities at amortised cost. Refer to Note 2c
for the accounting policy for financial liabilities at amortised cost.
ab. Fund Borrowings
Fund borrowings represent funds received from other banks, Bank Indonesia or other parties with the obligation of repayment in accordance with the requirements of the loan agreement.
Fund borrowings are initially measured at fair value minus directly attributable transaction costs. Fund borrowings are classified as financial liabilities at amortised cost. Refer to Note 2c for the
accounting policy for financial liabilities at amortised cost.
ac. Subordinated Loans
Subordinated loans are initially measured at fair value minus directly attributable transaction costs. Subsequently transactions costs are amortised using the effective interest rate up to the maturity of
subordinated loans. Subordinated loans are classified as financial liabilities at amortised cost. Refer to Note 2c for the
accounting policy for financial liabilities at amortised cost.
