DHIPAYA INSURANCE PUBLIC COMPANY LIMITED INTERIM … · Dhipaya Insurance Public Company Limited...

DHIPAYA INSURANCE PUBLIC COMPANY LIMITED INTERIM FINANCIAL INFORMATION (UNAUDITED) 30 JUNE 2020

AUDITOR’S REPORT ON THE REVIEW OF THE INTERIM FINANCIAL INFORMATION To the Board of Directors of Dhipaya Insurance Public Company Limited I have reviewed the interim financial information of Dhipaya Insurance Public Company Limited, which comprises the statement of financial position as at 30 June 2020, the statements of comprehensive income for the three-month and six-month periods then ended, the related statements of changes in equity and cash flows for the six-month period then ended, and the condensed notes to the interim financial information. Management is responsible for the preparation and presentation of this interim financial information in accordance with Thai Accounting Standard 34, “Interim Financial Reporting”. My responsibility is to express a conclusion on this interim financial information based on my review. Scope of review

I conducted my review in accordance with Thai Standard on Review Engagements 2410, “Review of interim financial information performed by the independent auditor of the entity”. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Thai Standards on Auditing and consequently does not enable me to obtain assurance that I would become aware of all significant matters that might be identified in an audit. Accordingly, I do not express an audit opinion. Conclusion

Based on my review, nothing has come to my attention that causes me to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with Thai Accounting Standard 34, “Interim Financial Reporting”. PricewaterhouseCoopers ABAS Ltd. Paiboon Tunkoon Certified Public Accountant (Thailand) No. 4298 Bangkok 13 August 2020

Dhipaya Insurance Public Company Limited

Statement of Financial Position

As at 30 June 2020

(Unaudited) (Audited)

30 June 31 December

2020 2019

Notes Baht Baht

Assets

Cash and cash equivalents 7 2,587,966,281 1,828,362,133

Premium receivables, net 8 3,629,401,010 4,063,192,209

Accrued investment income 44,050,415 41,169,501

Reinsurance assets, net 9, 16 13,667,590,907 12,597,338,806

Amounts due from reinsurance, net 10 3,866,198,418 2,977,902,392

Invested assets

Investments in securities, net 11 13,574,524,991 13,833,617,107

Investment properties, net 12 158,585,809 158,090,061

Property, plant and equipment, net 13 1,564,036,841 1,494,475,608

Intangible assets, net 14 59,135,268 61,436,162

Deferred tax assets 15 1,121,222,855 857,599,098

Prepaid reinsurance premiums, net 828,526,567 1,231,292,815

Prepaid commissions 1,006,330,842 1,176,074,367

Other assets 396,324,774 579,763,563

Total assets 42,503,894,978 40,900,313,822

The accompanying notes form part of this interim financial information.

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Statement of Financial Position (Cont’d)

As at 30 June 2020


30 June 31 December

2020 2019

Notes Baht Baht

Liabilities and equity

Liabilities

Insurance contract liabilities 16 19,274,279,350 17,701,424,091

Due to reinsurers 17 6,262,292,505 5,237,290,632

Accrued commission expenses 888,601,708 671,562,793

Premium received in advance 6,380,322,979 7,239,868,720

Premium suspense accounts 94,731,573 55,287,300

Income tax payables 255,856,113 144,469,269

Employee benefit obligations 439,156,087 416,591,857

Other liabilities 18 1,100,461,065 1,076,262,697

Total liabilities 34,695,701,380 32,542,757,359


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Statement of Financial Position (Cont’d)

As at 30 June 2020


30 June 31 December

2020 2019

Baht Baht

Liabilities and equity (Cont’d)

Equity

Share capital

Authorised share capital

Ordinary shares, 600,000,000 shares

of par Baht 1 each 600,000,000 600,000,000

Issued and paid-up share capital

Ordinary shares, 600,000,000 shares

paid-up Baht 1 each 600,000,000 600,000,000

Premium on ordinary shares 904,000,058 904,000,058

Retained earnings

Appropriated

Legal reserve 60,000,000 60,000,000

General reserve 858,637,842 858,637,842

Unappropriated 7,213,791,563 6,854,315,824

Other components of equity (1,828,235,865) (919,397,261)

Total equity 7,808,193,598 8,357,556,463

Total liabilities and equity 42,503,894,978 40,900,313,822


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Statement of Comprehensive Income

For the three-month period ended 30 June 2020

(Unaudited) (Unaudited)

30 June 30 June

2020 2019

Notes Baht Baht

Revenues

Premium written 5,512,092,496 4,420,406,776

Less Ceded premium (3,624,307,194) (2,949,299,658)

Net premium written 1,887,785,302 1,471,107,118

Less Increase (decrease) in unearned premium reserves 66,121,575 (124,010,715)

Net premium earned 1,953,906,877 1,347,096,403

Fee and commission income 1,055,273,100 953,460,623

Income on investments, net 214,983,310 188,831,030

Gains on investments 95,441,543 72,733,654

Gains on the revaluation of investments 402 332

Other income 12,870,328 7,511,998

Total revenues 3,332,475,560 2,569,634,040

Expenses

Gross insurance claims and loss adjustment

expenses 3,021,306,723 2,024,130,863

Less Insurance claims and loss adjustment

expenses recovery (1,918,663,192) (1,338,430,707)

Commission and brokerage expenses 592,040,144 565,601,497

Other underwriting expenses 459,469,694 296,480,860

Operating expenses 20 535,359,712 513,118,496

Net impairment losses on financial assets 22 (204,990) -

Total expenses 2,689,308,091 2,060,901,009

Profit before income tax 643,167,469 508,733,031

Income tax expense 21 (118,147,480) (75,316,716)

Profit for the period 525,019,989 433,416,315


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Statement of Comprehensive Income (Cont'd)

For the three-month period ended 30 June 2020


30 June 30 June

2020 2019

Note Baht Baht

Other comprehensive incomes (expenses)

Items that will be reclassified subsequently

to profit or loss

Unrealised gains in value of investments measured at

fair value through other comprehensive income 290,789,155 31,908,617

Realised losses from sale of investments measured at

fair value through other comprehensive income

investments transferred to profit or lossand impairment loss transferred to profit or loss 159,491 19,526,562

Income tax relating to items that will be

reclassified subsequently to profit or loss (58,189,729) (10,287,036)


for the period, net of income tax 232,758,917 41,148,143

Total comprehensive incomes (expenses) for the period 757,778,906 474,564,458

Earnings per share

Basic earnings per share (Baht) 23 0.87 0.72


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Statement of Comprehensive Income

For the six-month period ended 30 June 2020


30 June 30 June

2020 2019

Notes Baht Baht

Revenues

Premium written 11,615,544,577 9,302,566,957

Less Ceded premium (7,463,445,444) (6,458,076,723)

Net premium written 4,152,099,133 2,844,490,234

Less Increase in unearned premium reserves (501,228,958) (161,668,684)

Net premium earned 3,650,870,175 2,682,821,550

Fee and commission income 2,211,489,085 1,830,178,413

Income on investments, net 327,658,618 426,890,167

Gains on investments 112,651,976 109,680,726

Gains on the revaluation of investments 825 900

Other income 32,614,405 20,997,309

Total revenues 6,335,285,084 5,070,569,065

Expenses

Gross insurance claims and loss adjustment

expenses 7,179,582,074 4,121,635,252

Less Insurance claims and loss adjustment

expenses recovery (5,264,667,432) (2,826,834,074)

Commission and brokerage expenses 1,178,977,049 1,152,257,607

Other underwriting expenses 868,138,047 540,481,341

Operating expenses 20 1,061,527,177 931,983,571

Net impairment losses on financial assets 22 (1,186,917) -

Total expenses 5,022,369,998 3,919,523,697

Profit before income tax 1,312,915,086 1,151,045,368

Income tax expense 21 (260,345,215) (197,715,593)

Profit for the period 1,052,569,871 953,329,775


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Statement of Comprehensive Income (Cont'd)



30 June 30 June

2020 2019

Note Baht Baht


Items that will be reclassified subsequently

to profit or loss

Unrealised gains (losses) in value of investments measured at

fair value through other comprehensive income (1,043,082,630) 272,048,463

Realised gains from sale of investments measured at


investments transferred to profit or lossand impairment loss transferred to profit or loss (7,956,157) (2,645,685)

Income tax relating to items that will be

reclassified subsequently to profit or loss 210,207,757 (53,880,556)


for the period, net of income tax (840,831,030) 215,522,222

Total comprehensive incomes (expenses) for the period 211,738,841 1,168,851,997

Earnings per share

Basic earnings per share (Baht) 23 1.75 1.59


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Statement of Changes in Equity (Unaudited)


Unrealised gains

(losses) on change in

value of investments

measured at fair value

Issued and through other Unrealised Total other

paid-up Share comprehensive income actuarial gains components of Legal General

share capital premium - net of tax - net of tax equity reserve reserve Unappropriated Total

Notes Baht Baht Baht Baht Baht Baht Baht Baht Baht

Beginning balance as at 1 January 2019 600,000,000 904,000,058 (625,726,060) 14,764,261 (610,961,799) 60,000,000 782,079,741 5,937,680,508 7,672,798,508

Net profit - - - - - - - 953,329,775 953,329,775

Dividend paid 19 - - - - - - - (599,999,900) (599,999,900)

Transfer of unappropriated retained earnings - - - - - - 76,558,101 (76,558,101) -

Unrealised gains on change in value of investments measured at

fair value through other comprehensive income - - 217,638,770 - 217,638,770 - - - 217,638,770



and impairment loss transferred to profit or loss - - (2,116,548) - (2,116,548) - - - (2,116,548)

Closing balance as at 30 June 2019 600,000,000 904,000,058 (410,203,838) 14,764,261 (395,439,577) 60,000,000 858,637,842 6,214,452,282 8,241,650,605

Beginning balance as at 1 January 2020 600,000,000 904,000,058 (934,161,522) 14,764,261 (919,397,261) 60,000,000 858,637,842 6,854,315,824 8,357,556,463

Retrospective adjustment from adoption of new

financial reporting standards 4 - - (68,007,574) - (68,007,574) - - (3,094,247) (71,101,821)

Beginning balance after adjustment 600,000,000 904,000,058 (1,002,169,096) 14,764,261 (987,404,835) 60,000,000 858,637,842 6,851,221,577 8,286,454,642

Net profit - - - - - - - 1,052,569,871 1,052,569,871

Dividend paid 19 - - - - - - - (689,999,885) (689,999,885)

Transfer of unappropriated retained earnings - - - - - - - - -

Unrealised losses on change in value of investments measured at

fair value through other comprehensive income - - (834,466,104) - (834,466,104) - - - (834,466,104)



and impairment loss transferred to profit or loss - - (6,364,926) - (6,364,926) - - - (6,364,926)

Closing balance as at 30 June 2020 600,000,000 904,000,058 (1,843,000,126) 14,764,261 (1,828,235,865) 60,000,000 858,637,842 7,213,791,563 7,808,193,598


Other components of equity

Retained earnings

Appropriated

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Statement of Cash Flows



30 June 30 June

2020 2019

Baht Baht

Cash flows from (used in) operating activities

Net direct premium writtenNet direct premium written 11,105,840,271 8,042,653,893

Cash paid for reinsuranceCash received (paid) for reinsurance (962,163,597) (921,591,660)

Losses incurred of direct insuranceLosses incurred of direct insurance (5,211,864,097) (5,061,019,127)

Loss adjustment expenses of direct insuranceLoss adjustment expenses of direct insurance (226,195,763) (174,696,179)

Commissions and brokeragesCommissions and brokerages of direct insurance (913,295,335) (821,990,820)

Other underwriting expensesOther underwriting expenses (580,743,332) (442,497,782)

Interest incomeInterest income 80,000,223 115,966,593

Dividend receivedDividend received 260,805,144 327,278,497

Other incomeOther income 33,328,827 27,737,673

Operating expensesOperating expenses (967,631,288) (781,551,001)

Corporate income taxIncome tax paid (187,823,794) (220,670,504)

Cash received from investments in securities 8,953,312,993 9,763,907,602

Cash received from deposits at financial institutions 100,350,000 700,770,321

Cash used in investments in securities (9,572,925,559) (9,942,477,045)

Cash used in deposits at financial institutions (200,350,000) (700,000)

OthersOthers (130,055,690) (99,174,511)

Net cash provided from operating activities 1,580,589,003 511,945,950


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Statement of Cash Flows (Cont’d)



30 June 30 June

2020 2019

Note Baht Baht

Cash flows from (used in) investing activities

Cash provided from

Proceeds from disposal of property, plant and equipment 861,776 1,562,430

Cash provided from investing activities 861,776 1,562,430

Cash used in

Purchase of property, plant and equipment (100,351,935) (98,672,724)

Purchase of intangible assets (8,818,331) (10,932,232)

Cash used in investing activities (109,170,266) (109,604,956)

Net cash used in investing activities (108,308,490) (108,042,526)

Cash flows used in financing activities

Repayment on lease liabilities (22,676,480) (10,787,551)

Dividend paid 19 (689,999,885) (599,999,900)

Net cash used in financing activities (712,676,365) (610,787,451)

Net increase (decrease) in cash and cash equivalents 759,604,148 (206,884,027)

Cash and cash equivalents at beginning of the period 1,828,362,133 2,361,026,220

Cash and cash equivalents at end of the period 2,587,966,281 2,154,142,193

Significant non-cash transactions comprise:

Accounts payable - purchase of property, plant and equipment 2,790,310 62,959,278

Accounts payable - purchase of intangible assets 405,607 299,500

Reclassify investments in securities with maturity

not over 3 months from acquisition date 989,873,213 1,314,625,717


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Dhipaya Insurance Public Company Limited Condensed Notes to Interim Financial Information (Unaudited) For the interim period ended 30 June 2020

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1 General information

Dhipaya Insurance Public Company Limited (“the Company”) is a public limited company which listed on the Stock Exchange of Thailand. The Company is incorporated and domiciled in Thailand. The address of the Company’s registered office is as follows: The Company’s registered address is 1115 Rama III Road, Chong Nonsri, Yannawa, Bangkok. The principal business operation of the Company is insurance business. The interim financial information was authorised for issue by Dhipaya Insurance Public Company Limited’s authorised directors on 13 August 2020. This interim financial information has been reviewed, not audited.

2. Basis of preparation

The interim financial information has been prepared in accordance with Thai Accounting Standard 34, Interim Financial Reporting and other financial reporting requirements issued under the Securities and Exchange Act and as required by the Notification of the Office of Insurance Commission entitled “Principle, methodology, condition and timing of preparation, submission and reporting of financial statements and operation performance for non-life insurance company (No. 2) B.E. 2562” dated on 4 April 2019 (‘OIC Notification’). The interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2019. An English version of the interim financial information has been prepared from the interim financial information that is in the Thai language. In the event of a conflict or a difference in interpretation between the two languages, the Thai language interim financial information shall prevail. Costs that are incurred unevenly during the financial year are anticipated or deferred in the interim report only if it would also be appropriate to anticipate or defer such costs at the end of the financial year. Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.


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3. Accounting policies

The accounting policies used in the preparation of the interim financial information are consistent with those used in the annual financial statements for the year ended 31 December 2019, except as described in Note 4. New and amended financial reporting standards that are relevant and have significant impacts to the Company Financial reporting standards effective on 1 January 2020 TAS 12 Income tax TAS 19 Employee benefits TFRIC 23 Uncertainty over income tax treatments Amendment to TAS 12, Income tax - clarified that the income tax consequences of dividends of financial instruments classified as equity should be recognised according to where the past transactions or events that generated distributable profits were recognised. Amendment to TAS 19, Employee benefits (plan amendment, curtailment or settlement) - clarified accounting for defined benefit plan amendments, curtailments and settlements that the updated assumptions on the date of change are applied to determine current service cost and net interest for the remainder of the reporting period after the plan amendment, curtailment or settlement. TFRIC 23, Uncertainty over income tax treatments - explained how to recognise and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax treatment. In particular, it discusses:

- that the Company should assume a tax authority will examine the uncertain tax treatments and

have full knowledge of all related information, i.e. that detection risk should be ignored. - that the Company should reflect the effect of the uncertainty in its income tax accounting when it is

not probable that the tax authorities will accept the treatment. - that the judgements and estimates made must be reassessed whenever circumstances have

changed or there is new information that affects the judgements. The Company has already adopted above revised standards for the current reporting period. The management assessed that the above revised standards do not have significant impact to the Company.


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4. Adoption of new financial reporting standards and changes in accounting policies

Adoption of new financial reporting standards On 1 January 2020, the Company passes criteria of temporarily exemption from TFRS 9 Financial instruments and TFRS 7 Financial instruments: Disclosures under TFRS 4 (revised 2018) Insurance contracts and is eligible to apply the ‘financial instruments and disclosure for insurance companies’ accounting guidance’ (‘The Accounting Guidance’) as the Company has not previously applied TFRS 9 Financial instruments and the Company’s activities are predominantly connected with insurance business. Insurance liabilities under TFRS 4 (revised 2018) Insurance contracts as at 1 January 2018 is greater than 90% of total company’s liabilities resulting the Company be able to apply such Accounting Guidance. The Company has adopted financial reporting standards relating to financial instruments (TAS 32 and the Accounting Guidance) and leases standard (TFRS 16) retrospectively from 1 January 2020, but has not restated comparative for the 2019 reporting period, as permitted in the standards. The reclassifications and adjustments arising from the new requirements are therefore made against in the opening balances of the statement of financial position on 1 January 2020. The following table shows the adjustments made to the amounts recognised in each line item in the statement of financial position upon the adoption of the financial reporting standards relating to financial instruments (TAS 32 and the Accounting Guidance) and lease standard (TFRS 16):

As at 31 December 2019

As previously reported

TAS 32 and the Accounting Guidance

Reclassifications and adjustments

TFRS 16 Reclassifications and adjustments

As at 1 January 2020

Restated Baht Baht Baht Baht

Assets Investments in securities 13,833,617,107 (88,103,715) - 13,745,513,392 Property, plant and equipment 1,494,475,608 - 96,703,897 1,591,179,505 Deferred tax assets 857,599,098 17,001,894 - 874,600,992 Liabilities Other liabilities 1,076,262,697 - 96,703,897 1,172,966,594 Equity Retained earnings 7,772,953,666 (3,094,247) - 7,769,859,419 Other components of equity (919,397,261) (68,007,574) - (987,404,835)

The adoption of the new financial reporting standard on financial instruments mainly affects the Company’s accounting treatment as follows;

Classification and measurement of investments in equity instruments (previously called general investments)

Currently, the Company has a total equity instruments measured at cost of Baht 689,060,079. These equity instruments will be remeasured to fair value through other comprehensive income and reclassified with a corresponding fair value adjustment to other components of equity of Baht 88,103,715 as of 1 January 2020.

Classification of investments in equity instruments (previously called unit trust)

Currently, the Company classified investment in Thailand’s i) Real Estate Investment Trust (REIT) and Infrastructure Trust, ii) Infrastructure Fund, and iii) Property Fund at fair value of Baht 2,108,813,410 as equity instruments since 1 January 2020 according to the TFAC’s clarification announced on 25 June 2020.


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Classification and measurement of investments in debt instruments (previously called unit trust) Currently, the Company classified unit trust at fair value of Baht 1,266,616,808 as debt instruments since 1 January 2020 according to TAS 32 Financial instruments: Presentation. Impairment The new requirements on the impairment losses will lead to expected credit losses having to be considered and recognised at the initial recognition and subsequent period. The Company accounts for expected credit losses which involves a three-stage expected credit loss impairment model. The stage dictates how the Company measures impairment losses and applies the effective interest rate method. As of 1 January 2020, the Company recognised impairment losses for investment in securities of Baht 3,094,247. The transition adjustment is recognised as an adjustment to the opening balance of retained earnings. On adoption of TFRS 16, the Company recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of TAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 January 2020. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 January 2020 was 2.62-5.00%. Baht

Operating lease commitments disclosed as at 31 December 2019 153,498,228 (Less): discounted using the lessee’s incremental borrowing rate of at the date of initial application

(11,017,180)

Add: finance lease liabilities recognised as at 31 December 2019 18,103,926 (Less): short-term leases recognised on a straight-line basis as expense (319,400) (Less): low-value leases recognised on a straight-line basis as expense (47,184,791)

Lease liability recognised as at 1 January 2020 113,080,783

The associated right-of-use assets for property leases were measured on a retrospective basis as if the new rules had been applied since the beginning of lease agreements. Other right-of use assets were measured at the amount equal to the lease liability. There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application. The recognised right-of-use assets relate to the following types of assets (Note 13.2): 30 June

2020 1 January

2020 Baht Baht

Land 33,817,570 37,221,512 Buildings 10,133,116 9,695,371 Vehicle 69,619,640 70,366,225

Total right-of-use assets 113,570,326 117,283,108


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Practical expedients applied In applying TFRS 16 for the first time, the Company has used the following practical expedients permitted by the standard:

the use of a single discount rate to a portfolio of leases with reasonably similar characteristics

reliance on previous assessments on whether leases are onerous

the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2020 as short-term leases

the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application

the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease, and

elect not to reassess whether a contract is, or contains a lease as defined under TFRS 16 at the date of initial application but relied on its assessment made applying TAS 17 and TFRIC 4 Determining whether an Arrangement contains a Lease.

Changes in accounting policies from adoption of the financial reporting standards related to financial instruments and leases Investments in securities Classification and measurements From January 2020, the Company classifies its investments in securities as follows:

Investments measured at fair value through profit or loss (FVPL)

Investments measured at fair value through other comprehensive income (FVOCI)

Investments measured at amortised cost The Company initially recognises an investment in securities on trade date at its fair value plus transaction costs that are directly attributable to the acquisition of the investment in securities. The gains and losses from foreign currency translation of equity instruments is recognise at fair value through other comprehensive income. For the classification of investment in Thailand’s i) Real Estate Investment Trust (REIT) and Infrastructure Trust, ii) Infrastructure Fund, and iii) Property Fund, the Company applies the TFAC’s clarification announced on 25 June 2020. The announcement requires the Company to classify the aforementioned investments as investments in equity instruments. Those investments are measured at fair value through other comprehensive income. The Company has chosen to apply the temporary measures to relieve the impact from COVID-19 announced by TFAC for the reporting periods ending between 1 January 2020 and 31 December 2020 when measuring unquoted equity investments. The unquoted equity investments at the end of the reporting period was presented at the same amount as their fair values on 1 January 2020. Impairment From 1 January 2020, the Company assesses expected credit loss on a forward looking basis for its financial assets which classified as debt instruments carried at FVOCI and at amortised cost. The impairment methodology applied depends on whether there has been any significant increases in credit risk. The Company accounts for expected credit losses which involves a three-stage expected credit loss impairment model. The stage dictates how the Company measures impairment losses and applies the effective interest rate method. In which, the three-stage expected credit loss impairment will be as the following stages: - Stage 1 - from initial recognition of a financial assets to the date on which the credit risk of the asset has

not increased significantly relative to its initial recognition, a loss allowance is recognised equal to the credit losses expected to result from defaults occurring over the next 12 months.


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- Stage 2 - following a significant increase in credit risk relative to the initial recognition of the financial

assets, a loss allowance is recognised equal to the credit losses expected over the remaining life of the asset.

- Stage 3 - When a financial asset is considered to be credit-impaired, a loss allowance equal to full lifetime expected credit losses is to be recognised.

The expected credit loss will be recognised in profit or loss. For impairment of equity instruments which classified as investments measured at fair value through other comprehensive income will be recognised in profit and loss immediately when there is evidence supports the impairment of the instruments. The Company will recognise allowance of losses in other comprehensive income and the carrying amount of financial assets which classified as equity instruments in the statement of financial position will not be decreased. Right-of-use assets and lease liabilities The Company leases various property, plant and vehicle. Rental contracts are typically made for fixed periods of 1 to 10 years but may have extension options. Before 2020 financial year, leases of property, plant and vehicle were classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease. From 1 January 2020, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Company. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. Right-of-use assets are recorded as “Property, Plant and equipment” in Statement of Financial Position. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

fixed payments (including in-substance fixed payments), less any lease incentives receivable

variable lease payment that are based on an index or a rate

amounts expected to be payable by the lessee under residual value guarantees

the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and

payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Right-of-use assets are measured at cost comprising the following:

the amount of the initial measurement of lease liability

any lease payments made at or before the commencement date less any lease incentives received

any initial direct costs, and

restoration costs. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise Computer and Printer rental agreement.


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5. Estimates

The preparation of interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, incomes and expenses. Actual results may differ from these estimates. In preparing this interim financial information, the significant judgements made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the year ended 31 December 2019 except from estimation of renew contract according to TFRS 16.

6. Fair value

6.1 Fair value estimation

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The following table presents the Company’s significant financial assets that are measured and recognised at fair value at 30 June 2020 and 31 December 2019. As at 30 June 2020 (Unaudited)

Level 1 Level 2 Level 3 Total

Baht Baht Baht Baht

Financial assets at fair value through profit or loss

Equity securities 20,400,825 - - 20,400,825 Financial assets at fair value through other comprehensive income Equity securities 5,496,337,842 - 587,719,640 6,084,057,482 Debt securities - 4,320,225,653 - 4,320,225,653

Total 5,516,738,667 4,320,225,653 587,719,640 10,424,683,960


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As at 31 December 2019 (Audited)

Level 1 Level 2 Level 3 Total

Baht Baht Baht Baht

Financial assets at fair value through profit or loss

Held-for-trading investments Equity securities - - - - Financial assets at fair value through other comprehensive income Available-for-sale investments Government and state enterprise securities - 887,440,765 - 887,440,765 Private enterprise debt securities - 3,679,618,935 - 3,679,618,935 Equity securities 2,410,126,016 - - 2,410,126,016 Unit trusts 2,108,813,409 1,266,616,809 - 3,375,430,218

Total 4,518,939,425 5,833,676,509 - 10,352,615,934

There were no transfers between Levels 1 and 2 during the period. During the six-month period ended 30 June 2020 and the year ended 31 December 2019, there were no significant changes in the business or economic circumstances that affect the fair value of the Company’s financial assets and financial liabilities.

6.2 Valuation techniques used to derive fair values Financial instruments in level 1 The fair value of financial instruments traded in active markets is based on quoted market prices such as at the Statement of Financial Position date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis such as prices obtained from The Stock Exchange of Thailand. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in Level 1. Financial instruments in level 2 Level 2 debt investments of marketable securities are fair valued based on quoted last bid price or the yield curve which the Thai Bond Market Association at the close of business on the Statement of Financial Position date. Level 2 unit trusts are fair valued using the net asset value of the investment which has majority investing portion in marketable securities which traded in the Stock Exchange of Thailand and debt securities which has fair valued announced by Thai Bond Market Association. Financial instruments in level 3 The investment department performs the valuations of financial assets required for financial reporting purposes, including Level 3 fair values. This team reports directly to the assistance managing director. Discussions of valuation processes and results are held between the assistance managing director and the valuation team at least once every quarter, in line with the Company’s quarterly reporting dates.


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The main Level 3 input of unquoted equity investments that was used by the Company pertains to estimated cash flows from gains on securities trading, dividends and/or other benefits to the shareholders. The discount rate is based on a zero-coupon bond yield, announced by ThaiBMA, plus appropriate risk premium. Fair value hierarchy level 3 of Road Accident Victims Protection Co., Ltd. is determine based on fair value calculated using discounted cashflows method announced by Thailand General Insurance Association. Changes in level 3 financial instruments are as follows:

(Unaudited) 30 June 2020 Baht

Beginning balance of the period (Note 4) 600,956,364 Unrealised gains (losses) (13,236,724)

Closing balance of the period 587,719,640

As at 30 June 2020, the discount rate used to compute the fair value is between 16.30% to 85.00% per annum (2019: 16.30% to 85.00% per annum), depending on risk premium of each security. Based on the sensitivity analysis, should the discount rate shifted up by +1%, the other comprehensive income would decrease by Baht 11.92 million (31 December 2019: Baht 11.87 million). On the other hand, should the discount rate shifted down by -1%, the other comprehensive income would increase by Baht 12.77 million (31 December 2019: Baht 12.71 million).

7. Cash and cash equivalents

(Unaudited) (Audited) 30 June 31 December 2020 2019 Baht Baht

Cash on hand 1,375,952 1,435,529 Bank deposits held at call 1,596,717,115 1,316,532,493 Bank deposits with fixed maturity and certificate of deposits 2,118,050,000 2,018,050,000 Investment in securities with maturity not over 3 months from acquisition date 989,873,214 510,394,111

Total cash and deposits at financial institutions 4,706,016,281 3,846,412,133 Less Deposits at banks and other institutions with maturity (2,063,650,000) (1,963,500,000) over 3 months from acquisition dates (Note 11) Restricted deposit at banks (54,400,000) (54,550,000)

Cash and cash equivalents 2,587,966,281 1,828,362,133

As at 30 June 2020, the Company had pledged fixed deposits totalling Baht 54.40 million (31 December 2019: Baht 54.55 million) as collaterals against bank overdrafts and as bail bond in cases where insured drivers have been charged with criminal offence, and placed with the Registrar, in accordance with Section 19 of the Insurance Act B.E. 2535 (as stated in Notes 25 and 28).


21

8. Premium receivables, net

The balances of premium receivables which classified by aging from the maturity date of the premium collection are as follows:


Undue 2,019,326,098 3,084,293,545 Overdue Less than 30 days 589,651,806 353,007,228 31 - 60 days 464,808,838 277,635,054 61 - 90 days 134,383,796 163,345,357 91 days - 1 year 426,066,319 187,345,158 More than 1 year 137,941,054 91,563,345

Total premium receivables 3,772,177,911 4,157,189,687 Less Allowance for doubtful accounts (142,776,901) (93,997,478)

Total premium receivables, net 3,629,401,010 4,063,192,209

For premiums due from agents and brokers, the Company has established collection guidelines in accordance with the regulatory requirement for premium collection. For overdue premium receivables, the Company is pursuing legal proceedings against such agents and brokers case by case.

9. Reinsurance assets, net

Assets from reinsurance are as follows:


Insurance reserve to be called from reinsurance companies Loss reserve 5,580,755,156 4,073,298,342 Less Allowance for doubtful accounts (22,840,015) (22,840,015) Premium reserve - Unearned premium reserve (UPR) 8,109,675,766 8,546,880,479 - Unexpired risk reserve (URR) - -

Reinsurance assets, net 13,667,590,907 12,597,338,806


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10. Amounts due from reinsurance, net

Amounts due from reinsurance are as follows:


Deposits on reinsurance 3,182 3,182 Due from reinsurers 4,752,455,384 3,873,749,031

4,752,458,566 3,873,752,213 Less Allowance for doubtful accounts (886,260,148) (895,849,821)

Amounts due from reinsurance, net 3,866,198,418 2,977,902,392

11. Investments in securities, net

Investments in securities are as below:

(Unaudited) 30 June 2020

Cost/

Amortised cost Fair Value Baht Baht

Investments measured at fair value through profit or loss Equity securities 20,400,000 20,400,825

Total 20,400,000 20,400,825 Add Unrealised gains 825 -

Total investments measured at fair value through profit or loss 20,400,825 20,400,825

Investments measured at fair value through other comprehensive income Government and state enterprise securities 1,944,606,790 1,947,203,642 Private enterprise debt securities 2,375,744,153 2,373,022,011 Equity securities 8,389,596,241 6,084,057,482

Total 12,709,947,184 10,404,283,135 Less Unrealised (losses) (2,305,664,049) -

Total investments measured at fair value through other comprehensive income

10,404,283,135

10,404,283,135

Investment measured at amortised cost Government and state enterprise securities 1,071,191,031 - Deposit at banks (Note 7) 2,063,650,000 - Government lottery savings 15,000,000 -

Total 3,149,841,031 - Less Expected credit loss - -

Total investment measured at amortised cost 3,149,841,031 -

Total investments in securities, net 13,574,524,991


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(Audited) 31 December 2019

Cost/

Amortised cost Fair Value Baht Baht

Held-for-trading investments Equity securities - -

Total - - Add Unrealised gains - -

Total held-for-trading investments - -

Available-for-sale investments Government and state enterprise securities 882,205,126 887,440,765 Private enterprise debt securities 3,668,697,292 3,679,618,935 Equity securities 3,361,589,413 2,410,126,016 Unit trusts 3,607,846,916 3,375,430,218

Total 11,520,338,747 10,352,615,934 Less Unrealised (losses) (1,167,722,813) -

Total available-for-sale investments 10,352,615,934 10,352,615,934

Held-to-maturity investments Government and state enterprise securities 813,441,094 - Deposit at banks (Note 7) 1,963,500,000 - Government lottery savings 15,000,000 -

Total 2,791,941,094 - Less Impairment charge - -

Total held-to maturity investments 2,791,941,094 -

General investments Equity securities 820,037,624 -

Total 820,037,624 - Less Impairment charge (130,977,545) -

Total general investments 689,060,079 -

Total investments in securities, net 13,833,617,107


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11.1 Debt securities that are measured at fair value through other comprehensive income


Expected credit loss recognised in other Fair value comprehensive income Baht Baht

Investments in debt securities which credit risk has not significantly increased (Stage 1) 4,320,225,653 1,907,329 Investment in debt securities which credit risk has significantly increased (Stage 2) - - Credit-impaired investments in debt securities (Stage 3) - - Total 4,320,225,653 1,907,329

11.2 Debt securities that are measured at amortised cost


Gross Expected Carrying carrying value credit loss value Baht Baht Baht

Investments in debt securities which credit risk has not significantly increased (Stage 1) 3,149,841,031

- 3,149,841,031 Investment in debt securities which credit risk has significantly increased (Stage 2) -

- - Credit-impaired investments in debt securities (Stage 3) -

- -

Total 3,149,841,031 3,149,841,031

As at 30 June 2020, bonds and debentures of Baht 1,167.98 million (31 December 2019: Baht 763.21 million) and government lottery savings of Baht 10 million (31 December 2019: Baht 10 million) were used as collateral against premium reserve with the registrar, collateral for underwriting policies and collateral in case of the insured driver is an alleged offender and used as collateral against the court for the payment of losses (as stated in Notes 26 and 28). For the three-month period ended 30 June 2020, the Company had revenues relating to investment as follows:

- Interest income and dividend income from investments of Baht 33.18 million and Baht 181.81 million, respectively (30 June 2019: Baht 53.17 million and Baht 135.66 million, respectively)

- Consideration received from selling investments of Baht 3,397.99 million (30 June 2019: Baht 4,541.77 million) and gain from selling investments of Baht 95.44 million (30 June 2019: Baht 72.73 million)

For the six-month period ended 30 June 2020, the Company had revenues relating to investment as follows:

- Interest income and dividend income from investments of Baht 66.85 million and Baht 260.81 million, respectively (30 June 2019: Baht 99.61 million and Baht 327.28 million, respectively)

- Consideration received from selling investments of Baht 7,581.50 million (30 June 2019: Baht 8,315.59 million) and gain from selling investments of Baht 112.65 million (30 June 2019: Baht 109.68 million)


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12. Investment property, net

Building and Land improvements Total Baht Baht Baht

As at 1 January 2020 Cost 139,914,078 127,214,722 267,128,800 Less Accumulated depreciation - (109,038,739) (109,038,739)

Net book amount 139,914,078 18,175,983 158,090,061

For the six-month period ended 30 June 2020 Opening net book amount 139,914,078 18,175,983 158,090,061 Transferred in/(out) (Note 13.1) - 1,552,747 1,552,747 Depreciation - (1,056,999) (1,056,999)

Closing net book amount 139,914,078 18,671,731 158,585,809

As at 30 June 2020 Cost 139,914,078 128,767,469 268,681,547 Less Accumulated depreciation - (110,095,738) (110,095,738)

Net book amount 139,914,078 18,671,731 158,585,809


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13. Property, plant and equipment, net

13.1 Property, plant and equipment

Buildings and Fixture and Assets under Land improvements equipment Vehicles construction Total Baht Baht Baht Baht Baht Baht

At 1 January 2020 Cost 461,695,361 1,161,161,890 581,916,829 127,373,066 17,950,464 2,350,097,610 Less Accumulated depreciation - (347,347,212) (425,699,941) (103,154,060) - (876,201,213)

Net book amount 461,695,361 813,814,678 156,216,888 24,219,006 17,950,464 1,473,896,397

For the six-month period ended 30 June 2020 Opening net book amount 461,695,361 813,814,678 156,216,888 24,219,006 17,950,464 1,473,896,397 Additions 9,020,802 6,881,784 16,869,114 165,000 3,487,225 36,423,925 Disposal - - - (9,524) - (9,524) Transfers in/(out) - 14,647,438 5,781,215 - (20,428,653) - Transferred from (to) investment properties (Note 12) - (1,552,747) - - - (1,552,747) Depreciation charge - (29,837,952) (24,069,529) (4,384,055) - (58,291,536)

Closing net book amount 470,716,163 803,953,201 154,797,688 19,990,427 1,009,036 1,450,466,515

At 30 June 2020 Cost 470,716,163 1,181,138,365 604,567,158 124,452,832 1,009,036 2,381,883,554 Less Accumulated depreciation - (377,185,164) (449,769,470) (104,462,405) - (931,417,039)

Net book amount 470,716,163 803,953,201 154,797,688 19,990,427 1,009,036 1,450,466,515


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13.2 Right-of-use assets

Land Buildings Vehicles Total Baht Baht Baht Baht

At 1 January 2020 Cost 37,221,512 9,695,371 82,652,014 129,568,897 Less Accumulated amortisation - - (12,285,789) (12,285,789)

Net book amount 37,221,512 9,695,371 70,366,225 117,283,108


Opening net book amount 37,221,512 9,695,371 70,366,225 117,283,108 Additions - 3,224,538 8,725,159 11,949,697 Amortisation charge (3,403,942) (2,786,793) (9,471,744) (15,662,479)

Closing net book amount 33,817,570 10,133,116 69,619,640 113,570,326

At 30 June 2020 Cost 37,221,512 12,919,909 91,377,173 141,518,594 Less Accumulated amortisation (3,403,942) (2,786,793) (21,757,533) (27,948,268)

Net book amount 33,817,570 10,133,116 69,619,640 113,570,326

The related lease liabilities are disclosed in Note 18. For the six-month period ended 30 June 2020, the lease payments resulting from lease and service contracts which are not capitalised comprised of variable lease payments amounting to Baht 1.32 million, short-term leases amounting to Baht 13.02 million, and low-value leases amounting to Baht 0.67 million

14. Intangible assets, net

Computer Computer Software under software installation Total Baht Baht Baht

At 1 January 2020 Cost 273,286,306 24,618,160 297,904,466 Less Accumulated amortisation (236,468,304) - (236,468,304)

Net book amount 36,818,002 24,618,160 61,436,162


Opening net book amount 36,818,002 24,618,160 61,436,162 Additions 3,026,236 4,021,400 7,047,636 Transfers in/(out) 1,275,000 (1,275,000) - Amortisation charge (9,348,530) - (9,348,530)

Closing net book amount 31,770,708 27,364,560 59,135,268

At 30 June 2020 Cost 277,587,542 27,364,560 304,952,102 Less Accumulated amortisation (245,816,834) - (245,816,834)

Net book amount 31,770,708 27,364,560 59,135,268


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15. Deferred tax asset, net

Deferred tax assets and deferred tax liabilities are as follows:


Deferred tax assets 1,121,223,020 857,599,098 Deferred tax liabilities (165) -

Deferred tax asset, net 1,121,222,855 857,599,098

The movement in deferred tax for the six-month period ended 30 June 2020 is as follows: 30 June 2020 (Unaudited)

Balance as of

1 January 2020 Charges to

profit or loss

Charges to other comprehensive

income Balance as of 30 June 2020

Baht Baht Baht Baht

Deferred tax assets Provision for losses incurred but not yet reported (IBNR) 53,086,133 1,479,071 - 54,565,204 Allowance for doubtful accounts 106,699,669 7,739,088 - 114,438,757 Allowance for impairment of Investments 26,207,509 - - 26,207,509 Loss reserves 119,399,902 26,830,205 - 146,230,107 Employee benefit liabilities 80,773,490 4,512,846 - 85,286,336 Unrealised actuarial gains and losses 2,544,881 - - 2,544,881 Unrealised losses on the change in value of investments measured at fair value through other comprehensive Income 250,542,274 - 210,207,757 460,750,031 Unearned premium reserves 204,516,340 (4,362,920) - 200,153,420 Depreciation of intangible assets 12,957,966 (307,363) - 12,650,603 Unallocated loss adjustment expense reserve (ULAE) 17,872,828 523,344 - 18,396,172

874,600,992 36,414,271 210,207,757 1,121,223,020

Deferred tax liabilities Unrealised gain on the change in value of trading securities - (165) - (165)

- (165) - (165)

Deferred tax assets, net 874,600,992 36,414,106 210,207,757 1,121,222,855


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16. Insurance contract liabilities

30 June 2020 (Unaudited) 31 December 2019 (Audited)

Insurance Liabilities Insurance Liabilities contract recovered from contract recovered from liabilities reinsurance Net liabilities reinsurance Net Baht Baht Baht Baht Baht Baht

Claim liabilities - Reported claims 6,026,198,136 (4,920,484,216) 1,105,713,920 4,230,981,905 (3,116,630,110) 1,114,351,795 - Claims incurred but not reported 1,002,237,803 (637,430,925) 364,806,878 1,288,623,020 (933,828,217) 354,794,803 Premium liabilities - Unearned premium reserve 12,245,843,411 (8,109,675,766) 4,136,167,645 12,181,819,166 (8,546,880,479) 3,634,938,687

Total 19,274,279,350 (13,667,590,907) 5,606,688,443 17,701,424,091 (12,597,338,806) 5,104,085,285


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16.1 Claim liabilities


Beginning balance for the period/year 5,519,604,925 7,807,267,115 Claims and loss adjustment expenses incurred during the period/year 6,949,580,418 10,398,957,014 Change in claim reserve of claim incurred in previous period/year 765,435,042 (978,802,261) Change in claim reserve from change in assumptions during the period/year (286,385,216) (42,377,514) Claims and loss adjustment expenses paid during the period/year (5,919,799,230) (11,665,439,429)

Closing balance for the period/year 7,028,435,939 5,519,604,925

16.2 Unearned premium reserve


Beginning balance for the period/year 12,181,819,166 11,136,189,909 Premium written for the period/year 11,615,544,577 21,846,249,486 Premium earned in the period/year (11,551,520,332) (20,800,620,229)

Closing balance for the period/year 12,245,843,411 12,181,819,166

As at 30 June 2020, the Company had not provided for unexpired risk reserve for the amount of Baht 7,067.47 million (31 December 2019: Baht 6,099.22 million) since unexpired risk reserve was lower than unearned premium reserve.

17. Due to reinsurers


Outward premium payables 3,338,260,661 2,582,952,293 Amounts withheld on reinsurance treaties 2,924,031,844 2,654,338,339

Total due to reinsurers 6,262,292,505 5,237,290,632


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18. Other liabilities


Investment account payables 80,000,000 - Subrogation payables 40,567,954 3,312,779 Suspense accounts 353,253,785 304,482,055 Lease liabilities 106,511,217 18,103,926 Accrued expenses 163,702,408 7,646,297 Others 356,425,701 742,717,640

Total other liabilities 1,100,461,065 1,076,262,697

18.1 Lease liabilities

The maturity analysis of lease liabilities are aged as follows:


Maturing - Within 1 year 33,333,135 - Between 1 to 2 years 24,244,822 - Between 2 to 3 years 19,943,642 - Between 3 to 4 years 14,377,892 - Between 4 to 5 years 5,174,999 - Later than 5 years 9,436,727

Total 106,511,217

Including: - Principal 116,727,650 - Interest (10,216,433) For the six-month periods ended 30 June 2020, interest expense on lease liabilities amounted to Baht 2.23 million is recorded as “Operating expenses” in the statement of comprehensive income.

19. Dividends

At the Board of Directors’ meeting no. 3 held on 31 March 2020, the directors approved an interim dividend payment of Baht 1.15 per share, totalling to the amount of Baht 690,000,000 instead of an annual dividend payment for the year 2019. Such dividend was paid to the shareholders on 27 April 2020. At the Annual General Meeting of the shareholders of the Company held on 23 April 2019, the shareholders approved the payment of annual dividend from net profit for the year ended 31 December 2018 at Baht 1 per share, totalling Baht 600,000,000 and appropriate its retained earnings to general reserve amounting to Baht 76,558,101.


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20. Operating expenses

For the three-month

period ended

(Unaudited) (Unaudited) 30 June 30 June 2020 2019 Baht Baht

Personnel expenses which are not expenses for underwriting and claims 201,170,887 250,741,985 Premises and equipment expenses which are not expenses for underwriting and claims 106,376,438 89,150,238 Bad debts and doubtful accounts 30,335,477 23,632,671 Directors’ remuneration 2,148,000 22,398,000 Other operating expenses 195,328,910 127,195,602

Total operating expenses 535,359,712 513,118,496

For the six-month

period ended


Personnel expenses which are not expenses for underwriting and claims 407,234,939 471,343,892 Premises and equipment expenses which are not expenses for underwriting and claims 194,318,243 180,867,769 Bad debts and doubtful accounts 83,829,630 44,918,627 Directors’ remuneration 4,269,000 24,546,000 Other operating expenses 371,875,365 210,307,283

Total operating expenses 1,061,527,177 931,983,571

21. Income tax expense

Income tax expense are as follows:

For the three-month

period ended


Current income tax 115,887,584 96,205,734 Deferred income tax 2,259,896 (20,889,018)

Total income tax expense 118,147,480 75,316,716


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For the six-month

period ended


Current income tax 296,759,321 207,972,764 Deferred income tax (36,414,106) (10,257,171)

Total income tax expense 260,345,215 197,715,593

The interim income tax expense is accrued based on management’s estimate using the tax rate that would be applicable to expected total annual earnings. The estimated average annual tax rate used is 20% (the estimated tax rate for the interim period 30 June 2019 was 17% per annum).

22. Expected credit loss

For the three-month

period ended


Investments in securities (204,990)

Total expected credit loss (204,990)

For the six-month

period ended


Investments in securities (1,186,917)

Total expected credit loss (1,186,917)

For the three-month and the six-month period ended 30 June 2020, there is a reversal of allowance for expected credit loss amounting to Baht 204,990 and Baht 1,186,917, respectively which caused from changes in credit risk of financial assets.


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23. Earnings per share

Basic earnings per share is calculated by dividing profit for the period attributable to shareholders by the weighted average number of ordinary shares in issue during the period. The following table sets forth the computation of basic earnings per share:

For the three-month

period ended


30 June 30 June

2020 2019

Net profit attributable to shareholders (Baht) 525,019,989 433,416,315 Weighted average number of ordinary shares outstanding (Shares) 600,000,000 600,000,000 Basic earnings per share (Baht) 0.87 0.72

For the six-month

period ended


30 June 30 June

2020 2019

Net profit attributable to shareholders (Baht) 1,052,569,871 953,329,775 Weighted average number of ordinary shares outstanding (Shares) 600,000,000 600,000,000 Basic earnings per share (Baht) 1.75 1.59 There are no potential dilutive ordinary shares in issue for the six-month periods ended 30 June 2020 and 2019.

24. Related parties transactions

Enterprises and individuals that, directly or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Company and close members of the family of these individuals and companies associated with these individuals also constitute related parties. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form. Related parties are as follows:

Company’s name Nature of relationship

PTT Public Company Limited 13.33% of shares held in the Company and common director Government Saving Bank 11.20% of shares held in the Company and common director Krung Thai Bank Public Company Limited 10.00% of shares held in the Company and common director Dhipaya Life Assurance Public Company Limited 17.76% of shares held by the Company and common director Dhipaya Insurance Co., Ltd. (Lao PDR) 10.00% of shares held by the Company and common director Community and Estate Management Co., Ltd. 10.00% of shares held by the Company and common director Road Accident Victims Protection Co., Ltd. 3.29% of shares held by the Company and common director Vejthani Public Company Limited 1.54% of shares held by the Company and common director


35

During the period, the Company has significant business transactions with related parties. These transactions have been conducted on commercial terms in the ordinary course of businesses. Below is a summary of those transactions. (Unaudited) (Unaudited) 30 June 30 June 2020 2019 Baht Baht Pricing policies

Statement of comprehensive income for the three-month period ended

Premium written 110,074,685 76,886,389 Normal commercial terms for major customers.

Commission and brokerage expenses

141,890,234

115,271,246

Rate of commission terms for depending on types of insurance that not over the rate under the regulation.

Net investment income Interest income 5,744,667 4,648,229 Interest rate 0.25 - 1.75% per annum. Dividend received 607,500 - According to the payment declaration.

Gains on investments 1,038,804 - Offer price

Other income Rental revenue 1,496,085 1,496,085 Contract price based on market rate. Service revenue 2,200,125 2,200,125 Contract price based on market rate.

Statement of comprehensive income for the six-month period ended

Premium written 176,060,002 154,952,864 Normal commercial terms for major customers.

Commission and brokerage expenses

283,010,454

233,659,487

Rate of commission terms for depending on types of insurance that not over the rate under the regulation.

Net investment income

Interest income 10,270,789 8,386,963 Interest rate 0.25 - 1.75% per annum. Dividend received 607,500 99,531,400 According to the payment declaration.

Gains on investments 342,286 - Offer price

Other income Rental revenue 2,992,170 5,104,290 Contract price based on market rate. Service revenue 4,400,250 4,400,250 Contract price based on market rate.


36

The Company has the following assets, which mainly arise from investments, and liabilities, which are significant to related companies:


Statement of financial position

Investments in securities, net Stocks

PTT Public Company Limited 8,062,500 - Dhipaya Life Assurance Public Company Limited 323,254,398 564,011,264 Dhipaya Insurance Co., Ltd. (Lao PDR) 510,310 6,400,000 Community and Estate Management Co., Ltd. 856,485 2,000,000 Road Accident Victims Protection Co., Ltd. 162,470,222 3,286,210 Vejthani Public Company Limited 13,761,500 18,500,000

508,915,415 594,197,474 Less Allowance for impairment (8,326,400) (8,326,400)

Total 500,589,015 585,871,074

Debentures PTT Public Company Limited 115,976,940 29,751,484 Government Savings Bank 60,419,008 61,402,375

Total 176,395,948 91,153,859

Deposits at financial institutions Government Savings Bank 1,039,344,897 1,026,566,764 Krung Thai Bank Public Company Limited 626,629,186 472,368,872

Total 1,665,974,083 1,498,935,636

Accrued investment income Government Savings Bank 17,524,235 8,567,123 Krung Thai Bank Public Company Limited 322,097 359,544

Total 17,846,332 8,926,667


37


Statement of financial position (Cont’d) Premium receivables PTT Public Company Limited 1,383,746 5,352,281 Government Savings Bank 27,463,810 9,304,859 Krung Thai Bank Public Company Limited 24,042,827 32,591,060 Road Accident Victims Protection Co., Ltd. - 407,136 Vejthani Public Company Limited 57,636 6,247,458 Dhipaya Life Assurance Public Company Limited 455,536 -

Total 53,403,555 53,902,794

Amount due from reinsurance Dhipaya Insurance Co., Ltd. (Lao PDR) 42,160,706 108,563,171

Total 42,160,706 108,563,171

Accrued commission expenses Government Savings Bank 50,174,823 51,047,209 Krung Thai Bank Public Company Limited 40,909,780 34,713,355

Total 91,084,603 85,760,564

Other liabilities PTT Public Company Limited 4,972,863 5,663,739 Government Savings Bank 268,388 16,979 Krung Thai Bank Public Company Limited 2,832,323 4,464 Dhipaya Life Assurance Public Company Limited 3,696,210 3,696,210

Total 11,769,784 9,381,392

Key management compensation The compensation paid or payable to key management for the three-month periods ended 30 June 2020 and 2019 are shown below:


Short-term employee benefits 22,166,073 43,085,760 Post-employee benefits 1,063,115 3,102,308 Other long-term employee benefits 16,154 15,037

Total 23,245,342 46,203,105


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The compensation paid or payable to key management for the six-month periods ended 30 June 2020 and 2019 are shown below:


Short-term employee benefits 44,305,147 63,411,153 Post-employee benefits 2,126,231 6,204,616 Other long-term employee benefits 32,307 30,074

Total 46,463,685 69,645,843

25. Assets pledged with registrar

As at 30 June 2020, the Company had placed bank deposit amount of Baht 14 million (31 December 2019: Baht 14 million) as collateral with the registrar in accordance with the Section 19 of Insurance Act B.E. 2535 (Note 7).

26. Assets reserve pledged with registrar

As at 30 June 2020, government bonds, treasury bills and debentures amount of Baht 1,015.36 million (31 December 2019: Baht 610.46 million) had been placed as collateral against premium reserve with the registrar (Note 11).


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27. Financial information by segment

The Company’s operations involve only its single business being of non-life insurance, and are carried on in the single geographic area in Thailand. As a result, all of the revenues, operating profits and assets as reflected in this interim financial information pertain to the aforementioned business segment and geographical area. For the purposes of administration, the Company has reported operating segments divided into categories of products including fire insurance, marine and transportation insurance, motor insurance, personal accident insurance and miscellaneous insurance as segment income and profit for the three-month and six-month periods ended 30 June 2020 and 2019 are as follows:

For the three-month period ended 30 June 2020 (Unaudited)

Marine and Personal

Fire transportation Motor accident Miscellaneous Total

Baht Baht Baht Baht Baht Baht

Underwriting revenues Premium written 728,269,610 127,440,537 1,114,303,822 1,527,533,145 2,014,545,382 5,512,092,496 Less Ceded premium (232,180,655) (110,759,300) (533,873,442) (1,254,213,594) (1,493,280,203) (3,624,307,194)

Net premium written 496,088,955 16,681,237 580,430,380 273,319,551 521,265,179 1,887,785,302 Less Increase (decrease) in unearned premium reserves (187,488,766) (4,554,944) 13,889,324 336,287,884 (92,011,923) 66,121,575

Net premium earned 308,600,189 12,126,293 594,319,704 609,607,435 429,253,256 1,953,906,877 Fee and commission income 103,430,615 20,903,709 179,298,090 459,268,913 292,371,773 1,055,273,100

Total underwriting revenues 412,030,804 33,030,002 773,617,794 1,068,876,348 721,625,029 3,009,179,977


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Marine and Personal



Underwriting expenses Gross Insurance claims and loss adjustment expenses 94,127,708 81,850,747 634,876,335 1,402,629,537 807,822,396 3,021,306,723 Less Insurance claims and loss adjustment expenses recovery (15,404,717) (76,086,649) (297,578,137) (931,901,116) (597,692,573) (1,918,663,192) Commission and brokerage expenses 145,201,303 9,755,815 132,475,463 158,722,089 145,885,474 592,040,144 Other underwriting expenses 91,875,181 5,221,161 123,008,895 162,488,352 76,876,105 459,469,694

Total underwriting expenses before operating expenses 315,799,475 20,741,074 592,782,556 791,938,862 432,891,402 2,154,153,369

Operating expenses 535,359,712

Total underwriting expenses 2,689,513,081

Gains on underwriting 319,666,896 Income on investments, net 214,983,310 Gains on investments 95,441,945 Other income 12,870,328 Net impairment losses on financial assets 204,990

Profit before income tax 643,167,469 Income tax expense (118,147,480)

Profit for the period 525,019,989


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Fire

Marine and transportation

Motor

Personal accident

Miscellaneous

Total


Underwriting revenues Premium written 649,321,709 69,841,674 933,663,400 1,557,787,664 1,209,792,329 4,420,406,776 Less Ceded premium (206,986,429) (59,864,306) (480,014,843) (1,172,069,210) (1,030,364,870) (2,949,299,658)

Net premium written 442,335,280 9,977,368 453,648,557 385,718,454 179,427,459 1,471,107,118 Less Increase (decrease) in unearned premium reserves (152,403,759) 6,476,129 (71,760,209) 81,182,265 12,494,859 (124,010,715)

Net premium earned 289,931,521 16,453,497 381,888,348 466,900,719 191,922,318 1,347,096,403 Fee and commission income 91,231,146 16,547,754 168,960,778 500,897,630 175,823,315 953,460,623

Total underwriting revenues 381,162,667 33,001,251 550,849,126 967,798,349 367,745,633 2,300,557,026

Underwriting expenses Gross insurance claims and loss adjustment expenses (62,350,251) 56,987,243 553,305,757 1,147,646,157 328,541,957 2,024,130,863 Less Insurance claims and loss adjustment expenses recovery 95,476,813 (52,838,005) (300,024,761) (828,153,877) (252,890,877) (1,338,430,707) Commission and brokerage expenses 132,786,327 7,287,081 112,243,146 207,605,902 105,679,041 565,601,497 Other underwriting expenses 79,616,607 4,580,375 107,923,700 62,906,052 41,454,126 296,480,860

Total underwriting expenses before operating expenses 245,529,496 16,016,694 473,447,842 590,004,234 222,784,247 1,547,782,513



Gains on underwriting 239,656,017 Income on investments, net 188,831,030 Gains on investments 72,733,986 Other income 7,511,998

Profit before income tax 508,733,031 Income tax expense (75,316,716)



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For the six-month period ended 30 June 2020 (Unaudited)

Marine and Personal



Underwriting revenues Premium written 1,094,684,007 249,942,618 2,441,529,937 3,256,621,273 4,572,766,742 11,615,544,577 Less Ceded premium (360,086,727) (214,789,985) (1,173,184,977) (2,438,859,478) (3,276,524,277) (7,463,445,444)

Net premium written 734,597,280 35,152,633 1,268,344,960 817,761,795 1,296,242,465 4,152,099,133 Less Increase (decrease) in unearned premium reserves (129,198,064) (12,387,866) (132,438,813) 389,684,729 (616,888,944) (501,228,958)

Net premium earned 605,399,216 22,764,767 1,135,906,147 1,207,446,524 679,353,521 3,650,870,175 Fee and commission income 154,005,764 43,439,881 386,724,526 877,389,502 749,929,412 2,211,489,085 Total underwriting revenues 759,404,980 66,204,648 1,522,630,673 2,084,836,026 1,429,282,933 5,862,359,260

Underwriting expenses Gross Insurance claims and loss adjustment expenses 162,180,402 167,757,673 1,332,320,760 2,273,041,424 3,244,281,815 7,179,582,074 Less Insurance claims and loss adjustment expenses recovery (38,096,511) (155,577,234) (638,998,086) (1,465,222,679) (2,966,772,922) (5,264,667,432) Commission and brokerage expenses 214,043,660 21,438,060 290,792,217 331,769,889 320,933,223 1,178,977,049 Other underwriting expenses 147,640,237 10,117,963 274,694,555 293,760,285 141,925,007 868,138,047

Total underwriting expenses before operating expenses 485,767,788 43,736,462 1,258,809,446 1,433,348,919 740,367,123 3,962,029,738

Operating expenses 1,061,527,177


Gains on underwriting 838,802,345 Income on investments, net 327,658,618 Gains on investments 112,652,801 Other income 32,614,405 Net impairment losses on financial assets 1,186,917

Profit before income tax 1,312,915,086 Income tax expense (260,345,215)

Profit for the period 1,052,569,871


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For the six-month period ended 30 June 2019 (Unaudited)

Fire

Marine and transportation

Motor

Personal accident

Miscellaneous

Total


Underwriting revenues Premium written 1,020,829,550 186,426,906 1,804,231,364 3,608,086,503 2,682,992,634 9,302,566,957 Less Ceded premium (352,619,769) (164,155,455) (926,964,151) (2,715,370,633) (2,298,966,715) (6,458,076,723)

Net premium written 668,209,781 22,271,451 877,267,213 892,715,870 384,025,919 2,844,490,234 Less Increase (decrease) in unearned premium reserves (92,956,611) 13,368,858 (142,627,896) 62,466,844 (1,919,879) (161,668,684)

Net premium earned 575,253,170 35,640,309 734,639,317 955,182,714 382,106,040 2,682,821,550 Fee and commission income 151,516,133 35,602,741 303,584,511 980,853,747 358,621,281 1,830,178,413

Total underwriting revenues 726,769,303 71,243,050 1,038,223,828 1,936,036,461 740,727,321 4,512,999,963

Underwriting expenses Gross insurance claims and loss adjustment expenses (145,508,292) 88,722,392 1,048,659,625 2,192,678,401 937,083,126 4,121,635,252 Less Insurance claims and loss adjustment expenses recovery 212,103,326 (80,022,870) (564,321,855) (1,582,514,391) (812,078,284) (2,826,834,074) Commission and brokerage expenses 199,987,338 17,738,346 215,317,943 528,201,143 191,012,837 1,152,257,607 Other underwriting expenses 132,123,117 9,585,935 200,516,177 120,157,412 78,098,700 540,481,341

Total underwriting expenses before operating expenses 398,705,489 36,023,803 900,171,890 1,258,522,565 394,116,379 2,987,540,126



Gains on underwriting 593,476,266 Income on investments, net 426,890,167 Gains on investments 109,681,626 Other income 20,997,309

Profit before income tax 1,151,045,368 Income tax expense (197,715,593)



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The following table presents segment assets and liabilities of the Company’s operating segments as at 30 June 2020 and 31 December 2019 are as follows:

Fire Marine and

transportation

Motor Personal accident

Miscellaneous

Unallocated assets

Total

Baht Baht Baht Baht Baht Baht Baht

Assets As at 30 June 2020 1,827,429,751 612,664,402 2,543,621,748 7,210,715,866 10,915,659,830 19,393,803,381 42,503,894,978

As at 31 December 2019 1,414,404,783 553,689,942 2,216,117,052 8,495,190,421 9,577,342,676 18,643,568,948 40,900,313,822

Liabilities As at 30 June 2020 4,829,816,549 678,869,632 4,806,077,806 9,961,772,347 12,568,482,972 1,850,682,074 34,695,701,380

As at 31 December 2019 4,332,092,446 610,772,259 4,253,082,986 11,236,337,937 10,469,191,204 1,641,280,527 32,542,757,359


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28. Restricted assets and commitment

As at 30 June 2020, bonds of Baht 152.62 million (31 December 2019: Baht 152.75 million) and government lottery savings of Baht 10 million (31 December 2019: Baht 10 million) were used as collateral in case where the insured drivers are alleged offenders and as guarantees for underwriting business, and bank deposits of Baht 40.40 million (31 December 2019: 40.55 million) were used as collateral in case where the insured drivers are alleged offenders and as guarantee for credit lines with banks (Notes 7 and 11). As at 30 June 2020, the Company had the undrawn committed borrowing facilities of Baht 10 million at the fixed term deposit interest rate plus 2% per year (31 December 2019: Baht 10 million with fixed term deposit interest rate plus 2% per year).

29. Contingent liabilities and commitment

Operating lease and building construction obligations As at 30 June 2020, the Company had entered into the lease agreements with third parties for the building area, tools, constructions and other services over the period of 1 - 5 years in which the Company is to be liable for lease payment of Baht 92.70 million for 1 year (31 December 2019: Baht 114.94 million) and Baht 26.90 million for over 1 year respectively (31 December 2019: Baht 113.78 million). Litigation cases As at 30 June 2020, the Company was still under legal process in the normal course of the business as the Company was litigated as the insurer with the prosecution value of Baht 469.34 million (31 December 2019: Baht 612.21 million). However, the Company’s value of contingent liabilities from outstanding litigation cases should not be more than the policy coverage amount of Baht 425.68 million (31 December 2019: Baht 540.91 million). Those litigation cases have been still ongoing and the Company expects to win most of these cases. Nevertheless, the Company has already recorded related provision for contingent loss of Baht 287.38 million in the interim financial information (31 December 2019: Baht 399.40 million). Guarantees As at 30 June 2020, the Company had unused letters of guarantee issued by banks under the name of the Company for underwriting business of Baht 12.73 million (31 December 2019: Baht 19.04 million).

30. Event after the Statement of Financial Position date

At the Annual General Meeting of the shareholders of the Company held on 9 July 2020, the shareholders approved appropriate retained earnings to general reserve amounting to Baht 93,159,694. At the Extraordinary Board of Directors’ meeting no. 1/2020 held on 15 July 2020, the directors approved the restructuring plan of shareholding structure, management and other operations regarding to establish the Holding Company under the name “Dhipaya Group Holdings Public Company Limited” which will be a public company limited.

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