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Tokio Marine Safety Insurance (Thailand) Public Company Limited
Notes to the Financial Statements

Tokio Marine Safety Insurance (Thailand) Public Company Limited
For the year ended 31 December 2023
Notes to the Financial Statements
For the year ended 31 December 2023

c) Impairment of financial assets

The Company has 3 types of financial assets that are subject to the expected credit loss
model:

 Cash and cash equivalent
 Debt instruments to be measured at amortised cost
 Debt instruments designated at fair value through other comprehensive income
The expected credit loss is measured on either a 12-month or lifetime basis depending on whether
the significant increase in credit risk has occurred since initial recognition or whether an asset is
considered to be credit-impaired financial asset. The expected credit loss is the discounted product
of probability of default, loss given default and exposure at default, defined as follows;
 The probability of default represents the likelihood of a borrower defaulting on its financial
obligation either over the next 12 months or over the remaining lifetime of the obligation.
 The exposure at default is based on the amounts that the Company expects to be
owed at the time of default, over the next 12 months or over the remaining lifetime.
 The loss given default represents the Company’s expectation of the extent of loss on
a defaulted exposure. The loss given default varies by type of borrower, type and seniority
of claim and availability of collateral or other credit support. The loss given default is
calculated on a 12-month or over the remaining lifetime of the loan.
The expected credit loss is determined by projecting the probability of default, loss given
default and exposure at default for each future month and for each individual exposure or
collective segment. These three components are multiplied together and adjusted for the
likelihood of survival. This effectively calculates an expected credit loss for each future
month, which is then discounted back to the reporting date and summed. The discount rate
used in the expected credit loss calculation is the original EIR.

There have been no significant changes in estimation techniques or significant assumptions
made during the reporting period.

Debt instruments designated at fair value through other comprehensive income (FVOCI)

The Company considers that all debt investments measured at amortised cost has low credit
risk, and the loss allowance recognised during the period was therefore limited to 12 months
expected losses. Management consider ‘low credit risk’ for bonds to be an investment grade
credit rating with at least one major rating agency. Other instruments are considered to be low
credit risk when they have a low risk of default and the issuer has a strong capacity to meet its
contractual cash flow obligations.

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