Issue link: http://www.e-digitaleditions.com/i/826230
TMR 2016 Annual Repor t | 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS &GEGODGTCPF 2. BASIS OF PREPARATION (a) Statement of compliance 6JGEQPUQNKFCVGFƒPCPEKCNUVCVGOGPVUJCXGDGGPRTGRCTGFKPCEEQTFCPEGYKVJ+PVGTPCVKQPCN(KPCPEKCN4GRQTVKPI5VCPFCTFU ũ+(45ŪCUKUUWGF D[VJG+PVGTPCVKQPCN#EEQWPVKPI5VCPFCTFU$QCTF ũ+#5$Ū 9JGP+(45KUUKNGPVCUKVKUKPTGURGEVQHVJGOGCUWTGOGPVQHEGTVCKPKPUWTCPEGRTQFWEVUVJG+(45HTCOGYQTM +(45+PUWTCPEG%QPVTCEVU CNNQYUTGHGTGPEGVQCPQVJGTEQORTGJGPUKXGDQF[QHCEEQWPVKPIRTKPEKRNGU#EEQTFKPIN[VQVJGGZVGPVVJCV+(45FQGUPQVURGEKH[VJGTGEQIPKVKQP QTOGCUWTGOGPVQHKPUWTCPEGEQPVTCEVUVTCPUCEVKQPUTGRQTVGFKPVJGUGEQPUQNKFCVGFƒPCPEKCNUVCVGOGPVUJCXGDGGPRTGRCTGFKPCEEQTFCPEG YKVJCPQVJGTEQORTGJGPUKXGDQF[QHCEEQWPVKPIRTKPEKRNGUHQTKPUWTCPEGEQPVTCEVUPCOGN[7PKVGF5VCVGU)##2 (b) Basis of measurement 6JGEQPUQNKFCVGFƒPCPEKCNUVCVGOGPVUCTGRTGUGPVGFKP7PKVGF5VCVGU&QNNCTUYJKEJKUVJG%QORCP[ŦUTGRQTVKPIEWTTGPE[6JG[CTGEQORKNGFQP CIQKPIEQPEGTPDCUKU6JGEQPUQNKFCVGFƒPCPEKCNUVCVGOGPVUJCXGDGGPRTGRCTGFQPVJGJKUVQTKECNEQUVDCUKU5GG0QVGHQTGZEGRVKQPUVQVJKU (c) Use of estimates and judgments 6JGRTGRCTCVKQPQHVJGEQPUQNKFCVGFƒPCPEKCNUVCVGOGPVUKPEQPHQTOKV[YKVJ+(45TGSWKTGUOCPCIGOGPVVQOCMGLWFIOGPVUGUVKOCVGUCPF assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses. Actual results may differ from these estimates. 'UVKOCVGUCPFWPFGTN[KPICUUWORVKQPUCTGTGXKGYGFQPCPQPIQKPIDCUKU4GXKUKQPUVQCEEQWPVKPIGUVKOCVGUCTGTGEQIPKUGFKPVJGRGTKQFKP which the estimate is revised and in any future periods affected. 6JGOQUVUKIPKƒECPVGUVKOCVGOCFGD[OCPCIGOGPVKUKPTGNCVKQPVQQWVUVCPFKPINQUUGUCPFNQUUGZRGPUGU'UVKOCVGUKPTGNCVKQPVQNQUUGUCPF NQUUGZRGPUGUCTGFKUEWUUGFKP0QVG DŢ+PUWTCPEG%QPVTCEVU#NUQTGHGTVQ0QVGŢ+PUWTCPEG.KCDKNKVKGU 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of consolidation 6JGƒPCPEKCNUVCVGOGPVUEQPUQNKFCVGVJGCEEQWPVUQHVJG%QORCP[KVUDTCPEJGUCPFKVUYJQNN[QYPGFUWDUKFKCTKGU#UWDUKFKCT[KUCPGPVKV[ VJCVKUEQPVTQNNGFD[6/4#)6/4#)EQPVTQNUCPGPVKV[YJGPKVKUGZRQUGFVQQTJCUVJGTKIJVUVQXCTKCDNGTGVWTPUHTQOKVUKPXQNXGOGPVYKVJVJG GPVKV[CPFJCUVJGCDKNKV[VQCHHGEVVJQUGTGVWTPUVJTQWIJKVURQYGTQXGTVJGGPVKV[6JGƒPCPEKCNUVCVGOGPVUQHVJGUWDUKFKCTKGUCTGKPENWFGFKPVJG EQPUQNKFCVGFƒPCPEKCNUVCVGOGPVUHTQOVJGFCVGQPYJKEJEQPVTQNEQOOGPEGUWPVKNVJGFCVGQPYJKEJEQPVTQNEGCUGU6JGƒPCPEKCNUVCVGOGPVU QHVJGUWDUKFKCTKGUCTGRTGRCTGFHQTVJGUCOGTGRQTVKPI[GCTCUVJGRCTGPVEQORCP[WUKPIEQPUKUVGPVCEEQWPVKPIRQNKEKGU#NNUKIPKƒECPV intercompany transactions and balances are eliminated on consolidation. (b) Insurance contracts %NCUUKƒECVKQP %QPVTCEVUVJCVVTCPUHGTUKIPKƒECPVKPUWTCPEGTKUMCTGEQPUKFGTGFKPUWTCPEGEQPVTCEVUYJKNGEQPVTCEVUYKVJQWVUKIPKƒECPVKPUWTCPEGTKUMCTG ENCUUKƒGFCUKPXGUVOGPVEQPVTCEVU Reinsurance premiums assumed and acquisition costs 4GKPUWTCPEGRTGOKWOUCUUWOGFCTGTGEQTFGFQPVJGCEETWCNUDCUKUCPFCTGKPENWFGFKPKPEQOGQXGTVJGRGTKQFQHGZRQUWTGVQTKUMYKVJVJG WPGCTPGFRQTVKQPFGHGTTGFKPVJGEQPUQNKFCVGFDCNCPEGUJGGV2TGOKWOUCUUWOGFCTGUVCVGFDGHQTGVJGFGFWEVKQPUQHDTQMGTCIGEQOOKUUKQPU and taxes. (QTGZEGUUQHNQUUEQPVTCEVUVJGWNVKOCVGRTGOKWOKUGUVKOCVGFCVVJGEQPVTCEVKPEGRVKQP5WDUGSWGPVRTGOKWOCFLWUVOGPVUKHCP[CTGTGEQTFGF in the period in which they are determined. For proportional treaties, the amount of premium is normally estimated at inception by management DCUGFQPKPHQTOCVKQPRTQXKFGFD[VJGEGFKPIEQORCP[6JG%QORCP[CEEQWPVUHQTUWEJRTGOKWOWUKPIKPKVKCNGUVKOCVGUYJKEJCTGTGXKGYGF regularly with respect to the actual premium reported by the ceding company. Changes in estimates are recognised in the period in which they are determined. For certain property catastrophe contracts, the Company earns reinstatement premiums upon the occurrence of a loss under the reinsurance EQPVTCEV4GKPUVCVGOGPVRTGOKWOUCTGECNEWNCVGFKPCEEQTFCPEGYKVJVJGEQPVTCEVVGTOUDCUGFWRQPVJGWNVKOCVGNQUUGUVKOCVGCUUQEKCVGF with each contract.