The Securities and Exchange Commission of Pakistan (SECP) has amended the General Takaful Accounting Regulations, 2019, for takaful companies to disclose their takaful results in their published financial statements.
In a notification, the SECP states that insurers whose window takaful operations form 25% or more of their overall operations based on gross contribution, may disclose their takaful results in their published financial statements as follows:
(a) the assets and liabilities of the conventional operations shall be consolidated with the assets and liabilities of window general takaful operations in the statement of financial position of the insurer;
(b) the incomes and expenses of the conventional operations shall be consolidated with the incomes and expenses of the window general takaful operations in the profit and loss account or the statement of comprehensive income, as the case may be, of the insurer, provided that in the profit and loss account or the statement of comprehensive income, prior to arriving at the profit/(loss) for the year of the entity, adjustment in respect of surplus/(deficit) attributable to the Participants’ Takaful Fund (PTF) for the year shall be made.
The PTF is a fund into which participants’ risk related contributions are paid and from which risk related benefits are paid. The PTF is separate from the Operator Fund (OPF). The latter is a fund set up by a general takaful operator that undertakes transactions other than those which pertain to the PTF.
The SECP notification also states that supporting notes, where considered necessary for the understanding of the users of the published financial statements, may be included as part of the notes to the financial statements. The supporting notes shall provide a complete breakup of conventional and window takaful operations. In addition, segment disclosures for general takaful operations, in accordance with the requirements of IFRS8–Operating Segments, shall be included in the published financial statements.