8.2.1. General provisions

(1) A Takaful Operator may:

(a) measure the value of an asset at less than the value determined in accordance with this Chapter; and

(b) measure the value of a liability at more than the value determined in accordance with this Chapter.

(2) However, if the AFSA directs a Takaful Operator to measure an asset or a liability in accordance with principles that differ from those specified in this Chapter, the Takaful Operator must measure such assets or liability in accordance with those principles as directed.

8.2.2. Basis of accounting

Save where directed otherwise by the AFSA or where inconsistent with the Rules in this Chapter, a Takaful Operator must recognise its assets and liabilities and measure their value in accordance with the IFRS basis of accounting.

8.2.3. Methods and assumptions that may be used

In measuring assets and liabilities, a Takaful Operator must use methods and prudent assumptions that:

(a) are appropriate to the nature, scale and complexity of the Takaful Operator’s business;

(b) are made using professional judgement, training and experience;

(c) are made having regard to reasonably available statistics and other information;

(d) are consistent from year to year and without arbitrary changes;

(e) include appropriate margins for adverse deviation of relevant factors;

(f) recognise the distribution of profits or emerging surplus in an appropriate way over the duration of each Takaful Contract;

(g) are in accordance with generally accepted actuarial practice; and

(h) do not reflect the Takaful Operator’s own credit rating.

8.2.4. Changes in methods and assumptions on which valuations depend

(1) Where the valuation of an asset or liability is dependent upon the adoption of assumptions or the adoption of a calculation method, a Takaful Operator must ensure that any change in the assumptions or methods adopted is reflected immediately in the value attributed to the asset or liability concerned.

(2) The recognition of the effects of changes in assumptions or methods may not be deferred to future reporting periods.

8.2.5. Actuarial principles

The AFSA may specify actuarial principles to be used by a Takaful Operator in measuring assets and liabilities.

8.2.6. Derecognising liabilities

(1) A Takaful Operator must not derecognise a Takaful Liability (or a part of a Takaful Liability) until the obligation giving rise to the liability expires or is discharged or cancelled.

(2) To avoid doubt, if Retakaful / reinsurance covering the liability (or part of the liability) is purchased, the liability must not be derecognised unless the purchase results in the discharge or cancellation of the obligation giving rise to the liability.

8.2.7. Discount rate

In calculating the present value of a Takaful liability, the discount rate must be a prudent estimate of the yield expected to be earned by assets of the Takaful Operator that are sufficient in value and appropriate in nature to cover the provisions for the liability being discounted.

8.2.8. Valuation of expected future payments

Where this Chapter requires a Takaful Operator to recognise as a liability the value of expected future payments, that liability must be measured as the net present value of those expected future payments.

8.2.9. Valuation of expected future receipts

Where this Chapter requires a Takaful Operator carrying on General Takaful Business to recognise as an asset the value of expected future receipts, that asset must be measured as the net present value of those expected future receipts.