Notes to the Financial Statements Fot The Yoo Ended Deceinbar 31,2016 4 STATUS AND NATURE OF BUSINESS: East West Life Asiurance Company Limited (the Company) was incorporated in Pakistan on August 18, 1982 as» public limited company under the Companies Grdiance, 1984, Its shares are quoted an Pakistan Stock xchange. The compariy ‘commenced lfe insurance business.an February 22, 1993 after registration with Controller af Insurance on February 14, 1993. The addresses of ts reaistered and principal office are 57 Regal Plaza, M.A. jinnah Road, Quetta and 802, éth Floor, Laksan Square Builling No.1, Karachi, respectively, 1.1. ‘The compony is engaged in He insurance business. in accordance with the requirerents of Insurance Ordinance, 2000, the company has established shareholders fund and there statutory fundsin respect ofits each class of life insurance ‘business namely, Ordinary if, Universal life and Accident and health, 1.2 The Company incurred [oss after tax of Rs. 4,976,732 (2015 [oss afler Lax -restated Ms, 3,307,514), thereby reducing, accumulated deficit to As, 417,879,085 fas at December 31, 2075 -restated Rs, 397,462,353). Further, insurance operation ‘ofthe Coipany have reduced and the amount of Premiums less reinsurances for the year amounted to Rs 20,081, 316 (2015: Rs: 31, 583, 733) and haveresulted in net deficit of Rs, 17,200,223 (2015: Rs. 28,905,197), thereby increasing the accumulated deficr-to Rs. 320,764,127 (2015: Rs. 303,563,904), Above cited facts # factors indicate that there are matertal Lincertainties that mayécast doubt an the Companys ally to contiseas a going cancer, and the Company may not be able to realize its assets and ascharge lati tes in the normal course of business, ‘The directors of the Company have explicitly provided a commitment ta provide necessary financtal supportto the ‘Company; ifthe need ates, to address any liquidity and solvency Issues to enable the Company to continue istbusiness. We have further been given to understand that the directors and shareholders have both the intention and the ability { operate in the foreseeable flue, and vil be able to realize ts assels and to dischaqe its liabilities inthe normal. ‘course of the business. The management, therefore, believes that going concern assumption is appropriate, and has prepared the condensed interim financial information accorsinaly. 2 BASIS OF PRESENTATION Thesefinancial statements have been prepared on the farmat of financial statements issued by Securities and Exchange CConmmission of Pakistan (SECP) thraugh Securities and Exchange {Insurance} Rules, 2002. 2. STATEMENT OF COMPLIANCE ‘These financial statements have been prepared in actordance with appraved accounting standards applicable in Pakistan. Approved accounting standards comprise of such International Financial Repocting Standards (FRS) Issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Compinies Ordinance, 1884, the Insurance Ordinance, 2000 and SEC (nsurance) Rules, 2002; In case requirements dilfes, the provisians'or directives of the Companies Grdinance, 1984, Insurance Ordinance. 2000 and SEC Hnsutance) Rules, 2002 shall prevail. 4.1 Standards or interpretations that are effective in current year but not relevant tothe Company The following new standards and interpretations have been ixsued by the International Accounting Stondards Blourd ((ASB} which have been adopted locally by the Securities and Exchange Camimission of Pakistan vide SRO 6330)/2014 dated July 10, 2014 with effect from following dates. The Company has adapted these accounting standards and inserpretations wihich do not have significant impact on the Company's ancialststements other than certain disclosure requirement about far value of financial instruments as perl FRS 73 "Fair Value Measurement32 33 34 Effective Date (ian Perads ‘Amendsments re TAS) iscosure itv January 01,2016 (smendments (1A 1 Presentation of Finanatal Statements) Anil nprovements ta FAS: 2012-2014 Ge January 01 201% Depreciation and Amortistlen Janay 01,2016 (amendinents tolAS "Gand [AS 38) [Adoption of the abave revisions. amendments and interpretations of the standards have no significant effect ion the amounts for the year ended December 31, 2015 and 2616. ‘Standards, amendments to published standards and Interpretations that are effective but not relevant “The other new standards, amendments to published standards and interpretations that are mandatary forthe financial yeas beginning on January 01, 2016.re consilered nat to be relevant of tohave any significant effect on the Company's financial reporting and operations and are therefore nat presented here, ‘Standards, amendments and interpretations to th and net early adopted by the Company The following new standards. amendments 1p published standards and interpretations would be effective fram the dates mentioned belaw against the respective standard or interpretation, sblished standards that are relevant but not yet effective Interpretation and amendaments 1AS7—_Disclasue Initative (Amendments tal AS 7) Jamu 01,207 JAS 12 Recognition of Deferred Tax Assets for Unrealized Losses: January 01,2017 (Amendments tolAS 12) IFAIC 22 Foreign Currency Transactions and Advance Consideration January 01,2018 “Annutal improvements te BRS Standards 2014-2016 cyte January 01,2098 {amendments in FRS 12 and IFRS 28) ‘Tne Company is in the pracess of assessing the Impact of these Standards, amendments and interpretations to the published standards on the nancial statements ofthe Company. ‘Applicability of approved Insurance Accounting Regulaitons, 2017 Gn February 09,2017, the Securities ane Exchange Carnmission of Pakistan ISECP) through SRO AAl/2017 has approved Insurance Accaunting Regulations, 2017 (the Regulations). The Regulations inter aja pertains to Published Financiol ‘Statements and Policyholder |latalities, Consequentto the above SAQs, the Company has to prepare its financial statements for the period ended after March 30, 2017, using the Insurance Accourting Regulations, 2617. Keeping in viaw the nature of transactions ef the Campany, the Bove changes inthe accounting reporting framework would not result in.any material impact an the Financial statements ofthe Company,35, Standards, amendments and interpretations to the published standards that are not yet notified by the Securities ‘and Exchange Commission af Pakistan (SECP) Following nevr standards have been issued by the International Aceaunting Stanndasds Board (ASB) which are yet ta bbe natified by the SECP for the purpose of applicability in Pakistan. tho Peds Standard nterretation aaa IeRSS Financial Instruments January 01, 2078 IFRS 14 Regulatory Deferral Accounts January 01,2016 [FRS1S Revere from Contracts with Custorners January 01,2018 IFRS16 Leases Jory), 2019 4, BASIS OF MEASUREMENT ‘The financial statements have bean prepared under the historical cost convention except for certain financial assets and liabilities which are stated at fair value-or amortized cast as applicable, 5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ‘The significant accounting policies adopted in the preparation of these financial statements ae set out below, These polices havebeen applied consistently toall the years presented excepl as stated otherwise, 5.| Use of Critical Accounting Estimates and Judgments ‘The preparation of finaricial statements in conformity with approved aécounting standards as applicable in Pakistan and the requirements of the Insurance Ordinance, 2000, the Securities and Exchange Commission (Insurance) Rules, 2002 and the Companies Ordinance, 1984, requires the use of certain eritical accounting estimates. Iealso renuires management to exercise H's judgment in the process af applying the Cmmany’s accounting policies, Estimates and judgments are continuously eval uated and are nased on historical experience: inchiding expectation of future events that are believed to be reasonable under the circumstances, ‘The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recogniséd in the periort in which the estimates are revised. However, assumptions and judgments made by managerent in the application of accounting policies that have significant effect on the financial statements are exnected to result in material adjustment to the carrying amounts of assets and liabilitiesin the-next year are disclased in the folowing notes: = Provision for Compensated Absences 53 = aims BNR = Policyholders' Liabilities = Taxation = Useful Life of Depreciable f Amortizable Assets = Impairment of Assets 5.10 Reinsurance Recoveries Against Gutstanding Claims 54