VAKIFBANK
2015 ANNUAL REPORT
246
CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE IN NOTE I. OF SECTION THREE
TÜRKİYE VAKIFLAR BANKASI TÜRK ANONİM ORTAKLIĞI AND
ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)
Mathematical provisions are presented under “insurance technical provisions” in the accompanying consolidated financial statements.
Deferred acquisition cost and deferred commission income:
Commissions given to the intermediaries and other acquisition costs that vary with and are
related to securing new contracts and renewing existing insurance contracts are capitalized as deferred acquisition cost. Deferred acquisition costs are
amortized on a straight-line basis over the life of the contracts. Commission income obtained from the premiums ceded to reinsurance firms are also
deferred and amortized on a straight-line basis over the life of the contracts.
Liability adequacy test:
At each reporting date, a liability adequacy test is performed, to ensure the adequacy of unearned premiums net of related
deferred acquisition costs. In performing this test, current best estimates of future contractual cash flows, claims handling and policy administration
expenses are used. Any inadequacy is immediately charged to the statement of income by establishing an unexpired risk provision under “insurance
technical provisions” in the accompanying consolidated financial statements.
If the result of the test is that a loss is required to be recognized, the first step is to reduce any intangible item arising from business combinations
related to insurance. If there is still a loss remaining, then the deferred acquisition cost is reduced to the extent that expense loadings are considered
not recoverable. Finally, if there is a still remaining amount of loss, this should be booked as an addition to the reserve for premium deficiency.
Individual pension business
Individual pension system receivables
presented under ‘other assets’ in the accompanying consolidated financial statements consists of ‘receivables
from the clearing house on behalf of the participants’. Pension funds are the mutual funds that the individual pension companies invest in, by the
contributions of the participants. Shares of the participants are kept at the clearing house on behalf of the participants.
‘Receivables from the clearing house on behalf of the participants’ is the receivable from the clearing house on pension fund basis against the
contributions of the participants. The same amount is also recorded as payables to participants for the funds acquired against their contributions under
the ‘individual pension system payables’.
In addition to the ‘payables to participants’ account, mentioned in the previous paragraph, individual pension system payables also includes
participants’ temporary accounts, and payables to individual pension agencies. The temporary account of participants includes the contributions
of participants that have not yet been invested. Individual pension system payables are presented under other liabilities and provisions in the
accompanying consolidated financial statements.
Fees received from individual pension business consist of investment management fees, fees levied on contributions and entrance fees. Fees received
from individual pension business are recognized in other income in the accompanying consolidated statement of comprehensive income.
