Anuul report report 2010

Contents

1. FINANCIAL HIGHLIGHT ....................................................................................................................................... 2
2. MESSAGE FROM CHAIRMAN ............................................................................................................................. 4
3. MESSAGE FROM MANAGING DIRECTOR ........................................................................................................... 5
4. COMPANY ROLE ................................................................................................................................................. 6
5. MISSION STATEMEMT ....................................................................................................................................... 7
6. COMPANY PROFILE ............................................................................................................................................ 8
7. CAMBODIA INSURANCE MARKET OVERVIEW .................................................................................................. 12
8. ECONOMIC REVIEW 2009 ................................................................................................................................ 14
8.1 Agriculture and Rural Development .................................................................................................... 15
8.2 Financial and banking sector ............................................................................................................... 16
8.3 Garment Sector ................................................................................................................................... 16
8.3 Tourism Sector ..................................................................................................................................... 17
8.4 Construction ....................................................................................................................................... 18
8.5 Telecommunication ............................................................................................................................ 18
9. CAMBODIAN INSURANCE REVIEW 2010 .......................................................................................................... 19
9.1 Market performance and development ............................................................................................... 19
9.2 Cambodia Re’s performance ............................................................................................................... 19
9.2.1 Operational Performance for the last 3 year .................................................................................. 19
9.3 Property Reinsurance ........................................................................................................................... 21
9.4 Engineering Reinsurance ...................................................................................................................... 21
9.5 Moto Reinsurance ................................................................................................................................ 22
9.6 Marin Reinsurance ............................................................................................................................... 22
9.7 Medical & Health Reinsurance ............................................................................................................. 23
9.8 Miscellaneous Reinsurance ................................................................................................................. 23
10. RISK FACTORS AND MANAGEMENT ................................................................................................................ 25
10.1 Underwriting Uncertainty .................................................................................................................... 25
10.2 Retrocession Processing ....................................................................................................................... 26
10.3 Premium Delivery and investment ....................................................................................................... 26
11. INTERNAL AUDIT ....................................................................................................................................... 27
12. OUTLOOK FORWARD ………………………………………………………………………………………………………………………………...29
13. ACTIVITIES OF CAMBODIA RE ……………………………………………………………………………………………………………………..30
13.1 Inauguration Ceremony of Cambodia re’s new building ………………...……………………………………………….30

13.2 Training…………………………………………………………………………………………………………………………………………….30

14. REVIEW OF FINANCIAL PERFORMANCE ………………………………………………………………………………………………….....31

ANNUAL REPORT 2010 | 3

1 FINANCIAL
HIGHLIGHT

Grosss Premium Written
1,200,000

1,000,000

800,000
2006
2007
600,000
2008
2009
400,000
2010

200,000

0
Fire & Miscellaneous Medical Marine Motor
Engineering


Net Income
600,000

508,835
500,000 479,035
415,491 424,986 431,269
400,000

300,000

207,105
200,000

100,000

0
2005 2006 2007 2008 2009 2010

Total Assets
12,000,000
10,844,484
10,082,304
10,000,000 9,654,628
8,831,733 8,880,524

8,000,000
7,771,533

6,000,000

4,000,000

2,000,000

0
2005 2006 2007 2008 2009 2010


2
MESSAGE FROM
CHAIRMAN

Last year 2010, Cambodia Economy recovered from the negative impact in 2009 and come back
to positive rate with GDP growth of 6.7%. This growth was boosted by the export of Garment
industry and growth in other sectors. Last year, it saw that Garment export increased by 24%;
Agricultural sector increased by 5.3%; Tourism Sector increased by 16% and Investment also
increased by 16%.

Along with Economic growth in the year 2010, Insurance Industry was seen growing as well by
attaining growth rate of 24% and generated Gross Premium of nearly 25 million USD. This was
thanked to the Government which lay out the right strategy, coordination policies, regulatory and
supervisory measure in respond to Global financial crisis in 2008 so that it could ensure the
sustainable economic growth of the country. Furthermore, Government has diversified the
economy and strengthening its core competiveness for future economic development. Hence, it is
projected to attain economic growth of 6% and 6.5% for the year 2011 and 2012 respectively.

Cambodia Re in 2010 performed very well by achieving gross premium growth of 17% comparing
to the year 2009 and the bottom line increase by 6%. Moreover, Cambodia Re played its
importance role in insurance industry in respond to the market which is badly impacted by some
loss by providing technical training to enhance risk management awareness of underwriter and
surveyor of local insurance companies. Even more, the company will continue to fulfill its various
activities of National Reinsurance Company in order to develop insurance industry in Cambodia.

Taking this opportunity, I am grateful to thank the Royal Government of Cambodia and the
Ministry of Economy and Finance, especially Financial Industry Department who have been
contributing to ensure macroeconomic stability and encourage for more foreign direct
investment. This would bring a visualized opportunity for the growth of insurance industry and
industrial development.

I am also thankful for the efforts of the company’s management and staff who have been putting
new ideas and innovation into practice in order to gain core competency in business operational
framework.

Dr. Hang Chuon Naron


3 MESSAGE FROM MANAGING
DIRECTOR

The insurance industry for the year 2010 bound back to it track of growth after being hit of the
downturn in 2009 along together with the economic growth of the country. For the year 2010
operation, it was seen insurance industry increased by 24% comparing to the year 2009 with
Gross Premium reached nearly 25 million USD, in which Insurance related to Engineering was
dramatically increase of around 206%. However, at the end of last year, the industry was hit by
flood due to the heavy rain in the capital and some provinces. Also it was noticed that Garment
Factory was burn down by Fire 3 years in arrow from 2008 which badly impact the insurance
and reinsurance market.

For Cambodia Re’s side, its performance for the year 2010 still keep growing by achieving Gross
Premium growth rate of 17% comparing to the previous year performance. The company’s
Gross Premium reached to USD 2,9 million, in which Motor Business account 32.57% following
by Fire Insurance 31.46%, Miscellaneous 17.97%, Medical and Health 11.86% and Engineering
4.66% and the last one Marine Cargo 1.45%.

In this circumstance, Cambodia Re financial result showed that Net Profit for the year end was
amounted to 508,835 USD increased by 6.2% comparing to the year 2009, and Total Asset
reached to 10,844,484 USD.

Finally, I would like to take this occasion to express my sincerely thanks to the Board of
Director of Cambodia Re and employees who have make hard effort to bring the company to
this end. Also I would like express my gratitude to the Ministry of Economic of Finance,
particularly Financial Industry Department and to all insurance companies for their kind
cooperation during the year operation of 2010.

Dr. Chhay Rattanak

Managing Director


4
COMPANY
ROLE

As set by the Royal Government of Cambodia, and the Ministry of Economic and Finance the role of Cambodia Re is
as follows:

 To carry out reinsurance business operation of all class of risks, including general insurance and life
insurance;
 To act directly or indirectly with insurance and reinsurance companies;
 To fully cooperate with the existing or prospective enterprise or companies by way of sharing
participation, signing commercial contracts, buying shares, which are beneficial to Cambodia Re;
 To directly or indirectly participate in all industrial, commercial, financial, movable and progress of
the above transaction;
 To be responsible for the job safety and security;
 To adhere to the working principles and manner as the business people do;
 To effectively manage all activities;
 To have rights and duties provided by the Government to achieve its planned objectives.


5 MISSION
STATEMENT

Our Goal : To be the Effective National Reinsurer with the Best Quality Services in Cambodia.

Our Objectives : We shall achieve our goal by:

 Providing best reinsurance services with international standard,
 Delivering full customer satisfaction,
 Empowering Cambodia Re’s people,
 Innovating the reinsurance products and services in cooperation with our ceding companies in Cambodia,
and
 Producing superior returns for our shareholders.

Our Strategies : We pursue our objectives and goal by:

 Accepting and retroceding the compulsory cessions from local insurance companies in Cambodia,
 Providing information of local and international market trends on insurance and reinsurance to local
insurance companies,
 Providing a working environment having openness and self-development,
 Adhering to the principles of fair service, work with shareholders and do business according to a prudential
code of the business ethics so as to acquire satisfactory returns, and
 Enhancing the capacity of the local market to provide Reinsurance services with the best standard of
reinsurance professionalism.

Our Values : Cambodia Re shall build its corporate values with:

 Integrity—We shall deliver reinsurance quality and practices with high ethical standard to our customers
and reinsurance networks,
 Customers—We listen to our local ceding companies and improve our reinsurance products to meet their
present and future needs with their expectation, along with value-added services,
 Employees—Our prosperity largely depends on highly effective performance of how our employees
who are working together in a safety and healthy workplace where teamwork and development are
valued and recognized,
 Accountability—We expect superior performance and are accountable for our actions and results.
Cambodia Re’s leaders set clear goals and expectations, provide and seek frequent feedback, and
 Financial Responsibility—We are prudent and effective in the use of our financial resources.


6
COMPANY
PROFILE

Cambodian Reinsurance Company, known as Cambodia Re, was established under Sub-Decree No.
th
07AN.KR.MK by the Royal Government of Cambodia on 24 January 2002. The Company is incorporating with the
registered capital of USD 7 million for its operation regarding to the Insurance Law of Cambodia. In order to
build up the capacity and financial strengths with the ideal of privatization, company reached a Joint
th
Venture Agreement on 16 January 2004, with Asian Insurance International (Holding) Company “AII” with the

The Managing Director of Cambodia Re has been officially elected as chairman for the General Insurance
Association of Cambodia (GIAC) since 12th May 2005 and from then Cambodia Re on behalf of GIAC took its lead
to successfully host 5th Asian Insurance Congress 2005 which is the first congress ever organised, and many
others seminars workshop, meeting for the purpose of insurance improvement and protect public interest in the
industry.

Since the establishment in 2002, people in Cambodia Re have been making their efforts at their best for any
valuable transitions changing scenario for business in Cambodian.


BOARD OF DIRECTOR

Dr. Hang Chuon Naron

Mr. Im Sithol, H.E Koeut Rith, Mr. Teddy Hailamsash, Mr. Rath Sa Rath, Dr. Chhay Rattanak,
Board Member Board Member Asian Insurance Inter- Operation Director Managing Director,
national Holding “AII”,
Board Member, Board Member
Board Member
the Employee’s
Representative

BOARD OF MANAGEMENT

Mr. Rath Veasna Mr. Rath Sa Rath Dr. Chhay Rattanak Dr. Hang Chuon Naron


Board of Management General business management

The Board of Management has been set up since To bring organizational effectiveness as committed,
2003 to calibrate business management and decision general business management is handled by
making for the reason of environmental changes in Managing Director.
management perspective. Board of Management
The Managing Director is significantly playing a vital
comprises of Chairman, Managing Director,
role to ensure that there is organizational cost cutting
Operations Director and Chief of Account and Finance
and whilst enhancing business operation. Moreover,
and Human Resources and some other appointed
asset management is very essential for the company
persons called for at the time of the meeting.
to look after for an on-going investment.
The main purpose of the Board of Management, in
Empowering with his encouragement to the staff with
effect, aims at accomplishing some strategic goals
reliable decisions he makes is to bring what we call
derived from strategic decisions made by the Board of
balanced authority distribution within organization.
Directors by delivering some certain objectives and
Staff training becomes another factor to enhance their
following up those as closely as planned.
capability when empowerment is needed. Because
Customer relations have become an important focus training program can help staff to absorb new learning
in today business operation of Cambodia Re which and avoid risks such as complicated and unusual risks.
leads to considerable effectiveness. Understanding
customers’ value will help us bring the company’s
effectiveness so that we would adopt best practices of
our reinsurance professional in the country, as well as
with our retrocession ire.

In accordance with the company’s goals, to optimal
outcome by empowering subordinators to achieve
functional objectives and gaining feed back from
them, the Board of Management is committed itself
to adapting best strategies possibly.


Teamwork

Workgroup is fundamentally important for work
efficiency to the company. Staff member is
encouraged to have team building toward projects
or decisions which have to be made. We have an
underwriting team to assess ordinary and
complicated risks ceded by ceding companies, and
to make sure that the reliable information is
collected as much as possible regarding any
particular risk in order to better understand the
risk exposure for the company whenever claim
occurs between claim officer and underwriter. Our
core value is that our operation people have been
working together as the Think-Tank for
organisational capacity building and
implementation.

Partnerships

Cambodia Re has set up business partnership with both local and international companies:

Local Partnership International Partnership

 Asia Insurance Company  Swiss Reinsurance Company

 Caminco Insurance Company  Toa Reinsurance Company

 Campubanklonpac Insurance Company  Asia Capital Reinsurance Group

 Forte Insurance Company  Malaysian Reinsurance Bernhard

 Infinity Insurance Company  Labuan Reinsurance Company

 Cambodia Vietnam Insurance Company  Best Reinsurance Company

 J.B Boda & Co(s).Pte

 Bangkok Insurance

 PT.Asuranci Central Asia

 Asia Hong Kong


7CAMBODIA INSURANCE
MARKET OVERVIEW

Historical Development of Insurance Industry Privatization and Liberalization of the Insurance
Industry
The history of the Cambodian Insurance market went
back to 1950’s which at that time a number of French During the operation of CAMINCO for ten years, it has
Insurance companies maintained operations in been noticed that the insurance market was actually
colonial period and for a time after Independence. in embryonic stage while people in Cambodia had not
Until 1975 a State-Owned Insurance Company, named seriously understood how much they could get
Society National assurance et Reassurances (SNAR) benefits and compensation from insurance policy. Day
carried on business in the country but ceased the after day, anyway, insurance was understandable
activities when the Khmer Rouge seized control of the better by main business organizations and
country. Non-governmental Organizations and now even the
local investor, and people.

For seventeen years, no insurance business was
conducting in Cambodia. In 1990, the Cambodian Micro-Insurance also started to introduce in certain
National Insurance Company (CAMINCO) was province as pilot projects. In 1995, Asia Insurance
established to firstly conduct insurance business in (Cambodia) with a bulk of shares from Asian Insurance
Cambodia. CAMINCO at the time was not so active International (Holding) Company entered the market
due to lack of technical expertise, human resources, as the insurance agent of CAMINCO at that time. The
and related documents. Until the early 2000, in fact, industry was going to be fundamental growth as a
agents often placed insurance direct with insurance result of expanding the market. Soon after that, Forte
companies offshore by passing through CAMINCO. Insurance also accessed the market in 1999 as
another agent of CAMINCO. Eventually, the two
companies have been managing insurance
However, with the passing of insurance Law in June transactions as CAMINCO’s agents.
2000 and subsequent Royal-Decree, and Sub-Decree,
companies transact insurance business in Cambodia
are required to register at the Ministry of Economy
and Finance with an authorized capital of USD 7
millions. Since then development has been gradually
made.


In June 2000, Insurance Law was passed by the This process has been an effort of the Ministry of
Cambodian Parliament, yet there was a delay in Economy and Finance where long and careful
implementation of the corresponding Sub-Decree till negotiation had been made between Cambodia Re
beginning 2002. The Law says that an insurance and Asian Insurance International (Holding) Company
company is required to have the registered capital of “AII”. The joint Venture Agreement signed on 16
USD 7 millions to get a license from the Ministry of January 2004. This establishment was aimed at
Economy and Finance. Therefore, those three supporting and providing local reinsurance capacity to
companies became licensed Insurance Companies. In all direct insurers in the Kingdom of Cambodia, and
early 2002, the Cambodian Reinsurance Company based on the Insurance Law which specifies that all
(Cambodia Re) was established to support local reinsurance transactions has to be subjected to the 20
insurance companies. This establishment has even per cent as compulsory cession to Cambodia Re as the
made contribution in order to freeze the outflow of National Reinsurance Company.
premium to overseas markets.

Initially, Cambodia Re was operating as a State-Owned
company, the capital of which is wholly owned by the
Royal Government of Cambodia (RGC). As from the
start, Cambodia Re had conducted business on its own
until the Company turns to be a Joint Venture from
January 2004.


8 ECONOMIC
REVIEW 2009

Cambodian economy in 2009 was observed to have a real GDP growth around 2 per cent according to
projection of the Ministry of Economy and Finance.


8.1 Agriculture and Rural Development

This sector so far is one of the main driving forces of the economic growth of the country and it becomes the one
strategic tool for the government to ensure sustainable development. In the year 2010, the government outline
plans to export one million tons of milled rice to global market by the year 2015. Last year 2010, we also see that
this sector become target of various Bank to offer loan. According to the news, the largest bank of Cambodia,
Acleda Bank, have loan to Agriculture sector account
12.25% and plan to increase up to 15.25% for the
year 2011.

In addition, the government also provide fund of 18
million for agriculture loan in the year 2010, and
double this amount in the year 2011. It is also pre-
paring 25 million funds to guarantee 50 percent of
credit offer to the rice industry by the commercial
bank. For investment, Agriculture is still a leading
sector for investor‘s money.


8.2 Financial and banking sector

For the year 2010, Banking and financial sector was also
active. We see that number of bank increase up to 29
banks, 7 specialized banks, 25 licensed Micro Finance
Institute, 2 bank representative office, 28 Credit operators
and 60 NGO which running the like operation.

In the year 2010, Banking Industry enjoyed the positive
growth as a whole, which is estimated at 20% growth. It
was seen much increase in deposit as well as loan in many
banking operators. Let alone Acleda Bank the leading
bank in Cambodia, had the deposit increased by 31.65%
or USD 911 million, while outstanding loan increased by
36.82% to USD 744.31 million. Similarly, another big bank,
Canadia Bank, also see its deposit and loan increase by 40
% and 30% respectively for the year 2010.

For MFI (Micro Finance Institute) side, according to the
statistic show that in the year 2010, the total loan of all 23
MFI increased by 33%.

8.3 Garment sector

In the year 2010, Garment sector increase by 26% in term
of export comparing to the year 2009. The Garment
exports were worth a total of US$ 2.99 billion in 2010. The
main buyer are from United State which worth about 2
billion, while the other to Europe around 750 million.

For the year 2011, this sector is expected to continue
increase as the government has increase business
agreements made with other countries like Japan and
Asian member.


8.4 Tourism Sector

Tourism is also another sector that play importance role in Cambodia economy, and it contributes much to the
economy growth and employment. In the year 2010, this sector generated revenue to the country roughly 1.78
billion USD increase by 16% comparing to the year 2009. It was about 2.5 million foreigner entering Cambodia in
that year.

Lasts year, it was also seen increase in travel and tourism companies to 392 companies from 374 in the year
2009.

There is much potential for this sector to growth in the coming year when there is direct linkage between
Cambodia and Europe country. As earlier, the country has agreement to have a direct fly from French to
Cambodia. Even more, new tourist sit are on focus like Eco tourism. It is
also seen that other international hotel brands are set to operate in the
kingdom such as Marriott Hotel and Best Western.


8.5 Construction

Construction sector for the year 2010 was still not
favorable and still suffering from the world economic
crisis along with the slowdown of value and number of
construction. It was decrease around 60% during 2010
comparing to the previous year, and it was seen only
small projects such as hotel, restaurant, and housing.
According to Ministry of Land Management and
Urbanization, in 2010 there were 2149 projects with
value of USD 840 million less than the approved
projects of 2230 in 2009 with worth of USD 1,988
million.

8.6 Telecommunication

For the year 2010, it noticed that the number of
internet using is increasing in the country with the
number of internet subscriber 173,675 and
29,589 in the year 2010 and 2009 respectively. To
this 2010, there were 37 internet service
providers.

Competitiveness is also seen in small and medium
business now a day in which they provide free
Wi-Fi as a value added service. So there is much
potential increase in the internet subscriber in the
coming years.


9 CAMBODIAN INSURANCE
REVIEW 2010

9.1 Market performance and development

In general, Market achieve premium growth of 24% in 2010 to the estimated amount of 24.9 million USD.
The increase driven by 4 main business such as Engineering, Miscellaneous, Medical and Health and Motor
Insurance. Engineering was seen to increase by 206% which boosted by insurance on the hydro dam project;
Miscellaneous grow by 26%; Medical and Health grow by 20% and Motor insurance grow by 9%. However,
the market are also hit by some loss in the late of 2010 caused by food and brought the total loss of Market
around 13 million.

9.2 Cambodia Re’s performance

Having experienced the market with local insurance companies since 2002, we have been working on local
issues in an international perspective for a radical speed of market development. We have aligned within
the framework of our industrial strategic development through our communicative management process at
all levels of in order to make it happen. Our strategic development is based on the understanding of
constructed ideas for sustainable development with low risk and volatility. Thus, sustainability is our pivotal
acceptance in our partnership.

9.2.1 Operational Performance for the last 3 year

With regard to our experiences with local and overseas markets and wise-leading of our management board,
Cambodia Re has been able to perform a well and satisfied underwriting result, particularly in the last 3
years.

Underwriting Year Gross Preprium Increased (%) Net Preprium Increased (%)
2008 2,360,528.95 34.95% 1,334,461.00 41%
2009 2,533,852.69 7.34% 1,433,574.00 7%
2010 2,976,625.47 17.47% 1,692,561.18 18%


Premium by line of business

Line of Business 2008 2009 2010
Engineering 131,505.97 175,484.50 138,566.15
Fire 783,792.16 836,836.00 936,526.46
Miscellaneous 363,683.81 374,814.19 534,947.99
Medical 170,066.08 225,292.00 353,139.81
Marine 59,474.83 39,172.00 43,239.53
Motor 852,006.10 882,254.00 970,205.53
TOTAL 2,360,528.95 2,533,852.69 2,976,625.47

Gross Premium 2008 By Line of
Business
Engineering
6%

Motor
36%
Fire
33%

Medical Miscellaneou
7% s
15%
Marine
3%
Business
Engineering
7%

Motor
35%

Fire
33%

Medical
9% Miscellaneou
s
Marine 15%
1%

Business
Engineering
5%

Motor
33%
Fire
31%

Medical
12% Miscellaneou
s
Marine 18%
1%


9.3 Property Reinsurance

Property business accounted second main portfolio
of Cambodia Re business. In the year 2010,
Cambodia Re attain 11.91% increase in premium for
Fire line of business with amounted of 936,526 USD
whereas market Premium amounted to 6,174,999
USD or 1% increase from the year 2009. However,
we also impact by the loss in the middle of the year
from Fire and from flood at the year end due to
torrential rain. So the Claim incurred was accounted
to 691,185 USD of which 268,397 USD has been paid
during the year.

9.4 Engineering Reinsurance

For Engineering Reinsurance business, it still suffered
with premium amounted to 138,566 USD or 21 %
decrease from 2009. It was correlated to the
construction sector in the year which was reported to
be decrease 60%. However, the market premium was
seen 206% increase to 3,823,890 USD . This dramatic
increase was boosted by a construction project of hydro
dam during the year.

Also, in the year, Claim incurred amounted to 44,671
USD of which 37,320 was paid.


9.5 Motor Reinsurance

It seems a constant growth of this line of business from year to year. In this 2010, Premium keeps growing
by 10% to 970,205 USD and make it majority portfolio of Cambodia Re business. Motor Insurance in
Cambodia is still not compulsory insurance except for Commercial Vehicle. Likewise, Claim also increased at
8% rate to 318,060 USD. However, concern is still placed on road accident which increasing from year to
year.

9.6 Marine Reinsurance

Marine business is quite subjective even though in the year 2010 Garment export increase by 26% as well as
other agriculture products but Marine line of business seems not to change at all for whole market premium.
But for Cambodia Re’s side, it was reported increased by 10%. Claim was still limited.


9.7 Medical & Health Reinsurance

This line of business still continues growing into the year 2010 with rate of 57% increase in
premium comparing to 2009 to amount of 353,139.81. However, Claim also keeps increasing as
well. In the year 2010, Claim incurred reached to 174,137 USD 80% increased comparing to year
2009.

9.8 Miscellaneous Reinsurance

In the year 2010, Miscellaneous line of business was seen much increase by 42.72% to 534,948
USD. Miscellaneous business includes Product liability, Public Liability, Personal Accident,
Workmen Compensation, Money and Burglary insurance.

This line of business is noticed to be increase in the last few years. However, still there are more
potential for growth the incoming year together with the growth of business registration. As
business entity is keen to buy Personal Accident for their employee. For the year 2010, business
registration was reported to be increased by 28% comparing to 2009.

On the claim side, it was amounted to 116,794 USD of which 97,823 USD was paid in the year.


Gross Claim 2008 By Line of Business

Engineering
8%

Motor
21%
Marine
0%
Medical
9%

Miscellaneous
14%
Fire
48%

Medical Marine Engineering
3% 0% 4%

Miscellaneous Motor
4% 10%

Fire
79%

Engineering
4%

Motor
35%
Fire
31%

Miscellaneous
Medical 11%
19%
Marine
0%


10 RISK FACTORS
AND MANAGEMENT

There is uncertainty of some risk factors
involved just like any insurer practice
during the year which were hereunder :

10.1 Underwriting Uncertainty

Our concerns about risks in all aspects of underwriting business ceded by local pedants on both treaty and facultative
basis. The primary concern is natural disaster even though Cambodia has never been facing catastrophe like flood, big
storm, volcano, earthquake or tsunami; no serious claim up to now. Furthermore, some major risks and their concerns
ceded to us were not known in details in the treaty base. So, whatever a decision and judgement made by any pedant
toward particular risks is actually affecting Cambodia Re in respect of operational performance and financial capital
support if unreliable uncertainty of risk analysis.

Moreover, a facultative risk is predicament to be identified as there was a delay as usual to get risk data and
information supposed to be provided by pedants. However, there must be a need for us to question further in order
clarify the given data banks of that particular risk. This could become another facet of uncertainty of the underwriting
succession and time consuming is sometimes is key consideration for our customers to require our acceptance in a
certain period of time so that they can also respond to direct customer within a time frame.


10.2 Retrocession Processing

Engaging operational activities, time frame for risk processing units is vitally significant for us to report to our
panel of reinsures. As a matter of fact, the effectiveness of our service delivery largely depends upon a chain
communication with our local ceding companies reflected by direct customers in cooperative manner and so
then with our retrocession ire finally. Therefore, our two way risk processing to give capital support and to seek
financial support backup is essentially centralising our think tank to underwrite particular risks, especially when
the risk consideration is beyond our treaty capacity.

Whilst the facultative risks were experienced to have had another predicament of financial support for
pedants’ proposal as it has involved in too much technicality and beyond our knowledge. It is perplexed for us
to seek supports from our retrocession ire for ceding risk proposal. This predicament arose because of lack of
knowledge of risks both pedants and us, and of how to spread risks by searching for best alternative
resolutions. This was a result from our limitation of capacity to write business. However, the business
performance has been involved in a bit beyond our technicality and better improved from year to year in
operational point of view.

10.3 Premium Delivery and investment

Premium Collecting has become another risk factor
due to a delay of payment from pedants which could
bring us difficulty to enforce treaty though it specified
thereon. This matter arose when there is a delay of
payment by direct customers to pedants. Thus, it was
slowly generating cash inflow due to this matter and
could freeze company investment opportunities to
that some extend.

More than this, certain companies often asked for
refund premium for the risks which almost expiry or
expired already. This, in fact, due to the competition
among ceding companies which sometime they allow the clients to delay he premium payment beyond the
premium warranty. Thus, making Cambodia Re retrocession Aires to be in hard situation sometime.


11 INTERAL
AUDIT

Background

Internal control is in the process, in effect from 1st August 2004 by the Cambodia Re’s Board of Directors,
Management, and other personnel, designed to provide reasonable assurance in order to focus on the achievement
of both functional and organisational objectives in the following categories:

 Effectiveness and efficiency of operations,

 Reliability of financial report,

 Compliance with applicable law and regulations.

Internal control system would be the organisational tool that helps managers be effective and efficient while avoiding
serious problems such overspending, operational failures and violation of law. Hence, the elements of internal
control are hereunder:

 Controlling Environment: Orientating the determination of business goals, and formulation of effective
organisation’s structure, defining standards of ethics and prohibitions penalties, forbidding the
management and employees to engage in any activities that may lead to possible conflict of interest,
mapping out of policies and working procedures.

 Risk Assessment: An assessment of both internal and external risks and their influential factors affecting
the company’s business transactions, an analysis and determination of risk management measure,
communication with respective staff members, including following up the implementation of the defined
measures.

 Controlling Activities: A division of duties and responsibilities, a determination of authority and duties of
each level of executives including amount of money they can approve, as well as a supervision of the
company’s operational performance in accordance with related law.

 Information Technology and Communications: A convention of the Board of Directors’ meeting,
documentation work for the meeting, writing the minute of meeting, formulation of the management’s
accounting, including storage of documents for account recording in line with the specified standards.

 Monitoring: Following up and evaluating of actions to achieve a required target, making a correction in
case of deviation from target outcome.


Purpose and Auditing Framework

Internal Audit is an independent appraisal function established to examine the activities of the company. The main
purposes of this function are:

 To ensure that there is reliability of operational financial information.

 To have a system to ensure the compliance to the policy, planning, and regulations that cannot affect the
company’s sustainable operations.

 To assess whether asset safeguarding has been compiled in full.

 To make sure the operational activities have been on track effectively and efficiently.

 To provide management advisory information about the adequacy and effectiveness of company’s internal
control system and the quality of performance.

Internal Audit Mission

The mission of Internal Audit is to promote the company to achieve the set goals by the following auditing features:

 Internal Control and Compliance Audit: Examining the compliance of the company’s system, procedure,
structure and regulation to ensure that the controls are in place and functioning,

 Operational Audit: Evaluating the work processing in each department in order to improve the work
performance and maximising human resource capacity in the company,

 Special Audit Project: Checking and reviewing matter on a case-to-case basis when the need arises,

 Advisory Audit: Giving recommendations to improve the company’s effectiveness and efficiency.

Audit reporting is one of the most important stages in an audit process. In this internal audit review, the
auditing data having formulated, collected, and processed are transformed into informative report that
satisfies the Management requirements.


12 OUTLOOK
forward

Cambodia Re as well as market as a whole is expected to gain momentum of development of the industry in
coming years in a parallel to economic growth of the country which is projected to gain the growth of 6%,
6.5% and 6.5% in the year of 2011, 2012 and 2013 respectively.

As noticed, it see more potential for growth in this industry deriving from the strategy laid out by the
government to sustain its development such as increasing its capacity in production of Garment and
Agricultural sector. To this end, the government focuses on improvement of various infrastructures to
facilitate the strategy including irrigation system, road, electricity, and so on.

Moreover, on the service sector particularly financial service, which is very active and fast growing in last
few years, will see more growth after the stock exchange is set to launch in the middle of this year. Also
Tourism sector hope to enjoy further growth after direct linkage between Cambodia and European country
specifically French.

In fact, there are growing in business registration since last year and first quarter of 2011 mainly in
agro-business and agriculture, tourism, information and mining.


13 ACTIVITIES OF
CAMBODIA RE

13.1 Inauguration Ceremony of Cambodia Re’s New Building

Cambodian Reinsurance Company was established on 24 January 2002 by Sub-Decree Nº 07 A.N.KR.M.K of the Royal
Government of Cambodia. Initially, “Cambodia Re” operating as a state-owned the company located in the same
building of “CAMINCO” on the corner street 13 and 106, Sangkat Wat Phnom, Khan Daun Penh, Phnom Penh.

The Cambodian Reinsurance Company “Cambodia Re”,
however, was moved to the new office building on 27
January 2009. This premise is belonged to the company, so
it is more comfortable and convenient. The change of
location could remark and respond to the development and
growth of “Cambodia Re”, as well as the insurance industry
as a whole.

13.2 Training
Submitted, OECD Asian. Asian Insurance Council and East Asian
Insurance congress in overseas. Moreover, Cambodia Re’s staff
participated on many training topic different topics such as Property and
Engineering, Hong Kong, Risk Management training, Business
Interruption, International Financial Reports Standard ( IFRS ) and
Advance Microsoft-Office. We also conducted public training course on
Insurance Development in
Cambodia for Norton
University and National University of Management students in the
purpose of public awareness and confident on the insurance industry.

The Company’s objective is to build up the capacity of their staff by
improving their technical knowledge, and enable them to apply to their job
within the local and international market in order to help Cambodia Re to
become a professional reinsurance company.


14 REVIEW OF FINANCIAL
PERFORMANCE
Cambodian Reinsurance Company “Cambodia Re”
(Registration No.: Co – 6063/02 Et)
Balance sheet as at 31 December 2010
2010 2010 2009

Note % US$ KHR’000 % US$ KHR’000
(Note 4) (Note 4)
ASSETS
Non-current assets
Statutory deposits 6 39 4,200,000 17,589,600 42 4,200,000 17,400,600
Property and equipment 7 18 1,953,865 8,182,787 19 1,966,299 8,146,377
Investment - - - - - -
Intangible assets - - - - - -
Other investment 8 8 875,000 3,664,500 9 900,000 3,728,700
Total non-current assets 65 7,028,865 29,436,887 70 7,066,299 29,275,677
Current assets
Premiums receivable 9 5 604,970 2,533,614 5 521,968 2,162,514
Cash and bank balances 10 29 3,126,069 13,091,977 24 2,407,353 9,973,663
Other receivables 11 1 84,580 354,221 1 86,684 359,132
Total current assets 35 3,815,619 15,979,812 30 3,016,005 12,495,309
Total assets 100 10,844,484 45,416,699 100 10,082,304 41,770,986
LIABILITIES AND SHAREHOLDERS’ FUNDS
Current liabilities
Unearned premium reserve 12 8 862,193 3,610,864 7 709,834 2,940,842
Claims outstanding 13 1 108,734 455,378 1 58,677 243,099
Short-term payables - - - - - -
Other payables 14 6 636,777 2,666,822 2 254,598 1,054,800
Provision for taxation - - - - - -
Total current liabilities 15 1,607,704 6,733,064 10 1,023,109 4,238,741
Long-term liabilities
Long-term liabilities - - - - - -
Total long-term liabilities - - - - - -
Shareholders’ funds
Share capital 15 64 7,000,000 29,316,000 69 7,000,000 29,001,000
Minority share - - - - - -
Catastrophe reserve 13 2,059,195 8,623,909 16 1,580,160 6,546,603
Retained profits 5 508,835 2,131,001 5 479,035 1,984,642
Dividend 3 -331,250 -1,387,275 - - -
Total shareholders’ funds 85 9,236,780 38,683,635 90 9,059,195 37,532,245
Total liabilities and
shareholders’ funds 100 10,844,484 45,416,699 100 10,082,304 41,770,986

The accompanying notes form an integral part of these financial statements

Cambodian Reinsurance Company “Cambodia Re”
(Registration No.: Co – 6063/02 Et)
Income Statement at 31 December 2010
2010 2009
Note US$ KHR’000 US$ KHR’000
(Note 4) (Note 4)
Underwriting income
Gross premium income 2,975,291 12,460,519 2,535,094 10,502,895
Premium cancelled and refunded - - - -
Total premium income 2,975,291 12,460,519 2,535,094 10,502,895
Reinsurance ceded -1,198,187 -5,018,007 -1,039,789 -4,307,846
Net premium income 1,777,104 7,442,512 1,495,305 6,195,049
Unearned premium reserve: 12
At the beginning of the year 709,834 2,972,785 705,688 2,923,665
At the end of the year -862,193 -3,610,864 -709,834 -2,940,842
Premium earned 1,624,745 6,804,433 1,491,159 6,177,872
Reinsurance commission 376,822 1,578,131 364,951 1,511,992
Loss commission - - -5,358 -22,198
Total underwriting income 16 2,001,567 8,382,564 1,850,752 7,667,666
Underwriting expenses
Gross claims paid -871,472 -3,649,725 -2,666,999 -11,049,377
Claim recoveries from reinsurers 294,664 1,234,053 2,045,175 8,473,160
Net claims paid -576,808 -2,415,672 -621,824 -2,576,217
Net claims outstanding: 13
At the beginning of the year 58,677 245,739 81,178 336,320
At the end of the year -108,734 -455,378 -58,677 -243,099
Net claims incurred -626,865 -2,625,311 -599,323 -2,482,996
Commission expense -600,884 -2,516,502 -513,069 -2,125,645
Contribution fees -14,572 -61,028 -12,841 -53,200
Total underwriting expenses 16 -1,242,321 -5,202,841 -1,125,233 -4,661,841
Underwriting profit 759,246 3,179,723 725,519 3,005,825
Administrative expenses 17 -1,456,398 -347,144 -1,438,218
Net underwriting profit 411,491 1,723,325 378,375 1,567,607
Investment income
Interest income from Government bonds 125,863 527,114 124,697 516,620
Interest income from placements with banks 120,231 503,527 101,147 419,052
Others - - 1,411 5,846
Total investment income 246,094 1,030,641 227,255 941,518
Investment expenses - - - -
Net profit from investment 246,094 1,030,641 227,255 941,518
Net profit before income tax 657,585 2,753,966 605,630 2,509,125
Income tax expenses 18 -148,750 -622,965 -126,595 -524,483
Net profit for the year 508,835 2,131,001 479,035 1,984,642
The accompanying notes form an integral part of these financial statements

ANNUAL REPORT 2010
CAMBODIAN REINSURANCE COMPANY
No.17, St.134, Sangkat Mittapheab, Khan 7 Makara, Phonm Penh,
Cambodia.

Anuul report report 2010

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