MILLIRE_2019_Annual Report

224 Milli Re Annual Report 2019 Millî Reasürans Türk Anonim Şirketi NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2019 (Currency: Turkish Lira (TL)) (Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1) Credit risk Credit risk is the risk of financial loss to the Group if counterparties (parties issued financial instrument, insurance companies, reinsurance companies and other debtors) having business relationship with the Group fails to meet its contractual obligations. The Group manages this credit risk by regularly assessing reliability of the counterparties. Credit risk is measured by both quantitative and qualitative methods and the weighted reinsurers in retrocession programs, credit ratings of them that indicate their financial strengths and their financial positions are analysed. Reinsurance contracts are the most common method to manage insurance risk. This does not, however, discharge the Group’s liability as the primary insurer. If a reinsurer fails to pay a claim for any reason, the Group remains liable for the payment to the policyholder. The creditworthiness of reinsurers is considered on an annual basis by reviewing their financial strength prior to finalization of the reinsurance contract. Doubtful receivables are monitored quarterly. In addition, concentration of the investment portfolio is assessed quarterly. The results evaluated by the Risk Committee and reported regularly to the Board of Directors. Action plan is determined by the Board of Directors in the case of having exposure higher than acceptable level of risk and probability. Net book value of the assets that is exposed to credit risk is shown in the table below. December 31, 2019 December 31, 2018 Cash and cash equivalents (Note 14) (*) 6.391.117.981 5.815.801.420 Receivables from main operations (Note 12) 2.184.560.010 1.833.933.317 Financial assets and financial investments with risks on policyholders (Note 11) (**) 2.132.398.647 1.009.552.468 Reinsurer share in outstanding claims reserves (Note 10), (Note 17) 1.507.010.830 1.195.809.112 Prepaid taxes and funds (Note 12) 6.312.824 38.869.531 Income accruals (Note 12) 39.168.327 88.437.494 Other receivables (Note 12) 32.484.190 30.607.644 Other current asset (Note 12) 10.000 624.023 Total 12.293.062.809 10.013.635.009 (*) Cash on hands balance amounting to TL 111.671 are not included (December 31, 2018: TL 70.338). (**) Equity shares amounting to TL 267.706.195 are not included (December 31, 2018: TL 178.042.246). December 31, 2019 and 2018, the aging of the receivables from main operations and related provisions are as follows: December 31, 2019 December 31, 2018 Gross amount Provision Gross amount Provision Not past due 1.835.968.805 - 1.466.861.226 - Past due 0-30 days 269.419.754 (4.212.086) 263.048.540 (2.288.174) Past due 31-60 days 25.794.218 (2.229.697) 37.375.749 (2.525.052) Past due 61-90 days 10.660.653 (2.223.380) 17.223.622 (2.004.030) More than 90 days (*) 460.298.120 (408.916.377) 387.724.488 (331.483.052) Total 2.602.141.550 (417.581.540) 2.172.233.625 (338.300.308) (*) As per the February 3, 2005 dated and B.02.1.HM.O.SGM.0.3.1/01/05 numbered Circular issued by the Republic of Turkey Ministry of Treasury and Finance, in case where subrogation is subject to claim/legal action, related subrogation amount is recognized as doubtful receivables and allowance for doubtful receivables is provided by the same amount in the financial statements. Related amounts are presented in “More than 90 days” line in the above table.