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Muang Thai Life Assurance Public Company LimitedNotes to the financial statements for the year ended 31 December 2024Muang Thai Life Assurance Public Company LimitedNotes to the financial statementsFor the year ended 31 December 202419(9) Liability adequacy testThe Company tests liability adequacy by comparing the current estimate of future contractual cash flows by using current assumptions with the aggregated carrying amount of gross insurance contract provisions.An additional provision for liability inadequacy is made where the reserves calculated by %u201cGross Premium ValuationMethod%u201d exceed the liabilities calculated by %u201cNet Level Premium Valuation method%u201d. However, liability adequacy test is performed based on aggregation of total insurance contract liabilities including loss reserves and outstanding claims and premium reserve for policies in force at the reporting date.The assumptions used in the Gross Premium Valuation are in accordance with the Notification of Office of Insurance Commission regarding Assessment of Assets and Liabilities of Life Insurance B.E.2554 except for discounted interest rate which the Company uses the adjusted current risk-free interest rate for purpose of liability adequacy test in accordance with the industry practice. (e) Cash and cash equivalents Cash and cash equivalents comprise cash balance, call deposits and highly liquid short-term investments with original maturities of less than three months and not subject to withdrawal restrictions.(f) Investment in associates Investment in associates in the separate financial statements of the Company are accounted for using the cost method. Investment in associates in the financial statementsin which the equity method is applied are accounted for using the equity method, until the date on which significant influence ceases. (g) Investment in subsidiary Investment in subsidiary in the separate financial statements is accounted for using the cost method.(h) Financial instruments (1) Recognition and initial measurementFinancial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument. A financial asset and financial liability are initially measured at fair value plus transaction costs that are directly attributable to its acquisition or issue. A financial asset and a financial liability measured at FVTPL are initially recognised at fair value.(2) Classification and subsequent measurement Financial assets Financial assets held for trading are measured at fair value through profit or loss. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.Financial assets that the Company has the positive intent and ability to hold to maturity are classified asheld-to-maturity investments. Held-to-maturity investments are measured at amortised cost, lessimpairment losses. Acquisition cost and maturity amount of debt securities differences are amortised by effective interest method through the remaining life of the financial assets. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.Annual Report 2024 I Muang Thai Life Assurance PCL 155