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Muang Thai Life Assurance Public Company LimitedNotes to the financial statements for the year ended 31 December 202458continually monitors the Companys risk management process to ensure that the balance between that cost and benefit is still within appropriate level. Capital management The primary objectives of the Company%u2019s capital management are to ensure that it has appropriate financial resources to continue its business as a going concern and to maintain capital requirement in accordance with Notifications of the Office of Insurance Commission.All insurers are required to maintain the Capital Adequacy Ratio based on risk-based capital requirement of at least minimum level of 140% as required by the Office of Insurance Commission. It is the Company%u2019s policy to hold adequate and appropriate capital levels according to the risk-based capital adequacy framework.There were no changes in the Company%u2019s policy to capital management during the year.Muang Thai Life Assurance Public Company LimitedNotes to the financial statementsFor the year ended 31 December 2024Insurance risk management Insurance risk is the risk arising from fluctuation of claim frequency, claim severity and time of claim occurrence that deviate from the pricing and reserving assumptions.Risks that are specific to the various types of insurance contracts are elaborated as follows:Pricing risk Pricing risk refers to the risk that the prices charged by the Company for insurance contracts will be ultimately inadequate to support the future obligations arising from those insurance contracts. This risk is applicable for newly launched products. Pricing risk may occur where setting pricing assumptions are not appropriate, or having risk that the contracts expose it to risks that were not anticipated in the design of pricing of those products, or selecting pricing model is not appropriate. These mentioned outcomes may result to the financial loss of the Company.The Company manages pricing risk through the product approval process where products are regularly reviewed against pricing, design and profitability test agreed by the product development sub-committee.On-going profitability riskOn-going profitability risk refers to the risk that the current profit of each product deviates from the expected profit. This risk is applicable for existing products which can result from deviation of either assumptions or policyholder risk profile such as age, gender, sum assured etc.The Company closely monitors the performance of sales, new business value, product mix and other key drivers for growth and profitability in particular on a monthly basis.Reserving riskReserving risk refers to the risk that long-term and short-term provisions presented in the financial statements for its policyholder obligations will be inadequate.The adequacy of the reserves is considered by the Board of Directors of the Company at each reporting date based on the advice from the Company%u2019s actuaries and analysis of the sensitivity to key assumptions, in particular interest rate.Additionally, to ensure that the Company holds adequate reserves for future obligations, the control process on the quality of the in force policy data and the actuarial models are taken into consideration. The Company%u2019s internal audit department verifies the correctness and completeness of in force policy data at least twice a year.Reinsurance riskReinsurance risk refers to the risk resulted from the insurance company purchases reinsurance contracts from reinsurers that related to credit risk, concentration risk, and liquidity risk arising from reinsurers.The Company must select reinsurance companies that have defined credit ratings at commencement date and monitor each reinsurer%u2019s financial situation regularly. Besides, the Company also has a policy to reinsure with many reinsurers to mitigate the concentration risk.Annual Report 2024 I Muang Thai Life Assurance PCL 191