British American is a resident insurance company carrying out both general and life assurance businesses in Kenya. The following information relates to the insurance companys financial year ended 31 December 2021:

General insurance Business Life assurance Business

Ksh. 000 Ksh. 000

Insurance premiums received 50,750 86,900

Premiums returned on surrendered policies 8,000 2,000

Re-insurance commission ceded 5,000 -

Premiums paid to re-insurance company 4,000 -

Management expenses 8,400 26,500

Traveling expenses 1,800 2,400

Advertising expenses 364 820

General expenses 8,500 4,600

Bad debts written off (specific) 300 800

Income from exercise of subrogation rights 750 -

Rent and rates 200 450

Staff training expenses 3,000 2,000

Depreciation of equipment 900 1,100

Fines and penalties for late payment of tax 150 50

Repairs and maintenance 50 50

Claims recovered on re-insurance 1,450 -

Additional information

Reserves for unexpired risk for general insurance business was as follows:

General

Business

Ksh. 000

1 January 2021 3,200

31 December 2021 1,700

Claims outstanding were as follows:

General insurance Life assurance

Business Business

Ksh. 000 Ksh. 000

1 January 2021 5,600 3,400

31 December 2021 6,200 2,800

Claims paid during the year ended 31 December 2021 amounted to Ksh. 17,600,000 for General insurance business and Ksh. 16,900,000 for Life assurance business.

The life fund balance was estimated to be ksh 120 million out of which the actuary recommended that ksh 40 million to be transferred to the shareholders

Income from subrogation ksh 7.8 million. Capital allowances was agreed with KRA at ksh. 4 million.

Required: (i) Determine the taxable income or loss of British American Insurance Company Ltd. for the year of income 2021. (12 marks) (ii) Tax payable (if any) by the insurance company (3 marks) (Total: 15 Marks)