Page 54 - NIB Annual Report 12-13 | 13-14

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD
Notes to Financial Statements, continued Year ended March 31, 2013
4. Determination of fair values, continued
(a) Investment property, continued
When rent reviews or lease renewals are pending with anticipated reversionary increases, it is assumed that all notices, and when appropriate counter-notices, have been served validly and within the appropriate time.
 Taking a combination of a comparable approach for valuing land and a cost approach for valuing improvements. A comparable approach is most viable when an adequate number of properties of a similar type have been sold recently or are currently for sale in the subject property market. The application of this approach produces a value indication for the property through comparison with similar properties, called comparable sales. A cost approach is based on the premise that the value of a property can be indicated by the current cost to construct a reproduction or replacement including the improvements, minus the amount of depreciation evident in the structures from all causes, plus the value of land and entrepreneurial profit.
(b) Available-for-sale financial assets
The fair value of available-for-sale financial assets is determined by reference to their quoted closing bid price at the reporting date.
(c) Investment in, and assets held with, TCI Bank
The fair value of NIB’s investment in TCI Bank was assessed by NIB’s management to be US$nil at March 31, 2013 and March 31, 2012 as a consequence of TCI Bank entering provisional liquidation on April 9, 2010 and liquidation on October 29, 2010. The fair value of NIB’s other, non-secured, assets held with TCI Bank were reduced by 56% of the total amounts held at the date TCI Bank entered provisional liquidation, being management’s best estimate of an appropriate fair value adjustment in the circumstances.
The fair value of secured assets held with TCI Bank at March 31, 2012 were not reduced by NIB’s management due to the security held by NIB. These secured assets were settled in full during the year ended March 31, 2013.
(d) Loans and receivables
With the exception of assets held with TCI Bank the fair value of loans and receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. The fair value of assets held with TCI Bank has been estimated by NIB’s management.
(e) Other financial instruments
Due to their short-term nature the carrying amounts of other financial assets and
50 | The National Insurance Board of The Turks and Caicos Islands
liabilities of NIB approximate their fair value.
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