Page 86 - NIB Annual Report 12-13 | 13-14

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD
Notes to Financial Statements, continued Year ended March 31, 2013
25. Financial instruments, continued
(b) Liquidity risk, continued
Due to the uncertainties regarding the status of NIB’s assets held at TCI Bank, NIB management consider it appropriate to recognise the maturity period of assets held at TCI Bank, with the exception of the TCI Bank loan, as greater than four years for liquidity disclosure purposes.
(c) Market risk
Market risk is the risk that changes in market prices, such as interest rates and equity prices, will affect NIB’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
NIB’s strategy for the management of market risk is driven by NIB’s investment objectives as reflected in its IPS.
NIB’s market risk is managed on a regular basis by the Investment Committee.
NIB may not invest in: margin transactions; acquisition of shares that would permit the portfolio to exercise control over the issuer; uncovered speculative positions; direct investments in physical commodities; futures contracts; options and derivative investments.
(i) Interest rate risk
NIB’s operations are subject to the risk of interest rate fluctuation to the extent that interest-earning assets mature or reprice at different times or in differing amounts. Risk management activities are aimed at optimising net interest income, given market interest rate levels consistent with NIB’s strategies.
At the reporting date, the interest rate profile of NIB’s interest-bearing financial instruments was:
Cash flow sensitivity analysis for fixed rate instruments
Fixed rate instruments: Financial assets
Short-term investments
Notes receivable Available-for-sale financial assets Long-term receivables
(current and non-current) Long-term deposits – net
Financial liabilities
US$
US$
2013 2012
– 6,044,996
– 5,500,000 48,070,298 46,788,841
4,104,906 4,638,760 – – – –
52,175,204 62,972,597 61
82 | The National Insurance Board of The Turks and Caicos Islands