Page 145 - Capricorn IAR 2020

2020 INTEGRATED ANNUAL REPORT
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2020
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.19 Fiduciary activities
The Group commonly acts as trustee and in other fiduciary capacities that result in the holding or placing of assets on behalf of individuals, trusts, retirement benefit plans and other institutions. These assets and income arising thereon are excluded from these consolidated annual financial statements, as they are not assets of the Group.
2.20 Operating segments
The Group considers its banking operations in Namibia and Botswana as two operating segments; the other major operating segment is the microlending activities in Namibia. Other components include property development, asset management, unit
trust management and the Zambian banking operations. However these components each contribute less than 10% to the Group revenue, assets and profit for the year. Therefore, the Group has no significant components other than banking in Namibia and Botswana. This is in a manner consistent with the internal reporting provided to the chief operating decision-maker, identified as the chief executive officer of the Group. The chief operating decision-maker is the person that allocates resources to and assesses
the performance of the operating segment(s) of an entity.
In assessing the performance of the banking operations, the Group chief executive officer reviews the various aggregated revenue streams, the total costs and the assets and liabilities related to the banking activities, which have been disclosed in the various notes to the consolidated annual financial statements.
2.21 Insurance contracts
2.21.1 Policyholder insurance contracts
Policyholder insurance contracts are classified in accordance with IFRS 4.
The Entrepo group is licensed as a long-term insurer in Namibia in accordance with the Long-term Insurance Act (the Act) of 1998, as amended. The Act requires the determination of assets, liabilities and capital requirements for statutory purposes in accordance with generally accepted actuarial standards and principles.
In terms of IFRS 4, defined insurance liabilities are allowed to be measured under existing local practice. The Group has adopted the Namibian Standards of Actuarial Practice (“NSAP”) issued by the Society of Actuaries of Namibia (“SAN”) to determine the liability in respect of insurance contracts. The following NSAP is relevant to the determination of policyholder liabilities:
• NSAP 104: Calculation of the Value of the Assets, Liabilities and Solvency Capital Requirement of Long-term Insurers
Where applicable, the NSAPs are referred to in the accounting policies and notes to the financial statements.
Classification of insurance contracts
The Group issued contracts which transfer insurance risk. The Group classifies these contracts as insurance contracts.
Insurance contracts
Insurance contracts are those contracts under which the Group (as insurer) accepts significant insurance risk from another party
(the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects them. Such contracts may also transfer financial risk. As a general guideline, the Group defines as significant insurance risk the possibility of having to pay benefits on the occurrence of an insured event that are at least 10% more than the benefits payable if the insured event did not occur.
Profit and loss impact of movements
Adjustments to the amounts of policyholder liabilities for policies established in prior years are reflected in the financial statements for the period in which the adjustments are made and disclosed separately if material.
Outstanding insurance contract claims
Provision is made on a prudent basis for the estimated final costs of:
• Claims notified but not settled at year-end, using the best information available at that time. The estimate includes an amount
of the direct claims expenses and assessment charges arising from the settlement of claims.
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