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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2018 (CONTINUED)
17. Risk Management (continued)
(a) Insurance risk (continued)
Casualty insurance risks (continued)
contracts and the right to reject the payment of a fraudulent claim. The frequency and severity of claims can be affected by several factors, including inflation, the level of awards of the courts and length of time to settle the claims.
The majority of claims on casualty insurance contracts are payable on a claims-occurrence basis. The Group is liable for all insured events that occur during the term of the contract, even if the loss is discovered after the end of the contract term. As a result, liability claims are settled over a longer period of time. Given the uncertainty in establishing reserves for such claims, it is possible
that the final cost of a claim will vary significantly from the initial reserve. In calculating the estimated cost of outstanding claims, the Group uses various industry standard loss estimation techniques and the experience of the Group in settling similar claims.
(b) Financial risk
The Group is exposed to a range of financial risks through its financial assets, financial liabilities (investment contracts and borrowings), reinsurance assets and insurance liabilities. The most
important components of this financial risk are credit risk, liquidity risk, interest rate risk, equity price risk and foreign currency risk.
These risks arise from open positions in interest rate, currency and equity products, all of which are exposed to general and specific market movements. The risks that the Group primarily faces due to the nature of its investments and liabilities are interest rate risk and equity price risk.
The Group manages these positions within the risk policy framework that has been developed to achieve long-term investment returns in excess of its obligation under insurance contracts. Within the risk policy the Group periodically produces analytical reports at portfolio and country level, that are circulated to the various Board Committees and key management personnel. The Group has not changed the process used to manage its risks from previous years.
The following tables reconcile the consolidated balance sheet to the classes and portfolios used in the Group’s risk policy.
2018 2017 $$
42
Total assets
136,753,874
310,245,812
Financial assets
Cash on hand and at banks Term deposits
Investments in securities:
Fair value through profit or loss Loans and receivables
Due from reinsurers
Due from agents
Accounts receivable and other assets Outstanding claims recoverable from reinsurers
Total financial assets
Non-financial assets
14,145,911 10,007,944
5,889,183 13,054,875 971,652 9,497,414 525,865 43,581,845
97,674,689
39,079,185
7,610,978 9,915,508
6,104,473 13,114,136 937,076 11,356,335 6,951,540 211,757,236
267,747,282
42,498,530