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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2018 (CONTINUED)
17. Risk Management (continued)
(h) Sensitivity Analyses (continued)
As at 31 December 2017
Impact on profit and equity
Impact on profit and equity
Impact on profit and equity
18. Capital Management
+1%
$99,155
+5%
($605,890)
+5%
($1,050,725)
Interest Rates
-1% +3% -3%
($99,155) $297,465
Underwriting Expenses
($297,465)
-5% +10% -10%
$605,890 ($1,211,780)
Loss Ratio
$1,211,780
-5% +10% -10%
$1,050,725 ($2,101,450)
$2,101,450
The Group’s objectives when managing capital, which consists of total equity on the consolidated balance sheet, are:
• To comply with the insurance capital requirements required by the regulators of the insurance markets in which the Group operates;
• To safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders; and
• To provide adequate returns to shareholders by pricing insurance contracts commensurate with the level of risk.
In each country in which the Group operates, the insurance regulator specifies the minimum amount and type of capital that must be held and solvency ratio that must be maintained, based on the applicable laws and regulations governing the country’s insurance industry. The minimum capital requirements applicable to the Group range from $150,000 to $5,000,000. The Group has complied with all of the externally imposed capital requirements to which it is subject.
As at 31 December 2018, the Group maintained its A.M. Best Financial Strength Rating of A (Excellent) with a stable outlook.
19. Fair Values of Financial Instruments
Financial instruments utilized by the Group are limited to the recorded financial assets and liabilities included in the consolidated balance sheet. Carrying amounts of all financial instruments reflect fair values or are considered to approximate fair value given their short-term nature and/or interest rates that periodically reset to market interest rates. For long term financial assets with fixed interest rates, despite a change in market rates since the issuance of the financial liabilities there has been no observable change in fair values; accordingly, the carrying values approximate fair values.
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