Master netting agreement is an agreement providing for an entity that undertakes a number of financial instrument transactions with a single counterparty to make a single net settlement of all financial instruments covered by the agreement in the event of default on, or termination of, any contract. 

Negative amortization mortgages  are loans whereby the payment made by the borrower may be less than the accrued interest due and the difference is added to the loan balance. When the accrued balance of the loan reaches the negative amortization limit (typically 110% to 125% of the original loan amount), the loan recalibrates to a fully amortizing level and a new minimum payment amount is determined. 

Non-controlling interests are that portion of the profit or loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent. 

Monetary items  are units of currency held and assets and liabilities to be received or paid in a fixed or determinable number of units of currency. 

Monoline insurer  is an insurance company which issues types of insurance for securities and bonds to cover the interest and principal when an issuer defaults. 

Onerous contracts are contracts in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. 

Operating expenses  are all expenses associated with selling and administrative activities (excluding commissions) after reallocation of claim handling expenses to benefits paid. 

Past service cost is the increase in the present value of the defined benefit obligation for employee service in prior periods, resulting in the current period from the introduction of, or changes to, post-employment benefits. 

Plan assets are assets held by a long-term employee benefit fund and qualifying insurance policies. 

Policy acquisition costs are the expenses incurred in soliciting and placing new business as well as renewal of existing business. It includes agent’s commissions, underwriting expenses, medical and credit report fees, marketing expenses and all other direct and indirect expenses of the departments involved in such activities. 

Policyholder  is a party that has a right to compensation under an insurance contract if an insured event occurs. 

Presentation currency  is the currency in which the financial statements are presented. 

Price risk is a market risk, namely the risk that the value of a financial instrument will fluctuate as a result of changes in market prices. 

Private loan  is a non-derivative financial asset with a fixed interest rate and a maturity date, which is not bought in an active market but negotiated between the two parties involved. Private loans are not embodied in securities. When a private loan takes the form of a private placement of bonds or other investments directly to an institutional investor like an insurance company, it has more the character of a bond loan and such financial instruments are classified as available-for-sale investments rather than as loans and receivables. 

Projected unit credit method  is an actuarial valuation method that sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. 

Qualifying insurance policies  are a component of plan assets. These are insurance policies issued by an insurer that is not a related party of the reporting entity, if the proceeds of the policies: 

■ Can be used only to pay or fund employee benefits under a defined benefit plan; and 

■ Are not available to the reporting entity’s own creditors. 

Real estate investments foreclosed are real estate investments purchased through foreclosure on the mortgage. Such purchases are not accounted for as mortgages, but as real estate investments until they can be sold at a better price than at the foreclosure. Meanwhile they yield a rental income. 

Realizable value is the amount of cash or cash equivalents that could currently be obtained by selling an asset in an orderly disposal. 

Recognition is the process of incorporating in the statement of financial position or income statement an item that meets the definition of an element and satisfies the following criteria for recognition: 

■ It is probable that any future economic benefit associated with the item will flow to or from the entity; and 

■ The item has a cost or value that can be measured with reliability. 

Reinsurance assets are a cedant’s net contractual rights under a reinsurance contract. 

Reinsurance contract is an insurance contract issued by one insurer to compensate another insurer for losses on one or more contracts issued by the cedant. 

