NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011 14. FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (continued) CREDIT RATING AAA AA A Speculative Not +/- +/- +/- BBB Rated TOTAL $m $m $m $m $m $m Reinsurance and other recoveries on outstanding claims 2010 - 2.433 25.886 - - 0.664 28.983 2011 - 0.467 27.057 - - 0.537 28.061 Reinsurance and recoveries on paid claims 2010 - 0.092 4.661 - - 0.795 5.548 2011 - 0.038 3.408 - - 0.743 4.189 PAST DUE BUT NOT IMPAIRED Neither past Greater due nor Less than 3 to 6 6 months than TOTAL impaired 3 months months to 1 year 1 year Impaired $m $m $m $m $m $m Reinsurance and other recoveries on paid claims 2010 - 4.692 0.006 0.030 0.054 .765 5.547 2011 - 2.632 0.678 0.139 0.014 0.726 4.189 Interest rate risk The reinsurance indemnity contracts contain no clauses that expose the Scheme, directly to interest rate risk. The reinsurance contracts are long term arrangements, reviewed and payable annually. Total accumulated Operating funds after Change surplus at 30 the impact Current rate variable to June 2011 of applying variable % % $ Variable $ IMPACT OF CHANGES IN INTEREST CIVIC MUTUAL PLUS Base value at 30 June 2011 4% 7,247,835 Interest rate pa 249,112 8,035,295 (1,370,581) 6,415,602 6% 5% Credit risk The Scheme is exposed to credit risk on insurance contracts as a result of exposure to reinsurers. The credit risk to reinsurers is managed through the Scheme’s reinsurance management strategy and policies that includes regularly monitoring both the financial rating of the reinsurers both prior to and during the reinsurance program and the flow of payments coming from the reinsurers. Investments in cash and cash equivalents at balance date as in the Statement of Cash Flows are held in Standard and Poors rated AA and AAf rated cash deposits. risk Investments held are not subject to risk. Investments are cash at bank and fixed interest funds.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011 14. FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (continued) CREDIT RATING AAA +/- $m AA +/- $m A +/- $m BBB $m Speculative $m Not Rated $m TOTAL Reinsurance and other recoveries on outstanding claims 2011 2010 - - 0.467 2.433 27.057 25.886 - - - - 0.537 0.664 28.061 28.983 Reinsurance and recoveries on paid claims 2011 2010 - - 0.038 0.092 3.408 4.661 - - - - 0.743 0.795 4.189 5.548 PAST DUE BUT NOT IMPAIRED Neither past due nor Less than impaired 3 months 3 to 6 6 months months to 1 year Greater than 1 year Impaired TOTAL $m $m $m $m $m $m Reinsurance and other recoveries on paid claims 2011 2010 - - 2.632 4.692 0.678 0.006 0.139 0.030 0.014 0.054 0.726 .765 4.189 5.547 Interest rate risk The reinsurance indemnity contracts contain no clauses that expose the Scheme, directly to interest rate risk. The reinsurance contracts are long term arrangements, reviewed and payable annually. Variable Current rate % Operating Change surplus at 30 variable to June 2011 % $ Total accumulated funds after the impact of applying variable $ IMPACT OF CHANGES IN INTEREST CIVIC MUTUAL PLUS Base value at 30 June 2011 Interest rate pa 5% 6% 4% 249,112 (1,370,581) 7,247,835 8,035,295 6,415,602 Credit risk The Scheme is exposed to credit risk on insurance contracts as a result of exposure to reinsurers. The credit risk to reinsurers is managed through the Scheme’s reinsurance management strategy and policies that includes regularly monitoring both the financial rating of the reinsurers both prior to and during the reinsurance program and the flow of payments coming from the reinsurers. Investments in cash and cash equivalents at balance date as in the Statement of Cash Flows are held in Standard and Poors rated AA and AAf rated cash deposits. risk Investments held are not subject to risk. Investments are cash at bank and fixed interest funds.
2010-11-insurance-report.docx