NTUC Income AR 2017

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 4. MANAGEMENT OF INSURANCE AND FINANCIAL RISKS (CONTINUED) (c) Financial risk (continued) (ii) Credit risk (continued) The table below provides information regarding the credit risk exposure of the Group by classifying assets according to the rating buckets. 2017 Investment Grade (AAA to BBB-) $’000 Below Investment Grade (Below BBB-) $’000 Non-rated $’000 Total $’000 Debt securities 18,033,655 58,470 4,842,462 22,934,587 Loans – – 695,975 695,975 Cash and cash equivalents 585,761 – – 585,761 Derivatives with positive fair values – – 151,124 151,124 2016 Investment Grade (AAA to BBB-) $’000 Below Investment Grade (Below BBB-) $’000 Non-rated $’000 Total $’000 Debt securities 16,351,842 216,226 4,702,893 21,270,961 Loans – – 694,250 694,250 Cash and cash equivalents 664,724 – – 664,724 Derivatives with positive fair values – – 33,854 33,854 The carrying amount of assets included in the statement of financial position represents the maximum credit exposure. Cash and cash equivalents and derivative transactions are carried out with banks and financial institutions (i) which are regulated by the MAS and other regulators overseas; and (ii) whose credit is rated investment grade by the rating agencies. Ceded reinsurance contains credit risk, and such reinsurance assets are reported after deductions for known insolvencies and uncollectible items. The Group monitors the financial condition of its reinsurers on an ongoing basis and reviews its reinsurance arrangements periodically. When selecting its reinsurers, the Group considers their relative financial security. The security of the reinsurer is assessed based on public rating information. ANNUAL REPORT 2017 NTUC INCOME INSURANCE CO-OPERATIVE LIMITED 80