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) (d) Financial instruments by category The carrying amount of the different categories of financial instruments is as disclosed on the face of the statement of financial position and in Note 11 and Note 14 to the financial statements, except for the following. 2017 Life Insurance Par Fund $’000 Life Insurance Non-Par Fund $’000 Investment- Linked Fund $’000 General Insurance Fund $’000 Share holders' Fund $’000 Total $’000 Loans and receivables 1,241,324 73,248 77,769 72,869 97,098 1,562,308 Financial liabilities 1,199,349 121,905 53,335 106,061 644,355 2,125,005 2016 Life Insurance Par Fund $’000 Life Insurance Non-Par Fund $’000 Investment- Linked Fund $’000 General Insurance Fund $’000 Share holders' Fund $’000 Total $’000 Loans and receivables 1,349,569 85,438 111,239 79,510 110,860 1,736,616 Financial liabilities 1,027,124 102,363 65,562 113,070 645,193 1,953,312 (e) Capital management The Group’s capital policy is to ensure capital efficiency and the ability to self-generate sufficient level of surpluses within each fund to support the existing and on-going development. This is especially important given its co-operative status and limited avenues for raising capital. The Group’s capital management framework is to ensure the use of capital and generation of surplus through steering of bonus distribution strategy, investment strategy, product pricing and development and risk management. Critical amongst these is to ensure that products are priced on a profitable basis to self- generate surpluses and bolster capital. To ensure this, minimum pricing standards have been set. The Co-operative is required to comply with the regulatory capital requirement prescribed in the Insurance (Valuation and Capital) Regulations 2004 under the Insurance Act. Under the Risk-based Capital Framework regulation set by MAS, insurance companies are required to satisfy a minimum capital adequacy ratio of 120%. MAS may prescribe different fund solvency requirements or capital adequacy requirements for different classes of insurance business and for different types of insurers. The Co-operative has a capital adequacy ratio in excess of the minimum requirement. Regulated capital of the Co-operative as at 31 December 2017 comprised Available Capital at $10.12 billion, Risk Capital at $3.6 billion and Capital Adequacy Ratio of 282%. The amounts as at 31 December 2016 comprised: Available Capital at $8.71 billion, Risk Capital at $3.27 billion and Capital Adequacy Ratio of 266%. (f) Fair value measurements The following table presents our financial assets and liabilities measured at fair value and classified by level of the following fair value measurement hierarchy. (a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); (b) Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and (c) Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). ANNUAL REPORT 2017 EVERY DAY MADE DIFFERENT 83