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) (f) Fair value measurements (continued) The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Quoted market prices or dealer quotes for similar instruments are used to estimate fair value for long-term debt for disclosure purposes. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward foreign exchange contracts is determined using quoted forward exchange rates at the reporting date. These investments are included in Level 2 and comprise debt investments and derivative financial instruments. In infrequent circumstances, where a valuation technique for these instruments is based on significant unobservable inputs, such instruments are included in Level 3. The following table presents the changes in Level 3 instruments: 2017 Fair value through profit or loss Available-for-sale investments Debt securities $’000 Unquoted funds $’000 Unquoted equities $’000 Total $’000 At 1 January 1,117 1,516,449 42,548 1,560,114 Sales of Level 3 securities – (311,573) – (311,573) Purchases of Level 3 securities – 440,746 – 440,746 Revaluation reserve – 3,637 (1,144) 2,493 Gains and losses recognised in profit or loss (215) 96,983 134 96,902 At 31 December 902 1,746,242 41,538 1,788,682 During the financial year ended 31 December 2017, there is no transfer of investments between Level 1 and 2, and in and out of Level 3 of the fair value hierarchy. 2016 Fair value through profit or loss Available-for-sale investments Debt securities $’000 Unquoted funds $’000 Unquoted equities $’000 Total $’000 At 1 January 16,289 1,395,294 41,874 1,453,457 Sales of Level 3 securities (12,481) (246,486) – (258,967) Purchases of Level 3 securities – 266,420 – 266,420 Revaluation reserve – 54,882 674 55,556 Gains and losses recognised in profit or loss (2,691) 46,339 – 43,648 At 31 December 1,117 1,516,449 42,548 1,560,114 During the financial year ended 31 December 2016, there is no transfer of investments between Level 1 and 2, and in and out of Level 3 of the fair value hierarchy. ANNUAL REPORT 2017 EVERY DAY MADE DIFFERENT 85