NTUC Income AR 2018

Notes to the Financial Statements For the Financial Year Ended 31 December 2018 3. Critical accounting estimates and judgements (continued) Insurance contract provisions for General Insurance (continued) Development and movement of general insurance claim liabilities (continued) Below is the summary of the development of past years’ net claims liabilities as at this year’s valuation: Claims development table 2018 $’000 Accident year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total End of accident year 226,742 197,095 195,975 205,790 207,360 204,499 209,542 227,849 241,377 247,778 1 year later 210,311 172,582 184,283 203,562 202,798 191,188 191,300 214,611 222,091 2 years later 205,928 166,526 178,766 192,406 184,577 160,206 167,845 195,111 3 years later 201,684 160,751 164,004 175,255 151,580 139,189 154,281 4 years later 199,733 153,395 154,389 146,638 138,916 126,506 5 years later and beyond 185,873 142,124 133,685 137,461 129,543 Estimate of net cumulative claims 185,873 142,124 133,685 137,461 129,543 126,506 154,281 195,111 222,091 247,778 1,674,453 Cumulative net claim payments 185,496 141,463 131,263 134,919 123,883 116,430 123,722 137,186 135,315 81,599 1,311,276 Estimate of net claim liabilities 377 661 2,422 2,542 5,660 10,076 30,559 57,925 86,776 166,179 363,177 Claims handling expenses 22 39 144 151 336 598 1,815 3,439 5,153 9,867 21,564 Estimate of net claim liability before recoveries 399 700 2,566 2,693 5,996 10,674 32,374 61,364 91,929 176,046 384,741 Estimate of net claim liabilities for prior accident years 1,738 Recoveries and other adjustments 2,123 Provisions for adverse deviation 48,478 Net claim liabilities 437,080 Fair value of financial instruments and investment properties The majority of the Group’s financial instruments reported at fair value are based on quoted and observable market prices or on service providers’ internally developed models that are based on independently sourced market parameters, including interest rate yield curves, option volatilities and currency rates. Investment properties are carried at fair values as determined by independent professional valuers. The Group’s fair value policies are approved by the Investment Committee with oversight by the Board. Management exercise judgement in determining the risk characteristics of various financial instruments, discount rates, estimates of future cash flows and other factors used in the valuation process. Judgement may also be applied when less readily observable external parameters are used in fair value estimation. The valuation techniques and unobservable inputs used by management in the valuation process are detailed in Note 4(f). Impairment assessment of investment in associated company At the reporting date, the Group’s investment in associated company, NTUC Choice Homes Co-operative Ltd (“Choice Homes”) has a carrying amount of $119,019,000 (2017: $117,673,000) which is above its share redemption value of $20,000,000 (2017: $20,000,000). As Choice Homes is a co-operative, its By-laws state that the redemption value of its share shall not be more than the nominal value of the shares or the net asset value of the shares based on the last audited financial position, whichever is lower. The Group is of the view that the value of Choice Homes will be returned in the long term. This position will be reviewed from time to time and the Group will consider, among other factors, regular dividend payout made and the future plans of Choice Homes. 68 HAND IN HAND