NTUC Income AR 2018

Notes to the Financial Statements For the Financial Year Ended 31 December 2018 4. Management of insurance and financial risks (continued) (a) Life Insurance Contracts Risk Management (continued) Sensitivity Analysis (i) Life Insurance Par Fund To understand the risks undertaken by the Group in the Life Insurance Par Fund, the following sensitivity analysis is done to measure the impact on the Group’s liabilities. 2018 2017 Assumption Change Impact on liabilities $’000 Impact on liabilities % Impact on liabilities $’000 Impact on liabilities % Interest rates +100 bps – 0% – 0% -100 bps 2,182,376 8.4% 1,737,365 6.8% Mortality / morbidity / longevity – life insurance contracts, excluding annuities +20% – 0% – 0% -20% – 0% – 0% – annuities contracts Mortality Improvement of 1 Year – 0% – 0% Mortality Deterioration of 1 Year – 0% – 0% Lapses +20% – 0% – 0% -20% – 0% – 0% The liability is defined according to the Insurance Act, Chapter 142. In most scenarios, the value of the policy assets of the fund exceeds the Minimum Condition Liability and the sum of the liability in respect of each policy of the fund. As such, the sensitivity does not have an impact to the liability the Group is holding except in the scenario of decrease 1% in interest rates (the corresponding amount will be recognised as losses). The impact to the profit or loss for the Par Fund is determined by the cost of declared bonus, where the Group reserves the right to vary the bonus scale under the specific scenario. 70 HAND IN HAND