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) (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: 2018 Investment Grade (AAA to BBB-) $’000 Below Investment Grade (Below BBB-) $’000 Non-rated $’000 Total $’000 Debt securities 17,506,418 386,585 5,297,593 23,190,596 Loans – – 692,514 692,514 Derivatives with positive fair values – – 130,249 130,249 Cash and cash equivalents 644,554 – – 644,554 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 Derivatives with positive fair values – – 151,124 151,124 Cash and cash equivalents 585,761 – – 585,761 The carrying amount of assets included on 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 are 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. 82 HAND IN HAND