NTUC Income AR 2019

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 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 2019 $'000 Accident year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total End of accident year 226,742 197,095 195,975 205,790 207,360 204,499 209,542 227,849 241,377 247,778 242,580 1 year later 210,311 172,582 184,283 203,562 202,798 191,188 191,300 214,611 222,091 231,223 2 years later 205,928 166,526 178,766 192,406 184,577 160,206 167,845 195,111 195,831 3 years later 201,684 160,751 164,004 175,255 151,580 139,189 154,281 180,214 4 years later 199,733 153,395 154,389 146,638 138,916 126,506 144,229 5 years later and beyond 185,091 141,089 133,221 137,526 129,150 120,846 Estimate of net cumulative claims 185,091 141,089 133,221 137,526 129,150 120,846 144,229 180,214 195,831 231,223 242,580 1,841,000 Cumulative net claim payments 184,860 140,945 131,867 135,745 125,082 115,222 126,115 145,486 147,033 138,318 75,050 1,465,723 Estimate of net claim liabilities 231 144 1,354 1,781 4,068 5,624 18,114 34,728 48,798 92,905 167,530 375,277 Claims handling expenses 13 8 77 102 232 320 1,032 1,978 2,780 5,292 9,543 21,377 Estimate of net claim liability before recoveries 244 152 1,431 1,883 4,300 5,944 19,146 36,706 51,578 98,197 177,073 396,654 Estimate of net claim liabilities for prior accident years 1,526 Recoveries and other adjustments 1,069 Provisions for adverse deviation 49,136 Net claim liabilities 448,385 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 co-operative At the reporting date, the Group’s investment in associated co-operative, NTUC Choice Homes Co-operative Ltd (“Choice Homes”) being a secondary co-operative, has a carrying amount of $118,834,000 (2018: $119,019,000) which is above its share redemption value of $20,000,000 (2018: $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. However, section 89(3) of the Co-operative Societies Act states that, in the case of liquidation of a secondary co-operative, any money remaining can be distributed among the members. A secondary society means a society whose registered members are co-operatives, societies, trade unions, or co-operative societies and trade unions. ANNUAL REPORT 2019 73