NTUC Income AR 2019

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 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 insurance contract provisions. 2019 2018 Assumption Change Impact on insurance contract provisions $’000 Impact on insurance contract provisions $’000 Interest rates +100 bps – – -100 bps 1,971,734 2,182,376 Mortality / morbidity / longevity – life insurance contracts, excluding annuities +20% – – -20% – – – annuities contracts Mortality Improvement of 1 Year – – Mortality Deterioration of 1 Year – – Lapses +20% – – -20% – – The insurance contract provisions or liability is defined according to the Insurance Act. 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 insurance contract provisions 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. ANNUAL REPORT 2019 75