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) (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: 2019 Investment Grade (AAA to BBB-) $’000 Below Investment Grade (Below BBB-) $’000 Non-rated $’000 Total $’000 Debt securities 16,783,688 698,582 6,639,259 24,121,529 Loans – – 679,526 679,526 Derivatives with positive fair values – – 221,194 221,194 Cash and cash equivalents 676,161 – – 676,161 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 The carrying amount of assets included on the statement of financial position represents the maximum credit exposure. Substantial portion of non-rated debt securities are in Singapore Government and government- related organisations. 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. ANNUAL REPORT 2019 87