Good Insurance (International) Limited

International GAAP® Illustrative financial statements for the year ended 31 December 2010
Based on International Financial Reporting Standards in issue at 30 June 2010

Contents
Abbreviations and key.............................................................................................................................................. 1  Introduction ............................................................................................................................................................. 2  Independent auditors’ report to the shareholders of Good Insurance (International) Limited .................................... 12  Group consolidated income statement .................................................................................................................... 13  Group consolidated statement of comprehensive income ........................................................................................ 15  Group consolidated statement of financial position ................................................................................................. 16  Group consolidated statement of changes in equity ................................................................................................ 17  Group consolidated statement of cash flows ........................................................................................................... 19  Notes to the consolidated financial statements ...................................................................................................... 20  1. Corporate information .................................................................................................................................... 20  2.1 Basis of preparation...................................................................................................................................... 20  2.2 Basis of consolidation ................................................................................................................................... 20  2.3 Summary of significant accounting policies ..................................................................................................... 21  2.4 Changes in accounting policy and disclosures .................................................................................................. 46  2.5 Significant accounting judgments, estimates and assumptions .......................................................................... 48  2.6 Standards issued but not yet effective ............................................................................................................ 51  3. Business combinations and acquisition of non-controlling interests ..................................................................... 52  4. Segment information ...................................................................................................................................... 54  5. Net premiums ................................................................................................................................................ 58  6. Fees and commission income ........................................................................................................................... 59  7. Investment income ......................................................................................................................................... 59  8. Realised gains ................................................................................................................................................ 59  9. Fair value gains and losses .............................................................................................................................. 60  10. Net benefits and claims ................................................................................................................................. 60  11. Finance costs ............................................................................................................................................... 61  12. Other operating and administrative expenses .................................................................................................. 61  13. Employee benefits expense ........................................................................................................................... 61  14. Income tax expense ...................................................................................................................................... 62  15. Dividends paid and proposed ......................................................................................................................... 63  16. Earnings per share........................................................................................................................................ 63  17. Income tax effects relating to other comprehensive income.............................................................................. 64  18. Components of other comprehensive income .................................................................................................. 64  19. Share-based payment ................................................................................................................................... 64  20. Goodwill ...................................................................................................................................................... 66  21. Intangible assets .......................................................................................................................................... 68  22. Investment in an associate ............................................................................................................................ 68  23. Property and equipment................................................................................................................................ 69  24. Investment properties ................................................................................................................................... 70  25. Derivative financial instruments ..................................................................................................................... 70  26. Financial instruments other than derivative financial instruments and fair values of financial instruments ............ 73  27. Reinsurance assets ....................................................................................................................................... 84  28. Taxation ...................................................................................................................................................... 84  29. Insurance receivables ................................................................................................................................... 85  30. Deferred expenses ........................................................................................................................................ 86  31. Accrued income ........................................................................................................................................... 86  32. Cash and cash equivalents ............................................................................................................................. 86  33. Insurance contract liabilities .......................................................................................................................... 86  34. Investment contract liabilities ........................................................................................................................ 90  35. Net asset value attributable to unit–holders .................................................................................................... 92  36. Pension benefit obligation ............................................................................................................................. 92  37. Borrowings .................................................................................................................................................. 94 
Good Insurance (International) Limited i

38. Other financial liabilities ................................................................................................................................ 95  39. Insurance payables ....................................................................................................................................... 96  40. Deferred revenue ......................................................................................................................................... 96  41. Trade and other payables .............................................................................................................................. 96  42. Issued share capital ...................................................................................................................................... 97  43. Other equity instruments .............................................................................................................................. 97  44. Risk management framework ........................................................................................................................ 97  45. Insurance and financial risk ......................................................................................................................... 100  46. Cash generated from operating activities ...................................................................................................... 134  47. Contingencies and commitments.................................................................................................................. 135  48. Related party disclosures ............................................................................................................................ 136  49. Events after the reporting date .................................................................................................................... 137  Appendix 1 – First–time adoption of IFRS ............................................................................................................. 138  Appendix 2 – Shadow accounting .......................................................................................................................... 145  Appendix 3 – Embedded value (EV) ....................................................................................................................... 149  Appendix 4 – Non–controlling interests measured at fair value in business combination ........................................ 152  Appendix 5 – Consolidated cash flow statement – direct method ........................................................................... 154  Appendix 6 – Glossary of insurance terms ............................................................................................................ 155  Index ................................................................................................................................................................... 157 

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Good Insurance (International) Limited

Abbreviations and key
The following styles of abbreviation are used in this set of International GAAP® illustrative financial statements: IFRS Interpretations Committee IASB GAAP Commentary IAS 33.41 IAS 1.BC13 IAS 39.AG71 IAS 39.IG.G2 ISA 700.25 IFRIC 4.6 IFRS 3.60 IFRS 4.44 IFRS 7.27A SIC 29.6 SIC International Financial Reporting Standards IFRS Interpretations Committee (formerly International Financial Reporting Interpretations Committee, IFRIC) International Accounting Standards Board Generally Accepted Accounting Principles/Practice The commentary explains how the requirements of IFRS have been implemented in arriving at the illustrative disclosure International Accounting Standard No.33, paragraph 41 International Accounting Standard No.1 (Revised), Basis for Conclusions, paragraph 13 IAS 39 ‘Finance Instruments: Recognition and Measurement’ – Appendix A – Application Guidance, paragraph AG71 IAS 39 ‘Financial Instruments: Recognition and Measurement’ – Guidance on Implementing IAS 39 Section G: Other, paragraph G.2 International Standard on Auditing No. 700, paragraph 25 International Financial Reporting Interpretations Committee Interpretation No.4, paragraph 6 International Financial Reporting Standard No.3 (Revised), paragraph 60 International Financial Reporting Standard No.4, paragraph 44 International Financial Reporting Standard No.7, paragraph 27A (Amended as at 5 March 2009) Standing Interpretations Committee Interpretation No.29, paragraph 6 Standing Interpretations Committee

IFRS references are shown on the right hand side of each page of the primary financial statements and the notes, indicating the specific IFRS paragraph that outlines the accounting treatment or disclosure adopted for that particular line item or block of narrative in the publication. The IFRS references to IAS 1, IAS 27 and IFRS 3 are to the revised versions of these standards found in the 2010 Bound Volume of International Financial Reporting Standards, approved at 1 January 2010.

Good Insurance (International) Limited

1

Introduction
This publication contains the consolidated financial statements of a fictitious company, Good Insurance (International) Limited, a limited liability insurance company with subsidiaries (the Group) incorporated and listed in Euroland, with a reporting date of 31 December 2010. Euroland is a fictitious country within Europe. The functional currency of the parent and presentation currency of the group is the euro. These illustrative financial statements have been produced in accordance with the International Financial Reporting Standards (IFRS), for an insurance company that issues life and non-life insurance products (which comprise both general insurance and healthcare products) as well as some investment products. The Group also performs investment management services to policyholders of investment products that do not contain an insurance component. The aim of this publication is to illustrate common IFRS-based disclosures that are specific to the insurance industry. Therefore, some commonly found transactions and their disclosures have either been deliberately omitted or simplified because they are illustrated in other Ernst & Young illustrative financial statement publications. Our series of model accounts includes: Good Group (International) Limited Good Group (International) Limited – Illustrative interim condensed consolidated financial statements Good Bank (International) Limited Good Insurance (International) Limited Good Real Estate Group (International) Limited Good Investment Fund Limited Illustrative financial statements of a fund whose puttable shares are classed as equity instruments Illustrative financial statements of a fund whose puttable shares are classed as financial liabilities Good Petroleum (International) Limited Good Mining (International) Limited Look for other industry specific illustrative financial statements that will be added in the future. We strongly encourage readers of this publication to refer to the other model financial statements in our series (available at www.ey.com/ifrs) to gain a greater understanding of other presentation and disclosure requirements. Users should also be aware that the comparative disclosures do not necessarily correspond to the published Good Insurance (International) Limited 2009. IFRS 4 Insurance Contracts is a transaction-based standard built around the definition of an insurance contract. It is not an industry-based entity specific financial reporting standard. Care should be taken to determine when a transaction falls within the scope of this standard. In this publication, we illustrate what we consider to be best practice disclosure and we focus on those areas of IFRS reporting that are heavily reliant on the professional judgment of management. These illustrative disclosures should not be considered as the only acceptable form of presentation, as they are based on best practices observed in the insurance industry and do not attempt to show all possible accounting and disclosure requirements. These illustrative financial statements are not intended to satisfy country or stock market regulations in any given jurisdiction and so what we have illustrated may have to be altered to meet such requirements. The form and content of financial statements are the ultimate responsibility of Group management. It is essential to seek appropriate professional advice in case of doubt in relation to any financial reporting requirement. These illustrative disclosures have reflected professional judgment on the fairness of the various presentations. We believe you will find this a useful guide when preparing your next set of IFRS-based financial statements. If you require any further information on matters included in this publication, please contact your nearest Ernst & Young office, details of which can be found on the Ernst & Young website www.ey.com/ifrs.

International Financial Reporting Standards
The abbreviation IFRS is defined in paragraph 5 of the Preface to International Financial Reporting Standards to include ‘standards and interpretations approved by the IASB, and International Accounting Standards (IASs) and Standing Interpretations Committee (SIC) interpretations issued under previous Constitutions’. The abbreviation IFRS is also noted in IAS 1.7 and IAS 8.5. Thus, when financial statements are described as complying with IFRS, it means that they comply with the entire hierarchy of pronouncements sanctioned by the IASB including International Accounting Standards, International Financial Reporting Standards and Interpretations originated by the IFRS Interpretations committee (formerly International Financial Reporting Interpretations Committee, IFRIC or the former Standing Interpretations Committee, SIC).
2 Good Insurance (International) Limited

The IFRS Interpretations Committee
The IFRS Interpretations Committee (Interpretations Committee) is appointed by the IASC Foundation Trustees to assist the IASB in establishing and improving standards of financial accounting and reporting for the benefit of users, preparers and auditors of financial statements. The Interpretations Committee addresses issues of reasonably widespread importance, rather than issues of concern to only a small set of entities. Its interpretations cover: Newly identified financial reporting issues not specifically addressed in IFRS Issues where unsatisfactory or conflicting interpretations have developed, or are likely to develop in the absence of authoritative guidance, with a view to reaching a consensus on the appropriate treatment

Basis of preparation and presentation
The consolidated annual financial statements of the Group have been produced in accordance with IFRS and, where applicable, the interpretations issued by the Interpretations Committee. The financial statements do not include the stand alone disclosures for the parent. In certain jurisdictions, IFRS may apply to the parent entity and, hence, disclosures should also be made for this reporting entity. The Group is an existing preparer of IFRS consolidated financial statements and, therefore, IFRS 1 First-time Adoption of International Financial Reporting Standards is not applicable. However, Appendix 1 of this publication illustrates the firsttime adoption requirements had the Group been a first-time adopter for the period ending 31 December 2010.

IFRS as at 30 June 2010
The standards applied in these illustrative financial statements are the versions that were in issue as at 30 June 2010. Disclosures have not been illustrated for a number of IFRS which are either not relevant to the insurance industry or not applicable to the Group’s circumstances. IFRS comprises of standards and interpretations adopted by the International Accounting Standards Board (IASB) and is illustrated across our various illustrative financial statements as follows: Good Group Interim Good Invest (Liab.)

Good Invest (Eq.)

Good Real Estate

International Financial Reporting Standards (IFRS) IFRS 1 IFRS 2 IFRS 3 IFRS 3 IFRS 4 IFRS 5 IFRS 6 IFRS 7 IFRS 8 IFRS 9 First-time Adoption of International Financial Reporting Standards Share-based Payment Business Combinations (2005) for acquisition completed before 1 January 2010 Business Combinations (Revised in 2008) Insurance Contracts Non-current Assets Held for Sale and Discontinued Operations Exploration for and Evaluation of Mineral Resources Financial Instruments: Disclosures Operating Segments Financial Instruments: Classification and Measurement(1)

Good Insurance (International) Limited

Good Petroleum
3

Good Insurance

Good Mining

Good Group

Good Bank

Good Group Interim

Good Invest (Liab.)

Good Invest (Eq.)

Good Real Estate

International Accounting Standards (IAS) IAS 1 IAS 2 IAS 7 IAS 8 IAS 10 IAS 11 IAS 12 IAS 16 IAS 17 IAS 18 IAS 19 IAS 20 IAS 21 IAS 23 IAS 24 IAS 26 IAS 27 IAS 28 IAS 29 IAS 31 IAS 32 IAS 33 IAS 34 IAS 36 IAS 37 IAS 38 IAS 39 IAS 40 IAS 41 Presentation of Financial Statements Inventories Statement of Cash Flows Accounting Policies, Changes in Accounting Estimates and Errors Events after the Reporting Period Construction Contracts Income Taxes Property, Plant and Equipment Leases Revenue Employee Benefits Accounting for Government Grants and Disclosure of Government Assistance The Effects of Changes in Foreign Exchange Rates Borrowing Costs Related Party Disclosures Accounting and Reporting by Retirement Benefit Plans Consolidated and Separate Financial Statements (Revised in 2008) Investments in Associates Financial Reporting in Hyperinflationary Economies Interests in Joint Ventures Financial Instruments: Presentation Earnings per Share Interim Financial Reporting Impairment of Assets Provisions, Contingent Liabilities and Contingent Assets Intangible Assets Financial Instruments: Recognition and Measurement Investment Property Agriculture

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Good Insurance (International) Limited

Good Petroleum

Good Insurance

Good Mining

Good Group

Good Bank

Good Group Interim

Good Invest (Liab.)

Good Invest (Eq.)

Good Real Estate

Interpretations IFRIC 1 IFRIC 2 IFRIC 4 IFRIC 5 IFRIC 6 IFRIC 7 IFRIC 9 IFRIC 10 IFRIC 12 IFRIC 13 IFRIC 14 IFRIC 15 IFRIC 16 IFRIC 17 IFRIC 18 IFRIC 19 SIC 7 SIC 10 SIC 12 SIC 13 SIC 15 SIC 21 SIC 25 SIC 27 SIC 29 SIC 31 SIC 32 Changes in Existing Decommissioning, Restoration and Similar Liabilities Members’ Shares in Co-operative Entities and Similar Instruments Determining Whether an Arrangement Contains a Lease Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies Reassessment of Embedded Derivatives Interim Financial Reporting and Impairment Service Concession Arrangements Customer Loyalty Programmes IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction Agreements for the Construction of Real Estate Hedges of a Net Investment in a Foreign Operation Distributions of Non-cash Assets to Owners Transfers of Assets from Customers Extinguishing Financial Liabilities with Equity Investments Introduction of the Euro Government Assistance – No Specific Relation to Operating Activities Consolidation – Special Purpose Entities Jointly Controlled Entities – Non-Monetary Contributions by Venturers Operating Leases – Incentives Income Taxes – Recovery of Revalued Non-Depreciable Assets Income Taxes – Changes in the Tax Status of an Entity or its Shareholders Evaluating the Substance of Transactions Involving the Legal Form of a Lease Service Concession Arrangements: Disclosures Revenue – Barter Transactions Involving Advertising Services Intangible Assets – Web Site Costs

This standard or interpretation is reflected in the accounting policies and/or individual transactions with appropriate note disclosures
(1)

The impact of IFRS 9 is presented in a separate publication.

Good Insurance (International) Limited

Good Petroleum
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Good Insurance

Good Mining

Good Group

Good Bank

All standards and interpretations listed above incorporate amendments effective on 1 January 2010, unless otherwise stated. These amendments also include the amendments resulting from Improvements to IFRS issued in May 2008 and April 2009. It is important to note that the IASB may issue new and revised standards and interpretations subsequent to 30 June 2010. Therefore, users of this publication are advised to verify that there has been no change in the IFRS requirements between 30 June 2010 and the date on which their financial statements are authorised for issue. Any standards issued, but not yet effective, need to be considered in the disclosure requirements of a reporting entity.

Changes contained in 2010 edition of Good Insurance (International) Limited Annual Financial Statements
The Good Insurance (International) Limited financial statements have been updated to reflect all new standards and interpretations issued or amended since 31 March 2009. The following standards and interpretations have been illustrated in the 2010 edition, resulting in consequential changes to the accounting policies and other note disclosures. IFRS 3 Business Combinations The IASB issued the revised Business Combinations standard in January 2008 which is effective for financial years beginning on or after 1 July 2009. The standard introduces changes in the accounting for business combinations that will impact the amount of goodwill recognised, the reported results in the period when an acquisition occurs and future reported results. The revised standard has been adopted by the Group together with the revised IAS 27 Consolidated and Separate Financial Statements (see Note 3), including consequential amendments to IFRS 7, IAS 21, IAS 28, IAS 31 and IAS 39 in the reporting period commencing 1 January 2010. IAS 27 Consolidated and Separate Financial Statements In January 2008, the IASB issued the revised IAS 27, affecting consolidated and separate financial statements. IAS 27 (as issued in 2008) requires that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as an equity transaction. Therefore, such transactions will no longer give rise to goodwill, nor will they give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The amended standard has been adopted by the Group together with IFRS 3 (Revised) Business Combinations (see Note 3), including consequential amendments to IAS 21, IAS 28, IAS 31 and IAS 39. Improvements to IFRSs In April 2009 and April 2010, the IASB issued its annual amendments to International Financial Reporting Standards (IFRSs) and the related Bases for Conclusions and guidance made. The amendments primarily remove inconsistencies and clarify wording. These amendments, unless otherwise stated, are effective for financial years beginning on or after 1 January 2010. The Group has adopted these revised standards as considered appropriate, however, there are no impacts on the financial statements.

Commentary
In some jurisdictions, the adoption of IFRS for reporting purposes may be subject to a specific legal process (e.g., in the European Union or Australia). In those jurisdictions the effective date may therefore be different from the IASB's.

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Good Insurance (International) Limited

Listed below are standards and interpretations that have been issued and are effective for financial years 2010 or later, but are not illustrated in these illustrative financial statements
IFRS 1 First-time Adoption of International Financial Reporting Standards (Revised 2009) In July 2009, the IASB issued Additional Exemptions for First-time Adopters (Amendments to IFRS 1). The Group is not a first-time IFRS adopter, therefore, amendments to IFRS 1 have no impact on the financial statements. IFRS 2 Share-based Payment The IASB also issued an amendment to IFRS 2 in June 2009 on the accounting for group cash-settled share-based payment transactions. This amendment is effective for financial years beginning on or after 1 January 2010. This amendment also supersedes IFRIC 8 and IFRIC 11.The Group adopted all amendments that came into effect on 1 January 2010. However, this did not have an impact on the financial position or performance of the Group. IAS 24 Related Party Disclosures (Amendment) The amended standard is effective for annual periods beginning on or after 1 January 2011. It clarifies the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised standard introduced a partial exemption of disclosure requirements for government-related entities. Early adoption is permitted for either the partial exemption for government-related entities or for the entire standard. The Group does not expect any impact on its financial position or performance although additional disclosure is required for commitments with related parties after the initial application. IAS 32 Financial Instruments: Presentation – Classification of Rights Issues The amendment to IAS 32 is effective for annual periods beginning on or after 1 February 2010 and amended the definition of a financial liability in order to classify rights issues (and certain options or warrants) as equity instruments in cases where such rights are given pro rata to all of the existing owners of the same class of an entity’s non-derivative equity instruments, or to acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency. This amendment will have no impact on the Group after initial application. IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items This amendment was issued in July 2008 and is effective for financial years beginning on or after 1 July 2009. It addresses the designation of a one-sided risk in a hedged item, and the designation of inflation as a hedged risk or portion in particular situations. The Group has concluded that the amendment will have no impact on the financial position or performance of the Group, as the Group has not entered into any such hedges. IFRS 9 Financial Instruments: Classification and Measurement IFRS 9 reflects Phase 1 of the Board’s work on the replacement of IAS 39 and applies to classification and measurement of financial assets as defined in IAS 39. The standard is effective for annual periods beginning on or after 1 January 2013. In subsequent phases, the Board will address classification and measurement of financial liabilities, hedge accounting and derecognition. The completion of this project is expected in early 2011. The adoption of IFRS 9 will have an effect on the classification and measurement of the Group’s financial assets. However, the Group determined that the effect will be quantified in conjunction with the other phases when issued to present a comprehensive picture. IFRIC 14 Prepayments of a Minimum Funding Requirement (Amendment) The amendment to IFRIC 14 is effective for annual periods beginning on or after 1 January 2011 with retrospective application. The amendment provides guidance on assessing the recoverable amount of a net pension asset. The amendment permits an entity to treat the prepayment of a minimum funding requirement as an asset. The amendment is deemed to have no impact on the financial statements of the Group. IFRIC 17 Distribution of Non-cash Assets to Owners This interpretation provides guidance on accounting for arrangements whereby an entity distributes non-cash assets to shareholders either as a distribution of reserves or as dividends. An entity shall apply this Interpretation prospectively for annual periods beginning on or after 1 July 2009. The interpretation has no effect on either the financial position or on the performance of the Group. IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments IFRIC 19 is effective for annual periods beginning on or after 1 July 2010. The interpretation clarifies that equity instruments issued to a creditor to extinguish a financial liability qualify as consideration paid. The equity instruments issued are measured at their fair value. In case this cannot be reliably measured, they are measured at the fair value of the liability extinguished. Any gain or loss is recognised immediately in profit or loss. The adoption of this interpretation will have no effect on the financial statements of the Group.

Good Insurance (International) Limited

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Background facts
The following list highlights a series of important matters that have driven the presentation and disclosures illustrated in this publication. Business environment Stable economic and business environments and product offerings were assumed for both the 2010 and 2009 financial reporting periods. During the year, the Group acquired 80% of the common stock of Good American Life Co, but did not dispose of any businesses. The Group accounted for the 20% non-controlling interests based on the share of the total net assets (see Note 3). In addition, Appendix 4 illustrates the option to fair value the non-controlling interests. Operations Good Insurance (International) Limited is the parent company which operates in three principal areas of business, according to the nature of products and services offered. It provides life insurance, non-life insurance (which comprises general insurance and healthcare) and investment management services to its customers through its four subsidiaries: Good Life Insurance Limited, Good American Life Co Ltd (80% owned), Good Non-Life Insurance Limited and Good Investment Management Services Limited. The parent and the four subsidiaries throughout this publication are collectively referred to as ‘the Group’. The life insurance products offered include a wide range of whole life, term assurance, unitised pensions, guaranteed annuity pensions, pure endowment pensions and mortgage endowments. The non-life general insurance products offered include motor, household, commercial and business interruption insurance. The non-life healthcare products provide medical cover to policyholders. Investment management services are provided solely to customers through an investment management services subsidiary. The Group also has a 20% interest in one non-life insurance entity, Power Insurance Limited, which is involved in the insurance of power stations in Euroland. The Group has no joint venture agreements with any other external parties. Operating segments The Group has determined that the operating segments described above are those under IFRS 8 Operating Segments. IFRS status The Group is an existing preparer of IFRS consolidated financial statements, but to enhance the usability of this publication, additional disclosures have been illustrated if the Group is a first time adopter of IFRS in 2010. These disclosures, as set out under IFRS 1 (Revised 2009) First-time Adoption of International Financial Reporting Standards can be found in Appendix 1. As permitted under IFRS 4 Insurance Contracts, an insurance company is allowed to ‘grandfather’ its existing local Generally Accepted Accounting Policies (GAAP) adopted for its insurance contracts and investment contracts with discretionary participation features (DPF), within its IFRS accounting framework. The requirement will continue until the IASB’s Insurance Contracts Phase II project is completed, which will then determine the recognition and measurement of all insurance contracts on a consistent basis. The Group, therefore, continues with local GAAP for insurance contracts and for investment contracts with a DPF. Product accounting Under local GAAP, the same accounting treatment is applied to insurance contracts with and without DPF and for investment contracts with DPF. Deferred acquisition costs (DAC) and the present value of in-force business (PVIF), i.e., intangible assets, relating to the above contracts are also accounted for under local GAAP. Investment contracts without DPF and the related acquisition costs and intangible assets, are accounted for under IAS 39 Financial Instruments: Recognition and Measurement, IAS 18 Revenue and IAS 38 Intangible Assets, respectively. DPF provide the policyholder with a contractual right to receive, as a supplement to guaranteed benefits, additional benefits payable at the discretion of the insurance company and which are contractually based on the performance of a specified pool of contracts on the profit or loss of the insurance company or other entity that issued the contracts. Under IFRS 4, DPF can be either treated as an element of equity or as a liability, or can be split between the two elements. The Group policy is to treat all DPF as a liability within insurance or investment contract liabilities as appropriate. Risk management As part of the Group’s investment strategy to reduce both insurance and financial risk, the Group matches its investments to the liabilities arising from insurance and investment contracts, by reference to the type of benefits payable to contract holders. For each distinct category of liabilities, a separate portfolio of investments is maintained for policyholders and customers.

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Good Insurance (International) Limited

Taxation Income tax on profit and loss for the year comprises current and deferred tax. Income tax is determined in accordance with Euroland tax law.

Financial statement presentation
The primary financial statements have been drawn up on a basis consistent with IAS 1 (Revised 2007) which was effective for financial years beginning on or after 1 January 2009, and the following key presentation decisions have been made. Consolidated income statement and consolidated statement of comprehensive income The Group has elected to present comprehensive income in two separate statements, being the consolidated income statement and the consolidated statement of comprehensive income. Information about the individual components of comprehensive income as well as the tax effects have been disclosed in the notes to the financial statements. The analysis of expenses uses a classification based on their nature rather than their function. Reinsurance premiums and claims on the face of the income statement have been presented as negative items within premiums and net benefits and claims, respectively, because this is consistent with how the business is managed. Statement of changes in equity The Group presents a statement of changes in equity as part of its primary financial statements showing the following items: (a) total comprehensive income for the period, showing separately the total amounts attributable to owners of the parent and to minority interest; (b) the amounts of transactions with owners in their capacity as owners, showing separately contributions by and distributions to owners; and (c) for each component of equity, a reconciliation between the carrying amount at the beginning and the end of the period, separately disclosing each change. Statement of financial position The statement of financial position represents the statement of financial position for the group following the revision to IAS 1. It follows the presentation convention for previous balance sheet. It is presented in broad order of liquidity, with a distinction based on expectations regarding recovery or settlement within 12 months after the reporting date (current) and more than 12 months after the reporting date (non-current), presented in the notes. A permissible alternative is to present the assets and liabilities in the statement of financial position in a current/non-current format. Deferred acquisition costs are disclosed as a separate line item on the face of the statement of financial position by the Group. Alternative disclosure options would be to include these as part of intangible assets or as part of other assets. As required by IFRS 4, reinsurance assets are disclosed as assets on the face of the statement of financial position and are not offset against the related insurance liabilities. Statement of cash flows The Group represents its cash flow based on the indirect method, rather than the direct method. For cash flow purposes, the Group classifies the cash flows for the acquisition and disposal of financial assets as operating cash flows, as the purchase of these investments is funded from the net cash flows associated with the origination of insurance and investment contracts. The payment of benefits and claims in relation to insurance and investment contracts are treated as operating activities. Appendix 5 has provided an illustration of the statement of cash flow based on the direct method.

Allowed alternative accounting treatments
In some cases, IFRS permits alternative accounting treatments for similar transactions and events. Preparers of financial statements may choose the treatment that is most relevant to their business. IAS 8 requires an entity to select and apply its accounting policies consistently for similar transactions, and/or other events and conditions, unless IFRS specifically requires or permits categorisation of items for which different policies may be appropriate. Where IFRS requires or permits such categorisation, an appropriate accounting policy is selected and applied consistently to each category. Therefore, once a choice of one of the alternative treatments has been made, it becomes accounting policy and must be applied consistently. Changes in accounting policy should only be made if it is required by a standard or interpretation, or if the change results in the financial statements providing reliable and more relevant information. In some accounting models, recognised realised gains or losses on an insurer’s assets have a direct effect on the measurement of some or all of the insurance liabilities, related deferred acquisition costs and related intangible assets. An insurer is permitted, but not required, to change its accounting policies so that a recognised but unrealised gain or loss on an asset affects those measurements in the same way that a realised gain or loss does. The related adjustment to the insurance liability (or deferred acquisition costs) shall be recognised in equity if, and only if, the unrealised gains are recognised in equity. This practice is often described as ‘shadow accounting’. The group does not apply ‘shadow accounting’ but additional disclosures have been provided in Appendix 2 in case users would like to refer to the required treatment if ‘shadow accounting’ were applied.
Good Insurance (International) Limited 9

IFRS 4 permits the use of alternative sensitivity analysis such as embedded value (EV) or economic capital (EC) instead of IFRS basis for insurance and market risk sensitivity disclosures. This option is only allowed if insurance and market risk sensitivities are managed on that alternate basis. For illustrative purposes EV sensitivity disclosures have been provided in Appendix 3 in accordance with embedded values (EV) principles. In this publication, where a choice is permitted by IFRS, the Group has adopted one of the alternative treatments as appropriate to the circumstances of the Group. The commentary gives further details of which policy has been selected, and why, and summarises the difference in the disclosure requirements.

Financial review by management
Many entities present a financial review by management that is outside the scope of the financial statements. IFRS does not require the presentation of such information, although paragraph 13 of IAS 1 gives a brief outline of what may be included in such a report. The IASB issued an Exposure Draft (ED) Management Commentary in June 2009 with a proposal for a nonbinding, broad framework for the preparation and presentation of a Management Commentary. The content of a financial review by management is often determined by local market requirements or issues specific to a particular jurisdiction. Therefore, no financial review by management has been included for Good Insurance (International) Limited.

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Good Insurance (International) Limited

Good Insurance (International) Limited
Consolidated financial statements
31 December 2010

Good Insurance (International) Limited

11

Independent auditors’ report to the shareholders of Good Insurance (International) Limited
We have audited the accompanying consolidated financial statements of Good Insurance (International) Limited and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at 31 December 2010, the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, together with a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We have conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2010, and of its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards. Professional Accountants & Co. 29 January 2011 17 Euroville High Street Euroville

Commentary
The auditors’ report has been prepared in accordance with ISA 700 (Redrafted) Forming an Opinion and Reporting on Financial Statements which is applicable for audits of financial statements for periods beginning on or after 15 December 2009. The auditors’ report may differ depending on the requirements of different jurisdictions.

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Good Insurance (International) Limited

Group consolidated income statement
for the year ended 31 December 2010
IAS 1.10(b) IAS 1.51 (b), (c) IAS 1.51(d), (e)

Notes Gross premiums Premiums ceded to reinsurers Net premiums Fees and commission income Investment income Realised gains Fair value gains and losses Other operating revenue Other revenue Total revenue Gross benefits and claims paid Claims ceded to reinsurers Gross change in contract liabilities Change in contract liabilities ceded to reinsurers Net benefits and claims Finance costs Profit attributable to unit-holders Other operating and administrative expenses Other expenses Total benefits, claims and other expenses Profit before share of profit of an associate Share of profit of an associate Profit before tax Income tax expense Profit for the year Profit attributable to: Equity holders of the parent Non-controlling interests Earnings per share Basic, profit for the year attributable to ordinary equity holders of the parent (€) Diluted, profit for the year attributable to ordinary equity holders of the parent (€) 22 10(a) 10(b) 10(c) 10(d) 5(a) 5(b)

2010 €000 74,146 (18,756) 55,390 5,364 8,221 213 1,044 91 14,933 70,323 (38,418) 10,273 (7,837) 1,592 (34,390)

2009 €000 73,451 (19,112) 54,339 2,231 7,682 93 992 85 11,083 65,422 (39,410) 10,546 (7,172) 1,691 (34,345) (954) (111) (20,378) (21,443) (55,788) 9,634 230 9,864 (1,973) 7,891 7,891 − 7,891

IFRS 4.IG24 IFRS 4.IG24 IAS 1.85

6 7 8 9

IFRS 7.20(c)(i)

IAS 1.85

IAS 1.82(a)

IFRS 4.IG24 IFRS 4.IG24 IFRS 4.IG24 IFRS 4.IG24 IAS 1.85

11 35 12

(1,066) (267) (22,242) (23,575) (57,965) 12,358 129 12,487 (1,569) 10,918 10,063 855 10,918

IAS 1.82(b), IFRS 7.20

IAS 1.99 IAS 1.85

IAS 1.85

IAS 1.82(c), IAS 28.38 IAS 1.85

14

IAS 1.82(d), IAS 12.77 IAS 1.82(f)

IAS 1.83(a) (ii) IAS 1.83(a) (i)

16 16

1.26 1.25

1.07 1.06

IAS 33.66 IAS 33.66

Good Insurance (International) Limited

13

Group consolidated income statement
Commentary Paragraph 82(a) of IAS 1 requires disclosure of total revenue as a line item on the face of the income statement. In addition to this, The Group has presented the various types of revenues on the face of the income statement. Note that this information could also be given in the notes (per IAS 1.97). Paragraph 99 of IAS 1 requires expenses to be analysed by either their nature or their function within the entity, whichever provides information that is reliable and more relevant. The Group has presented the analysis of expenses by nature. Premiums and claims on the face of the income statement have been presented on a gross basis, with premiums ceded to reinsurers shown as negative revenue and claims ceded to reinsurers shown as negative net benefits and claims. An alternative disclosure option is to present premiums ceded to reinsurers as expenses and claims ceded to reinsurers as revenue. The comparative numbers do not necessarily correspond to the 2009 Good Insurance financial statements as they are purely for illustrative purposes. The Group has no discontinued operations and all profit has been generated from continuing operations.

14

Good Insurance (International) Limited

Group consolidated statement of comprehensive income
for the year ended 31 December 2010
IAS 1.51 (b), (c)

Notes Profit for the year Other comprehensive income Exchange differences on translating foreign operations Net loss on cash flow hedges Net gain on available-for-sale assets Income tax relating to components of other comprehensive income Other comprehensive income for the year, net of tax Total comprehensive income for the year, net of tax Total comprehensive income attributable to: Equity holders of the parent Non-controlling interests

2010 €000 10,918

2009 €000 7,891

IAS 1.51(d), (e)

IAS 1.81(b), 82 (f), 88

IAS 1.82(g)

18 18 18 17 18

(67) (36) 6,184 (1,824) 4,257 15,175 14,121 1,054 15,175

− (24) 3,297 (982) 2,291 10,182 10,182 − 10,182
IAS 1.90 IAS 1.85

IAS 1.82(i)

IAS 1.83(b)(ii) IAS 1.83(b)(i)

Commentary The components of comprehensive income are presented on an aggregated basis in the statement above. Therefore, an additional note is required to present the amount of reclassification adjustments and current year gains or losses. Alternatively, the individual components could have been presented within the statement of comprehensive income. The income tax effect has also been presented on an aggregated basis. Therefore, an additional note disclosure presents the income tax effect of each component. Alternatively, this information could have been presented within the statement of comprehensive income. Paragraph 96 of IAS 1 requires the Group to present a statement of changes in comprehensive income in either a single statement or two statements. The Group has elected to present the statement of comprehensive income in two statements: a statement displaying components of profit or loss (separate income statement) and a second statement beginning with profit and loss and displaying components of other comprehensive income. The Group applies the ‘corridor method’ for its actuarial gains and losses from its defined benefit pension plan. If entities apply the policy in IAS 19.93A to recognise all actuarial gains and losses in the period in which they occur outside of the income statement, then paragraph 93B of IAS 19 requires entities to present those gains and losses as part of other comprehensive income.

Good Insurance (International) Limited

15

Group consolidated statement of financial position
as at 31 December 2010
IAS 1.51 (b) (c) IAS 1.10 (a) IAS 1.51(d), (e) IAS 1.60 IAS 1.54(c) IAS 1.54(c) IFRS 4.37(b) IAS 1.54(a) IAS 1.54(b) IAS 1.54(e), IAS 28.38 IAS 1.54(d), IFRS 7.8

Assets Goodwill Intangible assets Deferred expenses Property and equipment Investment properties Investment in an associate Financial instruments Derivative financial instruments Held to maturity financial assets Loans and receivables Available-for-sale financial assets Financial assets at fair value through profit or loss Reinsurance assets Income tax receivable Insurance receivables Accrued income Cash and cash equivalents Total assets Equity and liabilities Equity attributable to equity holders of parent Issued share capital Additional paid-in capital Retained earnings Revaluation reserves Total ordinary shareholders’ equity Other equity instruments Non-controlling interests Total equity Liabilities Insurance contract liabilities Investment contract liabilities Pension benefit obligation Deferred revenue Borrowings Derivative financial instruments Other financial liabilities Deferred tax liability Net asset value attributable to unit-holders Insurance payables Trade and other payables Total liabilities Total equity and liabilities

Notes 20 21 30 23 24 22 25 26(a) 26(b) 26(c) 26(d) 27 28(a) 29 31 32

2010 €000 9,445 39,138 13,446 4,066 4,199 2,120 2,182 2,104 7,264 109,677 35,249 36,521 2,995 35,272 1,698 22,723 328,099

2009 €000 2,924 444 11,477 3,750 3,943 1,991 1,240 1,677 6,137 79,417 21,189 34,711 2,812 19,914 1,557 27,798 220,981

IFRS 4.37(b) IAS 1.54(n) IFRS 4.37(b) IAS 1.77 IAS 1.54(i)

42 42

43

8,638 27,415 20,297 8,060 64,410 52 64,462 8,368 72,830 176,712 15,220 4,449 4,365 16,562 1,782 7,743 5,452 520 5,157 17,307 255,269 328,099

7,385 1,045 13,457 4,002 25,889 − 25,889 − 25,889 126,260 11,558 4,152 4,334 21,064 1,758 7,272 1,848 367 4,841 11,638 195,092 220,981

IAS 1.54(r) IAS 1.54(r) IAS 1.54(r) IAS 1.54(r) IAS 1.54(r) IAS 1.54(r) IAS 1.54(r) IAS 1.54(q)

33 34 36 40 37 25 38 28(b) 35 39 41

IFRS 4.37(b) IAS 1.54(m), IFRS 4.37(b) IAS 1.55, IAS 1.78(d) IAS 1.55 IAS 1.54(m), IFRS 7.8(e), (f) IAS 1.54(m), IFRS 7.8 (e), (f) IAS 1.54(m), IFRS 7.8 (e), (f) IAS 1.54(o), IAS 1.54(o) IFRS 4.37(b) IAS 1.54(k)

Commentary
Paragraph 60 of IAS 1 requires companies to present assets and liabilities either in order of their liquidity or by a separate classification on the face of the statement of financial position for current and non-current assets, and current and non-current liabilities, whichever provides information that is most reliable and relevant. The Group has presented its assets and liabilities in order of liquidity. Deferred acquisition costs are included within deferred expenses rather than within intangible assets or other assets, which are alternative classification options in insurance practice. The previous version of IAS 1 used the titles ‘balance sheet’ and ‘cash flow statement’ to refer to two of the financial statements considered to be part of the complete set. The current standard refers to these statements as the ‘statement of financial position’ and ‘statement of cash flows’. However, the revised standard does not require the use of these terms (IAS 1.10). The Group has not presented three statements of financial position in these financial statements because it has not applied an accounting policy retrospectively, made a retrospective restatement of items in its financial statements, or reclassified items in its financial statements that affected the statement of financial position at the beginning of the earliest comparative period (IAS 1.10(f)). Good Group (International) Limited contains an illustrative disclosure of a statement of financial position at the beginning of the comparative period and related notes where the changes affect the beginning of the earliest comparative period.
16 Good Insurance (International) Limited

Group consolidated statement of changes in equity
for the year ended 31 December 2010
IAS 1.10(c) Attributable to equity holders of the parent Other reserves Issued share capital (Note 42) €000 At 1 January 2010 Profit for the year Other comprehensive income Total comprehensive income Issue of share capital Transaction costs for equity issue Issue of other equity instruments Coupon on other equity instruments paid during the year Share-based payment transactions Dividends paid during the year Non-controlling interests arising on business combination At 31 December 2010 42 42 7,385 − Additional paid-in capital (Note 42) €000 1,045 − Availablefor-sale financial assets €000 4,024 − Foreign currency translation reserve €000 − − Total ordinary shareholders’ equity €000 25,889 10,063 IAS 1.51 (b), (c)

Notes

Retained earnings €000 13,457 10,063

Cash flow hedging €000 (22) −

Other equity instruments €000 − −

Noncontrolling interests €000 − 855

Total equity €000 25,889 10,918

IAS 1.106 IAS 1.51(d), (e) IAS 1.106(d) IAS 1.106(d) (i)

18

4,121

(25)

(38)

4,058

199

4,257

IAS 1.106(d) (ii)

− 1,253 −

− 26,672 (302)

10,063 − −

4,121 − −

(25) − −

(38) − −

14,121 27,925 (302)

− − −

1,054 − −

15,175 27,925

IAS 1.106(a) IAS 1.106(d)(iii)

(302) IAS 32.39

43

52

52

43

(1)

(1)

(1)

19 15

− −

− −

14 (3,236)

− −

− −

− −

14 (3,236)

− −

− −

14

IFRS 2.50

(3,236) IAS 1.107

3

− 8,638

− 27,415

− 20,297

− 8,145

− (47)

− (38)

− 64,410

− 52

7,314 8,368

7,314 72,830 IAS 1.106(d)

Commentary The Group has elected to present all the information required for the statement of changes in equity on the face of the statement. However, transactions with equity holders acting in their capacity as equity holders and the reconciliation of retained earnings, contributed equity and other reserves could alternatively be presented in the notes to the financial statements. Paragraph 7 of IFRS 2 requires entities to recognise an increase in equity when goods or services are received in an equity-settled sharebased payment transaction. However, IFRS 2 does not specify where in equity this should be recognised. The Group has elected to recognise the credit in retained earnings.

Good Insurance (International) Limited

17

Group consolidated statement of changes in equity
for the year ended 31 December 2009
Attributable to equity holders of the parent Other reserves Issued share capital (Note 42) €000 At 1 January 2009 Profit for the year Other comprehensive income Total comprehensive income Issue of share capital Transaction costs for equity issue Share-based payment Dividends paid during the year At 31 December 2009 42 7,382 − Additional paid-in capital (Note 42) €000 1,000 − Availablefor-sale financial assets €000 1,716 − Foreign currency translation reserve €000 − − Total ordinary shareholders’ equity €000 17,736 7,891
IAS 1.51(a), (b), (c)

Notes

Retained earnings €000 7,643 7,891

Cash flow hedging €000 (5) −

Other equity instruments €000 − −

Noncontrolling interests €000 − −

Total equity €000 17,736 7,891

IAS 1.106 IAS 1.51(d), (e) IAS 1.106(d) IAS 1.106(d) (i)

18

− −

− −

− 7,891

2,308 2,308

(17) (17)

− −

2,291 10,182

− −

− −

2,291 10,182

IAS 1.106(d) (ii) IAS 1.106(a)

3

47

50

50

42 19 15

− − − 7,385

(2) − − 1,045

− 10 (2,087) 13,457

− − − 4,024

− − − (22)

− − − −

(2) 10 (2,087) 25,889

− − − −

− − − −

(2) IAS 32.39 10
IFRS 2.50

(2,087) IAS 1.107 25,889
IAS 1.106(d)

18

Good Insurance (International) Limited

Group consolidated statement of cash flows
for the year ended 31 December 2010
IAS 1.10(d) IAS 1.51(b), (c)

Notes Operating activities Cash generated from operating activities Dividend income received Interest income received Finance costs paid Rental income on investment properties Purchase of investment properties Income tax paid Net cash flows from operating activities Investing activities Acquisition of subsidiaries, net of cash acquired Interest income received on loans to related parties Proceeds from sale of property and equipment Purchase of intangible assets Increase in loans to related parties Purchase of property and equipment Net cash flows from investing activities Financing activities Proceeds from exercise of share options Transaction costs for equity issue Issue of other equity instruments Proceeds from bank loans Repayment of bank loans Finance costs paid on bank loan and bond borrowings Dividends paid to equity holders of the parent Net cash flows from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at 1 January Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at 31 December
Commentary

2010 €000 4,518 3,157 3,709 (422) 178 (203) (1,564) 9,373

2009 €000 6,310 3,015 4,435 (312) 170 (219) (1,444) 11,955

IAS 7.10 IAS 1.51(d), (e) IAS 7.10, IAS 7.18(b)

46

IAS 7.18(b) IAS 7.31 IAS 7.31 IAS 7.31

24 28(a)

IAS 7.14 IAS 7.35 IAS 7.10

IAS 7.21

3

21 23

(6,219) 21 1,964 (116) (65) (1,414) (5,829)

− 18 1,095 (318) (50) (1,683) (938)

IAS 7.39 IAS 7.31 IAS 7.16(b) IAS 7.16(a) IAS 7.16(c) IAS 7.16(a) IAS 7.10

IAS 7.10, IAS 7.21

42 42 43

15

66 (302) 51 − (3,500) (642) (3,236) (7,563) (4,019) 20,876 (52) 16,805

50 (2) − 5,500 − (450) (2,087) 3,011 14,028 6,848 − 20,876

IAS 7.17(a)

IAS 7.17(a) IAS 7.17(c) IAS 7.17(d) IAS 7.31 IAS 7.31 IAS 7.10

IAS 7.28 IAS 7.45

32

Paragraph 18 of IAS 7 permits a company to report its cash flows from operating activities using either the direct method or the indirect method. The Group presents its cash flows using the indirect method. The direct method is illustrated in Appendix 5. The Group reconciled from profit before tax to net cash flow from operating activities. However, a reconcilliation from profit after tax is also acceptable under IAS 7. Cash flows representing the assets backing equity holders are classified as investment activities. The cash flows in the operating activities are all attributable to policyholders. Paragraph 33 of IAS 7 permits interest paid to be shown as operating or financing activities, and interest received to be shown as operating or investing activities, as deemed relevant for the entity. For cash flow purposes, the Group classifies the cash flows for the acquisition and disposal of financial assets as operating cash flows, as the purchase of these investments is funded from the net cash flows associated with the origination of insurance and investment contracts and the payment of benefits and claims incurred for such insurance and investment contracts, which are respectively treated under operating activities. For cash flow purposes, cash and cash equivalents consist of cash and cash equivalents as defined in paragraph 6 of IAS 7, net of outstanding bank overdrafts, as permitted by paragraph 8 of IAS 7.

Good Insurance (International) Limited

19

Notes to the consolidated financial statements
1. Corporate information
Good Insurance (International) Limited (the Company) is a limited liability company incorporated and domiciled in Euroland, whose shares are publicly traded on the Euroland stock market. The principal activities of the Company and its subsidiaries (the Group) are described in Note 4. The Group has a 20% interest in its only associate, Power Insurance Limited, which is involved in the insurance of power stations in Euroland. On 30 April 2010, the Group acquired 80% of the common stock of Good American Life Co. Further details of the acquisition are provided in Note 3. The registered office of the Group is Homefire House, 18 Ashdown Square, Euroville, Euroland. The consolidated financial statements of Good Insurance (International) Limited for the year ended 31 December 2010 were authorised for issue in accordance with a resolution of the directors on 29 January 2011.
IAS 10.17 IAS 1.138

2.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). The consolidated financial statements have been prepared on an historic cost basis except for investment properties and those financial assets and financial liabilities that have been measured at fair value. The carrying values of recognised assets and liabilities that are designated as hedged items in fair value hedges and that are otherwise carried at amortised cost, are adjusted to record changes in the fair values attributable to the risks that are being hedged in effective hedge relationships. As permitted by IFRS 4 Insurance Contracts, the Group has applied Euroland Generally Accepted Accounting Practice (GAAP) for its insurance contracts and investment contracts with a discretionary participation feature (DPF). The consolidated financial statements values are presented in Euros (€) rounded to the nearest thousand (€000), unless otherwise indicated.
Commentary Paragraph 13 of IFRS 4 permits an insurance company to grandfather its previous Generally Accepted Accounting Principles (Local GAAP). Local GAAP can be used for any insurance contracts and investment contracts with aDiscretionary Participation Feature DPF that it issues (including related acquisition costs and intangible assets). The requirement will continue until the IFRS Phase 2 project is completed by the IASB, which will then regulate the recognition and measurement of all insurance contracts on a consistent basis.
IAS 1.51(d), (e) IAS 1.16

IAS 1.112(a) IAS 1.117

The Group presents its statement of financial position broadly in order of liquidity. An analysis regarding recovery or settlement within twelve months after the reporting date (current) and more than 12 months after the reporting date (non-current) is presented in the notes.

IAS 1.60, 61

2.2 Basis of consolidation
Basis of consolidation from 1 January 2010 The consolidated financial statements comprise the financial statements of the Group as at 31 December each year. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions and dividends, are eliminated in full.

IAS 27.12

IAS 27.12 IAS 27.26 IAS 27.22 IAS 27.23 IAS 27.24

IAS 27.20

20

Good Insurance (International) Limited

Notes to the consolidated financial statements
2.2 Basis of consolidation (cont’d)
Losses within a subsidiary are attributed to the non-controlling interest even if this results in a deficit balance. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: Derecognises the assets (including goodwill) and liabilities of the subsidiary Derecognises the carrying amount of any non-controlling interest Derecognises the cumulative translation differences recorded in equity Recognises the fair value of the consideration received Recognises the fair value of any investment retained Recognises any surplus or deficit in profit or loss Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate. The Group has invested in a number of specialised investment vehicles such as open-ended investment companies (OEICs) and unit trusts. The Group’s percentage ownership in these vehicles can fluctuate from day to day according to the Group’s participation in them. Where the Group controls such vehicles, they are consolidated with the interest of third parties shown as net asset value attributable to unit-holders in the statement of financial position. Where the Group does not control such vehicles, these are designated as financial investments held at fair value through profit or loss. Basis of consolidation prior to 1 January 2010 Certain of the above-mentioned requirements were applied on a prospective basis. The following differences, however, are carried forward in certain instances from the previous basis of consolidation: Acquisitions of non-controlling interests, prior to 1 January 2010, were accounted for using the parent entity extension method, whereby the difference between the consideration and the book value of the share of the net assets acquired were recognised in goodwill. Losses incurred by the Group were attributed to the non-controlling interest until the balance was reduced to nil. Any further excess losses were attributed to the parent, unless the non-controlling interest had a binding obligation to cover these. Losses prior to 1 January 2010 were not reallocated between non-controlling interest and the parent shareholders. Upon loss of control, the Group accounted for the investment retained at its proportionate share of net asset value at the date control was lost. The carrying value of such investments at 1 January 2010 has not been restated.
IAS 27.33 (2003) IAS 27.28 IAS 27.30

IAS 27.34

2.3 Summary of significant accounting policies
(a) Product classification Insurance contracts are those contracts when the Group (the insurer) has accepted significant insurance risk from another party (the policyholders) by agreeing to compensate the policyholders if a specified uncertain future event (the insured event) adversely affects the policyholders. As a general guideline, the Group determines whether it has significant insurance risk, by comparing benefits paid with benefits payable if the insured event did not occur. Insurance contracts can also transfer financial risk. Investment contracts are those contracts that transfer significant financial risk. Financial risk is the risk of a possible future change in one or more of a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of price or rates, credit rating or credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract. Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder of its lifetime, even if the insurance risk reduces significantly during this period, unless all rights and obligations are extinguished or expire. Investment contracts can, however, be reclassified as insurance contracts after inception if insurance risk becomes significant.

IAS 1.112, IAS 1.117(a),(b) IFRS 4.37(a) IFRS 4 Appendix A

IFRS 4 Appendix A

IFRS 4.B29, B30

Good Insurance (International) Limited

21

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(a) Product classification (cont’d) Insurance and investment contracts are further classified as being either with or without DPF. DPF is a contractual right to receive, as a supplement to guaranteed benefits, additional benefits that are: Likely to be a significant portion of the total contractual benefits The amount or timing of which is contractually at the discretion of the issuer That are contractually based on: The performance of a specified pool of contracts or a specified type of contract Realised and or unrealised investment returns on a specified pool of assets held by the issuer The profit or loss of the company, fund or other entity that issues the contract
Commentary Paragraphs 34 and 35 of IFRS 4 require the guaranteed element of an insurance or investment DPF contract to be recognised as a liability, but permit the discretionary element of a DPF to be treated as either an element of equity or as a liability, or tobe split between the two categories. The Group’s accounting policy is to treat all DPF features, both guaranteed and discretionary, as liabilities and to include them within insurance or investment contract liabilities as appropriate in the statement of financial position.
IAS 1.112, IAS 1.117(a),(b) IFRS 4.37(a) IFRS 4 Appendix A

Derivatives embedded in an insurance contract or an investment contract with DPF are separated and fair valued through the income statement unless the embedded derivative is itself an insurance contract or investment contract with DPF. The derivative is also not separated if the host insurance contract and/or investment contract with DPF is measured at fair value through the income statement. (b) Business combinations and goodwill Business combinations from 1 January 2010 Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group has an option to measure any non-controlling interests in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. In respect of the acquisition of Good American Life Co in 2010, the Group has measured the non-controlling interests at its proportionate share of the net assets acquired. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. No reclassification of insurance contracts is required for business combination. However, this does not preclude the Group from reclassifying insurance contracts to accord with its own policy only if classification needs to be made on the basis of the contractual terms and other factors at the inception or modification date. If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value as at the acquisition date through profit or loss. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or a liability, will be recognised as measurement period adjustments in accordance with the applicable IFRS. If the contingent consideration is classified as equity, it will not be remeasured and its subsequent settlement will be accounted for within equity Goodwill is initially measured at cost, being the excess of the fair value of the consideration transferred over the Group’s share in the net identifiable assets acquired and liabilities assumed and net of the fair value of any previously held equity interest in the acquiree. Fair values for life Insurance contracts are derived from embedded value (EV) principles developed by the Euroland Institute of Actuaries. Fair values for non-life insurance contracts are derived by calculating the present value of claims reserves. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

IFRS 4.7, 8, 9

IFRS 3.4 IFRS 3.10

IFRS 3.19

IFRS 3.15 IFRS 3.16

IFRS 3.42

IFRS 3.58

IFRS 3.54 IFRS 3.B63(a) IAS 36.80

22

Good Insurance (International) Limited

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(b) Business combinations and goodwill (cont’d) Business combinations from 1 January 2010 (cont’d) After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purposes of impairment testing, goodwill acquired in a business combination is allocated to an appropriate cash-generating unit that is expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained. Business combinations prior to 1 January 2010 In comparison with the above-mentioned requirements, the following differences applied: Business combinations were accounted for using the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The non-controlling interest (formerly known as minority interest) was measured at the proportionate share of the acquiree’s identifiable net assets. Business combinations achieved in stages were accounted for as separate steps. Any additional acquired share of interest did not affect previously recognised goodwill. When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree were not reassessed on acquisition unless the business combination resulted in a change in the terms of the contract that significantly modified the cash flows that otherwise would have been required under the contract. Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration affected goodwill.
Commentary The previous version of IFRS 3 was silent on whether the classification of insurance contracts needs to be revisited on an acquisition. Paragraph 17(b) of the revised standard (effective for annual periods beginning or after 1 July 2009) explicitly exempts insurance contracts from having to be reclassified on acquisition. This exemption, however, only applies to insurance contracts classified as such under IFRS.
IAS 36.80 IAS 1.10,

IAS 36.86

(c) Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the income statement in the year in which the expenditure is incurred. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the income statement in the expense category consistent with the function of the intangible asset. Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.
Good Insurance (International) Limited
IAS 38.24 IAS 38.83 IAS 38.74 IAS 38.57

IAS 38.88 IAS 38.97 IAS 38.9 IAS 38.104

IAS 38.118(d)

IAS 38.107 IAS 38.108 IAS 38.109

IAS 38.113

23

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(c) Intangible assets (cont’d) Present value of acquired in-force business (PVIF) When a portfolio of insurance contracts and/or investment contracts with a DPF is acquired, whether directly from another insurance company or as part of a business combination, the difference between the fair value and the value of the insurance liabilities measured using the Group’s existing accounting policies is recognised as the value of the acquired in-force business. Subsequent to initial recognition, the intangible asset is carried at cost less accumulated amortisation and accumulated impairment losses. The intangible asset is amortised over the useful life of the acquired in-force policy during which future premiums are expected, which typically varies between five and 50 years. Amortisation is recognised in the income statement as an expense. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period and they are treated as a change in an accounting estimate. An impairment review is performed whenever there is an indication of impairment. When the recoverable amount is less than the carrying value, an impairment loss is recognised in the income statement. PVIF is also considered in the liability adequacy test for each reporting period. PVIF is derecognised when the related contracts are settled or disposed of. Future servicing rights When a portfolio of investment contracts without DPF, under which the Group will render investment management services, is acquired, whether directly from another insurance company or as part of a business combination, the present value of future servicing rights is recognised as an intangible asset. Subsequent to initial recognition, the intangible asset is carried at cost less accumulated amortisation and accumulated impairment losses. The intangible asset is amortised on a straight line basis over the useful servicing period of the acquired in-force policy during which fees from services will emerge, which typically varies between 10 and 20 years. Amortisation is recorded in the income statement. An impairment review is performed whenever there is an indication of impairment. When the recoverable amount is less than the carrying value, an impairment loss is recognised in the income statement. Future servicing rights are also considered in establishing an onerous contract provision for each reporting period. Future servicing rights are derecognised when the related contracts are settled or disposed of. Other intangibles Other intangibles consist primarily of contractual relationships such as access to distribution networks and non-restricted customer lists. The economic lives of these assets are determined by consideration of relevant factors such as usage of the asset, typical product life cycles, potential obsolescence, maintenance costs, the stability of the industry, competitive position, and period of control over the assets. These intangibles are amortised over their useful economic lives, which range up to nine years, using the straight line method and recognised in the income statement. A summary of the policies applied to the Group’s intangible assets is as follows: PVIF Useful lives Amortisation method used Finite Amortised over the period of the policy Future servicing rights Finite Amortised over the servicing period Other intangibles Finite Amortised over its useful economic life
IAS 18 Appendix 14(b)(iii) IFRS 4.31(b) IAS 1.10,

24

Good Insurance (International) Limited

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(d) Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs to sell and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group makes an estimate of the asset’s or CGU recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the income statement unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. The following criteria are also applied in assessing impairment of specific assets: Goodwill Goodwill is tested for impairment, annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of the cash-generating units, to which the goodwill relates. Where the recoverable amount of the cash-generating units is less than their carrying amount an impairment loss is recognised. The Group performs its annual impairment test of goodwill as at 31 December. The recoverable amount for the life insurance business cash generating unit has been determined based on a value in use calculation. This calculation is derived from embedded value (EV) principles together with the present value of expected profits from future new business. The EV represents the shareholder interests in the life business and is the total of the net worth of the life business and the value of the in-force business. The details of the assumptions are in Note 20. The recoverable amount of the non-life insurance cash generating unit and investment management services businesses cash generating unit have been determined based on a value–in-use calculation. The calculation requires the Group to make an estimate of the expected future cash flows from each of the cash-generating units and discount these amounts using a suitable rate which reflects the risk of those cash flows in order to calculate the present value of those cash flows. Previously recorded impairment losses for goodwill are not reversed in future periods. When goodwill forms part of a cash-generating unit (or group of cash generating units) and part of the operations within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation to determine the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.
IAS 36.124 IAS 36.86 IAS 36.10(b) IAS 36.90 IAS 36.90 IAS 1.10, IAS 1.117(a), (b) IAS 36.6 IAS 36.9 IAS 36.66

IAS 36.59 IAS 36.30 IAS 36.55 IAS 36.25 IAS 36.33

IAS 36.60

IAS 36.110

IAS 36.114

IAS 36.117 IAS 36.119

Good Insurance (International) Limited

25

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(d) Impairment of non-financial assets (cont’d) Intangible assets Intangible assets with indefinite useful lives are tested for impairment annually as at 31 December either individually or at the cash generating unit level, as appropriate and when circumstances indicate that the carrying value may be impaired.
IAS 36.10(a) IAS 1.10 IAS 1.117(a), (b)

Commentary
Paragraph 9 of IAS 366 permits the annual impairment test for goodwill and intangible assets with indefinite useful lives to be performed at any time during the year provided it is undertaken at the same time each year. Different goodwill and intangible assets may be tested at different times.

(e) Deferred expenses Deferred acquisition costs (DAC) Those direct and indirect costs incurred during the financial period arising from the writing or renewing of insurance contracts and/or investment contracts with DPF, are deferred to the extent that these costs are recoverable out of future premiums. All other acquisition costs are recognised as an expense when incurred. Subsequent to initial recognition, DAC for life insurance and investment contracts with DPF are amortised over the expected life of the contracts as a constant percentage of expected premiums. DAC for general insurance and health products are amortised over the period in which the related revenues are earned. The reinsurers’ share of deferred acquisition costs is amortised in the same manner as the underlying asset amortisation is recorded in the income statement. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period and are treated as a change in an accounting estimate. An impairment review is performed at each reporting date or more frequently when an indication of impairment arises. When the recoverable amount is less than the carrying value an impairment loss is recognised in the income statement. DAC are also considered in the liability adequacy test for each reporting period. DAC are derecognised when the related contracts are either settled or disposed of. Deferred expenses-Reinsurance commissions Commissions receivable on outwards reinsurance contracts are deferred and amortised on a straight line basis over the term of the expected premiums payable. Deferred expenses-Investment management services Those incremental costs incurred during the financial period directly attributable to securing investment contracts without DPF, under which the Group will render investment management services, are deferred and recognised as an asset, to the extent that these costs can be identified separately, measured reliably and it is probable that these costs will be recovered out of future revenue margins. Incremental cost is a cost that would not have been incurred if the Group had not secured the investment contract without DPF. All other origination costs are recognised as an expense when incurred. For contracts involving both the origination of a financial liability and the provision of investment management services, only the transaction costs allocated to the servicing component are deferred. The other transaction costs are included in the financial liability. Subsequent to initial recognition, these costs are amortised in line with fee income, which typically varies between 10 and 20 years. Amortisation is recorded in the income statement. An impairment review is performed at each reporting date, or more frequently, when an indication of impairment arises. When the recoverable amount is less than the carrying value, an impairment loss is recognised in the income statement. Future servicing rights are also considered in establishing an onerous contract provision for each reporting period. Investment management services are derecognised when the related contracts are settled or disposed of.
IAS 18 Appendix 14(b)(iii) IFRS 4.37(a)

26

Good Insurance (International) Limited

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(f) Property and equipment Property and equipment, including owner-occupied property, is stated at cost, excluding the costs of day-today servicing, less accumulated depreciation and accumulated impairment losses. Replacement or major inspection costs are capitalised when incurred and if it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. Depreciation is provided on a straight line basis over the useful lives of the following classes of assets: Property: over 20 years
IAS 16.51 IAS 1.10 IAS 1.117(a), (b) IAS 16.12, 73(a) IAS 16.1, 30 IAS 16.14

IAS 16.73(b), (c)

Equipment: 5 to 15 years The assets’ residual values, and useful lives and method of depreciation are reviewed and adjusted if appropriate at each financial year end and adjusted prospectively, if appropriate. Impairment reviews are performed when there are indicators that the carrying value may not be recoverable. Impairment losses are recognised in the income statement as an expense. An item of property and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognised.
Commentary The Group has elected to carry property and equipment at historical cost less accumulated depreciation and impairment. IAS 16 also permits property and equipment to be carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated depreciation and impairment.
IAS 16.67 IAS 16.71 IAS 16.68

(g) Investment properties Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in the income statement in the year in which they arise. Fair values are evaluated annually by an accredited external, independent valuer, applying a valuation model recommended by the International Valuation Standards Committee. Investment properties are derecognised either when they have been disposed of, or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the income statement in the year of retirement or disposal. Transfers are made to or from investment property only when there is a change in use evidenced by the end of owner-occupation, commencement of an operating lease to another party or completion of construction or development. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner-occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property and equipment up to the date of the change in use. When the Group completes the construction or development of a self constructed investment property, any difference between the fair value of the property at that date and its previous carrying amount is recognised in the income statement.
Commentary The Group has elected to carry investment property at fair value. Both IAS 16 and IAS 40 permit property, plant and equipment and investment properties to be carried at historic cost less provisions for depreciation and impairment. In these circumstances disclosures about the cost basis and depreciation rates would be required. In addition, IAS 40 would require note disclosure about the fair value of any investment property recorded at cost. Therefore, companies would still need to determine the fair value.
IAS 40.20 IAS 40.33 IAS 40.75(a) IAS 40.35

IAS 40.75(e)

IAS 40.66 IAS 40.69

IAS 40.57 IAS 40.60 IAS 40.61

IAS 40.60, 61 IAS 40.65

Good Insurance (International) Limited

27

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(h) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. For qualifying assets commencing on or before 1 January 2008, borrowing costs that were directly attributable to the acquisition, construction or production of a qualifying asset (i.e., an asset that necessarily took a substantial period of time to get ready for its intended use or sale) were expensed as incurred.. (i) Investment in an associate The Group’s investment in its associate is accounted for using the equity method of accounting. An associate is an entity in which the Group has significant influence and which is neither a subsidiary nor a joint venture. Under the equity method, the investment in the associate is carried in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. The income statement reflects the share of the results of operations of the associate. Where there has been a change recognised directly in the equity of the associate, the Group recognises its share of any changes and discloses this, when applicable, in the statement of changes in equity. Profits or losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate. The share of profit of the associate is shown on the face of the income statement. This is profit attributable to equity holders of the associate and, therefore, is profit after tax and non-controlling interests in the subsidiaries of the associates. The financial statements of the associate are prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring its accounting policies in line with the Group. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in associates. The Group determines at each reporting date, whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the ‘share of profit of an associate’ in the income statement. Upon loss of significant influence over the associate, the Group measures and recognises any remaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the remaining investment and proceeds from disposal are recognised in profit or loss.
IAS 28. 37(e) IAS 28.26 IAS 28.13 IAS 28.6 IAS 28.23(a) IAS 28.11 IAS 28.22 IAS 28.39 IAS 23.8 IAS 1.10

IAS 23.27

IAS 28.31 IAS 28.33

IAS 28. 18

28

Good Insurance (International) Limited

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(j) Financial assets Initial recognition and measurement Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held to maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial assets at initial recognition. Financial assets are recognised initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The classification depends on the purpose for which the investments were acquired or originated. Financial assets are classified as at fair value through profit or loss where the Group’s documented investment strategy is to manage financial investments on a fair value basis, because the related liabilities are also managed on this basis. The available-for-sale and held to maturity categories are used when the relevant liability (including shareholders’ funds) is passively managed and/or carried at amortised cost. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset. The Group’s financial assets include cash and short-term deposits, trade and other receivables, loan and other receivables, quoted and unquoted financial instruments, and derivative financial instruments. Subsequent measurement The subsequent measurement of financial assets depends on their classification as follows: Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading and those designated upon initial recognition at fair value through profit or loss. Investments typically bought with the intention to sell in the near future are classified as held for trading. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Derivatives, including separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. For investments designated as at fair value through profit or loss, the following criteria must be met: The designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or liabilities or recognising gains or losses on a different basis. or The assets and liabilities are part of a group of financial assets, financial liabilities or both which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy. These investments are initially recorded at fair value. Subsequent to initial recognition, these investments are remeasured at fair value. Fair value adjustments and realised gains and losses are recognised in the income statement. The Group evaluated its financial assets at fair value through profit and loss (held for trading) whether the intent to sell them in the near term is still appropriate. When the Group is unable to trade these financial assets due to inactive markets and management’s intent to sell them in the foreseeable future significantly changes, the Group may elect to reclassify these financial assets in rare circumstances. The reclassification to loans and receivables, available-for-sale or held to maturity depends on the nature of the asset. This evaluation does not affect any financial assets designated at fair value through profit or loss using the fair value option at designation.
IAS 39.43 IAS 39.55(a) IAS 39.9(a), (b) IAS 39.46 IAS 39.9 IAS 1.10 IAS 1.117(a), (b) IFRS 7.21

IAS 39.9IAS 39.43

IAS 39.9 IAS 39.38

IAS 39.AG14 IAS 39.55(a)

IAS 39.10 IAS 39.11 IAS 39.50-50D

Good Insurance (International) Limited

29

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(j) Financial assets (cont’d) Subsequent measurement (cont’d) Available-for-sale financial assets Available-for-sale financial investments include equity and debt securities. Equity investments classified as available-for-sale are those, which are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those that are intended to be held for an indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in the market conditions. After initial measurement, available-for-sale financial assets are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income in the available-for-sale reserve until the asset is derecognised, at which time, the cumulative gain or loss is recognised in other operating income, or determined to be impaired, or the cumulative loss is recognised in the income statement in finance costs and removed from the available-for-sale reserve. The Group evaluated its available-for-sale financial assets to determine whether the ability and intention to sell them in the near term would still be appropriate. In the case where the Group is unable to trade these financial assets due to inactive markets and management’s intention significantly changes to do so in the foreseeable future, the Group may elect to reclassify these financial assets in rare circumstances. Reclassification to loans and receivables is permitted when the financial asset meets the definition of loans and receivables and management has the intention and ability to hold these assets for the foreseeable future or until maturity. The reclassification to held to maturity is permitted only when the entity has the ability and intention to hold the financial asset until maturity. For a financial asset reclassified out of the available-for-sale category, any previous gain or loss on that asset that has been recognised in equity is amortised to profit or loss over the remaining life of the investment using the EIR. Any difference between the new amortised cost and the expected cash flows is also amortised over the remaining life of the asset using the EIR. If the asset is subsequently determined to be impaired then the amount recorded in equity is reclassified to the income statement. Loans and other receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These investments are initially recognised at cost, being the fair value of the consideration paid for the acquisition of the investment. All transaction costs directly attributable to the acquisition are also included in the cost of the investment. After initial measurement, loans and receivables are measured at amortised cost, using the effective interest rate method (EIR) less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the income statement. Gains and losses are recognised in the income statement when the investments are derecognised or impaired, as well as through the amortisation process. Held to maturity financial assets Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held to maturity when the Group has the positive intention and ability to hold until maturity. These investments are initially recognised at cost, being the fair value of the consideration paid for the acquisition of the investment. All transaction costs directly attributable to the acquisition are also included in the cost of the investment. After initial measurement, held to maturity financial assets are measured at amortised cost, using the effective interest rate method, less impairment. Gains and losses are recognised in the income statement when the investments are derecognised or impaired, as well as through the amortisation process.
IAS 39.9 IAS 39.43 IAS 39.9 IAS 39.43 IAS 39.46(a) IAS 39.56 IAS 39.50E IAS 39.50F IAS 39.9 IAS 39.46 IAS 39.55(b) IAS 39.67 IAS 1.10 IFRS 7.21

IAS 39.56

30

Good Insurance (International) Limited

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(k) Financial assets (cont’d) Derecognition of financial assets A financial asset (or, when applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when: The rights to receive cash flows from the asset have expired The Group retains the right to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either: (a) the Group has transferred substantially all the risks and rewards of the asset; or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Group has transferred its right to receive cash flows from an asset or has entered into a passthrough arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay. (l) Impairment of financial assets The Group assesses at each reporting date whether a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Financial assets carried at amortised cost For financial assets carried at amortised cost, the Group first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred, the amount of the impairment loss is measured as the difference between the carrying amount of the asset and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.
IAS 39.63 IAS 39.64 IAS 39.58 IAS 39.59 IFRS 7.B5(f) IAS 39.30(a) IFRS 7.21 IAS 1.10 IFRS 7.21

IAS 39.17(a) IAS 39.18(b)

IAS 39.20(a) IAS 39.20(c) IAS 39.18(b)

IAS 39.AG84 IFRS 7.16 IFRS 7.B5(d)(i) IFRS 7.B5(d)(ii) IAS 39.65 IAS 39.AG93

Good Insurance (International) Limited

31

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(l) Impairment of financial assets (cont’d) Financial assets carried at amortised cost (cont’d) The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of investment income in the income statement. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to the ‘finance cost’ in the income statement. For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of the Group’s internal credit grading system, which considers credit risk characteristics such as asset type, industry, geographical location, collateral type, past-due status and other relevant factors. Future cash flows on a group of financial assets that are collectively evaluated for impairment are estimated on the basis of historical loss experience for assets with credit risk characteristics similar to those in the group. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not exist currently. Estimates of changes in future cash flows reflect, and are directionally consistent with, changes in related observable data from year to year (such as changes in unemployment rates, property prices, commodity prices, payment status, or other factors that are indicative of incurred losses in the group and their magnitude). The methodology and assumptions used for estimating future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience. See Note 45 for details of impairment losses on financial assets. Available-for-sale financial investments For available-for-sale financial investments, the Group assesses at each reporting date whether there is objective evidence that an investment or a group of investments is impaired. In the case of equity investments classified as available-for-sale, objective evidence would include a ‘significant or prolonged’ decline in the fair value of the investment below its cost. ‘Significant’ is to be evaluated against the original cost of the investment and ‘prolonged’ against the period in which the fair value has been below its original cost. Where there is evidence of impairment, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the income statement – is removed from other comprehensive income and recognised in the income statement. Impairment losses on equity investments are not reversed through the income statement; increases in their fair value after impairment are recognised directly in other comprehensive income. In the case of debt instruments classified as available-for-sale, impairment is assessed based on the same criteria as financial assets carried at amortised cost. However, the amount recorded for impairment is the cumulative loss measured as the difference between the amortised cost and the current fair value, less any impairment loss on that investment previously recognised in the income statement. Future interest income continues to be accrued based on the reduced carrying amount of the asset and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income. If, in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in the income statement, the impairment loss is reversed through the income statement.
IAS 39.67 IAS 39.68, 69 IAS 39.70 IAS 1.10 IFRS 7.21

IAS 39.65

IAS 39.AG87

IAS 39.AG89

IFRS 7.16 IAS 39.AG93 IAS 39.70

32

Good Insurance (International) Limited

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(m) Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. Income and expense will not be offset in the consolidated income statement unless required or permitted by any accounting standard or interpretation, as specifically disclosed in the accounting policies of the Group. (n) Derivative financial instruments and hedge accounting Initial recognition and subsequent measurement The Group uses derivative financial instruments such as forward currency contracts and interest rate swaps to hedge its foreign currency risks and interest rate risks, respectively. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. All derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Derivative financial instruments are classified as held for trading unless they are designated as effective hedging instruments. Embedded derivatives are treated as separate derivatives and are recorded at fair value if their economic characteristics and risks are not closely related to those of the related host contract and the host contract is not itself recorded at fair value through the income statement. Embedded derivatives that meet the definition of insurance contracts are treated and measured as insurance contracts. Derivative financial instruments held for trading are typically entered into with the intention to settle in the near future. These instruments are initially recorded at fair value. Subsequent to initial recognition, these instruments are remeasured at fair value. Derivative financial instruments designated as hedging instruments, for example, forward currency contracts and interest rate swaps, are entered into by the Group to hedge its risks associated with interest rate and foreign currency fluctuations. Any gains or losses arising from changes in fair value on derivatives are taken directly to the income statement, except for the effective portion of cash flow and net investment hedges, which are recognised in other comprehensive income. For the purpose of hedge accounting, hedges are classified as: Fair value hedges, when the hedge exposure to changes in the fair value of a recognised asset or liability or an unrecognised firm commitment, or an identified portion of such asset, liability or firm commitment, that is attributable to a particular risk Cash flow hedges, when they hedge exposure to variability in cash flows of a recognised asset or liability or a highly probable forecasted transaction Hedges of a net investment in a foreign operation The following criteria must be in place before the Group will use hedge accounting: Formal documentation of the hedging instrument, hedged item, hedging objective, strategy and relationship is prepared before hedge accounting is applied. The hedge is documented at inception showing that it is expected to be highly effective in offsetting the risk in the hedged item throughout the reporting period and the hedge is effective on an ongoing basis. For a cash flow hedge, a forecast transaction that is the subject of the hedge must be highly probable and must present an exposure to variations in cash flows that could ultimately affect the income statement.
IAS 39.86(a) IAS 39.55(a) IAS 39.43 IFRS 7.21 IAS 1.10

IAS 32.42

IAS 1.32

IFRS 7.21 IAS 39.43

IFRS 7.22(b)

IAS 39.86(b)

IAS 39.86(c) IAS 39.88 IAS 39.55(a)

Good Insurance (International) Limited

33

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(n) Derivative financial instruments and hedge accounting (cont’d) Hedges that meet the strict criteria for hedge accounting are accounted for as follows: Fair value hedges Such derivative financial instruments are also initially recognised at fair value on the date on which the derivative contract is entered into. The carrying amount of the hedged item is adjusted for gains and losses attributable to the risk being hedged. The derivative is remeasured at fair value and gains and losses are recognised in the income statement. For fair value hedges relating to items carried at amortised cost, the adjustment to carrying value is amortised through the income statement over the remaining term of maturity. Effective interest rate amortisation may begin as soon as an adjustment exists and shall begin no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged. When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss recognised in the income statement. The change in the fair value of the hedging instrument is also recognised in the income statement. The Group discontinues fair value hedge accounting if the hedging instrument expires, is sold, terminated or exercised, the hedge no longer meets the criteria for hedge accounting or the Group revokes the designation. The Group hedges interest rate risk and exchange rate risk on certain fixed interest rate investments using swaps, exchange traded futures and other forward exchange contracts. See Note 25 for more details. Cash flow hedges Such derivative financial instruments are initially recognised at fair value on the date on which the derivative contract is entered into. The effective portion of the gain or loss on the hedging instrument is recognised in other comprehensive income in the cash flow hedge reserve, while the ineffective portion is recognised in the income statement. Amounts taken to other comprehensive income are transferred to the income statement when the hedged transaction effects the income statement, such as when hedged financial income or financial expense is recognised or when the forecast sale or purchase occurs. When the hedged item is the cost of a non-financial asset or liability, the amounts taken to other comprehensive income are transferred to the initial carrying amount of the non-financial asset or non-financial liability. If the forecast transaction is no longer expected to occur, cumulative amounts previously recognised in other comprehensive income are transferred to the income statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognised in other comprehensive income remain in other comprehensive income until the forecast transaction or firm commitment affects profit or loss. The Group uses currency swaps as hedges of its exposure to foreign currency risk in forecasted transactions and firm commitments. Refer to Note 25 for more details. Current versus non-current classification Derivative instruments that are not designated and effective hedging instruments are separated into a current (amounts expected to be recovered or settled within 12 months) and non-current portion (amounts expected to be recovered or settled for more than 12 months) based on an assessment of the facts and circumstances (i.e., the underlying contracted cash flows). Where the Group will hold a derivative as an economic hedge (and does not apply hedge accounting) for a period beyond 12 months after the reporting date, the derivative is classified as non-current (or separated into current and non-current portions) consistent with the classification of the underlying item. Embedded derivates that are not closely related to the host contract are classified consistent with the cash flows of the host contract. Derivative instruments that are designated as, and are effective hedging instruments, are classified consistent with the classification of the underlying hedged item. The derivative instrument is separated into a current portion and non-current portion only if a reliable allocation can be made.
IAS 1.60 IFRS 7.22(a) IAS 39.95 IFRS 7.22(a) IAS 39.89 IAS 1.10

IAS 39.92

IAS 39.93

IAS 39.91

IAS 39.97-100

IAS 39.101

34

Good Insurance (International) Limited

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(o) Fair value of financial instruments The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to quoted market bid prices for assets and offer prices for liabilities, at the close of business on the reporting date, without any deduction for transaction costs. For units in unit trusts and shares in open ended investment companies, fair value is determined by reference to published bid values. For financial instruments where there is not an active market, the fair value is determined by using appropriate valuation techniques. Valuation techniques include the discounted cash flow method, comparison to similar instruments for which market observable prices exist, options pricing models, credit models and other relevant valuation models. Certain financial instruments are recorded at fair value using valuation techniques because current market transactions or observable market data are not available. Their fair value is determined using a valuation model that has been tested against prices or inputs to actual market transactions and using the Group’s best estimate of the most appropriate model assumptions. Models are adjusted to reflect the spread for bid and ask prices to reflect costs to close out positions, counterparty credit and liquidity spread and limitations in the models. Also, profit or loss calculated when such financial instruments are first recorded (Day 1 profit or loss) is deferred and recognised only when the inputs become observable or on derecognition of the instrument. For discounted cash flow techniques, estimated future cash flows are based on management’s best estimates and the discount rate used is a market related rate for a similar instrument. The use of different pricing models and assumptions could produce materially different estimates of fair values. The fair value of floating rate and overnight deposits with credit institutions is their carrying value. The carrying value is the cost of the deposit and accrued interest. The fair value of fixed interest bearing deposits is estimated using discounted cash flow techniques. Expected cash flows are discounted at current market rates for similar instruments at the reporting date. If the fair value can not be measured reliably, these financial instruments are measured at cost, being the fair value of the consideration paid for the acquisition of the investment or the amount received on issuing the financial liability. All transaction costs directly attributable to the acquisition are also included in the cost of the investment. An analysis of fair values of financial instruments and further details as to how they are measured are provided in Note 26. (p) Reinsurance The Group cedes insurance risk in the normal course of business for all of its businesses. Reinsurance assets represent balances due from reinsurance companies. Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision or settled claims associated with the reinsurer’s policies and are in accordance with the related reinsurance contract. Reinsurance assets are reviewed for impairment at each reporting date or more frequently when an indication of impairment arises during the reporting year. Impairment occurs when there is objective evidence as a result of an event that occurred after initial recognition of the reinsurance asset that the Group may not receive all outstanding amounts due under the terms of the contract and the event has a reliably measurable impact on the amounts that the Group will receive from the reinsurer. The impairment loss is recorded in the income statement. Gains or losses on buying reinsurance are recognised in the income statement immediately at the date of purchase and are not amortised. Ceded reinsurance arrangements do not relieve the Group from its obligations to policyholders.
IFRS 4.20 IFRS 4.37(a) IFRS 7.27 IFRS 7.27 IAS 1.10

IFRS 7.27

IFRS 7.27

IAS 39.46(c)

IFRS 4.37(b)(i)

Good Insurance (International) Limited

35

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(p) Reinsurance (cont’d) The Group also assumes reinsurance risk in the normal course of business for life insurance and non-life insurance contracts where applicable. Premiums and claims on assumed reinsurance are recognised as revenue or expenses in the same manner as they would be if the reinsurance were considered direct business, taking into account the product classification of the reinsured business. Reinsurance liabilities represent balances due to reinsurance companies. Amounts payable are estimated in a manner consistent with the related reinsurance contract. Premiums and claims are presented on a gross basis for both ceded and assumed reinsurance. Reinsurance assets or liabilities are derecognised when the contractual rights are extinguished or expire or when the contract is transferred to another party. Reinsurance contracts that do not transfer significant insurance risk are accounted for directly through the statement of financial position. These are deposit assets or financial liabilities that are recognised based on the consideration paid or received less any explicit identified premiums or fees to be retained by the reinsured. Investment income on these contracts is accounted for using the effective interest rate method when accrued. (q) Insurance receivables Insurance receivables are recognised when due and measured on initial recognition at the fair value of the consideration received or receivable. Subsequent to initial recognition, insurance receivables are measured at amortised cost, using the effective interest rate method. The carrying value of insurance receivables is reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable, with the impairment loss recorded in the income statement. Insurance receivables are derecognised when the derecognition criteria for financial assets, as described in Note 2.3 (k), have been met. (r) Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less in the statement of financial position. For the purpose of the consolidated cash flow, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
IAS 7.6 IFRS 4.37(a) IFRS 4.14(c) IAS 1.10 IFRS 4.37(a)

IAS 7.8

Commentary
The Group has included bank overdrafts within cash and cash equivalents as they are considered an integral part of the Group’s cash management.

(s) Taxes Current income tax Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date in the countries where the Group operates and generates taxable income. Current income tax assets and liabilities also include adjustments for tax expected to be payable or recoverable in respect of previous periods. Current income tax relating to items recognised directly in equity or other comprehensive income is recognised in equity or other comprehensive income and not in the income statement. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. The income tax charge is analysed between tax in respect of policyholders’ returns and the balance which represents the tax on equity holders’ returns. The income tax charge in respect of policyholders’ returns reflects the movement in current and deferred income tax recognised in respect of those items of income, gains and expenses, which inure to the benefit of policyholders.
IAS 12.46

IAS 12.61A IAS 1.117

36

Good Insurance (International) Limited

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(s) Taxes (cont’d) Deferred tax Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all taxable temporary differences, except: When the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except: Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Sales taxes and premium taxes Revenues, expenses and assets are recognised net of the amount of sales taxes and premium taxes except: Where the sales or premium tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable. Receivables and payables that are stated with the amount of sales or premium tax included. Outstanding net amounts of sales or premium tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.
IAS 12.22(c) IAS 1.10

IAS 12.39

IAS 12.34

IAS 12.24

IAS 12.44

IAS 12.56 IAS 12.37

IAS 12.47

IAS 12.61A

IAS 12.71

IAS 18.8

Good Insurance (International) Limited

37

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(t) Leasing The determination of whether an arrangement is a lease, or contains a lease, is based on the substance of the arrangement at the inception date and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the transitional requirements of IFRIC 4. Group as a lessee Finance leases that transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance cost in the income statement. Leased assets are depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term. Leases which do not transfer to the Group substantially all the risks and benefits incidental to ownership of the leased items are operating leases. Operating lease payments are recognised as an expense in the income statement on a straight line basis over the lease term. Contingent rentals are recognised as an expense in the period in which they are incurred. Group as a lessor Leases where the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. Contingent rents are recognised as revenue in the period in which they are earned. (u) Foreign currency translation The Group’s consolidated financial statements are presented in euros which is also the parent company’s functional currency. Each company in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. i) Transactions and balances
IAS 21.23(a) IAS 21.28 IAS 21.32 IAS 1.51(d) IAS 21.21 IAS 21.9 IAS 17.8 IAS 17.20 IAS 17.25 IFRIC 4.6 IAS 1.10

IFRIC 4.17

IAS 17.27

IAS 17.33

IAS 17.8 IAS 17.52

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the reporting date. All differences are taken to the income statement with the exception of differences on foreign monetary items that form part of a net investment in a foreign operation. These are recognised in other comprehensive income until the disposal of the net investment, at which time they are recognised in the income statement. Tax changes and credits attributable to exchange differences on these items are also recorded in other comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction and are not subsequently restated. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. ii) Group companies The assets and liabilities of foreign operations are translated into euros at the rate of exchange prevailing at the reporting date and their income statements are translated at exchange rates prevailing at the date of the transactions. The exchange differences arising on the translation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in the income statement. Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate.

IAS 21.39(a), (b) IAS 21.39(c) IAS 21.23(c) IAS 21.23(b)

IAS 21.39(a) IAS 21.39(b) IAS 21.39(c) IAS 21.48

IAS 21.47

38

Good Insurance (International) Limited

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(v) Insurance contract liabilities Life insurance contract liabilities Life insurance liabilities are recognised when contracts are entered into and premiums are charged. These liabilities are measured by using the net premium method. The liability is determined as the sum of the discounted value of the expected future benefits, claims handling and policy administration expenses, policyholder options and guarantees and investment income from assets backing such liabilities, which are directly related to the contract, less the discounted value of the expected theoretical premiums that would be required to meet the future cash outflows based on the valuation assumptions used. The liability is either based on current assumptions or calculated using the assumptions established at the time the contract was issued, in which case a margin for risk and adverse deviation is generally included. A separate reserve for longevity may be established and included in the measurement of the liability. Furthermore, the liability for life insurance contracts comprises the provision for unearned premiums and premium deficiency, as well as for claims outstanding, which includes an estimate of the incurred claims that have not yet been reported to the Group. Adjustments to the liabilities at each reporting date are recorded in the income statement. Profits originated from margins of adverse deviations on run-off contracts are recognised in the income statement over the life of the contract, whereas losses are fully recognised in the income statement during the first year of run-off. The liability is derecognised when the contract expires, is discharged or is cancelled. At each reporting date, an assessment is made of whether the recognised life insurance liabilities are adequate, net of related PVIF and DAC, by using an existing liability adequacy test as laid out under Euroland GAAP. The liability value is adjusted to the extent that it is insufficient to meet future benefits and expenses. In performing the adequacy test, current best estimates of future contractual cash flows, including related cash flows such as claims handling and policy administration expenses, policyholder options and guarantees, as well as investment income from assets backing such liabilities, are used. A number of valuation methods are applied, including discounted cash flows, option pricing models and stochastic modelling. Aggregation levels and the level of prudence applied in the test are consistent with Euroland GAAP requirements. To the extent that the test involves discounting of cash flows, the interest rate applied may be prescribed by Euroland regulations or may be based on management’s prudent expectation of current market interest rates. Any inadequacy is recorded in the income statement, initially by impairing PVIF and DAC and, subsequently, by establishing a technical reserve for the remaining loss. In subsequent periods, the liability for a block of business that has failed the adequacy test is based on the assumptions that are established at the time of the loss recognition. The assumptions do not include a margin for adverse deviation. Impairment losses resulting from liability adequacy testing can be reversed in future years if the impairment no longer exists, as allowed under Euroland GAAP. Non-life insurance (which comprises general insurance and healthcare) contract liabilities Non-life insurance contract liabilities include the outstanding claims provision, the provision for unearned premium and the provision for premium deficiency. The outstanding claims provision is based on the estimated ultimate cost of all claims incurred but not settled at the reporting date, whether reported or not, together with related claims handling costs and reduction for the expected value of salvage and other recoveries. Delays can be experienced in the notification and settlement of certain types of claims, therefore the ultimate cost of these cannot be known with certainty at the reporting date. The liability is calculated at the reporting date using a range of standard actuarial claim projection techniques, based on empirical data and current assumptions that may include a margin for adverse deviation. The liability is not discounted for the time value of money. No provision for equalisation or catastrophe reserves is recognised. The liabilities are derecognised when the obligation to pay a claim expires, is discharged or is cancelled.
IFRS 4.15-19 IFRS 4.37(a) IAS 1.10

IFRS 4.37(a)

Good Insurance (International) Limited

39

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(v) Insurance contract liabilities (cont’d) Non-life insurance (which comprises general insurance and healthcare) contract liabilities (cont’d) The provision for unearned premiums represents that portion of premiums received or receivable that relates to risks that have not yet expired at the reporting date. The provision is recognised when contracts are entered into and premiums are charged, and is brought to account as premium income over the term of the contract in accordance with the pattern of insurance service provided under the contract. At each reporting date the Group reviews its unexpired risk and a liability adequacy test is performed as laid out under Euroland GAAP to determine whether there is any overall excess of expected claims and deferred acquisition costs over unearned premiums. This calculation uses current estimates of future contractual cash flows after taking account of the investment return expected to arise on assets relating to the relevant nonlife insurance technical provisions. If these estimates show that the carrying amount of the unearned premiums (less related deferred acquisition costs) is inadequate, the deficiency is recognised in the income statement by setting up a provision for premium deficiency. (w) Investment contract liabilities Investment contracts are classified between contracts with and without DPF. The accounting policies for investment contract liabilities with DPF are the same as those for life insurance contract liabilities. Investment contract liabilities without DPF are recognised when contracts are entered into and premiums are charged. These liabilities are initially recognised at fair value this being the transaction price excluding any transaction costs directly attributable to the issue of the contract. Subsequent to initial recognition investment, contract liabilities are measured at fair value through profit or loss. Deposits and withdrawals are recorded directly as an adjustment to the liability in the statement of financial position. Fair value adjustments are performed at each reporting date and are recognised in the income statement. Fair value is determined through the use of prospective discounted cash flow techniques. For unitised contracts, fair value is calculated as the number of units allocated to the policyholder in each unit-linked fund multiplied by the unit-price of those funds at the reporting date. The fund assets and fund liabilities used to determine the unit-prices at the reporting date are valued on a basis consistent with their measurement basis in the consolidated Group statement of financial position adjusted to take account of the effect on the liabilities of the deferred tax on unrealised gains on assets in the fund. Non-unitised contracts are subsequently also carried at fair value, which is determined by using valuation techniques such as discounted cash flows and stochastic modelling. Models are validated, calibrated and periodically reviewed by an independent qualified person. The liability is derecognised when the contract expires, is discharged or is cancelled. For a contract that can be cancelled by the policyholder, the fair value cannot be less than the surrender value. When contracts contain both a financial risk component and a significant insurance risk component and the cash flows from the two components are distinct and can be measured reliably, the underlying amounts are unbundled. Any premiums relating to the insurance risk component are accounted for on the same basis as insurance contracts and the remaining element is accounted for as a deposit through the statement of financial position as described above. (x) Discretionary participation features (DPF) A DPF is a contractual right that gives holders of these contracts the right to receive as a supplement to guaranteed benefits, significant additional benefits which are based on the performance of the assets held within the DPF portfolio. Under the terms of the contracts surpluses in the DPF funds can be distributed to policyholders and shareholders on a 90/10 basis. The Group has the discretion over the amount and timing of the distribution of these surpluses to policyholders. All DPF liabilities including unallocated surpluses, both guaranteed and discretionary, at the end of the reporting period are held within insurance or investment contract liabilities as appropriate.
IFRS 4.37(a) IAS 39.49 IAS 39.43 IFRS 4.15-19 IFRS 4.37(a) IAS 1.10

IFRS 4.37(a)

40

Good Insurance (International) Limited

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(y) Financial liabilities – initial recognition and subsequent measurement Initial recognition and measurement Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives as appropriate. The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs. The Group’s financial liabilities include investment contracts without DPF, net asset value attributable to unitholders, trade and other payables, borrowings, insurance payables (see section y) and derivative financial instruments. Subsequent measurement The subsequent measurement of financial liabilities depends on their classification as follows: Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss includes financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. The Group has also designated investment contracts with DPF (see section u) and net asset value attributable to unit-holders (see section x) as at fair value through profit or loss upon initial recognition. Gains or losses on designated or held for trading liabilities are recognised in the income statement. Interest bearing loans and borrowings After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR. The EIR amortisation is included in finance cost in the income statement. Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement. (z) Net asset value attributable to unit-holders Unit trusts in which the Group has a percentage holding in excess of 50% have been consolidated. The units not owned by the Group are treated as a liability due to the puttable nature of the units. This liability is referred to as ‘net asset value attributable to unit-holders’. These liabilities are designated at fair value through profit or loss. Fair value is measured at current unit values, which reflect fair values of underlying assets of the fund. These liabilities are derecognised when the related contracts are settled or disposed of. (aa) Insurance payables Insurance payables are recognised when due and measured on initial recognition at the fair value of the consideration received less directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using the effective interest rate method. Derecognition insurance payables Insurance payables are derecognised when the obligation under the liability is discharged, cancelled or expired.
IFRS 4.37(a), (e) IAS 39.39 IAS 39.43, 47 IAS 39.39 IAS 39.47 IFRS 7.21 IAS 39.43 IAS 39.56 IAS 1.10

IAS 39.41 IAS 39.40

Good Insurance (International) Limited

41

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(ab) Financial guarantee contracts Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount recognised less cumulative amortisation. (ac) Classification of financial instruments between debt and equity A financial instrument is classified as debt if it has a contractual obligation to: Deliver cash or another financial asset to another entity. Exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the Group. If the Group does not have an unconditional right to avoid delivering cash or another financial asset to settle its contractual obligation, the obligation meets the definition of a financial liability. (ad) Pensions and other post employment benefits The Group operates a defined benefit pension plan, which requires contributions to be made to a separately administered fund. The cost of providing benefits under the defined benefit plan is determined separately using the projected unit credit valuation method. Actuarial gains and losses are recognised as income or expense when the net cumulative unrecognised actuarial gains and losses at the end of the previous reporting year exceed 10% of the higher of the defined benefit obligation and the fair value of plan assets at that date. These gains and losses are recognised over the expected average remaining working lives of the employees participating in the plan. The past service cost is recognised as an expense on a straight-line basis over the average period until the benefits become vested. If the benefits vest immediately following the introduction of, or changes to, a pension plan, the past service cost is recognised immediately. The defined benefit asset or liability comprises the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds, as explained in Note 2.5), less past service costs and actuarial gains and losses not yet recognised and less the fair value of plan assets out of which the obligations are to be settled directly. Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance policies. Plan assets are not available to creditors of the Group nor can they be paid directly to the Group. Fair value is based on market price information and, in the case of quoted securities, it is the published bid price. The value of any defined benefit asset is restricted to the sum of any past service cost and actuarial gains and losses not yet recognised and the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.
IFRS 4.37(a), (e) IAS 19.120A(b) IAS 19.64 IAS 12.120A(a) IAS 19.92 IAS 19.93 IAS 39.47(c) IAS 39.9 IAS 39.14 IAS 1.10

IAS 19.96

IAS 19.54 IAS 19.7

IAS 19.58A

Commentary
The Group’s policy for defined benefit plans is to recognise actuarial gains and losses when the cumulative unrecognised actuarial gains and losses of the previous period exceed 10% of the higher of the defined benefit obligation and the fair value of the plan assets at that date. This is sometimes referred to as the corridor approach. Paragraph 93A of IAS 19 also allows other recognition policies. Where the entity elects to recognise all actuarial gains and losses directly in equity, those gains and losses should be presented as part of other comprehensive income. However, all other disclosures about pension plans remain the same.

(ae) Deferred revenue Initial and other front-end fees received for rendering future investment management services relating to investment contracts without DPF, are deferred and recognised as revenue when the related services are rendered.
IAS 18 Appendix 14(b)(iii)

42

Good Insurance (International) Limited

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(af) Provisions General Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounting using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. Onerous contracts A provision is recognised for onerous contracts in which the unavoidable costs of meeting the obligations under the contract exceed the expected economic benefits expected to be received under it. The unavoidable costs reflect the least net cost of exiting the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it. (ag) Share-based payment transactions Employees (including senior executives) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments (‘equitysettled transactions’). Employees working in the business development group are granted share appreciation rights, which can only be settled in cash (‘cash-settled transactions’). In situations where equity instruments are issued and some or all of the goods or services received by the entity as consideration cannot be specifically identified, the unidentified goods or services received (or to be received) are measured as the difference between the fair value of the share-based payment transaction and the fair value of any identifiable goods or services received at the grant date. Equity-settled transactions The cost of equity-settled transactions with employees for awards granted after 7 November 2002, is measured by reference to the fair value at the date on which they are granted. The fair value is determined by an external valuer using an appropriate pricing model, further details of which are given in Note 19. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘the vesting date’). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognised for any modification, which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.
IFRS 2.45 IFRIC 8.11 IFRS 2.44 IAS 37.14 IAS 37.53 IAS 37.54 IAS 37.45 IAS 37.47 IAS 37.60 IAS 1.10

IAS 37.68

IFRS 2.13A

IFRS 2.10, 45, 53

IFRS 2.27 IFRS 2.27A

IFRS 2.28 IFRS 2.B42-B44

Good Insurance (International) Limited

43

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(ag) Share-based payment transactions (cont’d) Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award where nonvesting conditions within the control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph. All cancellations of equity-settled transaction awards are treated equally. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share (further details are given in Note 16). Cash-settled transactions The cost of cash-settled transactions is measured initially at fair value at the grant date using a Black-Scholes model, further details of which are given in Note 19. This fair value is expensed over the period until the vesting date with recognition of a corresponding liability. The liability is remeasured at each reporting date up to and including the settlement date with changes in fair value recognised in profit or loss. (ah) Equity movements Ordinary share capital The Group has issued ordinary shares that are classified as equity. Incremental external costs that are directly attributable to the issue of these shares are recognised in equity, net of tax. Treasury shares and contracts on own shares Own equity instruments which are acquired (treasury shares) are deducted from equity and accounted for at weighted average cost. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount and the consideration is recognised in other capital reserves. Voting rights related to treasury shares are nullified for the Group and no dividends are allocated to them respectively. Contracts on own shares that require physical settlement of a fixed number of own shares for a fixed consideration are classified as equity and added to or deducted from equity. Contracts on own shares that require net cash settlement or provide a choice of settlement are classified as trading instruments. Changes in the fair value are reported in the income statement. Dividends on ordinary share capital Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by the Group’s shareholders. Interim dividends are deducted from equity when they are paid. Dividends for the year that are approved after the reporting date are dealt with as an event after the reporting date. (ai) Revenue recognition Gross premiums Gross recurring premiums on life and investment contracts with DPF are recognised as revenue when payable by the policyholder. For single premium business, revenue is recognised on the date on which the policy is effective. Gross general insurance written premiums comprise the total premiums receivable for the whole period of cover provided by contracts entered into during the accounting period and are recognised on the date on which the policy commences. Premiums include any adjustments arising in the accounting period for premiums receivable in respect of business written in prior accounting periods. Premiums collected by intermediaries, but not yet received, are assessed based on estimates from underwriting or past experience and are included in premiums written. Unearned premiums are those proportions of premiums written in a year that relate to periods of risk after the reporting date. Unearned premiums are calculated on a daily pro rata basis. The proportion attributable to subsequent periods is deferred as a provision for unearned premiums.
IAS 10.12 IAS 32.33 IAS 32.35 IFRS 2.28 IAS 1.10

IAS 33.45 IFRS 2.7 IFRS 2.53 IFRS 2.30, 32, 33

IAS 10.13

IFRS 4.37(a), (e) IFRS 4.37(a)

44

Good Insurance (International) Limited

Notes to the consolidated financial statements
2.3 Summary of significant accounting policies (cont’d)
(ai) Revenue recognition (cont’d) Reinsurance premiums Gross reinsurance premiums on life and investment contracts are recognised as an expense when payable or on the date on which the policy is effective. Gross general reinsurance premiums written comprise the total premiums payable for the whole cover provided by contracts entered into the period and are recognised on the date on which the policy incepts. Premiums include any adjustments arising in the accounting period in respect of reinsurance contracts incepting in prior accounting periods. Unearned reinsurance premiums are those proportions of premiums written in a year that relate to periods of risk after the reporting date. Unearned reinsurance premiums are deferred over the term of the underlying direct insurance policies for risks-attaching contracts and over the term of the reinsurance contract for lossesoccurring contracts. Fees and commission income Insurance and investment contract policyholders are charged for policy administration services, investment management services, surrenders and other contract fees. These fees are recognised as revenue over the period in which the related services are performed. If the fees are for services provided in future periods then they are deferred and recognised over those future periods. Investment income Interest income is recognised in the income statement as it accrues and is calculated by using the effective interest rate method. Fees and commissions that are an integral part of the effective yield of the financial asset or liability are recognised as an adjustment to the effective interest rate of the instrument. Investment income also includes dividends when the right to receive payment is established. For listed securities, this is the date the security is listed as ex dividend. Realised gains and losses Realised gains and losses recorded in the income statement on investments include gains and losses on financial assets and investment properties. Gains and losses also include the ineffective portion of hedge transactions. Gains and losses on the sale of investments are calculated as the difference between net sales proceeds and the original or amortised cost and are recorded on occurrence of the sale transaction. (aj) Benefits, claims and expenses recognition Gross benefits and claims Gross benefits and claims for life insurance contracts and for investment contracts with DPF include the cost of all claims arising during the year including internal and external claims handling costs that are directly related to the processing and settlement of claims and policyholder bonuses declared on DPF contracts, as well as changes in the gross valuation of insurance and investment contract liabilities with DPF. Death claims and surrenders are recorded on the basis of notifications received. Maturities and annuity payments are recorded when due. General insurance and health claims include all claims occurring during the year, whether reported or not, related internal and external claims handling costs that are directly related to the processing and settlement of claims, a reduction for the value of salvage and other recoveries, and any adjustments to claims outstanding from previous years. Reinsurance claims Reinsurance claims are recognised when the related gross insurance claim is recognised according to the terms of the relevant contract. Finance cost Interest paid is recognised in the income statement as it accrues and is calculated by using the effective interest rate method. Accrued interest is included within the carrying value of the interest bearing financial liability.
IAS 39.47 IAS 39.56 IAS 40.69 IAS 39.95(b) IAS 18.30(a) IFRS 4.37(a), IAS 18 Appendix 14(b)(ii) IAS 1.10 IFRS 4.37(a), (e) IFRS 4.37(a)

IAS 18.30(c)

IFRS 4.37(a), (e) IFRS 4.37(a)

Good Insurance (International) Limited

45

Notes to the consolidated financial statements
2.4 Changes in accounting policy and disclosures
New and amended standards and interpretations The accounting policies adopted are consistent with those of the previous financial year, except for the following new and amended IFRS and IFRIC interpretations effective as of 1 January 2010: IFRS 2 Share-based Payment: Group Cash-settled Share-based Payment Transactions effective 1 January 2010 IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended) effective 1 July 2009 including consequential amendments to IFRS 7, IAS 21, IAS 28, IAS 31 and IAS 39 IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items effective 1 July 2009 IFRIC 17 Distributions of Non-cash Assets to Owners effective 1 July 2009 Improvements to IFRSs (April 2009), the effective date of each amendment is included in the IFRS affected Adoption of these revised standards and interpretations did not have any material effect on the financial performance or position of the Group. They did, however, give rise to additional disclosures in some occasions. The principal effects of these changes are as follows: IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate Financial Statements (Amended) IFRS 3 (Revised) introduces significant changes in the accounting for business combinations occurring after this date. Changes affect the valuation of non-controlling interest, the accounting for transaction costs, the initial recognition and subsequent measurement of a contingent consideration and business combinations achieved in stages. These changes will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs and future reported results. IAS 27 (Amended) requires that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as a transaction with owners in their capacity as owners. Therefore, such transactions will no longer give rise to goodwill, nor will it give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes by IFRS 3 (Revised) and IAS 27 (Amended) will affect future acquisitions or loss of control of subsidiaries and transactions with non-controlling interests. The change in accounting policy was applied prospectively and had no material impact on earnings per share. Listed below are standards and interpretations that have been issued, but have no significant impacts on the financial statements IFRS 1 First-time Adoption of International Financial Reporting Standards (Revised) In July 2009, the IASB issued Additional Exemptions for First-time Adopters (Amendments to IFRS 1). The Group is not a first time IFRS adopter and therefore amendments to IFRS 1 have no impact on the financial statements. IFRS 2 Share-based Payment (Revised) The IASB issued an amendment to IFRS 2 that clarified the scope and the accounting for group cash-settled share-based payment transactions. The Group adopted this amendment as of 1 January 2010. It does not have an impact on the financial position or performance of the Group. IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items The amendment clarifies that an entity is permitted to designate a portion of the fair value changes or cash flow variability of a financial instrument as a hedged item. This also covers the designation of inflation as a hedged risk or portion in particular situations. The Group has concluded that the amendment has no impact on the financial position or performance of the Group, as the Group has not entered into any such hedges.
IAS 8.28 IAS 8.14,15

46

Good Insurance (International) Limited

Notes to the consolidated financial statements
2.4 Changes in accounting policy and disclosures (cont’d)
Improvements to IFRSs In April 2009 the IASB issued its annual amendments to International Financial Reporting Standards (IFRSs) and the related Bases for Conclusions and guidance made. The IASB uses the annual improvements process to make necessary, but non-urgent, amendments to IFRSs that will not be included as part of a major project. The amendments primarily deal with a view to remove inconsistencies and clarifying wording. Good Insurance (International) Limited has adopted the following amendments to standards as they come to effect for the reporting period beginning on 1 January 2010: IFRS 2 Share-based Payment: the amendment clarifies that the contribution of a business on formation of a joint venture and combinations under common control are not within the scope of IFRS 2 and IFRS 3. It will be applied retrospectively for annual periods beginning on or after 1 July 2009 with early application permitted. This has no impact on the Group as there are no such activities during 2010. IFRS 5 Non-current Assets Held for Sale and Discontinued Operations: amendment clarifies the disclosure requirements for non-current assets or disposal groups classified as held for sale are only those set out in IFRS 5 although the general requirements of IAS 1 still apply to them. It is effective for annual periods beginning on or after 1 January 2010 and applied prospectively. This has no impact on the Group as the Group has no discontinued operations or held for sale assets that fall into the scope of IFRS 5. IFRS 8 Operating Segments: amendment clarifies that segment assets and liabilities need only be reported when those assets and liabilities are included in measures that are used by the chief operating decision maker. It is effective for annual periods beginning on or after 1 January 2010 and applied retrospectively. This has no impact on the Group as the Group’s segment assets and liabilities are used by the chief operating decision maker hence be reported on the financial statements. IAS 1 Presentation of Financial Statements: amendment clarifies that if the conversion option of a convertible instrument can be exercised by the holder at any time, the liability component would be classified as current. It is applicable retrospectively to annual periods beginning on or after 1 January 2010. This has no impact on the Group as the Group does not hold convertible financial instruments that are classified as liability. IAS 7 Statement of Cash Flows: amendment explicitly states that only expenditure that results in a recognised asset can be classified as a cash flow from investing activities. It is applicable retrospectively to annual periods beginning on or after 1 January 2010. This has no impact on the Group as the cash flow from investing activities does not include expenditures that results in recognised assets. IAS 17 Leases: the amendment removes the specific guidance on classifying leases of land and of buildings as operating or finance leases such that only the general guidance remains. It is effective for annual periods beginning on or after 1 January 2010 and applied retrospectively unless information necessary to apply the amendment retrospectively is not available. This has no impact on the Group’s financial statements as the Group does not own any land. IAS 18 Revenue: the Board has added guidance to determine whether an entity is acting as a principal or as an agent. The Group has reassessed its business relationships and concluded that this does not result in any change to existing recognition of revenue. IAS 36 Impairment of Assets: The amendment clarified that the largest unit permitted for allocating goodwill, acquired in a business combination, is the operating segment as defined in IFRS 8 before aggregation for reporting purposes. The amendment has no impact on the Group as the annual impairment test is performed before aggregation. IAS 39 Financial Instruments: Recognition and Measurement: amendment clarifies the assessment of loan prepayment penalties as embedded derivatives, the scope exemption for contracts associated with a business combination and the accounting treatment for gains and losses on cash flow hedges. IFRIC 9 Reassessment of Embedded Derivatives: amendment clarifies that IFRIC 9 does not apply to embedded derivatives in contracts acquired in a combination between entities under common control or the formation of a joint venture. This has no impact on the Group as the Group does not have any joint venture business. IFRIC 16 Hedges of a Net Investment in a Foreign Operation: amendment makes amendment to the restriction on the entity that can hold hedging instruments. This has no impact on the Group as the Group does not hedge for the foreign operations.

Good Insurance (International) Limited

47

Notes to the consolidated financial statements
2.5 Significant accounting judgments, estimates and assumptions
The preparation of the Group’s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in future periods. Judgments In the process of applying the Group's accounting policies, management has made the following judgments, apart from those involving estimations and assumptions, which have the most significant effect on the amounts recognised in the consolidated financial statements: Operating lease commitments-group as lessor The Group has entered into commercial property leases on its investment property portfolio. The Group, as a lessor, has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties and so accounts for them as operating leases. Estimates and assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (a) Valuation of insurance contract liabilities and investment contract liabilities with DPF Life insurance contract liabilities (including investment contract liabilities with DPF) The liability for life insurance contracts and investment contracts with DPF is either based on current assumptions or on assumptions established at inception of the contract, reflecting the best estimate at the time increased with a margin for risk and adverse deviation. All contracts are subject to a liability adequacy test, which reflect management’s best current estimate of future cash flows. Certain acquisition costs related to the sale of new policies are recorded as deferred acquisition costs (DAC) and are amortised to the consolidated income statement over time. If the assumptions relating to future profitability of these policies are not realised, the amortisation of these costs could be accelerated and this may also require additional impairment write-offs to the consolidated income statement. The main assumptions used relate to mortality, morbidity, longevity, investment returns, expenses, lapse and surrender rates and discount rates. The Group bases mortality and morbidity on standard industry Euroland and American mortality tables which reflect historical experiences, adjusted when appropriate to reflect the Group’s unique risk exposure, product characteristics, target markets and own claims severity and frequency experiences. For those contracts that insure risk related to longevity, prudent allowance is made for expected future mortality improvements as well as wide ranging changes to life style, could result in significant changes to the expected future mortality exposure. Estimates are also made as to future investment income arising from the assets backing life insurance contracts. These estimates are based on current market returns as well as expectations about future economic and financial developments. Assumptions on future expense are based on current expense levels, adjusted for expected expense inflation if appropriate. Lapse and surrender rates are based on the Group’s historical experience of lapses and surrenders. Discount rates are based on current industry risk rates, adjusted for the Group’s own risk exposure. The carrying value at the reporting date of life insurance contract liabilities is €126,048,000 (2009: €78,686,000) and of investment contract liabilities with DPF is €7,366,000 (2009: €4,281,000). Non-life insurance (which comprises general insurance and healthcare) contract liabilities For non-life insurance contracts, estimates have to be made both for the expected ultimate cost of claims reported at the reporting date and for the expected ultimate cost of claims incurred but not yet reported at the reporting date (IBNR). It can take a significant period of time before the ultimate claims cost can be established with certainty and for some type of policies, IBNR claims form the majority of the liability in the statement of financial position.
IAS 1.125(b) IAS 1.122

48

Good Insurance (International) Limited

Notes to the consolidated financial statements
2.5 Significant accounting judgments, estimates and assumptions (cont’d)
(a) Valuation of insurance contract liabilities and investment contract liabilities with DPF (cont’d) Non-life insurance (which comprises general insurance and healthcare) contract liabilities (cont’d) The ultimate cost of outstanding claims is estimated by using a range of standard actuarial claims projection techniques, such as Chain Ladder and Bornheutter-Ferguson methods. The main assumption underlying these techniques is that a company’s past claims development experience can be used to project future claims development and hence ultimate claims costs. As such, these methods extrapolate the development of paid and incurred losses, average costs per claim and claim numbers based on the observed development of earlier years and expected loss ratios. Historical claims development is mainly analysed by accident years, but can also be further analysed by geographical area, as well as by significant business lines and claim types. Large claims are usually separately addressed, either by being reserved at the face value of loss adjuster estimates or separately projected in order to reflect their future development. In most cases, no explicit assumptions are made regarding future rates of claims inflation or loss ratios. Instead, the assumptions used are those implicit in the historical claims development data on which the projections are based. Additional qualitative judgment is used to assess the extent to which past trends may not apply in future, (for example to reflect one-off occurrences, changes in external or market factors such as public attitudes to claiming, economic conditions, levels of claims inflation, judicial decisions and legislation, as well as internal factors such as portfolio mix, policy features and claims handling procedures) in order to arrive at the estimated ultimate cost of claims that present the likely outcome from the range of possible outcomes, taking account of all the uncertainties involved. Similar judgments, estimates and assumptions are employed in the assessment of adequacy of provisions for unearned premium. Judgment is also required in determining whether the pattern of insurance service provided by a contract requires amortisation of unearned premium on a basis other than time apportionment. The carrying value at the reporting date of non-life insurance contract liabilities is €50,664,000 (2009: €47,574,000). (b) Valuation of investment contract liabilities without DPF Unitised investment contract fair values are determined by reference to the values of the assets backing the liabilities, which are based on the value of the unit-linked fund. Non-unitised investment contract fair values are determined by using valuation techniques, such as discounted cash flow methods and stochastic modelling. A variety of factors are considered in these valuation techniques, including time value of money, volatility, policyholder behaviour, servicing cost and fair values of similar instruments. Certain incremental acquisition costs and sales enhancements that are directly attributable to securing an investment management service are also deferred and recorded in deferred expenses. These deferred costs are amortised over the period in which the service is provided. The carrying value at the reporting date of investment contracts liabilities without DPF is €7,854,000 (2009: €7,277,000). (c) Fair value of financial assets and derivative financial instruments determining using valuation techniques Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of discounted cash flows model and/or mathematical models. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. The judgments include considerations of liquidity risk, credit risk, and model inputs such as volatility for longer dated derivatives and discount rates, prepayment rates and default rate assumptions for asset backed securities. For discounted cash flow analysis, estimated future cash flows and discount rates are based on current market information and rates applicable to financial instruments with similar yields, credit quality and maturity characteristics. Estimated future cash flows are influenced by factors such as economic conditions (including country specific risks), concentrations in specific industries, types of instruments or currencies, market liquidity and financial conditions of counterparties. Discount rates are influenced by risk free interest rates and credit risk. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
IAS 1.125(b) IAS 1.125(b)

Good Insurance (International) Limited

49

Notes to the consolidated financial statements
2.5 Significant accounting judgments, estimates and assumptions (cont’d)
(c) Fair value of financial assets and derivative financial instruments determining using valuation techniques (cont’d) The carrying value at the reporting date of financial assets excluding derivatives held at fair value is €144,926,000 (2009: €100,606,000), of derivative financial assets is €2,182,000 (2009: €1,240,000) and of derivative financial liabilities is €1,782,000 (2009: €1,758,000). (d) Goodwill impairment testing The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash-generating unit to which goodwill is allocated. Details of the key assumptions used in the estimation of the recoverable amounts are contained in Note 20. The group has allocated the goodwill to three single cash generating units equivalent to the three operating segments of the Group, as per the segment information in Note 4. The carrying value at the reporting date of goodwill is €9,445,000 (2009: €2,924,000). (e) Valuation of pension benefit obligation The cost of defined benefit pension plans and other post employment medical benefits and the present value of the pension obligation are determined using actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and its long term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. Details of the key assumptions used in the estimates are contained in Note 36. The carrying value at the reporting date of pension benefit obligation is €4,449,000 (2009: €4,152,000). (f) Deferred tax assets and liabilities Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Group company's domicile. Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. The carrying value at the reporting date of deferred tax liability is €5,452,000 (2009: €1,848,000). Further details on taxes are disclosed in Note 28.
IAS 12.88 IAS 1.125 IAS 1.125(b) IAS 1.125(b) IAS 1.125(b)

Commentary
Paragraph 125 of IAS 1 requires an entity to disclose significant judgments applied in preparing the financial statements and significant estimates that involve a high degree of estimation uncertainty. The disclosure requirements go beyond those requirements that already exist in some other IFRS such as IAS 37. These disclosures represent a very important source of information in the financial statements because they highlight those areas in the financial statements that are most prone to change in the foreseeable future. Therefore, any information given should be sufficiently detailed to help the reader of the financial statements understand the impact of possible significant changes.

50

Good Insurance (International) Limited

Notes to the consolidated financial statements
2.6 Standards issued but not yet effective
Standards issued but not yet effective up to the date of issuance of the Group’s financial statements are listed below. This listing is of standards and interpretations issued, which the Group reasonably expects to be applicable at a future date. The Group intends to adopt those standards when they become effective. IAS 24 Related Party Disclosures (Amendment) The amended standard is effective for annual periods beginning on or after 1 January 2011. It clarified the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised standard introduced a partial exemption of disclosure requirements for government-related entities. The Group does not expect any impact on its financial position or performance. Early adoption is permitted for either the partial exemption for government-related entities or for the entire standard. IAS 32 Financial Instruments: Presentation – Classification of Rights Issues The amendment to IAS 32 is effective for annual periods beginning on or after 1 February 2010 and amended the definition of a financial liability in order to classify rights issues (and certain options or warrants) as equity instruments in cases where such rights are given pro rata to all of the existing owners of the same class of an entity’s non-derivative equity instruments, or to acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency. This amendment will have no impact on the Group after initial application. IFRS 9 Financial Instruments: Classification and Measurement IFRS 9 as issued reflects the first phase of the Boards work on the replacement of IAS 39 and applies to classification and measurement of financial assets as defined in IAS 39. The standard is effective for annual periods beginning on or after 1 January 2013. In subsequent phases, the Board will address classification and measurement of financial liabilities, hedge accounting and derecognition. The completion of this project is expected in early 2011. The adoption of IFRS 9 will have an effect on the classification and measurement of the Group’s financial assets. However, the Group determined that the effect shall be quantified in conjunction with the other phases when issued to present a comprehensive picture. IFRIC 14 Prepayments of a minimum funding requirement (Amendment) The amendment to IFRIC 14 is effective for annual periods beginning on or after 1 January 2011 with retrospective application. The amendment provides guidance on assessing the recoverable amount of a net pension asset. The amendment permits an entity to treat the prepayment of a minimum funding requirement as an asset. The amendment is deemed to have no impact on the financial statements of the Group. IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments IFRIC 19 is effective for annual periods beginning on or after 1 July 2010. The interpretation clarifies that equity instruments issued to a creditor to extinguish a financial liability qualify as consideration paid. The equity instruments issued are measured at their fair value. In case this cannot be reliably measured, they are measured at the fair value of the liability extinguished. Any gain or loss is recognised immediately in profit or loss. The adoption of this interpretation will have no effect on the financial statements of the Group. Improvements to IFRSs (issued in May 2010) The IASB issued Improvements to IFRSs, an omnibus of amendments to its IFRS standards. The amendments have not been adopted as they become effective for annual periods on or after either 1 July 2010 or 1 January 2011. The amendments listed below, are considered to have a reasonable possible impact on the Group: IFRS 3 Business Combinations IFRS 7 Financial Instruments: Disclosures IAS 1 Presentation of Financial Statements IAS 27 Consolidated and Separate Financial Statements IFRIC 13 Customer Loyalty Programmes The Group however, expects no impact from the adoption of the amendments on its financial position or performance.
IAS 8.30 IAS 8.31(d)

Commentary
Paragraph 30 of IAS 8 requires disclosure of those standards that have been issued, but are not yet effective and that provide known or reasonably estimable information to enable users to assess the possible impact of the application of such IFRSs on an entity’s financial statements. Therefore, the Group has listed standards and interpretations that are not yet effective, which it reasonably expects to be applicable at a future date (i.e., omitting to list amendments that have no impact, such as IFRS 1 or IAS 34).
Good Insurance (International) Limited 51

Notes to the consolidated financial statements
3. Business combinations and acquisition of non-controlling interests
Acquisitions in 2010 Acquisition of Good American Life Co On 30 April 2010, the Group acquired 80% of the common stock of Good American Life Co for a combination of cash and new shares. Good American Life Co is a leading Life Insurance provider of variable annuity products as well as equity-indexed life and savings products. The group has acquired this company as an important step for the Group to penetrate the US market in the life insurance industry. Good American Life Co is a private entity, therefore, no market information was available. €7,314,000 of noncontrolling interest in Good American Life Co was recognised at the acquisition date and is calculated as 20% share of the total acquired net assets. The exchange rate at the date of the acquisition was US$1.50 to €1. The fair value of the identifiable assets and liabilities of Good American Life Co as at the date of acquisition and the previous carrying amounts under IFRS immediately before the acquisition were: Fair value recognised on acquisition US$000 Present value of in-force business (Note 21) Future servicing rights (Note 21) Other intangible assets (Note 21) Deferred acquisition costs Property and equipment (Note 23) Investments Cash and cash equivalents Trade receivables 37,715 13,500 7,683 − 1,551 60,162 2,547 18,228 141,386 (63,027) (5,268) (2,525) (15,713) (86,533) 54,853 Fair value recognised on acquisition €000 25,143 9,000 5,122 − 1,034 40,108 1,698 12,152 94,257 (42,018) (3,512) (1,683) (10,475) (57,688) 36,569 (7,314) 29,255 6,521 35,776 Previous carrying value US$000 − − − 15,750 1,551 64,013 2,547 20,561 104,422 (64,535) (3,602) (1,005) (15,713) (84,855) 19,567 Previous carrying value €000 − − − 10,500 1,034 42,675 1,698 13,707 69,614 (43,023) (2,401) (670) (10,475) (56,569) 13,045
IFRS 3.B64(i) IAS 7.40(d) IFRS 3.B64(a), (b), (c) IFRS 3.B64(d) IFRS 3.B64(o)(i)

Gross insurance liabilities (Note 33) Gross liability for investment contracts (Note 34) Deferred income tax liability (Note 28(b)) Other liabilities Total Identifiable net assets Non-controlling interest measured at share of net assets Total net assets acquired Goodwill arising on acquisition (Note 20) Total consideration

52

Good Insurance (International) Limited

Notes to the consolidated financial statements
3. Business combinations and acquisition of non-controlling interests (cont’d)
Acquisitions in 2010 (cont’d) The total acquisition-date fair value of the consideration was €35,776,000 and comprised of an issue of 1,250,000 equity instruments at the published price of the shares of Good Insurance (International) Limited at the acquisition date and a cash payment of €7,917,000. The fair value of shares issued is €27,859,000. €000 Fair value of consideration Shares issued, at fair value Cash paid as part of consideration Total consideration 27,859 7,917 35,776 €000 Cash outflow on acquisition Net cash acquired with the subsidiary Cash paid as part of consideration Net cash outflow Assets acquired and liabilities assumed The largest fair value adjustments above relate to the recognition of the present value for the in-force business on insurance contracts (the PVIF) and investment contracts with discretionary participating features acquired by the Group and future servicing rights on investment contracts without discretionary participating features to a reduction in Other assets. The PVIF adjustment of €25,143,000 and future servicing rights adjustment of €9,000,000 represents the difference between the fair value at acquisition date and the subsequent carrying value of the acquired in-force life insurance and investment contracts. The present value of future profits takes into consideration the cost of capital and is estimated using actuarial assumptions based on projections made at purchase date but also using a discount rate that includes a risk premium. Deferred Acquisition costs (DAC) totalling €10,500,000, are not recognised in the IFRS fair value statement of financial position as they have no fair value at acquisition. The deferred tax liability has increased by €1,013,000 to reflect the increase in these intangible assets. Other Intangible assets of €5,122,000 are represented by Good American Life Co’s distribution channels and have been valued by an independent third party, using estimated pre-tax cash flows and discount rates. The distribution channels are separable and therefore meet the criteria for recognition as an intangible asset under IAS 38 Intangible Assets. The distribution channels have been assessed as having nine years life and their value is being amortised over that period, with a corresponding release of the applicable deferred tax provision. The residual goodwill of €6,521,000 represents future synergies expected to arise in the combined life operations, the value of new business from new distribution channels and customers going forward, and the value of the workforce and management and other future business not included in the intangibles and the PVIF. None of the goodwill recognised is expected to be deductible for income tax purposes. A reclassification and fair value adjustment of €1,000,000 was required for those contracts previously classified as insurance contracts under US GAAP which did not meet the definition of insurance risk under IFRS 4, and therefore, are accounted as Investment contracts per the requirements of IAS 39. The fair value of trade receivables amounts to €12,152,000. The gross amount of trade receivables is €12,170,000. None of the trade receivables have been impaired and it is expected the full contractual amount can be collected. €500,000 acquisition-related costs are recognised in the income statement as administrative expenses. €300,000 transaction costs related to the issuance of shares as consideration are recognised directly in equity as negative share premium. From the date of acquisition, Good American Life Co has contributed €17,233,000 of revenue and €1,965,000 to the net profit before tax of the Group. If the combination had taken place at the beginning of the year, the profit from continuing operations for the Group would have been €20,679,000 and revenue from continuing operations would have been €2,358,000.
IFRS 3.B64(h) IFRS 4.31(b) IFRS 3.B64(f)(iv) IAS 7.40(a) IFRS 3.B64(f)(iii)

1,698 (7,917) (6,219)

IAS 7.40(c) IAS 7.40(b)

IAS 38.12, 22, 33, 34 IFRS 3.B64(e)

IFRS 4.BC150

IFRS 3.B64(k)

IFRS 3.B64(m)

IFRS 3.B64(q)(i), (ii)

Good Insurance (International) Limited

53

Notes to the consolidated financial statements
3. Business combinations and acquisition of non-controlling interests (cont’d)
Acquisitions in 2010 (cont’d)

Commentary
Paragraph 31 of FRS 4 requires an insurer to measure the value of the insurance liabilities assumed and insurance assets acquired in a business combination at fair value in order to comply with IFRS 3. The Insurer is permitted, but not required, to use an expanded presentation that splits the fair value of acquired insurance contracts into: (i) a liability measured in accordance with the insurer’s accounting policies for insurance contracts that it issues; and (ii) an intangible asset, representing the difference between the fair value of the contractual insurance rights acquired and insurance obligations assumed and the amount described in (i). The Group has used the expanded presentation in respect of the Good American Life Co. The Group has derived the fair value of the insurance liability based on the principles laid out under Embedded Value reporting, as IFRS currently does not prescribe the determination of the fair value of an Insurance liability. The intangible asset (PVIF) represents the difference between the fair value of the insurance liabilities determined under this methodology, and the value of the insurance liabilities under the Group’s existing accounting practices. Paragraph 23 of IFRS 3 requires recognition of contingent liabilities if the fair value can be measured reliably and if it is a present obligation that arises from past events. In the illustrative example given, the Group has assumed that no contingent liabilities are recognised. IFRS 3 provides an option on a transaction by transaction basis on the recognition of non-controlling interest (minority interests). The entity may choose the fair value of the non-controlling interest, or choose to recognise its respective share of the total net assets. The Group has elected to recognise the non-controlling interest at its respective share of the total assets. If the initial accounting for a business combination has been determined provisionally, paragraph B67 of IFRS 3. requires entities to disclose this fact and provide further details.

4. Segment information
For management purposes, the Group is organised into business units based on their products and services and has three reportable operating segments as follows: The life insurance segment offers a wide range of whole life, term assurance, unitised pensions, guaranteed pensions, pure endowment pensions and mortgage endowment products. The non-life insurance segment comprises both general insurance and healthcare. General insurance products offered include motor, household, commercial and business interruption insurance. Non-life healthcare contracts provide medical cover to policyholders. The investment management segment provides investment management services to policyholders through the investment management services subsidiary. No operating segments have been aggregated to form the above reportable operating segments. Segment performance is evaluated based on profit or loss which in certain respects is measured differently from profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to individual operating segments. No inter-segment transactions occurred in 2010 and 2009. If any transaction were to occur, transfer prices between operating segments are set on an arm’s length basis in a manner similar to transactions with third parties. Segment income, expenses and results will include those transfers between business segments which will then be eliminated on consolidation.
IFRS 8.25 IFRS 8.22(a)

IFRS 8.22(b)

IFRS 8.27(a)

54

Good Insurance (International) Limited

Notes to the consolidated financial statements
4. Segment information (cont’d)
Segment income statement for the year ended 31 December 2010 Investment Adjustments and Non-life management services eliminations insurance €000 €000 €000 23,901 (5,975) 17,926 1,065 2,466 312 3,843 21,769 (15,441) 3,861 (2,463) 612 (13,431) (75) − (112) (1,696) (1,883) (15,314) 129 6,584 − − − 410 4 83 497 497 − − 22 (13) 9 (49) (267) (23) (130) (469) (460) − 37 − − − − − − − − − − − − − (844) − (45) (3,102) (3,991) (3,991) − (3,991)

Life insurance €000 Gross premiums Premiums ceded to reinsurers Net premiums Fees and commission income Investment income Gains and losses and other operating revenue Other revenue Segment revenue Gross benefits and claims paid Claims ceded to reinsurers Gross change in contract liabilities Change in contract liabilities ceded to reinsurers Net benefits and claims Finance costs Profit attributable to unit-holders Depreciation and amortisation Other operating and administrative expenses Other expenses Segment benefits, claims and other expenses Share of profit of an associate Segment results 50,245 (12,781) 37,464 3,889 5,751 953 10,593 48,057 (22,977) 6,412 (5,396) 993 (20,968) (98) − (827) (16,307) (17,232) (38,200) − 9,857

Total €000 74,146 (18,756) 55,390 5,364 8,221 1,348 14,933 70,323 (38,418) 10,273 (7,837) 1,592 (34,390) (1,066) (267) (1,007) (21,235) (23,575) (57,965) 129 12,487
IFRS 8.23(g) IFRS 8.23 IFRS 8.23(a)

IFRS 8.23((c)

IFRS 8.23(f)

IFRS 8.23(d)

IFRS 8.23(e)

Segment results for each segment do not include finance costs on group borrowings or certain corporate expenses such as depreciation on buildings occupied by the group head office. No impairment losses in respect of goodwill and other intangibles have been recognised during the year.
IAS 36.129(a)

Good Insurance (International) Limited

55

Notes to the consolidated financial statements
4. Segment information (cont’d)
Segment income statement for the year ended 31 December 2009 Investment Adjustments and Life Non-life management services eliminations insurance insurance €000 €000 €000 €000 Gross premiums Premiums ceded to reinsurers Net premiums Fees and commission income Investment income Gains and losses and other operating revenue Other revenue Segment revenue Gross benefits and claims paid Claims ceded to reinsurers Gross change in contract liabilities Change in contract liabilities ceded to reinsurers Net benefits and claims Finance costs Profit attributable to unit-holders Depreciation and amortisation Other operating and administrative expenses Other expenses Segment benefits, claims and other expenses Share of profit on an associate Segment results 49,440 (13,109) 36,331 1,564 5,442 695 7,701 44,032 (23,889) 6,665 (4,588) 1,041 (20,771) (100) − (300) (15,950) (16,350) 24,011 (6,003) 18,008 432 2,233 322 2,987 20,995 (15,521) 3,881 (2,579) 643 (13,576) (58) − (70) (1,393) (1,521) − − − 235 7 153 395 395 − − (5) 7 2 (29) (111) (9) (57) (206) − − − − − − − − − − − − − 1 (767) − (48) (2,551) (3,366)

Total €000 73,451 (19,112) 54,339 2,231 7,682 1,170 11,083 65,422 (39,410) 10,546 (7,172) 1,691 (34,345) (954) (111) (427) (19,951) (21,443)
IFRS 8.23(a)

IFRS 8.23(c)

IFRS 8.23(f)

IFRS 8.23(d)

IFRS 8.23(e)

(37,121)

(15,097) 230 6,128

(204)

(3,366) − (3,366)

(55,788) 230 9,864
IFRS 8.23(g) IFRS 8.23

6,911

191

Segment results for each segment do not include finance costs on group borrowings or certain corporate expenses such as depreciation on buildings operated by the group head office. No impairment losses in respect of goodwill and other intangibles have been recognised during the year.
IAS 36.129(a)

56

Good Insurance (International) Limited

Notes to the consolidated financial statements
4. Segment information (cont’d)
Segment statement of financial position at 31 December 2010 Life insurance €000 Intangible assets (incl. goodwill) Investment in an associate Financial instruments Reinsurance assets Insurance receivables Other assets Total assets Insurance contract liabilities Investment contract liabilities Net asset value attributable to unit-holders Other liabilities Total liabilities 46,830 − 87,142 23,555 12,109 25,237 194,873 126,048 13,672 − 30,615 170,335 Investment Adjustments and Non-life management services eliminations insurance €000 €000 €000 1,023 2,120 40,993 12,666 19,186 988 76,976 50,664 − − 7,645 58,309 730 − 28,341 300 3,977 18,615 51,963 − 1,548 520 3,742 5,810 − − − − − 4,287 4,287 − − − 20,815 20,815

Total €000 48,583 2,120 156,476 36,521 35,272 49,127 328,099 176,712 15,220 520 62,817 255,269

IFRS 8.24(a)

IFRS 8.23

IFRS 8.23

Segment assets do not include current tax (€2,995,000) or properties occupied by group head office (€1,292,000). Segment liabilities do not include deferred tax (€5,452,000), bank loans (€14,788,000) or certain trade payables (€575,000). Segment statement of financial position at 31 December 2009 Life insurance €000 Intangible assets Investment in an associate Financial instruments Reinsurance assets Insurance receivables Other assets Total assets Insurance contract liabilities Investment contract liabilities Net asset value attributable to unit-holders Other liabilities Total liabilities 1,315 − 69,009 22,153 10,254 19,581 122,312 78,686 11,010 − 30,572 120,268 Investment Adjustments and Non-life management services eliminations insurance €000 €000 €000 1,023 1,991 39,212 12,211 8,251 56 62,744 47,574 − − 1,436 49,010 1,030 − 1,439 347 1,409 27,541 31,766 − 548 367 4,217 5,132 − − − − − 4,159 4,159 − − − 20,682 20,682

Total €000 3,368 1,991 109,660 34,711 19,914 51,337 220,981 126,260 11,558 367 56,907 195,092

IFRS 8.24(a)

IFRS 8.23

IFRS 8.23

Segment assets do not include current tax (€2,812,000) or properties occupied by group head office (€1,347,000). Segment liabilities do not include deferred tax (€1,848,000), bank loans (€18,284,000) or certain trade payables (€550,000).

Good Insurance (International) Limited

57

Notes to the consolidated financial statements
4. Segment information (cont’d)
Segment statement of financial position at 31 December 2010 (cont’d)

Commentary
Disclosure of operating segment assets and liabilities is only required where such a measure is provided to the chief operating decision maker. The Group provides information to the chief operating decision maker about operating assets and liabilities. The remaining operations (e.g., treasury) which are amongst others reflected in ‘adjustments and eliminations’, do not constitute an individual operating segment. The Group’s internal reporting is set up to report in accordance with IFRS. The segment disclosures could be significantly more extensive if internal reports had been prepared on a basis other than IFRS. In this case, reconciliation between the internally reported items and the externally communicated items needs to be prepared.

Geographic information Year end 31 December 2010 Rest of World €000

Euroland €000 Total revenue from external customers Non-current assets Year end 31 December 2009

UK €000

USA €000

Total €000

30,325 9,101

24,053 4,405

10,526 51,952

5,419 65

70,323 65,523

IFRS 8.33(a) IFRS 8.33(b)

Euroland €000 Total revenue from external customers Non-current assets

UK €000

USA €000

Rest of World €000

Total €000

29,014 10,056

23,041 4,954

8,503 259

4,864 86

65,422 15,355

IFRS 8.33(a) IFRS 8.33(b)

The revenue information is based on the location of the customer. No revenue transactions with a single customer amount to more than 0.25% of total revenue. Non-current assets for this purpose consist of intangible assets, the investment in associate, property and equipment and investment properties.
IFRS 8.34

5. Net premiums
(a) Gross premiums on insurance contracts and investment contracts with DPF Notes Life insurance Non-life insurance Investment contracts with DPF Change in unearned premiums provision Total gross premiums 33(a) 33(b)(2) 34(a) 2010 €000 47,845 24,511 2,400 (610) 74,146 2009 €000 46,943 24,626 2,497 (615) 73,451

IFRS 4.37(b)

(b) Premiums ceded to reinsurers on insurance contracts and investment contracts with DPF 2010 Notes €000 Life insurance Non-life insurance Investment contracts with DPF Change in unearned premiums provision Total premiums ceded to reinsurers Total net premiums
58 Good Insurance (International) Limited

2009 €000 (11,736) (6,157) (1,373) 154 (19,112) 54,339

33(a) 33(b)(2) 34(a)

(11,461) (6,128) (1,320) 153 (18,756) 55,390

Notes to the consolidated financial statements
6. Fees and commission income
IFRS 4.37(b) IAS 18 Appendix 14(b)(iii)

2010 €000 Policyholder administration and investment management services Surrender charges and other contract fees Reinsurance commission income Total fees and commission income 2,573 2,212 579 5,364

2009 €000 1,010 958 263 2,231

7. Investment income
2010 €000 225 2009 €000 214
IAS 40.75(f)(i) IFRS 7.20(a)(i)

Note Rental income from investment properties Financial assets at fair value through profit or loss (held for trading purposes) Interest income Dividend income Financial assets at fair value through profit or loss (designated upon initial recognition) Interest income Dividend income Held to maturity financial assets interest income Loans to related parties interest income Available-for-sale financial assets Interest income Dividend income Loans and receivables interest income Interest income accrued on impaired loans and receivables Cash and cash equivalents interest income Total investment income 24

516 507

487 473

440 433 305 21 2,590 2,284 802 10 88 8,221

412 397 284 18 2,420 2,145 743 7 82 7,682

8. Realised gains
2010 €000 Property and equipment Realised gains Available-for-sale financial assets Realised gains Equity securities Debt securities Realised losses Equity securities Debt securities Total realised gains for available-for-sale financial assets Total realised gains 167 52
IFRS 7.20(a)(ii)

2009 €000

26 33 (9) (4) 46 213

21 29 (7) (2) 41 93

Good Insurance (International) Limited

59

Notes to the consolidated financial statements
9. Fair value gains and losses
2010 €000 53 2009 €000 97
IAS 40.76(d)

Notes Fair value gains on investment properties Fair value losses on derivative financial instruments held for trading Fair value gains on hedged items attributable to the hedged risk in fair value hedges Fair value losses on hedging instruments in fair value hedges Total fair value gains and losses on fair value hedges Fair value gains on financial assets at fair value through profit or loss (held for trading purposes) Fair value gains on financial assets at fair value through profit or loss (designated upon initial recognition) Total fair value gains on financial assets at fair value through profit or loss other than derivatives Total fair value gains and losses 24

(67)

(41)

IFRS 7.20(a)(i)

25 25

34 (28) 6

13 (22) (9)

IFRS 7.24(a)(i)

579 473 26(e) 1,052 1,044

520 425 945 992

IFRS 7.20(a)( i) IFRS 7.20(a)( i)

10. Net benefits and claims
(a) Gross benefits and claims paid Notes Life insurance contracts Non-life insurance contracts Investment contracts with DPF Total gross benefits and claims paid (b) Claims ceded to reinsurers Life insurance contracts Non-life insurance contracts Investment contracts with DPF Total claims ceded to reinsurers (c) Gross change in contract liabilities Change in life insurance contract liabilities Change in non-life insurance contract outstanding claims provision Change in investment contract liabilities with DPF Change in investment contract liabilities without DPF Change in premium deficiency provision Total gross change in contract liabilities (d) Change in contract liabilities ceded to reinsurers Change in life insurance contract liabilities Change in non-life insurance contract outstanding claims provision Change in investment contract liabilities with DPF Change in investment contract liabilities without DPF Change in premium deficiency provision Total change in contract liabilities ceded to reinsurers Net benefits and claims (951) (608) (42) 13 (4) (1,592) 34,390 (963) (639) (78) (7) (4) (1,691) 34,345 5,320 2,444 76 (22) 19 7,837 4,446 2,561 142 5 18 7,172 33(a) 33(b)(1) 34(a) (5,188) (3,861) (1,224) (10,273) (5,407) (3,881) (1,258) (10,546) 33(a) 33(b)(1) 34(a) 2010 €000 20,755 15,441 2,222 38,418 2009 €000 21,630 15,521 2,259 39,410

IFRS 4.37(a)

60

Good Insurance (International) Limited

Notes to the consolidated financial statements
11. Finance costs
2010 €000 Current borrowings Interest expense on bank overdraft Interest expense on €8,000,000 bank loan Interest expense on €7,500,000 bank loan Non-current borrowings Interest expense on €8,000,000 bank loan Interest expense on €7,500,000 bank loan Total finance cost 422 94 142 2009 €000 312 88 115
IFRS 7.20(b)

142 266 1,066

236 203 954
IAS 1.85, 88

12. Other operating and administrative expenses
2010 €000 672 500 2 43 335 100 54 14,635 (5,368) 3,399 715 7,191 (75) 39 22,242 2009 €000 48 − 16 22 379 70 46 13,559 (3,222) 2,109 494 6,869 (72) 60 20,378

Notes Amortisation of intangible assets Acquisition related transaction costs Impairment loss on reinsurance assets Impairment loss on loans and receivables Depreciation on property and equipment Amounts written off on loans and receivables Investment property related expenses Fees and commission expenses Deferred expenses Amortisation of deferred expenses Auditors’ remuneration Employee benefits expense Net foreign exchange adjustments Other expenses Total other operating and administrative expenses 21 3 27 26(e) 23 26(b) 24 30 30 13

IFRS 7.20(e)

13. Employee benefits expense
2010 €000 6,000 532 641 18 7,191 2009 €000 6,047 393 415 14 6,869

Notes Wages and salaries Social security costs Defined benefit pension costs Share-based payments expense Total employee benefits expense

36 19 12

IAS 19.46 IFRS 2.51(a)

Good Insurance (International) Limited

61

Notes to the consolidated financial statements
14. Income tax expense
The major components of income tax expense for the years ended 31 December 2010 and 2009 are: (a) Current tax year charge 2010 €000 Current tax Income tax Prior year adjustment Total current tax Deferred tax Origination of temporary differences (note 28) Changes in tax rates/base Write down of deferred tax assets Total deferred tax Total income tax expense Income tax expense relating to policyholders Income tax expense relating to shareholders (b) Tax recorded in other comprehensive income (see Note 17) 2010 €000 Current tax Deferred tax Total tax charge to other comprehensive income Tax charge to other comprehensive income relating to policyholders Tax charge to other comprehensive income relating to shareholders (c) Reconciliation of tax charge 2010 €000 Profit before tax Tax at Euroland’s statutory income tax rate of 30% Permanent differences arising from overseas operations Other untaxed income Disallowable expenses Differences arising from movement in unrealised gains and losses Policyholder tax (i) Relief for policyholder tax Adjustment to tax charge in respect of prior years Different tax rate on overseas operations Write down of deferred tax assets Utilisation of previously unrecognised tax losses Total tax charge for the year 12,487 3,746 (15) (33) 184 (123) 1,174 (352) (59) (49) 87 (2,991) 1,569 2009 €000 9,864 2,959 (23) (21) 475 (1,101) 1,480 (444) (323) (32) 23 (1,020) 1,973 − 1,824 1,824 27 1,797 2009 €000 − 982 982 894 88
IAS 12.8I(c)(i)

2009 €000
IAS 12.79

1,440 (59) 1,381

1,409 (323) 1,086

IAS 12.80(b) IAS 12.80(a)

IAS 12.79

169 7 12 188 1,569 1,174 395

661 (4) 230 887 1,973 1,480 493

IAS 12.80I IAS 12.80(d) IAS 12.80(g)

IAS 12.81(a), (b)

(i) The Group, as a proxy for policyholders in Euroland and the United Kingdom, is required to record taxes on investment income and gains each year. There are no income tax consequences attaching to the payment of dividends by the company to its shareholders.
62 Good Insurance (International) Limited

Notes to the consolidated financial statements
15. Dividends paid and proposed
2010 €000 Declared and paid during the year Equity dividends on ordinary shares: Final dividend for 2009: 21.92 cents (2008: 15.67 cents) Interim dividend for 2010: 18.72 cents (2009: 12.59 cents) Total dividends paid in the year Proposed for approval at AGM (not recognised as a liability as equity dividends on ordinary shares: at 31 December): Final dividend for 2010: 3.35 cents (2009: 21.92 cents) 2009 €000
IAS 1.107

1,619 1,617 3,236

1,157 930 2,087

IAS 1.137(a)

289

1,619

16. Earnings per share
Basic earnings per share amounts is calculated by dividing the net profit for the year attributable to ordinary shareholders of the parent by the weighted average number of ordinary shares outstanding at the reporting date. Diluted earnings per share is calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. The following reflects the income and share data used in the basic and diluted earnings per share computations: 2010 €000 Net profit attributable to ordinary shareholders for basic and diluted earnings 10,063 2010 €000 Weighted average number of ordinary shares for basic earnings per share Effect of dilution: Share options Weighted average number of ordinary shares adjusted for the effect of dilution Basic earnings per ordinary share € Diluted earnings per ordinary share € 8,012 40 8,052 1.26 1.25 2009 €000 7,891 2009 €000 7,384 45 7,429 1.07 1.06
IAS 33.66 IAS 33.66 IAS 33.70(d) IAS 33.70(b) IAS 33.70(a) IAS 33.70(c)

IAS 33.70(b)

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements.

Good Insurance (International) Limited

63

Notes to the consolidated financial statements
17. Income tax effects relating to other comprehensive income
2010 Tax (expense) benefit €000 2009 Tax (expense) benefit €000
IAS 1.90

Before tax amount €000 Exchange differences on translating foreign operations Net movement on cash flow hedges Available-for-sale financial assets Total

Net of tax amount (Note 14) €000

Before tax amount €000

Net of tax amount €000

(67) (36) 6,184 6,081

20 11 (1,855) (1,824)

(47) (25) 4,329 4,257

− (24) 3,297 3,273

− 7 (989) (982)

− (17) 2,308 2,291

18. Components of other comprehensive income
IAS 1.90

2010 €000 Exchange differences on translating of foreign operations Cash flow hedges: Gains (losses) arising during the year Available-for-sale financial assets: Gains arising during the year Less: Reclassification adjustments for gains included in the income statement Income tax relating to components of other comprehensive income Other comprehensive income for the year, net of tax (67) (36)

2009 €000 − (24)

IAS 1.82(g)

6,230 (46) 6,184 (1,824) 4,257

3,338 (41) 3,297 (982) 2,291
IAS 1.90 IAS 1.82(g)

19. Share-based payment
The expense recognised for employee services receivable during the year is shown in the following table: 2010 €000 2009 €000

Notes Expense arising from equity-settled share-based payment transactions Expense arising from cash-settled share-based payment transactions Total expense arising from share-based payment transactions 13

14 4 18

10 4 14
IFRS 2.51(a)

The share-based payment plans are described below. There have been no cancellations or modifications to any of the plans during 2010 or 2009. Senior executive plan Share options are granted to senior executives with more than 12 months service. The exercise price of the options is equal to the market price of the shares on the date of grant. The options vest if and when the Group’s earnings per share amount increases by 12%. If this increase is not met within three years from the date of grant the options lapse. The contractual life of each option granted is 6 years. There are no cash settlement alternatives. The fair value of the options is estimated at the grant date using a binomial pricing model, taking into account the terms and conditions upon which the share options were granted. The Group does not have a past practice of cash settlement for these share options.
64 Good Insurance (International) Limited
IFRS 2.46 IFRS 2.45(a)

Notes to the consolidated financial statements
19. Share-based payment (cont’d)
General employee share-option plan All other employees are entitled to a grant of options once they have been in service for two years. The options will vest if the employee remains in service for a period of three years from the date of grant, and the share price attains an average increase of 5% per year during the three-year period from the date of grant. The exercise price of the options is equal to the market price of the shares less 1% on the date of grant. The contractual life of the options is five years and there are no cash settlement alternatives. The Group has not developed a past practice of cash settlement. The fair value of the options is estimated at the grant date using a binomial pricing model, taking into account the terms and conditions upon which the instruments were granted. Share-based payment plan for certain employees of Good Life Insurance Limited Certain employees of Good Life Insurance Limited are granted share options which are only able to be settled in cash. These will vest when a specified target number is realised. The contractual life of the options is six years. The fair value of the options is estimated at the grant date using a Black-Scholes option model, taking into account the terms and conditions upon which the instruments were granted. The services received and a liability to pay for those services is recognised over the expected vesting period. Until the liability is settled, it is remeasured at each reporting date with changes in fair value recognised in the income statement. The carrying amount of the liability relating to the cash-settled options at 31 December 2010 is €114,000 (2009: €184,000) and is included within trade and other payables (Note 41). No cash–settled options had vested at 31 December 2010 and 31 December 2009. Movements in the year The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share options during the year: No. 2010 Outstanding at the beginning of the year Granted during the year Forfeited during the year Exercised during the year (Note 42) Expired during the year Outstanding at the end of the year Exercisable at the end of the year (1) 295,000 50,000 − (3)(3,000) (20,000)
(1)322,000

IAS 1.90 IFRS 2.45(a)

IFRS 2.46

IFRS 2.45(a)(iii)

IFRS 2.46

IFRS 2.51(b)

IFRS 2.45(b)

WAEP 2010 28.42 31.25 − 22.00 29.25 27.88 26.72

No. 2009
(1)303,000

WAEP 2009 27.72 29.75 27.00 15.67 26.50 28.42 26.75

35,000 (25,000) (2)(3,000) (15,000) 295,000 185,000

IFRS 2.45(c)

218,000

IFRS 2.45(d) IFRS 2.56

Included within these balances are options over 27,000 shares that have not been recognised in accordance with IFRS 2 as the options were granted on or before 7 November 2002. These options have not been subsequently modified and therefore do not need to be accounted for in accordance with IFRS 2. The number of shares outstanding was as follows: 1 January 2009: 277,000 31 December 2009 and 1 January 2010: 267,000 31 December 2010: 252,000

(2) (3)

The weighted average share price at the date of exercise for the options exercised is €28.05. The weighted average share price at the date of exercise for the options exercised is €28.43.

IFRS 2.45(c)

The weighted average remaining contractual life for the share options outstanding as at 31 December 2010 is 2.60 years (2009: 2.30 years). The weighted average fair value of options granted during the year was €6.40 (2009: €5.95). The range of exercise prices for options outstanding at the end of the year was €26.50 to €31.00 (2009: €26.50 to €31.25).

IFRS 2.45(d)

IFRS 2.47(a) IFRS 2.45(d)

Good Insurance (International) Limited

65

Notes to the consolidated financial statements
19. Share-based payment (cont’d)
The following table lists the inputs to the model used for equity-settled and cash-settled options for the years ended 31 December 2010 and 31 December 2009: 2010 €000 Dividend yield (%) Expected volatility (%) Historical volatility (%) Risk-free interest rate (%) Expected average life of option (years) Weighted average share price (€) 3.13 15.00 15.00 5.10 4.25 28.90 2009 €000 3.01 16.30 16.30 5.10 4.00 27.50
IFRS 2.47(a)(ii) IFRS 2.47(a)( i)

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may not necessarily be the actual outcome. No other features of options grants were incorporated in the measurement of fair value.

20. Goodwill
2010 €000 3,799 6,521 10,320 (875) − (875) 2009 €000 3,799 − 3,799 (875) − (875)

Notes Cost At 1 January Cost – acquisition of subsidiaries At 31 December Accumulated impairment At 1 January Impairment loss At 31 December Carrying amount At 31 December 12

3

9,445

2,924
IAS 36.134

Goodwill has been allocated to three individual cash-generating units which are equivalent to the three operating segments of the Group; life insurance, non-life insurance (which comprises general insurance and healthcare); and investment management services. The carrying amount of goodwill allocated to each of the cash-generating units is shown below: Investment management services €000 586 586

Life insurance €000 2010 2009 Life insurance unit 7,836 1,315

Non-life insurance €000 1,023 1,023

IAS 36.134(a)

Total €000 9,445 2,924
IAS 36.134(c) IAS 36.134(d)(iii)

The recoverable amount for the life insurance business cash generating unit has been determined based on a ‘value in use’ calculation. The calculation is based on the embedded value of the business together with the present value of expected profits from future new business over a five year period. The ‘value in use’ result was significantly greater than its carrying value, including goodwill. A reasonably possible change in a key assumption will not cause the carrying value of the life business to materially exceed its recoverable amount.

66

Good Insurance (International) Limited

Notes to the consolidated financial statements
20. Goodwill (cont’d)
The key assumptions used for the ‘value in use’ impairment calculation were: Embedded value represents the shareholder interest in the life business and is based on projected cash flows of the business including expected investment returns. Risk adjusted discount rates used for calculation of embedded value are calculated using a risk margin of 3% based on the operating segment’s weighted average cost of capital. Future regular bonuses on contracts with DPF are projected in a manner consistent with current bonus rates and expected future returns on assets deemed to back the policies. Economic assumptions are based on market yields on risk-free fixed interest rates at the end of each reporting year. New business contribution represents the present value of projected future distributable profit generated from business written in a period. This is initially based on the most recent five year business plans approved by senior management. Growth rate represents the rate used to extrapolate new business contributions beyond the business plan period, and is based on management’s estimate of future growth of 5% which is in line with the average growth rate of life insurance industry; and A pre-tax, Group specific risk adjusted discount rate of 12.5% (2009: 12.4%) is used to discount expected profits from future new business. Non-life insurance unit and investment management services unit The recoverable amount of the non-life and investment management services businesses has been determined based on a value-in-use calculation using cash flow projections based on financial budgets approved by senior management covering a five year period. A pre-tax, Group -specific risk adjusted discount rate of 12.5% (2009: 12.4%) is used. The projected cash flows beyond the five years excluding expenses have been extrapolated using a steady average growth rate of 3.5% (2009: 3.3%) not exceeding the long-term average growth rate for the market in which the units operate. The projected cash flows are determined by budgeted margins based on past performances and management expectations for market developments. The key assumptions used for the value-in-use impairment calculation are: Investment market conditions – Investment market conditions are based on market research and published statistics. Management plans assume modest investment growth of 4% which is lower than the anticipated market growth predicted. Policy lapses – The Group has retained records of policy lapses since its inception and is therefore able to predict trends over the coming years. Management plans assume no change from recent experiences. Premiums and margins – Premium income is based on average values achieved in the three years preceding the start of the budget period. A factor of 2% per annum was applied for non-life insurance and 2.5% for investment management services income. Gross margins are based on average percentages for the last three years while taking into account anticipated efficiency improvements, known expected expenditures and inflation. A factor of 2% per annum was applied for non-life insurance and 2% for investment management services income. Expenses – Estimates are obtained from published indices of inflation and market research. The financial budget plans assume that expenses will broadly increase in line with inflation. Sensitivity to changes in assumptions With regard to the assessment of value-in-use for the life and non-life insurance cash-generating unit, management does not believe a reasonably possible change in any of the above key assumptions would cause the carrying value of the units to exceed their recoverable amounts. For the investment management services cash-generating unit, a reasonably possible change in the investment market conditions assumption will cause the carrying amount to exceed the recoverable amount. The actual recoverable amount exceeds its carrying amount by €245,000 (2009: €211,000). Management recognised the fact that current investment market conditions reflect stable and profitable margins. Unfavourable conditions could materially affect the growth margins of these markets. A reduction of 1% in the investment growth rate would give a value-in-use equal to the carrying amount of the investment management services cashgenerating unit.
IAS 36.134(f) IAS 36.134(d) IAS 36.134(d)(ii) IAS 36.134(d) IAS 36.134(d)(i), (ii)

IAS 36.134(d)(iv)

IAS 36.134(d)(v)

IAS 36.134(d)(i)-(v)

Good Insurance (International) Limited

67

Notes to the consolidated financial statements
20. Goodwill (cont’d)
No impairment loss has been recognised in 2009 and 2010 as a result of the impairment review for each cash generating unit.

21. Intangible assets
PVIF €000 588 223 811 82 25,143 (13) 26,023 Future servicing rights €000 248 95 343 34 9,000 (7) 9,370 Other intangibles €000 − − − − 5,122 − 5,122
IAS 38.118

Notes Cost At 1 January 2009 Cost capitalised At 31 December 2009 Cost capitalised Cost – acquisition of subsidiaries Foreign exchange adjustment At 31 December 2010 Accumulated amortisation and impairment At 1 January 2009 Amortisation Impairment loss Foreign exchange adjustment At 31 December 2009 Amortisation Impairment loss Foreign exchange adjustment At 31 December 2010 Carrying amount At 31 December 2009 At 31 December 2010 Acquisition in 2010 12 12

Total €000
IAS 38.118(c)

3

836 318 1,154 116 39,265 (20) 40,515

IFRS 4.37(e)

IFRS 4.37(e)

IAS 38.118(c)

464 34 − − 498 271 − (3) 766

198 14 − − 212 21 − (2) 231

− − − − 380 − − 380

662 48 − − 710 672 − (5) 1,377
IAS 38.118(e)(vi) IAS 38.118(e)(iv) IAS 38.118(e)(vi) IAS 38.118(e)(iv)

IAS 38.118(c)

313 25,257

131 9,139

− 4,742

444 39,138

PVIF, future servicing rights and other intangible assets include acquisitions as a result of the business combination of Good American Life Co (Note 3). The PVIF is amortised on an average of 30 years based on expected future premiums for these contracts. Future servicing rights are amortised over a period of 15 years based on fees from the acquired in-force policies, and other intangibles is amortised over nine years. Other Intangible assets of €5,122,000 are represented by Good American Life Co’s distribution channels and have been valued by an independent third-party, using estimated post-tax cash flows and discount rates. The amortisation profile is in line with the Group’s accounting policy (Note 2.5 (b)). As at 31 December 2009, these assets were tested for impairment, and management have determined no impairment is required in respect of these intangibles.

22. Investment in an associate
The Group has a 20% interest in Power Insurance Limited, which is involved in the insurance of power stations in Euroland. Power Insurance Limited is a private entity that is not listed on any public exchange and there are no published price quotations for the fair value of this investment. The reporting date and reporting year of Power Insurance Limited is the same as the Group and both use uniform accounting policies.
IAS 28.37(a)

IAS 28.26

68

Good Insurance (International) Limited

Notes to the consolidated financial statements
22. Investment in an associate (cont’d)
The investment in Power Insurance Limited is as follows 2010 €000 Share of associate’s statement of financial position Current assets Non-current assets Current liabilities Non-current liabilities Net assets Share of associate’s revenue and profit Revenue Profit Carrying amount of investment in an associate Management considers the investment in Power Insurance Limited to be non-current. 2009 €000
IAS 28.37(b)

2,391 30,949 (1,942) (29,278) − 2,120

2,349 30,718 (1,884) (29,192) − 1,991

1,325 129 2,120

2,555 230 1,991
IAS 1.61

23. Property and equipment
Notes Cost At 1 January 2009 Additions Disposals At 31 December 2009 Additions Acquisition of subsidiaries Disposals At 31 December 2010 Accumulated depreciation At 1 January 2009 Depreciation Disposals At 31 December 2009 Depreciation Disposals At 31 December 2010 Carrying amount At 31 December 2009 At 31 December 2010 Property €000 Equipment €000 Total €000
IAS 1.78(a)

IAS 16.73(d)

3,315 1,160 (807) 3,668 962 − (1,699) 2,931

1,915 523 (1,026) 1,412 452 1,034 (1,028) 1,870

5,230 1,683 (1,833) 5,080 1,414 1,034 (2,727) 4,801

IAS 16.73(e)(i) IAS 16.73(e)(ix)

IAS 16.73(e)(i) IAS 16.73(e)(iii) IAS 16.73(e)(ix)

3

IAS 16.73(d)

12

1,111 194 48 1,353 186 (4) 1,535

630 185 (838) (23) 149 (926) (800)

1,741 379 (790) 1,330 335 (930) 735

IAS 16.73(e)(vii) IAS 16.73(e)(ix)

12

IAS 16.73(e)(vii) IAS 16.73(e)(ix)

IAS 16.73(d)

2,315 1,396

1,435 2,670

3,750 4,066
IAS 23.26

Property additions include €50,000 (2009: €23,000) in respect of capitalised borrowing costs which were capitalised at a rate of 7%. Property with a carrying amount of €904,123 (2009: €1,448,100) is subject to a first charge to secure the bank overdraft, see Note 37.
Good Insurance (International) Limited

IFRS 7.14(a), (b) IAS 16.74(a)

69

Notes to the consolidated financial statements
24. Investment properties
2010 €000 3,943 203 53 4,199 2009 €000 3,627 219 97 3,943
IAS 40.75(d), (e)

Notes At 1 January Additions Fair value gains At 31 December 9

IAS 40.76(a) IAS 40.76(d)

Investment properties are stated at fair value, which has been determined based on valuations performed by Chartered Surveyors & Co. as at 31 December 2010 and 31 December 2009. Chartered Surveyors & Co. is an industry specialist in valuing these types of investment properties. The fair value is supported by market evidence and represents the amount at which the assets could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arm’s length transaction at the date of valuation, in accordance with standards issued by the International Valuation Standards Committee. Valuations are performed on an annual basis and the fair value gains and losses are recorded within the income statement. The Group enters into operating leases for all of its investment properties. The rental income arising during the year amounted to €225,000 (2009: €214,000), which is included in investment income – see Note 7. Direct operating expenses (included within operating and administrative expenses) arising in respect of such properties during the year were €54,000 (2009: €46,000) – see Note 12. Future lease receivables are disclosed in Note 47(b). The following main inputs have been used: 2010 % Yields (%) Inflation rate (%) Long term vacancy rate (%) Long growth in real rental rates ( %) 6-7% 3.5% 9% 3% 2009 % 5-6% 3% 5% 4%

IAS 40.75(f)

IAS 40.75(d)

Commentary
The Group has elected to value investment properties at fair value in accordance with IAS 40. IAS 40 permits property, plant and equipment and investment properties to be carried at historic cost less provision for depreciation and impairment. If the Group accounted for investment properties at cost, information about the cost basis and depreciation rates (similar to property, plant and equipment) would be required in addition to the disclosures about the fair value, including disclosures about the methods and significant assumptions used to determine fair value.

25. Derivative financial instruments
The Group purchases derivative financial instruments to match the liabilities arising on insurance contracts and unit-linked investment contracts that it sells, and to enter into cash flow and fair value hedges. The following table shows the fair value of derivative financial instruments, recorded as assets or liabilities, together with their notional amounts. The notional amount, recorded gross, is the amount of a derivative’s underlying assets, reference rate or index and is the basis upon which changes in the value of derivatives are measured. The notional amounts indicate the volume of transactions outstanding at the year end and are indicative of neither the market risk nor the credit risk.
IFRS 7.25

70

Good Insurance (International) Limited

Notes to the consolidated financial statements
25. Derivative financial instruments (cont’d)
Assets 2010 €000 Derivatives held for trading: Interest rate swaps Exchange traded equity options Liabilities 2010 €000 Notional amount 2010 €000 Assets 2009 €000 Liabilities 2009 €000 Notional amount 2009 €000
IFRS 7.25,26

387 290 677

(244) (150) (394)

3,642 4,656 8,298

135 52 187

(815) (22) (837)

2,617 1,197 3,814
IFRS 7.22(b)

Derivatives held as fair value hedges: Interest rate swaps Forward foreign exchange contracts Foreign exchange traded futures

220 155 263 638

(347) (113) (383) (843)

4,568 1,206 6,532 12,306

160 102 198 460

(287) (63) (321) (671)

2,346 2,982 2,943 8,271

Derivatives held as cash flow hedges: Currency swaps Total derivatives

867 867 2,182

(545) (545) (1,782)

3,412 3,412 24,016

593 593 1,240

(250) (250) (1,758)

2,876 2,876 14,961
IFRS 7.33 IFRS 7.B10(b)

Derivatives often involve at their inception only a mutual exchange of promises with little or no transfer of consideration. However, these instruments frequently involve a high degree of leverage and are very volatile. A relatively small movement in the value of the asset, rate or index underlying a derivative contract may have a significant impact on the profit or loss of the Group. Over-the-counter derivatives may expose the Group to the risks associated with the absence of an exchange market on which to close out an open position. The Group’s exposure under derivative contracts is closely monitored as part of the overall management of the Group’s market risk (see also Note 45). As of 31 December 2010, the Group had positions in the following types of derivatives: Forward and futures Forwards and futures contracts are contractual agreements to buy or sell a specified financial instrument at a specific price and date in the future. Forwards are customised contracts transacted in the over-the-counter market. Futures contracts are transacted in standardised amounts on regulated exchanges and are subject to daily cash margin requirements. The main differences in the risk associated with forward and futures contracts are credit risk and liquidity risk. The Group has credit exposure to the counterparties of forward contracts. The credit risk related to future contracts is considered minimal because the cash margin requirements of the exchange help ensure that these contracts are always honoured. Forward contracts are settled gross and are, therefore, considered to bear a higher liquidity risk than the futures contracts which are settled on a net basis. Both types of contracts result in market risk exposure. Interest rate swaps Swaps are contractual agreements between two parties to exchange movements in interest or foreign currency rates. Typically, for an interest rate swap, a floating rate interest stream will be exchanged for a fixed rate or vice versa. The payment flows are usually netted against each other, with the difference being paid by one party to the other. Currency swaps In a currency swap, the Group pays a specified amount in one currency and receives a specified amount in another currency. Currency swaps are mostly gross–settled.

IFRS 7.B11F(g)

Good Insurance (International) Limited

71

Notes to the consolidated financial statements
25. Derivative financial instruments (cont’d)
Options Options are contractual agreements that convey the right, but not the obligation, for the purchaser either to buy or sell a specific amount of a financial instrument at a fixed price, either at a fixed future date or at any time within a specified period. The Group purchases and sells options through regulated exchanges and in the over-the-counter markets. Options purchased by the Group provide the Group with the opportunity to purchase (call options) or sell (put options) the underlying asset at an agreed-upon value either on or before the expiration of the option. The Group is exposed to credit risk on purchased options only to the extent of their carrying amount, which is their fair value. Options written by the Group provide the purchaser the opportunity to purchase from or sell to the Group the underlying asset at an agreed-upon value either on or before the expiration of the option. Derivative financial instruments held for trading purposes A variety of equity options are part of the portfolio matching insurance liabilities and unit-linked investment liabilities with corresponding assets. The Group has also purchased interest rate swap contracts to match the expected liability duration of fixed and guaranteed insurance and investment contracts, to swap floating rates of the backing assets, to fixed rates required to match the interest cash flows over the main duration of the related insurance and investment contracts. These are economic hedges, but do not meet the hedge accounting criteria. Derivative financial instruments held for hedging purposes As part of its asset and liability management, the Group uses derivatives for hedging purposes in order to reduce its exposure to market risks. This is achieved by hedging specific financial instruments or portfolios of fixed rate financial instruments. The accounting policy explained in Note 2.3 (n) varies according to the nature of the item hedged and compliance with the hedge criteria. Hedges entered into by the Group which provide economic hedges, but do not meet the hedge accounting criteria, are treated as ‘Derivatives held for trading purposes’. Fair value hedges Fair value hedges are used by the Group to protect it against changes in the fair value of financial assets and financial liabilities due to movements in exchange rates and interest rates. The Group hedges interest rate risk and exchange rate risk on certain fixed interest rate investments using swaps, exchange traded futures and other forward exchange contracts. The terms of the fair value hedges exactly match the terms of the underlying hedged items. For the year ended 31 December 2010, the Group recognised a net loss of €28,000 (2009: loss of €22,000), representing the loss on the hedging instruments. The total gain on hedged items attributable to the hedged risk amounted to €34,000 (2009: gain of €13,000). Cash flow hedges As a result of highly probable forecast transactions in foreign currencies, the Group is exposed to foreign exchange risks which are hedged with currency swaps. A schedule indicating as at 31 December 2010 the periods when the hedged cash flows are expected to occur and when they are expected to affect the income statement is as follows:
IFRS 7.22(a)IFRS 7.22(c) IFRS 7.22(a)

IFRS 7.22(b)

IFRS 7.24(a)(i) IFRS 7.24(a)(ii)

72

Good Insurance (International) Limited

Notes to the consolidated financial statements
25. Derivative financial instruments (cont’d)
Cash inflows/outflows Cash inflows €000 Within one year Within 1 – 3 years Within 3 – 8 years Income Statement 1,567 1,360 973 2010 Cash outflows €000 (1,489) (1,127) (926) Net cash inflows €000 78 233 47 Cash inflows €000 968 1,865 1,000 2009 Cash outflows €000 (950) (1,660) (950) 2010 €000 20 26 13
IFRS 7.23(a)

Net cash inflows €000 18 205 50 2009 €000 17 29 12
IFRS 7.23(d) IFRS 7.24(b) IFRS 7.23(a)

Within one year Within 1 – 3 years Within 3 – 8 years There were no cash flow hedges reclassified to the income statement in 2010 or 2009. There was no cash flow hedge ineffectiveness during 2010 or 2009.

26. Financial instruments other than derivative financial instruments and fair values of financial instruments
The Group’s financial instruments other than derivative financial instruments are summarised by categories as follows: 2010 €000 Held to maturity financial assets Loans and receivables Available-for-sale financial assets Financial assets at fair value through profit or loss Total financial instruments other than derivative financial instruments 2,104 7,264 109,677 35,249 154,294 2009 €000 1,677 6,137 79,417 21,189 108,420
IFRS 7.8(b) IFRS 7.8(c) IFRS 7.8(d) IFRS 7.8(a)

The following table compares the fair values of the financial instruments to their carrying values: 2010 Carrying value €000 Held to maturity financial assets Loans and receivables Available-for-sale financial assets Financial assets at fair value through profit or loss Total financial instruments other than derivative financial instruments 2,104 7,264 109,677 35,249 154,294 2009 Carrying value €000 1,677 6,137 79,417 21,189 108,420

Fair value €000 2,428 7,601 109,677 35,249 154,955

Fair value €000 2,246 6,256 79,417 21,189 109,108

Commentary
IFRS 7 requires disclosure of certain information per class of financial instruments as defined in IAS 39. Category disclosures are made for main asset lines on the face of the statement of financial position and class disclosures in the notes have been based on the characteristics of the financial assets.

Good Insurance (International) Limited

73

Notes to the consolidated financial statements
26. Financial instruments other than derivative financial instruments and fair values of financial instruments (cont’d)
(a) Held to maturity financial assets 2010 €000 Fair value Debt securities Total held to maturity financial assets at fair value 2009 €000

2,428 2,428 2010 €000

2,246 2,246 2009 €000 1,677 1,677

IFRS 7.6

Amortised cost Debt securities Total held to maturity financial assets at amortised cost (b) Loans and receivables Notes Amortised cost Loans to related parties Receivables from related parties Amounts written off in the year Other loans (net of impairment allowance of €526,000 (2009: €483,000), see Note 45) Total loans and receivables at amortised cost Fair value Loans to related parties Receivables from related parties Other loans Total loans and receivables at fair value The related party receivables are current and carrying value approximates fair value. 48(b) 48(b) 12

2,104 2,104

IFRS 7.6

2010 €000 336 382 (100) 6,646 7,264

2009 €000 271 357 (70) 5,579 6,137
IFRS 7.6 IFRS 7.6 IFRS 7.6 IFRS 7.6

336 382 6,883 7,601

271 357 5,628 6,256

IFRS 7.25 IFRS 7.25 IFRS 7.25

IFRS 7.29(a) IFRS 7.29(a) IFRS 7.27

The related party loans are at a variable interest rate and carrying value approximates fair value. The fair values of the other loans have been estimated by comparing current market interest rates for similar loans to the rates offered when the loans were first recognised together with appropriate market credit adjustments. (c) Available-for-sale financial assets 2010 €000 Equity securities Debt securities Total available-for-sale financial assets at fair value 71,070 38,607 109,677 2009 €000 55,466 23,951 79,417

IFRS 7.6 IFRS 7.6 IFRS 7.25

74

Good Insurance (International) Limited

Notes to the consolidated financial statements
26. Financial instruments other than derivative financial instruments and fair values of financial instruments (cont’d)
(d) Financial assets at fair value through profit or loss 2010 €000 Fair value Equity securities Debt securities Mutual funds Deposits with credit institutions Total financial assets at fair value through profit or loss 15,564 10,966 7,730 989 35,249 2009 €000 13,324 4,662 2,091 1,112 21,189
IFRS 7.6 IFRS 7.6 IFRS 7.6 IFRS 7.6 IFRS 7.25

The table below indicates the fair value of financial assets at fair value through profit or loss, split between those classified as held for trading and those designated as such upon initial recognition. 2010 €000 Held for trading purposes Designated upon initial recognition Total financial assets at fair value through profit or loss 8,483 26,766 35,249 2009 €000 8,904 12,285 21,189
IFRS 7.8(a) (ii) IFRS 7.8(a) (i)

Commentary
The fair value hierarchy of investment contract liabilities with DPF should also be disclosed where these are measured at fair value. Good Insurance does not measure its investment contract liabilities with DPF at fair value as disclosed in Note 34(a).

(e) Carrying values of financial instruments other than derivative financial instruments Fair value through profit or Held to Loans and Availableloss maturity receivables for-sale Notes €000 €000 €000 €000 At 1 January 2009 Purchases Maturities Disposals Fair value gains recorded in the income statement Fair value gains recorded in other comprehensive income Movement in impairment allowance Amortisation adjustment Amounts written off Foreign exchange adjustments At 31 December 2009 Purchases Acquisition of subsidiaries Maturities Disposals Fair value gains recorded in the income statement Fair value gains recorded in other comprehensive income Movement in impairment allowance Amortisation adjustment Amounts written off Foreign exchange adjustments At 31 December 2010 1,047 531 (85) − 9 18 − − − 184 12 − 1,677 333 (100) − 9 18 − − − 194 12 − 2,104 5,160 2,314 (1,245) − − − (22) (70) − 6,137 2,574 (1,304) − − − (43) − (100) − 7,264 76,784 5,000 (65) (6,523) − 3,338 − 848 35 79,417 8,000 25,100 (87) (9,844) − 6,230 − 821 40 109,677 19,244 4,000 − (3,000) 945 − − − − 21,189 5,000 15,008 − (7,000) 1,052 − − − − 35,249

Total €000 102,235 11,845 (1,395) (9,523) 945 3,338 (22) 1,032 (70) 35 108,420 15,907 40,108 (1,491) (16,844) 1,052 6,230 (43) 1,015 (100) 40 154,294
IFRS 7.20(a) IFRS 7.20(a)

IFRS 7.20(b)

IAS 21.28

3

IFRS 7.20(a) IFRS 7.20(a)

IFRS 7.20(b)

IAS 21.28

Good Insurance (International) Limited

75

Notes to the consolidated financial statements
26. Financial instruments other than derivative financial instruments and fair values of financial instruments (cont’d)
(e) Carrying values of financial instruments other than derivative financial instruments (cont’d) Fair value of financial assets and liabilities not carried at fair value The following describes the methodologies and assumptions used to determine fair values for those financial instruments which are not already recorded at fair value in the financial statements (i.e., held to maturity and loans and receivables). Assets for which fair value approximates carrying value For financial assets and financial liabilities that have a short-term maturity (less than three months), it is assumed that the carrying amounts approximate to their fair value. This assumption is also applied to demand deposits, and savings accounts without a specific maturity. For other variable rate instruments an adjustment is also made to reflect the change in required credit spread since the instrument was first recognised. Fixed rate financial instruments The fair value of fixed rate financial assets and liabilities carried at amortised cost are estimated by comparing market interest rates when they were first recognised with current market rates for similar financial instruments. The estimated fair value of fixed interest bearing deposits is based on discounted cash flows using prevailing money-market interest rates for debts with similar credit risk and maturity. For quoted debt issued the fair values are determined based on quoted market prices. For those notes issued where quoted market prices are not available, a discounted cash flow model is used based on a current interest rate yield curve appropriate for the remaining term to maturity and credit spreads. (f) Determination of fair value and fair values hierarchy The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly and Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data Financial assets and liabilities measured using a valuation technique based on assumptions that are supported by prices from observable current market transactions are assets and liabilities for which pricing is obtained via pricing services, but where prices have not been determined in an active market, financial assets with fair values based on broker quotes, investments in private equity funds with fair values obtained via fund managers and assets that are valued using the Group’s own models whereby the majority of assumptions are market observable. Non market observable inputs means that fair values are determined in whole or in part using a valuation technique (model) based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. The main asset classes in this category are unlisted equity investments and debt instruments. Valuation techniques are used to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. However, the fair value measurement objective remains the same, that is, an exit price from the perspective of the Group. Therefore, unobservable inputs reflect the Group’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). These inputs are developed based on the best information available, which might include the Group’s own data. About 21% of the total financial assets recorded at fair value, are based on estimates and recorded as Level 3 investments. Where estimates are used, these are based on a combination of independent third-party evidence and internally developed models, calibrated to market observable data where possible. While such valuations are sensitive to estimates, it is believed that changing one or more of the assumptions to reasonably possible alternative assumptions would not change the fair value significantly.
IFRS 7.27A IFRS 7.27Aª IFRS 7.25 IFRS 7.26 IFRS 7.27

IFRS 7.29(a)

IFRS 7.27A

76

Good Insurance (International) Limited

Notes to the consolidated financial statements
26. Financial instruments other than derivative financial instruments and fair values of financial instruments (cont’d)
(f) Determination of fair value and fair values hierarchy (cont’d) The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy:
IFRS 7.27A IFRS 7.27B(a) IFRS 7.IG13A Advisory Panel

Total fair 31 December 2010 Notes Financial assets Derivative financial instruments: Interest rate swaps Exchange traded equity options Forward foreign exchange contracts Foreign exchange traded futures Currency swaps 25 Financial assets held for trading: Equity securities Debt securities Mutual funds Deposits with credit institutions 26(d) Financial assets designated at fair value through profit or loss: Equity securities Debt securities Mutual funds Deposits with credit institutions 26(d) Available-for-sale financial assets: Equity securities Debt securities 26(c) Total financial assets Financial liabilities Investment contract liabilities: Investment contract liabilities without DPF Net asset value attributable to unit-holders Derivative financial instruments: Interest rate swaps Exchange traded equity options Forward foreign exchange contracts Foreign exchange traded futures Currency swaps 25 Total financial liabilities − 45 − − 298 343 3,493 300 105 113 383 247 1,148 5,021 291 − − − − 291 1,642 591 150 113 383 545 1,782 10,156 34 35 3,000 150 3,653 220 1,201 150 7,854 520 40,022 22,779 62,801 79,661 14,992 6,515 21,507 37,840 16,056 9,313 25,369 29,607 71,070 38,607 109,677 147,108 5,744 3,045 2,611 125 11,525 5,156 3,833 2,500 − 11,489 1,700 688 1,364 − 3,752 12,600 7,566 6,475 125 26,766 1,044 1,986 948 864 4,842 1,851 1,250 301 − 3,402 69 164 6 − 239 2,964 3,400 1,255 864 8,483 − 67 24 59 343 493 377 223 114 204 524 1,442 230 − 17 − − 247 607 290 155 263 867 2,182 Level 1 €000 Level 2 €000 Level 3 €000 value €000

IFRS 7.27A IFRS 7.27B(a) IFRS 7.25

Good Insurance (International) Limited

77

Notes to the consolidated financial statements
26. Financial assets other than derivative financial instruments and fair values of financial instruments (cont’d)
(f) Determination of fair value and fair values hierarchy (cont’d)
Total fair value €000

31 December 2009 Notes Financial assets Derivative financial instruments: Interest rate swaps Exchange traded equity options Forward foreign exchange contracts Foreign exchange traded futures Currency swaps 25 Financial assets held for trading: Equity securities Debt securities Mutual funds Deposits with credit institutions 26(d) Financial assets designated at fair value through profit or loss: Equity securities Debt securities Mutual funds Deposits with credit institutions 26(d) Available-for-sale financial assets: Equity securities Debt securities 26(c) Total financial assets Financial liabilities Investment contract liabilities: Investment contract liabilities without DPF Net asset value attributable to unit-holders Derivative financial instruments: Interest rate swaps Exchange traded equity options Forward foreign exchange contracts Foreign exchange traded futures Currency swaps 25 Total financial liabilities 34 35

Level 1 €000

Level 2 €000

Level 3 €000

− 10 23 45 249 327 2,940 960 397 467 4,764

69 42 56 153 344 664 2,000 895 288 − 3,183

226 − 23 − − 249 659 104 194 − 957

295 52 102 198 593 1,240 5,599 1,959 879 467 8,904

3,944 1,045 611 645 6,245 31,022 16,515 47,537 58,873

3,000 1,544 433 − 4,977 14,992 779 15,771 24,595

781 114 168 − 1,063 9,452 6,657 16,109 18,378

7,725 2,703 1,212 645 12,285 55,466 23,951 79,417 101,846

2,789 92

4,011 184

477 92

7,277 367

− 10 − − 60 70 2,951

677 12 63 321 190 1,263 5,458

425 − − − − 425 994

1,102 22 63 321 250 1,758 9,402

78

Good Insurance (International) Limited

Notes to the consolidated financial statements
26. Financial assets other than derivative financial instruments and fair values of financial instruments (cont’d)
(f) Determination of fair value and fair values hierarchy (cont’d) Financial instruments recorded at fair value The following is a description of the determination of fair value for financial instruments which are recorded at fair value using valuation techniques. These incorporate the Group’s estimate of assumptions that a market participant would make when valuing the instruments. Derivatives Derivative products valued using a valuation technique with market observable inputs (Level 2) are mainly interest rate swaps, currency swaps and forward foreign exchange contracts. The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates and interest rate curves. Derivative products valued using a valuation technique with significant non market observable inputs (Level 3) are primarily long dated option contracts and certain credit default swaps. These derivatives are valued using models which calculate the present value such as credit models (e.g., default rate models or credit spread models) and the binomial model for options. The models incorporate various non-observable assumptions which include the credit spread of the reference asset for credit default swaps, and market rate volatilities. The principal investments classified as Level 3 are: Structured bond type products held by the life businesses in Good American to €9.3million (2009: €6.7million), for which there is no active market. The Group values the securities using valuation models which use discounted cash flow analysis which incorporates either only observable data or both observable and non-observable data. Observable inputs include assumptions regarding current rates of interest and real estate prices; unobservable inputs include assumptions regarding expected future default rates, prepayment rates and market liquidity discounts. Most of these bonds have been classified as Level 3 because either, (i) the third party models included a significant unobservable liquidity adjustment or (ii) differences between the valuation provided by the counterparty and broker quotes and the validation model were sufficiently significant to result in a Level 3 classification. At 31 December 2010, the counterparty and broker quotes used to value these products were less than the modelled valuations. Private equity investment funds held by Euroland Life business amounting to €17.7 million (2009: €10.2 million). These assets are valued using models which sometimes only incorporate data observable in the market and at other times use both observable and non-observable data. The non-observable inputs to the models include assumptions regarding the future financial performance of the investee, its risk profile, and economic assumptions regarding the industry and geographical jurisdiction in which the investee operates. Other Level 3 investments amount to €2.6 million (2009: €1.5 million) and relate to a diverse range of different types of securities held by a number of businesses throughout the Group. No day 1 profits were unrecognised because of the use of valuation techniques for which not all the inputs are observable in the market.
IFRS 7.28

Commentary
Paragraph 27A of IFRS 7 requires an entity to provide a quantitative analysis of fair values based on a three-level hierarchy in tabular format. This information must be given by class of financial instrument, which is a level lower than categories such as held for trading or available for sale. The level within which the fair value measurement is categorised must be based on the lowest level of input to the instrument’s valuation that is significant to the fair value measurement in its entirety. For instance, if the credit valuation adjustment made to a derivative value is based on non-observable inputs and the effect of this is significant to the instrument’s value, then the whole instrument is to be shown in Level 3. The same principle also applies to unit-linked liabilities. Therefore, it is possible to have all three levels of unit-linked liabilities depending on the characteristics of the underlying assets backing liabilities. An entity that issues investment contacts without DPF such as unit-linked investment funds and fair values these contracts under IAS 39 principles will be required to determine the fair value hierarchy per the requirements of the new IFRS 7 amendment. The level of category will depend upon whether the investment funds are quoted in an active market. An investment fund is classified in Level 1 if it is quoted in an active market and measured at the unadjusted quoted price at the reporting date and Level 2 if it is measured using inputs that are directly observable at the reporting date. An investor classifies an investment in a fund in Level 3 if the investment is measured using unobservable inputs at the reporting date (e.g., a significant liquidity discount is applied to the directly observable inputs because of restrictions on redemptions such as lock-up periods, redemption gates).

Good Insurance (International) Limited

79

Notes to the consolidated financial statements
26. Financial assets other than derivative financial instruments and fair values of financial instruments (cont’d)
(f) Determination of fair value and fair values hierarchy (cont’d) Reconciliation of movements in level 3 financial instruments measured at fair value The following table shows a reconciliation of the opening and closing recorded amount of Level 3 financial assets and liabilities which are recorded at fair value:
IFRS 7.27B(b), (c), (d)

At 1 January 2010 €000 Financial assets Derivative financial instruments: Interest rate swaps Forward foreign exchange contracts Financial assets held for trading: Equity securities Debt securities Mutual funds Financial assets designated at fair value through profit or loss: Equities Debt securities Mutual funds Available-for-sale financial assets: Debt securities Equities

Total gains/(loss) in income statement €000

Total gains/(loss) recorded in other comprehensive income €000

Business combinations (Note 3) €000

Purchases €000

Sales €000

Transfers Settle- from level 1 ments and level 2 €000 €000

At 31 December 2010 €000

Total unrealised gains or losses for the period included in profit or loss for assets held at 31 December 2010 €000

226 23 249

33 (12) 21

− −

156 24 180

96 (20) (116)

(89) (9) (98)

− 11 11

230 17 247

13 − 13

659 104 194 957

137 54 36 227 −

− − − −

456 234 312 1,002

(677) (245) (500) (1,422)

(734) (52) (786)

228 17 16 261

69 164 6 239

100 25 5 130

781 114 168 1,063

100 34 45 179

− −

− − − −

1,100 566 545 2,211

(745) − (107) (852)

− (60) − (60)

464 34 713 1,211

1,700 688 1,364 3,752

25 30 35 90

9,452 6,657 16,109

21 (46) (25)

233 (77) 156

456 283 739

678 − 678

(673) (673)

(1,231) − (1,231)

6,447 3,169 9,616

16,056 9,313 25,369

30 25 55

Total Level 3 financial assets Financial liabilities Investment contract liabilities without DPF Net asset value attributable to unitholders Derivative financial instruments: Interest rate swaps Total Level 3 financial liabilities

18,378

402

156

4,071

(3,063)

(2,175)

11,099

29,607

288

477

45

89

(21)

611

1,201

45

92

35

− − 34 34

25

(90)

88

150

20

425 994

(45) 35

− −

− 114

(89) (200)

− −

− 699

291 1,642

(30) 35

80

Good Insurance (International) Limited

Notes to the consolidated financial statements
26. Financial assets other than derivative financial instruments and fair values of financial instruments (cont’d)
(f) Determination of fair value and fair values hierarchy (cont’d) Reconciliation of movements in Level 3 financial instruments measured at fair value (cont’d)
IFRS 7.27B(b), (c), (d)

At 1 January 2009 €000 Financial assets Derivative financial instruments: Interest rate swaps Forward foreign exchange contracts Financial assets held–for–trading: Equity securities Debt securities Mutual funds Financial assets designated at fair value through profit or loss: Equity securities Debt securities Mutual funds Available–for–sale financial assets: Debt securities Equities 10,244 6,554 16,798 Total Level 3 financial assets Financial liabilities Investment contract liabilities without DPF Net asset value attributable to unit– holders Derivative financial instruments: Interest rate swaps Total Level 3 financial liabilities

Total gains/(loss) in income statement €000

Total gains/(loss) recorded in other comprehendsive income €000

Purchases €000

Sales €000

Transfers from level 1 Settlements and level 2 €000 €000

At 31 December 2009 €000

Total unrealised gains or losses for the period included in profit or loss for assets held at 31 December 2009 €000

342 3 345

23 (12) 11

− − −

78 32 110

(200) (12) (212)

(98) − (98)

81 12 93

226 23 249

19 − 19

678 200 231 1,109
1

7 (90) (126) (209)

− − − −

834 3 73 910

(16) (22) (38)

(903) − − (903)

43 7 38 88

659 104 194 957

100 (25) (20) 55

456 65 233 754
1

34 (55) (102) (123)

− − − −

234 124 36 394

(123) (23) (12) (158)

− − − −

180 3 1 184

781 114 168 1,063

− (4) (25) (29)

4 (19)
2

345 (218) 127

600 3,030 3,630

(841) (2,028) (2,869)

(1,000) (867) (1,867)

100 205 305

9,452 6,657 16,109

355 (688) (333)

(15)

19,006

(336)

127

5,044

(3,277)

(2,868)

670

18,378

(288)

398

79

8

(12)

4

477

70

11

10

(5)

6

92

79 15 (31) 63

566 1,034

(34) 56

− −

13 31

(120) (137)

− −

− 10

425 994

1 2

Included in ‘Fair value gains and losses’ Included in ‘Realised gains and losses’

IFRS 7.2

Good Insurance (International) Limited

81

Notes to the consolidated financial statements
26. Financial assets other than derivative financial instruments and fair values of financial instruments (cont’d)
(f) Determination of fair value and fair values hierarchy (cont’d) Reconciliation of movements in Level 3 financial instruments measured at fair value (cont’d) Gains or losses (realised and unrealised) included in profit or loss for the period are presented in the consolidated income statement as follows: 2010 Fair value gains and losses €000 2009 Fair value gains and losses €000
IFRS 7.27B(b), (c), (d)

IFRS 7.27B(b), (c) IFRS 7.IG13B

Realised gains €000 Total gains or losses included in profit or loss for the period Total gains or losses included in profit and loss for the period for assets held at the end of the reporting period
Commentary

Total €000

Realised gains €000

Total €000

(25)

462

437

(15)

(265)

(280)

323

323

(225)

(225)

For fair value measurements resulting from the use of significant unobservable inputs into the valuation techniques, the IFRS 7 amendment requires a reconciliation from the beginning balances to the ending balances for those assets and liabilities that are measured at fair value in the statement of financial position. The reconciliation should include total gains and losses for the period split between those recognised in the profit or loss and those recognised in other comprehensive income, net purchases, sales and settlements and transfers in/out of Level 3. It also requires separate disclosure of the total amount of unrealised gains or losses included in the profit or loss for assets and liabilities held at the year end. The movement analysis should also provide a description of where the total gains or losses and unrealised gains or losses are presented in the consolidated statement of comprehensive income. As loans and receivables and held–to–maturity financial assets are not measured at fair value, the Level 3 movement analysis is not required for financial assets and liabilities that are not measured at fair value.

Transfers between Levels 1 and 2 The Group has also transferred certain financial assets from Level 1 to Level 2 which is shown in the following table as there is no longer an active market for the same product. The fair value for these products is calculated by applying other valuation techniques for which all significant inputs are based on observable market data. There have been no transfers from Level 2 to Level 1 in 2010 and 2009. Transfers from Level 1 to Level 2 2010 2009 €000 €000 Financial assets held for trading Equity securities Debt securities Mutual funds Financial investments available for sale Equity securities Debt securities 270 35 125 754 509 125 12 34 845 789

IFRS 7.27B(b)

IFRS 7.27B(b)

82

Good Insurance (International) Limited

Notes to the consolidated financial statements
26. Financial assets other than derivative financial instruments and fair values of financial instruments (cont’d)
(f) Determination of fair value and fair values hierarchy (cont’d) Transfers between Levels 1 and 2 (cont’d) Movement in Level 3 financial instruments measured at fair value During the year the Group transferred certain financial instruments from Level 2 to Level 3 of the fair value hierarchy. The recorded amount of the total assets transferred was €3,034,000 (year ended 31 December 2009: €703,000) and the cumulative unrealised loss at the time of transfer was €133,000 (year ended 31 December 2009: €40,000). The reason for the change in level is that the market for the securities had become inactive, which has led to a change in the method used to determine fair value. Prior to transfer, fair value for Level 2 securities was determined using observable market transactions or broker quotes for the same or similar instruments. Since transfer, all such assets have been valued using valuation models incorporating significant non market observable inputs. A description of the models and assumptions used is provided above. Sensitivity of Level 3 financial instruments measured at fair value to changes in key assumptions The following table shows the impact on the fair value of Level 3 instruments of using reasonably possible alternative assumptions by class of instrument:
31 December 2010 Effect of reasonably possible alternative assumptions Carrying (+/–) amount 31 December 2009 Effect of reasonably possible alternative Carrying assumptions amount (+/–)
IFRS 7.27B(e) IFRS 7.27(B)(c)

IFRS 7.27B(e)

€000
Derivative financial instruments: Interest rate swaps Forward foreign exchange contracts Financial assets held–for–trading: Equity securities Debt securities Mutual funds Financial assets designated at fair value through profit or loss: Equity securities Debt securities Mutual funds Available–for–sale financial assets: Debt securities Equities Financial liabilities Investment contract liabilities without DPF Net asset value attributable to unit–holders Derivative financial instruments Interest rate swaps 291 1,201 150 16,056 9,313 25,369 1,700 688 1,364 3,752 69 164 6 239 230 17 247

€000
5 6

€000
226 23 249

€000

3

3 2 2

659 104 194 957

4 3 1

12 7 4

781 114 168 1,063

8 2

23 17

9,452 6,657 16,109

18 8

7 4 8

477 92 425

3 1 1

Good Insurance (International) Limited

83

Notes to the consolidated financial statements
26. Financial assets other than derivative financial instruments and fair values of financial instruments (cont’d)
(f) Determination of fair value and fair values hierarchy (cont’d) Sensitivity of Level 3 financial instruments measured at fair value to changes in key assumptions (cont’d) In order to determine reasonably possible alternative assumptions, the Group adjusted key unobservable model inputs as follows: For interest rate swaps and forward foreign exchange contracts, the Group has adjusted the correlation model input assumption. The adjustment made was to increase and decrease the assumption within a range of between 3% and 7%, depending on the individual characteristics of the derivative instrument. Management used judgment in determining this range, having regard to recent transactions and indicative market quotes. For debt securities, the Group adjusted the credit valuation model input assumption and counterparty credit risk rating. The adjustment made was to increase and decrease the assumption by 10% which is a range that is consistent with the Group’s internal credit risk ratings for the counterparties. For equities, the Group adjusted the average price earnings ratio. The adjustment made was to increase and decrease the assumed price earnings ratio by two, which is considered by the Group to be within a range of reasonably possible alternatives based on price earnings ratios of companies with similar industry and risk profiles.

27. Reinsurance assets
2010 €000 30,100 6,421 36,521 2009 €000 28,370 6,341 34,711

IFRS 4.37(b)

Notes Reinsurance of insurance contracts Reinsurance of investment contracts Total reinsurance assets 33 34

At 31 December 2010, the group conducted an impairment review of the reinsurance assets and recognised an impairment loss of €2,000 (2009: €16,000) in other operating and administrative expenses. The carrying amounts disclosed above is in respect of the reinsurance of investment contracts approximate fair value at the reporting date. During the year, the Group entered into reinsurance arrangements which resulted in profits on inception of €42,000 (2009: €38,000). This profit has been reflected in the income statement.

IFRS 7.25, 29

IFRS 4.37(b)(i)

28. Taxation
(a) Tax receivable 2010 €000 At 1 January Amounts recorded in the income statement Payments made on–account during the year At 31 December 2,812 (1,381) 1,564 2,995 2009 €000 2,454 (1,086) 1,444 2,812

84

Good Insurance (International) Limited

Notes to the consolidated financial statements
28. Taxation (cont’d)
(b) Deferred tax liability Consolidated income statement 2009 2010 Consolidated statement of financial position 2010 2009 €000 €000 − (128) (67) 1,310 1,013 (1,326) 2,158 128 2,360 4 5,452 2010 €000 At 1 January Amounts recorded in the income statement Amounts recorded in other comprehensive income Acquisition of subsidiaries Foreign exchange adjustments At 31 December 1,848 188 1,824 1,683 (91) 5,452 (25) (177) (73) 1,357 − (1,245) 1,991 131 (112) 1 1,848 2009 €000 69 887 982 − (90) 1,848
IAS 12.81(e) IAS 12.81(a) IAS 12.81(g)(i)

Losses carried forward Provisions and other temporary differences Impairment of assets Insurance related items Fair value adjustments on acquisition (Note 3) Pension scheme deficit Net unrealised gains on investment securities Deferred expenses Accelerated capital allowances Other Deferred tax expense/(income) (Note 14) Total deferred tax liability

− (3) (7) 43 35 (39) 69 3 68 − 169

− (9) (6) 119 − − 538 9 9 1 661

IAS 12.81(g)(ii)

IAS 12.81(a)

A deferred tax asset is recognised for a tax loss carry forward only to the extent that realisation of the related tax benefit is probable. A deferred tax asset has not been recognised in respect of a tax loss carry forward of €415,000 (2009: €4,728,000) and accelerated capital allowances of €68,000 (2009: €57,000) relating to a branch in Africa, as there is insufficient certainty as to the availability of future profits arising from that tax jurisdiction. These amounts include tax losses of €222,000 (2009: €4,535,000) due to expire in 2011. In addition, the Group has an unrecognised deferred tax asset in respect of a capital loss of €178,000 (2009: €178,000) which can only be offset against future capital gains and has not been recognised in these financial statements. This tax loss has no expiry date. A deferred tax liability has not been recognised in respect of the investment in the associate.

IAS 12.81(e)

IAS 12.81(e)

IAS 12.81(f) IFRS 4.37(b)

29. Insurance receivables
2010 €000 Due from policyholders Due from reinsurers Due from agents, brokers and intermediaries Total insurance receivables 11,328 8,892 15,052 35,272 2009 €000 9,262 8,351 2,301 19,914

Good Insurance (International) Limited

85

Notes to the consolidated financial statements
30. Deferred expenses
Investment management Deferred acquisition services costs (DAC) Investment Investment Insurance contracts contracts contracts with DPF without DPF €000 €000 €000 6,042 1,626 (1,224) 6,444 2,749 (1,978) 7,215 4,027 1,076 (808) 4,295 1,826 (1,311) 4,810 295 520 (77) 738 793 (110) 1,421
IFRS 4.37(b), (e) IAS 18 Appendix 14(b)(iii)

Notes At 1 January 2009 Expenses deferred Amortisation At 31 December 2009 Expenses deferred Amortisation At 31 December 2010

Total €000 10,364 3,222 (2,109) 11,477 5,368 (3,399) 13,446

12 12 12 12

31. Accrued income
2010 €000 Dividends Interest Rent Total accrued income 1,089 446 163 1,698 2009 €000 1,022 419 116 1,557

32. Cash and cash equivalents
2010 €000 Cash at Group Short–term deposits (including demand and time deposits) Total cash and cash equivalents 17,821 4,902 22,723 2009 €000 24,153 3,645 27,798
IAS 1.66

Short–term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group. All deposits are subject to an average variable interest rate of 3.8% (2009: 4.3%). The carrying amounts disclosed above reasonably approximate fair value at the reporting date. The cash and cash equivalents position for cash flow purposes, net of the Group overdraft, as per Note 37, is €16,805,000 (2009: €20,876,000).

IFRS 7.25, 29 IAS 7.8

33. Insurance contract liabilities
2010 Insurance contract liabilities €000 Reinsurance of liabilities €000 Insurance contract liabilities €000 2009 Reinsurance of liabilities €000

IFRS 4.37(b)

Net €000

Net €000

Notes

Life insurance contracts Non–life insurance contracts Total insurance contract liabilities
86

33(a) 33(b)

126,048 50,664 176,712

(17,434) (12,666) (30,100)

108,614 37,998 146,612

78,686 47,574 126,260

(16,477) (11,893) (28,370)

62,209 35,681 97,890

Good Insurance (International) Limited

Notes to the consolidated financial statements
33. Insurance contract liabilities (cont’d)
Commentary The Group enters into reinsurance agreements in order to mitigate insurance risk. Although positions are managed on a net basis by management, insurance disclosures have been made on both a gross and net basis in order to provide a comprehensive set of disclosures. In some accounting models, recognised realised gains or losses on investments have a direct effect on the measurement of some or all of the insurance liabilities related deferred acquisition costs and related intangible assets. An insurer is permitted to change its accounting policies so that a recognised but unrealised gain or loss on an asset affects these measurements in the same way that a realised gain or loss does. This practice is often described as ‘shadow accounting’. The Group does not apply shadow accounting but additional disclosures have been provided in Appendix 2, should readers wish to refer to the required disclosures if shadow accounting is adopted.
IFRS 4.37(b)

(a) Life insurance contract liabilities 2010
Gross Insurance contract liabilities without DPF €000 Total gross insurance contract liabilities €000 Insurance contract liabilities without DPF €000 Reinsurance Total Re– insurance of insurance contract liabilities €000

IFRS 4.37(e)

Notes At 1 January 2010 Premiums received Liabilities paid for death, maturities, surrenders, benefits and claims Benefits and claims experience variation Fees deducted Credit of interest or change in unit– prices Acquisitions of subsidiaries Adjustments due to changes in assumptions: Mortality/ morbidity Longevity Investment return Expenses Lapse and surrender rates Discount rate Foreign exchange adjustment At 31 December 2010

Insurance contract liabilities with DPF €000

Insurance contract liabilities with DPF €000

Net €000

25,180 5(a) & 5(b) 15,670

53,506 32,175

78,686 47,845

(5,274) (3,668)

(11,203) (7,793)

(16,477) (11,461)

62,209 36,384

10(a)& 10(b)

(6,642)

(14,113)

(20,755)

1,660

3,528

5,188

(15,567)

(6,859) (850)

(14,014) (1,807)

(20,873) (2,657)

1,632 212

3,468 452

5,100 664

(15,773) (1,993)

134 3 22,509

286 19,509

420 42,018

(34)

(71)

(105)

315 42,018

245 192 (162) 113 73 (33) 8 49,578

522 408 (344) 239 156 (69) 16 76,470

767 600 (506) 352 229 (102) 24 126,048

(61) (49) 40 (28) (18) 8 (2) (5,582)

(130) (103) 86 (60) (39) 17 (4) (11,852)

(191) (152) 126 (88) (57) 25 (6) (17,434)

576 448 (380) 264 172 (77) 18 108,614

Good Insurance (International) Limited

87

Notes to the consolidated financial statements
33. Insurance contract liabilities (cont’d)
(a) Life insurance contract liabilities (cont’d) 2009
Gross Insurance contract liabilities without DPF €000 Total gross insurance contract liabilities €000 Insurance contract liabilities without DPF €000 Reinsurance Total Re– insurance of insurance contract liabilities €000
IFRS 4.37(e)

Notes At 1 January 2009 Premiums received Liabilities paid for death, maturities, surrenders, benefits and claims Benefits and claims experience variation Fees deducted Credit of interest or change in unit– prices Adjustments due to changes in assumptions: Mortality/ morbidity Longevity Investment return Expenses Lapse and surrender rates Discount rate Foreign exchange adjustment At 31 December 2009

Insurance contract liabilities with DPF €000

Insurance contract liabilities with DPF €000

Net €000

23,748 5(a) 15,022

50,466 31,921

74,214 46,943

(4,962) (3,756)

(10,545) (7,980)

(15,507) (11,736)

58,707 35,207

10(a)

(6,922)

(14,708)

(21,630)

1,730

3,677

5,407

(16,223)

(6,386) (879)

(13,569) (1,867)

(19,955) (2,746)

1,644 220

3,495 467

5,139 687

(14,816) (2,059)

146

305

451

(36)

(77)

(113)

338

IFRS 4.37(d)

248 200 (168) 119 81 (37)

526 425 (357) 254 171 (79)

774 625 (525) 373 252 (116)

(62) (50) 42 (30) (21) 9

(131) (106) 89 (63) (44) 20

(193) (156) 131 (93) (65) 29

581 469 (394) 280 187 (87)

8 25,180

18 53,506

26 78,686

(2) (5,274)

(5) (11,203)

(7) (16,477)

19 62,209

Changes in some of the previously mentioned assumptions will largely be offset by corresponding changes in the assets backing the liabilities. For reinsurance assets, see Note 27.

88

Good Insurance (International) Limited

Notes to the consolidated financial statements
33. Insurance contract liabilities (cont’d)
(b) Non–life insurance (which comprises general insurance and healthcare) contract liabilities
2010 Insurance contract liabilities €000 Reinsurance of liabilities €000 Insurance contract liabilities €000 2009 Reinsurance of liabilities €000
IFRS 4.37(e)

Net €000

Net €000

Notes Provision for reported claims by policyholders Provision for claims IBNR Outstanding claims provision Provision for unearned premiums Provision for premium deficiency Total non life insurance contract liabilities

12,339 27,872 (1) (2) (3) 40,211 10,019 434 50,664

(3,084) (6,969) (10,053) (2,505) (108) (12,666)

9,255 20,903 30,158 7,514 326 37,998

11,586 26,165 37,751 9,409 414 47,574

(2,896) (6,541) (9,437) (2,352) (104) (11,893)

8,690 19,624 28,314 7,057 310 35,681

For reinsurance assets, see Note 27. (1) Outstanding claims provision
2010 Insurance contract liabilities €000 37,751 14,495 Reinsurance of liabilities €000 (9,437) (3,626) Insurance contract liabilities €000 35,175 15,094 2009 Reinsurance of liabilities €000 (8,791) (3,778)
IFRS 4.37(e)

Net €000 28,314 10,869

Net €000 26,384 11,316

Notes At 1 January Claims incurred in the current accident year Adjustment to claims incurred in prior accident years due to changes in assumptions: Average claim cost Average number of claims Average claim settlement period Other movements in claims incurred in prior accident years Claims paid during the year Foreign exchange adjustment At 31 December

IFRS 4.37(d)

800 685 540

(200) (171) (131)

600 514 409

825 693 568

(206) (173) (138)

619 520 430

1,365 10(a) & 10 (b) (15,441) 16 40,211

(341) 3,861 (8) (10,053)

1,024 (11,580) 8 30,158

902 (15,521) 15 37,751

(225) 3,881 (7) (9,437)

677 (11,640) 8 28,314

Good Insurance (International) Limited

89

Notes to the consolidated financial statements
33. Insurance contract liabilities (cont’d)
(b) Non–life insurance (which comprises general insurance and healthcare) contract liabilities (cont’d) (2) Provision for unearned premiums
2010 Insurance contract liabilities €000 9,409 5(a) & 5(b) 24,511 (23,901) 10,019 Reinsurance of liabilities €000 (2,352) (6,128) 5,975 (2,505) Insurance contract liabilities €000 8,794 24,626 (24,011) 9,409 2009 Reinsurance of liabilities €000 (2,198) (6,157) 6,003 (2,352)
IFRS 4.37(e)

Net €000 7,057 18,383 (17,926) 7,514

Net €000 6,596 18,469 (18,008) 7,057
IFRS 4.37(e)

Notes At 1 January Premiums written in the year Premiums earned during the year At 31 December

(3) Provision for premium deficiency
2010 Insurance contract liabilities €000 414 10 10 161 (142) 1 434 Reinsurance of liabilities €000 (104) (40) 36 Insurance contract liabilities €000 394 172 (154) 2 414 2009 Reinsurance of liabilities €000 (99) (43) 39 (1) (104)

Net €000 310 121 (106) 1 326

Net €000 295 129 (115) 1 310

Notes At 1 January Incurred during the year Utilised during the year Foreign exchange adjustment At 31 December


(108)

34. Investment contract liabilities
2010 Investment contract liabilities €000 Reinsurance of liabilities €000 Insurance contract liabilities €000 2009 Reinsurance of liabilities €000

Net €000

Net €000

Notes Investment contract liabilities with DPF Investment contract liabilities without DPF Total investment contract liabilities

34(a) 34(b)

7,366 7,854 15,220

(2,382) (4,039) (6,421)

4,984 3,815 8,799

4,281 7,277 11,558

(2,338) (4,003) (6,341)

1,943 3,274 5,217

For reinsurance assets, see Note 27.

90

Good Insurance (International) Limited

Notes to the consolidated financial statements
34. Investment contract liabilities (cont’d)
(a) Investment contract liabilities with DPF
2010 Investment contract liabilities €000 4,281 5(a) & 5(b) 10(a) & 10(b) 2,400 (2,222) (213) 65 3,002 Reinsurance of liabilities €000 (2,338) (1,320) 1,224 117 (36) Insurance contract liabilities €000 4,131 2,497 (2,259) (234) 72 2009 Reinsurance of liabilities €000 (2,272) (1,373) 1,258 129 (40)
IFRS 4.37(e)

Notes At 1 January Premiums received Liability assumed for benefits Fees deducted Credit of income Acquisitions of subsidiaries Adjustment due to changes in assumptions: Mortality/morbidity Longevity Investment return Expense Lapse and surrender rates Discount rate Foreign exchange adjustment At 31 December

Net €000 1,943 1,080 (998) (96) 29 3,002

Net €000 1,859 1,124 (1,001) (105) 32


IFRS 4.37(d)

25 21 (8) 6 4 (2) 7 7,366

(14) (11) 4 (3) (2) 1 (4) (2,382)

11 10 (4) 3 2 (1) 3 4,984

35 30 (11) 9 7 (4) 8 4,281

(19) (17) 6 (5) (4) 3 (4) (2,338)

16 13 (5) 4 3 (1) 4 1,943

Investment contract liabilities with a DPF above represent the guaranteed and discretionary benefits attributable to these policyholders. As permitted by IFRS 7, the Group has not disclosed fair values for investment contract liabilities with a DPF as fair values or fair value ranges for the DPF cannot be reliably estimated. There is no active market for these instruments, which will be settled with policyholders in the normal course of business.
IFRS 7.29(c)

IFRS 7.30

Commentary
Fair value disclosures for investment contract liabilities with DPF are not required if the fair value of that feature cannot be reliably estimated (IFRS 7.29(c)). This concession does not exist for investment contract liabilities without DPF.

(b) Investment contract liabilities without DPF Investment contract liabilities without DPF are stated at fair value. Investment contract liabilities without DPF are further analysed as follows:
2010 Investment contract liabilities €000 At 1 January Acquisition of subsidiaries Deposits Withdrawals Fees deducted Credit of interest Investments fair value adjustment Foreign exchange adjustment At 31 December 7,277 510 463 (380) (90) 42 26 6 7,854 Reinsurance of liabilities €000 (4,003) Insurance contract liabilities €000 7,169 2009 Reinsurance of liabilities €000 (3,943)
IFRS 7.25, 29

Net €000 3,274 510 208 (171) (40) 17 14 3 3,815

Net €000 3,226


(255) 209 50 (25) (12) (3) (4,039)


525 (429) (95) 61 39 7 7,277


(289) 240 52 (36) (23) (4) (4,003)


236 (189) (43) 25 16 3 3,274
91

Good Insurance (International) Limited

Notes to the consolidated financial statements
35. Net asset value attributable to unit–holders
Unit–trusts in which the Group has a controlling interest (normally if the Group holds more than 50%) are consolidated. The units not owned by the Group are treated as a liability and amount to €520,000 (2009: €367,000). Profit attributable to unit–holders amounts to €267,000 (2009: €111,000). The carrying amounts disclosed above approximate fair value at the reporting date.
IFRS 7.25, 29

36. Pension benefit obligation
The Group has an average salary defined benefit pension scheme covering all of its employees in Euroland. Contributions are made to a separately administered fund. The amounts recognised in the consolidated income statement are as follows: 2010 €000 Current service cost Past service cost Interest cost on benefit obligation Net actuarial loss recognised in the year Expected return on plan assets 544 34 352 135 (424) 641 The actual return on plan assets is €542,000 (2009: €468,000). The amounts recognised in the statement of financial position at the reporting date are as follows: 2010 €000 Present value of the defined benefit obligation Fair value of plan assets Net defined benefit obligation Unrecognised net actuarial losses Unrecognised past service cost Total net defined benefit obligation The movement in the defined benefit obligation is as follows: 2010 €000 At 1 January Current service cost Past service cost Interest cost Contributions by plan participants Benefits paid Actuarial losses At 31 December 9,593 544 34 352 78 (773) 188 10,016 2009 €000 9,346 368 32 320 87 (640) 80 9,593 10,016 (5,303) 4,713 (89) (175) 4,449 2009 €000 9,593 (5,112) 4,481 (120) (209) 4,152
IAS 19.120A(c) IAS 19.120A(b)

IAS 19.120A(g)

2009 €000 368 32 320 78 (383) 415
IAS 19.120A(m) IAS 19.120A(f)

92

Good Insurance (International) Limited

Notes to the consolidated financial statements
36. Pension benefit obligation (cont’d)
The movement in the plan assets is as follows: 2010 €000 At 1 January Expected return on plan assets Contributions by employer Contributions by plan participants Benefits paid Actuarial gains At 31 December The Group expects to contribute €367,000 to the defined benefit plan in 2010. The distribution of the plan assets at the reporting date is as follows: 2010 €000 Euroland treasury bills Euroland equities Euroland corporate bonds Property Total plan assets 302 4,821 128 52 5,303 2009 €000 689 4,232 143 48 5,112
IAS 19.120A(k) IAS 19.120A(e)

2009 €000 4,873 383 324 87 (640) 85 5,112
IAS 19.120A(q)

5,112 424 344 105 (773) 91 5,303

IAS 19.120A(j)

The plan assets include property occupied by Good Insurance (International) Limited with a fair value of €52,000 (2009: €48,000). The overall expected rate of return on assets is determined based on market expectations prevailing on that date, applicable to the period over which the obligation is to be settled. There has been a significant change in the expected rate of return on assets due to the improved stock market scenario. The principal actuarial assumptions used in determining the pension benefit obligation for the Group’s plan are as follows: 2010 €000 Future salary increases Future pension increases Inflation assumption Discount rate Expected rate of return on plan assets Post retirement mortality for pensioners at 65: Male Female 4.5 3.0 2.9 6.5 8.0 2009 €000 4.0 2.8 2.8 6.4 7.5

IAS 19.120A(l)

IAS 19.120A(n)

20.0 23.0

20.0 23.0

Good Insurance (International) Limited

93

Notes to the consolidated financial statements
36. Pension benefit obligation (cont’d)
The discount rate is the assumption that has the largest impact on the value of the obligation. A 1% increase in this rate would reduce the present value of the defined benefit obligation by €965,000. The post–retirement mortality base table used for the schemes is PM/FA92. Post–retirement mortality improvements are allowed for through a reduction in the discount rate of 20 basis points. However, the extent of future improvement in longevity is subject to considerable uncertainty and judgement is required in setting this assumption. Increasing the allowance by five basis points, to a 25 basis point reduction in the discount rate, would increase the liability by €410,000.

Commentary
Although not specifically required by IAS 19, the discount rate assumption or other assumptions give rise to estimation uncertainty which can result in having a significant risk for a material adjustment. Paragraph 125 of IAS 1 requires adequate disclosure of the assumptions to help users understand the source of estimation uncertainty. The above disclosure about the sensitivity of the discount rate is one example of such disclosure.

Amounts for the current and previous four periods are as follows: 2010 €000 Defined benefit obligation Plan assets Deficit Experience adjustments on plan liabilities Experience adjustments on plan assets 10,016 5,303 (4,713) (188) 91 2009 €000 9,593 5,112 (4,481) (80) 85 2008 €000 9,268 4,873 (4,395) (75) 80 2007 €000 10,745 5,701 (5,044) 95 (104) 2006 €000 10,413 5,528 (4,885) 89 (99)

IAS 19.120A(p)

37. Borrowings
2010 €000 Group overdraft €8,000,000 Group loan €7,500,000 Group loan Total borrowings (a) Current borrowings 2010 €000 Group overdraft €8,000,000 Group loan €7,500,000 Group loan Total current borrowings Expected recovery or settlement within 12 months from the reporting date. The Group overdraft is subject to an average variable interest rate of 5.8% (2009: 5.3%). The Group overdraft has an average current maturity of 35 days (2009: 30 days). The Group overdraft is secured by a charge over certain of the Group’s assets. As at the reporting date, the aggregate unused Group overdraft facility amounted to €2,410,000 (2009: €2,630,000). The €8,000,000 Group loan is referenced to Euribor plus 2%, which resulted in an average interest rate of 5.9% for the year (2009: 5.4%). The loan is unsecured and is repayable in fixed annual instalments of €2,000,000 until 31 December 2012. The €7,500,000 fixed interest Group loan is unsecured and is repayable in fixed annual instalments of €1,500,000 through 31 December 2014 at an interest rate of 6.8%.
94 Good Insurance (International) Limited

2009 €000 6,922 6,324 7,818 21,064

5,918 4,236 6,408 16,562

IFRS 7.8(f)

2009 €000 6,922 2,324 1,818 11,064
IFRS 7.8(f)

5,918 2,236 1,908 10,062

Notes to the consolidated financial statements
37. Borrowings (cont’d)
(b) Non–current borrowings 2010 €000 €8,000,000 Group loan €7,500,000 Group loan Total non–current borrowings The following table compares the fair value of borrowings to their carrying value: 2010 Carrying value €000 Group overdraft €8,000,000 Group loan €7,500,000 Group loan 5,918 4,236 6,408 16,562 Fair value €000 5,918 4,236 6,836 16,990 Carrying value €000 6,922 6,324 7,818 21,064 2009 Fair value €000 6,922 6,324 7,942 21,188
IFRS 7.29(a)

2009 €000 4,000 6,000 10,000
IAS 1.61

2,000 4,500 6,500

All borrowings are stated at amortised cost. For short–term borrowings and variable rate loans, it is assumed that the carrying value approximates fair value. The fair value of the fixed rate loan carried at amortised cost is estimated by comparing market interest rates when it was first recognised with current market rates offered for similar financial instruments together with an adjustment for market credit risk.

38. Other financial liabilities
Deposits received from reinsurers €000 At 1 January 2009 Arising during the year Utilised Foreign exchange adjustment At 31 December 2009 Arising during the year Utilised Foreign exchange adjustment At 31 December 2010 1,804 207 (84) 5 1,932 211 (91) 6 2,058 Outstanding purchase of investment securities €000 4,987 587 (236) 2 5,340 593 (251) 3 5,685

Total €000 6,791 794 (320) 7 7,272 804 (342) 9 7,743
IFRS 7.25, 29 IAS 1.61

The carrying amounts disclosed above approximate fair value at the reporting date. All amounts are payable within one year.

Good Insurance (International) Limited

95

Notes to the consolidated financial statements
39. Insurance payables
Amounts payable on direct insurance business €000 At 1 January 2009 Arising during the year Utilised Foreign exchange adjustment At 31 December 2009 Arising during the year Utilised Foreign exchange adjustment At 31 December 2010 2,909 324 (109) 6 3,130 330 (133) 7 3,334 Amounts payable on assumed reinsurance business €000 1,578 181 (52) 4 1,711 185 (78) 5 1,823

Total €000 4,487 505 (161) 10 4,841 515 (211) 12 5,157
IFRS 7.25, 29 IAS 1.61

The carrying amounts disclosed above approximate fair value at the reporting date. All amounts are payable within one year.

40. Deferred revenue

IFRS 4.37(b) IAS 18 Appendix 14(b)(iii)

2010 €000 At 1 January Fees deferred Fees released to the income statement Foreign exchange adjustment Total deferred revenue The expected realisation of the deferred revenue is as follows: 2010 €000 Current Non–current Total deferred revenue 28 4,337 4,365 4,334 38 (9) 2 4,365

2009 €000 4,298 42 (7) 1 4,334
IAS 1.61

2009 €000 26 4,308 4,334

41. Trade and other payables
Note Payables to related parties Trade payables Accrued expenses Social security and other taxes Other 48(b) 2010 €000 1,191 13,001 2,418 638 59 17,307 The carrying amounts disclosed above reasonably approximate fair value at the reporting date. All amounts are payable within one year. 2009 €000 1,144 6,287 2,857 591 759 11,638
IFRS 7.25, 29 IAS 1.61

96

Good Insurance (International) Limited

Notes to the consolidated financial statements
42. Issued share capital
Authorised and issued share capital Authorised shares 2010 000 2009 000
IAS 1.79(a)(i)

Authorised share capital Ordinary shares of €1 each Ordinary shares issued and fully paid At 1 January 2009 Issued on 1 July 2009 for cash on exercise of share options (Note 19) At 31 December 2009 Issued on 30 April 2010 in exchange for issued share capital of Good American Life Co (Note 3) Issued on 1 July 2009 for cash on exercise of share options (Note 19) At 31 December 2010 Additional paid–in capital At 1 January 2009 Increase on 1 July 2009 for cash on exercise of share options Decrease due to transaction costs At 31 December 2009 Increase on 1 May 2010 because of issuance of share capital for the acquisition of Good American Life Co (Note 3) Increase on 1 July 2010 for cash on exercise of share options Decrease due to transaction costs At 31 December 2010

10,000 €000 7,382 3 7,385 1,250 3 8,638

10,000 €000 7,382 3 7,385 1,250 3 8,638 €000 1,000 47 (2) 1,045 26,609 63 (302) 27,415
IAS 1.79(a)(ii) IAS 1.78(e) IAS 1.79(a)(i)– (iv)

All ordinary shares issued are fully paid. All ordinary shares are held by external, non–related parties and companies to the Group.

43. Other equity instruments
On 3 January 2010, the Group issued €51,000 perpetual securities, which bear discretionary interest by the Group. The perpetual securities have no maturity date but can be redeemed at the option of the Group on 1 July 2013. The perpetual securities are classified as equity as there is no requirement to settle the obligation in cash or another financial asset. Interest payments are adjusted against retained earnings upon payment. A coupon interest of €1,000 was paid on 31 December 2010.
IAS 32.16 IAS 32.35

44. Risk management framework
(a) Governance framework The primary objective of the Group’s risk and financial management framework is to protect the Group’s shareholders from events that hinder the sustainable achievement of financial performance objectives, including failing to exploit opportunities. Key management recognises the critical importance of having efficient and effective risk management systems in place. The Group has established a risk management function with clear terms of reference from the board of directors, its committees and the associated executive management committees. This is supplemented with a clear organisational structure with documented delegated authorities and responsibilities from the board of directors to executive management committees and senior managers. Lastly, a Group policy framework which sets out the risk profiles for the Group, risk management, control and business conduct standards for the Group’s operations has been put in place. Each policy has a member of senior management charged with overseeing compliance with the policy throughout the Group.
Good Insurance (International) Limited
IFRS 7.33(b)

IFRS 7.33(b)

97

Notes to the consolidated financial statements
44. Risk management framework (cont’d)
(a) Governance framework (cont’d) The board of directors approves the Group risk management policies and meets regularly to approve any commercial, regulatory and organisational requirements of such policies. These policies define the Group’s identification of risk and its interpretation, limit structure to ensure the appropriate quality and diversification of assets, align underwriting and reinsurance strategy to the corporate goals, and specify reporting requirements. For example, following the regulatory changes brought about by the Euroland Financial Services Commission, which came into effect on 1 January 2000, the Group has placed a greater emphasis on assessment and documentation of risks and controls, including the development of an articulation of ‘risk appetite’. (b) Capital management objectives, policies and approach The Group has established the following capital management objectives, policies and approach to managing the risks that affect its capital position: To maintain the required level of stability of the Group thereby providing a degree of security to policyholders To allocate capital efficiently and support the development of business by ensuring that returns on capital employed meet the requirements of its capital providers and of its shareholders To retain financial flexibility by maintaining strong liquidity and access to a range of capital markets To align the profile of assets and liabilities taking account of risks inherent in the business To maintain financial strength to support new business growth and to satisfy the requirements of the policyholders, regulators and stakeholders To maintain strong credit ratings and healthy capital ratios in order to support its business objectives and maximise shareholders value The operations of the Group are also subject to regulatory requirements within the jurisdictions in which it operates. Such regulations not only prescribe approval and monitoring of activities, but also impose certain restrictive provisions (e.g., capital adequacy) to minimise the risk of default and insolvency on the part of the insurance companies to meet unforeseen liabilities as these arise. The Group and regulated entities within it have met all of these requirements throughout the financial year. In reporting financial strength, capital and solvency are measured using the rules prescribed by the Euroland Financial Services Authority (EFSA). These regulatory capital tests are based upon required levels of solvency, capital and a series of prudent assumptions in respect of the type of business written. The Group's capital management policy for its insurance and non–insurance business is to hold sufficient capital to cover the statutory requirements based on the EFSA directives, including any additional amounts required by the regulator. Approach to capital management The Group seeks to optimise the structure and sources of capital to ensure that it consistently maximises returns to the shareholders and policyholders. The Group’s approach to managing capital involves managing assets, liabilities and risks in a coordinated way, assessing shortfalls between reported and required capital levels (by each regulated entity) on a regular basis and taking appropriate actions to influence the capital position of the Group in the light of changes in economic conditions and risk characteristics. An important aspect of the Group's overall capital management process is the setting of target risk adjusted rates of return, which are aligned to performance objectives and ensure that the Group is focused on the creation of value for shareholders.
IAS 1.135(a)(iii) IAS 1.135(a) IAS 1.135(a) IFRS 7.33(b)

IAS 1.135(a)

IAS 1.135(d)

98

Good Insurance (International) Limited

Notes to the consolidated financial statements
44. Risk management framework (cont’d)
(b) Capital management objectives, policies and approach (cont’d) The primary source of capital used by the Group is equity shareholders’ funds and borrowings. The Group also utilises, where efficient to do so, sources of capital such as reinsurance and securitisation, in addition to more traditional sources of funding. The capital requirements are routinely forecast on a periodic basis and assessed against both the forecast available capital and the expected internal rate of return, including risk and sensitivity analyses. The process is ultimately subject to approval by the Board. The Group has developed an Individual Capital Assessment (ICA) framework to identify the risks and quantify their impact on the economic capital. The ICA estimates how much capital is required to reduce the risk of insolvency to a remote degree of probability. The ICA has also been considered in assessing the capital requirement. The Group has had no significant changes in its policies and processes to its capital structure during the past year from previous years.
IAS 1.135(c) IAS 1.135(b)

IAS 1.135(d)

Commentary
Paragraph 135(e) of IAS 1 requires that if an entity has not complied with its externally imposed capital requirements, the consequence of such non–compliance must be disclosed.

Available capital resources at 31 December 2010 Investment Non–life management services insurance €000 €000

Life insurance €000 Total shareholders' funds per financial statements Adjustments onto a regulatory basis Available capital resources

Other €000

Total €000

24,538 (4,025) 20,513

18,667 (5,000) 13,667

46,153 (300) 45,853

(16,528) (8,368) (24,896)

72,830 (17,693) 55,137

Available capital resources at 31 December 2009 Life insurance €000 Total shareholders' funds per financial statements Adjustments onto a regulatory basis Available capital resources Investment Non–life management services insurance €000 €000

Other €000

Total €000

2,044 (935) 1,109

13,734 (4,765) 8,969

26,634 (35) 26,599

(16,523) − (16,523)

25,889 (5,735) 20,154
IAS 1.136

Of the available life insurance capital resources, €8,206,000 (2009: €8,305,000) are restricted and may not be transferred to the other segments. The adjustments onto a regulatory basis represent assets inadmissible for regulatory reporting purposes. (c) Regulatory framework Regulators are primarily interested in protecting the rights of policyholders and monitor them closely to ensure that the Group is satisfactorily managing affairs for their benefit. At the same time, regulators are also interested in ensuring that the Group maintains an appropriate solvency position to meet unforeseen liabilities arising from economic shocks or natural disasters. The operations of the Group are subject to regulatory requirements within the jurisdictions in which it operates. Such regulations not only prescribe approval and monitoring of activities, but also impose certain restrictive provisions (e.g., capital adequacy) to minimise the risk of default and insolvency on the part of insurance companies to meet unforeseen liabilities as these arise.
Good Insurance (International) Limited

IFRS 7.33(a), (b)

IFRS 7.33 (b)

99

Notes to the consolidated financial statements
44. Risk management framework (cont’d)
(d) Asset liability management (ALM) framework Financial risks arise from open positions in interest rate, currency and equity products, all of which are exposed to general and specific market movements. The main risk that the Group faces, due to the nature of its investments and liabilities, is interest rate risk. The Group manages these positions within an ALM framework that has been developed to achieve long–term investment returns in excess of its obligations under insurance and investment contracts. The principal technique of the Group’s ALM is to match assets to the liabilities arising from insurance and investment contracts by reference to the type of benefits payable to contract holders. For each distinct category of liabilities, a separate portfolio of assets is maintained. The Group’s ALM is: Integrated with the management of the financial risks associated with the Group’s other financial assets and liabilities not directly associated with insurance and investment liabilities An integral part of the insurance risk management policy, to ensure in each period sufficient cash flow is available to meet liabilities arising from insurance and investment contracts.
IFRS 7.33(a), (b)

IFRS 7.33(b)

Commentary
Paragraph B6 of IFRS 7 permits entities to disclose the information requested by paragraphs 31 to 42 of IFRS 7 on the nature and extent of risks arising from financial instruments either in the financial statements or incorporated by cross–reference to some other statement, such as a management commentary, that is available to users of the financial statements on the same terms as the financial statements and at the same time. The Group has elected to disclose this information in the financial statements.

45. Insurance and financial risk
(a) Insurance risk The principal risk the Group faces under insurance contracts is that the actual claims and benefit payments or the timing thereof, differ from expectations. This is influenced by the frequency of claims, severity of claims, actual benefits paid and subsequent development of long–term claims. Therefore, the objective of the Group is to ensure that sufficient reserves are available to cover these liabilities. The risk exposure is mitigated by diversification across a large portfolio of insurance contracts and geographical areas. The variability of risks is also improved by careful selection and implementation of underwriting strategy guidelines, as well as the use of reinsurance arrangements. The Group purchases reinsurance as part of its risks mitigation programme. Reinsurance ceded is placed on both a proportional and non–proportional basis. The majority of proportional reinsurance is quota–share reinsurance which is taken out to reduce the overall exposure of the Group to certain classes of business. Non–proportional reinsurance is primarily excess–of–loss reinsurance designed to mitigate the group’s net exposure to catastrophe losses. Retention limits for the excess–of–loss reinsurance vary by product line and territory. Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision and are in accordance with the reinsurance contracts. Although the Group has reinsurance arrangements, it is not relieved of its direct obligations to its policyholders and thus a credit exposure exists with respect to ceded insurance, to the extent that any reinsurer is unable to meet its obligations assumed under such reinsurance agreements. The Group’s placement of reinsurance is diversified such that it is neither dependent on a single reinsurer nor are the operations of the Group substantially dependent upon any single reinsurance contract. There is no single counterparty exposure that exceeds 5% of total reinsurance assets at the reporting date.
IFRS 4.38 IFRS 4.39(a)

IFRS 4.39(a)

IFRS 4.39(a)

100

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
(a) Insurance risk (cont’d) (1) Life insurance contracts (including investment contracts with DPF) Life insurance contracts offered by the Group include: whole life, term assurance, unitised pensions, guaranteed annuity pensions, pure endowment pensions and mortgage endowments. Investment contracts with DPF offered by the Group are unitised pensions. Whole life and term assurance are conventional regular premium products when lump sum benefits are payable on death or permanent disability. Few contracts have a surrender value. Pensions are contracts when retirement benefits are expressed in the form of an annuity payable at retirement age. If death occurs before retirement, contracts generally return the value of the fund accumulated or premiums. Most contracts give the policyholder the option at retirement to take a cash sum at guaranteed conversion rates allowing the policyholders the option of taking the more valuable of the two. Under unitised pensions, a percentage of the premium is applied towards the purchase of accumulation units in one or more of the internal linked funds. Provision of additional death benefits may be provided by cancellation of units or through supplementary term assurance contracts. Certain personal pension plans also include contribution protection benefits that provide for payment of contributions on behalf of policyholders in periods of total disability. For contracts with DPF, changes in the level of pensions are based on the rate of return declared annually by the insurer which is not guaranteed. Guaranteed annuities are single premium products which pay a specified payment to the policyholder whilst they and/or their spouse are still alive. Payments are generally either fixed or increased each year at a specified rate or in line with the rate of inflation. Most contracts guarantee an income for a minimum period, usually of five years, irrespective of death. Death benefits of endowment products are subject to a guaranteed minimum amount. The maturity value usually depends on the investment performance of the underlying assets. For contracts with DPF the guaranteed minimum may be increased by the addition of bonuses. These are set at a level that takes account of expected market fluctuations, such that the cost of the guarantee is generally met by the investment performance of the assets backing the liability. However, in circumstances when there has been a significant fall in investment markets, the guaranteed maturity benefits may exceed investment performance and these guarantees become valuable to the policyholder. Certain pure endowment pensions contain the option to apply the proceeds towards the purchase of an annuity earlier than the date shown on the contract or to convert the contract to ‘paid up’ on guaranteed terms. The majority of the mortgage endowment contracts offered by the Group has minimum maturity values subject to certain conditions being satisfied. The main risks that the Group is exposed to are as follows: Mortality risk – risk of loss arising due to policyholder death experience being different than expected Morbidity risk – risk of loss arising due to policyholder health experience being different than expected Longevity risk – risk of loss arising due to the annuitant living longer than expected Investment return risk – risk of loss arising from actual returns being different than expected Expense risk – risk of loss arising from expense experience being different than expected Policyholder decision risk – risk of loss arising due to policyholder experiences (lapses and surrenders) being different than expected These risks do not vary significantly in relation to the location of the risk insured by the Group, type of risk insured or by industry.
IFRS 4.39(c)(ii) IFRS 4.38 IFRS 4.38

IFRS 4.38

IFRS 4.38

IFRS 4.38

IFRS 4.38

IFRS 4.39(a)

Good Insurance (International) Limited

101

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
(a) Insurance risk (cont’d) The Group’s underwriting strategy is designed to ensure that risks are well diversified in terms of type of risk and level of insured benefits. This is largely achieved through diversification across industry sectors and geography, the use of medical screening in order to ensure that pricing takes account of current health conditions and family medical history, regular review of actual claims experience and product pricing, as well as detailed claims handling procedures. Underwriting limits are in place to enforce appropriate risk selection criteria. For example, the Group has the right not to renew individual policies, it can impose deductibles and it has the right to reject the payment of fraudulent claims. Insurance contracts also entitle the Group to pursue third parties for payment of some or all costs. The Group further enforces a policy of actively managing and promptly pursuing claims, in order to reduce its exposure to unpredictable future developments that can negatively impact the Group. For contracts when death or disability is the insured risk, the significant factors that could increase the overall frequency of claims are epidemics, widespread changes in lifestyle and natural disasters, resulting in earlier or more claims than expected. Group wide reinsurance limits of €1,000,000 on any single life insured and €500,000 on all high risk individuals insured are in place. For annuity contracts, the most significant factor is continued improvement in medical science and social conditions that would increase longevity. The Group reinsures its annuity contracts on a quota share basis to mitigate its risk. For contracts with DPF, the participating nature of these contracts results in a significant portion of the insurance risk being shared with the insured party. For contracts without DPF the Group charges for death and disability risks on a quarterly basis. Under these contracts the Group has the right to alter these charges to take account of death and disability experience, thereby mitigating the risks to the Group. The insurance risk described above is also affected by the contract holder’s right to pay reduced premiums or no future premiums, to terminate the contract completely or to exercise guaranteed annuity options. As a result, the amount of insurance risk is also subject to contract holder behaviour. The following tables show the concentration of life insurance and investment contract liabilities with DPF by type of contract. 31 December 2010
Gross Total gross insurance liabilities and investment contract liabilities with DPF €000 37,433 32,003 24,289 23,074 9,249 126,048 7,366 7,366 133,414 Reinsurance Total reinsurance of insurance liabilities and investment contract liabilities with DPF €000 (4,784) (3,750) (3,222) (3,018) (2,660) (17,434) (2,382) (2,382) (19,816)
IFRS 4.38 IFRS 4.39(a)

IFRS 4.39(a)

IFRS 4.39(a)

IFRS 4.39(a)

IFRS 4.39(a)

IFRS 4.39(c)(ii)

IFRS 4.39(c)(ii)

Insurance and investment contract liabilities with DPF €000 Whole life Term assurance Guaranteed annuity products Pure endowment pensions Mortgage endowment Total life insurance Unitised pensions Total investment contracts with DPF Total 14,459 12,721 10,252 9,864 2,282 49,578 7,366 7,366 56,944

Insurance contract liabilities without DPF €000 22,974 19,282 14,037 13,210 6,967 76,470 − − 76,470

Insurance contract and investment contract liabilities with DPF €000 (1,531) (1,200) (1,031) (966) (854) (5,582) (2,382) (2,382) (7,964)

Insurance contract liabilities without DPF €000 (3,253) (2,550) (2,191) (2,052) (1,806) (11,852) −

Net €000 32,649 28,253 21,067 20,056 6,589 108,614 4,984 4,984 113,598


(11,852)

102

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
(a) Insurance risk (cont’d) 31 December 2009
Gross Total gross insurance liabilities and investment contract liabilities with DPF €000 24,716 20,299 12,971 11,642 9,058 78,686 4,281 4,281 82,967 Reinsurance Total reinsurance of insurance liabilities and investment contract liabilities with DPF €000 (4,483) (3,574) (3,242) (2,910) (2,268) (16,477) (2,338) (2,338) (18,815)
IFRS 4.38

Insurance and investment contract liabilities with DPF €000 Whole life Term assurance Guaranteed annuity products Pure endowment pensions Mortgage endowment Total life insurance Unitised pensions Total investment contracts with DPF Total 7,909 6,496 4,151 3,725 2,899 25,180 4,281 4,281 29,461

Insurance contract liabilities without DPF €000 16,807 13,803 8,820 7,917 6,159 53,506 −

Insurance contract and investment contract liabilities with DPF €000 (1,435) (1,144) (1,037) (931) (727) (5,274) (2,338) (2,338) (7,612)

Insurance contract liabilities without DPF €000 (3,048) (2,430) (2,205) (1,979) (1,541) (11,203) −

Net €000 20,233 16,725 9,729 8,732 6,790 62,209 1,943 1,943 64,152
IFRS 4.39(c)(ii)


53,506


(11,203)

The geographical concentration of the group’s life insurance liabilities and investment contract liabilities with DPF is shown below. The disclosure is based on the countries where the business is written. The analysis would not be materially different if based on the countries in which the counterparties are situated. 31 December 2010
Gross Total gross insurance liabilities and investment contract liabilities with DPF €000 44,572 25,110 56,366 126,048 1,628 1,741 3,997 7,366 133,414 Reinsurance Total reinsurance of insurance liabilities and investment contract liabilities with DPF €000 (7,819) (6,278) (3,337) (17,434) (895) (957) (530) (2,382) (19,816)

IFRS 4.39(c)(ii)

Insurance and investment contract liabilities with DPF €000 Euroland United Kingdom United States Total life insurance Euroland United Kingdom United States Total investment contracts with DPF Total 7,366 56,944 14,263 8,035 27,280 49,578 1,628 1,741 3,997

Insurance contract liabilities without DPF €000 30,309 17,075 29,086 76,470 − − −

Insurance contract and investment contract liabilities with DPF €000 (2,502) (2,009) (1,071) (5,582) (895) (957) (530) (2,382) (7,964)

Insurance contract liabilities without DPF €000 (5,317) (4,269) (2,266) (11,852) − − −

Net €000 36,753 18,832 53,029 108,614 733 784 3,467 4,984 113,598


76,470


(11,852)

Good Insurance (International) Limited

103

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
(a) Insurance risk (cont’d) 31 December 2009
Gross Reinsurance Total reinsurance of insurance liabilities and investment contract liabilities with DPF €000 (7,343) (5,813) (3,321) (16,477) (964) (884) (490) (2,338) (18,815)
IFRS 4.38 IFRS 4.39(c)(ii)

Insurance and investment contract liabilities with DPF €000 Euroland United Kingdom United States Total life insurance Euroland United Kingdom United States Total investment contracts with DPF Total 4,281 29,461 13,489 7,440 4,251 25,180 1,754 1,608 919

Insurance contract liabilities without DPF €000 28,663 15,809 9,034 53,506 − − −

Total gross insurance liabilities and investment contract liabilities €000 42,152 23,249 13,285 78,686 1,754 1,608 919 4,281 82,967

Insurance contract and investment contract liabilities with DPF €000 (2,350) (1,860) (1,064) (5,274) (964) (884) (490) (2,338) (7,612)

Insurance contract liabilities without DPF €000 (4,993) (3,953) (2,257) (11,203) − − −

Net €000 34,809 17,436 9,964 62,209 790 724 429 1,943 64,152
IFRS 4.37(c)


53,506


(11,203)

Key assumptions Material judgment is required in determining the liabilities and in the choice of assumptions. Assumptions in use are based on past experience, current internal data, external market indices and benchmarks which reflect current observable market prices and other published information. Assumptions and prudent estimates are determined at the date of valuation and no credit is taken for possible beneficial effects of voluntary withdrawals. Assumptions are further evaluated on a continuous basis in order to ensure realistic and reasonable valuations. The key assumptions to which the estimation of liabilities is particularly sensitive are as follows: Mortality and morbidity rates Assumptions are based on standard industry and national tables, according to the type of contract written and the territory in which the insured person resides. They reflect recent historical experience and are adjusted when appropriate to reflect the Group’s own experiences. An appropriate, but not excessive, prudent allowance is made for expected future improvements. Assumptions are differentiated by sex, underwriting class and contract type. An increase in rates will lead to a larger number of claims (and claims could occur sooner than anticipated), which will increase the expenditure and reduce profits for the shareholders. Longevity Assumptions are based on standard industry and national tables, adjusted when appropriate to reflect the Group’s own risk experience. An appropriate but not excessive prudent allowance is made for expected future improvements. Assumptions are differentiated by sex, underwriting class and contract type. An increase in longevity rates will lead to an increase in the number of annuity payments made, which will increase the expenditure and reduce profits for the shareholders.

IFRS 4.37(c)

104

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
Key assumptions (cont’d) Investment return The weighted average rate of return is derived based on a model portfolio that is assumed to back liabilities, consistent with the long–term asset allocation strategy. These estimates are based on current market returns as well as expectations about future economic and financial developments. An increase in investment return would lead to a reduction in expenditure and an increase in profits for the shareholders. Expenses Operating expenses assumptions reflect the projected costs of maintaining and servicing in–force policies and associated overhead expenses. The current level of expenses is taken as an appropriate expense base, adjusted for expected expense inflation if appropriate. An increase in the level of expenses would result in an increase in expenditure thereby reducing profits for the shareholders. Lapse and surrender rates Lapses relate to the termination of policies due to non–payment of premiums. Surrenders relate to the voluntary termination of policies by policyholders. Policy termination assumptions are determined using statistical measures based on the Group’s experience and vary by product type, policy duration and sales trends. An increase in lapse rates early in the life of the policy would tend to reduce profits for shareholders, but later increases are broadly neutral in effect. Discount rate Life insurance liabilities are determined as the sum of the discounted value of the expected benefits and future administration expenses directly related to the contract, less the discounted value of the expected theoretical premiums that would be required to meet these future cash outflows. Discount rates are based on current industry risk rates, adjusted for the Group’s own risk exposure. A decrease in the discount rate will increase the value of the insurance liability and therefore reduce profits for the shareholders.

Good Insurance (International) Limited

105

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
The assumptions that have the greatest effect on the statement of financial position and income statement of the Group are listed below: Portfolio assumptions by type of business impacting net liabilities
IFRS 4.37(c)

Mortality and morbidity rates 2010 2009

Investment return 2010 2009

Lapse and surrender rates 2010 2009

Discount rates 2010 2009

With fixed and guaranteed terms and with DPF contracts Life insurance Pensions
(1)80– (1)70–

100% AM/F92 (1)80– 100% AM/F92

100% AM/F92 (1)70– 100% AM/F92

3.5% – 4% 4%

3% – 3.5% 33.5%

3.5% – 4% 4%

3% – 3.5% 3.5%

4.5% 4.5%

4% 4%

Without DPF contracts Term assurance Males Females

(2)43–

(2)40–

145% TM92 (2)55– 160% TF92

142% TM92 (2)50– 150% TF92

3.5% – 4% 4%

3% – 3.5% 3.5%

4.5% 4.5%

4% 4%

4.5% 4.5%

4% 4%

Pension Annuities Males Females

(3)95% PMA92 (3)85% PFA92

(3)90% PMA92 (3)80% PFA92

4% 4%

3.5% 3.5%

4.5% 4.5%

4% 4%

4.5% 4.5%

4% 4%

(1) (2) (3)

Industry mortality and morbidity experience tables for endowment assurance policies that were observed in Euroland and America between 1990 and 1994. Industry mortality and morbidity experience tables for term assurance policies that were observed in Euroland and America between 1990 and 1994. Industry mortality and morbidity experience tables for annuity policies that were observed in Euroland and America between 1990 and 1994.
IFRS 4.39I(i), 39A(a)

Sensitivities The analysis which follows is performed for reasonably possible movements in key assumptions with all other assumptions held constant, showing the impact on gross and net liabilities, profit before tax and equity. The correlation of assumptions will have a significant effect in determining the ultimate claims liabilities, but to demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual basis. It should be noted that movements in these assumptions are non–linear. Sensitivity information will also vary according to the current economic assumptions, mainly due to the impact of changes to both the intrinsic cost and time value of options and guarantees. When options and guarantees exist, they are the main reason for the asymmetry of sensitivities.

106

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
Life insurance contracts 31 December 2010 Change in assumptions Impact on gross liabilities €000 3,183 2,945 (3,112) 2,971 2,900 (2,745) Impact on gross liabilities €000 2,951 2,700 (2,901) 2,765 2,700 (2,551) Impact on net liabilities €000 2,387 2,209 (2,334) 2,228 2,175 (2,059) Impact on net liabilities €000 2,213 2,025 (2,176) 2,074 2,205 (1,913) Impact on profit before tax €000 (597) (552) 584 (557) (544) 515 Impact on profit before tax €000 (553) (506) 544 (518) (506) 478 Impact on equity* €000 (449) (428) 448 (438) (426) 397 Impact on equity* €000 (427) (386) 409 (399) (387) 363

Mortality/morbidity Longevity Investment return Expenses Lapse and surrenders rate Discount rate 31 December 2009

+ 10 % – 10 % +1% + 10 % + 10 % +1% Change in assumptions

Mortality/morbidity Longevity Investment return Expenses Lapse and surrenders rate Discount rate Investment contracts with DPF 31 December 2010

+ 10 % – 10 % +1% + 10 % + 10 % +1%

Change in assumptions

Increase/ (decrease) on gross liabilities €000 457 356 (446) 335 290 (245) Increase/ (decrease) on gross liabilities €000 387 311 (365) 221 212 (167)

Increase/ (decrease) on net liabilities €000 206 160 (201) 151 131 (110) Increase/ (decrease) on net liabilities €000 174 140 (164) 99 95 (75)

Increase/ (decrease) on profit before tax €000 (51) (40) 50 (38) (33) 28 Increase/ (decrease) on profit before tax €000 (44) (35) 41 (25) (24) 19

Increase/ (decrease) on equity* €000 (39) (31) 38 (29) (25) 21 Increase/ (decrease) on equity* €000 (33) (27) 31 (19) (18) 14

Mortality/morbidity Longevity Investment return Expenses Lapse and surrenders rate Discount rate 31 December 2009

+ 10 % – 10 % +1% + 10 % + 10 % +1%

Change in assumptions

Mortality/morbidity Longevity Investment return Expenses Lapse and surrenders rate Discount rate

+ 10 % – 10 % +1% + 10 % + 10 % +1%

*Impact on equity reflects adjustments for tax, when applicable.

The method used and significant assumptions made for deriving sensitivity information did not change from the previous period.

Commentary
Paragraph 39(d)(ii) of IFRS 4 and paragraph 39A(a) of IFRS 4 permit the use of Embedded Value (EV) sensitivity disclosures instead of IFRS 7 sensitivity disclosures for insurance and market risk sensitivities. This disclosure option is only allowed if insurance and market risk sensitivities are managed on an EV basis. Another allowed alternative is to base sensitivity disclosures on Economic Capital measures. This is also only allowed if insurance and market risk sensitivities are actually managed on that basis. For illustrative purposes, EV sensitivity disclosures, based on observed best practice disclosures in the insurance industry, have been provided in Appendix 3.
Good Insurance (International) Limited 107

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
(2) Non–life insurance contracts (which comprise general insurance and healthcare) The Group principally issues the following types of general insurance contracts: motor, household, commercial and business interruption. Healthcare contracts provide medical expense coverage to policyholders and are not guaranteed renewable. Risks under non–life insurance policies usually cover twelve months duration. For general insurance contracts, the most significant risks arise from climate changes, natural disasters and terrorist activities. For longer tail claims that take some years to settle, there is also inflation risk. For healthcare contracts the most significant risks arise from lifestyle changes, epidemics and medical science and technology improvements. These risks do not vary significantly in relation to the location of the risk insured by the Group, type of risk insured and by industry. The above risk exposure is mitigated by diversification across a large portfolio of insurance contracts and geographical areas. The variability of risks is improved by careful selection and implementation of underwriting strategies, which are designed to ensure that risks are diversified in terms of type of risk and level of insured benefits. This is largely achieved through diversification across industry sectors and geography. Furthermore, strict claim review policies to assess all new and ongoing claims, regular detailed review of claims handling procedures and frequent investigation of possible fraudulent claims are all policies and procedures put in place to reduce the risk exposure of the Group. The Group further enforces a policy of actively managing and promptly pursuing claims, in order to reduce its exposure to unpredictable future developments that can negatively impact the business. Inflation risk is mitigated by taking expected inflation into account when estimating insurance contract liabilities. The Group has also limited its exposure by imposing maximum claim amounts on certain contracts as well as the use of reinsurance arrangements in order to limit exposure to catastrophic events (e.g., hurricanes, earthquakes and flood damage). The purpose of these underwriting and reinsurance strategies is to limit exposure to catastrophes based on the Group’s risk appetite as decided by management. The overall aim is currently to restrict the impact of a single catastrophic event to approximately 50% of shareholders’ equity on a gross basis and 10% on a net basis. In the event of such a catastrophe, counterparty exposure to a single reinsurer is estimated not to exceed 2% of shareholders’ equity. The Board may decide to increase or decrease the maximum tolerances based on market conditions and other factors. The Group uses both its own and commercially available proprietary risk management software to assess catastrophe exposure. However, there is always a risk that the assumptions and techniques used in these models are unreliable or that claims arising from an unmodelled event are greater than those arising from a modelled event. As a further guide to the level of catastrophe exposure written by the Group, the following table shows hypothetical claims arising for various realistic disaster scenarios based on the Group’s average risk exposures during 2009. Modelled industry claims €000 Euroland windstorm California earthquake Euroland earthquake 50,000,000 70,000,000 40,000,000 Estimated gross Claims €000 10,000 8,000 7,000 Estimated net claims €000 2,000 1,500 1,200
IFRS 4.38

IFRS 4.39(a)

IFRS 4.39(c)(ii)

IFRS 4.39(a)

IFRS 4.39(a)

IFRS 4.39(a)

108

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
The table below sets out the concentration of non–life insurance contract liabilities by type of contract: 31 December 2010 Gross Reinsurance liabilities of liabilities €000 €000 Motor Household Commercial Business interruption Healthcare Total 11,134 10,659 8,457 7,890 12,524 50,664 (2,784) (2,665) (2,114) (1,973) (3,130) (12,666) 31 December 2009 Gross Reinsurance liabilities of liabilities €000 €000 10,956 10,232 7,988 6,411 11,987 47,574 (2,739) (2,558) (1,997) (1,603) (2,996) (11,893)
IFRS 4.39(c)(ii)

Net liabilities €000 8,350 7,994 6,343 5,917 9,394 37,998

Net liabilities €000 8,217 7,674 5,991 4,808 8,991 35,681
IFRS 4.39(c)(ii)

The geographical concentration of the Group’s non–life insurance contract liabilities is noted below. The disclosure is based on the countries where the business is written. The analysis would not be materially different if based on the countries in which the counterparties are situated. Non–life insurance contracts 31 December 2010 Gross Reinsurance liabilities of liabilities €000 €000 Euroland United Kingdom International Total Key assumptions The principal assumption underlying the liability estimates is that the Group’s future claims development will follow a similar pattern to past claims development experience. This includes assumptions in respect of average claim costs, claim handling costs, claim inflation factors and claim numbers for each accident year. Additional qualitative judgments are used to assess the extent to which past trends may not apply in the future, for example: once–off occurrence, changes in market factors such as public attitude to claiming, economic conditions, as well as internal factors such as portfolio mix, policy conditions and claims handling procedures. Judgment is further used to assess the extent to which external factors such as judicial decisions and government legislation affect the estimates. Other key circumstances affecting the reliability of assumptions include variation in interest rates, delays in settlement and changes in foreign currency rates. Sensitivities The non–life insurance claim liabilities are sensitive to the key assumptions that follow. It has not been possible to quantify the sensitivity of certain assumptions such as legislative changes or uncertainty in the estimation process. The following analysis is performed for reasonably possible movements in key assumptions with all other assumptions held constant, showing the impact on gross and net liabilities, profit before tax and equity. The correlation of assumptions will have a significant effect in determining the ultimate claims liabilities, but to demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual basis. It should be noted that movements in these assumptions are non–linear. 22,798 17,732 10,134 50,664 (5,700) (4,433) (2,533) (12,666) 31 December 2009 Gross Reinsurance liabilities of liabilities €000 €000 21,408 16,651 9,515 47,574 (5,237) (4,329) (2,327) (11,893)

Net liabilities €000 17,098 13,299 7,601 37,998

Net liabilities €000 16,171 12,322 7,188 35,681
IFRS 4.37(c)

IFRS 4.39(c)(i), 39A(a)

Good Insurance (International) Limited

109

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
31 December 2010 Change in assumptions Impact on gross liabilities €000 1,798 1,641 1,521 Impact on net liabilities €000 1,349 1,231 1,141 Impact on profit before tax €000 (337) (308) (285) Impact on equity* €000 (263) (235) (223)

Average claim cost Average number of claims Average claim settlement period

+ 10 % + 10 % Reduce from 30 months to 24 months Change in assumptions

31 December 2009

Impact on gross liabilities €000 1,658 1,522 1,487

Impact on net liabilities €000 1,244 1,142 1,115

Impact on profit before tax €000 (311) (285) (279)

Impact on equity* €000 (244) (223) (213)

Average claim cost Average number of claims Average claim settlement period

+ 10 % + 10 % Reduce from 36 months to 30 months

* Impact on equity reflects adjustments for tax, when applicable

The method used for deriving sensitivity information and significant assumptions did not change from the previous period. Claims development table The following tables show the estimates of cumulative incurred claims, including both claims notified and IBNR for each successive accident year at each reporting date, together with cumulative payments to date. The cumulative claims estimates and cumulative payments are translated to euros at the rate of exchange that applied at the end of the accident year. The impact of exchange differences is shown at the bottom of the table. The Group has taken advantage of the transitional rules of IFRS 4 that permit only five years of information to be disclosed upon adoption of IFRS. The claims development information disclosed is being increased from five years to ten years over the period 2006–2010. As required by Euroland GAAP, in setting claims provisions the Group gives consideration to the probability and magnitude of future experience being more adverse than assumed and exercises a degree of caution in setting reserves where there is considerable uncertainty. In general, the uncertainty associated with the ultimate claims experience in an accident year is greatest when the accident year is at an early stage of development and the margin necessary to provide the necessary confidence in the provisions adequacy is relatively at its highest. As claims develop, and the ultimate cost of claims becomes more certain, the relative level of margin maintained should decrease. However, due to the uncertainty inherited in the estimation process, the actual overall claim provision may not always be in surplus. In 2010, there has been an overall deficit of €2,547,000 (2009: deficit of €2,246,000) due primarily to additional business interruption claims on the 2008 accident year (2009: motor liability claims arising from unfavourable court rulings on the 2007 accident years).
IFRS 4.44 IFRS 4.39(c)(iii)

110

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
Gross non–life insurance contract outstanding claims provision for 2010:
Before 2002 Accident year At end of accident year One year later Two years later Three years later Four years later Five years later Six years later Seven years later Eight years later Current estimate of cumulative claims incurred At end of accident year One year later Two years later Three years later Four years later Five years later Six years later Seven years later Eight years later Cumulative payments to date Gross non–life insurance contract l outstanding claims provision at 31 December 2010 at original exchange rates Foreign exchange adjustment Total gross non–life insurance outstanding claims provision per the statement of financial position Current estimate of surplus/(deficiency) % Surplus/(deficiency) of initial gross reserve Note €000
IFRS 4.39(c)(iii)

2002 €000 12,254 12,587 12,752 12,623 12,258 12,325 13,258 13,427 13,443

2003 €000 12,235 12,436 12,517 12,634 12,587 13,584 13,598 13,612

2004 €000 15,320 15,486 15,522 15,615 15,373 15,687 15,990

2005 €000 14,078 14,103 14,285 14,635 15,832 15,907

2006 €000 15,967 16,138 16,250 16,526 16,012

2007 €000 16,660 16,733 16,607 17,754

2008 €000 15,093 17,587 18,281

2009 €000 14,493 15,543

2010 €000 14,495

Total €000

13,443 (9,500) (9,541) (10,554) (10,821) (12,125) (12,754) (12,854) (13,024) (13,275)

13,612 (9,235) (9,452)

15,990 (8,904) (9,211)

15,907 (7,134) (7,267) (7,825) (10,349) (11,847) (12,597)

16,012 (6,939) (8,054)

17,754 (7,549) (9,949)

18,281 (7,750) (9,395) (10,311)

15,543 (6,851) (8,106)

14,495 (5,681)

141,037

(10,152) (10,434) (10,631) (11,072) (11,492) (12,099) (12,562) (13,442) (12,662) (13,995) (13,390)

(8,209) (10,233) (10,602) (11,899) (11,792)

(13,275)

(13,390) (13,995)

(12,597)

(11,792) (11,899)

(10,311)

(8,106)

(5,681) (101,046)

203

168

222

1,995

3,310

4,220

5,855

7,970

7,437

8,814

40,194

1

3

2

1

2

2

1

2

3

17

33(b)(1)

203

169

225

1,997

3,311

4,222

5,857

7,971

7,439

8,817

40,211

(1,189)

(1,377)

(670)

(1,829)

(45)

(1,094)

(3,188)

(1,050)

(9%)

(10%)

(4%)

(11%)

(6%)

(17%)

(7%)

Good Insurance (International) Limited

111

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
Net non–life insurance contract outstanding claims provision for 2010:
Before 2002 Accident year At end of accident year One year later Two years later Three years later Four years later Five years later Six years later Seven years later Eight years later Current estimate of cumulative claims incurred At end of accident year One year later Two years later Three years later Four years later Five years later Six years later Seven years later Eight years later Cumulative payments to date Net non–life insurance contract outstanding claims provision at 31 December 2010 at original exchange rates Foreign exchange adjustment Total net non–life insurance outstanding claims provision per the statement of financial position Current estimate of surplus/(deficiency) % Surplus/(deficiency) of initial gross reserve Note €000 2002 €000 10,003 10,070 10,002 9,898 9,406 9,860 10,606 10,802 10,835 2003 €000 8,288 8,388 8,372 8,619 8,588 9,067 9,170 9,520 2004 €000 10,690 10,495 10,442 10,211 10,780 11,015 11,035 2005 €000 11,159 11,177 11,262 11,576 11,724 12,780 2006 €000 11,475 11,604 11,688 11,895 11,921 2007 €000 13,228 13,627 13,204 13,529 2008 €000 11,315 12,493 12,920 2009 €000 10,868 11,830 2010 €000 11,209 Total €000
IFRS 4.39(c)(iii)

10,835 (7,600) (7,633) (8,443) (8,657) (8,900) (10,403) (10,483) (10,619) (10,823) (10,823)

9,520 (7,388) (7,562) (8,122) (8,505) (8,627) (8,683) (8,563) (9,410)

11,035 (6,678) (6,908) (7,076) (7,179) (7,949) (8,755) (9,930)

12,780 (5,351) (5,450) (5,494) (6,262) (9,175) (10,630)

11,921 (5,354) (5,291) (7,157) (8,002) (9,901)

13,529 (5,239) (6,359) (7,986) (8,867)

12,920 (6,254) (7,356) (7,472)

11,830 (4,988) (5,083)

11,209 (3,398)

105,579

(9,410)

(9,930)

(10,630)

(9,901)

(8,867)

(7,472)

(5,083)

(3,398)

(75,514)

89

12

110

1105

2,150

2,020

4,662

5,448

6,747

7,811

30,154

(2)

1

1

1

1

1

1

4

33(b)(1)

87

13

111

1,105

2,151

2,020

4,663

5,449

6,748

7,811

30,158

(832)

(1,232)

(345)

(1,621)

(446)

(301)

(1,605)

(962)

(8%)

(13%)

(3%)

(13%)

(4%)

(2%)

(12%)

(8%)

Commentary
The Group has elected to present its claims development on an accident year basis as this is consistent with how the business is managed. IFRS 4 does not prescribe the format of the disclosure of claims development and the presentation of this information by underwriting year is also permissible. Additionally, IFRS 4 does not explain how entities should present exchange differences or business combinations in the claims development disclosure. The Group has elected to translate estimated claims and claims payments at the rate of exchange applicable at the end of each accident year. Alternatively, entities could translate claim estimates or payments at the rate of exchange applying at the reporting date or by some other method.

112

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
(b) Financial risks (1) Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by failing to discharge an obligation. The following policies and procedures are in place to mitigate the Group’s exposure to credit risk: A Group credit risk policy which sets out the assessment and determination of what constitutes credit risk for the Group. Compliance with the policy is monitored and exposures and breaches are reported to the Group risk committee. The policy is regularly reviewed for pertinence and for changes in the risk environment. Net exposure limits are set for each counterparty or group of counterparties, geographical and industry segment (i.e., limits are set for investments and cash deposits, foreign exchange trade exposures and minimum credit ratings for investments that may be held). The Group further restricts its credit risk exposure by entering into master netting arrangements with counterparties with which it enters into significant volumes of transactions. However, such arrangements do not generally result in an offset of balance sheet assets and liabilities, as transactions are usually settled on a gross basis. However, the credit risk associated with such balances is reduced in the event of a default, when such balances are settled on a net basis. At 31 December 2010, the Group had the right to set off financial liabilities amounting to €10,789,000 (2009: €8,563,000) against financial assets with a fair value of €11,265,000 (2009: €10,582,000) under such arrangements. Guidelines determine when to obtain collateral and guarantees (i.e., certain derivative transactions are covered by collateral and derivatives are only taken out with counterparties with a suitable credit rating). The Group maintains strict control limits by amount and terms on net open derivative positions. The amounts subject to credit risk are limited to the fair value of ‘in the money’ financial assets against which the Group either obtains collateral from counterparties or requires margin deposits. Collateral may be sold or repledged by the Group and is repayable if the contract terminates or the contract’s fair value falls. Reinsurance is placed with counterparties that have a good credit rating and concentration of risk is avoided by following policy guidelines in respect of counterparties’ limits that are set each year by the board of directors and are subject to regular reviews. At each reporting date, management performs an assessment of creditworthiness of reinsurers and updates the reinsurance purchase strategy, ascertaining suitable allowance for impairment. The Group sets the maximum amounts and limits that may be advanced to corporate counterparties by reference to their long–term credit ratings. The credit risk in respect of customer balances incurred on non–payment of premiums or contributions will only persist during the grace period specified in the policy document or trust deed until expiry, when the policy is either paid up or terminated. Commission paid to intermediaries is netted off against amounts receivable from them to reduce the risk of doubtful debts. The Group issues unit–linked investment policies in a number of its operations. In the unit–linked business, the policyholder bears the investment risk on the assets held in the unit–linked funds, as the policy benefits are directly linked to the value of the assets in the fund. Therefore, the Group has no material credit risk on unit– linked financial assets.
IFRS 7.33(a)

IFRS 7.33(b)

Good Insurance (International) Limited

113

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
Credit exposure The table below shows the maximum exposure to credit risk for the components of the statement of financial position and items such as future commitments. The maximum exposure is shown gross, before the effect of mitigation through the use of master netting or collateral agreements and the use of credit derivatives. Other Unit–linked €000 €000 Total €000
IFRS 7.36(a)

IFRS 7.36(a)

31 December 2010 Financial instruments Derivative financial assets Derivative financial instruments held–for–trading Cash flow hedges Fair value hedges Held–to–maturity financial assets Debt securities Loans and receivables Available–for–sale financial assets Equity securities Debt securities Financial assets at fair value through profit or loss Equity securities Debt securities Mutual funds Credit institutions Reinsurance assets Insurance receivables Cash and cash equivalents Total credit risk exposure

Notes

25 677 867 638 26(a) 26(b) 26(c) 2,104 7,264 71,070 38,607 26(d) 10,768 5,607 − − 27 29 32 36,521 35,272 22,723 232,118 4,796 5,359 7,730 989 − − − 18,874 15,564 10,966 7,730 989 36,521 35,272 22,723 250,992 Total €000
IFRS 7.34(a)

− − − − − − −

677 867 638 2,104 7,264 71,070 38,607

31 December 2009 Financial instruments Derivative financial assets Derivative financial instruments held–for–trading Cash flow hedges Fair value hedges Held–to–maturity financial assets Debt securities Loans and receivables Available–for–sale financial assets Equity securities Debt securities Financial assets at fair value through profit or loss Equity securities Debt securities Mutual funds Credit institutions Reinsurance assets Insurance receivables Cash and cash equivalents Total credit risk exposure

Notes

Other Unit–linked €000 €000

IFRS 7.36(a)

25 187 593 460 26(a) 26(b) 26(c) 1,677 6,137 55,466 23,951 26(d) 6,910 341 − − 34,711 19,914 27,798 178,145 6,414 4,321 2,091 1,112 − − − 13,938 13,324 4,662 2,091 1,112 34,711 19,914 27,798 192,083
IFRS 7.34(a) IFRS 7.36(a)

− − − − − − −

187 593 460 1,677 6,137 55,466 23,951

27 29 32

The fair value of derivatives shown on the statement of financial position represents the current risk exposure but not the maximum risk exposure that could arise in the future as a result of the changes in values.

114

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d) Commentary
The general requirement in paragraph 34(a) of IFRS 7 is that the quantitative data on risk exposures should be based on information provided internally to key management personnel. The quantitative data in the risk management disclosure as at the reporting date is assumed to be representative of the Group’s exposure to risk during the period. Therefore, the disclosures on unrepresentative exposure to risk during the period required by paragraph 35 of IFRS 7 are not applicable for these illustrative financial statements. Reinsurance assets exclude the reinsurers’ share of unearned premiums.

Industry analysis
31 December 2010 Financial Services €000 Derivative financial assets Derivative financial instruments held for trading Cash flow hedges Fair value hedges Held–to–maturity financial assets Debt securities Loans and receivables Available–for–sale financial assets Equity securities Debt securities Financial assets at fair value through profit or loss Equity securities Debt securities Mutual funds Credit institutions Reinsurance assets Insurance receivables Cash and cash equivalents Total credit risk exposure 22,723 154,835 − 32,487 − 34,066 − 13,954 − 14,996 − 3,596 − 9,266 22,723 250,992 − 6,790 2,116 1,574 989 11,469 36,521 3,898 − − 7,865 − − 7,865 − − − 2,367 985 564 − 3,916 − 23,479 − 3,789 − 325 − 4,114 − 7,895 − − − 2,357 − 2,357 − 7,630 − 753 − 765 − 1,518 − − − 1,865 − 2,145 − 4,010 − 4,578 − 15,564 10,966 7,730 989 35,249 36,521 35,272 65,400 9,364 74,764 − 23,456 23,456 − 2,345 2,345 − 1,789 1,789 4,567 4,567 425 1,653 2,078 678 678 − 71,070 38,607 109,677 2,938 − 4,326 − − − − 7,264 − 436 436 − 1,166 1,166 − − − 156 156 − 346 346 − − − − − 2,104 2,104 677 867 542 2,086 − − − − − − − − − − − 96 96 − − − − − − 677 867 638 2,182 Government €000 Consumers €000 Retail and Wholesale1 €000 Construction and Manufacturing Materials2 and Petroleum €000 €000 Services3 €000 Total €000

Good Insurance (International) Limited

115

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
31 December 2009 Financial Services €000 Retail and Wholesale1 €000 Construction and Manufacturing Materials2 and Petroleum €000 €000

Government €000

Consumers €000

Services3 €000

Total €000

Derivative financial assets Derivative financial instruments held for trading Cash flow hedges Fair value hedges Held–to–maturity financial assets Debt securities Loans and receivables Available–for–sale financial assets Equity securities Debt securities Financial assets at fair value through profit or loss Equity securities Debt securities Mutual funds Credit institutions Reinsurance assets Insurance receivables Cash and cash equivalents Total credit risk exposure 446 446 3,811 829 829 − − 49,576 1,443 51,019 − 4,650 1,812 1,264 1,112 8,838 34,711 3,738 27,798 131,365 − 19,521 19,521 − − 1,865 − − 1,865 − − − 22,215 8,479 − 18,302 5,895 − 9,220 − − 5,460 1,235 − 3,166 567 − 2,355 − − 2,326 − − 2,045 2,045 − 4,467 985 − − 5,452 − − 189 189 − 2,489 − 325 − 2,814 4,787 − − − 357 − 357 − 4,787 − 425 753 1,178 − 753 − − − 753 1,110 678 − 965 − 145 − 678 86 86 316 316 − − − −

187 593 224 1,004

− − − −

− − −

− − 236 236

− − − −

− − − −

− − − −

187 593 460 1,240 − 1,677 1,677 6,137 − 55,466 23,951 79,417 − 13,324 4,662 2,091 1,112 21,189 34,711 19,914 27,798 192,083

1 2 3

Retail and wholesale includes Beverages Construction and Materials includes Aerospace and Defence Services includes Telecommunication, Media, Electricity, Consumers, IT, Health Care and Other

116

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
Credit exposure by credit rating The table below provides information regarding the credit risk exposure of the Group by classifying assets according to the Group’s credit ratings of counterparties: 31 December 2010 Neither past–due nor impaired Non– Non– investment investment Investment grade: grade: un– grade satisfactory satisfactory €000 €000 €000
IFRS 7.36(a)

IFRS 7.36(c), (d)

Unit– linked €000

Past– due but not impaired €000

Total €000

Financial instruments Derivative financial assets Derivatives held–for–trading Cash flow hedges Fair value hedges Held–to–maturity financial assets Debt securities Loans and receivables Available–for–sale financial assets Equity securities Debt securities Financial assets at fair value through profit or loss Equity securities Debt securities Mutual funds Credit institutions Reinsurance assets Insurance receivables Cash and cash equivalents Total 677 867 638 − − − − − − − − − − − − 677 867 638

2,104 −

− 6,659

− 491

− −

− 114

2,104 7,264

44,497 25,457

26,573 13,150

− −

− −

− −

71,070 38,607

10,768 5,607 − − 35,985 24,077 22,723 173,400

− − − − 20 9,560 − 55,962

− − − − − 820 − 1,311

4,796 5,359 7,730 989 − − − 18,874

− − − − 516 815 − 1,445

15,564 10,966 7,730 989 36,521 35,272 22,723 250,992

IFRS 7.34(a)

Good Insurance (International) Limited

117

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
Credit exposure by credit rating 31 December 2009 Neither past–due nor impaired Non– Non– investment investment Investment grade: grade: un– grade satisfactory satisfactory €000 €000 €000
IFRS 7.36(c), (d)

Unit– linked €000

Past– due but not impaired €000

Total €000

Financial instruments Derivative financial assets Derivative financial instruments held–for–trading Cash flow hedges Fair value hedges Held–to–maturity financial assets Debt securities Loans and receivables Available–for–sale financial assets Equity securities Debt securities Financial assets at fair value through profit or loss Equity securities Debt securities Mutual funds Credit institutions Reinsurance assets Insurance receivables Cash and cash equivalents Total 187 593 460 − − − − − − − − − − − − 187 593 460

1,677 −

− 5,789

− 201

− −

− 147

1,677 6,137

30,788 16,440

24,678 7,511

− −

− −

− −

55,466 23,951

6,910 341 − − 34,281 3,912 27,798 123,387

− − − − 2 14,758 − 52,738

− − − − − 600 − 801

6,414 4,321 2,091 1,112 − − − 13,938

− − − − 428 644 − 1,219

13,324 4,662 2,091 1,112 34,711 19,914 27,798 192,083

IFRS 7.34(a)

Commentary
Paragraph BC54 of IFRS 7 states, “The board of directors noted that information about credit quality gives a greater insight into the credit risk of assets and helps users to assess whether such assets are more or less likely to become impaired in the future. Because this information will vary between companies, the board of directors decided not to specify a particular method for giving this information, but rather to allow each entity to devise a method that is appropriate to its circumstances.” Paragraph 36(c) of IFRS 7 and paragraph 37(a) of IFRS 7 require the disclosure of the quality of financial assets that are neither impaired nor past due and an analysis of the age of financial assets that are past due as at the reporting date, but not yet impaired. This is required by the standard, although disclosure of the fact that many financial assets could be past due by only a few days is arguably of limited value and potentially misleading. Reinsurance asset figures exclude the reinsurers’ share of unearned premiums as this is not a financial asset.

118

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
The table below provides information regarding the credit risk exposure of the Group at 31 December 2010 by classifying assets according to the Euroland Credit Agency’s credit ratings of the counterparties. AAA is the highest possible rating. Assets that fall outside the range of AAA to BBB are classified as speculative grade. 31 December 2010 AAA €000 Financial instruments Derivative financial assets Derivative held–for–trading Cash flow hedges Fair value hedges Held–to–maturity financial assets Debt securities Loans and receivables Available–for–sale financial assets Equity securities Debt securities Financial assets at fair value through profit or loss Equity securities Debt securities Mutual funds Credit institutions Reinsurance assets Insurance receivables Cash and cash equivalents Total 31 December 2009 AAA €000 Financial instruments Derivative financial assets Derivatives held–for–trading Cash flow hedges Fair value hedges Held–to–maturity financial assets Debt securities Loans and receivables Available–for–sale financial assets Equity securities Debt securities Financial assets at fair value through profit or loss Equity securities Debt securities Mutual funds Credit institutions Reinsurance assets Insurance receivables Cash and cash equivalents Total AA €000 BBB €000 BB €000 AA €000 BBB €000 BB €000 Not rated €000 Unit– linked €000 Total €000
IFRS 7.36(a)

IFRS 7.36(c)

71 867 407

606 − 231

− − −

− − −

− − −

− − −

677 867 638

1,610 −

494 −

− −

− −

− 7,264

− −

2,104 7,264

19,849 9,559

24,648 15,898

− −

− −

26,573 13,150

− −

71,070 38,607

10,768 5,607 − − 33,141 772 20,218 102,869

− − − − 1,241 1,717 2,505 47,340

− − − − 1,603 21,588 − 23,191

− − − − 536 1,204 − 1,740

− − − − − 9,991 − 56,978 Not rated €000

4,796 5,359 7,730 989 − − − 18,874 Unit– linked €000

15,564 10,966 7,730 989 36,521 35,272 22,723 250,992

IFRS 7.34(a)

Total €000

IFRS 7.36(c)

92 593 264

95 − 196

− − −

− − −

− − −

− − −

187 593 460

1,540 −

137 −

− −

− −

− 6,137

− −

1,677 6,137

18,912 9,357

11,876 7,083

− −

− −

24,678 7,511

− −

55,466 23,951

6,910 341 − − 31,576 1,242 27,238 98,065

− − − − 1,167 1,439 560 22,553

− − − − 1,538 1,231

− − − − 430 1,065

− − − − − 14,937

6,414 4,321 2,091 1,112 − −

13,324 4,662 2,091 1,112 34,711 19,914 27,798 192,083
IFRS 7.34(a)

2,769

1,495

53,263

13,938

Good Insurance (International) Limited

119

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d) Commentary
If the credit quality analysis is based on external credit grading systems, the entity might disclose the credit exposure for each external credit grade the rating agencies used, the value of the entity’s rated and unrated credit exposures and the relationship between internal and external ratings (IFRS 7.IG24).

The table below provides information regarding the credit risk exposure of the Group according to the Group’s categorisation of counterparties by the Euroland Credit Agency’s credit rating: 31 December 2010 AAA €000 Investment grade Non–investment grade: satisfactory Non–investment grade: unsatisfactory Past–due but not impaired Total 102,869 − − − 102,869 AA €000 47,340 − − − 47,340 BBB €000 23,191 − − − 23,191 BB €000 − 1,224

IFRS 7.36(a)

Not rated €000

Total €000

Unit– linked €000

Total €000

IFRS 7.36(c)

− 173,400 54,738 1,311 55,962 1,311

14,330 187,730 4,544 − 60,506 1,311

516 1,740

929 1,445 56,978 232,118 Not rated €000

− 1,445 18,874 250,992 Unit– linked €000

IFRS 7.34(a)

31 December 2009

AAA €000 98,065 − − − 98,065

AA €000 22,553 − − − 22,553

BB €000 2,769 − − − 2,769

BBB €000 − 1,067

Total €000

Total €000

IFRS 7.36(c)

Investment grade Non–investment grade: satisfactory Non–investment grade: unsatisfactory Past–due but not impaired Total

− 123,387 51,671 801 52,738 801

11,847 135,234 2,091 − 54,829 801

428 1,495

791 1,219 53,263 178,145

− 1,219 13,938 192,083

IFRS 7.34(a)

It is the Group’s policy to maintain accurate and consistent risk ratings across its credit portfolio. This enables management to focus on the applicable risks and the comparison of credit exposures across all lines of business, geographic regions and products. The rating system is supported by a variety of financial analytics combined with processed market information to provide the main inputs for the measurement of counterparty risk. All internal risk ratings are tailored to the various categories and are derived in accordance with the Group’s rating policy. The attributable risk ratings are assessed and updated regularly. The Group has not provided the credit risk analysis for the financial assets of the unit–linked business. This is due to the fact that, in unit–linked business, the liability to policyholders is linked to the performance and value of the assets that back those liabilities and the shareholders have no direct exposure to any credit risk in those assets. During the year, no credit exposure limits were exceeded. The Group actively manages its product mix to ensure that there is no significant concentration of credit risk.
IFRS 7.34(c)

120

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
Age analysis of financial assets past due but not impaired 31 December 2010 < 30 days €000 Loans and receivables Reinsurance assets Insurance receivables Total 31 December 2009 < 30 days €000 Loans and receivables Reinsurance assets Insurance receivables Total Impaired financial assets At 31 December 2010, there are impaired reinsurance assets of €84,000 (2009: €82,000) and impaired loans and receivables of €526,000 (2009: €483,000). For assets to be classified as ‘past–due and impaired’ contractual payments must be in arrears for more than 90 days. No collateral is held as security for any past due or impaired assets. The Group records impairment allowances for loans and receivables in a separate impairment allowance account. A reconciliation of the allowance for impairment losses for loans and receivables is as follows: 2010 €000 At 1 January Charge for the year Recoveries Amounts written off Interest accrued on impaired loans At 31 December 483 65 (12) (20) 10 526 2009 €000 461 50 (5) (30) 7 483
IFRS 7.37(b)

31 to 60 days 61 to 90 days €000 €000 − 121 278 399 − − 12 12

Unit–linked €000 − − − −

Total past– due but not impaired €000 114 516 815 1,445 Total past– due but not impaired €000 147 428 644 1,219

IFRS 7.37(a)

114 395 525 1,034

31 to 60 days 61 to 90 days €000 €000 − 85 218 303 − − 9 9

IFRS 7.37(a)

Unit–linked €000 − − − −

147 343 417 907

IFRS 7.37(c)

IFRS 7.16

Commentary
Paragraph 36(c) of IFRS 7 and paragraph 37(a) of IFRS 7 require the disclosure of the quality of financial assets that are neither impaired nor past due and an analysis of the age of financial assets that are past due as at the reporting date, but not yet impaired. This is required by the standard, although disclosure of the fact that many financial assets could be past due by only a few days is arguably of limited value and potentially misleading.

Good Insurance (International) Limited

121

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
Collateral The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Guidelines are implemented regarding the acceptability of types of collateral and the valuation parameters. Collateral is mainly obtained for securities lending and for cash purposes. Credit risk is also mitigated by entering into collateral agreements. Management monitors the market value of the collateral, requests additional collateral when needed and performs an impairment valuation when applicable. For over–the–counter derivative transactions undertaken by the Group, collateral is received from the counterparty. The collateral can be sold or repledged by the Group and is repayable if the contract terminates or the contract’s fair value decreases. At 31 December 2010, the fair value of such collateral held was €5,750,000 (2009: €4,500,000). No collateral received from the counterparty has been sold or repledged (2009: Nil). (2) Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial instruments. In respect of catastrophic events there is also a liquidity risk associated with the timing differences between gross cash out–flows and expected reinsurance recoveries. The following policies and procedures are in place to mitigate the Group’s exposure to liquidity risk: A Group liquidity risk policy which sets out the assessment and determination of what constitutes liquidity risk for the Group. Compliance with the policy is monitored and exposures and breaches are reported to the Group risk committee. The policy is regularly reviewed for pertinence and for changes in the risk environment. Guidelines are set for asset allocations, portfolio limit structures and maturity profiles of assets, in order to ensure sufficient funding available to meet insurance and investment contracts obligations. Contingency funding plans are in place, which specify minimum proportions of funds to meet emergency calls as well as specifying events that would trigger such plans. The Group’s catastrophe excess–of–loss reinsurance contracts contain clauses permitting the immediate draw down of funds to meet claim payments should claim events exceed a certain size. Maturity profiles The table that follows summarises the maturity profile of the non–derivative financial assets and financial liabilities of the Group based on remaining undiscounted contractual obligations, including interest payable and receivable. For the derivative liabilities, the total fair value is disclosed in the ‘up to one year’ column as the Group manages liquidity risk for a trading portfolio of derivatives on the basis of fair value and management believes that this presentation more accurately reflects the liquidity of the markets in which the financial instruments are traded and the availability of market observable inputs to measure these instruments. The interest rate swaps held– for–trading and fair value hedges are also disclosed in the ‘up to one year’ column as management believes they are not essential for an understanding of the timing of the cash flows. For insurance contracts liabilities and reinsurance assets, maturity profiles are determined based on estimated timing of net cash outflows from the recognised insurance liabilities. Unearned premiums and the reinsurers’ share of unearned premiums have been excluded from the analysis as they are not contractual obligations. Unitlinked liabilities are repayable or transferable on demand and are included in the up to a year column. Repayments which are subject to notice are treated as if notice were to be given immediately. The Group maintains a portfolio of highly marketable and diverse assets that can be easily liquidated in the event of an unforeseen interruption of cash flow. The Group also has committed lines of credit that it can access to meet liquidity needs to assist users in understanding how assets and liabilities have been matched. Reinsurance assets have been presented on the same basis as insurance liabilities. Loans and receivables include contractual interest receivable.
IFRS 7.39(b), (c), IFRS 7.B11E(a), (c), IFRS 7.39(a), (c), IAS 1.61, IFRS 7.39(b), B11B IFRS 7.33 (b) IFRS 7.39(c) IFRS 7.33(a) IFRS 7.36(b), 37(c)

IFRS 4.39(d)(i)

122

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
Maturity analysis (contractual undiscounted cash flow basis for non–derivatives)
31 December 2010 Carrying Amount €000 Financial assets Derivative financial assets Held–to–maturity financial assets Loans and receivables Available–for–sale financial assets Financial assets at fair value through profit or loss Reinsurance assets Insurance receivables Cash and cash equivalents Total assets Up to a year €000 1–3 years €000 3–5 years 5–15 years €000 €000 Over 15 years €000 No maturity date €000

Total €000

2,182 2,104 7,264 109,677

2,182 586 735 10,467

− 421 1,078 4,756

− 1,097 2,546 2,866

− − 6,321 7,234

− − − 3,801

− − − 79,070

2,182 2,104 10,680 108,194

35,249 36,521 35,272 22,723 250,992

9,959 12,144 35,272 22,723 94,068

3,114 4,655 − − 14,024

547 4,536 − − 11,592

− 11,742 − − 25,297

− 3,444 − − 7,245

20,934 − − − 100,004 No maturity date €000

34,554 36,521 35,272 22,723 252,230
IFRS 7.39(a),

Carrying Amount €000 Financial liabilities Insurance contract liabilities With DPF Without DPF Investment contract liabilities With DPF Without DPF Net asset value attributable to unit–holders Derivative financial liabilities Borrowings Other financial liabilities Insurance payables Trade and other payables Total liabilities 49,578 127,134

Up to a year €000

1–3 years €000

3–5 years 5–15 years €000 €000

Over 15 years €000

Total €000

IFRS 4.39(d)(i)

6,084 42,516

12,071 18,005

11,300 11,367

13,903 50,010

6,220 5,236

− −

49,578 127,134

7,366 7,854

4,826 7,145

523 160

975 180

643 273

554 152

− −

7,521 7,910

520 1,782 16,562 7,743 5,157 17,307 241,003

520 1,782 5,918 7,743 5,157 17,307 98,998

− − 4,586 − − − 35,345

− − 6,758 − − − 30,580

− −

− −

− −

520 1,782 17,262
IFRS 7.B11C

− − − 64,829

− − − 12,162

− − − −

7,743 5,157 17,307 241,914

Good Insurance (International) Limited

123

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
Maturity analysis (contractual undiscounted cash flow basis for non–derivatives) (cont’d)
31 December 2009 Carrying Amount €000 Financial assets Derivative financial assets Held–to–maturity financial assets Loans and receivables Available–for–sale financial assets Financial assets at fair value through profit or loss Reinsurance assets Insurance receivables Cash and cash equivalents Total assets Up to a year €000 1–3 years €000 3–5 years 5–15 years €000 €000 Over 15 years €000 No maturity date €000

Total €000

1,240 1,677 6,137 79,417

1,240 455 735 5,601

− 301 771 4,442

− 921 1,888 3,020

− − 6,123 6,533

− − − 3,545

− − − 55,466

1,240 1,677 9,517 78,607

21,189 34,711 19,914 27,798 192,083

2,455 7,999 19,914 27,798 66,197

2,988 4,655 − − 13,157

46 6,536 − − 12,411

− 12,299 − − 24,955

− 3,222 − − 6,767

15,415

20,904 34,711

− − 70,881 No maturity date €000

19,914 27,798 194,368
IFRS 7.39(a),

Carrying Amount €000 Insurance contract liabilities With DPF Without DPF Investment contract liabilities With DPF Without DPF Net asset value attributable to unit–holders Derivative financial liabilities Borrowings Other financial liabilities Insurance payables Trade and other payables Total liabilities 25,180 101,080

Up to a year €000

1–3 years €000

3–5 years 5–15 years €000 €000

Over 15 years €000

Total €000

IFRS 4.39(d)(i)

5,692 34,534

6,354 9,069

5,100 13,041

7,809 34,516

225 9,920

− −

25,180 101,080

4,281 7,277

900 6,950

1,655 125

825 140

805 160

550 120

− −

4,735 7,495

367 1,758 21,064 7,272 4,841 11,638 184,758

367 1,758 6,922 7,272 4,841 11,638 80,874

− − 6,674 − − − 23,877

− − 8,168 − − − 27,274

− − − − − − 43,290

− − − − − − 10,815

− − − − − − −

367 1,758 42,828 7,272 4,841 11,638 207,194
IFRS 7.B11C

124

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
Maturity Analysis (undiscounted cash flow basis for non–derivatives)
IFRS 7.39(a)

Commentary
The amendments to IFRS 7 require a maturity analysis for derivative financial liabilities that is based on how the entity manages the liquidity risk associated with such instruments. In addition, for those derivative financial liabilities for which contractual liabilities are essential for an understanding of the timing of the cash flows, for example, interest rate swaps with remaining maturity of five years in a cash flow hedge or loan commitments, a contractual maturity analysis is required. Good Insurance has no interest rate swaps in cash flow hedges, therefore, all the derivative instruments are disclosed in ‘up to a year’ column at their fair value. A contractual maturity analysis for non–derivative financial liabilities (including issued financial guarantee contracts) which include the remaining contractual maturities is required. These are the contractual undiscounted cash flows. The standard also requires an entity to disclose a maturity analysis of financial assets that it holds for managing liquidity risk (e.g., financial assets that are readily saleable or expected to generate cash inflows to meet cash outflows on financial liabilities) if that information is necessary to enable users of its financial statements to evaluate the nature and extent of liquidity risk. It is anticipated that this will apply to most insurers as most insurers hold financial assets to manage liquidity risk. Good insurance has made these maturity disclosures for its financial assets. For recognised insurance liabilities, paragraph 39(d)(i) of IFRS 4.39 permits the maturity analysis to be based on expected net cash outflows resulting from recognised insurance liabilities. The Group has elected to use this alternative presentation for the maturity analysis of its insurance liabilities. Unearned premiums are excluded from this analysis as these are not contractual liabilities.

The table below summarises the expected utilisation or settlement of assets and liabilities. Maturity analysis on expected maturity bases 31 December 2010 Current* €000 Intangible assets Deferred expenses Property and equipment Investment properties Investment in an associate Financial instruments Derivative financial assets Held–to–maturity financial assets Loans and receivables Available–for sale–financial assets Financial assets at fair value through profit or loss Reinsurance assets Income tax receivable Insurance receivables Accrued income Cash and cash equivalents Total assets ( excluding goodwill) 34 1,464 − − − 1,614 125 7,264 43,471 4,858 26,301 2,995 35,272 1,698 22,723 147,819 Non– current €000 39,104 11,982 4,066 4,199 2,120 568 1,979 − 66,206 11,517 10,220 − − − − 151,961

IAS 1.61 IFRS 7.B11E

Unit–linked €000 − − − − − − − − − 18,874 − − − − − 18,874

Total €000 39,138 13,446 4,066 4,199 2,120 2,182 2,104 7,264 109,677 35,249 36,521 2,995 35,272 1,698 22,723 318,654

Good Insurance (International) Limited

125

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
Maturity analysis on expected maturity bases (cont’d) 31 December 2010 Current* €000 Insurance contract liabilities With DPF Without DPF Investment contract liabilities With DPF Without DPF Pension benefit obligation Deferred income Borrowings Derivative financial liabilities Other financial liabilities Deferred tax liability Net asset value attributable to unit–holders Insurance payables Trade and other payables Total liabilities Non– current €000

Unit–linked €000

Total €000

5,478 23,411 1,567 − 98 28 15,300 845 7,743 − − 5,157 17,307 76,934

44,100 93,963 4,549 510 4,351 4,337 1,262 937 − 5,452 − − − 159,461

− 9,760 1,250 7,344 − − − − − 520 − − 18,874

49,578 127,134 7,366 7,854 4,449 4,365 16,562 1,782 7,743 5,452 520 5,157 17,307 255,269

*Paragraph 61 of IAS 1 requires disclosure of the two sub totals (less than and greater than 12 months) of expected maturities.

31 December 2009 Current* €000 Intangible assets Deferred expenses Property and equipment Investment properties Investment in an associate Financial instruments Derivative financial assets Held–to–maturity financial assets Loans and receivables Available–for sale–financial assets Financial assets at fair value through profit or loss Reinsurance assets Income tax receivable Insurance receivables Accrued income Cash and cash equivalents Total assets (excluding goodwill) 25 1,128 − − − 494 119 6,137 29,599 7,029 23,785 2,812 19,914 1,557 27,798 120,397

Non– current €000 419 10,349 3,750 3,943 1,991 746 1,558 − 49,818 222 10,926 − − − − 83,722

Unit–linked €000 − − − − − − − − − 13,938 − − − − − 13,938

Total €000 444 11,477 3,750 3,943 1,991 1,240 1,677 6,137 79,417 21,189 34,711 2,812 19,914 1,557 27,798 218,057

126

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
Maturity Analysis on expected maturity bases (cont’d) 31 December 2009 Current* €000 Insurance contract liabilities With DPF Without DPF Investment contract liabilities With DPF Without DPF Pension benefit obligation Deferred income Borrowings Derivative financial liabilities Other financial liabilities Deferred tax liability Net asset value attributable to unit–holders Insurance payables Trade and other payables Total liabilities Non– current €000

Unit–linked €000

Total €000

4,970 21,345 1,344 − 124 26 6,477 799 7,272 − − 4,841 11,638 58,836

20,210 74,878 1,500 − 4,028 4,308 14,587 959 − 1,848 − − − 122,318

− 4,857 1,437 7,277 − − − − − − 367 − − 13,938

25,180 101,080 4,281 7,277 4,152 4,334 21,064 1,758 7,272 1,848 367 4,841 11,638 195,092

*Paragraph 61 of IAS 1 requires disclosure of the two sub totals (less than and greater than 12 months) of expected maturities.

Commentary
Paragraph 61 of IAS 1 requires disclosure of the two sub totals (less than and greater than 12 months) of expected maturities. The amended IFRS 7 Appendix B.11E requires an entity shall disclose a maturity analysis of financial assets it holds for managing liquidity risk (e.g., financial assets that are readily saleable or expected to generate cash inflows to meet cash outflows on financial liabilities), if that information is necessary to enable users of its financial statements to evaluate the nature and extent of liquidity risk. Most insurers hold financial assets to manage liquidity risk and therefore Good Insurance has provided a maturity analysis of financial assets as illustrated in the table above.

(3) Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: foreign exchange rates (currency risk), market interest rates (interest rate risk) and market prices (price risk). A Group market risk policy sets out the assessment and determination of what constitutes market risk for the Group. Compliance with the policy is monitored and exposures and breaches are reported to the Group risk committee. The policy is reviewed regularly for pertinence and for changes in the risk environment. Guidelines are set for asset allocation and portfolio limit structure, to ensure that assets back specific policyholders’ liabilities and that assets are held to deliver income and gains for policyholders which are in line with expectations of the policyholders. The Group stipulates diversification benchmarks by type of instrument and geographical area, as the Group are exposed to guaranteed bonuses, cash and annuity options when interest rates falls. There is strict control over hedging activities (e.g., equity derivatives are only permitted to be held to facilitate portfolio management or to reduce investment risk). The Group issues unit–linked investment policies in a number of its operations. In the unit–linked business, the policyholder bears the investment risk on the assets held in the unit–linked funds as the policy benefits are directly linked to the value of the assets in the fund. The Group’s exposure to market risk on this business is limited to the extent that income arising from asset management charges is based on the value of assets in the fund.
IFRS 7.33(a)

Good Insurance (International) Limited

127

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
(a) Currency risk Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s principal transactions are carried out in Euros and its exposure to foreign exchange risk arise primarily with respect to UK sterling and US dollar. The Group’s financial assets are primarily denominated in the same currencies as its insurance and investment contract liabilities. This mitigates the foreign currency exchange rate risk for the overseas operations. Thus, the main foreign exchange risk arises from recognised assets and liabilities denominated in currencies other than those in which insurance and investment contract liabilities are expected to be settled. The currency risk is effectively managed by the Group through derivative financial instruments. Forward currency contracts are in place to eliminate the currency exposure on individual foreign transactions. Forward currency contracts must be in the same currency and under the same terms as the hedged item to maximise effective hedging. The Group will not enter into these forward contracts until a firm commitment is in place. The table below summarises the Group’s assets and liabilities by major currencies: 31 December 2010 Pound Sterling €000 − − − − − − 558 586 − 14,602 5,035 11,995 − 12,217 − − 44,993
IFRS 7.33(b) IFRS 7.33(a)

IFRS 7.34(a)

Euro €000 2,924 545 13,446 3,041 4,199 2,120 1,091 947 4,808 63,160 16,766 16,101 2,995 12,931 1,698 22,723 169,495

US Dollar €000 6,521 38,593 − 1,025 − − 533 421 2,456 26,915 13,448 7,425 − 8,124 − − 105,461

Other €000 − − − − − − − 150 − 5,000 − 1,000 − 2,000 − − 8,150

Total €000 9,445 39,138 13,446 4,066 4,199 2,120 2,182 2,104 7,264 109,677 35,249 36,521 2,995 35,272 1,698 22,723 328,099

Goodwill Intangible assets Deferred expenses Property and equipment Investment properties Investment in an associate Financial instruments Derivative financial assets Held–to–maturity financial assets Loans and receivables Available–for sale–financial assets Financial assets at fair value through profit or loss Reinsurance assets Tax receivable Insurance receivables Accrued income Cash and cash equivalents Total assets Insurance contract liabilities With DPF Without DPF Investment contract liabilities With DPF Without DPF Pension benefit obligation Deferred income Borrowings Derivative financial liabilities Other financial liabilities Deferred tax liability Net asset value attributable to unit–holders Insurance payables Trade and other payables Total liabilities
128

IFRS 7.34(a)

7,884 52,078 1,357 4,955 4,449 4,365 16,562 552 7,743 4,385 234 2,329 8,745 115,638

15,998 35,434 1,741 2,071 − − − 874 − − 182 1,305 − 57,605

18,071 30,747 4,268 328 − − − 356 − 1,067 104 1,023 8,562 64,526

7,625 8,875 − 500 − − − − − − − 500 − 17,500

49,578 127,134 7,366 7,854 4,449 4,365 16,562 1,782 7,743 5,452 520 5,157 17,307 255,269

IFRS 7.34(a)

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
(a) Currency risk (cont’d) 31 December 2009 Euro €000 Goodwill Intangible assets Deferred expenses Property and equipment Investment properties Investment in an associate Financial instruments Derivative financial assets Held–to–maturity financial assets Loans and receivables Available–for sale–financial assets Financial assets at fair value through profit or loss Reinsurance assets Tax receivable Insurance receivables Accrued income Cash and cash equivalents Total assets Insurance contract liabilities With DPF Without DPF Investment contract liabilities With DPF Without DPF Pension benefit obligation Deferred income Borrowings Derivative financial liabilities Other financial liabilities Deferred tax liability Net asset value attributable to unit–holders Insurance payables Trade and other payables Total liabilities 2,924 444 11,477 3,750 3,943 1,991 658 754 6,137 35,737 12,285 15,444 2,812 9,664 1,557 27,798 137,375 Pound Sterling €000 − − − − − − 334 586 − 22,295 5,666 11,260 − 5,626 − − 45,767

US Dollar €000 − − − − − − 248 337 − 15,885 3,238 7,007 − 3,502 − − 30,217

Other €000 − − − − − − − − − 5,500 − 1,000 − 1,122 − − 7,622

Total €000 2,924 444 11,477 3,750 3,943 1,991 1,240 1,677 6,137 79,417 21,189 34,711 2,812 19,914 1,557 27,798 220,981

IFRS 7.34(a)

9,504 47,947 1,753 3,275 4,152 4,334 21,064 1,091 7,272 1,848 165 2,178 11,638 116,221

8,475 29,311 1,608 2,147 − − − 515 − − 128 1,094 − 43,278

5,701 19,322 920 1,455 − − − 152 − − 74 969 − 28,593

1,500 4,500 − 400 − − − − − − − 600 − 7,000

25,180 101,080 4,281 7,277 4,152 4,334 21,064 1,758 7,272 1,848 367 4,841 11,638 195,092

IFRS 7.34(a) IFRS 7.34(c) IFRS 7.40(a), (b)

The Group has no significant concentration of currency risk. The analysis that follows is performed for reasonably possible movements in key variables with all other variables held constant, showing the impact on profit before tax and equity due to changes in the fair value of currency sensitive monetary assets and liabilities including insurance contract claim liabilities. The correlation of variables will have a significant effect in determining the ultimate impact on market risk, but to demonstrate the impact due to changes in variables, variables had to be changed on an individual basis. It should be noted that movements in these variables are non–linear.

Good Insurance (International) Limited

129

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
(a) Currency risk (cont’d) 31 December 2010 Impact on Change in profit Impact on variables before tax equity* €000 €000 €000 + 10 % + 10 % – 10 % – 10 % 378 264 (414) (308) 295 204 (316) (235) 31 December 2009 Impact on profit Impact on before tax equity* €000 €000 364 247 (387) (289) 278 188 (294) (223)

Currency

GBP USD GBP USD

* Impact on equity reflects adjustments for tax, when applicable.

The method used for deriving sensitivity information and significant variables did not change from the previous period.

IFRS 7.40(c)

Commentary
In disclosing currency risk sensitivities, companies will need to aggregate information to display the overall picture. However aggregation should not result in disclosures which combine information from significantly different economic environments with different risk characteristics. For each relevant risk variable, the entity should determine the reasonably possible changes based on the economic environment in which the entity operates over the period to the next reporting date. The reasonably possible changes should not include remote scenarios (IFRS 7.B19). Paragraph 39(d)(ii) of IFRS 4 and paragraph 39A(a) of IFRS 4 permit the use of embedded value (EV) sensitivity disclosures instead of IFRS 7 sensitivity disclosures for insurance and market risk sensitivities. This disclosure option is only allowed if insurance and market risk sensitivities are managed on an EV basis. Another permitted alternative is to base sensitivity disclosures on Economic Capital measures. This is also only allowed if insurance and market risk sensitivities are actually managed on that basis. For illustrative purposes, EV sensitivity disclosures, based on observed best practice in the insurance industry, have been provided in Appendix 3.

(b) Interest rate risk Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Floating rate instruments expose the Group to cash flow interest risk, whereas fixed interest rate instruments expose the Group to fair value interest risk. The Group’s interest risk policy requires it to manage interest rate risk by maintaining an appropriate mix of fixed and variable rate instruments. The policy also requires it to manage the maturities of interest bearing financial assets and interest bearing financial liabilities. Any gap between fixed and variable rate instruments and their maturities are effectively managed by the Group through derivative financial instruments. Interest on floating rate instruments is re–priced at intervals of less than one year. Interest on fixed interest rate instruments is priced at inception of the financial instrument and is fixed until maturity. The Group has no significant concentration of interest rate risk. The analysis that follows is performed for reasonably possible movements in key variables with all other variables held constant, showing the impact on profit before tax (due to changes in fair value of floating rate financial assets and liabilities, including the effect of fair value hedges) and equity (that reflects adjustments to profit before tax and revaluing fixed rate available–for–sale financial assets, including the effect of cash flow hedges). The correlation of variables will have a significant effect in determining the ultimate impact on interest rate risk, but to demonstrate the impact due to changes in variables, variables had to be changed on an individual basis. It should be noted that movements in these variables are non–linear.
IFRS 7.33(b) IFRS 7.33(a)

IFRS 7.34(c)

130

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
(b) Interest rate risk (cont’d)
Impact on equity* 31 December 2010 Change in variables Notes + 100 basis points + 100 basis points – 100 basis points – 100 basis points Impact on profit before tax €000 Up to a year €000 1–3 years €000 3–5 years €000 Over 5 years €000

Total €000

GBP USD GBP USD

(211) (197) 168 125

(283) (248) 214 181

(257) (214) 192 148

(215) (208) 178 137

(197) (144) 145 103

(952) (814) 729 569

Impact on equity* 31 December 2009 Change in variables Notes + 100 basis points + 100 basis points – 100 basis points – 100 basis points Impact on profit before tax €000 Up to a year €000 1–3 years €000 3–5 years €000 Over 5 years €000

Total €000

GBP USD GBP USD

(189) (163) 155 147

(265) (245) 211 201

(244) (211) 181 187

(199) (186) 166 151

(165) (143) 140 138

(873) (785) 698 677

* Impact on equity reflects adjustments for tax, when applicable.

The method used for deriving sensitivity information and significant variables did not change from the previous period.

IFRS 7.40(c)

Commentary
In disclosing interest rate risk sensitivities, companies will need to aggregate information to display the overall picture. However, aggregation should not result in disclosures which combine information from significantly different economic environments with different risk characteristics. For each relevant risk variable, the entity should determine the reasonably possible changes based on the economic environment in which the entity operates over the period to the next reporting date. The reasonably possible changes should not include remote scenarios (IFRS 7.B19). Paragraph 39(d)(ii) of IFRS 4 and paragraph 39A(a) of IFRS 4 permit the use of embedded value (EV) sensitivity disclosures instead of IFRS 7 sensitivity disclosures for insurance and market risk sensitivities. This disclosure option is only allowed if insurance and market risk sensitivities are managed on an EV basis. Another allowed alternative disclosure is to base sensitivity disclosures on Economic Capital measures. This is also only allowed if insurance and market risk sensitivities are actually managed on that basis. For illustrative purposes, EV sensitivity disclosures, based on observed best practice in the insurance industry, have been provided in Appendix 3.

Good Insurance (International) Limited

131

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
(c) Price risk Equity price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Group’s equity price risk exposure relates to financial assets and financial liabilities whose values will fluctuate as a result of changes in market prices, principally investment securities not held for the account of unit–linked business. The Group’s price risk policy requires it to manage such risks by setting and monitoring objectives and constraints on investments, diversification plans, limits on investments in each country, sector and market and careful and planned use of derivative financial instruments. The Group has no significant concentration of price risk. The analysis below is performed for reasonably possible movements in key variables with all other variables held constant, showing the impact on profit before tax (due to changes in fair value of financial assets and liabilities whose fair values are recorded in the income statement) and equity (that reflects adjustments to profit before tax and changes in fair value of available–for–sale financial assets). The correlation of variables will have a significant effect in determining the ultimate impact on price risk, but to demonstrate the impact due to changes in variables, variables had to be changed on an individual basis. It should be noted that movements in these variables are non–linear. 31 December 2010 Impact Impact on profit on before tax equity* €000 €000 374 352 331 (319) (288) (254) 285 272 254 (242) (220) (201) 31 December 2009 Impact on Impact profit on before tax equity* €000 €000 351 339 318 (297) (276) (243) 268 257 241 (229) (213) (188)
IFRS 7.33(a)

IFRS 7.33(b)

IFRS 7.33(b)

IFRS 7.34(c) IFRS 7.40(a), (b)

Change in variables Market indices Euronext 100 FTSE 100 NYSE Euronext 100 FTSE 100 NYSE + 15% + 10% + 10% – 15 % – 10 % – 10 %

* Impact on equity reflects adjustments for tax, when applicable.

The method used for deriving sensitivity information and significant variables did not change from the previous period.

IFRS 7.40(c)

Commentary
In disclosing price risk sensitivities, companies will need to aggregate information to display the overall picture. However, aggregation should not result in disclosures which combine information from significantly different economic environments with different risk characteristics. For each relevant risk variable, the entity should determine the reasonably possible changes based on the economic environment in which the entity operates over the period to the next reporting date. The reasonably possible changes should not include remote scenarios (IFRS 7.B19). Paragraph 39(d)(ii) of IFRS 4) and paragraph 39A(A) permit the use of embedded value (EV) sensitivity disclosures instead of IFRS 7 sensitivity disclosures for insurance and market risk sensitivities. This disclosure option is only allowed, if insurance and market risk sensitivities are managed on an EV basis. Another allowed alternative disclosure is to base sensitivity disclosures on Economic Capital measures. This is also only allowed if insurance and market risk sensitivities are actually managed on that basis. For illustrative purposes, EV sensitivity disclosures, based on observed best practice in the insurance industry, have been provided in Appendix 3.

132

Good Insurance (International) Limited

Notes to the consolidated financial statements
45. Insurance and financial risk (cont’d)
Sensitivity analysis on financial assets As part of the Group’s investment strategy, in order to reduce both insurance and financial risk, the Group matches its investments to the liabilities arising from insurance and investment contracts by reference to the type of benefits payable to contract holders. The analysis below is performed for reasonably possible movements in key variables with all other variables held constant, showing the impact on profit before tax (due to changes in fair value of financial assets whose fair values are recorded in the income statement) and equity (that reflects adjustments to profit before tax and changes in fair value of financial assets whose fair values are recorded in the statement of changes in equity). The correlation of variables will have a significant effect in determining the ultimate fair value and/or amortised cost of financial assets other than derivative financial instruments, but to demonstrate the impact due to changes in variables, variables had to be changed on an individual basis. It should be noted that movements in these variables are non–linear. 31 December 2010 Impact on Impact profit on before tax equity* €000 €000 481 381 354 (291) (419) (301) (266) 265 367 294 269 (223) (320) (233) (204) 202 31 December 2009 Impact on Impact profit on before tax equity* €000 €000 394 367 301 (263) (353) (284) (248) 205 299 286 234 (200) (274) (221) (192) 158
IFRS 7.40(a), (b)

Change in variables

Exchange rate Interest yield curve Stock market Discount rate Exchange rate Interest yield curve Stock market Discount rate

+ 10 % + 100 basis points + 10 % +1% – 10 % – 100 basis points – 10 % –1%

* Impact on equity reflects adjustments for tax, when applicable.

The method used for deriving sensitivity information and significant variables did not change from the previous period. Operational risks Operational risk is the risk of loss arising from system failure, human error, fraud or external events. When controls fail to perform, operational risks can cause damage to reputation, have legal or regulatory implications or can lead to financial loss. The Group cannot expect to eliminate all operational risks, but by initiating a rigorous control framework and by monitoring and responding to potential risks, the Group is able to manage the risks. Controls include effective segregation of duties, access controls, authorisation and reconciliation procedures, staff education and assessment processes, including the use of internal audit. Business risks such as changes in environment, technology and the industry are monitored through the Group’s strategic planning and budgeting process.

IFRS 7.40(c)

Commentary
IFRS 7 does not require any disclosures on operational risk because it is not necessarily related to financial instruments. The above narrative on operational risk is included for illustrative purposes only and does not cover all the possible operational risks for an insurer.

Good Insurance (International) Limited

133

Notes to the consolidated financial statements
46. Cash generated from operating activities
2010 €000 12,487 (1,015) − (4,658) 7,000 (114) (8,000) 9,844 87 (333) 100 2009 €000 9,864 (100) 1,070 (3,649) 3,000 (59) (5,000) 6,523 65 (531) 85
IAS 7.20(b)

Notes Profit before tax Purchase of derivatives Proceeds from sale of derivatives Purchase of fair value through profit or loss financial assets Proceeds from disposals of fair value through profit or loss financial assets Withdrawals by unit–holders Purchase of available–for–sale financial assets Proceeds from sale of available–for–sale financial assets Maturity of available–for–sale financial assets Purchase of held–to–maturity financial assets Maturity of held–to–maturity financial assets Non–cash items Investment income Finance costs Realised gains recorded in the income statement Fair value gains recorded in the income statement Share of associate’s profit Profit attributable to unit–holders Expenses deferred during the year Deferred fee income released to the income statement Share–based payment expense Amortisation of deferred expenses Amortisation of intangible assets Depreciation of property and equipment Foreign exchange adjustments Movements in items in the statement of financial position Increase in reinsurance assets Increase in insurance receivables Increase in loans and receivables Increase in life insurance contract liabilities Increase in non–life insurance contract liabilities Increase in investment contract liabilities Increase in pension benefit obligation Increase in deposits received from reinsurers Increase in insurance payables Increase in deferred revenue (Decrease)/increase in trade and other payables Cash generated from operating activities

26(e) 26(e) 26(e) 26(e) 26(e) 26(e) 26(e)

7 11 8 9 22 35 30 40 19 12 12 12

(8,221) 1,066 (213) (1,044) (129) 267 (5,368) (9) 18 3,399 672 335 (128)

(7,682) 954 (93) (992) (230) 111 (3,222) (7) 14 2,109 48 379 (123)
IAS 7.20(a)

(1,810) (3,206) (1,062) 5,344 3,090 150 297 126 316 40 (4,810) 4,518

(1,901) (2,423) (927) 4,472 3,211 258 91 128 354 43 470 6,310
IAS 7.20(c)

The Group classifies the cash flows from the acquisition and disposal of financial assets as operating cash flows, as the purchases are funded from the cash flows associated with the origination of insurance and investment contracts, net of the cash flows for payments of benefits and claims incurred for insurance and investment contracts, which are respectively treated under operating activities.

Commentary
Purchases and sales of held–to–maturity and available–for–sale financial assets may also be presented as investing cash flows.

134

Good Insurance (International) Limited

Notes to the consolidated financial statements
47. Contingencies and commitments
(a) Legal proceedings and regulations The Group operates in the insurance industry and is subject to legal proceeding in the normal course of business. While it is not practicable to forecast or determine the final results of all pending or threatened legal proceedings, management does not believe that such proceedings (including litigations) will have a material effect on its results and financial position. The Group is also subject to insurance solvency regulations in all the territories where it operates and has complied with all these solvency regulations. There are no contingencies associated with the Group’s compliance or lack of compliance with such regulations. (b) Capital commitments and operating leases The Group has no capital commitments as at the reporting date. The Group has entered into commercial property leases on its investment property portfolio, consisting of the Group’s surplus office buildings. These non–cancellable leases have remaining terms of between five and twenty years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. Future minimum lease rentals receivable under non–cancellable operating leases as at 31 December are as follows: 2010 €000 Within one year After one year but not more than five years More than five years Total operating lease rentals receivable 234 1,170 2,106 3,510 2009 €000 219 1,090 2,095 3,404
IAS 17.35(d) IAS 17.56(c) IAS 37.86

IAS 17.56(a)

The Group has entered into commercial leases on certain property and equipment. These leases have an average life of between three and five years with no renewal option included in the contracts. There are no restrictions placed upon the Group by entering into the leases. Future minimum rentals payable under non–cancellable operating leases as at 31 December are as follows: 2010 €000 Within one year After one year but not more than five years More than five years Total operating lease rentals payable 255 412 208 875 2009 €000 200 400 200 800

Good Insurance (International) Limited

135

Notes to the consolidated financial statements
48. Related party disclosures
The financial statements include the financial statements of Good Insurance ( International ) Limited and the subsidiaries listed in the following table: Group undertakings Good Life Insurance Limited Good Non–Life Insurance Limited Country of incorporation Euroland Euroland Primary business operation Life insurance Non–life insurance (which comprises general insurance and healthcare) Investment management services 100 United States Life Insurance 80 % Held 100
IAS 24.12

100

Good Investment Management Services Limited Good American Life Company Good Investment Management Services Limited

Euroland

Euroland

Investment management services

100

(a) Transactions with related parties The Group enters into transactions with its associate and key management personnel in the normal course of business. The sales to and purchases from related parties are made at normal market prices. Details of significant transactions carried out during the year with related parties are as follows: 2010 €000 Sale of Insurance and investment contracts to associate Insurance and investment contracts to key management personnel Purchase of Insurance and investment contracts from associate (b) Balances with related parties (1) Receivables from and payables to related parties are as follows: 2010 €000 2009 €000 762 10 2009 €000 689 9

IAS 24.17(a)

IAS 24.21

221

196
IAS 24.17(b)

Notes Receivables from related parties Associate Key management personnel 26(b)

376 6 382 41 (1,191) (1,191)

352 5 357

Payables to related parties Associate

(1,144) (1,144)
IAS 24.17(b) IAS 24.17(c)

Outstanding balances at the reporting date are unsecured and interest free. Settlement will take place in cash. There was no provision for doubtful debts at the reporting date and no bad debt expense in the year (2009: Nil).

136

Good Insurance (International) Limited

Notes to the consolidated financial statements
48. Related party disclosures (cont’d)
(b) Balances with related parties (cont’d) (2) Loans to related parties are as follows: 2010 Note Loans to related parties Associate Key management personnel 26(b) 314 22 336 251 20 271 €000 2009 €000

The loan to the associate is payable in full on 1 June 2010. Interest is charged at EURIBOR + 0.8. The Group offers the possibility for senior management to receive up to a maximum of €20,000 repayable within five years from the date of disbursement. Such loans are unsecured and the same interest rate as for long term company loans is applicable (currently EURIBOR plus 0.8). (c) Compensation of key management personnel Key management personnel of the Group includes all directors, executive and non–executive, and senior management. The summary of compensation of key management personnel for the year is as follows: 2010 €000 Salaries Fees Bonuses Other short–term employment benefits Share–based payment Post employment pension benefits Total compensation of key management personnel (d) Investment in associate No restrictions are placed on the ability of the associate to transfer funds to the parent company in the form of cash dividends or for the repayment of loans when due. No guarantees or collaterals were provided to the associate.
IAS 24.20(h) IAS 24.16

2009 €000 417 281 195 74 3 86 1,056
IAS 24.17 IAS 24.16(a) IAS 24.16(a) IAS 24.16(a) IAS 24.16(a) IAS 24.16(e) IAS 24.16(b)

495 378 265 107 5 176 1,426

49. Events after the reporting date
On 14 January 2010, an office owned and used by the Group with a net book value of €1,695,000 was severally damaged by flooding. It is expected that insurance proceeds will fall short of the costs of rebuilding by €750,000.
IAS 10.12 IAS 10.21

Good Insurance (International) Limited

137

Appendix 1 – First–time adoption of IFRS
Commentary
If the Group is a first-time adopter of IFRS, the following disclosures will be required.

A1.1. Accounting policies – Basis of preparation
For all periods up to and including the year ended 31 December 2009, the Group prepared its financial statements in accordance with local generally accepted accounting practice (Local GAAP). These financial statements, for the year ended 31 December 2010, are the first the Group has prepared in accordance with International Financial Reporting Standards (IFRS). Accordingly, the Group has prepared financial statements which comply with IFRS applicable for periods beginning on or after 1 January 2010 as described in the accounting policies. In preparing these financial statements, the Group’s opening statement of financial position was prepared as at 1 January 2009, the Group’s date of transition to IFRS. This note explains the principal adjustments made by the Group in restating its Local GAAP statement of financial position as at 1 January 2009 and its previously published Local GAAP financial statements for the year ended 31 December 2009.

IFRS 1.7 IFRS 1.21

A1.2. Notes to the financial statements – First-time adoption of IFRS
IFRS has been applied retrospectively, except for certain optional and mandatory exemptions from full retrospective application, as provided for by IFRS 1 (Revised 2009) First–Time Adoption of International Financial Reporting Standards, as detailed below. Business combinations The Group has elected to apply IFRS 3 (Revised) Business Combinations prospectively only to business combinations on or after transition date. As a result, business combinations prior to transition have not been restated. Upon adoption of IFRS, the Group is now only permitted to recognise existing liabilities contained in the acquirees’ financial statements on acquisition, rather than recognising liabilities arising from acquisitions regardless of whether the acquiree had recognised these types of liabilities or not. Fair value or revaluation value as deemed cost The Group has elected to use the Euroland GAAP revaluation value of owner–occupied property as the deemed cost at the date of transition. A revaluation of assets in this category was performed on transition date. Post retirement benefits (Defined benefit scheme) The Group elected to recognise all cumulative unrecognised actuarial gains and losses at transition. The ‘corridor’ approach for recognising actuarial gains and losses will be applied to gains and losses occurring after transition. Designation of financial assets and financial liabilities At the date of transition, the Group chose to designate according to the IFRS designation criteria, certain of its existing financial assets as ‘at fair value through profit or loss’. Derecognition of financial assets and financial liabilities The Group has applied the derecognition requirements under IFRS prospectively for transactions occurring on or after transition when applicable. Hedge accounting In line with the transitional provisions of IFRS 1, the Group will continue to apply hedge accounting for those hedging relationships that meet the criteria of hedge accounting under IFRS. At date of transition, ineffective hedge relationships will continue to be accounted for, but could subsequently be derecognised under IFRS on failing the effectiveness test. Estimates At the date of transition, the Group’s estimates under IFRS are consistent with estimates previously made under Euroland GAAP. Insurance contracts The Group has elected to disclose only five years of claims experience data in its claims development tables as permitted in the first financial year in which it adopts IFRS 4 Insurance Contracts. These disclosures will be extended for an additional year in each succeeding year until the 10-year information requirement has been satisfied.

IFRS 1.22, 23

IFRS 1 Appendix C

IFRS 1 Appendix D

IFRS 1. D10

IFRS 1. D19

IFRS 1. B2

IFRS 1. B4

IFRS 1. D4

138

Good Insurance (International) Limited

Appendix 1 – First-time adoption of IFRS
A1.2. Notes to the financial statements – First–time adoption of IFRS (cont’d)
(b) Reconciliation of equity reported under Euroland GAAP to equity reported under IFRS Appendix 1 Notes Previous GAAP €000
IFRS 1. 24(a)

1 January 2009

Adjustments €000

IFRS €000

Assets Goodwill Intangible assets Deferred expenses Property and equipment Investment properties Investment in an associate Financial Instruments Derivative financial instruments Held–to–maturity financial assets Loans and receivables Available–for–sale financial assets Financial assets at fair value through profit or loss Reinsurance assets Income tax receivable Insurance receivables Accrued income Cash and cash equivalents Total assets Equity and liabilities Equity Issued share capital Additional paid–in capital Revaluation reserves Retained earnings Total ordinary shareholders’ equity Other equity instruments Total equity Liabilities Insurance contract liabilities Investment contract liabilities Pension benefit obligation Deferred revenue Borrowings Derivative financial instruments Other financial liabilities Deferred tax liability Insurance payables Net asset value attributable to unit–holders Trade and other payables Total liabilities Total equity and liabilities

e(2) e(8) e(9) e(9)

2,938 174 4,093 5,759 3,957 1,808 − 2,297 1,047 5,130 76,784 19,244 32,810 2,454 35,167 4,065 3,760 201,487

(14) 6,271 330 (330) − − − − − − − − − − − 6,257

2,924 174 10,364 6,089 3,627 1,808 2,297 1,047 5,130 76,784 19,244 32,810 2,454 35,167 4,065 3,760 207,744

8,382 1,000 385 159 9,926 − 9,926 e(5), e(6) e(5) e(3) e(7) 129,976 − 3,122 3,338 22,888 1,552 6,791 1,741 4,487 315 17,351 191,561 201,487

− − 1,326 7,484 8,810 − 8,810 (11,399) 11,300 845 960 − − − 328 − − (4,587) (2,553) 6,257

8,382 1,000 1,711 7,643 18,736 − 18,736 118,577 11,300 3,967 4,298 22,888 1,552 6,791 2,069 4,487 315 12,764 189,008 207,744

e(1)

Good Insurance (International) Limited

139

Appendix 1 – First-time adoption of IFRS
A1.2. Notes to the financial statements – First–time adoption of IFRS (cont’d)
(b) Reconciliation of equity reported under Euroland GAAP to equity reported under IFRS (cont’d) Appendix 1 Notes Previous GAAP €000
IFRS 1. 24(a)

31 December 2009

Adjustments €000

IFRS €000

Assets Goodwill Intangible assets Deferred expenses Property and equipment Investment properties Investment in an associate Financial Instruments Derivative financial instruments Held–to–maturity financial assets Loans and receivables Available–for–sale financial assets Financial assets at fair value through profit or loss Reinsurance assets Income tax receivable Insurance receivables Accrued income Cash and cash equivalents Total assets Equity and liabilities Equity Issued share capital Additional paid–in capital Revaluation reserves Retained earnings Total ordinary shareholders’ equity Other equity instruments Total equity Liabilities Insurance contract liabilities Investment contract liabilities Pension benefit obligation Deferred revenue Borrowings Derivative financial instruments Other financial liabilities Deferred tax liability Net asset value attributable to unit–holders Insurance payables Trade and other payables Total liabilities Total equity and liabilities

e(2) e(8) e(9) e(9)

2,977 444 5,938 3,420 4,249 1,991 1,240 1,677 6,137 79,417 21,189 34,711 2,812 19,914 2,157 27,198 215,471

(53) − 5,539 330 (306) − − − − − − − − − − − 5,510

2,924 444 11,477 3,750 3,943 1,991 1,240 1,677 6,137 79,417 21,189 34,711 2,812 19,914 2,157 27,198 220,981

7,385 1,045 664 8,633 17,727 − 17,727 e(5), (6) e(5) e(3) e(7) 137,922 − 3,275 2,995 21,064 1,758 7,272 693 367 4,841 17,557 197,744 215,471

− − 3,338 4,824 8,162 − 8,162 (11,662) 11,558 877 1,339 − − − 1,155 − − (5,919) (2,652) 5,510

7,385 1,045 4,002 13,457 25,889 − 25,889 126,260 11,558 4,152 4,334 21,064 1,758 7,272 1,848 367 4,841 11,638 195,092 220,981

e(1)

140

Good Insurance (International) Limited

Appendix 1 – First-time adoption of IFRS
A1.2. Notes to the financial statements – First–time adoption of IFRS (cont’d)
(c) Reconciliation of the comprehensive income statement under Euroland GAAP to the consolidated income statement and consolidated statement of comprehensive income statement reported under IFRS Appendix 1 Notes Previous GAAP €000 74,669 (19,112) 55,557 2,610 7,682 93 1,436 85 11,906 67,463 (39,410) 10,546 (8,395) 1,691 (35,568) (954) (111) (19,597) (20,662) (56,230) 11,233 230 11,463 (906) 10,557 Previous GAAP €000 10,557 − (24) 3,707 (863) 2,820 13,377
IFRS 1. 24(b)

31 December 2009

Adjustments €000 (1,218) − (1,218) (379) − − (444) − (823) (2,041) − − 1,223 1,223 − − (781) (781) 442 (1,599) − (1,599) (1,067) (2,666)

IFRS €000 73,451 (19,112) 54,339 2,231 7,682 93 992 85 11,083 65,422 (39,410) 10,546 (7,172) 1,691 (34,345) (954) (111) (20,378) (21,443) (55,788) 9,634 230 9,864 (1,973) 7,891

Gross premiums Reinsurers’ share of gross premiums Net premiums Fees and commission income Investment income Realised gains Fair value gains and losses Other operating revenue Other revenue Total income Gross benefits and claims paid Reinsurers’ share of gross benefits and claims paid Gross change in contract liabilities Reinsurers’ share of gross change in contract liabilities Net benefits and claims Finance costs Profit attributable to unit–holders Other operating and administrative expenses Other expenses Total benefits, claims and expenses Profit before share of associate’s profit Share of associate’s profit Profit before tax Income tax expense Profit for the year Consolidated statement of comprehensive income

e(5)

e(7)

e(4), e(9)

e(5), e(6)

e(2), e(8), e(9)

e(1)

Appendix 1 Notes

Adjustments €000 (2,666) − − (410) (119) (529) (3,195)

IFRS €000 7,891 − (24) 3,297 (982) 2,291 10,182
IFRS 1. 40

Profit for the year Exchange differences on translating foreign operations Net (loss)/gain on cash flow hedges Net (loss)/gain on available–for–sale assets Income tax relating to components of other comprehensive income Other comprehensive income for the year, net of tax Total comprehensive income for the year, net of tax (d) Cash flow statement

e(4)

The Group did not present a cash flow statement under Euroland GAAP. Therefore, it is not required to explain the material adjustments to the cash flow statement upon first time adoption of IFRS.

Good Insurance (International) Limited

141

Appendix 1 – First-time adoption of IFRS
A1.2. Notes to the financial statements – First–time adoption of IFRS (cont’d)
(e) Adjustments between Euroland GAAP and IFRS
IFRS 1. 25

The basis of material adjustments between Euroland GAAP and IFRS are as follows. (1) Deferred tax Under Euroland GAAP deferred tax assets and liabilities are recognised under the liability method for all timing differences that are expected to reverse in the foreseeable future. Under IAS 12 Income Taxes full provision is made for deferred tax assets and liabilities arising from temporary differences between the recognition of gains and losses in the financial statements and their recognition in the income tax return. Deferred tax assets are recognised for unused tax losses and tax credits to the extent that it is probable that future profits will be utilised against the unused tax losses and tax credits. Year ended 31 December 2010 €000 Additional deferred tax expense adjustment Total dividends charged in the year Under Euroland GAAP, the total dividends charge in the year is recorded within the income statement, but under IFRS it is recorded within the statement of changes in equity. Under Euroland GAAP, the dividends for the year ended 31 December 2009 charged to the income statement were €9,319,000. (2) Goodwill Reversal of goodwill amortisation and the recognition of a goodwill impairment adjustment Under Euroland GAAP, goodwill arising on acquisition is amortised on a straight line basis over a period of up to 20 years. Goodwill was only reviewed for impairment whenever there was an indicator of impairment. Under IFRS, goodwill arising on business combinations is no longer amortised, rather, it is subject to an annual impairment test at a cash–generating unit level. Consequently, the 2008 Euroland amortisation charge of €190,000 has been reversed and an impairment loss of €243,000 has been recognised due to the different level of testing required under IFRS. Year ended 31 December 2010 €000 Reversal of goodwill (39) 31 December 2009 €000 (53) 1 January 2009 €000 (14) (827)

31 December 2009 €000 (1,155)

1 January 2009 €000 (328)

(3) Full recognition of cumulative unrecognised actuarial losses on post retirement benefits Under Euroland GAAP, the cost of pension benefits is recorded in the income statement using actuarial valuation methods that provide a substantially even charge over the expected service lives of employees. Under IAS 19 Employee Benefits, the pension obligation is calculated by using the projected unit credit method which matches the fair value of the obligation against the fair value of the underlying plan assets. The cumulative unrecognised actuarial gains or losses on first time adoption are fully recognised within the statement of changes in equity. Subsequent actuarial gains or losses are recognised within the income statement by applying the corridor method. 31 December 2009 €000 Recognition of cumulative unrecognised actuarial losses on post retirement benefits 1 January 2009 €000

877

845

142

Good Insurance (International) Limited

Appendix 1 – First-time adoption of IFRS
A1.2. Notes to the financial statements – First–time adoption of IFRS (cont’d)
(4) Available–for–sale financial assets fair value adjustment Under Euroland GAAP, available–for–sale financial assets are measured at fair value at each reporting date, with changes recorded in the income statement. Under IAS 39: Financial Instruments: Recognition and Measurement, fair value adjustments are recorded in the statement of changes in equity. 31 December 2009 €000 Fair value adjustment for available–for–sale financial assets (5) Insurance and investment contract classification IFRS 4 requires that only contracts which meet the definition of an insurance contract can be classified as insurance contracts. This requires that the contracts transfer significant insurance risk. Under Euroland GAAP contracts were classified as insurance contracts if they were regulated as insurance contracts regardless of whether significant insurance risk was transferred. As a result, technical provisions in respect of contracts that do not transfer significant insurance risk have been reclassified as investment contracts. Furthermore, in respect of investment contracts without DPF, these contracts are now accounted for under IAS 39 and not as insurance contracts. Consequently, premium income previously recognised in 2008 of €1,218,000 has been derecognised with a corresponding entry to gross change in contract liabilities. Year ended 31 December 2010 €000 Reclassification of insurance contracts (6) Equalisation provision Under Euroland law, an equalisation provision is required (even though there is no actual liability at the reporting date) for a general insurer, to eliminate or reduce the volatility of incurred claims arising from exceptional levels of claims. Under IFRS, no equalisation provision is recorded as a liability, as there is no present obligation for the losses. Year ended 31 December 2010 €000 Derecognition of equalisation provision 5 − 1 January 2009 €000

410

2,894

31 December 2009 €000 11,558

1 January 2009 €000 11,300

31 December 2009 €000 104

1 January 2009 €000 99

Good Insurance (International) Limited

143

Appendix 1 – First-time adoption of IFRS
A1.2. Notes to the financial statements – First–time adoption of IFRS (cont’d)
(7) Deferred revenue Under Euroland GAAP, income is recorded within the period the cash is received. Under IFRS, initial and other front–end fees for future investment management services relating to investment contracts without DPF, are deferred and recognised as revenue when the related services are rendered. Year ended 31 December 2010 €000 Deferral of revenue Recognition of deferred revenue amortisation charge Total deferred revenue adjustment (8) Deferred expenses Under Euroland GAAP, all incremental costs relating to securing investment contracts without DPF, under which the Group will render investment management services, is recognised within the income statement. Under IFRS, incremental costs incurred during the financial period directly attributable to securing those contracts, are deferred and recognised as an asset, to the extent that they can be identified separately, measured reliably and it is probable that they will be recovered out of future revenue margins. These costs are amortised on a straight line basis in line with fee income. Year ended 31 December 2010 €000 Deferral of expense Recognition of deferred expenses amortisation charge Total deferred expenses adjustment (9) Owner–occupied property Owner–occupied properties with a fair value of €340,000 previously recorded within investment properties have been reclassified to property and equipment. The Group has elected to use the Euroland GAAP revaluation value as the deemed cost at the date of transition and therefore there was no adjustment at the date of transition. Property and equipment are carried at cost less accumulated depreciation, therefore, the fair value adjustment recorded in the 2008 income statement under Euroland GAAP of €34,000 has been reversed and a depreciation charge of €10,000 recognised under IFRS. (349) (383) (732) 381 (2) 379

31 December 2009 €000 1,359 (20) 1,339

1 January 2009 €000 978 (18) 960

31 December 2009 €000 14,561 (9,022) 5,539

1 January 2009 €000 14,910 (8,639) 6,271

144

Good Insurance (International) Limited

Appendix 2 – Shadow accounting
Commentary
If shadow accounting is applicable to the Group, the following disclosures will be required.

A2.1. Shadow accounting
In some of the accounting policies for insurance liabilities that have been adopted for the group, realised gains or losses on certain assets have a direct effect on the measurement of certain related insurance assets and liabilities. This is either because of the way that the accounting model works or because the policyholder has a contractual right linked to realised gains and losses only. In these situations, if unrealised gains or losses on these assets exist, the group applies ‘shadow accounting’. By applying shadow accounting the Group treats the impact of unrealised gains or losses on insurance assets and liabilities affected by an unrealised gain or loss on a financial asset in the same way as the gain or loss on that asset. In particular, the related adjustment to insurance liabilities or DAC is recognised in equity if the unrealised gains or losses are recognised directly in equity.

IFRS 4.30

A2.2. Accounting policy – Shadow accounting
Shadow accounting is consistently applied to all those situations where realised gains and losses on investments would influence insurance assets and/or insurance liabilities, and unrealised gains and losses on those investments exist. Where applicable, the adjustment to PVIF, DAC and the insurance liabilities is recognised in a manner consistent with the recognition of the unrealised gains and losses on the investments.
IFRS 4.30

A2.3. Consolidated statement of comprehensive income
IAS 1.51(a), (b), (c)

Notes Profit for the year Other comprehensive income Exchange differences on translating foreign operations Net loss on cash flow hedges Net gain on available–for–sale assets Shadow accounting adjustment Income tax relating to components of other comprehensive income Other comprehensive income for the year, net of tax Total comprehensive income for the year, net of tax Total comprehensive income attributable to: Equity holders of the parent Non–controlling interests

2010 €000 10,918

2009 €000 7,891

IAS 1.81, 82(g–i) IAS 1.51(d), (e)

IAS 1.81(b), 88

2.4(b) 2.4(b) 2.4(b) 2.4(a) 2.4(b)

(67) (36) 6,184 (25) (1,817) 4,239 15,157

− (24) 3,297 (15) (977) 2,281 10,172
IAS 1.90 IAS 1.91 IAS 1.82(i)

14,103 1,054 15,157

10,172 − 10,172

IAS 1.83(b)(ii) IAS 1.83(b)(i), IAS 27.33

Good Insurance (International) Limited

145

Appendix 2 – Shadow accounting
A2.4. Disclosures of components of other comprehensive income
(a) Note disclosures of income tax effects relating to comprehensive income 2010 Tax (expense) benefit €000 2009 Tax (expense) benefit €000

Before tax amount €000 Exchange differences on translating foreign operations Net movement on cash flow hedges Available–for–sale financial assets Shadow accounting adjustment Total

Net of tax amount €000

Before tax amount €000

Net of tax amount €000

(67) (36) 6,184 (25) 6,056

20 11 (1,855) 7 (1,817)

(47) (25) 4,329 (18) 4,239

− (24) 3,297 (15) 3,258

− 7 (989) 5 (977)

− (17) 2,308 (10) 2,281

(b) Note disclosures of components of other comprehensive income
IAS 1.90

2010 €000 Exchange differences on translating foreign operations Cash flow hedges: Losses arising during the year Available–for–sale financial assets: Gains arising during the year Less: Reclassification adjustments for gains included in the income statement Shadow accounting adjustment Income tax relating to components of other comprehensive income Other comprehensive income for the year, net of tax (67) (36) 6,230 (46) 6,184 (25) (1,817) 4,239

2009 €000 − (24) 3,338 (41) 3,297 (15) (977) 2,281

IAS 1.82(g)

IAS 1.90 IAS 1.82(g)

146

Good Insurance (International) Limited

Appendix 2 – Shadow accounting
A2.5. Consolidated Statement of changes in equity
Attributable to equity holders of the parent Available– for–sale financial assets €000 Foreign currency translation reserve €000 Total ordinary share– holders’ equity €000
IAS 1.51(a), (b), (c)

Notes

Issued share capital €000

Additional paid–in capital €000

Retained earnings €000

Cash flow hedging €000

Other equity instruments €000

Non– controlling Interests €000

Total equity €000

IAS 1.106(a), (c), (d)

IAS 1.51(d), (e)

At 1 January 2010 Profit for the year Other comprehensive income Total comprehensive income Issue of share capital Transaction costs for equity issue Issue of other equity instruments Coupon interest on other equity instruments accrued during the year Share–based payment Dividends paid during the year Non–controlling interests arising on business combination At 31 December 2010 42 42 43

7,385 −

1,045 −

13,457 10,063

4,014 −

(22) −

− −

25,879 10,063

− −

− 855

25,879 10,918

IAS 1.106(d) IAS 1.106(d) (i)

A2.4

4,103

(25)

(38)

4,040

199

4,239

IAS 1.106(d) (ii) IAS 1.106(a)

− 1,253 − −

− 26,672 (302) −

10,063 − − −

4,103 − − −

(25) − − −

(38) − − −

14,103 27,925 (302) −

− − − 52

1,054 − − −

15,157 27,925

(302) IAS 32.39 52

43 19 15

− − −

− − −

(1) 14 (3,236)

− − −

− − −

− − −

(1) 14 (3,236)

− − −

− − −

(1) 14
IFRS 2.50

(3,236) IAS 1.107

3

− 8,638

− 27,415

− 20,297

− 8,117

− (47)

− (38)

− 64,382

− 52

7,314 8,368

7,314 72,802
IAS 1.106(d)

Good Insurance (International) Limited

147

Appendix 2 – Shadow accounting
A2.5. Consolidated Statement of changes in equity (cont’d)
Attributable to equity holders of the parent Available– for–sale financial assets €000 Foreign currency translation reserve €000 Total ordinary share– holders’ equity €000
IAS 1.51(a), (b), (c)

Notes

Issued share capital €000

Additional paid–in capital €000

Retained earnings €000

Cash flow hedging €000

Other equity instruments €000

Non– controlling Interests €000

Total equity €000

IAS 1.106(a), (c), (d) IAS 1.51(d), (e)

At 1 January 2009 Profit for the year Other comprehensive income Total comprehensive income Issue of share capital Transaction costs for equity issue Share–based payment Dividends paid during the year At 31 December 2009 42 42 19 15

7,382 −

1,000 −

7,643 7,891

1,716 −

(5) −

− −

17,736 7,891

− −

− −

17,736 7,891

IAS 1.106(d) IAS 1.106(d) (i)

A2.4

− −

− −

− 7,891

2,298 2,298

(17) (17) −

2,281 10,172

− −

− −

2,281 10,172

IAS 1.106(d) (ii) IAS 1.106(a)

3 − − − 7,385

47 (2) − − 1,045

− − 10 (2,087) 13,457

− − − − 4,014

− − − − (22)

− − − − −

50 (2) 10 (2,087) 25,879

− − − − −

− − − − −

50 (2) IAS 32.39 10 (2,087) IAS 1.107 25,879
IAS 1.106(d)

A2.6. Notes to the financial statements
Deferred expenses Investment Deferred acquisition management costs (DAC) services Investment Investment contracts contracts Insurance with DPF without DPF contracts €000 €000 €000 6,042 1,626 (1,224) (15) 6,429 2,749 (1,978) (25) 7,175 4,027 1,076 (808) − 4,295 1,826 (1,311) − 4,810 295 520 (77) − 738 793 (110) − 1,421

Notes At 1 January 2009 Expenses deferred Amortisation Shadow accounting adjustment At 31 December 2009 Expenses deferred Amortisation Shadow accounting adjustment At 31 December 2010

Total €000 10,364 3,222 (2,109) (15) 11,462 5,368 (3,399) (25) 13,406

12 12

IFRS 4.30

12 12

IFRS 4.30

148

Good Insurance (International) Limited

Appendix 3 – Embedded value (EV)
Commentary
In addition to IFRS, Embedded Value (EV) is an alternative performance measure for reporting the underlying value of the Group’s life insurance operations. The total profit recognised over the full lifetime of the life insurance policy is the same as under the IFRS basis of reporting. EV, however, gives a clearer indication of the profitability of the life insurance business on inception. Shareholders’ funds also incorporate internally generated additional value of in–force business (VIF), which is not the case under IFRS.

A3.1. Reconciliation
The table below shows the reconciliation between the IFRS and EV reported equity. Adjustments reflect the difference in the recognition and measurement bases. 31 December 2010 Life insurance €000 Total assets before acquired additional value of in–force life insurance business Acquired additional value of in– force life insurance business Total assets included in the IFRS statement of financial position Liabilities Net assets included in the IFRS statement of financial position Additional value of in–force life insurance business Net assets included in the EV statement of financial position Issued share capital, revaluation reserves and other equity instruments IFRS basis retained earnings IFRS basis total equity Additional EV basis retained earnings EV basis total equity Investment Non–life management insurance services €000 €000

Unallocated €000

Total €000

169,730 25,143 194,873 170,335 24,538 5,428 29,966

76,976 − 76,976 58,309 18,667 − 18,667

51,963 − 51,963 5,810 46,153 − 46,153

4,287 − 4,287 20,815 (16,528) − (16,528)

302,956 25,143 328,099 255,269 72,830 5,428 78,258

52,533 20,297 72,830 5,428 78,258

Good Insurance (International) Limited

149

Appendix 3 – Embedded value (EV)
A3.1. Reconciliation (cont’d)
The table below shows the reconciliation between the IFRS and EV reported equity. Adjustments reflect the difference in the recognition and measurement bases. 31 December 2009 Life insurance €000 Total assets before acquired additional value of in–force life insurance business Acquired additional value of in– force life insurance business Total assets included in the IFRS statement of financial position Liabilities Net assets included in the IFRS statement of financial position Additional value of in–force life insurance business Net assets included in the EV statement of financial position Issued share capital, revaluation reserves and other equity instruments IFRS basis retained earnings IFRS basis total equity Additional EV basis retained earnings EV basis total equity Investment Non–life management insurance services €000 €000

Unallocated €000

Total €000

122,689 223 122,912 120,268 2,644 5,019 7,663

62,744 − 62,744 49,010 13,734 − 13,734

31,166 − 31,166 5,132 26,034 − 26,034

4,159 − 4,159 20,682 (16,523) − (16,523)

220,758 223 220,981 195,092 25,889 5,019 30,908

12,432 13,457 25,889 5,019 30,908

A3.2. Sensitivity disclosures
The table below provides EV sensitivity disclosures.
IFRS 4.39(d)(ii), 39A(a), IFRS 7.41

Change in assumption/variables

31 December 2010 Increase/(decrease) in Embedded value of life insurance €000 63 (137) (163) (265) (248) (257) (188) 94

31 December 2009 Increase/(decrease) in Embedded value of life insurance €000 52 (93) (118) (226) (208) (217) (123) 74

Interest rate Risk discount rate Lapse rates Mortality rate for life business Mortality rate for annuity business Morbidity rates Expenses Equity

+ 25 basis points +1% + 10 % + 10 % – 10 % + 10 % + 10 % +2%

150

Good Insurance (International) Limited

Appendix 3 – Embedded value (EV)
A3.3. Additional disclosures
When an entity prepares a sensitivity analysis that reflects interdependencies between risk variables and uses it to manage financial risks on explanation of the method used, limitations and objectives should also be disclosed. The following commentary should therefore be considered: The Group uses a number of sensitivity based risk management tools to understand volatility of earnings and manage its business more efficiently. The Group’s life insurance business is accounted for using the embedded value approach which provides a comprehensive framework for the evaluation of insurance and related risks. Sensitivities of embedded value to changes in both economic and non–economic experience are used on an ongoing basis in order to understand volatility of earnings and inform management’s decision making and planning processes. A key feature of life insurance business is the importance of managing the assets, liabilities and risks in a coordinated way, as this reflects the interdependence of these three elements. The analysis provided under A3.2 shows the effect on closing embedded value of reasonably possible changes in the main economic and non–economic variables across the Group’s insurance underwriting subsidiaries covered by the embedded value methodology. The effects are illustrative only and employ simplified scenarios. In addition, the variables are non–linear. As far as the economic assumptions are concerned, the analysis shows the sensitivity of closing embedded value to the following: A 1% increase in the discount rate compared to that used for the calculation of EV. A 2% increase in the assumed investment return for equity investments (for the portion of policyholders’ funds consisting of equities) excluding consequential changes to the risk discount rate. This assumption is used in projecting future fund growth and the level of distributable cash flows arising as a result. Assumed future bond returns are unaffected by this test. A 25 basis point increase in interest rates, including all consequential changes such as assumed investment returns for applicable asset classes, the market value of fixed interest securities and risk discount rates. This assumption is used in projecting future fund growth and the level of distributable cash flows arising as a result. In each sensitivity calculation provided for changes in key economic variables, all other assumptions remain unchanged except when they are directly affected by the revised economic conditions. For non–economic assumptions the analysis shows the sensitivity of closing embedded value to the following: A 10% increase in maintenance expenses (a 10% sensitivity on a base expense assumption of €10 per annum would represent an expense assumption of €9 per annum). It should be noted that external commissions (a significant component of maintenance expenses) are typically fixed, for example as a proportion of premiums, and are therefore not subject to changes in expenses inflation. When there is a ‘look through’ into service company expenses, the fee charged by the service company in this test is unchanged while the underlying expenses increase. A 10% increase in lapse rates (a 10% sensitivity on a base assumption of 5% would represent a lapse rate of 4.5% per annum.) The lapse rate represents the percentage of in–force policies that terminate as a result of non–payment of renewal premiums or surrenders. A 10% increase in both mortality and morbidity rates (i.e., increased longevity) compared to that used for the calculation of EV. This is disclosed separately for life assurance and morbidity business. Changes to key non–economic variables do not incorporate management actions that could be taken to mitigate effects nor do they take account of consequential changes in policyholder behaviour. In each sensitivity calculation all other assumptions are therefore unchanged. Some of the sensitivity scenarios shown in respect of changes to both economic and non–economic variables may have a consequential effect on the valuation basis when a product is valued on an active basis which is updated to reflect current economic conditions. While the magnitude of these sensitivities will, to a large extent, reflect the size of closing embedded value each variable will have a different impact on different components of the embedded value. In addition, other factors such as the intrinsic cost and time value of options and guarantees, the proportion of investments between equities and bonds and the type of business written, including for example, the extent of with–profit business versus non–profit business and extent to which the latter is invested in matching assets, will also have a significant impact on sensitivities.
IFRS 4.39(d)(ii), 39A(a), IFRS 7.41

Good Insurance (International) Limited

151

Appendix 4 – Non–controlling interests measured at fair value in business combination
Acquisitions in 2010 Acquisition of Good American Life Co On 30 April 2010, the Group acquired 80% of the common stock of Good American Life Co for a combination of cash and issuance of new shares. Good American Life Co is a leading Life Insurance provider of variable annuity products as well as equity–indexed life and savings products. The group has acquired this company as an important step for the Group to penetrate the US market in the life insurance industry. The fair value of the identifiable assets and liabilities of Good American Life Co as at the date of acquisition and the corresponding carrying amounts under IFRS immediately before the acquisition were: Fair value recognised on acquisition US$000 Present value of in–force business (Note 21) Future servicing rights (Note 21) Other intangible assets (Note 21) Deferred acquisition costs Property and equipment (Note 23) Investments Cash and cash receivables Trade receivables 37,715 13,500 7,683 − 1,551 60,162 2,547 18,228 141,386 (63,027) (5,268) (2,525) (15,713) (86,533) 54,853 Fair value recognised on acquisition €000 25,143 9,000 5,122 − 1,034 40,108 1,698 12,152 94,257 (42,018) (3,512) (1,683) (10,475) (57,688) 36,569 (8,944) 27,625 8,151 35,776
IFRS 3.B64(o)(ii) IFRS 3.B64(i) IAS 7.40(d) IFRS 3.B64(a)– (d)

Previous carrying value US$000 − − − 15,750 1,551 64,013 2,547 20,561 104,422 (64,535) (3,602) (1,005) (15,713) (84,855) 19,567

Previous carrying value €000 − − − 10,500 1,034 42,675 1,698 13,707 69,614 (43,023) (2,401) (670) (10,475) (56,569) 13,045

Gross insurance liabilities (Note 33) Gross liability for investment contracts (Note 34) Deferred income tax liability (Note 28(b)) Other liabilities Total Identifiable net assets Non–controlling interest measured at fair value Total net assets acquired Goodwill arising on acquisition (Note 20) Total consideration

IFRS 3.B64(o)(i)

The fair value of the non–controlling interest in Good American Life Co has been estimated by applying an income approach. Good American Life Co is an unlisted company and therefore no market information is available. The fair value estimate is based on: An assumed discount rate of 5% based on AA corporate bond yield of a similar entity to Good American Life Co. Terminal value, calculated based on a long–term sustainable growth rate for the industry ranging from 2 to 5% which has been used to determine income for the future years. An assumed adjustment because of the lack of control. This would be taken into account by market participants when estimating the fair value of the non–controlling interest. The total acquisition–date fair value of the consideration was €35,576,000 and comprised of an issue of 1,250,000 equity instruments at the published price of the shares of Good Insurance (International) Limited at the acquisition date. The fair value of shares issued is €27,859,000 and cash paid was €7,917,000.

IFRS 3.B64(f)(vi)

152

Good Insurance (International) Limited

Appendix 4 – Non-controlling interests measured at fair value in business combination
Acquisitions in 2010 (cont’d) Acquisition of Good American Life Co (cont’d) The largest fair value adjustments relate to the recognition of the present value for the in–force business on insurance contracts and investment contracts with discretionary participating features acquired by the Group (the PVIF) and future servicing rights on investment contracts without discretionary participating features to a reduction in other assets. The PVIF adjustment of €25,143,000 and future servicing rights adjustment of €9,000,000 represents the difference between the fair value and the carrying value of the acquired in–force life insurance and investment contracts with DPF at acquisition date. The present value of future profits takes into consideration the cost of capital and is estimated using actuarial assumptions based on projections made at purchase date but also using a discount rate that includes a risk premium. Deferred Acquisition costs (DAC) totalling €10,500,000, are not recognised in the IFRS fair value statement of financial position as they have no fair value at acquisition. The deferred tax liability has increased by €1,013,000 to reflect the increase in these intangible assets. Other intangible assets of €5,122,000 are represented by Good American Life Co’s distribution channels and have been valued by an independent third–party, using estimated post–tax cash flows and discount rates. The distribution channels are separable and therefore meet the criteria for recognition as an intangible asset under IAS 38 Intangible Assets. The distribution channels have been assessed as having nine years life and their value is being amortised over that period, with a corresponding release of the applicable deferred tax provision. The residual goodwill of €8,151,000 represents future synergies expected to arise in the combined life operations, the value of new business from new distribution channels and customers going forward, and the value of the workforce and management and other future business not included in the intangibles and the PVIF. None of the goodwill recognised is expected to be deductible for income tax purposes. A reclassification and fair value adjustment of €1,005,000 was required for those contracts previously classified as Insurance contracts under US GAAP which did not meet the definition of Insurance risk under IFRS 4, and therefore are accounted as investment contracts per the requirements of IAS 39. The fair value of trade receivables amounts to €12,152,000. The gross amount of trade receivables is €12,170,000. None of the trade receivables have been impaired and it is expected the full contractual amount can be collected. Acquisition–related costs of €500,000 are recognised in the income statement as administrative expenses. Transaction costs of €300,000 related to the issuance of shares as consideration are recognised directly in equity as negative share premium. From the date of acquisition, Good American Life Co has contributed €17,233,000 of revenue and €1,965,000 to the net profit before tax of the Group. If the combination had taken place at the beginning of the year, the profit from continuing operations for the Group would have been €20,679,000 and revenue from continuing operations would have been €2,358,000.
IFRS 3.B64(h) IFRS 4.31(b)

IAS 38.12, 22, 33, 34

IFRS 4.BC150 IFRS 3.B64(e) IFRS 3.B64(k)

IFRS 3.B64(m)

IFRS 3.B64(q)(i), (ii)

Commentary
IFRS 3 provides an option on a transaction by transaction basis on the recognition of non–controlling interest (minority interests). The entity may choose to fair value the non–controlling interest or to recognise its respective share of the total net assets. Good Insurance does not illustrate step acquisitions, but Ernst & Young has produced a number of thought leadership publications which illustrate the impact of this amendment, to learn more, please visit our website at www.ey.com/ifrs.

Good Insurance (International) Limited

153

Appendix 5 – Consolidated cash flow statement – direct method
for the year ended 31 December 2010

Commentary
Good Insurance presents cash flows using the indirect method. However, the cash flow statement prepared using the direct method for operating activities is presented in this appendix for illustrative purposes.
IAS 1.111 IAS 1.51(b), (c)

Notes Operating activities Payments to policyholders Receipts from policyholders Payments to reinsurers Receipts from reinsurers Payments to suppliers and employees Receipts from agents, brokers and intermediaries Purchase of derivatives Proceeds from sale of derivatives Purchase of fair value through profit or loss financial assets Proceeds from disposals of fair value through profit or loss financial assets Withdrawals by unit–holders Purchase of available–for–sale financial assets Proceeds from sale of available–for–sale financial assets Maturity of available–for–sale financial assets Purchase of held–to–maturity financial assets Maturity of held–to–maturity financial assets Purchase of loans and receivables Maturity of loans and receivables Purchase of investment properties Rental income on investment properties Dividend income received Interest income received Finance costs paid Income tax paid Net cash flows from operating activities Investing activities Acquisition of a subsidiary, net of cash acquired Interest income received on loans to related parties Proceeds from sale of property and equipment Purchase of intangible assets Increase in loans to related parties Purchase of property and equipment Net cash flows used in investing activities Financing activities Proceeds from exercise of options Transaction costs for equity issue Issue of other equity instruments Proceeds from Group loans Repayment of Group loans Finance costs paid on Group loan and bond borrowings Dividends paid to equity holders of the parent Net cash flows used in financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at 1 January Net foreign exchange difference Cash and cash equivalents at 31 December
154

2010 €000 (38,601) 73,153 (19,057) 10,061 (27,629) 4,885 (1,015)

2009 €000 (39,624) 73,653 (19,426) 10,558 (20,453) 1,217 (100) 1,070 (3,649) 3,000 (59) (5,000) 6,523 65 (531) 85 (2,264) 1,245 (219) 170 3,015 4,435 (312) (1,444) 11,955

IAS 7.10 IAS 1.51(d),(e) IAS 7.18(a)


(4,658) 7,000 (114) (8,000) 9,844 87 (333) 100 (2,509) 1,304 (203) 178 3,157 3,709 (422) (1,564) 9,373

24

28(a)

IAS 7.35 IAS 7.10 IAS 7.21 IAS 7.39 IAS 7.31 IAS 7.16(b) IAS 7.16(a) IAS 7.16(c) IAS 7.16(a) IAS 7.10

3

21 23

(6,219) 21 1,964 (116) (65) (1,414) (5,829)


18 1,095 (318) (50) (1,683) (938)

IAS 7.21

42 43

66 (302) 51 (3,500) (642) (3,236) (7,563) (4,019) 20,876 (52) 16,805

50 (2)

IAS 7.17(a) IAS 7.17(a) IAS 7.17(c) IAS 7.17(d) IAS 7.31 IAS 7.31 IAS 7.10


5,500 (450) (2,087) 3,011 14,028 6,848

15


20,876

IAS 7.28 IAS 7.45

32
Good Insurance (International) Limited

Appendix 6 – Glossary of insurance terms
Assumptions Benefits and claims experience variation Claims development table* The underlying variables which are taken into account in determining the value of insurance and investment contract liabilities. The difference between the expected and the actual benefit payout. A table that compares actual claims paid and current estimates of claims with previously-reported estimates of the same claims, demonstrating the sufficiency or otherwise of those previous estimates.

Deferred expenses – deferred acquisition costs Those direct and indirect costs incurred during the financial period arising (DAC) from the writing or renewing of insurance contracts and/or investment contracts with DPF, which are deferred and brought to account as expenses of future reporting periods. Deferred expenses – investment management services Those incremental costs incurred during the financial period directly attributable to securing investment contracts without DPF, under which investment management services are rendered, which are deferred to the extent that these costs can be identified separately, measured reliably and it is probable that these costs will be recoverable out of future revenue margins. Initial and other front–end fees received for rendering future investment management services relating to investment contracts without DPF, which are deferred and recognised as revenue when the related services are rendered. A contractual right given to a policyholder to receive, as a supplement to guaranteed benefits, additional benefits: that are likely to be a significant portion of the total contractual benefits whose amount or timing is contractually at the discretion of the issuer that are contractually based on: the performance of a specified pool of contracts or a specified type of contract the realised and or unrealised investment returns on a specified pool of assets held by the issuer the profit or loss of the company, fund or other entity that issues the contract General insurance An insurance contract which provides coverage other than life insurance to the policyholder. Examples include motor, household, liability, marine and business interruption. Short-tem life and health insurance is also frequently classified as general insurance. This is an estimate of the adjusted net worth of a life insurance business plus the value of in–force business. The measurement principles differ from the measurement principles under IFRS. The previous national accounting basis that will be used as the grandfathered accounting basis for the recognition and measurement of insurance contracts, as allowed under IFRS 4, until Phase II of IFRS 4 is completed, which will then regulate the recognition and measurement of insurance contracts. The risk of a possible future change in one or more of a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index or other variable, provided in the case of a non–financial variable that the variable is not specific to a party to the contract. An insurance contract which provides medical coverage to a policyholder. Claims to be made by a policyholder, but not yet reported to the insurance company.

Deferred revenue

Discretionary participation features (DPF)*

Embedded value (EV)

Euroland GAAP

Financial risk*

Healthcare Incurred but not reported (IBNR)

Good Insurance (International) Limited

155

Appendix 6 – Glossary of insurance terms
Intangible assets – present value of acquired in–force business (PVIF) Intangible assets – future servicing rights The difference between the fair value and the carrying amount of a portfolio of acquired insurance and/or investment contracts with DPF. The present value of future servicing rights from a portfolio of acquired investment contracts without DPF, under which the company will render investment management services. A contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder. Risk, other than financial risk, transferred from the holder of a contract to the issuer. A contract, which contains significant financial risk and may contain insignificant insurance risk, but does not meet the definition of an insurance contract. The managing of an investment contract on behalf of a policyholder, for which an investment management service fee, is charged. An annual assessment of the sufficiency of insurance and/or investment contract with DPF liabilities, to cover future insurance obligations. A contract which provides whole life, term assurance, unitised pension, guaranteed pension, pure endowment pension and mortgage endowment coverage to the policyholder. Comprises general insurance and healthcare and includes an insurance contract that is not life insurance. Comprises claims incurred by the policyholder and reported to the insurance company, and IBNR claims. In the case of general insurance business, earned premium is the proportion of written premiums (including where relevant those of prior accounting periods) attributable to the risks borne by the insurer during the accounting period. For non-life insurance contracts the premium income attributable to the insurance risks borne by the insurer in the reporting period, that is after adjusting for the opening and closing balances of unearned premium. For general insurance, premiums written are that an insurer is contractually entitled to receive from the insured in relation to contracts of insurance. These are premiums on contracts entered into during the accounting period and adjustments arising in the accounting period to premiums receivable in respect of contracts entered into in prior accounting periods. For life insurance, premiums written are premiums to which the insurer is contractually entitled becoming due for payment in the accounting period. A provision for premiums received or receivable for which the underlying risk has not yet expired. This provision is released over the term of the contract as the underlying risk expires. The provision for premium deficiency reflects management assessment of claims expected to be incurred after the reporting date in respect of current insurance contracts, that will, together with any deferred expenses, exceed the premiums to be earned on those contracts after the reporting date. Insurance risk that is ceded to another insurer to compensate for losses, but the ultimate obligation to the policyholder remains with the entity who issued the original insurance contract. An accounting adjustment to allow for the impact of recognising unrealised gains or losses on related insurance assets and liabilities, in a consistent manner to the recognition of the unrealised gains or losses on financial assets that have a direct effect on the measurement of the related insurance assets and liabilities, (i.e., in the income statement or in the statement of changes in equity). Investor in a unit–linked product, when the investment risk is borne by the policyholder and not by the insurance company.

Insurance contract*

Insurance risk* Investment contract

Investment management services Liability adequacy test Life insurance

Non–life insurance Outstanding claims provision Premiums earned

Premiums written

Provision for unearned premiums

Provision for premium deficiency

Reinsurance

Shadow accounting

Unit–holder/unit–linked
* Definition sourced from IFRS 4 Appendix A
156

Good Insurance (International) Limited

Index
IAS 1 Presentation of financial statements IAS 1.10 16, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45 13 17 17, 18, 147, 148 17, 18, 147, 148 17, 18, 147, 148 17, 18, 147, 148 17, 18, 147, 148 17, 18, 63, 147, 148 19, 154 21 20 20, 21, 22, 25, 26, 27, 29 25, 26, 27, 29 25, 26, 27, 29 48 48, 49, 50, 94 48, 49, 50 98 98 99 99 98, 99 99 99 63 20 20 33 13, 15, 16, 17, 18, 19, 20, 38, 145, 147, 148, 154 15, 17, 18, 145, 147, 148 13, 15, 17, 18, 19, 145, 147, 148, 154 13, 15, 17, 18, 19, 145, 147, 148, 154 13, 15, 16, 17, 18, 19, 20, 38, 145, 147, 148, 154 13, 15, 16, 17, 18, 19, 20, 145, 147, 148 16 16 16 16 16 16 IAS 1.54(i) IAS 1.54(k) IAS 1.54(m) IAS 1.54(n) IAS 1.54(o) IAS 1.54(q) IAS 1.54(r) IAS 1.55 IAS 1.60 IAS 1.61 IAS 1.66 IAS 1.77 IAS 1.78(a) IAS 1.78(d) IAS 1.78(e) IAS 1.79(a)(i) IAS 1.79(a)(ii) IAS 1.79(a)(iii) IAS 1.79(a)(iv) IAS 1.81 IAS 1.81(b) IAS 1.82(a) IAS 1.82(b) IAS 1.82(c) IAS 1.82(d) IAS 1.82(f) IAS 1.82(g) IAS 1.82(h) IAS 1.82(i) IAS 1.83 IAS 1.83(a) IAS 1.83(b)(i) IAS 1.83(b)(ii) IAS 1.85 IAS 1.88 IAS 1.90 IAS 1.91 IAS 1.96 IAS 1.99 IAS 27.33 16 16 16 16 16 16 16 16 16, 20, 34 20, 69, 95, 96, 122, 125, 126, 127 86 16 69 16 97 97 97 97 97 15, 145 15, 145 13 13 13 13 13 15, 64, 145, 146 15, 145 15, 145 13, 15, 145 13 15, 145 15, 145 13, 61 15, 61, 145 15, 64, 65, 145, 146 15, 145 15 13, 14 21, 145 IAS 7.40(b) IAS 7.40(c) IAS 7.40(d) IAS 7.45 IAS 7.6 IAS 7.8 53 53 52, 152 19, 154 19, 36 19, 36, 86

IAS 8 Accounting policies, changes in accounting estimates and errors IAS 8.14 IAS 8.15 IAS 8.28 IAS 8.30 IAS 8.30(d) 46 46 46 51 51

IAS 1.10(b) IAS 1.10(c) IAS 1.106(a) IAS 1.106(c) IAS 1.106(d) IAS 1.106(d)(i) IAS 1.106(d)(ii) IAS 1.107 IAS 1.111 IAS 1.112 IAS 1.112(a) IAS 1.117 IAS 1.117(a) IAS 1.117(b) IAS 1.122 IAS 1.125 IAS 1.125(b) IAS 1.135(a) IAS 1.135(a)(iii) IAS 1.135(b) IAS 1.135(c) IAS 1.135(d) IAS 1.135(e) IAS 1.136 IAS 1.137(a) IAS 1.138 IAS 1.16 IAS 1.32 IAS 1.51

IAS 10 Events after the reporting period IAS 10.12 IAS 10.13 IAS 10.17 IAS 10.21 IAS 12 Income taxes IAS 12.117 IAS 12.120A(a) IAS 12.22(c) IAS 12.24 IAS 12.34 IAS 12.37 IAS 12.39 IAS 12.44 IAS 12.46 IAS 12.47 IAS 12.56 IAS 12.61 IAS 12.61A IAS 12.71 IAS 12.77 IAS 12.79 IAS 12.80(a) IAS 12.80(b) IAS 12.80(d) IAS 12.80(g) IAS 12.80I IAS 12.81(a) IAS 12.81(b) IAS 12.81(c)(i) IAS 12.81(e) IAS 12.81(f) IAS 12.81(g)(i) IAS 12.81(g)(ii) IAS 12.88 IAS 16 Property, plant and equipment IAS 16.1 IAS 16.12 IAS 16.14 IAS 16.30 IAS 16.51 IAS 16.67 IAS 16.68 IAS 16.71 IAS 16.73(a) 27 27 27 27 27 27 27 27 27
157

44, 137 44 20 137

IAS 1.51(a) IAS 1.51(b) IAS 1.51(c) IAS 1.51(d)

IAS 7 Cash flow statements IAS 7.10 IAS 7.14 IAS 7.16(a) IAS 7.16(b) IAS 7.16(c) IAS 7.17(a) IAS 7.17(c) IAS 7.17(d) IAS 7.18 IAS 7.18(a) IAS 7.18(b) IAS 7.20(a) IAS 7.20(b) IAS 7.20(c) IAS 7.21 IAS 7.28 IAS 7.31 IAS 7.35 IAS 7.39 IAS 7.40(a) 19, 154 19 19, 154 19, 154 19, 154 19, 154 19, 154 19, 154 19, 154 154 19 134 134 134 19, 154 19, 154 19, 154 19, 154 19, 154 53

36 42 37 37 37 37 37 37 36 37 37 36, 37 37 37 13 62 62 62 62 62 62 62, 85 62 62 85 85 85 85 50

IAS 1.51(e) IAS 1.54 IAS 1.54(a) IAS 1.54(b) IAS 1.54(c) IAS 1.54(d) IAS 1.54(e)

Good Insurance (International) Limited

Index
IAS 16.73(b) IAS 16.73(c) IAS 16.73(d) IAS 16.73(e)(i) IAS 16.73(e)(iii) IAS 16.73(e)(ix) IAS 16.73(e)(vii) IAS 16.74(a) IAS 17 Leases IAS 17.20, IAS 17.25, IAS 17.27, IAS 17.33, IAS 17.35(d), IAS 17.52, IAS 17.56(a), IAS 17.56(c), IAS 17.8, IAS 18 Revenue IAS 18 Appendix 14(b)(ii) IAS 18 Appendix 14(b)(iii) IAS 18.30(a) IAS 18.30(c) IAS 18.8 45 24, 26, 42,59,86,96 45 45 37 38 38 38 38 135 38 135 38, 135 38 27 27 69 69 69 69 69 69 IAS 23 Borrowing costs IAS 23.26 IAS 23.27 IAS 23.8 69 28 28 IAS 33 Earnings per share IAS 33.45, IAS 33.66, IAS 33.70(b) IAS 33.70(c) IAS 33.70(d) 44 13, 63 63 63 63

IAS 24 Related party disclosures IAS 24.12 IAS 24.16 IAS 24.16(a) IAS 24.16(b) IAS 24.16(e) IAS 24.17 IAS 24.17(a) IAS 24.17(b) IAS 24.17(c) IAS 24.20(h) IAS 24.21 136 137 137 137 137 136, 137 136 136 136 137 136

IAS 36 Impairment of assets IAS 36.10(a) IAS 36.10(b) IAS 36.110 IAS 36.114 IAS 36.117 IAS 36.119 IAS 36.124 IAS 36.129(a) IAS 36.134 IAS 36.134(a) IAS 36.134(c) IAS 36.134(d) IAS 36.134(d)(i) IAS 36.134(d)(ii) IAS 36.134(d)(iii) IAS 36.134(d)(iv) IAS 36.134(d)(v) IAS 36.134(f) IAS 36.25 IAS 36.30 IAS 36.55 IAS 36.59 IAS 36.6 IAS 36.60 IAS 36.66 IAS 36.80 IAS 36.86 IAS 36.9 IAS 36.90 IAS 36.96 26 25 25 25 25 25 25 55, 56 66, 67 66 66 66, 67 67 67 66, 67 67 67 67 25 25 25 25 25 25 25 22, 23 23, 25 25, 26 25 26

IAS 27 Consolidated and separate financial statements IAS 27.12 IAS 27.20 IAS 27.21 IAS 27.22 IAS 27.23 IAS 27.24 IAS 27.26 IAS 27.28 IAS 27.30 IAS 27.33 IAS 27.34 20 20 20 20 20 20 20 21 21 15, 145 21

IAS 19 Employee benefits IAS 19.120A(b) IAS 19.120A(c) IAS 19.120A(e) IAS 19.120A(f) IAS 19.120A(g) IAS 19.120A(j) IAS 19.120A(k) IAS 19.120A(l) IAS 19.120A(m) IAS 19.120A(n) IAS 19.120A(p) IAS 19.120A(q) IAS 19.46 IAS 19.54 IAS 19.58 IAS 19.58A IAS 19.64 IAS 19.7 IAS 19.92 IAS 19.93 IAS 19.93A IAS 19.96 42, 92 92 93 92 92 93 93 93 92 93 94 93 61 42 42 42 42 42 42 42 15, 42 42

IAS 28 Investments in associates IAS 28.11 IAS 28.13 IAS 28.18 IAS 28.22 IAS 28.23(a) IAS 28.26 IAS 28.31 IAS 28.33 IAS 28.37(a) IAS 28.37(b) IAS 28.37(e) IAS 28.38 IAS 28.39 IAS 28.6 28 28 28 28 28 28, 68 28 28 68 69 28 13, 16 28 28

IAS 37 Provisions, contingent liabilities and contingent assets IAS 37.14, IAS 37.45, IAS 37.47, IAS 37.53, IAS 37.54, IAS 37.60, IAS 37.68, IAS 37.86, IAS 38 Intangible assets IAS 38.104 IAS 38.107 IAS 38.109 IAS 38.118 IAS 38.118(c) IAS 38.118(d) IAS 38.118(e) IAS 38.118(e)(iv) IAS 38.118(e)(vi) IAS 38.12 IAS 38.22 IAS 38.24 IAS 38.33 IAS 38.34 23 23 23 23, 68 68 23 68 68 68 53, 153 53, 153 23 53, 153 53, 153 43 43 43 43 43 43 43 135

IAS 32 Financial instruments – presentation IAS 32.16 IAS 32.33 IAS 32.35 IAS 32.42 97 44 44, 97 33

IAS 21 The effects of changes in foreign exchange rates IAS 21.21 IAS 21.23(a) IAS 21.23(b) IAS 21.23(c) IAS 21.28 IAS 21.32 IAS 21.39(a) IAS 21.39(b) IAS 21.39(c) IAS 21.47 IAS 21.48 IAS 21.9
158

38 38 38 38 75, 38 38 38 38 38 38 38 38

IAS 32 Financial instruments – presentation IAS 32.16 IAS 32.33 IAS 32.35 IAS 32.39 97 44 97 17, 18, 147, 148

Good Insurance (International) Limited

Index
IAS 38.57 IAS 38.74 IAS 38.88 IAS 38.97 IAS 39 Financial instruments – Recognition and Measurement IAS 39.100 IAS 39.101 IAS 39.14 IAS 39.17 IAS 39.18, IAS 39.18(b) IAS 39.20(a) IAS 39.20(c) IAS 39.30(a) IAS 39.38 IAS 39.39 IAS 39.40 IAS 39.41 IAS 39.43 IAS 39.46 IAS 39.46(a) IAS 39.46(c) IAS 39.47 IAS 39.47(c) IAS 39.49 IAS 39.50E IAS 39.55(a) IAS 39.55(b) IAS 39.56 IAS 39.58 IAS 39.59 IAS 39.63 IAS 39.64 IAS 39.65 IAS 39.67 IAS 39.68 IAS 39.69 IAS 39.70 IAS 39.86 IAS 39.88 IAS 39.89 IAS 39.9 IAS 39.9(a) IAS 39.91 IAS 39.92 IAS 39.93 IAS 39.95 IAS 39.95(b) IAS 39.97 IAS 39.98 IAS 39.99 IAS 39.AG14 IAS 39.AG84 IAS 39.AG87 IAS 39.AG89 IAS 39.AG93 34 34 42 31 31 31 31 31 31 29 41 41 41 29, 30, 33, 40, 41 29, 30 30 35 41, 42, 45 42 40 30 29, 33 30 30, 41, 45 31 31 31 31 31, 32 30, 32 32 32 32 33 33 34 29, 30, 34, 42, 45 29 34 34 34 34, 45 45 34 34 34 29 31 32 32 31, 32 23 23 23 23 IAS 40 Investment property IAS 40.18 IAS 40.19 IAS 40.20 IAS 40.38 IAS 40.57 IAS 40.60 IAS 40.61 IAS 40.65 IAS 40.66 IAS 40.69 IAS 40.75(a) IAS 40.75(d) IAS 40.75(e) IAS 40.75(f) IAS 40.75(f)(i) IAS 40.76 IAS 40.76(a) IAS 40.76(d) IFRIC 8 Scope of IFRS 2 IFRIC 8.11 IFRIC Interpretation 4 Determining whether an Arrangement contains a Lease IFRIC 4.17 IFRIC 4.6, 1 38 38 43 27 27 27 27 27 27 27 27 27 27, 45 27 70 27, 70 59, 70 59 60, 70 70 60, 70 IFRS 2.30 IFRS 2.32 IFRS 2.33 IFRS 2.44 IFRS 2.45 IFRS 2.45(a) IFRS 2.45(a)(iii) IFRS 2.45(b) IFRS 2.45(c) IFRS 2.45(d) IFRS 2.46 IFRS 2.47(a) IFRS 2.47(a)(i) IFRS 2.47(a)(ii) IFRS 2.50 IFRS 2.51(a) IFRS 2.51(b) IFRS 2.53 IFRS 2.56 IFRS 2.7 IFRS 2.B42 44 44 44 43 43, 64, 65 64, 65 65 65 65 65 64, 65 65, 66 66 66 17, 18, 147 61, 64 65 43, 44 65 17, 44 43

IFRS 3 Business combinations IFRS 3.10 IFRS 3.19 IFRS 3.23 IFRS 3.32 IFRS 3.37 IFRS 3.5 IFRS 3.54 IFRS 3.B63(a) IFRS 3.B64(a) IFRS 3.B64(b) IFRS 3.B64(c) IFRS 3.B64(d) IFRS 3.B64(e) IFRS 3.B64(f)(iii) IFRS 3.B64(h) IFRS 3.B64(i) IFRS 3.B64(k) IFRS 3.B64(m) IFRS 3.B64(o)(i) IFRS 3.B64(o)(ii) IFRS 3.B64(q)(i) IFRS 3.B64(q)(ii) IFRS 3.B67 22 22 54 22 22 22 22 22 52, 152 52, 152 52, 152 52, 152 53, 153 53, 152 53, 153 52, 152 53, 153 53, 153 52, 152 152 53, 153 53, 153 54

IFRS 1 First-time adoption of International Financial Reporting Standards IFRS 1 IFRS 1 Appendix C IFRS 1 Appendix D IFRS 1.21 IFRS 1.22 IFRS 1.23 IFRS 1.24 IFRS 1.24(a) IFRS 1.24(b) IFRS 1.25 IFRS 1.40 IFRS 1.7 IFRS 1.B2 IFRS 1.B4 IFRS 1.D10 IFRS 1.D19 IFRS 1.D4 3, 7, 8, 46, 138, 139, 140, 141, 142 138 138 138 138 138 139, 140, 141 139, 140 141 142 141 138 138 138 138 138 138

IFRS 4 Insurance contracts IFRS 4 Appendix A IFRS 4.13 IFRS 4.14(c) IFRS 4.15 IFRS 4.16 IFRS 4.17 IFRS 4.18 IFRS 4.19 IFRS 4.20 IFRS 4.30 IFRS 4.31 21, 22, 156 20 36 39, 40 39, 40 39, 40 39, 40 39, 40 35 145, 148 24, 53, 54, 153

IFRS 2 Share-based payment IFRS 2.10 IFRS 2.27 IFRS 2.27A IFRS 2.28 43 43 43 43, 44

Good Insurance (International) Limited

159

Index
IFRS 4.31(b) IFRS 4.34 IFRS 4.35 IFRS 4.37(a) 24, 53, 153 22 22 21, 22, 23, 24, 25, 26, 27, 35, 36, 39, 40, 41, 42, 44, 45, 60 16, 35, 58, 59, 84, 85, 86, 87, 96 35, 84 104, 106, 109 88, 89, 91 26, 27, 41, 42, 44, 45, 68, 86, 87, 88, 89, 90, 91 100, 101, 102, 103, 104, 108 100, 101, 102, 108 106, 109 101, 102, 103, 104, 108, 109 110, 111, 112 122, 123, 124, 125 107, 130, 131, 132, 150, 151 106, 107, 109, 130, 131, 132, 150, 151 1, 110 22 22 22 21 21 53, 153 13 IFRS 7.20(a) IFRS 7.20(a)(i) IFRS 7.20(a)(ii) IFRS 7.20(b) IFRS 7.20(c) IFRS 7.20(c)(i) IFRS 7.20(e) IFRS 7.21 IFRS 7.22(a) IFRS 7.22(b) IFRS 7.22(c) IFRS 7.23(a) IFRS 7.23(d) IFRS 7.24(a)(i) IFRS 7.24(a)(ii) IFRS 7.24(b) IFRS 7.25 IFRS 7.27 IFRS 7.27A IFRS 7.27B, IFRS 7.28 IFRS 7.29 IFRS 7.29(a) IFRS 7.29(c) IFRS 7.30 IFRS 7.33 59, 60, 75 59, 60 59 61, 75 13 13 61 29, 30, 31, 32, 33, 41 34, 72 33, 71, 72 72 73 73 60, 72 72 73 70, 71, 74, 75, 76, 77, 84, 86, 91, 92, 95, 96 35 1, 76, 77, 79 77, 80, 81, 82, 83 79 74, 76, 91, 92, 95, 96 74, 76, 95 91 91 71, 97, 98, 99, 100, 113, 122, 127, 128, 130, 132 99, 100, 113, 122, 127, 128, 130, 132 97, 98, 99, 100, 113, 128, 130, 132 114, 115, 117, 118, 119, 120, 128, 129 120, 129, 130, 132 115 114, 117, 119, 120 122 IFRS 7.36(c) IFRS 7.36(d) IFRS 7.37(a) IFRS 7.37(b) IFRS 7.37(c) IFRS 7.39(a) IFRS 7.40(a) IFRS 7.40(b) IFRS 7.41 IFRS 7.6 IFRS 7.8 IFRS 7.8(a) IFRS 7.8(b) IFRS 7.8(c) IFRS 7.8(d) IFRS 7.8(f) IFRS 7.B10(b) IFRS 7.B11C IFRS 7.B11E IFRS 7.B11E(a) IFRS 7.B11E(c) IFRS 7.B11F(g) IFRS 7.B19 IFRS 7.B5(d)(i) IFRS 7.B5(d)(ii) IFRS 7.B5(f) IFRS 7.B6, IFRS 7.BC54 IFRS 7.IG13B IFRS 7.IG24 117, 118, 119, 120, 121 117, 118 118, 121 121 121 122, 123, 124, 125 129, 132, 133 132, 133 150, 151 74, 75 16, 73, 75, 94 73, 75 73 73 73 94 71 123, 124 122, 125 122 122 71 130, 131, 132 31 31 31 100 118 82 120

IFRS 4.37(b) IFRS 4.37(b)(i) IFRS 4.37(c) IFRS 4.37(d) IFRS 4.37(e)

IFRS 4.38 IFRS 4.39(a) IFRS 4.39(c)(i) IFRS 4.39(c)(ii) IFRS 4.39(c)(iii) IFRS 4.39(d)(i) IFRS 4.39(d)(ii) IFRS 4.39A(a) IFRS 4.44 IFRS 4.7 IFRS 4.8 IFRS 4.9 IFRS 4.B29 IFRS 4.B30 IFRS 4.BC150 IFRS 4.IG24

IFRS 8 Operating segments IFRS 8.22(a) IFRS 8.22(b) IFRS 8.23 IFRS 8.23(a) IFRS 8.23(c) IFRS 8.23(d) IFRS 8.23(e) IFRS 8.23(f) IFRS 8.23(g) IFRS 8.24(a) IFRS 8.25 IFRS 8.27(a) IFRS 8.33(a) IFRS 8.33(b) IFRS 8.34 54 54 55, 56, 57 55, 56 55, 56 55, 56 55, 56 55, 56 55, 56 57 54 54 58 58 58

IFRS 7.33(a) IFRS 7.33(b) IFRS 7.34(a) IFRS 7.34(c) IFRS 7.35 IFRS 7.36(a) IFRS 7.36(b)

IFRS 7 Financial instruments disclosures IFRS 7. 27B (a) IFRS 7. 27B (b) IFRS 7.14(a) IFRS 7.16 IFRS 7.20 77 80, 81, 82 69 31, 32, 121 13, 59, 60, 61, 75

160

Good Insurance (International) Limited

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