<strong>QBE</strong> <strong>European</strong> <strong>Operations</strong> <strong>plc</strong> Annual report 2011 80 Notes to the financial statements continued For the year ended 31 December 2011 26 Guarantees and contingencies Of the total assets disclosed on the Group’s balance sheet £2,294,371,000 (2010 £2,379,073,000) are subject to Lloyd’s Premium Trust Funds, or will become subject to them on realisation, of which £2,232,177,000 (2010 £2,256,411,000) are investments. The Group has liabilities covered by the deposit of certain investments and cash, in respect of undrawn letters of credit amounting to: 2011 2010 Original Reporting Original Reporting currency currency currency currency 000 £000 000 £000 United States dollar 30,366 19,544 42,044 26,930 Euro 13,336 11,108 29,151 24,983 Canadian dollar 111 70 209 135 Pound sterling 35,132 35,132 46,381 46,381 65,854 98,429 Additionally there are charges over fixed income securities of US$14,732,635 (£9,482,284) (2010 US$17,020,060 (£10,901,896)) backing the Group’s Excess and Surplus lines business in the USA, which are required by the US insurance regulatory authorities. 27 Provisions for liabilities and charges 2011 2010 £000 £000 1 January 2011 1,534 4,275 Utilised during year (106) (2,741) 31 December 2011 1,428 1,534 The current year provision is in relation to the voluntary pension provision. On 1 January 2006, Limit Holdings Limited, a fellow <strong>QBE</strong> undertaking, transferred at book value to the company a voluntary pension provision. Details of the voluntary pension arrangement are as follows: The company operates an arrangement under which former employees of <strong>QBE</strong> Underwriting Limited (previously Janson Green Limited) receive retirement benefits, including enhanced pension payments and medical insurance, provided by the company on an ex-gratia basis. The payments are adjusted for inflation on an annual basis. The costs are paid by the company as they fall due and hence the arrangement is unfunded. Since the commitments under the arrangement relate to past service the liability is provided for in full at the directors’ estimate of the ultimate cost based on mortality tables. The provision assumes that future inflation in pension payments is offset by similar changes in the discount rate used to calculate the present value of such obligations. All adjustments to the provision are dealt with in the profit or loss account. The restructuring provision booked in 2009 was fully utilised in 2010 upon the completion of the exercise. 28 Funds at Lloyd’s (“FAL”) FAL are those of the Group’s funds which are subject to the terms of the Lloyd’s Deposit Trust Deed and which are used to support the underwriting of the Group’s corporate member subsidiary. Under Lloyd’s regulations, the amounts of FAL required to support underwriting for the following year and open years of account are determined at the “coming-into-line” date as prescribed by Lloyd’s each year. At 31 December 2011, these amounted to £1,068,481,000 (2010 £897,004,000). This requirement was satisfied as follows: 2011 2010 £000 £000 Letters of credit guaranteed by the ultimate holding company 908,844 688,764 Interim profits 47,537 76,051 General deposit 28,318 64,469 Reserve margins 83,782 67,720 1,068,481 897,004
<strong>QBE</strong> <strong>European</strong> <strong>Operations</strong> <strong>plc</strong> Annual report 2011 81 29 Parent undertaking The company’s ultimate controlling entity is <strong>QBE</strong> Insurance Group Limited which is incorporated in Australia. The consolidated accounts for <strong>QBE</strong> Insurance Group Limited are available from the company’s registered office at Plantation Place, 30 Fenchurch Street, London EC3M 3BD. The company’s immediate parent company is <strong>QBE</strong> Insurance Holdings Pty Limited, which is incorporated in Australia. 30 Capital commitments The Group’s capital commitments authorised and contracted for but not provided for in the accounts amount to £1.1 million (2010 £5.8 million). 31 Post balance sheet event On 16 February 2012, the company paid an interim dividend of £356,700,000 to ordinary shareholders. Financial statements