2009 Annual report - Nedbank Group Limited

N E D N A M I B I AH O L D I N G SNotes to the Consolidated Annual Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 20093. significant ACCOUNTING POLICIES (continued)3.21 Policyholder insurance contracts (continued)The liability assumptions are reviewed annually. Any changes in assumptions and/or other changes to the liabilitycalculation are reflected in the statement of comprehensive income as they occur.Outstanding claims provisionProvision is made in the policyholders’ liabilities under insurance contracts for the estimated cost of claims outstandingat the end of the year.Liability adequacy testAt each reporting date, liability adequacy tests are performed to ensure the adequacy of the insurance contract liabilitiesnet of related intangible present value of acquired in-force business assets. The liability is calculated in terms of the FSVbasis described in PGN 104. The FSV basis meets the minimum requirement of liability adequacy test.Acquisition costsAcquisition costs for insurance contracts represent commission that relate to the securing of new contracts.The FSV method for valuing insurance contracts makes explicit allowance for the deferral of acquisition costs and henceno explicit deferred acquisition cost asset is recognised in the statement of financial position for insurance contracts.94 G RO U P A N N U A L F I N A N C I A L STAT E M E N T S