IBRC annual report for 2011 - Irish Bank Resolution Corporation ...

Notes to the financial statements continued40. Liabilities to customers under investment contractsThe Group2011 2010€m €mAssets held in respect of liabilities to customers under investment contracts:Investment property 1,130 1,193Financial assets at fair value through profit or loss 194 237Loans and advances to banks 5 13Total 1,329 1,443Less:Funding provided by parent Bank (738) (764)Funding provided by external banks (305) (299)Derivative financial instruments (60) (84)Net asset value attributable to external unitholdersAdd:(37) (37)Funds on deposit with parent Bank 94 92Liabilities to customers under investment contracts at fair value283 351Under the terms of the investment contracts issued by the Group's assurance business legal title to the underlying investmentsis held by the Group, but the inherent risks and rewards in the investments are borne by customers through unit-linked lifeassurance policies. In the normal course of business the Group's financial interest in such investments is restricted to feesearned for contract set up and investment management.Underlying investments related to certain investment contracts are held through unit trusts or other legal entities which are notnecessarily wholly-owned subsidiaries of the Group. The inherent risks and rewards borne by external third parties are treatedas either amounts attributable to external unitholders or non-controlling interests as appropriate.In accordance with IFRS, obligations under investment contracts are carried at fair value in the statement of financial positionand are classified as liabilities to customers under investment contracts. The above table sets out where the relevant assets andliabilities in respect of the life assurance business investment contracts are included in the Group statement of financialposition. On consolidation, Group loans and advances to customers and Group loans classified as held for sale are shown netof funding of €724m (2010: €749m) and €14m (2010: €15m) respectively provided by the parent Bank to fund assets held bythe life assurance business in respect of liabilities to customers under investment contracts.Total funding provided by the parent Bank amounts to €935m (2010: €954m). €738m represents the current market value ofassets, net of related derivative liabilities, to which the parent Bank holds recourse. In prior periods the market value of assetsto which the Bank held recourse exceeded the amount of funding that it had provided in relation to those assets. The Grouphas assessed these lending facilities for impairment, with any resulting charge included within provisions for impairment onloans and advances to customers.Derivative financial instruments are entered into by the Group's assurance company in order to hedge the interest rateexposure on funding provided to geared policyholder funds. The decrease in liabilities to customers under investment contractsin the current year results primarily from net withdrawals by policyholders from unit-linked investment funds during the year.94