annual financial statements - Nedbank Group Limited

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46 NEDNAMIBIA HOLDINGS LIMItED ANNUAL REPORt 2010 STATUTorY ACtUARY’S REPORt TO THE mEmbERS OF NEDNAmIbIA LIFE ASSURANcE cOmPANY LImITED 1. Financial Soundness I have conducted an actuarial valuation of NedNamibia Life Assurance company Limited in accordance with generally accepted actuarial principles. These principles require reasonable provision for future outgo under in-force policies, generally based on the assumption that current conditions will continue. Provision is therefore not made for all possible contingencies. The liability has been based on cash flow projections, on a per policy basis, using the assumptions contained in note 3 below. Statement of Assets, Liabilities, Excess Assets and Capital requirements Statutory reporting Basis 2010 N$’000s 2009 N$’000s Total value of assets as per statement of financial position 54,711,213 32 624,060 Value of liabilities 30,195,760 20 454,840 current and other liabilities as per statement of financial position 72,500 173,085 Total value of liabilities 30,268,260 20,627,925 Excess assets 24,442,953 11,996,135 The value of the assets, liabilities and excess assets on the Published Reporting basis are identical to the Statutory Reporting basis. 2. Analysis of Change in Excess Assets The excess of the value of the assets over the liabilities has changed as follows over the reporting period. Analysis of Change in Excess Assets 2010 2009 Excess assets as at end of reporting period 24,442,953 11,996,135 Excess assets as at beginning of reporting period 11,996,135 6,341,118 Change in excess assets over the reporting period 12,446,818 5,655,017 This change in excess assets is due to the following factors: Investment return 2,884,849 1,119,918 Total investment return 2,884,849 1,119,918 Operating profit 5,445,611 2,803,549 changes in valuation methods and assumptions 4,504,218 1,888,339 Taxation (387,860) (156,789) Total earnings 12,446,818 5,655,017 capital raised – – Dividends paid – – Total change in excess assets 12,446,818 5,655,017 reconciliation to reported earnings Total earnings as per above table 12,446,818 5,655,017 Reported earnings in the financial statements 12,446,818 5,655,017 Difference – – The excess assets on the Statutory (and Published) Reporting basis increased to N$12,446,818. This is an improvement from the previous year’s earnings of N$5,655,017. The increase in earnings is attributable to good expense and mortality experience, reducing expense and mortality assumptions and another strong year of new business flows. 3. Changes in Valuation Methods or Assumptions The value of liabilities decreased by N$1,022,991 as a result of the renewal expense assumptions reducing from N$191,70 per annum to N$170 per annum. This assumption is reduced to reflect the expense basis that Nedgroup Life will use when administering this tranche of business after transfer in 2011. The value of the liabilities decreased by N$3,481,227 as a result of the mortality, morbidity and retrenchment assumptions reducing 25%. claims have been small over the last two years and there is strong motivation to drop the assumptions despite a small cohort of data. The 25% reduction was asserted with the view that there may be scope to further decrease this over time as the statistical credibility grows.
4. Valuation basis of assets Assets are valued at financial position values i.e. at market or directors’ value as described in the annual financial statements. VALUATIoN oF PoLICY LIABILITIES The valuation of the policy liabilities was conducted based on the assumptions below. The assumptions are based on best estimates of the expected experience. The main assumptions, before allowing for prescribed margins, were as follows: Investment 6.91% per annum (net of tax) Return mortality 75% x SA85/90 Heavy (ULT) + 37.5% of AIDS extra mortality (High Risk Group males with 2 year progression) Permanent cSI Skilled Lives x 0.9375 Disability Dread Disease cSI 1997 Dread Disease x 0.9375 Temporary Disability cmIR12 Inception Rates (4 week deferred period) x 0.375, 6 months payment on average Retrenchment 3.75% Inception Rate, 6 months payment on average Withdrawals Year 1 = 15% Year 2 = 10% Year 3+ = 5% NAmFISA 0.15% of Outstanding Liability Levy Renewal N$170 per annum Expenses Expense 5.5% per annum Inflation Taxation 40% Investment income is taxed at 34%. All investment income assumed to be taxable • No negative reserves were held. • An incurred but not reported reserve of 6/12ths of the annual expected claims was established. 5. Capital adequacy requirement The capital adequacy requirement (“cAR”) is calculated, in accordance with PGN 104, to determine whether the excess of assets over liabilities is sufficient to provide for the possibility of actual future experience departing negatively from the assumptions made in calculating policy liabilities and against fluctuations in the value of assets. In line with changes to PGN 104 guidelines, cAR now includes operational risk and credit risk components. 47 For the purpose of grossing up the intermediate ordinary capital adequacy requirements (“IOcAR”) to determine the ordinary capital adequacy requirements (“OcAR”), it has been assumed that assets backing the capital adequacy requirements are invested 100% in cash or cash equivalents. This is in line with a decision taken by the board. The OcAR exceeded the termination capital adequacy requirement (“TcAR”) at the valuation date, and thus the capital adequacy requirements have been based on the OcAR. This amounts to N$1,693,360. However regulation requires that a life company with multiple products, hold at least N$4m in capital. It is therefore required that NedNamibia Life Assurance hold N$4m in capital. The surplus is 6.1 times the capital adequacy requirement. Certification of Statutory Financial Position I hereby certify that: • the valuation on the Statutory basis of NedNamibia Life Assurance company as at 31 December 2010, the results of which are summarised above, has been conducted in and this Statutory Actuary’s report has been produced in accordance with applicable Actuarial Society of South Africa Professional Guidance Notes; • I have accepted that the annual financial statements comply with the requirements of the Namibian companies Act and Long-term Insurance Act in Namibia; • my Statutory Actuary’s Report, read together with the annual financial statements, fairly presents the financial position of the company; and • the company was financially sound on the Statutory basis as at the valuation date, and in my opinion, is likely to remain financially sound for the foreseeable future. Sc Dippnall Statutory Actuary of NedNamibia Life Assurance co Ltd February 2011
Page 1 and 2: 1 finAnciAl environmentAl sociAl cu
Page 3 and 4: group profile nednAmiBiA Holdings l
Page 5 and 6: 2010 HigHligHts solid performance i
Page 7 and 8: oVeRView group reports oPeRatioNal
Page 11 and 12: oVeRView group reports debbie smit
Page 13 and 14: oVeRView group reports the Bill in
Page 15 and 16: oVeRView group reports membership o
Page 20 and 21: 18 NEDNAMIBIA HOLDINGS LIMItED ANNU
Page 38: 36 NEDNAMIBIA HOLDINGS LIMItED ANNU
Page 41 and 42: oVeRView diReCtoRs’ deClaRatioN g
Page 43 and 44: CoNTENTS Annual financial statement
Page 45 and 46: 2010 2009 N$’000 % N$’000 % Val
Page 47: INDEPENDENT AUDItOR’S REPORt TO T
Page 51 and 52: The composition of board committees
Page 53 and 54: CONSOLIDAtED StAtEMENt OF CoMPrEHEN
Page 55 and 56: Revaluation reserve Share-based pay
Page 57 and 58: NOtES tO tHE CONSOLIDAtED ANNUAL FI
Page 59 and 60: 2. Adoption of new and revised stan
Page 61 and 62: 3. Significant accounting policies
Page 79 and 80: 4. Cash and balances with central b
Page 81 and 82: 7. Derivative financial instruments
Page 83 and 84: 9. Loans and advances to customers
Page 85 and 86: 11. Investment in subsidiaries, ass
Page 87 and 88: 13. Computer software and developme
Page 89 and 90: 18. Share-based payment reserve 201
Page 91 and 92: 24. Deferred tax (continued) The ba
Page 93 and 94: 30. Impairment of advances 2010 30.
Page 95 and 96: 31. operating expenditure (continue
Page 97 and 98: 37. Cash flow information (continue
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41. Share-based payments (continued
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42. related party disclosure 42.1 P
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43. Capital risk management (contin
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Notes At fair value through profit
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44. Statement of financial position
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111 Up Equity / to 3 3 - 6 6 - 12 1
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47. Currency risk (continued) 47.2
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47. Currency risk (continued) 47.3
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48. Interest rate risk (continued)
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NGR 21 Non-IFRS7 NGR 16 NGR 17 NGR
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49. Credit risk (continued) 49.3 Cr
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StAtEMENt OF CHANGES IN EQUITY FOR
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6. Investment in subsidiaries (cont
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12. Taxation 12.1 Charge for the ye
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CONtACt DETAILS NEDBANK NAMIBIA LIM
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annual financial statements - Nedbank Group Limited

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