Page 198 - CJ 2019 INTEGRATED REPORT

196
NOTES TO THE FINANCIAL
STATEMENTS 31 DECEMBER 2019 (CONTINUED)
2 FINANCIAL
RISK MANAGEMENT (CONTINUED)
(f) Financial risk arising in in in in in the the Life Assurance Business subsidiary (the “LABS”) (Continued)
Mismatch risk (Continued)
The The following tables indicate the the the the the the estimated amount and and timing of of cash flows arising from the the the the the the insurance liabilities and and the the the the the the the the extent of of duration-matching for for these these contacts They summarise the the the the the the the the LABS’s exposure to to interest rate risk for for these these assets and liabilities When debt securities securities mature the the the the the the the the the proceeds proceeds not needed to to meet the the the the the the the the the liability cash flows will will be re-invested in in in in in in floating rate securities securities The reinvestment of these net positive proceeds proceeds in in in in in in the the the the the the the earlier years years will will fund the the the the the the the negative cash flows displayed in in in in in the the the table below for the the the later years At 31 December 2019 Liabilities
Life insurance – life
Outstanding claims Trade and other payables
Retirement benefit obligations
Total 1 068 885
Estimated cash flows (undiscounted)
At 31 December 2018
Liabilities
Life insurance – life
Outstanding claims Trade and other payables
Retirement benefit obligations
Total Estimated cash flows (undiscounted)
Carrying amount Rs’000
Carrying amount Rs’000
1 033 376 6
6
786 55 112 7
253 1 1 102 527
0 – 5
yrs Rs’000
321 200 15 753 40 262 10 441 387 656
5
5
– – 10 10 yrs yrs 10 10 – – 15yrs Rs’000
Rs’000
Rs’000
Rs’000
237 563 211 272
- - - - - - - - - - - - 237 563 211 272
>15 years Rs’000
277 142
- - - 277 142
1 002 429 15 753 40 262 10 441 The liability period period analysis analysis does not agree with the the the the total total carrying carrying amount amount due to to to the the the the fact that the the the the period period analysis analysis is is is is is is undiscounted whilst the the total total carrying carrying amount is is is is discounted discounted The LABS intends to manage the net cash outflows position arising from Year 5
onwards as as follows:
• Investments at at at FVOCI would be reinvested in in in similar instruments at at at maturity • The value value value of o of investment investment portfolio classified as as as as as “financial assets at fair fair value value value through profit or or loss” is is expected to increase in fin in in in in in in in the the the future as as as as as the the the LABS realises the the the fair fair value value value gain upon sale of o of investments and proceeds are reinvested in fin in in in in in in in similar instruments • Amount of loans loans disbursed is is expected to increase increase and hence the the interest income generated from these loans loans would increase Minimum capital requirements
The The LABS has to comply with capital capital requirements
as as as as set out by the Financial Services Commission for insurance insurance companies The The The law requires that an an an an an an an an insurance insurance company manages its its capital capital capital on on a a a a a a a a a a a a a a a a a a a a a a a a a a a basis at at at least 100% of its its minimum capital capital requirement (“MCR”) The The MCR MCR for for the the the the the LABS LABS stands at at at at at 24% for for the the the the the year year ended 2019 (2018 :
111 7%) As a a a a a a a a a a a a a a a a a a a a a a a a a result of of the the the the the the the fall in in in in interest rates and and investment returns over the the the the the the the year year the the the the the the the LABS LABS solvency position deteriorated to to to to below 100% 100% A A capital injection of of Rs 88 55 million is required as at at at at at the the the the the Balance Sheet date to to to to restore the the the the the MCR ratio to to to to 100% 100% The The process to to to cover the the the the the the shortfall in in solvency will will be followed The The Board of the the the the the the Company will will consider the the the the the the recommendations made made by the the the the the the the the the the Statutory Actuary in in in their 2019 Valuation report and recommend recommend to to to to to to to the the the the the the the the the the Shareholders the the the the the the the injection of additional capital to to to to to to restore the the the the the the the solvency position to to to to to to 100% An application will then be made made to to to to to to the the the the the the the Financial Services Commission CURRIMJEE JEEWANJEE AND COMPANY LIMITED
0 – 5
yrs Rs’000
633 325 6
6
786 55 112 7
253 702 476
5
– 10 yrs Rs’000
424 853 - - - 424 853 10 – 15yrs Rs’000
340 992 - - - 340 992 >15 years Rs’000
627 402 - - - 627 402