ASSOCIATION OF ALBERTA MUNICIPALITIES

Notes to the Consolidated Financial Statements

Year ended December 31, 2022

24: Financial risks and concentration of credit risk (continued):

(d) Interest rate risk:

Interest rate risk is the risk that future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Interest rate risk arises on interest sensitive financial instruments such as the bond and mortgage fund.

There has been no change to interest rate risk from the prior year.

(e) Market rate risk:

Market risk is the risk of adverse financial impact as a consequence of market movements such as currency exchange rates, interest rates and other price changes. Market risk arises due to fluctuations in both the value of the assets held and the value of liabilities.

Investments in equity, bonds, and mortgage pooled funds are subject to fair value fluctuation of underlying securities held by the funds traded on domestic and global exchanges. Changes in the foreign exchange rates and market prices can result in a change in fair value.

There has been no change to market risk from the prior year.

25. Comparative figures:

Certain comparative figures have been reclassified to conform to the financial statement presentation adopted for the current year.

Financial Statements of ALBERTA MUNICIPAL INSURANCE

Year ended December 31, 2022