NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
20. FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES (continued) CREDIT RATING
Reinsurance and other recoveries on outstanding claims Reinsurance and other recoveries on paid claims
Reinsurance and other recoveries on paid claims
AAA +/$m
AA +/$m
A +/$m
BBB $m
Speculative Grade $m
Not Rated $m
TOTAL $m
2012
-
0.431
32.220
-
-
0.454
33.105
2011
-
0.467
27.057
-
-
0.537
28.061
2012
-
0.022
1.378
-
-
0.757
2.157
2011
-
0.038
3.408
-
-
0.743
4.189
PAST DUE BUT NOT IMPAIRED Neither Greater past than due nor Less than 3 to 6 6 months 1 year Impaired impaired 3 months months to 1 year $m $m $m $m $m $m
Total $m
2012
-
1.053
0.347
0.026
-
0.731
2.157
2011
-
2.632
0.678
0.139
0.014
0.726
4.189
Interest rate risk The reinsurance indemnity contracts contain no clauses that expose the Scheme, directly to interest rate risk. The reinsurance contracts are long term arrangements, reviewed and payable annually.
Variable
Current rate
Change variable to
%
%
Total Operating Accumulated surplus Funds after the impact (deficit) at 30 June of applying variable 2012 $
$
(1,314,338)
5,933,495
3.5%
(827,338)
6,420,495
2.5%
(1,801,338)
5,446,495
Impact of changes in interest rates LIABILITY MUTUAL INSURANCE Base value at 30 June 2012 Interest rate pa
3%
Credit risk The Scheme is exposed to credit risk on insurance contracts as a result of exposure to reinsurers. The credit risk to reinsurers is managed through the Scheme’s Reinsurance Management Strategy and policies that includes regularly monitoring both the financial rating of the reinsurers both prior to and during the reinsurance program and the flow of payments coming from the reinsurers. Investments in cash and cash equivalents at balance date as shown in the Statement of Cash Flows are held in Standard and Poors rated AA and AAf rated cash deposits.
Price risk Investments held are not subject to price risk. Investments are cash at bank and fixed interest funds.
68> MAV FINANCIAL REPORT 2011/12