Good Insurance Annual 2008 - Secured

Ernst & Young
Good Insurance
Assurance | Tax | Transactions | Advisory
r
Good Insurance
nternational) Limited International GAAP Illustrative nancial statements 2008

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Illustrative nancial statements for
Limited, each of which is a separate legal entity.
Ernst & Young Global Limited, a UK company the year ended 31 December 2008
limited by guarantee, does not provide services
to clients.
Based on International Financial Reporting
About Ernst & Youngs International Financial
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2008 EYGM Limited.

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Contents
Abbreviations and key...........................................................................................................................................3
Introduction .........................................................................................................................................................4
Consolidated financial statements of Good Insurance (International) Limited ........................................................9
Independent auditor's report to the shareholders of Good Insurance (International) Limited.................................10
Consolidated income statement...........................................................................................................................11
Consolidated balance sheet .................................................................................................................................12
Consolidated statement of changes in equity .......................................................................................................14
Consolidated cash flow statement ......................................................................................................................16
Notes to the consolidated financial statements.................................................................................................... 17
1. Corporate information ...........................................................................................................................17
2.1 Basis of preparation ..............................................................................................................................17
2.2 Changes in accounting policies ...............................................................................................................18
2.3 Significant accounting judgments, estimates and assumptions ..................................................................18
2.4 Summary of significant accounting policies..............................................................................................18
2.5 Standards issued but not yet effective.....................................................................................................38
3. Segment information.............................................................................................................................41
4. Intangible assets ...................................................................................................................................45
5. Investment in an associate .....................................................................................................................47
6. Property and equipment ........................................................................................................................48
7. Investment properties ...........................................................................................................................48
8. Derivative financial instruments .............................................................................................................49
9. Financial assets other than derivative financial instruments ......................................................................51
10. Reinsurance assets ...............................................................................................................................55
11. Taxation ...............................................................................................................................................55
12. Insurance receivables ............................................................................................................................56
13. Deferred expenses ................................................................................................................................56
14. Accrued income ....................................................................................................................................57
15. Cash and cash equivalents .....................................................................................................................57
16. Insurance contract liabilities...................................................................................................................57
17. Investment contract liabilities.................................................................................................................61
18. Net asset value attributable to unit-holders .............................................................................................63
19. Pension benefit obligation......................................................................................................................64
20. Borrowings ...........................................................................................................................................66
21. Other financial liabilities ........................................................................................................................67
22. Insurance payables................................................................................................................................67
23. Deferred revenue ..................................................................................................................................68
24. Trade and other payables .......................................................................................................................68
25. Issued share capital ...............................................................................................................................68
26. Other equity instruments .......................................................................................................................69
27. Net premiums .......................................................................................................................................69
Good Insurance (International) Limited 1

28. Fees and commission income .................................................................................................................69
29. Investment income................................................................................................................................70
30. Realised gains.......................................................................................................................................70
31. Fair value gains and losses .....................................................................................................................71
32. Net benefits and claims..........................................................................................................................71
33. Finance costs........................................................................................................................................72
34. Other operating and administrative expenses...........................................................................................72
35. Employee benefits expense ....................................................................................................................72
36. Income tax expense...............................................................................................................................73
37. Share-based payments...........................................................................................................................74
38. Earnings per share ................................................................................................................................75
39. Dividends paid and proposed ..................................................................................................................76
40. Risk management framework .................................................................................................................76
41. Insurance and financial risk ....................................................................................................................79
42. Cash generated from operating activities...............................................................................................109
43. Investment in Group ............................................................................................................................110
44. Contingencies and commitments ..........................................................................................................110
45. Related party transactions ...................................................................................................................111
46. Events after the balance sheet date ......................................................................................................112
Appendix 1 First time adoption of IFRS in 2008 ..............................................................................................113
Appendix 2 - Shadow accounting .......................................................................................................................120
Appendix 3 - Embedded value (EV)...................................................................................................................123
Appendix 4 - Glossary of insurance terms ..........................................................................................................126
Index ................................................................................................................................................................128
2 Good Insurance (International) Limited

Abbreviations and key
The following styles of abbreviation are used in this set of International GAAP Illustrative Financial Statements:
IFRS International Financial Reporting Standards
IFRIC International Financial Reporting Interpretations Committee
IASB International Accounting Standards Board
GAAP Generally Accepted Accounting Practice
Commentary The commentary explains how the requirements of IFRS have been implemented in arriving at the
illustrative disclosure
IAS 33.41 International Accounting Standard No.33, paragraph 41
IAS 1.BC.13 International Accounting Standard No.1, Basis for Conclusions, paragraph 13
IAS 39.AG.71 IAS 39 Finance Instruments: Recognition and Measurement Appendix A Application Guidance,
paragraph AG71
IAS 39.IG.G.2 IAS 39 Financial Instruments: Recognition and Measurement Guidance on Implementing IAS 39
Section G: Other, paragraph G.2
IFRIC 4.6 International Financial Reporting Interpretations Committee Interpretation No.4, paragraph 6
IFRS 4.44 International Financial Reporting Standard No.4, paragraph 44
IFRS references are shown on the right hand side of each page of the financial statements, indicating the specific IFRS
paragraph that outlines the accounting treatment or disclosure adopted for that particular line item or block of narrative
in the publication.
The IFRS references to IAS 1, IAS 27 and IFRS 3 are to original versions of these Standards and not to the paragraphs
found in the 2008 Bound Volume of International Financial Reporting Standards approved at 1 January 2008.

Introduction
This publication contains the consolidated financial statements of a fictitious company, Good Insurance (International)
Limited, a limited liability insurance company with subsidiaries (the Group) incorporated and listed in Euroland, with a
reporting date of 31 December 2008. Euroland is a fictitious country within Europe. The functional currency of the
parent and presentational currency of the group is Euros.
The aim of this publication is to provide a set of illustrative IFRS financial statements for an insurance company that
issues life and non-life insurance products (which comprise both general insurance and healthcare products) as well as
some investment products. The Group also performs investment management services to policyholders of investment
products that do not contain an insurance component. Our aim in this publication has been to illustrate common IFRS-
based disclosures made by the insurance industry, rather than to companies in general. Therefore some commonly found
transactions and their disclosure have either been deliberately omitted or simplified because they are illustrated in other
Ernst & Young illustrative financial statement publications, such as Good Group (International) Limited 2008 and Good
Bank (International) Limited 2006. We therefore strongly encourage readers of this publication to obtain these other
publications to gain a greater understanding of other presentation and disclosure requirements.
IFRS 4 Insurance Contracts is a transaction-based standard built around the definition of an insurance contract. It is not
an industry-based entity specific financial reporting standard. Care should be taken to determine when a transaction falls
within the scope of this Standard.
In this publication we have illustrated what we consider to be best practice disclosure and have focused on those areas of
IFRS reporting that are heavily reliant on the professional judgment of management.
These illustrative disclosures should not be considered as the only acceptable form of presentation, as they are based on
best practices observed in the insurance industry and do not attempt to show all possible accounting and disclosure
requirements. These illustrative financial statements are not intended to satisfy country or stock market regulations in
any given jurisdiction and so what we have illustrated may have to be altered to meet such requirements. The form and
content of financial statements are the ultimate responsibility of Group management. It is essential to seek appropriate
professional advice in case of doubt in relation to any financial reporting requirement. These illustrative disclosures have
reflected professional judgment on the fairness of the various presentations.
We believe you will find this a useful guide when preparing your next set of IFRS-based financial statements. If you
require any further information on matters included in this publication, please contact your nearest Ernst & Young office,
details of which can be found on the Ernst & Young website.
Basis of preparation and presentation

The consolidated annual financial statements of the Group have been produced in accordance with IFRS and, where
applicable, interpretations issued by IFRIC. The financial statements do not include the stand alone disclosures for the
parent. In certain jurisdictions, IFRS may apply to the parent entity and hence disclosures should also be made for this
reporting entity.
The Group is an existing preparer of IFRS consolidated financial statements and therefore IFRS 1 First-time Adoption of
International Financial Reporting Standards is not applicable.
Disclosures have not been illustrated for a number of IFRS which are either not relevant to the insurance industry or not
applicable to the Groups circumstances. Disclosures outlined in the following IFRS have not been illustrated in this
publication:
IFRS 1 First-time Adoption of International Financial Reporting Standards

IFRS 3 Business Combinations
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
IFRS 6 Exploration for and Evaluation of Mineral Resources
IAS 2 Inventories
IAS 11 Construction Contracts
IAS 14 Segment Reporting
IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
IAS 26 Accounting and Reporting by Retirement Benefit Plans
IAS 29 Financial Reporting in Hyperinflationary Economies
IAS 31 Interests in Joint Ventures
IAS 34 Interim Financial Reporting
IAS 41 Agriculture

The standards applied in these financial statements are the versions that were in issue as at 30 September 2008. It is
important to note that these financial statements require continual updating, as standards are issued and/or revised by
the IASB. Therefore, users of this publication are advised to verify that there has been no change in the requirements of
IFRS between 30 September 2008 and their reporting date.
Recent changes
The Good Insurance (International) Limited financial statements have been updated to reflect all new standards and
interpretations issued since we published the previous version of Good Insurance (International) Limited which was
based on IFRSs in issue as of 31 December 2006. The following standards and interpretations have been illustrated for
the first time in 2008, resulting in consequential changes to the accounting policies and other note disclosures.
IFRS 8 - Operating Segments

IFRS 8 was issued in November 2006 and becomes effective for financial years beginning on or after 1 January 2009.
Good Insurance (International) Limited illustrates early adoption of the Standard in 2008. The new disclosures are
illustrated in Note 3 Segment Information. Entities that do not early adopt IFRS 8 will continue to apply IAS 14 Segment
Reporting.
IAS 23 Amendment Borrowing Costs (Revised)

The revised IAS 23 Borrowing Costs is effective for financial years beginning on or after 1 January 2009 and requires
capitalisation of borrowing costs that relate to a qualifying asset. The transitional requirements of the Standard require it
to be adopted as a prospective change from the effective date. Good Insurance (International) Limited discloses the
impact of the revised Standard in Note 6.
Listed below are Standards and Interpretations that have been issued, but are not illustrated in these
illustrative financial statements.
IFRS 2 Share-Based Payment (Amendments)
The IASB issued an amendment to IFRS 2 in January 2008 that clarifies the definition of a vesting condition and
prescribes the treatment for an award that is cancelled. This amendment will be effective for financial years beginning on
or after 1 January 2009.
IAS 1 Presentation of Financial Statements (Revised)

The IASB issued revised IAS 1 Presentation of Financial Statements in September 2007 which will be effective for
financial years beginning on or after 1 January 2009. The Standard separates owner and non-owner changes in equity.
Therefore, the statement of changes in equity will include only details of transactions with owners, with all non-owner
changes in equity presented as a single line. In addition, the Standard introduces a statement of comprehensive income:
presenting all items of income and expense recognised in the income statement, together with all other items of
recognised income and expense, either in one single statement, or in two linked statements.
IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements - Puttable Financial
Instruments and Obligations Arising on Liquidation
The IASB issued amendments to IAS 32 and IAS 1 in February 2008. The revised IAS 32 and IAS 1 allow a limited scope
exception for puttable instruments to be classified as equity if they fulfil a number of specified features. It will be
effective for financial years beginning on or after 1 January 2009.
IFRS 3 Business Combinations (Revised)

The IASB issued the revised Business Combinations standard in January 2008 which will be effective for financial years
beginning on or after 1 July 2009. The Standard introduces changes in the accounting for business combinations that
will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future
reported results.
Improvements to IFRSs
In May 2008 the IASB issued its first omnibus of amendments to its standards, primarily with a view to remove
inconsistencies and clarifying wording. There are separate transitional provisions for each standard.
IFRIC 13 Customer Loyalty Programmes

The IFRIC issued IFRIC 13 in June 2007. This interpretation requires customer loyalty credits to be accounted for as a
separate component of the sales transaction in which they are granted. It will be effective for financial years beginning
on or after 1 July 2008.
IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
The IFRIC issued IFRIC 14 in July 2007. This Interpretation provides guidance on how to assess the limit on the amount
of surplus in a defined benefit scheme that can be recognised as an asset under IAS 19 Employee Benefits. This
interpretation will be effective for financial years beginning on or after 1 July 2008.

IFRIC 16 Hedges of a Net Investment in a Foreign Operation
The IFRIC issued IFRIC 16 in July 2008. This interpretation provides guidance on the accounting for a hedge of a net
investment. This interpretation will be effective prospectively for financial years beginning on or after 1 October 2008.
Background facts
Listed below are a series of important matters that have driven the presentation and disclosures illustrated in this
publication.
Business environment
A stable economic and business environment and product offering was assumed for both the 2008 and 2007 financial
reporting periods and during this same period the Group did not acquire or dispose of any businesses.
Operations
Good Insurance (International) Limited is the parent company which operates in three principal areas of business,
according to the nature of products and services offered. It provides life insurance, non-life insurance (which comprises
general insurance and healthcare) and investment management services to its customers through its three subsidiaries;
Good Life Insurance Limited, Good Non-Life Insurance Limited and Good Investment Management Services Limited. The
parent and the three subsidiaries throughout this publication are collectively referred to as the Group.
u The life insurance products offered include a wide range of whole life, term assurance, unitised pensions, guaranteed
annuity pensions, pure endowment pensions and mortgage endowments.
u The non-life general insurance products offered include motor, household, commercial and business interruption
insurance.
u The non-life healthcare products provide medical cover to policyholders.
u Investment management services are provided solely to customers through an investment management services
subsidiary.
The Group has a further 20% interest in its only associate, Power Insurance Limited, which is involved in the insurance of
power stations in Euroland. The Group has no joint venture agreements with any other external parties.
Operating segments
The Group has determined that the operating segments under IFRS 8 Operating Segments are the three principal areas of
business described under operations above previously identified under IAS 14 Segment Reporting.
IFRS status
The Group is an existing preparer of IFRS consolidated financial statements, but to enhance the usability of this
publication, additional disclosures have been illustrated if the Group is a first time adopter of IFRS in 2008. These
disclosures, as set out under IFRS 1 First-time Adoption of International Financial Reporting Standards can be found in
Appendix 1.
As permitted under IFRS 4 Insurance Contracts, an insurance company is allowed to grandfather its existing local
Generally Accepted Accounting Policies (GAAP) adopted for its insurance contracts and investment contracts with
discretionary participation features (DPF), within its IFRS accounting framework. The requirement will continue until the
IASBs Insurance Contracts Phase II project is completed, which will then determine the recognition and measurement of
all insurance contracts on a consistent basis. The Group therefore continues with Euroland GAAP for insurance contracts
and for investment contracts with a DPF.
Product accounting
Under Euroland GAAP, the same accounting treatment is applied to insurance contracts with and without DPF and for
investment contracts with DPF. Deferred acquisition costs (DAC) and the present value of in-force business (PVIF), i.e.,
intangible assets, relating to the above contracts are also accounted for under Euroland GAAP.
Investment contracts without DPF and the related acquisition costs and intangible assets, are accounted for under IAS 39
Financial Instruments: Recognition and Measurement, IAS 18 Revenue and IAS 38 Intangible Assets respectively.
DPF provides the policyholder with a contractual right to receive, as a supplement to guaranteed benefits, additional
benefits payable at the discretion of the insurance company and which are contractually based on the performance of a
specified pool of contracts on the profit or loss of the insurance company or other entity that issued the contracts. Under
IFRS 4, DPF can be either treated as an element of equity or as a liability, or can be split between the two elements. The
Group policy is to treat all DPF as a liability within insurance or investment contract liabilities as appropriate.

Risk Management
As part of the Groups investment strategy in order to reduce both insurance and financial risk, the Group matches its
investments to the liabilities arising from insurance and investment contracts, by reference to the type of benefits
payable to contract holders. For each distinct category of liabilities, a separate portfolio of investments is maintained to
policyholders and customers.
Taxation
Income tax on profit and loss for the year comprises current and deferred tax. Income tax is determined in accordance
with Euroland tax law.
Financial statement presentation

The primary financial statements have been drawn up on a basis consistent with prior years and the following key
presentation decisions have been made.
Balance sheet
The balance sheet is presented in this publication in broad order of liquidity, with a distinction based on expectations
regarding recovery or settlement within twelve months after the balance sheet date (current) and more than twelve
months after the balance sheet date (non-current), presented in the notes. A permissible alternative is to present the
assets and liabilities in the balance sheet in a current/non-current format.
Deferred acquisition costs are disclosed as a separate line item on the face of the balance sheet by the Group. Alternative
disclosure options would be to include these as part of intangible assets or as part of other assets.
As required by IFRS 4, reinsurance assets are disclosed as assets on the face of the balance sheet and are not offset
against the related insurance liabilities.
Income statement
The Group has elected to present its analysis of expenses using a classification based on their nature rather than based
on their function.
Reinsurance premiums and claims on the face of the income statement have been presented as negative items within
premiums and net benefits and claims respectively because this is consistent with how the business is managed. An
alternative treatment would be to present reinsurance premiums as expenses and reinsurance claims as revenue.
Statement of changes in equity
The Group presents a statement of changes in equity as part of its primary financial statements, instead of a statement of
recognised income and expenses. The Group has further elected to present all the information required for the statement
of changes in equity on the face of the statement, instead of disclosing transactions with equity holders acting in their
capacity as equity holders, the reconciliation of retained earnings, contributed equity and other reserves in a note to the
financial statements.
Cash flows
The Group represents its cash flow based on the indirect method, rather than the direct method. For cash flow purposes,
the Group classifies the cash flows for the acquisition and disposal of financial assets as operating cash flows, as the
purchase of these investments is funded from the net cash flows associated with the origination of insurance and
investment contracts. The payment of benefits and claims in relation to insurance and investment contracts are treated
as operating activities.
Allowed alternative accounting treatments

In some cases, IFRS permits alternative accounting treatments for similar transactions and events. Preparers of financial
statements may choose the treatment that is most relevant to their business.
IAS 8 requires an entity to select and apply its accounting policies consistently for similar transactions, and/or other
events and conditions, unless an IFRS specifically requires or permits categorisation of items for which different policies
may be appropriate. Where an IFRS requires or permits such categorisation, an appropriate accounting policy is selected
and applied consistently to each category. Therefore, once a choice of one of the alternative treatments has been made,
it becomes accounting policy and must be applied consistently. Changes in accounting policy should only be made if it is
required by a Standard or Interpretation, or if the change results in the financial statements providing reliable and more
relevant information.

In some accounting models, recognised realised gains or losses on an insurers assets have a direct effect on the
measurement of some or all of the insurance liabilities, related deferred acquisition costs and related intangible assets.
An insurer is permitted, but not required, to change its accounting policies so that a recognised but unrealised gain or
loss on an asset affects those measurements in the same way that a realised gain or loss does. The related adjustment to
the insurance liability (or deferred acquisition costs or intangible assets) shall be recognised in equity if, and only if, the
unrealised gains are recognised in equity. This practice is often described as shadow accounting. The group does not
apply shadow accounting but additional disclosures have been provided in Appendix 2 in case users would like to refer
to the required treatment if shadow accounting were applied.
IFRS 4 permits the use of alternative sensitivity analysis such as embedded value (EV) or economic capital (EC) instead
of IFRS for insurance and market risk sensitivity disclosures. This option is only allowed if insurance and market risk
sensitivities are managed on that alternate basis. For illustrative purposes EV sensitivity disclosures have been provided
in Appendix 3 in accordance with EV principles introduced by the Euroland Institute of Actuaries.
Financial review by management

Many entities present a financial review by management that is outside the scope of the financial statements. IFRS does
not require the presentation of such information, although IAS 1.9 gives a brief outline of what may be included in such
a report.
The content of a financial review by management is often determined by local market requirements or issues specific to a
particular jurisdiction. Therefore, no financial review by management has been included for Good Insurance
(International) Limited.

Good Insurance
Consolidated Financial Statements
31 December 2008

Independent auditors report to the shareholders of
Good Insurance (International) Limited
We have audited the accompanying financial statements of Good Insurance (International) Limited and its subsidiaries
(the Group), which comprise the consolidated balance sheet as at 31 December 2008 and the consolidated income
statement, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended,
and a summary of significant accounting policies and other explanatory notes.
Managements responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with
International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining
internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
Auditors responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as of
31 December 2008, and of its financial performance and its cash flows for the year then ended in accordance with
International Financial Reporting Standards.
Professional Accountants & Co.
28 January 2009
17 Euroville High Street
Euroville
Commentary
The auditors report for Good Insurance (International) Limited has been prepared in accordance with ISA 700 The Independent
Auditors Report on a Complete Set of General Purpose Financial Statements.

Consolidated income statement
for the year ended 31 December 2008
IAS 1.46 (a),(b),(c)

Year ended 2008 2007
Notes 000 000 IAS 1.46(d),(e)
Gross premiums 27(a) 72,143 73,447 IFRS 4.IG24
Premiums ceded to reinsurers 27(b) (18,755) (19,111) IFRS 4.IG24
Net premiums 53,388 54,336 IAS 1.83
Fees and commission income 28 5,364 2,231 IFRS 7.20(c)(i)
Investment income 29 8,221 7,682

Realised gains 30 213 93
Fair value gains and losses 31 1,027 992
Other operating revenue 510 498
Other revenue 15,335 11,496 IAS 1.83
Total revenue 68,723 65,832 IAS 1.81(a)
Gross benefits and claims paid 32(a) (38,418) (39,410) IFRS 4.IG24
Claims ceded to reinsurers 32(b) 10,271 10,530 IFRS 4.IG24
Gross change in contract liabilities 32(c) (6,837) (7,174) IFRS 4.IG24
Change in contract liabilities ceded to reinsurers 32(d) 1,590 1,691 IFRS 4.IG24
Net benefits and claims (33,394) (34,363) IAS 1.83
Finance costs 33 (1,504) (1,336) IAS 1.81(b)
Profit attributable to unit-holders 18 (267) (111)

Other operating and administrative expenses 34 (26,857) (21,570) IAS 1.88
Other expenses (28,628) (23,017) IAS 1.83
Total benefits, claims and other expenses (62,022) (57,380) IAS 1.83
Profit before share of profit of an associate 6,701 8,452
Share of profit of an associate 5 129 230 IAS 1.81(c), IAS 28.38
Profit before tax 6,830 8,682 IAS 1.83
Income tax expense 36 (1,569) (1,973) IAS 1.81(d), IAS12.77
Profit for the year 5,261 6,709 IAS 1.81(f)
Earnings per share

Basic earnings per ordinary share () 38 0.63 0.80 IAS 33.66
Diluted earnings per ordinary share () 38 0.62 0.80 IAS 33.66
Commentary
IAS 1.88 requires expenses to be analysed by their nature or by their function within the entity, whichever provides information that
is reliable and more relevant. The Group has presented the analysis of expenses by nature.
Premiums and claims on the face of the income statement have been presented on a gross basis, with premiums ceded to reinsurers
shown as negative revenue and claims ceded to reinsurers shown as negative net benefits and claims. An alternative disclosure option
is to present premiums ceded to reinsurers as expenses and claims ceded to reinsurers as revenue.

Consolidated balance sheet
as at 31 December 2008
IAS 1.46(a),(b),(c)
2008 2007
Notes 000 000 IAS 1.46(d),(e)
Assets
Intangible assets 4 3,200 3,371 IAS 1.68(c)
Investment in an associate 5 2,120 1,991 IAS 1.68(e), IAS 28.38
Property and equipment 6 4,292 6,050 IAS 1.68(a)
Investment properties 7 4,199 3,943 IAS 1.68(b)
Financial instruments IAS 1.68(d), IFRS 7.8
Derivative financial instruments 8 2,165 1,240

Held-to-maturity financial assets 9(b) 2,104 1,677
Loans and receivables 9(c) 7,404 6,177
Available-for-sale financial assets 9(d) 84,577 79,417
Financial assets at fair value through profit or loss 9(a) 20,241 21,189
Reinsurance assets 10 36,539 34,727
Income tax receivable 11(a) 2,995 2,812 IAS 1.68(m)
Insurance receivables 12 40,620 37,505 IFRS 4.37(b)
Deferred expenses 13 13,446 11,477 IFRS 4.37(b)
Accrued income 14 2,298 2,157 IAS 1.69
Cash and cash equivalents 15 6,646 4,283 IAS 1.68(i)
Total assets 232,846 218,016
Equity and liabilities
Equity IAS 1.68(p)
Issued share capital 25 8,388 8,385 IAS 1.75(e)
Additional paid-in capital 1,110 1,047

Retained earnings 313 5,275 IAS 1.75(e)
Revaluation reserves 9,905 3,793 IAS 1.75(e)
Total ordinary shareholders equity 19,716 18,500

Other equity instruments 26 52 IAS 1.75(e)
Total equity 19,768 18,500
Liabilities
Insurance contract liabilities 16 133,694 126,260 IFRS 4.37(b)
Investment contract liabilities 17 11,708 11,558 IAS 1.68(l), IFRS 4.37(b)
Net asset value attributable to unit-holders 18 520 367 IAS 1.68(l)
Pension benefit obligation 19 4,422 4,152 IAS 1.68(k), IAS 1.75(d)
Derivative financial instruments 8 1,782 1,758 IAS 1.68(l)
Borrowings 20 24,562 23,064 IAS 1.68(l)
Other financial liabilities 21 7,743 7,272 IAS 1.68(l)
Deferred tax liability 11(b) 2,190 2,057 IAS 1.68(n)
Insurance payables 22 5,157 4,841 IFRS 4.37(b)
Deferred revenue 23 4,365 4,334 IAS 1.69
Trade and other payables 24 16,935 13,853 IAS 1.68(j)
Total liabilities 213,078 199,516

Total liabilities and shareholders equity 232,846 218,016

Commentary
IAS 1.51 requires companies to present assets and liabilities either in order of their liquidity or by a separate classification on the face
of the balance sheet for current and non-current assets, and current and non-current liabilities, whichever provides information that is
reliable and more relevant. The Group has presented its assets and liabilities in order of liquidity.
Deferred acquisition costs are included within deferred expenses rather than within intangible assets or other assets, which are
alternative disclosure options.

Consolidated statement of changes in equity
IAS 1.46(a),
(b), (c)
Attributable to equity holders of the parent IAS 1.97(b), (c)
Revaluation reserves
Total
Available- ordinary
Issued Additional for-sale share- Other
share paid-in Retained financial Cash flow holders equity Total IAS 1.46(d),
capital capital earnings assets hedging equity instruments equity (e)
Notes 000 000 000 000 000 000 000
At 1 January 2007 8,382 1,000 7,643 1,716 (5) 18,736 18,736
Fair value gains/(losses)
Available-for-sale IFRS
financial assets 9(e) 3,338 3,338 3,338 7.20(a)(ii)
Cash flow hedging (24) (24) (24) IFRS 7.23(c)
Realised gain transfer to the
income statement on sale
of available-for-sale IFRS
financial assets 30 (41) (41) (41) 7.20(a)(ii)
Aggregate tax effect of items
recognised directly in equity 36(b) (1,193) 2 (1,191) (1,191) IAS 12.81(a)
Total income and expense

for the year recognised
directly in equity 2,104 (22) 2,082 2,082 IAS 1.96(b)
Profit for the year 6,709 6,709 6,709 IAS 1.96(a)
Total recognised income

and expense for the year 6,709 2,104 (22) 8,791 8,791 IAS 1.96(c)
Issue of share capital 25 3 47 50 50 IAS 1.97(c)
Dividends paid during
the year 39 (9,087) (9,087) (9,087) IAS 1.95
Share-based payment 37 10 10 10 IFRS 2.50
At 31 December 2007 8,385 1,047 5,275 3,820 (27) 18,500 18,500 IAS 1.97(a)
Available-for-sale IFRS
financial assets 9(e) 6,230 6,230 6,230 7.20(a)(ii)
Cash flow hedging (36) (36) (36) IFRS 7.23(c)
Realised gain transfer to the
income statement on sale
of available-for-sale IFRS
financial assets 30 (46) (46) (46) 7.20(a)(ii)
Aggregate tax effect of items
recognised directly in equity 36(b) (40) 4 (36) (36) IAS 12.81(a)

directly in equity 6,144 (32) 6,112 6,112 IAS 1.96(b)
Profit for the year 5,261 5,261 5,261 IAS 1.96(a)

and expense for the year 5,261 6,144 (32) 11,373 11,373 IAS 1.96(c)
Issue of share capital 25 3 63 66 66 IAS 1.97(c)
Issue of other
equity instruments 26 52 52 IAS 1.97(a)
Coupon interest on other
equity instruments accrued IAS 1.95,
during the year 26 (1) (1) (1) IAS1.97(a)
Dividends paid during IAS 1.95,
the year 39 (10,236) (10,236) (10,236) IAS1.97(a)
Share-based payment 37 14 14 14 IFRS 2.50
At 31 December 2008 8,388 1,110 313 9,964 (59) 19,716 52 19,768

Commentary
IAS 1.96 requires the Group to present a statement of changes in equity or a statement of recognised income and expense. The Group
has elected to present a statement changes in equity.
The Group applies the corridor method for its actuarial gains and losses from its defined benefit person plan. If a company uses the
alternative option in IAS 19 to recognise all actuarial gains and losses in the period in which they occur, outside of profit or loss, then
IAS 19.93B requires the company to present a statement of recognised income and expense.
The Group has elected to present all the information required for the statement of changes in equity on the face of the statement.
However, transactions with equity holders acting in their capacity as equity holders and the reconciliation of retained earnings,
contributed equity and other reserves could alternatively be presented in the notes to the financial statements.
IFRS 2.7 requires entities to recognise an increase in equity when goods or services are received in an equity-settled share-based
payment transaction. However, IFRS 2 does not specify where in equity this should be recognised. The Group has elected to recognise
the credit in retained earnings.

Consolidated cash flow statements
IAS 1.8(d)
IAS 1.46(b), (c)
2008 2007 IAS 7.10
Notes 000 000 IAS 1.46(d), (e),

IAS 7.18 (b)
Operating Activities IAS 7.21
Cash generated from operating activities 42 7,024 7,601 IAS 7.18(b)
Dividend income received 3,213 3,006 IAS 7.31
Interest income received 3,384 3,381 IAS 7.31
Finance cost paid (422) (312) IAS 7.31
Income tax paid 11(a) (1,564) (1,444) IAS 7.35
Net cash flows from operating activities 11,635 12,232 IAS 7.10
Investing Activities IAS 7.21

Interest income received on loans to related parties 21 18 IAS 7.31
Rental income on investment properties 178 170
Proceeds from sale of property and equipment 3,204 795 IAS 7.16(b)
Purchase of intangible assets 4 (116) (318) IAS 7.16(a)
Purchase of investment properties 7 (203) (219) IAS 7.16(a)
Increase in loans to related parties (65) (50) IAS 7.16(a)
Purchase of property and equipment 6 (2,414) (1,983) IAS 7.16(a)
Net cash flows from investing activities 605 (1,587) IAS 7.10
Financing Activities IAS 7.21
Proceeds from exercise of share options 25 66 50 IAS 7.17(a)

Issue of other equity instruments 26 52 - IAS 7.17(a)
Repayment of bank loans (3,498) (3,218)
Finance cost paid on bank loan and bond borrowings (1,148) (1,173) IAS 7.31
Dividends paid to equity holders 39 (10,236) (9,087) IAS 7.31
Net cash flows from financing activities (14,764) (13,428) IAS 7.10
Net decrease in cash and cash equivalents (2,524) (2,783)

Cash and cash equivalents at 1 January (4,639) (1,768)
Effects of exchange rate changes on cash and cash
equivalents (109) (88) IAS 7.28
Cash and cash equivalents, at 31 December 15 (7,272) (4,639) IAS 7.45
Commentary
IAS 7.18 permits a company to report its cash flows from operating activities using either the direct method or the indirect method.
The Group presents its cash flows using the indirect method.
The Group has reconciled from profit before tax to net cash flow from operating activities. However, a reconciliation from profit after
tax is also acceptable under IAS 7.
IAS 7 permits interest paid to be shown as operating or financing activities, and interest received to be shown as operating or
investing activities, as deemed relevant for the entity. For cash flow purposes, the Group classifies the cash flows for the acquisition
and disposal of financial assets as operating cash flows, as the purchase of these investments are funded from the net cash flows
associated with the origination of insurance and investment contracts and the payment of benefits and claims incurred for such
insurance and investment contracts, which are respectively treated under operating activities.
For cash flow purposes, cash and cash equivalents consist of cash and cash equivalents as defined in IAS 7.6, net of outstanding bank
overdrafts, as permitted by IAS 7.8.

Notes to the consolidated financial statements
1. Corporate information IAS 1.126
Good Insurance (International) Limited (the Company) is a limited liability company incorporated and
domiciled in Euroland, whose shares are publicly traded on the Euroland stock market. The principal activities
of the company and its subsidiaries (the Group) are described in Note 3.
The Group has a further 20% interest in its only associate, Power Insurance Limited, which is involved in the
insurance of power stations in Euroland.
The registered office of the Group is Homefire House, 18 Ashdown Square, Euroville, Euroland. The IAS 10.17
consolidated financial statements of Good Insurance (International) Limited for the year ended 31 December
2008 were authorised for issue in accordance with a resolution of the directors on 29 January 2009.
2.1 Basis of preparation

The consolidated financial statements have been prepared on an historic cost basis except for investment IAS 1.108
properties and those financial instruments and financial liabilities that have been measured at fair value. The
carrying values of recognised assets and liabilities that are hedged items in fair value hedges, and are
otherwise carried at cost, are adjusted to record changes in the fair values attributable to the risks that are
being hedged. As permitted by IFRS 4 Insurance Contracts, the Group has applied Euroland Generally
Accepted Accounting Practice (GAAP) for its insurance contracts and investment contracts with a
discretionary participation feature (DPF).
Commentary
IFRS 4.13 permits an insurance company to grandfather its previous Generally Accepted Accounting Policies (Local GAAP). Local
GAAP can be used for any insurance contracts and investment contracts with a DPF that it issues (including related acquisition costs
and intangible assets). The requirement will continue until the IFRS Phase 2 project is completed by the IASB, which will then regulate
the recognition and measurement of all insurance contracts on a consistent basis.
Statement of compliance
The consolidated financial statements of the Group have been prepared in accordance with International IAS 1.14
Financial Reporting Standards (IFRS).

Consolidated financial statements values are presented in euros () rounded to the nearest thousand IAS 1.46(d)
(000), unless otherwise indicated.

The Group presents its balance sheet broadly in order of liquidity, with a distinction based on expectations IAS 1.51, 52
regarding recovery or settlement within twelve months after the balance sheet date (current) and more than
twelve months after the balance sheet date (non-current), presented in the notes.
Financial assets and financial liabilities are offset and the net amount reported in the balance sheet only when IAS 32.42
there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a
net basis, or to realise the assets and settle the liability simultaneously. Income and expense will not be offset IAS 1.32
in the income statement unless required or permitted by any accounting standard or interpretation, as
specifically disclosed in the accounting policies of the Group.
Basis of consolidation IAS 27.12
The consolidated financial statements comprise the financial statements of the Group as at 31 December IAS 27. 26
IAS 27. 28
each year. The financial statements of the subsidiaries are prepared for the same reporting year as the parent
company, using consistent accounting policies.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains IAS 27.30
control, and continue to be consolidated until the date that such control ceases.
All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group IAS 27.24
IAS 27.25
transactions are eliminated in full.
The Group has invested in a number of specialised investment vehicles such as open ended investment
companies (OEICS) and unit trusts. The Groups percentage ownership in these vehicles can fluctuate from
day-to-day according to the Groups participation in them. Where the Group controls such vehicles they are
consolidated with the interest of third parties shown as net asset value attributable to unit-holders in the
balance sheet. Where the Group does not control such vehicles these are designated as financial investments
held at fair value through profit or loss.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows: IAS 8.14
The Group has adopted the following new and amended IFRS and IFRIC interpretations during the year.
Adoption of these revised standards and interpretations did not have any material effect on the financial
performance or position of the Group. They did however give rise to additional disclosures, including in some
cases, revisions to accounting policies.
u IFRS 8 Operating Segments
u IFRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Rrequirements and their Interaction.
The Group has also early adopted the following IFRS. Adoption of this Standard did not have a material effect
on the financial performance or position of the Group. It did however give rise to additional disclosures,
including revisions to accounting policies.
u IAS 23 (Revised) Borrowing Costs
The principal effects of these changes are as follows: IAS 8.28
IFRS 8 Operating Segments

This Standard requires disclosure of information about the Groups operating segments and replaced the
requirement to determine primary (business) and secondary (geographical) reporting segments of the
Group. The Group determined that the operating segments were the same as the business segments
previously identified under IAS 14 Segment Reporting.
IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
This interpretation provides guidance on how to assess the limit on the amount of surplus in a defined benefit
scheme that can be recognised as an asset under IAS 19 Employee Benefits. As the Groups defined benefit
scheme is currently in deficit the adoption of this interpretation has had no impact on the financial position or
performance of the Group.
IAS 23 (Revised) Borrowing Costs
IAS 23 has been revised to require capitalisation of borrowing costs when such costs relate to a qualifying
asset. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its
intended use or sale. Previously the Standard also permitted such costs to be expensed as incurred and this
was the Groups previous accounting policy. In accordance with the transitional requirements in the Standard,
the Group will adopt this as a prospective change. Accordingly, borrowing costs are now capitalised on
qualifying assets with a commencement date after 1 January 2008. No changes have been made for
borrowing costs incurred prior to this date previously expensed.
2.3 Significant accounting judgments, estimates and assumptions

The preparation of the Groups financial statements requires management to make judgments, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure
of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates
could result in outcomes that could require a material adjustment to the carrying amount of the asset or
liability affected in the future. These factors could include:
IAS 1.113
Judgments
In the process of applying the Group's accounting policies, management has made the following judgments,
apart from those involving estimations and assumptions, which have the most significant effect on the
amounts recognised in the financial statements.
IAS 17.8
Operating lease commitments
The Group has entered into commercial property leases on its investment property portfolio. The Group, as a
lessor, has determined, based on an evaluation of the terms and conditions of the arrangements, that it
retains all the significant risks and rewards of ownership of these properties and so accounts for them as
operating leases.
Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance
sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.

2.3 Significant accounting judgments, estimates and assumptions continued

(a) Valuation of insurance contract liabilities and investment contract liabilities with DPF
Life insurance contract liabilities (including investment contract liabilities with DPF)
The liability for life insurance contracts and investment contracts with DPF is either based on current
assumptions or on assumptions established at inception of the contract, reflecting the best estimate at the
time increased with a margin for risk and adverse deviation. All contracts are subject to a liability adequacy
test, which reflect managements best current estimate of future cash flows.
Certain acquisition costs related to the sale of new policies are recorded as intangible assets or deferred
acquisition costs (DAC) respectively and are amortised to the income statement over time. If the
assumptions relating to future profitability of these policies are not realised, the amortisation of these costs
could be accelerated and this may also require additional impairment write-offs to the income statement.
The main assumptions used relate to mortality, morbidity, longevity, investment returns, expenses, lapse and
surrender rates and discount rates. The Group base mortality and morbidity on standard industry and
Euroland mortality tables which reflect historical experiences, adjusted when appropriate to reflect the
Groups unique risk exposure, product characteristics, target markets and own claims severity and frequency
experiences. For those contracts that insure risk to longevity, prudent allowance is made for expected future
mortality improvements, but epidemics, as well as wide ranging changes to life style, could result in
significant changes to the expected future mortality exposure.
Estimates are also made as to future investment income arising from the assets backing life insurance
contracts. These estimates are based on current market returns as well as expectations about future
economic and financial developments.
Assumptions on future expense are based on current expense levels, adjusted for expected expense inflation
adjustments if appropriate.
Lapse and surrender rates are based on the Groups historical experience of lapses and surrenders.
Discount rates are based on current industry risk rates, adjusted for the Groups own risk exposure.
The carrying value at the balance sheet date of life insurance contract liabilities is 83,030,000 IAS 1.116(b)
(2007: 78,686,000) and of investment contract liabilities with DPF is 4,364,000 (2007: 4,281,000).
Non-life insurance (which comprises general insurance and healthcare) contract liabilities
For non-life insurance contracts, estimates have to be made both for the expected ultimate cost of claims
reported at the balance sheet date and for the expected ultimate cost of claims incurred but not yet reported
at the balance sheet date (IBNR). It can take a significant period of time before the ultimate claims cost can
be established with certainty and for some type of policies, IBNR claims form the majority of the balance
sheet liability. The ultimate cost of outstanding claims is estimated by using a range of standard actuarial
claims projection techniques, such as Chain Ladder and Bornheutter-Ferguson methods.
The main assumption underlying these techniques is that a companys past claims development experience
can be used to project future claims development and hence ultimate claims costs. As such, these methods
extrapolate the development of paid and incurred losses, average costs per claim and claim numbers based on
the observed development of earlier years and expected loss ratios. Historical claims development is mainly
analysed by accident years, but can also be further analysed by geographical area, as well as by significant
business lines and claim types. Large claims are usually separately addressed, either by being reserved at the
face value of loss adjustor estimates or separately projected in order to reflect their future development. In
most cases, no explicit assumptions are made regarding future rates of claims inflation or loss ratios. Instead,
the assumptions used are those implicit in the historic claims development data on which the projections are
based. Additional qualitative judgment is used to assess the extent to which past trends may not apply in
future, (for example to reflect one-off occurrences, changes in external or market factors such as public
attitudes to claiming, economic conditions, levels of claims inflation, judicial decisions and legislation, as well
as internal factors such as portfolio mix, policy features and claims handling procedures) in order to arrive at
the estimated ultimate cost of claims that present the likely outcome from the range of possible outcomes,
taking account of all the uncertainties involved.
The carrying value at the balance sheet date of non-life insurance contract liabilities is 50,664,000 (2007: IAS 1.116(b)
47,574,000).

2.3 Significant accounting judgments, estimates and assumptions continued

(b) Valuation of investment contract liabilities without DPF
Unitised investment contract fair values are determined by reference to the values of the assets backing the
liabilities, which are based on the value of the unit-linked fund.
Non-unitised investment contract fair values are determined by using valuation techniques, such as
discounted cash flow methods and stochastic modelling. A variety of factors are considered in these valuation
techniques, including time value of money, volatility, policyholder behaviour, servicing cost and fair values of
similar instruments.
The carrying value at the balance sheet date of investment contracts liabilities without DPF is 7,344,000 IAS1.116(b)
(2007: 7,277,000).
(c) Fair value of financial assets and derivative financial instruments determining using
valuation techniques
Fair value, in the absence of an active market, is estimated by using valuation techniques, such as recent
arms length transactions, reference to the current market value of another instrument which is substantially
the same, discounted cash flow analysis and/or option pricing model. For reference to similar instruments,
instruments must have similar credit ratings.
For discounted cash flow analysis, estimated future cash flows and discount rates are based on current
market information and rates applicable to financial instruments with similar yields, credit quality and
maturity characteristics. Estimated future cash flows are influenced by factors such as economic conditions
(including country specific risks), concentrations in specific industries, types of instruments or currencies,
market liquidity and financial conditions of counterparties. Discount rates are influenced by risk free interest
rates and credit risk.
Option pricing models incorporate all factors that market participants would consider and are based on
observable market data when available. These models consider, among other factors, contractual and market
prices, correlation, time value of money, credit risk, yield curve volatility factors and/or prepayment rates of
the underlying positions.
The valuation techniques described above are calibrated annually.
IA39.AG76
The carrying value at the balance sheet date of financial assets excluding derivatives held at fair value is IAS 1.116(b)
104,818,000 (2007: 100,606,000), of derivative financial assets is 2,165,000 (2007: 1,240,000)

and of derivative financial liabilities is 1,782,000 (2007: 1,758,000).
(d) Goodwill impairment testing

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of
the recoverable amount of the cash-generating unit to which goodwill is allocated.
Management has used the three operating segments of the Group, as per the segment information in Note 3, IAS 1.116(b)
as the cash-generating units to which goodwill is allocated. The carrying value at the balance sheet date of
goodwill is 2,701,000 (2007: 2,924,000).
(e) Valuation of pension benefit obligation

The cost of defined benefit pension plans and other post employment medical benefits is determined using
actuarial valuations. The actuarial valuation involves making assumptions about discount rates, expected rates
of return on assets, future salary increases, mortality rates and future pension increases. Due to the long term
nature of these plans, such estimates are subject to significant uncertainty.
The carrying value at the balance sheet date of pension benefit obligation is 4,422,000 (2007: IAS 1.116(b)
4,152,000).

2.4 Summary of significant accounting policies IAS 1.8(e)

IFRS 4.37(a)
(a) Product classification
IFRS4
Insurance contracts are those contracts when the Group (the insurer) has accepted significant insurance risk Appendix A
from another party (the policyholders) by agreeing to compensate the policyholders if a specified uncertain
future event (the insured event) adversely affects the policyholders. As a general guideline, the Group
determines whether it has significant insurance risk, by comparing benefits paid with benefits payable if the
insured event did not occur. Insurance contracts can also transfer financial risk.
Investment contracts are those contracts that transfer significant financial risk. Financial risk is the risk of a IFRS4
Appendix A
possible future change in one or more of a specified interest rate, financial instrument price, commodity price,
foreign exchange rate, index of price or rates, credit rating or credit index or other variable, provided in the
case of a non-financial variable that the variable is not specific to a party to the contract.
Once a contract has been classified as an insurance contract, it remains an insurance contract for the IFRS4 B29-30
remainder of its lifetime, even if the insurance risk reduces significantly during this period, unless all rights
and obligations are extinguished or expire. Investment contracts can however be reclassified as insurance
contracts after inception if insurance risk becomes significant.
Insurance and investment contracts are further classified as being either with or without discretionary IFRS4
Appendix A
participation features (DPF). DPF is a contractual right to receive, as a supplement to guaranteed benefits,
additional benefits that are:
u likely to be a significant portion of the total contractual benefits,
u whose amount or timing is contractually at the discretion of the issuer, and
u that are contractually based on the
u performance of a specified pool of contracts or a specified type of contract,
u realised and or unrealised investment returns on a specified pool of assets held by the issuer, or
u the profit or loss of the company, fund or other entity that issues the contract.
Commentary
IFRS 4.34-35 requires the guaranteed element of an insurance or investment DPF contract to be recognised as a liability but permits
the discretionary element of a DPF to be treated as either an element of equity or as a liability, or it can be split between the two
categories. The Groups accounting policy is to treat all DPF features, both guaranteed and discretionary, as liabilities and to include
them within insurance or investment contract liabilities as appropriate in the balance sheet.
For financial options and guarantees which are not closely related to the host insurance contract and/or IFRS 4.7-9
investment contract with DPF, bifurcation is required to measure these embedded financial derivatives
separately at fair value through the income statement. However, bifurcation is not required if the embedded
derivative is itself an insurance contract and/or investment contract with DPF, or if the host insurance
contract and/or investment contract itself is measured at fair value through the income statement.
(b) Foreign currency translation

IAS 1.46(d)
The consolidated financial statements are presented in Euros which is also the functional currency of the IAS 21.21
company, all of its subsidiaries and of the associate. Each company in the Group determines its own functional
IAS 21.23(a)
currency and items included in the financial statements of each entity are measured using that functional
currency. Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated IAS 21.23(b)
at the functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the IAS 21.23(c)
income statement with the exception of differences on foreign currency borrowings accounted for as a hedge IAS 21.28
of a net investment in a foreign operation. These are taken directly to equity until the disposal of the net IAS 21.30
investment, at which time they are recognised in the income statement. Tax changes and credits attributable
to exchange differences on these borrowings are also dealt with in equity. Non-monetary items that are
measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date
of the initial transaction and are not subsequently restated. Non-monetary items measured at fair value in a
foreign currency are translated using the exchange rates at the date when the fair value was determined. All
foreign exchange differences are taken to the income statement, except for differences relating to items
where gains or losses are recognised directly in equity, in which case the gain or loss is recognised net of the
exchange component in equity.

2.4 Summary of significant accounting policies continued

(c) Intangible Assets
Business combinations and goodwill
Business combinations are accounted for using the purchase method.
Goodwill is initially measured at cost being the excess of the cost of the business combination over the IFRS 3.51(b)
IFRS 3.54
Groups share in the net fair value of the identifiable assets, liabilities and contingent liabilities. IFRS 3.55
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the IAS 36.80
purpose of impairment testing goodwill acquired in a business combination is allocated to each of the Groups
cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of
the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or
groups of units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, IAS 36.86
the goodwill associated with the operation disposed of is included in the carrying amount of the operation
when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is
measured based on the relative values of the operation disposed of and the portion of the cash-generating
unit retained.
Where the Group acquires a business, embedded derivatives separated from the host contract by the acquiree
are not reassessed on acquisition unless the business combination results in a change in the terms of the
contract that significantly modifies the cash flows that would otherwise be required under the contract.
Intangible assets
IAS 38.24, 74
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets
acquired in a business combination is their fair value as at the date of acquisition. Following initial
recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated
impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not
capitalised and expenditure is reflected in the income statement in the year in which the expenditure
is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment IAS 38.97
whenever there is an indication that the intangible asset may be impaired. The amortisation period and the IAS 38.88
amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year IAS 38.104
end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits
IAS 38.118(d)
embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and
are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite
lives is recognised in the income statement in the expense category consistent with the intangible asset.
Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the IAS 38.107
IAS 38.109
cash generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an
indefinite life is reviewed annually to determine whether indefinite life assessment continues to be
supportable. If not, the change in the useful life assessment from indefinite to finite is made on a
prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the
net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when
the asset is derecognised.


Present value of acquired in-force business (PVIF) IFRS 4.31(b)
When a portfolio of insurance contracts and/or investment contracts with a DPF is acquired, whether
directly from another insurance company or as part of a business combination, the difference between the
fair value and the carrying amount of the insurance liabilities is recognised as the value of the acquired in-
force business.
Subsequent to initial recognition, the intangible asset is carried at cost less accumulated amortisation and
accumulated impairment losses. The intangible asset is amortised over the useful life of the acquired in-force
policy during which future premiums are expected, which typically varies between 5 and 50 years.
Amortisation is recognised in the income statement as an expense.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits
embodied in the asset are accounted for by changing the amortisation period and they are treated as a change
in an accounting estimate.
An impairment review is performed whenever there is an indication of impairment. When the recoverable
amount is less than the carrying value, an impairment loss is recognised in the income statement. PVIF is also
considered in the liability adequacy test for each reporting period.
PVIF is derecognised when the related contracts are settled or disposed of.
Future servicing rights IAS 18
Appendix
When a portfolio of investment contracts without DPF under which the Group will render investment 14(b)(iii)
management services is acquired, whether directly from another insurance company or as part of a business
combination, the present value of future servicing rights is recognised as an intangible asset.
Subsequent to initial recognition, the intangible asset is carried at cost less accumulated amortisation and
accumulated impairment losses. The intangible asset is amortised on a straight line basis over the useful
servicing period of the acquired in-force policy during which fees from services will emerge, which typically
varies between 10 and 20 years. Amortisation is recorded in the income statement.
An impairment review is performed whenever there is an indication of impairment. When the recoverable
amount is less than the carrying value, an impairment loss is recognised in the income statement. Future
servicing rights are also considered in establishing an onerous contract provision for each reporting period.
Future servicing rights are derecognised when the related contracts are settled or disposed of.
A summary of the policies applied to the Groups intangible assets is as follows:
IAS 38.118(a),
PVIF Future Servicing Rights (b)
Useful lives Finite Finite
Amortisation method used Amortised over the period of the Amortised over the servicing
policy period
(d) Investment in an associate

The Groups investment in its associate is accounted for using the equity method of accounting. An associate IAS 28.13
is an entity in which the Group has significant influence and which is neither a subsidiary nor a joint venture.
Under the equity method, the investment in the associate is carried in the balance sheet at cost plus post IAS 28.23(a)
IAS 28.11
acquisition changes in the Groups share of net assets of the associate. Goodwill relating to an associate is
included in the carrying amount of the investment and is not amortised. The income statement reflects the
share of the results of operations of the associate. When there has been a change recognised directly in the
equity of the associate, the Group recognises its share of any changes and discloses this, when applicable, in
the statement of changes in equity. Profits or losses resulting from transactions between the Group and the
associate are eliminated to the extent of the interest in the associate.
The financial statements of the associate are prepared for the same reporting period as the parent company. IAS 28.37(e)
IAS 28.76
Where necessary, adjustments are made to bring its accounting policies in line with the Group.


(e) Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any IAS 36.9
such indication exists, or when annual impairment testing for an asset is required, the Group estimates the
assets recoverable amount. An assets recoverable amount is the higher of an assets or cash-generating
units fair value less costs to sell and its value in use. The recoverable amount is determined for an individual
asset, unless the asset does not generate cash inflows that are largely independent of those from other assets
or groups of assets.
Impairment losses of continuing operations are recognised in the income statement in those expenses IAS 36.60
categories consistent with the function of the impaired asset.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any IAS 36.110
indication that previously recognised impairment losses may no longer exist or may have decreased. If such IAS 36.114
indication exists, the Group makes an estimate of recoverable amount. A previous impairment loss is reversed
only if there has been a change in the estimates used to determine the assets recoverable amount since the
IAS 36.117
last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its
IAS 36.119
recoverable amount. That increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such
reversal is recognised in the income statement unless the asset is carried at revalued amount, in which case
the reversal is treated as a revaluation increase.
The following criteria are also applied in assessing impairment of specific assets:
Goodwill
The Group assesses whether there are any indicators that goodwill is impaired at each reporting date. Goodwill IAS 36.90
is tested for impairment, annually and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of the cash-generating units, to IAS 36.90
which the goodwill relates. Where the recoverable amount of the cash-generating units is less than their
carrying amount an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed
in future periods. The Group performs its annual impairment test of goodwill as at 31 December.
The recoverable amount for the life insurance business has been determined based on a fair value less costs to
sell calculation. The calculation requires the Group to make an estimate of the total of the adjusted net worth
of the life insurance business plus the value of in-force covered business. This calculation is derived from the
embedded value principles developed by the Euroland Institute of Actuaries. New business contribution
represents the present value of projected future distributable profits generated from business written in a
period. Growth and discount rates used are suitable rates which reflect the risks of the underlying cash flows.
The recoverable amount of the non-life insurance and investment management services businesses have been
determined based on a valuein-use calculation. The calculation requires the Group to make an estimate of the
expected future cash flows from each of the cash-generating units and discount these amounts using a
suitable rate which reflects the risk of those cash flows in order to calculate the present value of those
cash flows.
Previously recorded impairment losses for goodwill are not reversed in future periods. IAS 36.124
When goodwill forms part of a cash-generating unit (group of cash generating units) and part of the IAS 36.86
operations within that unit is disposed of, the goodwill associated with the operation disposed of is included in
the carrying amount of the operation to determine the gain or loss on disposal of the operation. Goodwill
disposed of in this circumstance is measured based on the relative values of the operation disposed of and the
portion of the cash-generating unit retained.
Associates
After application of the equity method, the Group determines whether it is necessary to recognise an
additional impairment loss of the Groups investments in associates. The Group determines at each balance
sheet date whether there is any objective evidence that the investment in associate is impaired. If this is the
case the Group calculates the amount of impairment as being the difference between the fair value of the
associate and the acquisition cost and recognises this amount in the income statement.
Commentary
IAS 36.96 permits the annual impairment test for goodwill to be performed at any time during the year provided it is undertaken at
the same time each year.


(f) Property and equipment
Property and equipment, including owner-occupied properties, is stated at cost, excluding the costs of day to IAS 16.12,
73(a)
day servicing, less accumulated depreciation and accumulated impairment losses. Replacement or major IAS 16.1, 30
inspection costs are capitalised when incurred and if it is probable that future economic benefits associated IAS 16.14
with the item will flow to the entity and the cost of the item can be measured reliably.
Depreciation is provided on a straight line basis over the useful lives of the following classes of assets: IAS 16.73(b),
(c)
u Property: over 20 years
u Equipment: 5 to 15 years
The assets residual values, and useful lives and method are reviewed and adjusted if appropriate at each IAS 16.51
financial year end.

Impairment reviews are performed when there are indicators that the carrying value may not be recoverable.
Impairment losses are recognised in the income statement as an expense.
An item of property and equipment is derecognised upon disposal or when no further future economic IAS 16.67
IAS 16.71
benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset IAS 16.68
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is
included in the income statement in the year the asset is derecognised.
Commentary
The Group has elected to carry property and equipment at historical cost less accumulated depreciation and impairment. IAS 16 also
permits property and equipment to be carried at a revalued amount, being its fair value at the date of the revaluation less any
subsequent accumulated depreciation and impairment.
(g) Borrowing costs

Until 1 January 2008, borrowing costs that are directly attributable to the acquisition, construction or IAS 23.27
production of a qualifying asset (i.e., an asset that necessary takes a substantial period of time to get ready
for its intended use or sale) were expensed as incurred. For qualifying assets commencing on or after 1
January 2008 in accordance with the revised IAS 23 such costs are capitalised. Comparative amounts have
not been restated as permitted by the revised standard.
(h) Investment properties
Investment properties are measured initially at cost, including transaction costs. The carrying amount includes IAS 40.19, 20
IAS 40.18
the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition IAS 40.75(a)
criteria are met; and excludes the costs of day to day servicing of an investment property. Subsequent to IAS 40.38
initial recognition, investment properties are stated at fair value, which reflects market conditions at the
balance sheet date. Gains or losses arising from changes in the fair values of investment properties are
included in the income statement in the year in which they arise.
Investment properties are derecognised when either they have been disposed of or when the investment IAS 40.66
IAS 40.69
property is permanently withdrawn from use and no future economic benefit is expected from its disposal.
Any gains or losses on the retirement or disposal of an investment property are recognised in the income
statement in the year of retirement or disposal.
Transfers are made to or from investment property only when there is a change in use evidenced by the end IAS 40.57
of owner-occupation, commencement of an operating lease to another party or completion of construction or

development. For a transfer from investment property to owner occupied property, the deemed cost for
subsequent accounting is the fair value at the date of change in use. If owner occupied property becomes an
investment property, the Group accounts for such property in accordance with the policy stated under
property, plant and equipment up to the date of the change in use.
When the Group completes the construction or development of a self constructed investment property, any IAS 40.60, 61
IAS 40.65
difference between the fair value of the property at that date and its previous carrying amount is recognised
in the income statement.
Commentary
The Group has elected to carry investment property at fair value. IAS 40 also permits investment property to be carried at historical
cost less provision for depreciation and impairment.


(i) Investments and other financial assets
The Group classifies its investments into financial assets at fair value through profit or loss, held-to-maturity IAS 39.45
financial assets, loans and other receivables and available-for-sale financial assets.
The classification depends on the purpose for which the investments were acquired or originated. Financial IAS 39.45
assets are classified as at fair value through profit or loss where the Groups documented investment strategy
is to manage financial investments on a fair value basis, because the related liabilities are also managed on
this basis. The available-for-sale and held-to-maturity categories are used when the relevant liability
(including shareholders funds) are passively managed and/or carried at amortised cost.
All regular way purchases and sales of financial assets are recognised on the trade date which is the date that IAS 39.38
the Group commits to purchase or sell the asset. Regular way purchases or sales of financial assets require
delivery of assets within the period generally established by regulation or convention in the market place.
Financial assets at fair value through profit or loss IAS 39.9(a),
(b)
Financial assets at fair value through profit and loss include financial assets held for trading and those
designated at fair value through profit or loss at inception. Investments typically bought with the intention to
sell in the near future are classified as held for trading. For investments designated as at fair value through
profit or loss, the following criteria must be met:
u the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise
from measuring the assets or liabilities or recognising gains or losses on a different basis, or
u the assets and liabilities are part of a group of financial assets, financial liabilities or both which are
managed and their performance evaluated on a fair value basis, in accordance with a documented risk
management or investment strategy.
These investments are initially recorded at fair value. Subsequent to initial recognition, these investments IAS 39.43
are remeasured at fair value. Fair value adjustments and realised gain and loss are recognised in the
IAS 39.55(a)
income statement.
Held-to-maturity financial assets
Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held- IAS 39.9
IAS 39.43
to-maturity when the Group has the positive intention and ability to hold until maturity. These investments are
initially recognised at cost, being the fair value of the consideration paid for the acquisition of the investment.
All transaction costs directly attributable to the acquisition are also included in the cost of the investment.
After initial measurement held-to-maturity financial assets are measured at amortised cost, using the effective
IAS 39.56
interest rate method. Gains and losses are recognised in the income statement when the investments are
derecognised or impaired, as well as through the amortisation process.
Loans and other receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not IAS 39.9
quoted in an active market. These investments are initially recognised at cost, being the fair value of the
IAS 39.43
consideration paid for the acquisition of the investment. All transaction costs directly attributable to the IAS 39.46(a)
acquisition are also included in the cost of the investment. After initial measurement loans and receivables
are measured at amortised cost, using the effective interest rate method. Gains and losses are recognised in
IAS 39.56
the income statement when the investments are derecognised or impaired, as well as through the
amortisation process.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale IAS 39.9
IAS 39.43
or are not classified in any of the three preceding categories. These investments are initially recorded at fair IAS 39.55(b)
value. After initial measurement available-for-sale financial assets are measured at fair value. Fair value gains
and losses are reported as a separate component of equity until the investment is derecognised or the
investment is determined to be impaired. On derecognition or impairment, the cumulative fair value gains and
losses previously reported in equity is transferred to the income statement.


(j) Derivative financial instruments
Derivative financial instruments are classified as held for trading unless they are designated as effective
hedging instruments. All derivatives are carried as assets when the fair values are positive and as liabilities
when the fair values are negative.
Embedded derivatives are treated as separate derivatives and are recorded at fair value if their economic
characteristics and risks are not closely related to those of the related host contract and the host contract is
not itself recorded at fair value through the income statement. Embedded derivatives that meet the definition
of insurance contracts are treated and measured as insurance contracts.
Derivative financial instruments held for trading are typically entered into with the intention to settle in the IAS 39.43
IAS 39.55(a)
near future. These instruments are initially recorded at fair value. Subsequent to initial recognition, these
instruments are remeasured at fair value. Fair value adjustments and realised gains and losses are recognised
in the income statement.
Derivative financial instruments designated as hedging instruments, for example, forward currency contracts IFRS 7.22(b)
and interest rate swaps, are entered into by the Group to hedge its risks associated with interest rate and
foreign currency fluctuations.
For the purpose of hedge accounting, hedges are classified as: IAS 39.86
u cash flow hedges, when they hedge exposure to variability in cash flows of a recognised asset or liability or IFRS 7.22(a)
a highly probable forecasted transaction, or IFRS 7.22(a)

u fair value hedges, when they hedge exposure to changes in the fair value of a recognised asset or liability
or an unrecognised firm commitment, or an identified portion of such asset, liability or firm commitment,
that is attributable to a particular risk.
The following criteria must be in place before the Group will use hedge accounting: IAS 39.88
u formal documentation of the hedging instrument, hedged item, hedging objective, strategy and
relationship is prepared before hedge accounting is applied, and
u the hedge is documented at inception showing that it is expected to be highly effective in offsetting
the risk in the hedged item throughout the reporting period and the hedge is effective on an ongoing basis,
and
u for a cash flow hedge, a forecast transaction that is the subject of the hedge must be highly probable and
must present an exposure to variations in cash flows that could ultimately affect the income statement.
Cash flow hedges IFRS 7.22(a)
Such derivative financial instruments are initially recognised at fair value on the date on which the derivative IAS 39.95
IAS 39.97-100
contract is entered into. The effective portion of the gain or loss on the hedging instrument is recognised
directly in equity, while the ineffective portion is recognised in the income statement. Amounts taken to
equity are transferred to the income statement when the hedged transaction effects the income statement,
such as when hedged financial income or financial expense is recognised or when the forecast sale or
purchase occurs. When the hedged item is the cost of a non-financial asset or liability, the amounts taken to
equity are transferred to the initial carrying amount of the non-financial asset or non-financial liability.
If the forecast transaction is no longer expected to occur, amounts previously recognised in equity are
transferred to the income statement. If the hedging instrument expires or is sold, terminated or exercised
without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognised in
equity remain in equity until the forecast transaction occurs.
Fair value hedges IFRS 7.22(a)
Such derivative financial instruments are also initially recognised at fair value on the date on which the IAS 39.89
derivative contract is entered into. The carrying amount of the hedged item is adjusted for gains and losses
attributable to the risk being hedged. The derivative is remeasured at fair value and gains and losses are
recognised in the income statement.
For fair value hedges relating to items carried at amortised cost, the adjustment to carrying value is amortised IAS 39.92
through the income statement over the remaining term of maturity. Amortisation may begin as soon as an
adjustment exists and shall begin no later than when the hedged item ceases to be adjusted for changes in its
fair value attributable to the risk being hedged.


(j) Derivative financial instruments continued
When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in IAS 39.93
the fair value of the firm commitment attributable to the hedged risk is recognised as an asset or liability with
a corresponding gain or loss recognised in the income statement. The change in the fair value of the hedging
instrument is also recognised in the income statement.
The Group discontinues fair value hedge accounting if the hedging instrument expires, is sold, terminated or IAS 39.91
exercised, the hedge no longer meets the criteria for hedge accounting or the Group revokes the designation.
(k) Fair value of financial instruments
The fair value of financial instruments that are actively traded in organized financial markets is determined by IFRS 7.27(b)
reference to quoted market bid prices for assets and offer prices for liabilities, at the close of business on the
balance sheet date. If quoted market prices are not available, reference can also be made to broker or dealer
price quotations.
For units in unit trusts and shares in open ended investment companies, fair value is determined by reference IFRS 7.27(a)
to published bid-values.
For financial instruments where there is not an active market, the fair value is determined by using valuation IFRS 7.27(a)
techniques. Such techniques include using recent arms length transactions, reference to the current market
value of another instrument which is substantially the same, discounted cash flow analysis and/or option
pricing models. For discounted cash flow techniques, estimated future cash flows are based on managements
best estimates and the discount rate used is a market related rate for a similar instrument. Certain financial
instruments, including derivative financial instruments, are valued using pricing models that consider, among
other factors, contractual and market prices, correlation, time value of money, credit risk, yield curve
volatility factors and/or prepayment rates of the underlying positions. The use of different pricing models and
assumptions could produce materially different estimates of fair values.
The fair value of floating rate and overnight deposits with credit institutions is their carrying value. The IFRS 7.27(a)
carrying value is the cost of the deposit and accrued interest. The fair value of fixed interest bearing deposits
is estimated using discounted cash flow techniques. Expected cash flows are discounted at current market
rates for similar instruments at the balance sheet date.
If the fair value can not be measured reliably, these financial instruments are measured at cost, being the fair IAS 39.46(c)
value of the consideration paid for the acquisition of the investment or the amount received on issuing the
financial liability. All transaction costs directly attributable to the acquisition are also included in the cost of
the investment.
(l) Impairment of financial assets

The Group assesses at each balance sheet date whether a financial asset or group of financial assets is IAS 39.58
impaired.
Assets carried at amortised cost
If there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred, IAS 39.63
the amount of the impairment loss is measured as the difference between the assets carrying amount and the
present value of estimated future cash flows (excluding future expected credit losses that have not been
incurred) discounted at the financial assets original effective interest rate. The carrying amount of the asset
is reduced and the loss is recorded in the income statement.
The Group first assesses whether objective evidence of impairment exists individually for financial assets that IAS 39.64
are individually significant, and individually or collectively for financial assets that are not individually
significant. If it is determined that no objective evidence of impairment exists for an individually assessed
financial asset, whether significant or not, the asset is included in a group of financial assets with similar
credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets
that are individually assessed for impairment and for which an impairment loss is or continues to be
recognised are not included in a collective assessment of impairment. The impairment assessment is
performed at each balance sheet date.


If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related IAS 39.65
objectively to an event occurring after the impairment was recognised, the previously recognised impairment
loss is reversed. Any subsequent reversal of an impairment loss is recognised in the income statement, to the
extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.
Available-for-sale financial investments
If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net IAS 39.67
of any principal repayment and amortisation) and its current fair value, less any impairment loss previously
recognised in the income statement, is transferred from equity to the income statement. Reversals in respect IAS 39.68, 69
of equity instruments classified as available-for-sale are not recognised in the income statement. Reversals of IAS 39.70
impairment losses on debt instruments classified at available-for-sale are reversed through the income
statement if the increase in the fair value of the instruments can be objectively related to an event occurring
after the impairment losses were recognised in the income statement.
(m) Derecognition of financial assets

A financial asset (or, when applicable, a part of a financial asset or part of a group of similar financial assets) IAS 39.17, 18
is derecognised when:
u the rights to receive cash flows from the asset have expired,
u the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay
them in full without material delay to a third party under a pass-through arrangement, or
u the Group has transferred its rights to receive cash flows from the asset and either:
u has transferred substantially all the risks and rewards of the asset, or
u has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
When the Group has transferred its right to receive cash flows from an asset and has neither transferred nor IAS 39.20(c)
retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is
recognised to the extent of the Groups continuing involvement in the asset. Continuing involvement that
takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying
amount of the asset and the maximum amount of consideration that the Group could be required to repay.
When continuing involvement takes the form of a written and/or purchased option (including a cash settled IAS 39.30(b)
option or similar provision) on the transferred asset, the extent of the Groups continuing involvement is the
amount of the transferred asset that the Group may repurchase, except that in the case of a written put option
(including a cash settled option or similar provision) on an asset measured at fair value, the extent of the
Groups continuing involvement is limited to the lower of the fair value of the transferred asset and the option
exercise price.
IFRS 4.37(a)
(n) Reinsurance
The Group cedes insurance risk in the normal course of business for all of its businesses. Reinsurance assets
represent balances due from reinsurance companies. Amounts recoverable from reinsurers are estimated in a
manner consistent with the outstanding claims provision or settled claims associated with the reinsurers
policies and are in accordance with the related reinsurance contract.
Reinsurance assets are reviewed for impairment at each reporting date or more frequently when an indication IFRS 4.20
of impairment arises during the reporting year. Impairment occurs when there is objective evidence as a
result of an event that occurred after initial recognition of the reinsurance asset that the Group may not
receive all outstanding amounts due under the terms of the contract and the event has a reliably measurable
impact on the amounts that the Group will receive from the reinsurer. The impairment loss is recorded in the
income statement.
Gains or losses on buying reinsurance are recognised in the income statement immediately at the date of IFRS
4.37(b)(i)
purchase and are not amortised.
Ceded reinsurance arrangements do not relieve the Group from its obligations to policyholders.


The Group also assumes reinsurance risk in the normal course of business for life insurance and non-life
insurance contracts when applicable. Premiums and claims on assumed reinsurance are recognised as revenue
or expenses in the same manner as they would be if the reinsurance were considered direct business, taking
into account the product classification of the reinsured business. Reinsurance liabilities represent balances
due to reinsurance companies. Amounts payable are estimated in a manner consistent with the related
reinsurance contract.
Premiums and claims are presented on a gross basis for both ceded and assumed reinsurance.
Reinsurance assets or liabilities are derecognised when the contractual rights are extinguished or expire or IFRS 4.14(c)
when the contract is transferred to another party.

Reinsurance contracts that do not transfer significant insurance risk are accounted for directly through the
balance sheet. These are deposit assets or financial liabilities that are recognised based on the consideration
paid or received less any explicit identified premiums or fees to be retained by the reinsured. Investment
income on these contracts is accounted for using the effective interest rate method when accrued.
(o) Taxes
Current income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount IAS 12.46
IAS 12.47
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute
the amount are those that are enacted or substantively enacted by the balance sheet date.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the income
statement.
The income tax charge is analysed between tax in respect of policyholders returns and the balance which
represents the tax on equity holders returns. The income tax charge in respect of policyholders returns
reflects the movement in current and deferred income tax recognised in respect of those items of income,
gains and expenses, which inure to the benefit of policyholders.
Deferred income tax
Deferred income tax is provided using the liability method on temporary differences at the balance sheet date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences, except:
IAS 12.15
u when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or
liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss, and
u in respect of taxable temporary differences associated with investments in subsidiaries, associates and IAS 12.39
interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled
and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused IAS 12.24
tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses
can be utilised except:
u when the deferred income tax asset relating to the deductible temporary difference arises from the initial IAS12.15(b)
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss, and
u in respect of deductible temporary differences associated with investments in subsidiaries, associates and IAS 12.44
interests in joint ventures, deferred income tax assets are recognised only to the extent that it is probable
that the temporary differences will reverse in the foreseeable future and taxable profit will be available
against which the temporary differences can be utilised.


The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the
IAS 12.56
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the IAS 12.37
deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each
balance sheet date and are recognised to the extent that it has become probable that future taxable profit will
allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year IAS 12.47
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted at the balance sheet date.
Deferred income tax relating to items recognised directly in equity is recognised in equity and not in the IAS 12.61
income statement.
Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to IAS 12.74
set off current tax assets against current income tax liabilities and the deferred income taxes relate to the
same taxable entity and the same taxation authority.
IAS 18.8
(p) Sales taxes and premium taxes
Revenues, expenses and assets are recognised net of the amount of sales taxes and premium taxes except:
u when the sales or premium tax incurred on a purchase of assets or services is not recoverable from the
taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset
or as part of the expense item as applicable, and
u receivables and payables that are stated with the amount of sales or premium tax included.
Outstanding net amounts of sales or premium tax recoverable from, or payable to, the taxation authority is
included as part of receivables or payables in the balance sheet.
IFRS 4.37(a)
(q) Insurance receivables
Insurance receivables are recognised when due and measured on initial recognition at the fair value of the
consideration received or receivable. Subsequent to initial recognition, insurance receivables are measured at
amortised cost, using the effective interest rate method. The carrying value of insurance receivables is
reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be
recoverable, with the impairment loss recorded in the income statement.
Insurance receivables are derecognised when the derecognition criteria for financial assets, as described in
Note 2.4 (m), have been met.
(r) Deferred expenses

Deferred acquisition costs (DAC) IFRS 4.37(a)
Those direct and indirect costs incurred during the financial period arising from the writing or renewing of
insurance contracts and/or investment contracts with DPF, are deferred to the extent that these costs are
recoverable out of future premiums. All other acquisition costs are recognised as an expense when incurred.
Subsequent to initial recognition, these costs are amortised on a straight line basis based on the term of
expected future premiums, which typically varies between 5 and 50 years for life insurance contracts and is
normally 1 year for non-life insurance contracts. Amortisation is recorded in the income statement.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits
embodied in the asset are accounted for by changing the amortisation period and are treated as a change in
an accounting estimate.
An impairment review is performed at each reporting date or more frequently when an indication of
impairment arises. When the recoverable amounts is less than the carrying value an impairment loss is
recognised in the income statement. DAC is also considered in the liability adequacy test for each
reporting period.
DAC are derecognised when the related contracts are either settled or disposed of.
Reinsurance commissions
Commissions receivable on outwards reinsurance contracts are deferred and amortised on a straight line basis
over the term of the expected premiums payable.


IAS 18
Appendix 14
Investment management services (b(iii)
Those incremental costs incurred during the financial period directly attributable to securing investment
contracts without DPF, under which the Group will render investment management services, are deferred and
recognised as an asset, to the extent that these costs can be identified separately, measured reliably and it is
probable that these costs will be recovered out of future revenue margins. Incremental cost is a cost that
would not have been incurred if the Group had not secured the investment contract without DPF. All other
origination costs are recognised as an expense when incurred.
For contracts involving both the origination of a financial liability and the provision of investment
management services, only the transaction costs allocated to the servicing component are deferred. The
other transaction costs are included in the financial liability.
Subsequent to initial recognition, these costs are amortised on a straight line basis in line with fee income,
which typically varies between 10 and 20 years. Amortisation is recorded in the income statement.
An impairment review is performed at each reporting date or more frequently when an indication of
impairment arises. When the recoverable amount is less than the carrying value an impairment loss is
recognised in the income statement. Future servicing rights are also considered in establishing an onerous
contract provision for each reporting period.
Investment management services are derecognised when the related contracts are settled or disposed of.
(s) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original IAS 7.6
maturity of three months or less in the balance sheet.

For the purpose of the consolidated cash flow, cash and cash equivalents consist of cash and cash equivalents IAS 7.8
as defined above, net of outstanding bank overdrafts.
(t) Insurance contract liabilities

Life insurance contract liabilities IFRS 4.37(a)
Life insurance liabilities are recognised when contracts are entered into and premiums are charged. These
liabilities are measured by using the net premium method. The liability is determined as the sum of the
discounted value of the expected future benefits, claims handling and policy administration expenses,
policyholder options and guarantees and investment income from assets backing such liabilities, which are
directly related to the contract, less the discounted value of the expected theoretical premiums that would be
required to meet the future cash outflows based on the valuation assumptions used. The liability is either
based on current assumptions or calculated using the assumptions established at the time the contract was
issued, in which case a margin for risk and adverse deviation is generally included. A separate reserve for
longevity may be established and included in the measurement of the liability. Furthermore, the liability for
life insurance contracts comprises the provision for unearned premiums and unexpired risks, as well as for
claims outstanding, which includes an estimate of the incurred claims that have not yet been reported to the
Group. Adjustments to the liabilities at each reporting date are recorded in the income statement. Profits
originated from margins of adverse deviations on run-off contracts, are recognised in the income statement
over the life of the contract, whereas losses are fully recognised in the income statement during the first year
of run-off. The liability is derecognised when the contract expires, is discharged or is cancelled.


At each reporting date, an assessment is made of whether the recognised life insurance liabilities are IFRS 4.15 - 19
adequate, net of related PVIF and DAC, by using an existing liability adequacy test as laid out under Euroland
GAAP. The liability value is adjusted to the extent that it is insufficient to meet future benefits and expenses.
In performing the adequacy test, current best estimates of future contractual cash flows, including related
cash flows such as claims handling and policy administration expenses, policyholder options and guarantees,
as well as investment income from assets backing such liabilities, are used. A number of valuation methods
are applied, including discounted cash flows, option pricing models and stochastic modelling. Aggregation
levels and the level of prudence applied in the test are consistent with Euroland GAAP requirements. To the
extent that the test involves discounting of cash flows, the interest rate applied may be prescribed by
Euroland regulations or may be based on managements prudent expectation of current market interest rates.
Any inadequacy is recorded in the income statement, initially by impairing PVIF and DAC and subsequently by
establishing a technical reserve for the remaining loss. In subsequent periods, the liability for a block of
business that has failed the adequacy test is based on the assumptions that are established at the time of the
loss recognition. The assumptions do not include a margin for adverse deviation, unless required under
Euroland GAAP. Impairment losses resulting from liability adequacy testing can be reversed in future years if
the impairment no longer exists, as allowed under Euroland GAAP.
Non-life insurance (which comprises general insurance and healthcare) contract liabilities IFRS 4.37(a)
Non-life insurance contract liabilities are recognised when contracts are entered into and premiums are
charged. These liabilities are known as the outstanding claims provision, which are based on the estimated
ultimate cost of all claims incurred but not settled at the balance sheet date, whether reported or not,
together with related claims handling costs and reduction for the expected value of salvage and other
recoveries. Delays can be experienced in the notification and settlement of certain types of claims, therefore
the ultimate cost of these cannot be known with certainty at the balance sheet date. The liability is calculated
at the reporting date using a range of standard actuarial claim projection techniques based on empirical data
and current assumptions that may include a margin for adverse deviation. The liability is not discounted for
the time value of money. No provision for equalisation or catastrophe reserves is recognised. The liabilities
are derecognised when the contract expires, is discharged or is cancelled.
The provision for unearned premiums represents premiums received for risks that have not yet expired.
Generally the reserve is released over the term of the contract and is recognised as premium income.
At each reporting date the Group reviews its unexpired risk and a liability adequacy test is performed as laid IFRS 4.15- 19
out under Euroland GAAP to determine whether there is any overall excess of expected claims and deferred
acquisition costs over unearned premiums. This calculation uses current estimates of future contractual cash
flows after taking account of the investment return expected to arise on assets relating to the relevant non-
life insurance technical provisions. If these estimates show that the carrying amount of the unearned
premiums (less related deferred acquisition costs) is inadequate the deficiency is recognised in the income
statement by setting up a provision for liability adequacy.
IFRS 4.37(a)
(u) Investment contract liabilities
Investment contracts are classified between contracts with and without DPF. The accounting policies for
investment contract liabilities with DPF are the same as those for life insurance contract liabilities.
Investment contract liabilities without DPF are recognised when contracts are entered into and premiums are IAS 39.43
charged. These liabilities are initially recognised at fair value being the transaction price excluding any
transaction costs directly attributable to the issue of the contract. Subsequent to initial recognition
investment contact liabilities are measured at fair value through profit or loss.
Deposits and withdrawals are recorded directly as an adjustment to the liability in the balance sheet.


Fair value adjustments are performed at each reporting date and are recognised in the income statement. Fair
value is determined through the use of prospective discounted cash flow techniques. For unitised contracts,
fair value is calculated as the number of units allocated to the policyholder in each unit-linked fund multiplied
by the unit-price of those funds at the balance sheet date. The fund assets and fund liabilities used to
determine the unit-prices at the balance sheet date are valued on a basis consistent with their measurement
basis in the consolidated Group balance sheet adjusted to take account of the effect on the liabilities of the
deferred tax on unrealised gains on assets in the fund.
Non-unitised contracts are subsequently also carried at fair value, which is determined by using valuation
techniques such as discounted cash flows and stochastic modelling. Models are validated, calibrated and
periodically reviewed by an independent qualified person.
The liability is derecognised when the contract expires, is discharged or is cancelled. For a contract that can IAS 39.49
be cancelled by the policyholder, the fair value cannot be less than the surrender value.
When contracts contain both a financial risk component and a significant insurance risk component and the
cash flows from the two components are distinct and can be measured reliably, the underlying amounts are
unbundled. Any premiums relating to the insurance risk component are accounted for on the same bases as
insurance contracts and the remaining element is accounted for as a deposit through the balance sheet as
described above.
IFRS 4.37(a)
(v) Discretionary participation features (DPF)
A DPF is a contractual right that gives holders of these contracts the right to receive as a supplement to
guaranteed benefits, significant additional benefits which are based on the performance of the assets held
within the DPF portfolio. Under the terms of the contracts surpluses in the DPF funds can be distributed to
policyholders and shareholders on a 90/10 basis. The Group has the discretion over the amount and timing of
the distribution of these surpluses to policyholders. All DPF liabilities including unallocated surpluses, both
guaranteed and discretionary, at the end of the reporting period are held within insurance or investment
contract liabilities as appropriate.
(w) Net asset value attributable to unit-holders

Unit trusts in which the Group has a percentage holding in excess of 50% have been consolidated. The units
not owned by the Group are treated as a liability due to the puttable nature of the units. This liability is
referred to as net asset value attributable to unit-holders.
These liabilities are designated at fair value through profit or loss. Fair value is measured at current unit
values, which reflect fair values of underlying assets of the fund.
These liabilities are derecognised when the related contracts are settled or disposed of.
(x) Pensions and other post employment benefits

The Group operates a defined benefit pension plan, which requires contributions to be made to a separately IAS
19.120A(b)
administered fund. The cost of providing benefits under the defined benefit plan is determined separately IAS 19.64
using the projected unit credit valuation method. Actuarial gains and losses are recognised as income or IAS
expense when the net cumulative unrecognised actuarial gains and losses at the end of the previous reporting 12.120A(a)
IAS 19.92
year exceed 10% of the higher of the defined benefit obligation and the fair value of plan assets at that date.
IAS 19.93
These gains and losses are recognised over the expected average remaining working lives of the employees
participating in the plan.
The past service cost is recognised as an expense on a straight-line basis over the average period until the IAS 19.96
benefits become vested. If the benefits vest immediately following the introduction of, or changes to, a
pension plan, the past service cost is recognised immediately.
The defined benefit asset or liability comprises the present value of the defined benefit obligation less past IAS 19.54
service cost not yet recognised and less the fair value of plan assets out of which the obligations are to be IAS 19.58
settled directly. Plan assets are assets that are held by a long-term employee benefit fund or qualifying
insurance policies. Plan assets are not available to creditors of the Group nor can they be paid directly to the
Group. Fair value is based on market price information and in the case of quoted securities it is the published
bid price. The value of any asset is restricted to the sum of any past service cost not yet recognised and the
present value of any economic benefits available in the form of refunds from the plan or reductions in future
contributions to the plan.

Commentary
The Groups policy for defined benefit plans is to recognise actuarial gains and losses when the cumulative unrecognised actuarial
gains and losses exceed 10% of the higher of the defined benefit obligation and the fair value of the plan assets at that date. However
IAS 19 also allows other recognition policies provided this is a systematic method that results in faster recognition of actuarial gains
and losses and that the same basis is applied to both gains and losses and that basis is applied consistently from period to period.
Where the entity elects to recognise all actuarial gains and losses directly in equity, a statement of recognised income and expenses is
required.
(y) Share-based payment transactions

Employees (including senior executives) of the Group receive remuneration in the form of share-based IFRS 2.44
payment transactions, whereby employees render services as consideration for equity instruments (equity-
settled transactions). Employees working in the business development group are granted share appreciation
rights, which can only be settled in cash (cash-settled transactions).
In situations where equity instruments are issued and some or all of the goods or services received by the IFRIC 8.11
entity as consideration cannot be specifically identified, they are measured as the difference between the fair
value of the share-based payment and the fair value of any identifiable goods or services received at the
grant date.
IFRS
Equity-settled transactions
2.10,45,53
The cost of equity-settled transactions with employees for awards granted after 7 November 2002, is
measured by reference to the fair value at the date on which they are granted. The fair value is determined by
an external valuer using an appropriate pricing model, further details of which are given in Note 37.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over IFRS 2.45
the period in which the performance and/or service conditions are fulfilled, ending on the date on which the
relevant employees become fully entitled to the award (the vesting date). The cumulative expense
recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to
which the vesting period has expired and the Groups best estimate of the number of equity instruments that
will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is IFRS
2.29,20,21
conditional upon a market condition, which are treated as vesting irrespective of whether or not the market
condition is satisfied, provided that all other performance and/or service conditions are satisfied.
Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense as IFRS 2.27
if the terms had not been modified. An additional expense is recognised for any modification, which increases
the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as
measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and IFRS 2.28
any expense not yet recognised for the award is recognised immediately. However, if a new award is
substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the
cancelled and new awards are treated as if they were a modification of the original award, as described in the
previous paragraph.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of IAS 33.45
earnings per share (further details are given in Note 38).

Cash-settled transactions IFRS 2.53
The cost of cash-settled transactions is measured initially at fair value at the grant date using a Black-Scholes IFRS
2.30,32,33
model, further details of which are given in Note 37. This fair value is expensed over the period until the
vesting date with recognition of a corresponding liability. The liability is remeasured at each balance sheet
date up to and including the settlement date with changes in fair value recognised in profit or loss.


IAS 32.16
(z) Classification of financial instruments between debt and equity
A financial instrument is classified as debt if it has a contractual obligation to:
u deliver cash or another financial asset to another entity, or
u exchange financial assets or financial liabilities with another entity under conditions that are potentially
unfavourable to the Group.
If the Group does not have an unconditional right to avoid delivering cash or another financial asset to settle
its contractual obligation, the obligation meets the definition of a financial liability.
(aa) Interest bearing loans and borrowings

All borrowings and loans are initially recognised at fair value, less directly attributable transaction costs. After
initial recognition, they are measured at amortised cost, using the effective interest rate method.
Gains and losses are recognised in the income statement when the liabilities are derecognised as well as
through the amortisation process.
IAS 39.43, 47
(ab) Other financial liabilities and insurance payables
Other financial liabilities are recognised when due and measured on initial recognition at the fair value of the
consideration received less directly attributable transaction costs. Subsequent to initial recognition, they are
measured at amortised cost using the effective interest rate method.
(ac) Derecognition of financial liabilities and insurance payables

Financial liabilities and insurance payables are derecognised when the obligation under the liability is IAS 39.39
discharged, cancelled or expired.

When the existing liability is replaced by another from the same lender on substantially different terms, or the IAS 39.40
terms of an existing liability are substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and the recognition of a new liability, and the difference in the respective
carrying amounts is recognised in the income statement.
(ad) Deferred revenue

Initial and other front-end fees received for rendering future investment management services relating to IAS 18
Appendix
investment contracts without DPF, are deferred and recognised as revenue when the related services 14(b)(iii)
are rendered.
(ae) Provisions
General IAS 37.14
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a IAS 37.14
past event, and it is probable that an outflow of resources embodying economic benefits will be required to IAS 37.53
settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group IAS 37.54
expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but IAS 37. 45
only when the reimbursement is virtually certain. The expense relating to any provision is presented in the IAS 37. 47
income statement net of any reimbursement. If the effect of the time value of money is material, provisions IAS 37.60
are discounting using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a
borrowing cost.
Onerous contracts IAS 37.68
A provision is recognised for onerous contracts in which the unavoidable costs of meeting the obligations
under the contract exceed the expected economic benefits expected to be received under it. The unavoidable
costs reflect the least net cost of exiting the contract, which is the lower of the cost of fulfilling it and any
compensation or penalties arising from failure to fulfil it.
(af) Equity movements

Ordinary share capital IAS 32.35
The Group has issued ordinary shares that are classified as equity. Incremental external costs that are directly
attributable to the issue of these shares are recognised in equity, net of tax.


Treasury shares and contracts on own shares
Own equity instruments which are acquired (treasury shares) are deducted from equity and accounted for at IAS 32.33
weighted average cost. No gain or loss is recognised in the income statement on the purchase, sale, issue or
cancellation of the Groups own equity instruments.
Contracts on own shares that require physical settlement of a fixed number of own shares for a fixed
consideration are classified as equity and added to or deducted from equity. Contracts on own shares that
require net cash settlement or provide a choice of settlement are classified as trading instruments. Changes in
the fair value are reported in the income statement.
Dividends on ordinary share capital
Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by IAS 10.12
the Groups shareholders. Interim dividends are deducted from equity when they are paid.
Dividends for the year that are approved after the balance sheet date are dealt with as an event after the IAS 10.13
balance sheet date.
(ag) Income recognition

Gross premiums IFRS 4.37(a)
Gross recurring premiums on life and investment contracts with DPF are recognised as revenue when payable
by the policyholder. For single premium business revenue is recognised on the date on which the policy
is effective.
Gross general insurance written premiums comprise the total premiums receivable for the whole period of
cover provided by contracts entered into during the accounting period and are recognised on the date on
which the policy incepts. Premiums include any adjustments arising in the accounting period for premiums
receivable in respect of business written in prior accounting periods. Premiums collected by intermediaries,
but not yet received, are assessed based on estimates from underwriting or past experience and are included
in premiums written.
Unearned premiums are those proportions of premiums written in a year that relate to periods of risk after the
balance sheet date. Unearned premiums are calculated on a daily pro rata basis. The proportion attributable to
subsequent periods is deferred as a provision for unearned premiums.
Reinsurance premiums
Gross reinsurance premiums on life and investment contracts are recognised as an expense when payable or
on the date on which the policy is effective.
Gross general reinsurance premiums written comprise the total premiums payable for the whole cover
provided by contracts entered into the period and are recognised on the date on which the policy incepts.
Premiums include any adjustments arising in the accounting period in respect of reinsurance contracts
incepting in prior accounting periods.
Unearned reinsurance premiums are those proportions of premiums written in a year that relate to periods of
risk after the balance sheet date. Unearned reinsurance premiums are deferred over the term of the
underlying direct insurance policies for risks-attaching contracts and over the term of the reinsurance
contract for losses-occurring contracts.
Fees and commission income IFRS 4.37(a),
IAS 18
Insurance and investment contract policyholders are charged for policy administration services, investment Appendix
management services, surrenders and other contract fees. These fees are recognised as revenue over the 14(b)(ii)
period in which the related services are performed. If the fees are for services provided in future periods then
they are deferred and recognised over those future periods.
Investment income
Interest income is recognised in the income statement as it accrues and is calculated by using the effective IAS 18.30(a)
interest rate method. Fees and commissions that are an integral part of the effective yield of the financial
asset or liability are recognised as an adjustment to the effective interest rate of the instrument.
Investment income also includes dividends when the right to receive payment is established. For listed IAS 18.30(c)
securities, this is the date the security is listed as ex dividend.


Realised gains and losses
Realised gains and losses recorded in the income statement on investments include gains and losses on IAS 39.56
IAS 40.69
financial assets and on investment properties. Gains and losses also include the ineffective portion of hedge IAS 39.95(b)
transactions. Gains and losses on the sale of investments are calculated as the difference between net sales
proceeds and the original or amortised cost and are recorded on occurrence of the sale transaction.
(ah) Benefits, claims and expenses recognition

Gross benefits and claims IFRS 4.37(a)
Gross benefits and claims for life insurance contracts and for investment contracts with DPF include the cost
of all claims arising during the year including internal and external claims handling costs that are directly
related to the processing and settlement of claims and policyholder bonuses declared on DPF contracts as well
as changes in the gross valuation of insurance and investment contract liabilities with DPF. Death claims and
surrenders are recorded on the basis of notifications received. Maturities and annuity payments are recorded
when due.
General insurance and health claims includes all claims occurring during the year, whether reported or not,
related internal and external claims handling costs that are directly related to the processing and settlement of
claims, a reduction for the value of salvage and other recoveries, and any adjustments to claims outstanding
from previous years.
Reinsurance claims
Reinsurance claims are recognised when the related gross insurance claim is recognised according to the
terms of the relevant contract.
Finance cost
Interest paid is recognised in the income statement as it accrues and is calculated by using the effective IAS 39.47
interest rate method. Accrued interest is included within the carrying value of the interest bearing
financial liability.
IAS 10.3
(ai) Events after the balance sheet date
The financial statements are adjusted to reflect events that occurred between the balance sheet date and the
date when the financial statements are authorised for issue, provided they give evidence of conditions that
existed at the balance sheet date. Events that are indicative of conditions that arose after the balance sheet
date are disclosed, but do not result in an adjustment of the financial statements themselves.
2.5 Standards issued but not yet effective IAS 8.30
IFRS 2 Share-based Payment (Amendments)

This amendment to IFRS 2 Share-based payments was issued in January 2008 and becomes effective for
financial years beginning on or after 1 January 2009. The Standard restricts the definition of vesting
condition to a condition that includes an explicit or implicit requirement to provide services. Any other
conditions are non-vesting conditions, which have to be taken into account to determine the fair value of the
equity instruments granted. The Group currently does not have share-based payment schemes with non-
vesting conditions attached and, therefore, does not expect significant implications as a result of
this amendment.
Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 27
Consolidated and Separate Financial Statements
The amendments to IFRS 1 allow an entity to determine the cost of investments in subsidiaries, jointly
controlled entities or associates in its opening IFRS financial statements in accordance with IAS 27 or using a
deemed cost. The amendments to IAS 27 require all dividends from a subsidiary, jointly controlled entity or
associate to be recognised in the income statement in the separate financial statements. Both revisions will be
effective for financial years beginning on or after 1 January 2009. The revision to IAS 27 will have to be
applied prospectively. The new requirements affect only the parents separate financial statements and do not
have an impact on the consolidated financial statements.

2.5 Standards issued but not yet effective continued

IFRS 3R Business Combinations and IAS 27R Consolidated and Separate Financial Statements
The revised standards were issued in January 2008 and become effective for financial years beginning on or
after 1 July 2009. IFRS 3R introduces a number of changes in the accounting for business combinations
occurring after this date that will impact the amount of goodwill recognised, the reported results in the period
that an acquisition occurs, and future reported results. IAS 27R requires that a change in the ownership
interest of a subsidiary (without loss of control) is accounted for as an equity transaction. Therefore, such a
transaction will no longer give rise to goodwill, nor will it give rise to a gain or loss. Furthermore, the amended
standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a
subsidiary. Other consequential amendments were made to IAS 7 Statement of Cash Flows, IAS 12 Income
Taxes, IAS 21 The Effects of Changes in Foreign Exchange Rates, IAS 28 Investment in Associates and IAS 31
Interests in Joint Ventures. The changes by IFRS 3R and IAS 27R will affect future acquisitions or loss of
control and transactions with minority interests. The standards may be early adopted. However, the Group
does not intend to take advantage of this possibility.
IAS 1 Revised Presentation of Financial Statements
The revised Standard was issued in September 2007 and becomes effective for financial years beginning on or
after 1 January 2009. The Standard separates owner and non-owner changes in equity. The statement of
changes in equity will include only details of transactions with owners, with non-owner changes in equity
presented as a single line. In addition, the Standard introduces the statement of comprehensive income: it
presents all items of recognised income and expense, either in one single statement, or in two linked
statements. The Group is still evaluating whether it will have one or two statements.
IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements Puttable
Financial Instruments and Obligations Arising on Liquidation
These amendments were issued in February 2008 and become effective for financial years beginning on or
after 1 January 2009. The revisions provide a limited scope exception for puttable instruments to be
classified as equity if they fulfil a number of specified features. The amendments to the standards will have no
impact on the financial position or performance of the Group, as the Group has not issued such instruments.
Improvements to IFRSs
In May 2008 Improvements to IFRSs were issued. There are separate transitional provisions for each
standard. None of these amendments are expected to have a material effect on the Group. The Group has not
yet adopted the following amendments:
u IFRS 7 Financial Instruments: Disclosures:
Removal of the reference to total interest income as a component of finance costs.
u IAS 8 Accounting Policies, Change in Accounting Estimates and Errors:
Clarification that only implementation guidance that is an integral part of an IFRS is mandatory when
selecting accounting policies.
u IAS 10 Events after the Reporting Period:
Clarification that dividends declared after the end of the reporting period are not obligations.
u IAS 16 Property, Plant and Equipment:
Items of property, plant and equipment held for rental that are routinely sold in the ordinary course of
business after rental, are transferred to inventory when rental ceases and they are held for sale.
u IAS 18 Revenue:
Replacement of the term direct costs with transaction costs as defined in IAS 39.
u IAS 19 Employee Benefits:
Revised the definition of past service costs, return on plan assets and short term and other long-term
employee benefits. Amendments to plans that result in a reduction in benefits related to future services
are accounted for as a curtailment. Deleted the reference to the recognition of contingent liabilities to
ensure consistency with IAS 37.


u IAS 20 Accounting for Government Grants and Disclosures of Government Assistance:
Loans granted in the future with no or low interest rates will not be exempt from the requirement to
impute interest. The difference between the amount received and the discounted amount is accounted for
as government grant. Also, revised various terms used to be consistent with other IFRS.
u IAS 27 Consolidated and Separate Financial Statements:
When a parent entity accounts for a subsidiary at fair value in accordance with IAS 39 in its separate
financial statements, this treatment continues when the subsidiary is subsequently classified as held
for sale.
u IAS 29 Financial Reporting in Hyperinflationary Economies:
Revised the reference to the exception to measure assets and liabilities at historical cost, such that it
notes property, plant and equipment as being an example, rather than implying that it is a definitive list.
Also, revised various terms used to be consistent with other IFRS.
u IAS 34 Interim Financial Reporting:
Earnings per share is disclosed in interim financial reports if an entity is within the scope of IAS 33.
u IAS 39 Financial Instruments: Recognition and Measurement:
Changes in circumstances relating to derivatives are not reclassifications and therefore may be either
removed from, or included in, the fair value through profit or loss classification after initial recognition.
Removed the reference in IAS 39 to a segment when determining whether an instrument qualifies as a
hedge. Require the use of the revised effective interest rate when remeasuring a debt instrument on the
cessation of fair value hedge accounting.
u IAS 40 Investment Property:
Revision of the scope such that property under construction or development for future use as an
investment property, is classified as investment property. If fair value cannot be reliably determined, the
investment under construction will be measured at cost until such time as fair value can be determined or
construction is complete. Also, revised the conditions for a voluntary change in accounting policy to be
consistent with IAS 8 and clarified that the carrying amount of investment property held under a lease is
the valuation obtained increased by any recognised liability.
u IAS 41 Agriculture:
Removed the reference to the use of a pre-tax discount rate to determine fair value. Removed the
prohibition to take into account cash flows resulting from any additional transformations when estimating
fair value. Also, replaced the term point-of-sale costs with costs to sell.
IFRIC interpretations not yet effective
IFRIC 13 Customer Loyalty Programmes
IFRIC 13 was issued in June 2007 and becomes effective for annual periods beginning on or after 1 July
2008. This Interpretation requires customer loyalty award credits to be accounted for as a separate
component of the sales transaction in which they are granted and therefore part of the fair value of the
consideration received is allocated to the award credits and deferred over the period that the award credits
are fulfilled. The Group expects that this interpretation will have no impact on the Groups financial
statements as no such schemes currently exist.
IFRIC 15 Agreement for the Construction of Real Estate
IFRIC 15 was issued in July 2008 and becomes effective for financial years beginning on or after
1 January 2009. The interpretation is to be applied retrospectively. It clarifies when and how revenue and
related expenses from the sale of a real estate unit should be recognised if an agreement between a developer
and a buyer is reached before the construction of the real estate is completed. Furthermore, the
interpretation provides guidance on how to determine whether an agreement is within the scope of IAS 11 or
IAS 18. IFRIC 15 will not have an impact on the consolidated financial statement because the Group does not
conduct such activity.


IFRIC 16 Hedges of a Net Investment in a Foreign Operation
IFRIC 16 was issued in July 2008 and becomes effective for financial years beginning on or after 1 October
2008. The interpretation is to be applied prospectively. IFRIC 16 provides guidance on the accounting for a
hedge of a net investment. As such it provides guidance on identifying the foreign currency risks that qualify
for hedge accounting in the hedge of a net investment, where within the group the hedging instruments can
be held in the hedge of a net investment and how an entity should determine the amount of foreign currency
gain or loss, relating to both the net investment and the hedging instrument, to be recycled on disposal of the
net investment. The Group expects that this interpretation will have no impact on the consolidated
financial statements.
3. Segment information
For management purposes, the Group is organised into business units based on their products and services IFRS 8.22(a)
and has three reportable operating segments as follows:

The life insurance segment offers a wide range of whole life, term assurance, unitised pensions, guaranteed IFRS 8.22(b)
pensions, pure endowment pensions and mortgage endowment products.

The non-life insurance segment comprises both general insurance and healthcare. General insurance products
offered include motor, household, commercial and business interruption insurance. Non-life healthcare
contracts provide medical cover to policyholders.
The investment management segment provides investment management services to policyholders through
the investment management services subsidiary.
No operating segments have been aggregated to form the above reportable operating segments.
Segment performance is evaluated based on profit or loss which in certain respects is measured differently IFRS 8.25
from profit or loss in the consolidated financial statements. Group financing (including finance costs) and
income taxes are managed on a group basis and are not allocated to individual operating segments.
No inter-segment transactions occurred in 2008 and 2007. If any transaction were to occur, transfer prices IFRS 8.27(a)
between operation segments are set on an arms length basis in a manner similar to transactions with third
parties. Segment income, expense and results will then include those transfers between business segments
which will then be eliminated on consolidation.

3. Segment information continued

Segment income statement for the year end 31 December 2008
Investment Adjustments
Life Non-life management and
insurance insurance services eliminations Total
000 000 000 000 000
Gross premiums 48,246 23,897 72,143

Premiums ceded to reinsurers (12,781) (5,974) (18,755)
Net premiums 35,465 17,923 53,388
Fees and commission income 2,484 1,608 1,272 5,364

Investment income 5,343 2,466 412 8,221 IFRS 8.23(c)
Gains and losses and other
operating revenue 787 612 351 1,750
Other revenue 8,614 4,686 2,035 15,335
Segment revenue 44,079 22,609 2,035 68,723 IFRS 8.23(a)
Gross benefits and claims paid (22,977) (15,441) (38,418)

Claims ceded to reinsurers 6,410 3,861 10,271
Gross change in contract liabilities (4,352) (2,463) (22) (6,837)
Change in contract liabilities ceded to
reinsurers 965 612 13 1,590
Net benefits and claims (19,954) (13,431) (9) (33,394) IFRS 8.23(f)
Finance costs (280) (120) (22) (1,082) (1,504) IFRS 8.23(d)

Profit attributable to unit-holders (267) (267)
Depreciation and amortisation (670) (312) (92) (130) (1,204) IFRS 8.23(e)
Other operating and administrative
expenses (17,335) (5,612) (586) (2,120) (25,653)
Other expenses (18,285) (6,044) (967) (3,332) (26,628)
Segment benefits, claims and other

expenses (38,239) (19,475) (976) (3,332) (62,022)
Share of profit of an associate 129 129 IFRS 8.23(g)
Segment results 5,840 3,263 1,059 (3,332) 6,830 IFRS 8.23
Segment profit does not include finance costs on group borrowings or certain corporate expenses such as
depreciation on buildings occupied by the group head office.
IAS 36.129(a)
Other operating and administrative expenses include impairment losses of 223,000 in respect of the non life
operating segment.
Commentary
Disclosure of operating segment liabilities is only required where such a measure is provided to the chief operating decision maker.


Segment income statement for the year end 31 December 2007
000 000 000 000 000
Gross premiums 49,438 24,009 73,447

Premiums ceded to reinsurers (13,109) (6,002) (19,111)
Net premiums 36,329 18,007 54,336
Fees and commission income 1,450 669 112 2,231

Investment income 3,993 2,304 1,385 7,682 IFRS 8.23(c)
Gains and losses and other
operating revenue 727 574 282 1,583
Other revenue 6,170 3,547 1,779 11,496
Segment revenue 42,499 21,554 1,779 65,832 IFRS 8.23(a)
Gross benefits and claims paid (23,889) (15,521) (39,410)

Claims ceded to reinsurers 6,649 3,881 10,530
Gross change in contract liabilities (4,588) (2,581) (5) (7,174)
Change in contract liabilities ceded
to reinsurers 1,041 643 7 1,691
Net benefits and claims (20,787) (13,578) 2 (34,363) IFRS 8.23(f)
Finance costs (181) (110) (21) (1,024) (1,336) IFRS 8.23(d)

Profit attributable to unit-holders (111) (111)
Depreciation and amortisation (725) (383) (94) (125) (1,327) IFRS 8.23(e)
Other operating and administrative
expenses (14,619) (3,194) (606) (1,824) (20,243)
Other expenses (15,525) (3,687) (832) (2,973) (23,017)
Segment benefits, claims and

other expenses (36,312) (17,265) (830) (2,973) (57,380)
Share of profit on an associate 230 230 IFRS 8.23(g)
Segment results 6,187 4,519 949 (2,973) 8,682 IFRS 8.23
Segment results do not include finance costs on group borrowings or certain corporate expenses such as
depreciation on buildings operated by the group head office.
IAS 36.129(a)
Other operating and administrative expenses include impairment losses of 243,000 in respect of the life
operating segment.


Segment balance sheet at 31 December 2008
000 000 000 000 000
Intangible assets 1,567 945 688 3,200

Investment in an associate 2,120 2,120 IFRS 8.24(a)
Financial instruments 72,257 40,993 3,241 116,491

Reinsurance assets 23,573 12,666 300 36,539
Insurance receivables 28,434 12,186 40,260
Other assets 18,695 9,300 1,594 4,287 33,876
Total assets 144,526 78,210 5,823 4,287 232,846 IFRS 8.23
Insurance contract liabilities 83,030 50,664 133,694

Investment contract liabilities 11,100 608 11,708
Net asset value attributable to
unit-holders 520 520
Other liabilities 28,745 16,877 3,981 17,553 67,156
Total liabilities 122,875 67,541 5,109 17,553 213,078 IFRS 8.23
Segment assets do not include current tax (2,995,000) or properties occupied by group head office
(1,292,000). Segment liabilities do not include deferred tax (2,190,000), bank loans (14,788,000)
or certain trade payables (575,000).
Segment balance sheet at 31 December 2007

000 000 000 000 000
Intangible assets 1,630 1,023 718 3,371

Investment in an associate 1,991 1,991 IFRS 8.24(a)
Financial instruments 67,808 37,862 2,793 108,463

Reinsurance assets 22,554 11,893 280 34,727
Insurance receivables 26,254 11,251 37,505
Other assets 16,902 9,341 1,557 4,159 31,959
Total assets 135,148 73,361 5,348 4,159 218,016 IFRS 8.23
Insurance contract liabilities 78,686 47,574 126,260

Investment contract liabilities 11,010 548 11,558
Net asset value attributable to
unit-holders 367 367
Other liabilities 22,639 14,114 3,687 20,891 61,331
Total liabilities 112,335 61,688 4,602 20,891 199,516 IFRS 8.23
Segment assets do not include current tax (2,812,000) or properties occupied by group head
office (1,347,000).
Segment liabilities do not include deferred tax (2,057,000), bank loans (18,284,000) or certain trade
payables (550,000).

Geographic information
Year end 31 December 2008
Rest of
Euroland UK USA World Total
000 000 000 000 000
Total revenue from external customers 30,925 24,053 8,326 5,419 68,723 IFRS 8.33(a)
Non-current assets 9,101 4,405 240 65 13,811 IFRS 8.33(b)
Year end 31 December 2007

Rest of
Euroland UK USA World Total
000 000 000 000 000
Total revenue from external customers 29,624 23,041 8,503 4,864 65,832 IFRS 8.33(a)
Non-current assets 10,056 4,954 259 86 15,355 IFRS 8.33(b)
The revenue information is based on the location of the customer.

No revenue transactions with a single customer amount to more than 0.25% of total revenue. IFRS 8.34
Non-current assets for this purpose consist of intangible assets, the investment in associate, property and
equipment and investment properties.
4. Intangible assets
Future servicing
Goodwill PVIF rights Total
Notes 000 000 000 000
Cost IAS 38.118(c)
At 1 January 2007 3,799 588 248 4,635
Cost capitalised 223 95 318 IFRS 4.37(e)
At 31 December 2007 3,799 811 343 4,953

Cost capitalised 82 34 116 IFRS 4.37(e)
At 31 December 2008 3,799 893 377 5,069
Accumulated amortisation and IAS

impairment 38.118(c)
At 1 January 2007 632 464 198 1,294
IAS
Amortisation 34 34 14 48 38.118(e)(vi)
IAS
Impairment loss 34 243 243 38.118(e)(iv)
Foreign exchange adjustment (2) (1) (3)
At 31 December 2007 875 496 211 1,582
IAS
Amortisation 34 48 21 69 38.118(e)(vi)
IAS
Impairment loss 34 223 223 38.118(e)(iv)
Foreign exchange adjustment (3) (2) (5)
At 31 December 2008 1,098 541 230 1,869
Carrying amount IAS 38.118(c)
At 31 December 2007 2,924 315 132 3,371

At 31 December 2008 2,701 352 147 3,200
Goodwill has been allocated to the individual cash-generating units which are based on the three operating IAS 36.134
segments of the Group; life insurance, non-life insurance (which comprises general insurance and
healthcare) and investment management services. The carrying amount of goodwill allocated to each of the
cash-generating units is shown below.

4. Intangible assets continued
Investment IAS 36.134(a)

Life Non-life management
insurance insurance services Total
000 000 000 000
2008 1,215 945 541 2,701
2007 1,315 1,023 586 2,924
The recoverable amount for the life insurance business has been determined based on a fair value less costs IAS
36.134(c)
to sell calculation. For this purpose, an estimate of the total of the adjusted net worth of the life insurance
business was calculated derived from Euroland Embedded Value (EEV) principles. The fair value less costs to
sell of the life business resulting from this was significantly greater than its carrying value, including goodwill.
A reasonably possible change in a key assumption will not cause the carrying value of the life business to
exceed its recoverable amount.
The key assumptions used for the impairment calculation were:
u Risk discount rates are calculated using a risk margin of 3% based on the operating segments weighted
average cost of capital.
u Future regular bonuses on contracts with DPF are projected in a manner consistent with current bonus
rates and expected future returns on assets deemed to back the policies.
u Economic assumptions are based on market yields on risk-free fixed interest rates at the end of each
reporting year.
The recoverable amount of the non-life and investment management services businesses have been IAS 36.134(d)
determined based on a value-in-use calculation using cash flow projections based on financial budgets
approved by senior management covering a 5 year period. A pre-tax, Group specific risk adjusted discount rate
of 10.5% (2007: 10.4%) is used. The projected cash flows beyond the five years have been extrapolated
using a steady average growth rate of 3.5% (2007: 3.3%) not exceeding the long-term average growth rate
for the market in which the units operate. The projected cash flows are determined by budgeted margins
based on past performances and management expectations for market developments.
The key assumptions used for the value-in-use impairment calculation are: IAS 36.134(d)
u Investment market conditions Investment market conditions are based on market research and published
statistics. Management plans assume modest investment growth of 4% which is lower than the anticipated
market growth predicted.
u Policy lapses The Group have retained records of policy lapses since inception of the Group and is
therefore able to predict trends over the coming years. Management plans assume no change from
recent experiences.
u Premiums and margins Premium income is based on average values achieved in the three years preceding
the start of the budget period. A factor of 2% per annum was applied for non-life insurance and 2.5% for
investment management services income. Gross margins are based on average percentages for the last
three years while taking into account anticipated efficiency improvements, known expected expenditures
and inflation. A factor of 2% per annum was applied for non-life insurance and 2% for investment
management services income.
u Expenses - Estimates are obtained from published indices of inflation and market research. The plans
assume that expenses will broadly increase in line with inflation.
With regard to the assessment of value-in-use for the non-life insurance cash-generating units, management
does not believe a change in any of the above key assumptions would cause the carrying value of the units to
exceed their recoverable amounts.
For the investment management services cash-generating unit, a reasonably possible change in the
investment market conditions assumption will cause the carrying amount to exceed the recoverable amount.
The actual recoverable amount exceeds its carrying amount by 245,000 (2007: 211,000). Management
recognised the fact that current investment market conditions reflect stable and profitable margins.
Unfavourable conditions could materially affect the growth margins of these markets. A reduction of 1% in the
investment growth rate would give a value-in-use equal to the carrying amount of the investment management
services cash-generating unit.

4. Intangible assets continued

The impairment charge in 2008 arose in the Euroland non-life insurance business following a decision to IAS 36.130(a)
reduce activities related to the selling of credit insurance. Following this decision, the Group considered that
there would be insufficient volumes of new business to fully recover goodwill that arose on the purchase and,
as a result, an impairment charge of 223,000 was recognised in the income statement.
The impairment charge in 2007 arose in the Euroland life insurance business following a decision to abandon
certain annuity products. Following this decision, the Group re-assessed the goodwill that arose on the
purchase of this business and, as a result, an impairment charge of 243,000 was recognised in the
income statement.
Amortisation and impairment losses are presented in other operating and administrative expenses in the IAS 38.118(d)
income statement.
5. Investment in an associate
The Group has a 20% interest in Power Insurance Limited, which is involved in the insurance of power stations IAS 28.37(a)
in Euroland. Power Insurance Limited is a private entity that is not listed on any public exchange and there are IAS 28.26
no published price quotations for the fair value of this investment. The reporting date and reporting year of
Power Insurance Limited is the same as the Group and both use uniform accounting policies.
The investment in Power Insurance Limited is as follows IAS 28.37(b)
2008 2007
000 000
Share of associates balance sheet
Current assets 2,340 2,298
Non-current assets 5,469 5,238
Current liabilities (1,924) (1,866)
Non-current liabilities (3,765) (3,679)
Net assets 2,120 1,991
Share of associates revenue and profit

Revenue 1,325 2,555
Profit 129 230
Carrying amount of investment in an associate 2,120 1,991

Management consider the investment in Power Insurance Limited to be non-current. IAS 1.52

6. Property and equipment

Property Equipment Total IAS 1.75(a)
Notes 000 000 000

Cost IAS 16.73(d)
At 1 January 2007 4,315 3,915 8,230

Additions 1,160 823 1,983 IAS 16.73(a)
Disposals (807) (1,426) (2,233) IAS 16.73(e)(ix)
At 31 December 2007 4,668 3,312 7,980

Additions 1,462 952 2,414 IAS
16.73(e)(i)
Disposals (2,699) (2,028) (4,727) IAS 16.73(e)(ix)
At 31 December 2008 3,431 2,236 5,667
Accumulated depreciation IAS 16.73(d)
At 1 January 2007 1,111 1,030 2,141

IAS
Depreciation 34 794 485 1,279 16.73(e)(vii)
IAS
Disposals (706) (784) (1,490) 16.73(e)(ix)
At 31 December 2007 1,199 731 1,930

IAS
Depreciation 34 686 449 1,135 16.73(e)(vii)
IAS
Disposals (1,004) (686) (1,690) 16.73(e)(ix)
At 31 December 2008 881 494 1,375
Carrying amount IAS 16.73(d)

At 31 December 2007 3,469 2,581 6,050
At 31 December 2008 2,550 1,742 4,292
Property additions include 50,000 (2007:Nil) in respect of capitalised borrowing costs which were IAS 23.26
capitalised at a rate of 7%.

Property with a carrying amount of 2,904,123 (2007: 2,448,100) is subject to a first charge to secure IFRS 7.14(a),
(b)
the bank overdraft, see Note 20. IAS 16.74(a)
7. Investment properties
2008 2007
Note 000 000
At 1 January 3,943 3,627 IAS 40.76
Additions 203 219

Fair value gains 31 53 97
At 31 December 4,199 3,943
Investment properties are stated at fair value, which has been determined based on valuations performed by IAS 40.75(d),
(e)
Chartered Surveyors & Co. as at 31 December 2008. Chartered Surveyors & Co. is an industry specialist in
valuing these types of investment properties. The fair value is supported by market evidence and represents
the amount at which the assets could be exchanged between a knowledgeable, willing buyer and a
knowledgeable, willing seller in an arms length transaction at the date of valuation, in accordance with
standards issued by the International Valuation Standards Committee. Valuations are performed on an annual
basis and the fair value gains and losses are recorded within the income statement.
The Group enters into operating leases for all of its investment properties. The rental income arising during IAS 40.75(f)
the year amounted to 225,000 (2007: 214,000), which is included in investment income - see Note 29.
Direct operating expenses (included within operating and administrative expenses) arising in respect of such
properties during the year was 54,000 (2007: 46,000) - see Note 34. Future lease receivables are
disclosed in Note 44(b).

8. Derivative financial instruments

The Group purchases derivative financial instruments to match the liabilities arising on insurance contracts
and unit-linked investment contracts that it sells and to enter into cash flow and fair value hedges
The table below shows the fair value of derivative financial instruments, recorded as assets or liabilities, IFRS 7.22(b)
together with their notional amounts. The notional amount, recorded gross, is the amount of a derivatives
underlying asset, reference rate or index and is the basis upon which changes in the value of derivatives are
measured. The notional amounts indicate the volume of transactions outstanding at the year end and are
indicative of neither the market risk nor the credit risk.
Notional Notional
Assets Liabilities amount Assets Liabilities amount
2008 2008 2008 2007 2007 2007
000 000 000 000 000 000
Derivatives held for trading:
Interest rate swaps 387 (244) 3,642 135 (815) 2,617
Exchange traded equity options 290 (150) 4,656 52 (22) 1,197
677 (394) 8,298 187 (837) 3,814
Derivatives held as fair value hedges:

Interest rate swaps 220 (347) 4,388 160 (287) 2,346
Forward foreign exchange contracts 138 (113) 1,206 102 (63) 2,982
Foreign exchange traded futures 263 (383) 6,532 198 (321) 2,943
621 (843) 12,126 460 (671) 8,271
Derivatives held as cash flow hedges:

Currency swaps 867 (545) 3,412 593 (250) 2,876
867 (545) 3,412 593 (250) 2,876
Total derivatives 2,165 (1,782) 23,836 1,240 (1,758) 14,961
As of 31 December 2008, the Group had positions in the following types of derivatives:
Forward and futures
Forwards and futures contracts are contractual agreements to buy or sell a specified financial instrument at a
specific price and date in the future. Forwards are customised contracts transacted in the over-the-counter
market. Futures contracts are transacted in standardised amounts on regulated exchanges and are subject to
daily cash margin requirements.
Interest rate swaps
Swaps are contractual agreements between two parties to exchange movements in interest or foreign
currency rates. Typically, for an interest rate swap, a floating rate interest stream will be exchanged for a
fixed rate or vice versa.
Options
Options are contractual agreements that convey the right, but not the obligation, for the purchaser either to
buy or sell a specific amount of a financial instrument at a fixed price, either at a fixed future date or at any
time within a specified period.
Derivative financial instruments held for trading purposes
A variety of equity options are part of the portfolio matching insurance liabilities and unit-linked investment
liabilities with corresponding assets.
The Group has also purchased interest rate swap contracts to match the expected liability duration of fixed
and guaranteed insurance and investment contracts, to swap floating rates of the backing assets to be fixed
rates required to match the interest cash flows over the main duration of the related insurance and
investment contracts. These are economic hedges but do not meet the hedge accounting criteria.

8. Derivative financial instruments continued

Derivative financial instruments held for hedging purposes
As part of its asset and liability management, the Group uses derivatives for hedging purposes in order to
reduce its exposure to market risks. This is achieved by hedging specific financial instruments or portfolios of
fixed rate financial instruments.
The accounting policy explained in Note 2.4 (j) varies according to the nature of the item hedged and
compliance with the hedge criteria. Hedges entered into by the Group which provide economic hedges but do
not meet the hedge accounting criteria are treated as Derivatives held for trading purposes.
Fair value hedges
Fair value hedges are used by the Group to protect it against changes in the fair value of financial assets and IFRS 7.22(a)
financial liabilities due to movements in exchange rates and interest rates.

The Group hedges interest rate risk and exchange rate risk on certain fixed interest rate investments using IFRS 7.22(b)
swaps, exchange traded futures and other forward exchange contracts. The terms of the fair value hedges
exactly match the terms of the underlying hedged items.
For the year ended 31 December 2008, the Group recognised a net loss of 28,000(2007: loss of IFRS
7.24(a)(i)
22,000), representing the loss on the hedging instruments. The total gain on hedged items attributable to IFRS
the hedged risk amounted to 17,000(2007: gain of 13,000). 7.24(a)(ii)
Cash flow hedges

As a result of highly probable forecast transactions in foreign currencies, the Group is exposed to foreign IFRS 7.22(a)
IFRS 7.22 (c)
exchange risks which are hedged with currency swaps. A schedule indicating as at 31 December 2008 the
periods when the hedged cash flows are expected to occur and when they are expected to affect the income
statement is as follows:
Cash inflows/outflows 2008 2007 IFRS 7.23(a)

Cash Cash Net cash Cash Cash Net cash
inflows outflows inflows inflows outflows inflows
000 000 000 000 000 000
Within one year 1,567 (1,481) 78 968 (950) 18
Within 1 3 years 1,360 (1,127) 233 1,865 (1,660) 205
Within 3 8 years 973 (926) 47 1,000 (950) 50
Income Statement 2008 2007 IFRS 7.23(a)

000 000
Within one year 20 17
Within 1 3 years 26 29
Within 3 8 years 13 12
There were no cash flow hedges reclassified to the income statement in 2008 or 2007. IFRS 7.23(d)
There was no cash flow hedge ineffectiveness during 2008 or 2007. IFRS 7.24(b)

9. Financial instruments other than derivative financial instruments

The Groups financial instruments other than derivative financial instruments are summarised by categories
as follows.
2008 2007
000 000
Financial assets at fair value through profit or loss 20,241 21,189 IFRS 7.8(a)
Held-to-maturity financial assets 2,104 1,677 IFRS 7.8(b)
Loans and receivables 7,404 6,177 IFRS 7.8(c)
Available-for-sale financial assets 84,577 79,417 IFRS 7.8(d)
Total financial instruments other than derivative financial instruments 114,326 108,460
The following table compares the fair values of the financial instruments to their carrying values:
2008 2007
Carrying Fair Carrying Fair
value value value value
000 000 000 000
Financial assets at fair value through profit or loss 20,241 20,241 21,189 21,189
Held-to-maturity financial assets 2,104 2,428 1,677 2,246
Loans and receivables 7,404 7,601 6,177 6,256
Available-for-sale financial assets 84,577 84,577 79,417 79,417
114,326 114,847 108,460 109,108
Commentary
IFRS 7 requires disclosure of certain information per class of financial instruments as defined in IAS 39. Category disclosures are
made for main asset lines on the face of the balance sheet and class disclosures have been based on the characteristics of the
financial assets.
(a) Financial assets at fair value through profit or loss

2008 2007
000 000
Fair value
Equity securities 11,804 13,324 IFRS 7.6
Debt securities 4,966 4,662 IFRS 7.6
Mutual funds 2,130 2,091 IFRS 7.6
Deposits with credit institutions 1,341 1,112 IFRS 7.6
Total financial assets at fair value through profit or loss 20,241 21,189
The table below indicates the fair value of financial assets at fair value through profit or loss, split between
those classified as held for trading and those designated as such upon initial recognition.

9. Financial assets other than derivative financial instruments continued
2008 2007
000 000
Held for trading purposes 9,483 8,904 IFRS 7.8(a)(ii)
Designated upon initial recognition 10,758 12,285 IFRS 7.8(a)(i)
Total financial assets at fair value through profit or loss 20,241 21,189
(b) Held-to-maturity financial assets

2008 2007
000 000
Amortised cost
Total held-to-maturity financial assets at amortised cost 2,104 1,677
Fair value
Total held-to-maturity financial assets at fair value 2,428 2,246 IFRS 7.6
The fair values of the debt securities are their quoted market price.
(c) Loans and receivables

2008 2007
Notes 000 000
Amortised cost
Loans to related parties 45(b) 356 291 IFRS 7.6
Receivables from related parties 45(b) 382 357 IFRS 7.6
Other loans (net of impairment allowance of 526,000 IFRS 7.6

(2007: 483,000)) 6,666 5,529
Total loans and receivables at amortised cost 7,404 6,177
Fair value
Loans to related parties 356 291 IFRS 7.25
Receivables from related parties 382 357 IFRS 7.25
Other loans 6,863 5,608 IFRS 7.25
Total loans and receivables at fair value 7,601 6,256
The related party receivables are current and carrying value approximates fair value. IFRS 7.29(a)
The related party loans are at a variable interest rate and carrying value approximates fair value. IFRS 7.27(a)
The fair values of the other loans have been estimated by comparing current market interest rates for similar IFRS 7.27(a)
loans to the rates offered when the loans were first recognised together with appropriate market
credit adjustments.
(d) Available-for-sale financial assets

2008 2007
000 000
Equity securities 59,070 55,466 IFRS 7.6
Total available-for-sale financial assets at fair value 84,577 79,417 IFRS 7.25

(e) Carrying values of financial instruments other than derivative financial instruments
Fair
value
through
profit or Held-to- Loans and Available-
loss maturity receivables for-sale Total
Notes 000 000 000 000 000
At 1 January 2007 19,244 1,047 5,130 76,784 102,205
Purchases 4,000 531 2,314 5,000 11,845
Maturities - (85) (1,245) (65) (1,395)
Disposals (3,000) - - (6,523) (9,523)
Fair value gains recorded in the
income statement 31 945 - - - 945 IFRS 7.20(a)
Fair value gains recorded in statement
of changes in equity - - - 3,338 3,338 IFRS 7.20(a)
Movement in impairment allowance - - (22) - (22)
Amortisation adjustment - 184 - 848 1,032 IFRS 7.20(b)
Foreign exchange adjustments - - - 35 35 IAS 21.28
At 31 December 2007 21,189 1,677 6,177 79,417 108,460

Purchases 5,000 333 2,574 8,000 15,907
Maturities - (100) (1,304) (87) (1,491)
Disposals (7,000) - - (9,844) (16,844)
Fair value gains recorded in the
income statement 31 1,052 - - - 1,052 IFRS 7.20(a)
Fair value gains recorded in statement
of changes in equity - - - 6,230 6,230 IFRS 7.20(a)
Movement in impairment allowance - - (43) - (43)
Amortisation adjustment - 194 - 821 1,015 IFRS 7.20(b)
Foreign exchange adjustments - - - 40 40 IAS 21.28
At 31 December 2008 20,241 2,104 7,404 84,577 114,326
(f) Fair values of derivatives and financial assets

The following table shows derivatives and financial assets recorded at fair value analysed between those IFRS 7.27(b)
whose fair value is based on quoted market prices, those involving valuation techniques where all significant
model inputs are observable in the market, and those where the valuation techniques involves the use of
significant non-market observable inputs.
Valuation Valuation
techniques- techniques-
Quoted market non market
Market observable observable
Price inputs inputs Total
2008 2008 2008 2008
000 000 000 000
Financial assets
Derivative financial instruments 553 1,442 170 2,165
Financial assets held for trading 6,946 2,537 - 9,483
Financial assets designated at fair value through profit
and loss 8,857 1,901 - 10,758
Financial assets available-for-sale 56,860 18,763 8,954 84,577
73,216 24,643 9,124 106,983
Financial liabilities
Derivative financial instruments 533 876 373 1,782

Valuation Valuation
techniques- techniques-
Quoted market non market
Market observable observable
Price inputs inputs Total
2007 2007 2007 2007
000 000 000 000
Financial assets
Derivative financial instruments 250 664 326 1,240
Financial assets held for trading 6,842 2,062 - 8,904
Financial assets designated at fair value through profit
and loss 10,484 1,801 - 12,285
Financial assets available-for-sale 55,765 16,020 7,632 79,417
73,341 20,547 7,958 101,846
Derivative financial instruments 343 1,106 309 1,758
Included in the quoted market price category are financial assets and liabilities that are measured in whole or
in part by reference to published quotes in an active market. A financial instrument is regarded as quoted in an
active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry
group, pricing service or regulatory agency and those prices represent actual and regularly occurring market
transactions on an arms length basis.
Financial assets and liabilities measured using a valuation technique based on assumptions that are supported
by prices from observable current market transactions are assets and liabilities for which pricing is obtained
via pricing services but where prices have not been determined in an active market, financial assets with fair
values based on broker quotes, investments in private equity funds with fair values obtained via fund
managers and assets that are valued using the Groups own models whereby the majority of assumptions
are market observable.
Non market observable inputs means that fair values are determined in whole or in part using a valuation
technique (model) based on assumptions that are neither supported by prices from observable current
market transactions in the same instrument nor are they based on available market data. The main asset
classes in this category are unlisted equity investments and limited partnerships. Valuation techniques are
used to the extent that observable inputs are not available, thereby allowing for situations in which there is
little, if any, market activity for the asset or liability at the measurement date. However, the fair value
measurement objective remains the same, that is, an exit price from the perspective of the Group. Therefore,
unobservable inputs reflect the Groups own assumptions about the assumptions that market participants
would use in pricing the asset or liability (including assumptions about risk). These inputs are developed
based on the best information available, which might include the Groups own data.
For financial instruments that are recorded at fair value with valuation techniques using non-market IFRS 7.27(c)
observable inputs the potential effect of using reasonably possible alternative assumptions for volatility and
credit risk in valuing those instruments would reduce fair value by 1,026,000 or increase fair value
by 987,000.
For financial instruments whose fair value is estimated using valuation techniques with non-market observable IFRS 7.27(d)
inputs the net unrealised amount recorded in the income statement in the year due to changes in inputs was
227,000 (2007: 250,000).
No day 1 profits were unrecognised because of the use of valuation techniques for which not all the inputs are IFRS 7.28
observable in the market.

10. Reinsurance assets IFRS 4.37(b)
2008 2007
Notes 000 000
Reinsurance of insurance contracts 16 30,100 28,370
Reinsurance of investment contracts 17 6,439 6,357
Total reinsurance assets 36,539 34,727
The carrying amounts disclosed above in respect of the reinsurance of investment contracts approximate fair IFRS 7.25, 29
value at the balance sheet date.

During the year, the Group entered into reinsurance arrangements which resulted in profits on inception of IFRS 4.37(b)(i)
42,000 (2007: 38,000). This profit has been reflected in the income statement.
11. Taxation
IAS 7.35
(a) Tax receivable
2008 2007
000 000
At 1 January 2,812 2,454
Amounts recorded in the income statement (1,381) (1,086)
Payments made on-account during the year 1,564 1,444
At 31 December 2,995 2,812
IAS 12.81(g)(i)
(b) Deferred tax liability
2008 2007
000 000
Losses carried forward - (25)
Provisions and other temporary differences (128) (177)
Impairment of assets (67) (73)
Other 4 1
Insurance related items 1,310 1,357
Pension scheme deficit (1,326) (1,245)
Net unrealised gains on investment securities 2,158 1,991
Deferred expenses 128 131
Accelerated capital allowances 111 97
Total deferred tax liability 2,190 2,057
2008 2007 IAS 12.81(a)
000 000
At 1 January 2,057 69
Amounts recorded in the income statement 188 887
Amounts recorded in equity 36 1,191
Foreign exchange adjustments (91) (90)
At 31 December 2,190 2,057

11. Taxation continued
Expected recovery or settlement of the deferred tax liability is as follows:

2008 2007
000 000
Current* 262 246
Non-current 1,928 1,811
At 31 December 2,190 2,057
* Expected recovery or settlement within 12 months from the balance sheet date.
A deferred tax asset is recognised for a tax loss carry forward only to the extent that realisation of the related IAS 12.81(e)
tax benefit is probable.

A deferred tax asset has not been recognised in respect of a tax loss carry forward of 415,000 (2007: IAS 12.81(e)
4,728,000) and accelerated capital allowances of 68,000 (2007: 57,000) relating to a branch in Africa,
as there is insufficient certainty as to the availability of future profits arising from that tax jurisduction. These
amounts include tax losses of 222,000 (2007: 4,535,000) due to expire in 2009 (2007: 2008).
In addition, the Group has an unrecognised deferred tax asset in respect of a capital loss of 178,000 (2007: IAS 12.81(e)
178,000) which can only be offset against future capital gains and has not been recognised in these financial
statements. This tax loss has no expiry date.
A deferred tax liability has not been recognised in respect of the investment in subsidiaries and the associate. IAS 12.81(f)
12. Insurance receivables IFRS 4.37(b)

2008 2007
000 000
Due from policyholders 29,004 26,938
Due from reinsurers 8,892 8,351
Due from agents, brokers and intermediaries 2,724 2,216
Total insurance receivables 40,620 37,505
13. Deferred expenses IFRS 4.37(b), (e)

IAS 18 Appendix
14(b)(iii)
Investment
Deferred acquisition management
costs (DAC) services
Investment Investment
Insurance contracts contracts
contracts with DPF without DPF Total
Notes 000 000 000 000
At 1 January 2007 6,042 4,027 295 10,364
Expenses deferred 34 1,626 1,076 520 3,222
Amortisation 34 (1,224) (808) (77) (2,109)
At 31 December 2007 6,444 4,295 738 11,477

Amortisation 34 (1,978) (1,311) (110) (3,399)
At 31 December 2008 7,215 4,810 1,421 13,446

14. Accrued income

2008 2007
000 000
Dividends 1,089 1,022
Interest 446 419
Rent 763 716
Total accrued income 2,298 2,157
15. Cash and cash equivalents

2008 2007
000 000
Cash at bank 1,744 638
Short-term deposits (including demand and time deposits) 4,902 3,645
Total cash and cash equivalents 6,646 4,283
Short-term deposits are made for varying periods of between one day and three months depending in the IAS 1.57
immediate cash requirements of the Group. All deposits are subject to an average variable interest rate of 4.8%
(2007: 4.3%).
The carrying amounts disclosed above reasonably approximate fair value at balance sheet date. IFRS 7.25, 29
The cash and cash equivalents position for cash flow purposes, net of the bank overdraft, as per Note 20, is an IAS 7.8
overdraft of 7,272,000 (2007: overdraft of 4,639,000).
16. Insurance contract liabilities IFRS 4.37(b)
2008 2007
Insurance Insurance
contract Reinsurance contract Reinsurance
liabilities of liabilities Net liabilities of liabilities Net
Notes 000 000 000 000 000 000
Life insurance
contracts 16(a) 83,030 (17,434) 65,596 78,686 (16,477) 62,209
Non-life insurance
contracts 16(b) 50,664 (12,666) 37,998 47,574 (11,893) 35,681
Total insurance
contract liabilities 133,694 (30,100) 103,594 126,260 (28,370) 97,890
Commentary
The Group enters into reinsurance agreements in order to mitigate insurance risk. Although positions are managed on a net basis by
management, insurance disclosures have been made on both a gross and net basis in order to provide a comprehensive set of disclosures.
In some accounting models, recognised realised gains or losses on investments have a direct effect on the measurement of some or all
of the insurance liabilities, related deferred acquisition costs and related intangible assets. An insurer is permitted to change its
accounting policies so that a recognised but unrealised gain or loss on an asset affects these measurements in the same way that a
realised gain or loss does. This practice is often described as shadow accounting. The Group does not apply shadow accounting but
additional disclosures have been provided in Appendix 2 should readers wish to refer to the required disclosures if shadow accounting
is adopted.

16. Insurance contract liabilities continued

IFRS 4.37(e)
(a) Life insurance contract liabilities
2008
Gross Reinsurance
Total Re-
Insurance Total Insurance insurance
Insurance contract gross Insurance contract of
contract liabilities insurance contract liabilities insurance
liabilities without contract liabilities without contract
with DPF DPF liabilities with DPF DPF liabilities Net
Notes 000 000 000 000 000 000 000
At 1 January
2008 25,180 53,506 78,686 (5,273) (11,204) (16,477) 62,209
Premiums
received 27(a) 14,670 31,175 45,845 (3,668) (7,793) (11,461) 34,384
Liabilities paid
for death,
maturities,
surrenders,
benefits and
claims 32(a) (6,642) (14,113) (20,755) 1,660 3,528 5,188 (15,567)
Benefits and
claims
experience
variation (6,359) (13,514) (19,873) 1,632 3,468 5,100 (14,773)
Fees deducted (850) (1,807) (2,657) 212 452 664 (1,993)
Credit of
interest or
change in unit-
prices 134 286 420 (34) (71) (105) 315
Adjustments due
to changes in
assumptions: IFRS 4.37(d)
Mortality/
morbidity 245 522 767 (61) (130) (191) 576
Longevity 192 408 600 (49) (103) (152) 448
Investment
return (162) (344) (506) 40 86 126 (380)
Expenses 113 239 352 (28) (60) (88) 264
Lapse and
surrender rates 73 156 229 (16) (39) (55) 174
Discount rate (33) (69) (102) 8 17 25 (77)
Foreign
exchange
adjustment 9 15 24 (2) (6) (8) 16
At 31 December
2008 26,570 56,460 83,030 (5,579) (11,855) (17,434) 65,596


IFRS 4.37(e)
(a) Life insurance contract liabilities
2007
Gross Reinsurance
Total Re-
Insurance Total Insurance insurance
Insurance contract gross Insurance contract of
contract liabilities insurance contract liabilities insurance
Notes 000 000 000 000 000 000 000
At 1 January
2007 23,748 50,466 74,214 (4,962) (10,545) (15,507) 58,707
Premiums
received 27(a) 15,022 31,921 46,943 (3,756) (7,980) (11,736) 35,207
Liabilities paid
for death,
maturities,
surrenders,
benefits and
claims 32(a) (6,922) (14,708) (21,630) 1,730 3,677 5,407 (16,223)
Benefits and
claims
experience
variation (6,386) (13,569) (19,955) 1,644 3,495 5,139 (14,816)
Fees deducted (879) (1,867) (2,746) 220 467 687 (2,059)
Credit of
interest or
change in unit-
prices 144 307 451 (36) (77) (113) 338
Adjustments due
to changes in
assumptions: IFRS 4.37(d)
Mortality/
morbidity 248 526 774 (62) (131) (193) 581
Longevity 200 425 625 (50) (106) (156) 469
Investment
return (168) (357) (525) 42 89 131 (394)
Expenses 119 254 373 (30) (63) (93) 280
Lapse and
surrender rates 81 171 252 (21) (44) (65) 187
Discount rate (37) (79) (116) 9 20 29 (87)
Foreign
exchange
adjustment 10 16 26 (1) (6) (7) 19
At 31 December
2007 25,180 53,506 78,686 (5,273) (11,203) (16,477) 62,209
Changes in some of the above mentioned assumptions will largely be offset by corresponding changes in the
assets backing the liabilities.
For reinsurance assets, see Note 10.


IFRS 4.37(e)
(b) Non-life insurance (which comprises general insurance and healthcare) contract liabilities
2008 2007
Insurance Insurance
000 000 000 000 000 000
Provision for
reported claims by
policyholders 12,339 (3,084) 9,255 11,586 (2,896) 8,690
Provision for claims
IBNR 27,872 (6,969) 20,903 26,165 (6,541) 19,624
Outstanding claims
provision 40,211 (10,053) 30,158 37,751 (9,437) 28,314
Provision for
unearned premiums 10,019 (2,505) 7,514 9,409 (2,352) 7,057
Provision for liability
adequacy 434 (108) 326 414 (104) 310
Total non-life
insurance contract
liabilities 50,664 (12,666) 37,998 47,574 (11,893) 35,681
IFRS 4.37(e)
(1) Outstanding claims provision
2008 2007
Insurance Insurance
Note 000 000 000 000 000 000
At 1 January 37,751 (9,437) 28,314 35,175 (8,791) 26,384
Claims incurred
in the current
accident year 14,495 (3,626) 10,869 15,094 (3,778) 11,316
Adjustment to claims IFRS 4.37(d)
incurred in prior
accident years due
to changes in
assumptions:
Average claim cost 800 (200) 600 825 (206) 619
Average number of
claims 685 (171) 514 693 (173) 520
Average claim
settlement period 540 (131) 409 568 (138) 430
Other movements in
claims incurred in
prior accident years 1,365 (341) 1,024 902 (225) 677
Claims paid during
the year 32(a) (15,441) 3,861 (11,580) (15,521) 3,881 (11,640)
Foreign exchange
adjustment 16 (8) 8 15 (7) 8
At 31 December 40,211 (10,053) 30,158 37,751 (9,437) 28,314


IFRS 4.37(e)
(2) Provision for unearned premiums
2008 2007
Insurance Insurance
Note 000 000 000 000 000 000
At 1 January 9,409 (2,352) 7,057 8,794 (2,198) 6,596
Premiums written
in the year 27(a) 24,511 (6,128) 18,383 24,626 (6,157) 18,469
Premiums earned
during the year (23,901) 5,975 (17,926) (24,011) 6,003 (18,008)
At 31 December 10,019 (2,505) 7,514 9,409 (2,352) 7,057
IFRS 4.37(e)
(3) Provision for liability adequacy
Insurance Insurance
Note 000 000 000 000 000 000
At 1 January 414 (104) 310 394 (99) 295
Incurred during
the year 161 (40) 121 172 (43) 129
Utilised during
the year 27(a) (142) 36 (106) (154) 39 (115)
Foreign exchange
adjustment 1 - 1 2 (1) 1
At 31 December 434 (108) 326 414 (104) 310
17. Investment contract liabilities
2008 2007
Notes 000 000 000 000 000 000
Investment contract
liabilities with DPF 17(a) 4,364 (2,400) 1,964 4,281 (2,354) 1,927
Investment contract
liabilities without
DPF 17(b) 7,344 (4,039) 3,305 7,277 (4,003) 3,274
Total investment
contract liabilities 11,708 (6,439) 5,269 11,558 (6,357) 5,201

17. Investment contract liabilities continued

IFRS 4.37(e)
(a) Investment contract liabilities with DPF
2008 2007
Notes 000 000 000 000 000 000
At 1 January 4,281 (2,354) 1,927 4,131 (2,272) 1,859
Premiums received 27(a) 2,400 (1,320) 1,080 2,497 (1,373) 1,124
Liability assumed for
benefits 32(a) (2,222) 1,222 (1,000) (2,259) 1,242 (1,017)
Fees deducted (213) 117 (96) (234) 129 (105)
Credit of income 65 (36) 29 72 (40) 32
Adjustment due to IFRS 4.37(d)
changes in
assumptions:
Mortality/morbidity 25 (14) 11 35 (19) 16
Longevity 21 (11) 10 30 (17) 13
Investment return (8) 4 (4) (11) 6 (5)
Expense 6 (3) 3 9 (5) 4
Lapse and surrender
rates 4 (2) 2 7 (4) 3
Discount rate (2) 1 (1) (4) 3 (1)
Foreign exchange
adjustment 7 (4) 3 8 (4) 4
At 31 December 4,364 (2,400) 1,964 4,281 (2,354) 1,927
Investment contract liabilities with a DPF above represent the guaranteed and discretionary benefits
attributable to these policyholders.
As permitted by IFRS 7, the Group has not disclosed fair values for investment contract liabilities with a DPF IFRS 7.29(c)
as fair values or fair value ranges for the DPF cannot be reliably estimated. There is no active market for these IFRS 7.30
instruments which will be settled with policyholders in the normal course of business.
Commentary
Fair value disclosures for investment contract liabilities with DPF are not required if the fair value of that feature cannot be reliably
estimated (IFRS 7.29(c)). This concession does not exist for investment contract liabilities without DPF.

17. Investment contract liabilities continued

(b) Investment contract liabilities without DPF
2008 2007
000 000 000 000 000 000
At 1 January 7,277 (4,003) 3,274 7,169 (3,943) 3,226
Deposits 463 (255) 208 525 (289) 236
Withdrawals (380) 209 (171) (429) 240 (189)
Fees deducted (90) 50 (40) (95) 52 (43)
Credit of interest 42 (25) 17 61 (36) 25
Investments fair value
adjustment 26 (12) 14 39 (23) 16
Foreign exchange
adjustment 6 (3) 3 7 (4) 3
At 31 December 7,344 (4,039) 3,305 7,277 (4,003) 3,274
Investment contract liabilities without DPF are stated at fair value. IFRS 7.25, 29
Investment contract liabilities without DPF are further analysed as follows:
2008 2007
000 000 IFRS 7.27(b)
Unit linked liabilities valued using valuation techniques with market

6,653 6,800
observable inputs
Other liabilities valued using valuation techniques with non-market
observable inputs 691 477
7,344 7,277
For investment contract liabilities that are recorded at fair value with valuation techniques using non-market IFRS 7.27(c)
observable inputs the potential effect of using reasonably possible alternative assumptions for valuing those
liabilities could reduce fair value by 74,000 or increase fair value by 83,000.
For investment contract liabilities whose fair value is estimated using valuation techniques with non- IFRS 7.27(d)
observable inputs the net unrealised amount recorded in the income statement in year due to changes in
inputs was 32,000 (2007: 25,000)
There were no unrecognised day 1 profits arising from valuation techniques. IFRS 7.28
18. Net asset value attributable to unit-holders

Unit-trusts in which the Group has a controlling interest (normally if the Group holds more than 50%) are
consolidated. The units not owned by the Group are treated as a liability and amount to 520,000 (2007:
367,000). Profit attributable to unit-holders amounts to 267,000 (2007: 111,000).
The carrying amounts disclosed above approximate fair value at balance sheet date. IFRS 7.25, 29

19. Pension benefit obligation

The Group has an average salary defined benefit pension scheme covering all of its employees in Euroland. IAS 19.120A(b)
Contributions are made to a separately administered fund.

The amounts recognised in the income statement are as follows. IAS 19.120A(g)
2008 2007
000 000
Current service cost 644 446
Past service cost 34 32
Interest cost on benefit obligation 387 320
Expected return on plan assets (424) (383)
641 415
The actual return on plan assets is 515,000 (2007: 468,000). IAS

19.120A(m)
The amounts recognised in the balance sheet at balance sheet date are as follows. IAS 19.120A(f)
2008 2007
000 000
Present value of the defined benefit obligation 10,016 9,593
Fair value of plan assets (5,303) (5,112)
Net defined benefit obligation 4,713 4,481
Unrecognised net actuarial losses (116) (120)
Unrecognised past service cost (175) (209)
Total net defined benefit obligation 4,422 4,152
The movement in the defined benefit obligation is as follows: IAS 19.120A(c)
2008 2007
000 000
At 1 January 9,593 9,268
Current service cost 644 446
Past service cost - 32
Interest cost 387 320
Contributions by plan participants 78 87
Benefits paid (773) (640)
Actuarial losses 87 80
At 31 December 10,016 9,593
The movement in the plan assets is as follows: IAS 19.120A(e)
2008 2007
000 000
At 1 January 5,112 4,873
Expected return on plan assets 424 383
Contributions by employer 344 324
Contributions by plan participants 105 87
Benefits paid (773) (640)
Actuarial losses 91 85
At 31 December 5,303 5,112
The Group expects to contribute 367,000 to the defined benefit plan in 2008. IAS 19.120A(q)

19. Pension benefit obligation continued
The distribution of the plan assets at balance sheet date is as follows: IAS 19.120A(j)
2008 2007
000 000
Euroland Treasury bills 302 689
Euroland Equities 4,821 4,232
Euroland Corporate bonds 128 143
Property 52 48
Total plan assets 5,303 5,112
The plan assets include property occupied by Good Insurance (International) Limited with a fair value of IAS 19.120A(k)
52,000 (2007: 48,000)

The overall expected rate of return on assets is determined based on market expectations prevailing on that IAS19.120A(l)
date, applicable to the period over which the obligation is to be settled. There has been a significant change in
the expected rate of return on assets due to the improved stock market scenario.
The principal actuarial assumptions used in determining the pension benefit obligation for the Groups plan IAS 19.120A(n)
are as follows.
2008 2007
% %
Future salary increases 4.5 4.0
Future pension increases 3.0 2.8
Inflation assumption 2.9 2.8
Discount rate 6.5 6.4
Expected rate of return on plan assets 8.0 7.5
Post retirement mortality for pensioners at 65:

Male 20.0 20.0
Female 23.0 23.0
The discount rate is the assumption that has the largest impact on the value of the obligation. A 1% increase
in this rate would reduce the present value of the defined benefit obligation by 965,000.
The post-retirement mortality base table used for the schemes is PM/FA92. Post-retirement mortality
improvements are allowed for through a reduction in the discount rate of 20 basis points. However, the
extent of future improvement in longevity is subject to considerable uncertainty and judgment is required in
setting this assumption. Increasing the allowance by 5 basis points to a 25 basis point reduction in the
discount rate would increase the liability by 410,000.
Amounts for the current and previous four periods are as follows: IAS 19.120A(p)
2008 2007 2006 2005 2004

000 000 000 000 000
Defined benefit obligation 10,016 9,593 9,268 10,745 10,413

Plan assets 5,303 5,112 4,873 5,701 5,528
Deficit (4,713) (4,481) (4,395) (5,044) (4,885)
Experience adjustments on plan liabilities (87) (80) (75) 95 89
Experience adjustments on plan assets 91 85 80 (104) (99)

20. Borrowings
2008 2007
000 000
Bank overdraft 13,918 8,922

8,000,000 Bank loan 4,236 6,324
7,500,000 Bank loan 6,408 7,818 IFRS 7.8(f)
Total borrowings 24,562 23,064
(a) Current borrowings
2008 2007
000 000
Bank overdraft 13,918 8,922

8,000,000 Bank loan 2,236 2,324
7,500,000 Bank loan 1,908 1,818
Total current borrowings 18,062 13,064 IFRS 7.8(f)
Expected recovery or settlement within 12 months from the balance sheet date.
The bank overdraft is subject to an average variable interest rate of 5.8% (2007: 5.3%). The bank overdraft
has an average current maturity of 35 days (2007: 30 days). The bank overdraft is secured by a charge over
certain of the Groups assets. As at the balance sheet date, the aggregate unused bank overdraft facility
amounted to 2,410,000 (2007: 2,630,000).
The 8,000,000 bank loan is referenced to Euribor plus 2%, which resulted in an average interest rate of
5.9% for the year (2007: 5.4%). The loan is unsecured and is repayable in fixed annual instalments of
2,000,000 until 31 December 2010.
The 7,500,000 fixed interest bank loan is unsecured and is repayable in fixed annual instalments of
1,500,000 through 31 December 2012 at an interest rate of 6.8%.
(b) Non-current borrowings
2008 2007
000 000
8,000,000 Bank loan 2,000 4,000

7,500,000 Bank loan 4,500 6,000
Total non-current borrowings 6,500 10,000 IAS 1.52
The following table compares the fair value of borrowings to their carrying value:
2008 2007
Carrying Carrying
value Fair value value Fair value
000 000 000 000
Bank overdraft 13,918 13,918 8,922 8,922

8,000,000 Bank loan 4,236 4,236 6,324 6,324
7,500,000 Bank loan 6,408 6,836 7,818 7,942
24,562 24,990 23,064 23,188
All borrowings are stated at amortised cost. For short-term borrowings and variable rate loans it is assumed IFRS 7.29(a)
IFRS 7.27(a)
that the carrying value approximates fair value. The fair value of the fixed rate loan carried at amortised cost
is estimated by comparing market interest rates when it was first recognised with current market rates
offered for similar financial instruments together with an adjustment for market credit risk.

21. Other financial liabilities

Outstanding
Deposits purchase of
received from investment
reinsurerers securities Total
000 000 000
At 1 January 2007 1,804 4,987 6,791
Arising during the year 207 587 794
Utilised (84) (236) (320)
Foreign exchange adjustment 5 2 7
At 31 December 2007 1,932 5,340 7,272

Utilised (91) (251) (342)
At 31 December 2008 2,058 5,685 7,743
The carrying amounts disclosed above approximate fair value at the balance sheet date. IFRS 7.25, 29
All amounts are payable within one year. IAS 1.52
22. Insurance payables
Amounts Amounts
payable on payable on
direct assumed
insurance reinsurance
business business Total
000 000 000
At 1 January 2007 2,909 1,578 4,487
Utilised (109) (52) (161)
At 31 December 2007 3,130 1,711 4,841

Utilised (133) (78) (211)
At 31 December 2008 3,334 1,823 5,157
The carrying amounts disclosed above approximate fair value at the balance sheet date. IFRS 7.25, 29

23. Deferred revenue IFRS 4.37(b)

IAS 18 Appendix
14(b)(iii)
2008 2007
000 000
At 1 January 4,334 4,298
Fees deferred 38 42
Fees released to the income statement (9) (7)
Foreign exchange adjustment 2 1
Total deferred revenue 4,365 4,334
The expected realisation of the deferred revenue is as follows: IAS 1.52
2008 2007
000 000
Current 28 26
Non-current 4,337 4,308
Total deferred revenue 4,365 4,334
24. Trade and other payables
2008 2007
Note 000 000
Payables to related parties 45(b) 191 144
Trade payables 11,333 10,222
Accrued expenses 2,848 1,871
Social security and other taxes 538 191
Other 2,025 1,425
16,935 13,853
The carrying amounts disclosed above reasonably approximate fair value at balance sheet date. IFRS 7.25, 29
25. Issued share capital

Authorised and issued share capital
2008 2007
000 000 IAS 1.75(e)
Authorised share capital IAS 1.76(a)(i)
10,000,000 ordinary shares of 1 each 10,000 10,000 IAS 1.76(a)(iii)
Issued share capital

8,388,000 (2007: 8,385,000) ordinary shares of 1 each 8,388 8,385
All ordinary shares issued are fully paid. All ordinary shares are held by external, non-related parties and
companies to the Group.

25. Issued share capital continued

IAS 1.76(a)
Changes to issued share capital during the year:
IAS 1.76(a)(ii)
Ordinary Ordinary
shares shares
IAS 1.75(a)(iv)
No. 000 IAS 1.97(c)
At 1 January 2007 8,382 8,382
Issued on 1 July 2007 for cash on exercise of shares options (Note 37) 3 3
At 31 December 2007 8,385 8,385

Issued on 1 July 2008 for cash on exercise of shares options (Note 37) 3 3
At 31 December 2008 8,388 8,388
During the year, 3,000 (2007: 3,000) shares were issued for 66,000 (2007: 50,000) giving rise to
additional paid-in capital of 63,000 (2007: 47,000).
26. Other equity instruments

On 3 January 2008, the Group issued 52,000 perpetual securities, which bear discretionary interest. The
perpetual securities have no maturity date but can be redeemed at the option of the Group on 1 July 2012.
IAS 32.16
The perpetual securities are classified as equity as there is no requirement to settle the obligation in cash or
another financial asset. Interest payments are adjusted against retained earnings upon payment. IAS 32.35
27. Net premiums IFRS 4.37(b)

(a) Gross premiums on insurance contracts and investment contracts with DPF
2008 2007
Notes 000 000
Life insurance 16(a) 45,845 46,943
Non-life insurance 16(b)(2) 24,511 24,626
Investment contracts with DPF 17(a) 2,400 2,497
Change in unearned premiums provision (613) (619)
Total gross premiums 72,143 73,447
(b) Premiums ceded to reinsurers on insurance contracts and investment contracts with DPF
2008 2007
Notes 000 000
Life insurance 16(a) (11,461) (11,736)
Non-life insurance 16(b)(2) (6,128) (6,156)
Investment contracts with DPF 17(a) (1,320) (1,373)
Change in unearned premiums provision 154 154
Total premiums ceded to reinsurers (18,755) (19,111)
Total net premiums 53,388 54,336
28. Fees and commission income IFRS 4.37(b)

IAS 18 Appendix
14(b)(iii)
2008 2007
000 000
Policyholder administration and investment management services 2,573 1,010
Surrender charges and other contract fees 2,212 958
Reinsurance commission income 579 263
Total fees and commission income 5,364 2,231

29. Investment income
2008 2007
Note 000 000
IAS
Rental income from investment properties 7 225 214 40.75(f)(i)
Financial assets at fair value through profit or loss (held for IFRS
7.20(a)(i)
trading purposes)
Interest income 516 487
Dividend income 507 473
Financial assets at fair value through profit or loss (designated
upon initial recognition)
Interest income 440 412
Dividend income 433 397
Held-to-maturity financial assets interest income 305 284
Loans to related parties interest income 21 18
Interest income 2,590 2,420
Dividend income 2,284 2,145
Loans and receivables interest income 802 743
Interest income accrued on impaired loans and receivables 10 7
Cash and cash equivalents interest income 88 82
Total investment income 8,221 7,682
30. Realised gains
2008 2007
000 000
Property and equipment
Realised gains 167 52
IFRS
Available-for-sale financial assets 7.20(a)(ii)
Realised gains
Equity securities 26 21
Debt securities 33 29
Realised losses
Equity securities (9) (7)
Debt securities (4) (2)
Total realised gains for available-for-sale financial assets 46 41
Total realised gains 213 93

31. Fair value gains and losses

2008 2007
Notes 000 000
Fair value gains on investment properties 7 53 97 IAS 40.76(d)
Fair value losses on derivative financial instruments held for trading (67) (41) IFRS 7.20(a)(i)
Fair value gains on hedged items attributable to the hedged risk in

fair value hedges 17 13
Fair value losses on hedging instruments in fair value hedges (28) (22)
Total fair value losses on fair value hedges (11) (9) IFRS 7.24(a)(i)
Fair value gains on financial assets at fair value through profit or

loss (held for trading purposes) 579 520 IFRS 7.20(a)(i)
Fair value gains on financial assets at fair value through profit or

loss (designated upon initial recognition) 473 425 IFRS 7.20(a)(i)
Total fair value gains on financial assets at fair value through

profit or loss other than derivatives 9(e) 1,052 945
Total fair value gains and losses 1,027 992
32. Net benefits and claims

IFRS 4.37(b)
(a) Gross benefits and claims paid
2008 2007
Notes 000 000
Life insurance contracts 16(a) 20,755 21,630
Non-life insurance contracts 16(b)(1) 15,441 15,521
Investment contracts with DPF 17(a) 2,222 2,259
Total gross benefits and claims paid 38,418 39,410
(b) Claims ceded to reinsurers
Life insurance contracts 16(a) (5,188) (5,407)

Non-life insurance contracts 16(b)(1) (3,861) (3,881)
Investment contracts with DPF 17(a) (1,222) (1,242)
Total claims ceded to reinsurers (10,271) (10,530)
(c) Gross change in contract liabilities
Change in life insurance contract liabilities 4,320 4,446

Change in non-life insurance contract liabilities 2,444 2,561
Change in investment contract liabilities with DPF 76 142
Change in investment contract liabilities without DPF (22) 5
Change in liability adequacy provision 19 20
Total gross change in contract liabilities 6,837 7,174
(d) Change in contract liabilities ceded to reinsurers
Change in life insurance contract liabilities (949) (963)

Change in non-life insurance contract liabilities (608) (639)
Change in investment contract liabilities with DPF (42) (78)
Change in investment contract liabilities without DPF 13 (7)
Change in liability adequacy provision (4) (4)
Total change in contract liabilities ceded to reinsurers (1,590) (1,691)
Net benefits and claims 33,394 34,363

33. Finance costs IFRS 7.20(b)
2008 2007
000 000
Current borrowings
Interest expense on bank overdraft 422 312
Interest expense on 8,000,000 bank loan 94 88
Non-current borrowings
Total finance cost 1,504 1,336
34. Other operating and administrative expenses IAS 1.88, 93
2008 2007
Notes 000 000
Amortisation of intangible assets 4 69 48
Impairment loss on intangible assets 4 223 243
Impairment loss on reinsurance assets 41 2 16
Impairment loss on loans and receivables 41 53 45 IFRS 7.20(e)
Depreciation on property and equipment 6 1,135 1,279

Investment property related expenses 7 54 46
Fees and commission expenses 18,635 13,559
Deferred expenses 13 (5,368) (3,222)
Amortisation of deferred expenses 13 3,399 2,109
Auditors remuneration 715 494
Employee benefits expense 35 7,868 6,869
Net foreign exchange adjustments 33 24
Other expenses 39 60
Total other operating and administrative expenses 26,857 21,570
35. Employee benefits expense
2008 2007
Notes 000 000
Wages and salaries 6,677 6,047
Social security costs 532 393
Defined benefit pension costs 19 641 415 IAS 19.46
Share-based payments expense 37 18 14 IFRS 2.51(a)
Total employee benefits expense 34 7,868 6,869

36. Income tax expense

(a) Current tax year charge
2008 2007
000 000
Current tax IAS 12.79
Income tax 1,440 1,409

Prior year adjustment (59) (323) IAS 12.80(b)
Total current tax 1,381 1,086 IAS 12.80(a)
Deferred tax IAS 12.79
Origination of temporary differences 169 661 IAS 12.80(c)
Changes in tax rates/base 7 (4) IAS 12.80(d)
Write down of deferred tax assets 12 230 IAS 12.80(g)
Total deferred tax 188 887

Total income tax expense 1,569 1,973
Income tax expense relating to policyholders 1,174 1,480

Income tax expense relating to shareholders 395 493
IAS 12.81(a)
(b) Tax recorded in equity
2008 2007
000 000
Current tax - -
Deferred tax 36 1,191
Total tax charge to equity 36 1,191
Tax charge to equity relating to policyholders 27 894

Tax charge to equity relating to policyholders 9 297
IAS 12.81(c)
(c) Reconciliation of tax charge
2008 2007
000 000
Profit before tax 6,830 8,682
Tax at Eurolands statutory income tax rate of 30% 2,049 2,605
Permanent differences arising from overseas operations (15) (23)

Other untaxed income (33) (21)
Disallowable expenses 184 475
Differences arising from movement in unrealised gains and losses (123) (1,101)
Policyholder tax (i) 1,174 1,480
Relief for policyholder tax (352) (444)
Adjustment to tax charge in respect of prior years (59) (323)
Different tax rate on overseas operations (49) (32)
Write down of deferred tax assets 87 23
Recognition of previously unrecognised tax loss/tax credit (1,294) (666)
Total tax charge for the year 1,569 1,973
(i) The Group, as a proxy for policyholders in Euroland and the United Kingdom, is required to record taxes
on investment income and gains each year.
There are no income tax consequences attaching to the payment of dividends by the company to
its shareholders.

37. Share-based payments
The expense recognised for employee services receivable during the year is shown in the following table: IFRS 2.80
2008 2007
Note 000 000
Expense arising from equity-settled share-based
payment transactions 14 10
Expense arising from cash-settled share-based payment transactions 4 4
Total expense arising from share-based payment transactions 35 18 14
The share-based payment plans are described below. There have been no cancellations or modifications to
any of the plans during 2008 or 2007.
Senior Executive Plan IFRS 2.45(a)
Share options are granted to senior executives with more than 12 months service. The exercise price of the
options is equal to the market price of the shares on the date of grant. The options vest if and when the
Groups earnings per share amount increases by 12%. If this increase is not met within three years from the
date of grant the options lapse. The contractual life of each option granted is five years. There are no cash
settlement alternatives.
The fair value of the options is estimated at the grant date using a binomial pricing model, taking into account IFRS 2.46
the terms and conditions upon which the instruments were granted.
General Employee Share-option Plan IFRS 2.45(a)
All other employees are entitled to a grant of options once they have been in service for two years. The
options will vest if the employee remains in service for a period of three years from the date of grant, and the
share price attains an average increase of 5% per year during the three-year period from the date of grant. The
exercise price of the options is equal to the market price of the shares less 1% on the date of grant. The
contractual life of the options is five years and there are no cash settlement alternatives. The Group has not
developed a past practice of cash settlement.
The fair value of the options is estimated at the grant date using a binomial pricing model, taking into account IFRS 2.46
the terms and conditions upon which the instruments were granted.
Share-based payment plan for certain employees of Good Life Insurance Limited IFRS 2.45(a)
Certain employees of Good Life Insurance Limited are granted share options which are only able to be
settled in cash. These will vest when a specified target number is realised. The contractual life of the options
is six years.
The fair value of the options is estimated at the grant date using a Black-Scholes option model, taking into IFRS 2.46
IFRS 2.51(b)
account the terms and conditions upon which the instruments were granted. The services received and a
liability to pay for those services is recognised over the expected vesting period. Until the liability is settled, it
is remeasured at each reporting date with changes in fair value recognised in the income statement. The
carrying amount of the liability relating to the cash-settled options at 31 December 2008 is 114,000 (2007:
184,000) and is included within trade and other payables (Note 24). No cash settled options had vested at
31 December 2008 (2007: Nil).
Movements in the year IFRS 2.45(b)
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and
movements in, share options during the year.

37. Share-based payments continued
No. WAEP No. WAEP

2008 2008 2007 2007
(1)
Outstanding at the beginning 295,000 28.42 303,000 27.72
Granted during the year 50,000 31.25 35,000 29.75
Forfeited during the year - - (25,000) 27.00
(3) (2)
Exercised during the year (Note 25) (3,000) 22.00 (3,000) 16.67 IFRS 2.45(c)
Expired during the year (20,000) 29.25 (15,000) 26.50
Outstanding at the end of the year (1)

322,000 27.88 295,000 28.42
Exercisable at the end of the year 218,000 26.72 185,000 26.75 IFRS 2.45(d)
(1) included within these balances are options over 27,000 shares that have not been recognised in accordance with IFRS 2 IFRS 2.56
as the options were granted on or before 7 November 2002. These options have not been subsequently modified and
therefore do not need to be accounted for in accordance with IFRS2.
(2) The weighted average share price at the date of exercise for the options exercised is 28.05. IFRS 2.45(d)
(3) The weighted average share price at the date of exercise for the options exercised is 28.43. IFRS 2.47(a)
The weighted average remaining contractual life for the share options outstanding as at 31 December 2008 is IFRS 2.45(d)
2.60 years (2007: 2.30 years).

The weighted average fair value of options granted during the year was 6.40 (2007: 5.95).
The range of exercise prices for options outstanding at the end of the year was 26.50 to 31.00 (2007: IFRS 2.45(d)
26.50 to 31.25).
IFRS 2.51(b)
The following table lists the inputs to the model used for equity-settled and cash-settled options for the years IFRS
2.47(a)(i)
ended 31 December 2008 and 31 December 2007.
2008 2007
000 000
Dividend yield (%) 3.13 3.01
Expected volatility (%) 15.00 16.30
Historical volatility (%) 15.00 16.30
Risk-free interest rate (%) 5.10 5.10
Expected average life of option (years) 4.25 4.00
Weighted average share price () 28.90 27.50
The expected life of the options is based on historical data and is not necessarily indicative of exercise IFRS
2.47(a)(ii)
patterns that may occur. The expected volatility reflects the assumption that the historical volatility is
indicative of future trends, which may also not necessarily be the actual outcome. No other features of
options grants were incorporated into the measurement of fair value.
38. Earnings per share

Basic earnings per share amounts are calculated by dividing the net profit for the year attributable to ordinary
shareholders of the Group by the weighted average number of ordinary shares outstanding at the balance
sheet date.
Diluted earnings per share are calculated by dividing the net profit attributable to ordinary equity holders of
the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted
average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary
shares into ordinary shares.

38. Earnings per share continued

The following reflects the income and share data used in the basic and diluted earnings per IAS 33.70(c)
share computations.
2008 2007
000 000 IAS 33.70(a)
Net profit attributable to ordinary shareholders for basic and diluted earnings 5,261 6,709
2008 2007
Thousands Thousands IAS 30.70(b)
Weighted average number of ordinary shares for basic earnings per share 8,387 8,383
Effect of dilution:
Share options 40 45
Weighted average number of ordinary shares adjusted for the effect of dilution 8,427 8,428
Basic earnings per ordinary share 0.63 0.80 IAS 33.66
Diluted earnings per ordinary share IAS 33.66

0.62 0.80
There have been no other transactions involving ordinary shares or potential ordinary shares between the IAS 33.70(d)
reporting date and the date of completion of these financial statements.
39. Dividends paid and proposed

2008 2007
000 000
Declared and paid during the year IAS 1.95
Equity dividends on ordinary shares:

Final dividend for 2007: 70.6 cents (2006: 67.8 cents) 5,919 5,687
Interim dividend for 2008: 51.4 cents (2007: 40.1 cents) 4,317 3,400
Total dividends paid in the year 10,236 9,087
Proposed for approval at AGM (not recognised as a liability as equity dividends on

ordinary shares: at 31 December): IAS 1.125(a)
Final dividend for 2008: 3.4 cents (2007: 70.6 cents) 289 5,919
40. Risk management framework

(a) Governance framework
The primary objective of the Groups risk and financial management framework is to protect the Groups IFRS 7.33(b)
shareholders from events that hinder the sustainable achievement of financial performance objectives,
including failing to exploit opportunities. Key management recognises the critical importance of having
efficient and effective risk management systems in place.
The Group has established a risk management function with clear terms of reference from the board of IFRS 7.33(b)
directors, its committees and the associated executive management committees. This is supplemented with a
clear organisational structure with documented delegated authorities and responsibilities from the board of
directors to executive management committees and senior managers. Lastly, a Group policy framework which
sets out the risk profiles for the Group, risk management, control and business conduct standards for the
Groups operations has been put in place. Each policy has a member of senior management charged with
overseeing compliance with the policy throughout the Group.
The board of directors approves the Group risk management policies and meets regularly to approve any IFRS 7.33(b)
commercial, regulatory and organisational requirements of such policies. These policies define the Groups
identification of risk and its interpretation, limit structure to ensure the appropriate quality and diversification
of assets, align underwriting and reinsurance strategy to the corporate goals, and specify reporting
requirements. For example, following the regulatory changes brought about by the Euroland Financial
Services Commission, which came into effect on 1 January 2000, the Group has placed a greater emphasis on
assessment and documentation of risks and controls, including the development of an articulation of
risk appetite.

40. Risk management framework continued

(b) Capital management objectives, policies and approach
The Group has established the following capital management objectives, policies and approach to managing IAS 1.124A
the risks that affect its capital position.

The capital management objectives are: IAS 1.124B(a)
u To maintain the required level of stability of the Group thereby providing a degree of security to
policyholders,
u To allocate capital efficiently and support the development of business by ensuring that returns on capital
employed meet the requirements of its capital providers and of its shareholders,
u To retain financial flexibility by maintaining strong liquidity and access to a range of capital markets,
u To align the profile of assets and liabilities taking account of risks inherent in the business,
u To maintain financial strength to support new business growth and to satisfy the requirements of the
policyholders, regulators and stakeholders, and
u To maintain strong credit ratings and healthy capital ratios in order to support its business objectives and
maximise shareholders value.
The operations of the Group are also subject to regulatory requirements within the jurisdictions where it IAS 1.124B(a)
(ii)
operates. Such regulations not only prescribe approval and monitoring of activities, but also impose certain
restrictive provisions (e.g. capital adequacy) to minimise the risk of default and insolvency on the part of the
insurance companies to meet unforeseen liabilities as these arise.
The Group and regulated entities within it have met all of these requirements throughout the financial year. IAS 1.124B(d)
In reporting financial strength, capital and solvency is measured using the rules prescribed by the Euroland
Financial Services Authority (EFSA) These regulatory capital tests are based upon required levels of solvency
capital and a series of prudent assumptions in respect of the type of business written.
The Group's capital management policy for its insurance and non-insurance business is to hold sufficient
capital to cover the statutory requirements based on the EFSA directives, including any additional amounts
required by the regulator.
Approach to capital management

The Group seeks to optimise the structure and sources of capital to ensure that it consistently maximises IAS 1.124B(a)
(iii)
returns to the shareholders and policyholders.
The Groups approach to managing capital involves managing assets, liabilities and risks in a co-ordinated way,
assessing shortfalls between reported and required capital levels (by each regulated entity) on a regular basis
and taking appropriate actions to influence the capital position of the Group in the light of changes in
economic conditions and risk characteristics. An important aspect of the Group's overall capital management
process is the setting of target risk adjusted rates of return which are aligned to performance objectives and
ensure that the Group is focused on the creation of value for shareholders.
The primary source of capital used by the Group is equity shareholder's funds and borrowings. The Group also IAS 1.124B(b)
utilises, where efficient to do so, sources of capital such as reinsurance and securitisation in addition to more
traditional sources of funding.
The capital requirements are routinely forecast on a periodic basis, and assessed against both the forecast IAS 1.124B (d)
available capital and the expected internal rate of return including risk and sensitivity analyses. The process is
ultimately subject to approval by the Board.
The Group has developed an Individual Capital Assessment (ICA) framework to identify the risks and quantify
their impact on the economic capital. The ICA estimates how much capital is required to reduce the risk of
insolvency to a remote degree of probability. The ICA has also been considered in assessing the
capital requirement.
The Group has had no significant changes in its policies and processes to its capital structure during the past IAS 1.124B(c)
year from previous years.
Commentary
IAS 1.124B(e) requires that if an entity has not complied with its externally imposed capital requirements, the consequence of such
non-compliance needs to be disclosed.

40. Risk management framework continued
Available capital resources at 31st December 2008

Investment
insurance insurance services Other Total
000 000 000 000 000
Total Shareholders' funds per
financial statements 21,651 10,669 714 (13,266) 19,768
Adjustments onto a regulatory basis (4,025) (5,000) (300) - (9,325)
Available capital resources 17,626 5,669 414 (13,266) 10,443
Available capital resources at 31st December 2007

Investment
insurance insurance services Other Total
000 000 000 000 000
Total Shareholders' funds per
financial statements 22,813 11,673 746 (16,732) 18,500
Adjustments onto a regulatory basis (4,935) (4,765) (35) - (9,735)
Available capital resources 17,878 6,908 711 (16,732) 8,765
Of the available life insurance capital resources, 8,206,000 (2007: 8,305,000) are restricted and unable IAS 1.124C
to be transferred to the other segments.

The adjustments onto a regulatory basis represent assets inadmissible for regulatory reporting purposes.
(c) Regulatory framework

Regulators are primarily interested in protecting the rights of policyholders and monitor them closely to IFRS 7.33(a),
(b)
ensure that the Group is satisfactorily managing affairs for their benefit. At the same time, regulators are also
interested in ensuring that the Group maintains an appropriate solvency position to meet unforeseen liabilities
arising from economic shocks or natural disasters.
The operations of the Group are subject to regulatory requirements within the jurisdictions in which it IFRS 7.33(b)
operates. Such regulations not only prescribe approval and monitoring of activities, but also impose certain
restrictive provisions (e.g., capital adequacy) to minimise the risk of default and insolvency on the part of
insurance companies to meet unforeseen liabilities as these arise.
(d) Asset liability management (ALM) framework

Financial risks arise from open positions in interest rate, currency and equity products, all of which are IFRS 7.33(a),
(b)
exposed to general and specific market movements. The main risk that the Group faces due to the nature of its
investments and liabilities is interest rate risk. The Group manages these positions within an ALM framework
that has been developed to achieve long-term investment returns in excess of its obligations under insurance
and investment contracts. The principal technique of the Groups ALM is to match assets to the liabilities
arising from insurance and investment contracts by reference to the type of benefits payable to contract
holders. For each distinct category of liabilities, a separate portfolio of assets is maintained.
The Groups ALM is: IFRS 7.33(b)
u integrated with the management of the financial risks associated with the Groups other financial assets
and liabilities not directly associated with insurance and investment liabilities, and
u forms an integral part of the insurance risk management policy, to ensure in each period sufficient cash
flow is available to meet liabilities arising from insurance and investment contracts.
Commentary
IFRS 7.B6 permits entities to disclose the information requested by paragraphs 31 to 42 of IFRS 7 on the nature and extent of risks
arising from financial instruments either in the financial statements or incorporated by cross-reference to some other statement, such
as a management commentary, that is available to users of the financial statements on the same terms as the financial statements
and at the same time. The Group has elected to disclose this information in the financial statements.

41. Insurance and financial risk

IFRS 4.38
(a) Insurance risk
The principal risk the Group faces under insurance contracts is that the actual claims and benefit payments or IFRS 4.39(a)
the timing thereof, differ from expectations. This is influenced by the frequency of claims, severity of claims,
actual benefits paid and subsequent development of long-term claims. Therefore the objective of the Group is
to ensure that sufficient reserves are available to cover these liabilities.
The above risk exposure is mitigated by diversification across a large portfolio of insurance contracts and IFRS 4.39(a)
geographical areas. The variability of risks is also improved by careful selection and implementation of
underwriting strategy guidelines, as well as the use of reinsurance arrangements.
The Group purchases reinsurance as part of its risks mitigation programme. Reinsurance ceded is placed on IFRS 4.39(a)
both a proportional and non-proportional basis. The majority of proportional reinsurance is quota-share
reinsurance which is taken out to reduce the overall exposure of the Group to certain classes of business.
Non-proportional reinsurance is primarily excess-of-loss reinsurance designed to mitigate the groups net
exposure to catastrophe losses. Retention limits for the excess-of-loss reinsurance vary by product line
and territory.
Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims
provision and are in accordance with the reinsurance contracts. Although the Group has reinsurance
arrangements, it is not relieved of its direct obligations to its policyholders and thus a credit exposure exists
with respect to ceded insurance, to the extent that any reinsurer is unable to meet its obligations assumed
under such reinsurance agreements. The Groups placement of reinsurance is diversified such that it is neither
dependent on a single reinsurer nor are the operations of the Group substantially dependent upon any single
reinsurance contract. There is no single counterparty exposure that exceeds 5% of total reinsurance assets at
the balance sheet date.
(1) Life insurance contracts (including investment contracts with DPF)
Life insurance contracts offered by the Group include whole life, term assurance, unitised pensions, IFRS 4.38
guaranteed annuity pensions, pure endowment pensions and mortgage endowments. Investment contracts
with DPF offered by the Group are unitised pensions.
Whole life and term assurance are conventional regular premium products when lump sum benefits are IFRS 4.38
payable on death or permanent disability. Few contracts have a surrender value.

Pensions are contracts when retirement benefits are expressed in the form of an annuity payable at IFRS 4.38
retirement age. If death occurs before retirement, contracts generally return the value of the fund
accumulated or premiums. Most contracts give the policyholder the option at retirement to take a cash sum at
guaranteed conversion rates allowing the policyholders the option of taking the more valuable of the two.
Under unitised pensions, a percentage of the premium is applied towards the purchase of accumulation units
in one or more of the internal linked funds. Provision of additional death benefits may be provided by
cancellation of units or through supplementary term assurance contracts. Certain personal pension plans also
include contribution protection benefits that provide for payment of contributions on behalf of policyholders
in periods of total disability. For contracts with DPF, changes in the level of pensions are based on the rate of
return declared annually by the insurer which is not guaranteed.
Guaranteed annuities are single premium products which pay a specified payment to the policyholder whilst IFRS 4.38
they and/or their spouse are still alive. Payments are generally either fixed or increased each year at a
specified rate or in line with the rate of inflation. Most contracts guarantee an income for a minimum period
usually of five years, irrespective of death.
Death benefits of endowment products are subject to a guaranteed minimum amount. The maturity value IFRS 4.38
usually depends on the investment performance of the underlying assets. For contracts with DPF the
guaranteed minimum may be increased by the addition of bonuses. These are set at a level that takes account
of expected market fluctuations, such that the cost of the guarantee is generally met by the investment
performance of the assets backing the liability. However in circumstances when there has been a significant
fall in investment markets, the guaranteed maturity benefits may exceed investment performance and these
guarantees become valuable to the policyholder. Certain pure endowment pensions contain the option to
apply the proceeds towards the purchase of an annuity earlier than the date shown on the contract or to
convert the contract to paid up on guaranteed terms. The majority of the mortgage endowment contracts
offered by the Group have minimum maturity values subject to certain conditions being satisfied.

41. Insurance and financial risk continued

The main risks that the Group is exposed to are as follows. IFRS 4.39(a)
u Mortality risk risk of loss arising due to policyholder death experience being different than expected.
u Morbidity risk risk of loss arising due to policyholder health experience being different than expected.
u Longevity risk risk of loss arising due to the annuitant living longer than expected.
u Investment return risk risk of loss arising from actual returns being different than expected.
u Expense risk risk of loss arising from expense experience being different than expected.
u Policyholder decision risk risk of loss arising due to policyholder experiences (lapses and surrenders)
being different than expected.
These risks do not vary significantly in relation to the location of the risk insured by the Group, type of risk IFRS 4.39(c)(ii)
insured or by industry.
The Groups underwriting strategy is designed to ensure that risks are well diversified in terms of type of risk IFRS 4.39(a)
and level of insured benefits. This is largely achieved through diversification across industry sectors and
geography, the use of medical screening in order to ensure that pricing takes account of current health
conditions and family medical history, regular review of actual claims experience and product pricing, as well
as detailed claims handling procedures. Underwriting limits are in place to enforce appropriate risk selection
criteria. For example, the Group has the right not to renew individual policies, it can impose deductibles and it
has the right to reject the payment of fraudulent claims. Insurance contracts also entitle the Group to pursue
third parties for payment of some or all costs. The Group further enforces a policy of actively managing and
prompt pursuing of claims, in order to reduce its exposure to unpredictable future developments that can
negatively impact the Group.
For contracts when death or disability is the insured risk, the significant factors that could increase the overall IFRS 4.39(a)
frequency of claims are epidemics, widespread changes in lifestyle and natural disasters, resulting in earlier or
more claims than expected. Group wide reinsurance limits of 1,000,000 on any single life insured and
500,000 on all high risk individuals insured are in place.
For annuity contracts, the most significant factor is continued improvement in medical science and social IFRS 4.39(a)
conditions that would increase longevity. The Group reinsures its annuity contracts on a quota share basis to
mitigate its risk.
For contracts with DPF, the participating nature of these contracts results in a significant portion of the IFRS 4.39(a)
insurance risk being shared with the insured party. For contracts without DPF the Group charges for death and
disability risks on a quarterly basis. Under these contracts the Group has the right to alter these charges to
take account of death and disability experience thereby mitigating the risks to the Group.
The insurance risk described above is also affected by the contract holders right to pay reduced or no future IFRS 4.39(a)
premiums, to terminate the contract completely or to exercise guaranteed annuity options. As a result, the
amount of insurance risk is also subject to contract holder behaviour.


The tables below show the concentration of life insurance and investment contract liabilities with DPF by type IFRS 4.39(c)(ii)
of contract.
IFRS 4.39(c)(ii)
31 December 2008
Gross Reinsurance
Total
reinsurance
Total gross of
Insurance insurance Insurance insurance
and Insurance liabilities contract and Insurance liabilities
investment contract and investment contract and
contract liabilities investment contract liabilities investment
000 000 000 000 000 000 000
Whole life 8,459 17,974 26,433 (1,531) (3,253) (4,784) 21,649
Term assurance 6,721 14,282 21,003 (1,200) (2,550) (3,750) 17,253
Guaranteed annuity
products 4,252 9,037 13,289 (1,031) (2,191) (3,222) 10,067
Pure endowment
pensions 3,864 8,210 12,074 (966) (2,052) (3,018) 9,056
Mortgage endowment 3,274 6,957 10,231 (851) (1,809) (2,660) 7,571
Total life insurance 26,570 56,460 83,030 (5,579) (11,855) (17,434) 65,596
Unitised pensions 4,364 - 4,364 (2,400) - (2,400) 1,964

Total investment
contracts with DPF 4,364 - 4,364 (2,400) - (2,400) 1,964
Total 30,934 56,460 87,394 (7,979) (11,855) (19,834) 67,560
31 December 2007
Gross Reinsurance
Total
reinsurance
Total gross of
000 000 000 000 000 000 000
Whole life 7,909 16,807 24,716 (1,435) (3,048) (4,483) 20,233
Term assurance 6,496 13,803 20,299 (1,144) (2,430) (3,574) 16,725
Guaranteed annuity
products 4,151 8,820 12,971 (1,037) (2,205) (3,242) 9,729
Pure endowment
pensions 3,725 7,917 11,642 (931) (1,979) (2,910) 8,732
Mortgage endowment 2,899 6,159 9,058 (726) (1,542) (2,268) 6,790
Unitised pensions 4,281 - 4,281 (2,354) - (2,354) 1,927

Total investment
Total 29,461 53,506 82,967 (7,627) (11,204) (18,831) 64,136


The geographical concentration of the groups life insurance liabilities and investment contract liabilities with IFRS
4.39(c)(ii)
DPF is shown below. The disclosure is based on the countries where the business is written. The analysis
would not be materially different if based on the countries in which the counterparties are situated.
31 December 2008 IFRS

4.39(c)(ii)
Gross Reinsurance
Total
reinsurance
Total gross of
000 000 000 000 000 000 000
Euroland 14,264 30,308 44,572 (2,502) (5,317) (7,819) 36,753
United Kingdom 8,035 17,075 25,110 (2,009) (4,269) (6,278) 18,832
International 4,271 9,077 13,348 (1,068) (2,269) (3,337) 10,011
Euroland 1,628 - 1,628 (895) - (895) 733

United Kingdom 1,741 - 1,741 (957) - (957) 784
International 995 - 995 (548) - (548) 447
Total investment
Total 30,934 56,460 87,394 (7,979) (11,855) (19,834) 67,560
31 December 2007 IFRS

4.39(c)(ii)
Gross Reinsurance
Total
reinsurance
Total gross of
000 000 000 000 000 000 000
Euroland 13,489 28,663 42,152 (2,350) (4,993) (7,343) 34,809
United Kingdom 7,440 15,809 23,249 (1,860) (3,953) (5,813) 17,436
International 4,251 9,034 13,285 (1,063) (2,258) (3,321) 9,964
Euroland 1,754 - 1,754 (964) - (964) 790

United Kingdom 1,608 - 1,608 (884) - (884) 724
International 919 - 919 (506) - (506) 413
Total investment
Total 29,461 53,506 82,967 (7,627) (11,204) (18,831) 64,136


Key assumptions IFRS 4.37(c)
Material judgment is required in determining the liabilities and in the choice of assumptions. Assumptions in
use are based on past experience, current internal data, external market indices and benchmarks which reflect
current observable market prices and other published information. Assumptions and prudent estimates are
determined at the date of valuation and no credit is taken for possible beneficial effects of voluntary
withdrawals. Assumptions are further evaluated on a continuous basis in order to ensure realistic and
reasonable valuations.
The key assumptions to which the estimation of liabilities is particularly sensitive are as follows. IFRS 4.37(c)
u Mortality and morbidity rates

Assumptions are based on standard industry and national tables, according to the type of contract written
and the territory in which the insured person resides, reflecting recent historical experience and are
adjusted when appropriate to reflect the Groups own experiences. An appropriate but not excessive
prudent allowance is made for expected future improvements. Assumptions are differentiated by sex,
underwriting class and contract type.
An increase in rates will lead to a larger number of claims and claims could occur sooner than anticipated,
which will increase the expenditure and reduce profits for the shareholders.
u Longevity
Assumptions are based on standard industry and national tables, adjusted when appropriate to reflect the
Groups own risk experience. An appropriate but not excessive prudent allowance is made for expected
future improvements. Assumptions are differentiated by sex, underwriting class and contract type.
An increase in longevity rates will lead to an increase in the number of annuity payments made, which will
increase the expenditure and reduce profits for the shareholders.
u Investment return
The weighted average rate of return is derived based on a model portfolio that is assumed to back
liabilities, consistent with the long-term asset allocation strategy. These estimates are based on current
market returns as well as expectations about future economic and financial developments.
An increase in investment return would lead to a reduction in expenditure and an increase in profits for
the shareholders.
u Expenses
Operating expenses assumptions reflect the projected costs of maintaining and servicing in-force policies
and associated overhead expenses. The current level of expenses is taken as an appropriate expense base,
adjusted for expected expense inflation if appropriate.
An increase in the level of expenses would result in an increase in expenditure thereby reducing profits for
the shareholders.
u Lapse and surrender rates
Lapses relate to the termination of policies due to non-payment of premiums. Surrenders relate to the
voluntary termination of policies by policyholders. Policy termination assumptions are determined using
statistical measures based on the Groups experience and vary by product type, policy duration and
sales trends.
An increase in lapse rates early in the life of the policy would tend to reduce profits for shareholders, but
later increases are broadly neutral in effect.
u Discount rate
Life insurance liabilities are determined as the sum of the discounted value of the expected benefits and
future administration expenses directly related to the contract, less the discounted value of the expected
theoretical premiums that would be required to meet these future cash outflows. Discount rates are based
on current industry risk rates, adjusted for the Groups own risk exposure.
A decrease in the discount rate will increase the value of the insurance liability and therefore reduce
profits for the shareholders.


The assumptions that have the greatest effect on the balance sheet and income statement of the Group are IFRS 4.37(c)
listed below.
Portfolio assumptions by
type of business impacting Mortality and Investment Lapse and
net liabilities morbidity rates return surrender rates Discount rates
2008 2007 2008 2007 2008 2007 2008 2007
With fixed and guaranteed
terms and with DPF
contracts
(1) (1)
80- 70-
100% 100% 3.5% - 3% - 3.5% - 3% -
Life insurance AM/F92 AM/F92 4% 3.5% 4% 3.5% 4.5% 4%
(1) (1)
80- 70-
100% 100%
Pensions AM/F92 AM/F92 4% 33.5% 4% 3.5% 4.5% 4%
Without DPF contracts
Term assurance
(2) (2)
43- 40-
145% 142% 3.5% - 3% -
Males TM92 TM92 4% 3.5% 4.5% 4% 4.5% 4%
(2) (2)
55- 50-
160% 150%
Females TF92 TF92 4% 3.5% 4.5% 4% 4.5% 4%
Pension Annuities
(3) (3)
95% 90%
Males PMA92 PMA92 4% 3.5% 4.5% 4% 4.5% 4%
(3) (3)
85% 80%
Females PFA92 PFA92 4% 3.5% 4.5% 4% 4.5% 4%
(1) Industry mortality and morbidity experience tables for endowment assurance polices that were observed in Euroland
between 1990 and 1994.
(2) Industry mortality and morbidity experience tables for term assurance polices that were observed in Euroland between
1990 and 1994.
(3) Industry mortality and morbidity experience tables for annuity polices that were observed in Euroland between 1990
and 1994.
Sensitivities IFRS
4.39(c)(i),
The analysis below is performed for reasonably possible movements in key assumptions with all other 39A(a)
assumptions held constant, showing the impact on gross and net liabilities, profit before tax and equity. The
correlation of assumptions will have a significant effect in determining the ultimate claims liabilities, but to
demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual basis.
It should be noted that movements in these assumptions are non-linear. Sensitivity information will also vary
according to the current economic assumptions, mainly due to the impact of changes to both the intrinsic cost
and time value of options and guarantees. When options and guarantees exist they are the main reason for the
asymmetry of sensitivities.


Life insurance contracts
31 December 2008 Impact on Impact Impact on Impact

Change in gross on net profit on
assumptions liabilities liabilities before tax equity*
000 000 000 000
Mortality/morbidity + 10 % 3,183 2,387 (597) (449)
Longevity - 10 % 2,945 2,209 (552) (428)
Investment return +1% (3,112) (2,334) 584 448
Expenses + 10 % 2,971 2,228 (557) (438)
Lapse and surrenders rate + 10 % 2,900 2,175 (544) (426)
Discount rate +1% (2,745) (2,059) 515 397
*Impact on equity reflects adjustments for tax, when applicable.
31 December 2007 Impact on Impact Impact on Impact

Change in gross on net profit on
assumptions liabilities liabilities before tax equity*
000 000 000 000
Mortality/morbidity + 10 % 2,951 2,213 (553) (427)
Longevity - 10 % 2,700 2,025 (506) (386)
Investment return +1% (2,901) (2,176) 544 409
Expenses + 10 % 2,765 2,074 (518) (399)
Lapse and surrenders rate + 10 % 2,700 2,205 (506) (387)
Discount rate +1% (2,551) (1,913) 478 363
Investment contracts with DPF
31 December 2008 Increase/ Increase/

(decrease) on Increase/ (decrease) on Increase/
Change in gross (decrease) on profit before (decrease)
assumptions liabilities net liabilities tax on equity*
000 000 000 000
Mortality/morbidity + 10 % 457 206 (51) (39)
Longevity - 10 % 356 160 (40) (31)
Investment return +1% (446) (201) 50 38
Expenses + 10 % 335 151 (38) (29)
Lapse and surrenders rate + 10 % 290 131 (33) (25)
Discount rate +1% (245) (110) 28 21
31 December 2007 Increase/ Increase/

(decrease) on Increase/ (decrease) on Increase/
Change in gross (decrease) on profit before (decrease)
assumptions liabilities net liabilities tax on equity*
000 000 000 000
Mortality/morbidity + 10 % 387 174 (44) (33)
Longevity - 10 % 311 140 (35) (27)
Investment return +1% (365) (164) 41 31
Expenses + 10 % 221 99 (25) (19)
Lapse and surrenders rate + 10 % 212 95 (24) (18)
Discount rate +1% (167) (75) 19 14
*Impact on equity reflects adjustments for tax, when applicable.
The method used and significant assumptions made for deriving sensitivity information did not change from
the previous period.
Commentary
IFRS 4.39(d)ii and IFRS 4.39A(a) permit the use of Embedded Value (EV) sensitivity disclosures instead of IFRS 7 sensitivity
disclosures for insurance and market risk sensitivities. This disclosure option is only allowed if insurance and market risk sensitivities
are managed on an EV basis. Another allowed alternative is to base sensitivity disclosures on Economic Capital measures. This is also
only allowed if insurance and market risk sensitivities are actually managed on that basis. For illustrative purposes, EV sensitivity
disclosures, based on observed best practice disclosures in the insurance industry, have been provided in Appendix 3.


(2) Non-life insurance contracts (which comprise general insurance and healthcare)
The Group principally issues the following types of general insurance contracts: motor, household, commercial IFRS 4.38
and business interruption. Healthcare contracts provide medical expense cover to policyholders and are not
guaranteed renewable. Risks under non-life insurance policies usually cover twelve month duration.
For general insurance contracts the most significant risks arise from climate changes, natural disasters and IFRS 4.39(a)
terrorist activities. For longer tail claims, that take some years to settle, there is also inflation risk. For
healthcare contracts the most significant risks arise from lifestyle changes, epidemics and medical science and
technology improvements.
These risks do not vary significantly in relation to the location of the risk insured by the Group, type of risk IFRS
4.39(c)(ii)
insured and by industry.
The above risk exposure is mitigated by diversification across a large portfolio of insurance contracts and IFRS 4.39(a)
geographical areas. The variability of risks is improved by careful selection and implementation of
underwriting strategies, which are designed to ensure that risks are diversified in terms of type of risk and
level of insured benefits. This is largely achieved through diversification across industry sectors and
geography. Further, strict claim review policies to assess all new and ongoing claims, regular detailed review
of claims handling procedures and frequent investigation of possible fraudulent claims are all policies and
procedures put in place to reduce the risk exposure of the Group. The Group further enforces a policy of
actively managing and prompt pursuing of claims, in order to reduce its exposure to unpredictable future
developments that can negatively impact the Group. Inflation risk is mitigated by taking expected inflation into
account where estimating insurance contract liabilities.
The Group has also limited its exposure by imposing maximum claim amounts on certain contracts as well as IFRS 4.39(a)
the use of reinsurance arrangements in order to limit exposure to catastrophic events (e.g., hurricanes,
earthquakes and flood damages).
The purpose of these underwriting and reinsurance strategies is to limit exposure to catastrophes based on IFRS 4.39(a)
the Groups risk appetite as decided by management. The overall aim is currently to restrict the impact of a
single catastrophic event to approximately 50% of shareholders equity on a gross basis and 10% on a net
basis. In the event of such a catastrophe counterparty exposure to a single reinsurer is estimated not to
exceed 2% of shareholders equity. The Board may decide to increase or decrease the maximum tolerances
based on market conditions and other factors.
The Group uses its own and commercially available proprietary risk management software to assess
catastrophe exposure. However, there is always a risk that the assumptions and techniques used in these
models are unreliable or that claims arising from an unmodelled event are greater than those arising from a
modelled event.
As a further guide to the level of catastrophe exposure written by the Group, the table below shows
hypothetical claims arising for various realistic disaster scenarios based on the Groups average risk exposures
during 2008.
Modelled industry Estimated gross Estimated net

claims Claims claims
000 000 000
Euroland windstorm 50,000,000 10,000 2,000
California earthquake 70,000,000 8,000 1,500
Euroland earthquake 40,000,000 7,000 1,200
The table below sets out the concentration of non-life insurance contract liabilities by type of contract. IFRS 4.39(c)(ii)
31 December 2008 31 December 2007

Gross Reinsurance Net Gross Reinsurance Net
liabilities of liabilities liabilities liabilities of liabilities liabilities
000 000 000 000 000 000
Motor 11,134 (2,784) 8,350 10,956 (2,739) 8,217
Household 10,659 (2,665) 7,994 10,232 (2,558) 7,674
Commercial 8,457 (2,114) 6,343 7,988 (1,997) 5,991
Business interruption 7,890 (1,973) 5,917 6,411 (1,603) 4,808
Healthcare 12,524 (3,130) 9,394 11,987 (2,996) 8,991
Total 50,664 (12,666) 37,998 47,574 (11,893) 35,681


The geographical concentration of the Groups non-life insurance contract liabilities is noted below. The IFRS 4.39(c)(ii)
disclosure is based on the countries where the business is written. The analysis would not be materially
different if based on the countries in which the counterparties are situated.
Non-life insurance contracts

Gross Reinsurance Net Gross Reinsurance Net
liabilities of liabilities liabilities liabilities of liabilities liabilities
000 000 000 000 000 000
Euroland 22,798 (5,700) 17,098 21,408 (5,237) 16,171
United Kingdom 17,732 (4,433) 13,299 16,651 (4,329) 12,322
International 10,134 (2,533) 7,601 9,515 (2,327) 7,188
Total 50,664 (12,666) 37,998 47,574 (11,893) 35,681
Key assumptions IFRS 4.37(c)
The principal assumption underlying the liability estimates is that the Groups future claims development will
follow a similar pattern to past claims development experience. This includes assumptions in respect of
average claim costs, claim handling costs, claim inflation factors and claim numbers for each accident year.
Additional qualitative judgments are used to assess the extent to which past trends may not apply in the
future, for example once-off occurrence, changes in market factors such as public attitude to claiming,
economic conditions, as well as internal factors such as portfolio mix, policy conditions and claims handling
procedures. Judgment is further used to assess the extent to which external factors such as judicial decisions
and government legislation affect the estimates.
Other key circumstances affecting the reliability of assumptions include variation in interest rates, delays in
settlement and changes in foreign currency rates.
Sensitivities IFRS 4. 39(c)(i),
39A(a)
The non-life insurance claim liabilities are sensitive to the key assumptions shown below. It has not been
possible to quantify the sensitivity of certain assumptions such as legislative changes or uncertainty in the
estimation process.
The analysis below is performed for reasonably possible movements in key assumptions with all other
assumptions held constant, showing the impact on gross and net liabilities, profit before tax and equity. The
correlation of assumptions will have a significant effect in determining the ultimate claims liabilities, but to
demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual basis.
It should be noted that movements in these assumptions are non-linear.
31 December 2008 Impact Impact Impact on

Change in on gross on net profit before Impact on
assumptions liabilities liabilities tax equity*
000 000 000 000
Average claim cost + 10 % 1,798 1,349 (337) (263)
Average number of claims + 10 % 1,641 1,231 (308) (235)
Average claim settlement period Reduce from 1,521 1,141 (285) (223)
30 months to
24 months
31 December 2007 Impact Impact Impact on

Change in on gross on net profit before Impact on
assumptions liabilities liabilities tax equity*
000 000 000 000
Average claim cost + 10 % 1,658 1,244 (311) (244)
Average number of claims + 10 % 1,522 1,142 (285) (223)
Average claim settlement period Reduce from 1,487 1,115 (279) (213)
36 months to
30 months
* Impact on equity reflects adjustments for tax, when applicable


The method use for deriving sensitivity information and significant assumptions did not change from the
previous period.
Claims development table IFRS
4.39(c)(iii)
The following tables show the estimate cumulative incurred claims, including both claims notified and IBNR
for each successive accident year at each balance sheet date, together with cumulative payments to date.
The cumulative claims estimates and cumulative payments are translated to Euros at the rate of exchange
that applied at the end of the accident year. The impact of exchange differences is shown at the bottom of
the table.
The Group has taken advantage of the transitional rules of IFRS 4 that permit only five years of information to IFRS 4.44
be disclosed upon adoption of IFRS. The claims development information disclosed is being increased from
five years to ten years over the period 2006 -2010.
As required by Euroland GAAP, in setting claims provisions the Group gives consideration to the probability
and magnitude of future experience being more adverse than assumed and exercises a degree of caution in
setting reserves where there is considerable uncertainty. In general the uncertainty associated with the
ultimate claims experience in an accident year is greatest when the accident year is at an early stage of
development and the margin necessary to provide the necessary confidence in the provisions adequacy is
relatively at its highest. As claims develop, and the ultimate cost of claims becomes more certain, the relative
level of margin maintained should decrease. In 2008 there has been an overall deficit of 2,547,000 (2007:
deficit of 2,246,000) due primarily to additional business interruption claims on the 2007 accident year
(2007: motor liability claims arising from unfavourable court rulings on the 2001 and 2002 accident years).


Gross non-life insurance contract liabilities for 2008: IFRS
4.39(c)(iii)
Before
2001 2001 2002 2003 2004 2005 2006 2007 2008 Total
Accident year Note 00 000 000 000 000 000 000 000 000 000
0
At end of accident year 12,254 12,235 15,320 14,078 15,967 16,660 15,093 14,493
One year later 12,587 12,436 15,486 14,103 16,138 16,733 17,587
Two years later 12,752 12,517 15,522 14,285 16,250 16,607
Three years later 12,623 12,634 15,615 14,635 16,526
Four years later 12,258 12,587 15,373 14,832
Five years later 12,325 13,584 15,687
Six years later 13,258 13,598
Seven years later 13,427
Current estimate of
cumulative claims
incurred 13,427 13,598 15,687 14,832 16,526 16,607 17,587 14,493
At end of accident year (9,500) (9,235) (8,904) (7,134) (6,939) (6,549) (7,750) (5,851)
One year later (9,541) (9,452) (9,211) (7,267) (7,054) (7,949) (9,195)
Two years later (10,554) (10,152) (9,434) (7,325) (8,209) (9,233)
Three years later (10,821) (10,631) (10,072) (8,349) (9,602)
Four years later (12,125) (11,492) (11,099) (10,847)
Five years later (12,754) (12,562) (12,442)
Six years later (12,854) (12,662)
Seven years later (13,024)
Cumulative payments to
date (13,024) (12,662) (12,442) (10,847) (9,602) (9,233) (9,195) (5,851)
Gross non-life insurance

contract liabilities at 31
December 2008 at
original exchange rates 294 403 936 3,245 3,985 6,924 7,374 8,392 8,642 40,195
Foreign exchange
adjustment 2 1 3 2 1 2 2 1 2 16
Total gross non-life

insurance contract
liabilities per the balance
sheet 16(b) 296 404 939 3,247 3,986 6,926 7,376 8,393 8,644 40,211
Current estimate of
surplus/(deficiency) (1,173) (1,363) (367) (754) (559) 53 (2,494)
% Surplus/(deficiency) of
initial gross reserve (10%) (11%) (2%) (5%) (4%) 0% (17%)


Net non-life insurance contract liabilities for 2008: IFRS
4.39(c)(iii)
Before
2001 2001 2002 2003 2004 2005 2006 2007 2008 Total
Accident year Note 000 000 000 000 000 000 000 000 000 000
At end of accident year 10,003 8,288 10,690 11,159 11,475 13,228 11,315 10,868
One year later 10,070 8,388 10,495 11,177 11,604 13,627 13,493
Two years later 10,002 8,372 10,442 11,262 11,688 13,204
Three years later 9,898 8,619 10,211 11,576 11,895
Four years later 9,406 8,588 10,780 11,724
Five years later 9,860 9,067 11,015
Six years later 10,606 9,170
Seven years later 10,802
Current estimate of
cumulative claims
incurred 10,802 9,170 11,015 11,724 11,895 13,204 13,493 10,868
At end of accident year (7,600) (7,388) (6,678) (5,351) (5,354) (5,239) (6,254) (4,388)
One year later (7,633) (7,562) (6,908) (5,450) (5,291) (6,359) (7,356)
Two years later (8,443) (8,122) (7,076) (5,494) (6,157) (7,386)
Three years later (8,657) (8,505) (7,179) (6,262) (7,002)
Four years later (8,900) (8,627) (7,949) (8,175)
Five years later (10,403) (8,683) (8,755)
Six years later (10,483) (8,563)
Seven years later (10,619)
Cumulative payments to
date (10,619) (8,563) (8,755) (8,175) (7,002) (7,386) (7,356) (4,388)
Net non-life insurance

contract liabilities at 31
December 2008 at
original exchange rates 223 183 607 2,260 3,549 4,893 5,818 6,137 6,480 30,150
Foreign exchange
adjustment 2 1 1 - 1 - 1 1 1 8
Total net non-life

insurance contract
liabilities per the balance
sheet 16(b) 225 184 608 2,260 3,550 4,893 5,819 6,138 6,481 30,158
Current estimate of
surplus/(deficiency) (799) (882) (325) (565) (420) 24 (2,178)
% Surplus/(deficiency) of
initial gross reserve (8%) (11%) (3%) (5%) (4%) 0% (19%)
Commentary
The Group has elected to present its claims development on an accident year basis as this is consistent with how the business is
managed. IFRS 4 does not prescribe the format of the disclosure of claims development and the presentation of this information by
underwriting year is also permissible. Additionally, IFRS 4 does not explain how entities should present exchange differences or
business combinations in the claims development disclosure. The Group has elected to translate estimated claims and claims payments
at the rate of exchange applying at the end of each accident year. Alternatively, entities could translate claim estimates or payments
at the rate of exchange applying at the balance sheet date or by some other method.


(b) Financial risks
(1) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by IFRS 7.33(a)
failing to discharge an obligation.

The following policies and procedures are in place to mitigate the Groups exposure to credit risk: IFRS 7.33(b)
u A Group credit risk policy setting out the assessment and determination of what constitutes credit risk for
the Group. Compliance with the policy is monitored and exposures and breaches are reported to
the Group risk committee. The policy is regularly reviewed for pertinence and for changes in the
risk environment.
u Net exposure limits are set for each counterparty or group of counterparties, geographical and industry
segment (i.e., limits are set for investments and cash deposits, foreign exchange trade exposures and
minimum credit ratings for investments that may be held).
u The Group further restricts its credit risk exposure by entering into master netting arrangements with
counterparties with which it enters into significant volumes of transactions. However such arrangements
do not generally result in offset of balance sheet assets and liabilities, as transactions are usually settled
on a gross basis. However, the credit risk associated with such balances is reduced in the event of a
default, when such balances are settled on a net basis. At 31 December 2008, the Group had the right to
set off financial liabilities amounting to 10,789,000 (2007: 8,563,000) against financial assets with a
fair value of 11,265,000 (2007: 10,582,000) under such arrangements.
u Guidelines determine when to obtain collateral and guarantees (i.e., certain derivative transactions are
covered by collateral and derivatives are only taken out with counterparties with a suitable credit rating).
The Group maintains strict control limits by amount and terms on net open derivative positions. The
amounts subject to credit risk are limited to the fair value of in the money financial assets against which
the Group either obtains collateral from counterparties or requires margin deposits. Collateral may be sold
or repledged by the Group and is repayable if the contract terminates or the contracts fair value falls.
u Reinsurance is placed with counterparties that have a good credit rating and concentration of risk is
avoided by following policy guidelines in respect of counterparties limits that are set each year by the
board of directors and are subject to regular reviews. At each reporting date, management performs an
assessment of creditworthiness of reinsurers and updates the reinsurance purchase strategy, ascertaining
suitable allowance for impairment.
u The Group sets the maximum amounts and limits that may be advanced to corporate counterparties by
reference to their long-term credit ratings.
u The credit risk in respect of customer balances, incurred on non-payment of premiums or contributions
will only persist during the grace period specified in the policy document or trust deed until expiry, when
the policy is either paid up or terminated. Commission paid to intermediaries is netted off against amounts
receivable from them to reduce the risk of doubtful debts.
The Group issues unit-linked investment policies in a number of its operations. In the unit-linked business the
policyholder bears the investment risk on the assets held in the unit-linked funds as the policy benefits are
directly linked to the value of the assets in the fund. Therefore, the Group has no material credit risk on unit-
linked financial assets.


Credit exposure
The table below shows the maximum exposure to credit risk for the components of the balance sheet and IFRS 7.36(a)
items such as future commitments. The maximum exposure is shown gross, before the effect of mitigation
through the use of master netting or collateral agreements and the use of credit derivatives.
Other Unit-linked Total IFRS 7.36(a)
31 December 2008 Notes 000 000 000
Financial instruments
Derivative financial assets 8
Derivative financial instruments held for trading 677 - 677
Cash flow hedges 867 - 867
Fair value hedges 621 - 621
Financial assets at fair value through profit or loss 9(a)
Equity securities 4,768 7,036 11,804
Debt securities 607 4,359 4,966
Mutual funds - 2,130 2,130
Credit institutions - 1,341 1,341
Held-to-maturity financial assets 9(b)
Debt securities 2,104 - 2,104
Loans and receivables 9(c) 7,404 - 7,404
Available-for-sale financial assets 9(d)
Equity securities 59,070 - 59,070
Reinsurance assets 10 34,034 - 34,034
Insurance receivables 12 40,620 - 40,620
Cash and cash equivalents 15 6,646 - 6,646
Total credit risk exposure 182,925 14,866 197,791 IFRS 7.34(a)
Other Unit-linked Total IFRS 7.36(a)

31 December 2007 Notes 000 000 000
Derivative financial assets 8
Derivative financial instruments held for trading 187 - 187
Cash flow hedges 593 - 593
Fair value hedges 460 - 460
Financial assets at fair value through profit or loss 9(a)
Equity securities 6,910 6,414 13,324
Debt securities 341 4,321 4,662
Mutual funds - 2,091 2,091
Credit institutions - 1,112 1,112
Held-to-maturity financial assets 9(b)
Loans and receivables 9(c) 6,177 - 6,177
Available-for-sale financial assets 9(d)
Equity securities 55,466 - 55,466
Reinsurance assets 10 32,375 - 32,375
Insurance receivables 12 37,505 - 37,505
Cash and cash equivalents 15 4,283 - 4,283
Total credit risk exposure 169,925 13,938 183,863 IFRS 7.34(a)
The fair value of derivatives shown on the balance sheet represents the current risk exposure but not the IFRS 7.36(a)
maximum risk exposure that could arise in the future as a result of the changes in values.

Commentary
The general requirement in IFRS 7.34(a) is that the quantitative data on risk exposures should be based on information provided
internally to key management personnel.
The quantitative data in the risk management disclosure as at the reporting date is assumed to be representative of the Groups exposure
to risk during the period. Therefore, the disclosures on unrepresentative exposure to risk during the period required by IFRS 7.35 are not
applicable for these illustrative financial statements. Reinsurance assets exclude the reinsurers share of unearned premiums
Credit exposure by credit rating
The table below provides information regarding the credit risk exposure of the Group by classifying assets IFRS 7.36(a)
according to the Groups credit ratings of counterparties.
31 December 2008 IFRS 7.36(c),

Neither past-due nor impaired (d)
Non- Non- Past-
investment investment due but
Investment grade: grade: un- Unit- not
grade satisfactory satisfactory linked impaired Total
000 000 000 000 000 000
Derivative financial assets
Derivative financial
instruments held for trading 71 606 - - - 677
Cash flow hedges 867 - - - - 867
Fair value hedges 390 231 - - - 621
Financial assets at fair value
through profit or loss
Equity securities 4,768 - - 7,036 - 11,804
Debt securities 607 - - 4,359 - 4,966
Mutual funds - - - 2,130 - 2,130
Credit institutions - - - 1,341 - 1,341
Debt securities 1,610 494 - - - 2,104
Loans and receivables - 6,659 531 - 214 7,404
Equity securities 56,422 2,648 - - - 59,070
Debt securities 22,709 2,798 - - - 25,507
Reinsurance assets 30,654 2,864 - - 516 34,034
Insurance receivables 6,120 32,865 820 - 815 40,620
Cash and cash equivalents 5,941 705 - - - 6,646
Total 130,159 48,870 1,351 14,866 1,545 197,791 IFRS 7.34(a)

Credit exposure by credit rating
31 December 2007 IFRS 7.36(c),

Neither past-due nor impaired (d)
Non- Non- Past-
investment investment due but
Investment grade: grade: un- Unit- not
grade satisfactory satisfactory linked impaired Total
000 000 000 000 000 000
instruments held for trading 92 95 - - - 187
Cash flow hedges 593 - - - - 593
Fair value hedges 264 196 - - - 460
Financial assets at fair value
through profit or loss
Equity securities 6,910 - - 6,414 - 13,324
Debt securities 341 - - 4,321 - 4,662
Mutual funds - - - 2,091 - 2,091
Credit institutions - - - 1,112 - 1,112
Debt securities 1,540 137 - - - 1,677
Loans and receivables - 5,789 201 - 187 6,177
Available-for-sale financial
assets
Equity securities 53,590 1,876 - - - 55,466
Debt securities 21,568 2,383 - - - 23,951
Reinsurance assets 29,240 2,707 - - 428 32,375
Insurance receivables 6,833 29,428 600 - 644 37,505
Cash and cash equivalents 3,723 560 - - - 4,283
Total 124,694 43,171 801 13,938 1,259 183,863 IFRS 7.34(a)
Commentary
IFRS 7 BC54 states: The board of directors noted that information about credit quality gives a greater insight into the credit risk of
assets and helps users to assess whether such assets are more or less likely to become impaired in the future. Because this
information will vary between companies, the board of directors decided not to specify a particular method for giving this information,
but rather to allow each entity to devise a method that is appropriate to its circumstances.
IFRS 7.36(c) and IFRS 7.37(a) require the disclosure of the quality of financial assets that are neither impaired nor past due and an
analysis of the age of financial assets that are past due as at the reporting date but not yet impaired. This is required by the standard,
although disclosure of the fact that many financial assets could be past due by only a few days is arguably of limited value and
potentially misleading.
Reinsurance asset figures exclude the reinsurers share of unearned premiums as this is not a financial asset.


The table below provides information regarding the credit risk exposure of the Group at 31 December 2008 IFRS 7.36(a)
by classifying assets according to Standard and Poors credit ratings of the counterparties. AAA is the highest
possible rating. Assets that fall outside the range of AAA to BBB are classified as speculative grade.
31 December 2008 Not Unit-

AAA AA BBB BB rated linked Total IFRS 7.36(c)
000 000 000 000 000 000 000
Derivative financial instruments
held for trading 71 606 - - - - 677
Cash flow hedges 867 - - - - - 867
Fair value hedges 390 231 - - - - 621
Financial assets at fair value through
profit or loss
Equity securities 4,768 - - - - 7,036 11,804
Debt securities 607 - - - - 4,359 4,966
Mutual funds - - - - - 2,130 2,130
Credit institutions - - - - - 1,341 1,341
Debt securities 1,610 494 - - - - 2,104
Loans and receivables - - - - 7,404 - 7,404
Equity securities 56,422 2,648 - - - - 59,070
Debt securities 22,709 2,798 - - - - 25,507
Reinsurance assets 30,654 1,241 1,603 536 - - 34,034
Insurance receivables 6,120 1,717 1,588 1,204 29,991 - 40,620
Cash and cash equivalents 5,941 705 - - - - 6,646
Total 130,159 10,440 3,191 1,740 37,395 14,866 197,791 IFRS 7.34(a)

AAA AA BBB BB rated linked Total IFRS 7.36(c)
000 000 000 000 000 000 000
Derivative financial instruments
held for trading 92 95 - - - - 187
Cash flow hedges 593 - - - - - 593
Fair value hedges 264 196 - - - - 460
Financial assets at fair value through
profit or loss
Equity securities 6,910 - - - - 6,414 13,324
Debt securities 341 - - - - 4,321 4,662
Mutual funds - - - - - 2,091 2,091
Credit institutions - - - - - 1,112 1,112
Debt securities 1,540 137 - - - - 1,677
Loans and receivables - - - - 6,177 - 6,177
Equity securities 53,590 1,876 - - - - 55,466
Debt securities 21,568 2,383 - - - - 23,951
Reinsurance assets 29,240 1,167 1,538 430 - - 32,375
Insurance receivables 6,833 1,439 1,231 1,065 26,937 - 37,505
Cash and cash equivalents 3,723 560 - - - - 4,283
Total 124,694 7,853 2,769 1,495 33,114 13,938 183,863 IFRS 7.34(a)

Commentary
If the credit quality analysis is based on external credit grading systems the entity might disclose the credit exposure for each external
credit grade, the rating agencies used, the value of the entitys rated and unrated credit exposures and the relationship between
internal and external ratings (IFRS 7.IG24).
The table below provides information regarding the credit risk exposure of the Group according to the Groups IFRS 7.36(a)
categorisation of counterparties by Standard and Poor's credit rating

AAA AA BBB BB rated Total linked Total IFRS 7.36(c)
000 000 000 000 000 000 000 000
Investment grade 130,159 - - - - 130,159 12,736 142,895

Non-investment grade:
satisfactory - 10,440 3,191 1,224 35,015 49,870 2,130 52,000
unsatisfactory - - - - 1,351 1,351 - 1,351
Past-due but not impaired - - - 516 1,029 1,545 - 1,545
130,159 10,440 3,191 1,740 37,395 182,925 14,866 197,791 IFRS 7.34(a)
Total
Not Unit-
31 December 2007 AAA AA BB BBB rated Total linked Total IFRS 7.36(c)
000 000 000 000 000 000 000 000
Investment grade 124,694 - - - - 124,694 11,847 136,541

satisfactory - 7,853 2,769 1,067 31,482 43,171 2,091 45,262
unsatisfactory - - - - 801 801 - 801
Past-due but not impaired - - - 428 831 1,259 - 1,259
124,694 7,853 2,769 1,495 33,114 169,925 13,938 183,863 IFRS 7.34(a)
Total
It is the Groups policy to maintain accurate and consistent risk ratings across its credit portfolio. This enables
management to focus on the applicable risks and the comparison of credit exposures across all lines of
business, geographic regions and products. The rating system is supported by a variety of financial analytics
combined with processed market information to provide the main inputs for the measurement of counterparty
risk. All internal risk ratings are tailored to the various categories and are derived in accordance with the
Groups rating policy. The attributable risk ratings are assessed and updated regularly.
During the year, no credit exposure limits were exceeded.
The Group actively manage its product mix to ensure that there is no significant concentration of credit risk. IFRS 7.34(c)


Age analysis of financial assets past due but not impaired
31 December 2008 Unit- Total past-due IFRS 7.37(a)

< 30 days 31 to 60 days 61 to 90 days linked but not impaired
000 000 000 000 000
Loans and receivables 214 - - - 214
Reinsurance assets 395 121 - - 516
Insurance receivables 525 278 12 - 815
Total 1,134 399 12 - 1,545
31 December 2007 Unit- Total past-due IFRS 7.37(a)

< 30 days 31 to 60 days 61 to 90 days linked but not impaired
000 000 000 000 000
Loans and receivables 187 - - - 187
Reinsurance assets 343 85 - - 428
Insurance receivables 417 218 9 - 644
Total 947 303 9 - 1,259
Impaired financial assets
At 31 December 2008 there are impaired reinsurance assets of 84,000 (2007: 82,000) and impaired IFRS 7.37(b)
loans and receivables of 526,000 (2007: 483,000).

For assets to be classified as past-due and impaired contractual payments must be in arrears for more than IFRS 7.37(c)
90 days. No collateral is held as security for any past due or impaired assets.
The Group records impairment allowances for loans and receivables in a separate impairment allowance IFRS 7.16
account. A reconciliation of the allowance for impairment losses for loans and receivables is as follows:
2008 2007
000 000
At 1 January 483 461
Charge for the year 65 50
Recoveries (12) (5)
Amounts written off (20) (30)
Interest accrued on impaired loans 10 7
At 31 December 526 483
Commentary
IFRS 7.36(c) and IFRS 7.37(a) require the disclosure of the quality of financial assets that are neither impaired nor past due and an
analysis of the age of financial assets that are past due as at the reporting date but not yet impaired. This is required by the Standard,
although disclosure of the fact that many financial assets could be past due by only a few days is arguably of limited value and
potentially misleading.


Collateral
IFRS 7.36(b),
The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. 37 (c)
Guidelines are implemented regarding the acceptability of types of collateral and the valuation parameters.
Collateral is mainly obtained for securities lending and for cash purposes. Credit risk is also mitigated by
entering into collateral agreements. Management monitors the market value of the collateral, requests
additional collateral when needed and performs an impairment valuation when applicable.
For over-the-counter derivative transactions undertaken by the Group, collateral is received from the
counterparty. The collateral can be sold or repledged by the Group and is repayable if the contract terminates
or the contracts fair value decreases. At 31 December 2008, the fair value of such collateral held was
5,750,000 (2007: 4,500,000). No collateral received from the counterparty has been sold or repledged
(2007: Nil).
(2) Liquidity risk IFRS 7.33(a)
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial
instruments. In respect of catastrophic events there is also a liquidity risk associated with the timing
differences between gross cash out-flows and expected reinsurance recoveries.
The following policies and procedures are in place to mitigate the Groups exposure to liquidity risk: IFRS 7.33(b)
u A Group liquidity risk policy setting out the assessment and determination of what constitutes liquidity
risk for the Group. Compliance with the policy is monitored and exposures and breaches are reported
to the Group risk committee. The policy is regularly reviewed for pertinence and for changes in the
risk environment.
u Set guidelines on asset allocations, portfolio limit structures and maturity profiles of assets, in order to
ensure sufficient funding available to meet insurance and investment contracts obligations.
u Setting up contingency funding plans which specify minimum proportions of funds to meet emergency
calls as well as specifying events that would trigger such plans.
u The Groups catastrophe excess-of-loss reinsurance contracts contain clauses permitting the immediate
draw down of funds to meet claim payments should claim events exceed a certain size.
u A Group liquidity risk policy setting out the assessment and determination of what constitutes liquidity
risk for the Group. Compliance with the policy is monitored and exposures and breaches are reported
to the Group risk committee. The policy is regularly reviewed for pertinence and for changes in the
risk environment.
Maturity profiles
The table below summarises the maturity profile of the financial assets and financial liabilities of the Group IFRS 7.39(a),
d(i), IAS 1.52,
based on remaining undiscounted contractual obligations, including interest payable and receivable. For IFRS
insurance contracts liabilities and reinsurance assets, maturity profiles are determined based on estimated 4.39(d)(i)
timing of net cash outflows from the recognised insurance liabilities. Unearned premiums and the reinsurers
share of unearned premiums have been excluded from the analysis as they are not contractual obligations.
Unit linked liabilities are repayable or transferable on demand and are included in the up to a year column.
Repayments which are subject to notice are treated as if notice were to be given immediately.

31 December 2008 Balance Over No IFRS 7.39(a)

Sheet Up to a 1-3 3-5 5-15 15 maturity IFRS
Amount year* years years years years date Total 4.39(d)(i)
000 000 000 000 000 000 000 000
Financial instruments:
assets 2,165 8,678 5,478 - - - - 14,156
Held-to-maturity
financial assets 2,104 586 421 1,097 - - - 2,104
Loans and receivables 7,404 735 1,078 2,546 6,321 - - 10,680
Available-for-sale
financial assets 84,577 5,467 4,756 2,866 7,234 3,801 59,070 83,194
Financial assets at fair
value through profit
or loss 20,241 2,456 3,114 547 - - 13,934 20,051
Reinsurance assets 34,034 9,657 4,655 4,536 11,742 3,444 - 34,034
Insurance receivables 40,620 40,620 - - - - - 40,620
Cash and cash equivalents 6,646 6,646 - - - - - 6,646
Total assets 197,791 74,845 19,502 11,592 25,297 7,245 73,004 211,485
31 December 2008 Balance Over No

Sheet Up to a 1-3 3-5 5-15 15 maturity
Amount year* years years years years date Total
000 000 000 000 000 000 000 000
Insurance contract
liabilities
With DPF 26,570 7,076 6,071 5,300 7,903 220 - 26,570
Without DPF 97,105 22,487 18,005 11,367 40,010 5,236 - 97,105
Investment contract
liabilities
With DPF 4,364 1,008 1000 975 2,000 300 - 5,283
Without DPF 7,344 7,198 160 180 200 150 - 7,888
Net asset value attributable
to unit-holders 520 520 - - - - - 520
liabilities 1,782 4,259 4,095 - - - - 8,354
Borrowings 24,562 18,181 9,327 - - - - 27,508
Other financial liabilities 7,743 7,743 - - - - - 7,743
Insurance payables 5,157 5,157 - - - - - 5,157
Trade and other payables 16,935 16,935 - - - - - 16,935
Total liabilities 192,082 90,564 38,658 17,822 50,113 5,906 - 203,063


IFRS 7.39(a)
Sheet Up to a 1-3 3-5 5-15 15 maturity IFRS
Amount year* years years years years date Total 4.39(d)(i)
000 000 000 000 000 000 000 000
Financial instruments:
assets 1,240 5,577 2,345 - - - - 7,922
Held-to-maturity
financial assets 1,677 455 301 921 - - - 1,677
Loans and receivables 6,177 735 771 1,888 6,123 - - 9,517
Available-for-sale
financial assets 79,417 5,601 4,442 3,020 6,533 3,545 55,466 78,607
Financial assets at fair
value through profit or
loss 21,189 2,455 2,988 46 - - 15,415 20,904
Reinsurance assets 32,375 5,663 4,655 6,536 12,299 3,222 - 32,375
Insurance receivables 37,505 37,505 - - - - - 37,505
Cash and cash equivalents 4,283 4,283 - - - - - 4,283
Total assets 183,863 62,274 15,502 12,411 24,955 6,767 70,881 192,790

Sheet Up to a 1-3 3-5 5-15 15 maturity
Amount year* years years years years date Total
000 000 000 000 000 000 000 000
Insurance contract
liabilities
With DPF 25,180 5,692 6,354 5,100 7,809 225 - 25,180
Without DPF 91,671 27,125 9,069 11,041 34,516 9,920 - 91,671
Investment contract
liabilities
With DPF 4,281 900 1,655 825 805 550 - 4,735
Without DPF 7,277 6,950 125 140 160 120 - 7,495
Net asset value attributable
to unit-holders 367 367 - - - - - 367
liabilities 1,758 4,452 4,825 - - - - 9,277
Borrowings 23,064 17,366 9,842 - - - - 27,208
Other financial liabilities 7,272 7,272 - - - - - 7,272
Insurance payables 4,841 4,841 - - - - - 4,841
Trade and other payables 13,853 13,853 - - - - - 13,853
Total liabilities 179,564 88,818 31,870 17,106 43,290 10,815 - 191,899
Commentary
The maturity analysis for financial liabilities is based on remaining contractual obligations, but for recognised insurance liabilities, IFRS
4.39(d)i permits the maturity analysis to be based on expected net cash outflows resulting from recognised insurance liabilities The
Group has elected to use this alternative presentation for the maturity analysis of its insurance liabilities. Unearned premiums are
excluded from this analysis as these are not contractual liabilities.
IFRS 7.B14 requires the maturity analysis for financial liabilities including investment contracts with and without DPF to be based on
undiscounted contractual cash flows including interest payments and that derivative cash flows be shown gross when settlement will
be on a gross basis.
IFRS 7 does not require a contractual analysis of financial assets but the Group has elected to present such an analysis to assist users in
understanding how assets and liabilities have been matched. Reinsurance assets have been presented on the same basis as insurance
liabilities and exclude the reinsurers share of unearned premiums. Loans and receivables include contractual interest receivable.


The table below summarises the expected utilisation or settlement of assets. IAS 1.52
31 December 2008 Non- Unit-

Current* current linked Total
000 000 000 000
Intangible assets - 3,200 - 3,200

Investment in an associate - 2,120 - 2,120
Property and equipment - 4,292 - 4,292
Investment properties - 4,199 - 4,199
Derivative financial assets 1,614 551 - 2,165
Held-to-maturity financial assets 125 1,979 - 2,104
Loans and receivables 7,404 - - 7,404
Available-for sale-financial assets 43,471 41,106 - 84,577
Financial assets at fair value through profit or loss 4,858 517 14,866 20,241
Reinsurance assets 26,301 10,238 - 36,539
Tax receivable 2,995 - - 2,995
Insurance receivables 40,620 - - 40,620
Deferred expenses 1,464 11,982 - 13,446
Accrued income 2,298 - - 2,298
Cash and cash equivalents 6,646 - - 6,646
Total assets 137,796 80,184 14,866 232,846
* Expected utilisation or settlement within 12 months from the balance sheet date
31 December 2007 Non- Unit-

Current* current linked Total
000 000 000 000
Intangible assets - 3,371 - 3,371

Investment in an associate - 1,991 - 1,991
Property and equipment - 6,050 - 6,050
Investment properties - 3,943 - 3,943
Derivative financial assets 494 746 - 1,240
Held-to-maturity financial assets 119 1,558 - 1,677
Loans and receivables 6,177 - - 6,177
Available-for sale-financial assets 29,599 49,818 - 79,417
Financial assets at fair value through profit or loss 7,029 222 13,938 21,189
Reinsurance assets 23,785 10,942 - 34,727
Insurance receivables 37,505 - - 37,505
Deferred expenses 1,128 10,349 - 11,477
Accrued income 2,157 - - 2,157
Cash and cash equivalents 4,283 - - 4,283
Total assets 115,088 88,990 13,938 218,016
* Expected utilisation or settlement within 12 months from the balance sheet date
Commentary
IFRS 7.IG.30 suggests that entities disclose a further maturity analysis based on expected maturity by management if assets are
managed accordingly.


(3) Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because IFRS 7.33(a)
of changes in market prices. Market risk comprises three types of risk: foreign exchange rates (currency
risk), market interest rates (interest rate risk) and market prices (price risk).
u A Group market risk policy setting out the assessment and determination of what constitutes market risk
for the Group. Compliance with the policy is monitored and exposures and breaches are reported to the
Group risk committee. The policy is reviewed regularly for pertinence and for changes in the
risk environment.
u Set asset allocation and portfolio limit structure, to ensure that assets back specific policyholders
liabilities and that assets are held to deliver income and gains for policyholders which are in line with
expectations of the policyholders.
u Stipulated diversification benchmarks by type of instrument and geographical area, as the Group are
exposed to guaranteed bonuses, cash and annuity options when interest rates falls.
u Strict control over hedging activities (e.g., equity derivatives are only permitted to be held to facilitate
portfolio management or to reduce investment risk).
The Group issues unit-linked investment policies in a number of its operations. In the unit-linked business the
policyholder bears the investment risk on the assets held in the unit-linked funds as the policy benefits are
directly linked to the value of the assets in the fund. The Groups exposure to market risk on this business is
limited to the extent that income arising from asset management charges is based on the value of assets in
the fund.
(a) Currency risk
Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because IFRS 7.33(a)
of changes in foreign exchange rates.

The Groups principal transactions are carried out in euros and its exposure to foreign exchange risk arise
primarily with respect to UK sterling and US dollar.
The Groups financial assets are primarily denominated in the same currencies as its insurance and IFRS 7.33(b)
investment contract liabilities, which mitigates the foreign currency exchange rate risk for the overseas
operations. Thus the main foreign exchange risk arises from recognised assets and liabilities denominated in
currencies other than those in which insurance and investment contract liabilities are expected to be settled.
The currency risk is effectively managed by the Group through derivative financial instruments. Forward
currency contracts are in place to eliminate the currency exposure on individual foreign transactions. Forward
currency contracts must be in the same currency and under the same terms as the hedged item to maximise
effective hedging. The Group will not enter into these forward contracts until a firm commitment is in place.


The table below summarises the Groups assets and liabilities by major currencies. IFRS 7.34(a)
31 December 2008 Pound US

Euro Sterling Dollar Other Total
000 000 000 000 000
Intangible assets 3,200 - - - 3,200

Investment in an associate 2,120 - - - 2,120
Property and equipment 4,292 - - - 4,292
Investment properties 4,199 - - - 4,199
Derivative financial assets 1,074 558 533 - 2,165
Held-to-maturity financial assets 947 586 421 150 2,104
Loans and receivables 7,404 - - - 7,404
Available-for sale-financial assets 38,060 24,602 16,915 5,000 84,577
Financial assets at fair value through profit or
loss 10,758 6,035 3,448 - 20,241
Reinsurance assets 16,119 11,995 7,425 1,000 36,539
Tax receivable 2,995 - - - 2,995
Insurance receivables 18,279 12,217 8,124 2,000 40,620
Deferred expenses 13,446 - - - 13,446
Accrued income 2,298 - - - 2,298
Cash and cash equivalents 6,646 - - - 6,646
Total assets 131,837 55,993 36,866 8,150 232,846
Insurance contract liabilities

With DPF 9,876 8,998 6,071 1,625 26,570
Without DPF 51,068 30,434 20,747 4,875 107,124
Investment contract liabilities
With DPF 1,627 1,741 996 - 4,364
Without DPF 3,305 2,071 1,468 500 7,344
Net asset value attributable to unit-holders 234 182 104 - 520
Pension benefit obligation 4,422 - - - 4,422
Derivative financial liabilities 552 874 356 - 1,782
Borrowings 24,562 - - - 24,562
Other financial liabilities 7,743 - - - 7,743
Deferred tax liability 2,190 - - - 2,190
Insurance payables 2,329 1,305 1,023 500 5,157
Deferred income 4,365 - - - 4,365
Trade and other payables 16,935 - - - 16,935
Total liabilities 129,208 45,605 30,765 7,500 213,078 IFRS 7.34(a)

31 December 2007 Pound US IFRS 7.34(a)

Euro Sterling Dollar Other Total
000 000 000 000 000
Intangible assets 3,371 - - - 3,371

Investment in an associate 1,991 - - - 1,991
Property and equipment 6,050 - - - 6,050
Investment properties 3,943 - - - 3,943
Derivative financial assets 658 334 248 - 1,240
Held-to-maturity financial assets 754 586 337 - 1,677
Loans and receivables 6,177 - - - 6,177
Available-for sale-financial assets 35,737 22,295 15,885 5,500 79,417
Financial assets at fair value through profit or
loss 12,285 5,666 3,238 - 21,189
Reinsurance assets 15,460 11,260 7,007 1,000 34,727
Insurance receivables 16,877 11,626 7,502 1,500 37,505
Deferred expenses 11,477 - - - 11,477
Accrued income 2,157 - - - 2,157
Cash and cash equivalents 4,283 - - - 4,283
Total assets 124,032 51,767 34,217 8,000 218,016
Insurance contract liabilities

With DPF 9,504 8,475 5,701 1,500 25,180
Without DPF 47,947 29,311 19,322 4,500 101,080
Investment contract liabilities
With DPF 1,753 1,608 920 - 4,281
Without DPF 3,275 2,147 1,455 400 7,277
Net asset value attributable to unit-holders 165 128 74 - 367
Pension benefit obligation 4,152 - - - 4,152
Derivative financial liabilities 1,091 515 152 - 1,758
Borrowings 23,064 - - - 23,064
Other financial liabilities 7,272 - - - 7,272
Deferred tax liability 2,057 - - - 2,057
Insurance payables 2,178 1,094 969 600 4,841
Deferred income 4,334 - - - 4,334
Trade and other payables 13,853 - - - 13,853
Total liabilities 120,645 43,278 28,593 7,000 199,516 IFRS 7.34(a)
The Group has no significant concentration of currency risk. IFRS 7.34(c)
The analysis below is performed for reasonably possible movements in key variables with all other variables IFRS 7.40(a),
(b)
held constant, showing the impact on profit before tax and equity due to changes in the fair value of currency
sensitive monetary assets and liabilities including insurance contract claim liabilities. The correlation of
variables will have a significant effect in determining the ultimate impact on market risk, but to demonstrate
the impact due to changes in variables, variables had to be changed on an individual basis. It should be noted
that movements in these variables are non-linear.


Impact on Impact Impact on Impact
Change in profit on profit on
variables before tax equity* before tax equity*
Currency 000 000 000 000
GBP + 10 % 378 295 364 278

USD + 10 % 264 204 247 188
GBP - 10 % (414) (316) (387) (294)

USD - 10 % (308) (235) (289) (223)
* Impact on equity reflects adjustments for tax, when applicable.
The method used for deriving sensitivity information and significant variables did not change from the IFRS 7.40(c)
previous period.
Commentary
In disclosing currency risk sensitivities, companies will need to aggregate information to display the overall picture. However
aggregation should not result in disclosures which combine information from significantly different economic environments with
different risk characteristics.
For each relevant risk variable, the entity should determine the reasonably possible changes based on the economic environment in
which the entity operates over the period to the next reporting date. The reasonably possible changes should not include remote
scenarios (IFRS 7.B19).
disclosures for insurance and market risk sensitivities. This disclosure option is only allowed if insurance and market risk sensitivities
are managed on an EV basis. Another allowed alternative is to base sensitivity disclosures on Economic Capital measures. This is also
only allowed if insurance and market risk sensitivities are actually managed on that basis. For illustrative purposes, EV sensitivity
disclosures, based on observed best practice in the insurance industry, have been provided in Appendix 3.
(b) Interest rate risk

Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because IFRS 7.33(a)
of changes in market interest rates.
Floating rate instruments expose the Group to cash flow interest risk, whereas fixed interest rate instruments
expose the Group to fair value interest risk.
The Groups interest risk policy requires it to manage interest rate risk by maintaining an appropriate mix of IFRS 7.33(b)
fixed and variable rate instruments. The policy also requires it to manage the maturities of interest bearing
financial assets and interest bearing financial liabilities. Any gap between fixed and variable rate instruments
and their maturities are effectively managed by the Group through derivative financial instruments. Interest
on floating rate instruments is re-priced at intervals of less than one year. Interest on fixed interest rate
instruments is priced at inception of the financial instrument and is fixed until maturity.
The Group has no significant concentration of interest rate risk. IFRS 7.34(c)
The analysis below is performed for reasonably possible movements in key variables with all other variables
held constant, showing the impact on profit before tax (due to changes in fair value of floating rate financial
assets and liabilities, including the effect of fair value hedges) and equity (that reflects adjustments to profit
before tax and revaluing fixed rate available-for-sale financial assets, including the effect of cash flow
hedges). The correlation of variables will have a significant effect in determining the ultimate impact on
interest rate risk, but to demonstrate the impact due to changes in variables, variables had to be changed on
an individual basis. It should be noted that movements in these variables are non-linear.

31 December 2008 Impact on equity*

Impact on
Change in profit Up to 1-3 3-5 Over 5
variables before tax a year years years years Total
000 000 000 000 000 000
+ 100
GBP basis points (211) (283) (257) (215) (197) (952)
+ 100
USD basis points (197) (248) (214) (208) (144) (814)
- 100
GBP basis points 168 214 192 178 145 729
- 100
USD basis points 125 181 148 137 103 569
31 December 2007 Impact on equity*

Impact on
Change in profit Up to a 1-3 3-5 Over 5
variables before tax year years years years Total
000 000 000 000 000 000
+ 100
GBP basis points (189) (265) (244) (199) (165) (873)
+ 100
USD basis points (163) (245) (211) (186) (143) (785)
- 100
GBP basis points 155 211 181 166 140 698
- 100
USD basis points 147 201 187 151 138 677

previous period.
Commentary
In disclosing interest rate risk sensitivities, companies will need to aggregate information to display the overall picture. However
aggregation should not result in disclosures which combine information from significantly different economic environments with
different risk characteristics.
disclosures for insurance and market risk sensitivities. This disclosure option is only allowed, if insurance and market risk sensitivities
are managed on an EV basis. Another allowed alternative disclosure is to base sensitivity disclosures on Economic Capital measures.
This is also only allowed if insurance and market risk sensitivities are actually managed on that basis. For illustrative purposes, EV
sensitivity disclosures, based on observed best practice in the insurance industry, have been provided in Appendix 3.


(c) Price risk
IFRS 7.33(a)
Equity price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in market prices (other than those arising from interest rate risk or currency risk),
whether those changes are caused by factors specific to the individual financial instrument or its issuer, or
factors affecting all similar financial instruments traded in the market.
The Groups equity price risk exposure relates to financial assets and financial liabilities whose values will IFRS 7.33(b)
fluctuate as a result of changes in market prices, principally investment securities not held for the account of
unit-linked business.
The Groups price risk policy requires it to manage such risks by setting and monitoring objectives and IFRS 7.33(b)
constraints on investments, diversification plans, limits on investments in each country, sector and market
and careful and planned use of derivative financial instruments.
The Group has no significant concentration of price risk. IFRS 7.34(c)
(b)
held constant, showing the impact on profit before tax (due to changes in fair value of financial assets and
liabilities whose fair values are recorded in the income statement and equity (that reflects adjustments to
profit before tax and changes in fair value of available-for-sale financial assets). The correlation of variables
will have a significant effect in determining the ultimate impact on price risk, but to demonstrate the impact
due to changes in variables, variables had to be changed on an individual basis. It should be noted that
movements in these variables are non-linear.

Impact Impact Impact on Impact
Change in on profit on profit on
Market indices 000 000 000 000
Euronext 100 + 15% 374 285 351 268

FTSE 100 + 10% 352 272 339 257
NYSE + 10% 331 254 318 241
Euronext 100 - 15 % (319) (242) (297) (229)

FTSE 100 - 10 % (288) (220) (276) (213)
NYSE - 10 % (254) (201) (243) (188)
previous period.
Commentary
In disclosing price risk sensitivities, companies will need to aggregate information to display the overall picture. However aggregation
should not result in disclosures which combine information from significantly different economic environments with different
risk characteristics.
disclosures for insurance and market risk sensitivities. This disclosure option is only allowed, if insurance and market risk sensitivities are
managed on an EV basis. Another allowed alternative disclosure is to base sensitivity disclosures on Economic Capital measures. This is
also only allowed if insurance and market risk sensitivities are actually managed on that basis. For illustrative purposes, EV sensitivity
disclosures, based on observed best practice in the insurance industry, have been provided in Appendix 3.


Sensitivity analysis on financial assets
As part of the Groups investment strategy, in order to reduce both insurance and financial risk, the Group
matches its investments to the liabilities arising from insurance and investment contracts, by reference to the
type of benefits payable to contract holders.
(b)
held constant, showing the impact on profit before tax (due to changes in fair value of financial assets whose
fair values are recorded in the income statement) and equity (that reflects adjustments to profit before tax
and changes in fair value of financial assets whose fair values are recorded in the statement of changes in
equity). The correlation of variables will have a significant effect in determining the ultimate fair value and/or
amortised cost of financial assets other than derivative financial instruments, but to demonstrate the impact
due to changes in variables, variables had to be changed on an individual basis. It should be noted that
movements in these variables are non-linear.

Impact on Impact Impact on Impact
Change in profit on profit on
000 000 000 000
Exchange rate + 10 % 481 367 394 299

+ 100 basis
Interest yield curve points 381 294 367 286
Stock market + 10 % 354 269 301 234
Discount rate +1% (291) (223) (263) (200)
Exchange rate - 10 % (419) (320) (353) (274)

- 100 basis
Interest yield curve points (301) (233) (284) (221)
Stock market - 10 % (266) (204) (248) (192)
Discount rate -1% 265 202 205 158

previous period.
Operational risks
Operational risk is the risk of loss arising from system failure, human error, fraud or external events. When
controls fail to perform, operational risks can cause damage to reputation, have legal or regulatory
implications or can lead to financial loss. The Group cannot expect to eliminate all operational risks, but by
initiating a rigorous control framework and by monitoring and responding to potential risks, the Group is able
to manage the risks. Controls include effective segregation of duties, access controls, authorisation and
reconciliation procedures, staff education and assessment processes, including the use of internal audit.
Business risks such as changes in environment, technology and the industry are monitored through the
Groups strategic planning and budgeting process.
Commentary
IFRS 7 does not require any disclosures on operational risk because it is not necessarily related to financial instruments.
The above narrative on operational risk is included for illustrative purpose only and does not cover all the possible operational
risks for an insurer.

42. Cash generated from operating activities
2008 2007
Notes 000 000
Profit before tax 6,830 8,682

Investment income 29 (8,221) (7,682)
Realised gains recorded in the income statement 30 (213) (93)
Fair value gains recorded in the income statement 31 (1,027) (992)
Finance costs 33 1,504 1,336
Purchases of derivatives (989) (100)
Proceeds from sale of derivatives 10 1,070
Purchases of fair value through profit or loss financial assets 9(e) (5,000) (4,000)
Proceeds from disposals of fair value through profit or loss
financial assets 9(e) 7,000 3,000
Purchases of available-for-sale financial assets 9(e) (8,000) (5,000)
Proceeds from sale of available-for-sale financial assets 9(e) 9,844 6,523
Maturity of available-for-sale financial assets 9(e) 87 65
Purchase of held-to-maturity financial assets 9(e) (333) (531)
Maturity of held-to-maturity financial assets 9(e) 100 85
Non-cash items IAS 7.20(b)

Share of associates profit 5 (129) (230)
Expenses deferred during the year 13 (5,368) (3,222)
Profit attributable to unit-holders 18 267 111
Deferred fee income released to the income statement 23 (9) (7)
Share based payment expense 37 18 14
Amortisation of deferred expenses 34 3,399 2,109
Amortisation of intangible assets 34 69 48
Depreciation of property and equipment 34 1,135 1,279
Impairment losses on intangible assets 34 223 243
Changes in working capital IAS 7.20(a)

Increase in reinsurance assets (1,812) (1,917)
Increase in insurance receivables (3,115) (2,338)
Increase in loans and receivables (1,162) (997)
Increase in life insurance contract liabilities 4,344 4,472
Increase in non-life insurance contract liabilities 3,090 3,211
Increase in investment contract liabilities 150 258
Increase in net asset value attributable to unit-holders 153 52
Increase in pension benefit obligation 270 185
Increase in other financial liabilities 471 481
Increase in insurance payables 316 354
Increase in deferred revenue 40 43
Increase in trade and other payables 3,082 1,089
Cash generated from operating activities 7,024 7,601
The Group classifies the cash flows from the acquisition and disposal of financial assets as operating cash IAS 7.20(c)
flows, as the purchases are funded from the cash flows associated with the origination of insurance and
investment contracts, net of the cash flows for payments of benefits and claims incurred for insurance and
investment contracts, which are respectively treated under operating activities.
Commentary
Purchases and sales of held-to-maturity and available-for-sale financial assets may also be presented as investing cash flows.

43. Investment in Group

Particulars of the Group principal undertakings are shown below. IAS 24.12
Group undertakings Country of incorporation Primary business operation % Held
Good Life Insurance Limited Euroland Life insurance 100
Non-life insurance
Good Non-Life Insurance (which comprises general
Limited Euroland insurance and healthcare) 100
Good Investment
Management Services Investment management
Limited Euroland services) 100
For transactions with and balances from and to related parties, refer to Note 45.
44. Contingencies and commitments

IAS 37.86
(a) Legal proceedings and regulations
The Group operates in the insurance industry and is subject to legal proceeding in the normal course of
business. While it is not practicable to forecast or determine the final results of all pending or threatened
legal proceedings, management does not believe that such proceedings (including litigations) will have a
material effect on its results and financial position.
The Group is also subject to insurance solvency regulations in all the territories where it operates and has
complied with all these solvency regulations. There are no contingencies associated with the Groups
compliance or lack of compliance with such regulations.
(b) Capital commitments and operating leases

The Group has no capital commitments as at balance sheet date.
The Group has entered into commercial property leases on its investment property portfolio, consisting of the IAS 17.56(c)
Groups surplus office buildings. These non-cancellable leases have remaining terms of between 5 and 20
years. All leases include a clause to enable upward revision of the rental charge on an annual basis according
to prevailing market conditions.
Future minimum lease rentals receivable under non-cancellable operating leases as at 31 December are IAS 17.56(a)
as follows.
2008 2007
000 000
After one year but not more than five years 1,170 1,090
More than five years 2,106 2,095
Total operating lease rentals receivable 3,510 3,404
The Group has entered into commercial leases on certain property and equipment. These leases have an IAS 17.35(d)
average life of between 3 and 5 years with no renewal option included in the contracts. There are no
restrictions placed upon the Group by entering into the leases.
Future minimum rentals payable under non-cancellable operating leases as at 31 December are as follows:
2008 2007
000 000
After one year but not more than five years 412 400
More than five years 208 200
Total operating lease rentals payable 875 800

45. Related party transactions

IAS 24.17(a)
(a) Transactions with related parties
The Group enters into transactions with its associate and key management personnel in the normal course of IAS 24.21
business. The sales to and purchases from related parties are made at normal market prices.
Details of significant transactions carried out during the year with related parties are as follows.
2008 2007
000 000
Sale of
Insurance and investment contracts to associate 762 689
Insurance and investment contracts to key management personnel 10 9
Purchase of
Insurance and investment contracts from associate 221 196
(b) Balance sheet balances with related parties

IAS 24.17(b)
(1) Receivables from and payables to related parties are as follows:
2008 2007
Notes 000 000
Receivables from related parties 9(c)
Associate 376 352
Key management personnel 6 5
382 357
Payables to related parties 24

Associate (191) (144)
(191) (144)
Outstanding balances at balance sheet date are unsecured and interest free. Settlement will take place IAS 24.17(b)
in cash.
There was no provision for doubtful debts at the balance sheet date and no bad debt expense in the year IAS 24.17(c)
(2007: Nil).
(2) Loans to related parties are as follows:
2008 2007
Note 000 000
Loans to related parties 9(c)
Associate 336 271
Key management personnel 22 20
356 291
The loan to the associate is payable in full on 1 June 2010. Interest is charged at EURIBOR + 0.8.
The Group offers the possibility for senior management to receive up to a maximum of 20,000 repayable
within 5 years from the date of disbursement. Such loans are unsecured and the same interest rate as for
long term company loans is applicable (currently EURIBOR plus 0.8)

45. Related party transactions continued

IAS 24.16
(c) Compensation of key management personnel
Key management personnel of the Group includes all directors, executive and non-executive, and senior
management. The summary of compensation of key management personnel for the year is as follows.
2008 2007
000 000
Salaries 495 417 IAS 24.16(a)
Fees 378 281 IAS 24.16(a)
Bonuses 265 195 IAS 24.16(a)
Other short-term employment benefits 107 74 IAS 24.16(a)
Share-based payment 5 3 IAS 24.16(e)
Post employment pension benefits 176 86 IAS 24.16(b)
Total compensation of key management personnel 1,426 1,056
IAS 24.17
(d) Investment in associate
No restrictions are placed on the ability of the associate to transfer funds to the parent company in the form
of cash dividends or for the repayment of loans when due.
No guarantees or collaterals were provided to the associate. IAS 24.20(h)
46. Events after the balance sheet date

On 14 January 2009, an office owned and used by the Group with a net book value of 1,695,000 was IAS 10.12
IAS 10.21
severally damaged by flooding. It is expected that insurance proceeds will fall short of the costs of
rebuilding by 750,000.

Appendix 1 First time adoption of IFRS in 2007
Commentary
If the Group is a first time adopter of IFRS, the following disclosures will be required.
A1.1. Accounting policies Basis of preparation IFRS 1.7
The consolidated financial statements of Good Insurance (International) Limited have been prepared in IFRS 1.36
accordance with IFRS. These are the Groups first consolidated financial statements prepared in accordance
with IFRS, with the 2007 comparatives restated accordingly. Previously, the financial statements were
prepared based on the reporting requirements of Euroland GAAP. The effects of the transition to IFRS as of 1
January 2007 on the financial position, financial performance and cash flows can be found below.
A1.2. Notes to the financial statements First time adoption of IFRS IFRS 1.13, 26
(a) IFRS has been applied retrospectively, except for certain optional and mandatory exemptions from full
retrospective application, as provided for by IFRS 1 First Time Adoption of International Financial
Reporting Standards, as detailed below.
Business combinations
The Group has elected to apply IFRS 3 Business Combinations prospectively only to business combinations on
or after transition date. As a result, business combinations prior to transition have not been restated. Upon
adoption of IFRS, the Group is now only permitted to recognise existing liabilities contained in the acquirees
financial statements on acquisition, rather than recognising liabilities arising from acquisitions regardless of
whether the acquiree had recognised these types of liabilities or not.
Fair value or revaluation value as deemed cost

The Group has elected to use the notional GAAP revaluation value of owner-occupied property as the deemed
cost at the date of transition. A revaluation of assets in this category was performed on transition date.
Post retirement benefits (Defined benefit scheme)

The Group elected to recognise all cumulative unrecognised actuarial gains and losses at transition. The
corridor approach for recognising actuarial gains and losses will be applied to gains and losses occurring
after transition.
Designation of financial assets and financial liabilities

At the date of transition, the Group chose to designate according to the IFRS designation criteria, certain of its
existing financial assets as at fair value through profit or loss.
Derecognition of financial assets and financial liabilities

The Group has applied the derecognition requirements under IFRS prospectively for transactions occurring on
or after transition when applicable.
Hedge accounting
In line with the transitional provisions of IFRS 1, the Group will continue to apply hedge accounting for those
hedging relationships that meet the criteria of hedge accounting under IFRS. At date of transition, ineffective
hedge relationships will continue to be accounted for, but could subsequently be derecognised under IFRS on
failing the effectiveness test.
Estimates
At the date of transition, the Groups estimates under IFRS are consistent with estimates previously made
under Euroland GAAP.
Insurance contracts
The Group has elected to disclose only five years of claims experience data in its claims development tables
as permitted in the first financial year in which it adopts IFRS 4 Insurance Contracts. These disclosures will
be extended for an additional year in each succeeding year until the 10 year information requirement has
been satisfied.

A1.2. Notes to the financial statements First time adoption of IFRS continued
(b) Reconciliation of equity reported under Euroland GAAP to equity reported under IFRS
as at 1 January 2007 Appendix 1 Notes Previous GAAP Adjustments IFRS

000 000 000
Assets
Intangible assets e(2) 3,455 (114) 3,341
Investment in an associate 1,808 - 1,808
Property and equipment e(9) 5,759 330 6,089
Investment properties e(9) 3,957 (330) 3,627
Financial assets
Derivative financial instruments 2,054 - 2,054
Held-to-maturity financial assets 1,047 - 1,047
Loans and receivables 5,130 - 5,130
Available-for-sale financial assets 76,784 - 76,784
Financial assets at fair value through profit
or loss 19,244 - 19,244
Reinsurance assets 32,810 - 32,810
Tax receivable 2,454 - 2,454
Insurance receivables 35,167 - 35,167
Deferred expenses e(8) 2,525 7,839 10,364
Accrued income 2,065 - 2,065
Cash and cash equivalents 3,760 - 3,760
Total assets 198,019 7,725 205,744

Equity
Issued share capital 8,382 - 8,382
Additional paid-in capital 1,000 - 1,000
Revaluation reserves (1,183) 2,894 1,711
Retained earnings 159 7,484 7,643
Total ordinary shareholders equity 8,358 10,378 18,736
Other equity instruments - - -
Total equity 8,358 10,378 18,736
Liabilities
Insurance contract liabilities e(5), e(6) 129,976 (11,399) 118,577
Investment contract liabilities e(5) - 11,300 11,300
Net asset value attributable to unit-holders 315 - 315
Pension benefit obligation e(3) 3,122 845 3,967
Borrowings 22,888 - 22,888
Other financial liabilities 6,791 - 6,791
Deferred tax liability e(10) (1,259) 1,328 69
Insurance payables 4,487 - 4,487
Deferred revenue e(7) 3,338 960 4,298
Trade and other payables e(1) 18,451 (5,687) 12,764
Total liabilities 189,661 (2,653) 187,008
Total equity and liabilities 198,019 7,725 205,744

A1.2. Notes to the financial statements - First time adoption of IFRS continued
(b) Reconciliation of equity reported under Euroland GAAP to equity reported under IFRS.
Appendix 1
as at 31 December 2007 Notes Previous GAAP Adjustments IFRS
000 000 000
Assets
Intangible assets e(2) 3,424 (53) 3,371
Investment in an associate 1,991 - 1,991
Property and equipment e(9) 5,720 330 6,050
Investment properties e(9) 4,249 (306) 3,943
Financial assets
Held-to-maturity financial assets 1,677 - 1,677
Loans and receivables 6,177 - 6,177
Available-for-sale financial assets 79,417 - 79,417
Financial assets at fair value through profit or loss 21,189 - 21,189
Reinsurance assets 34,727 - 34,727
Tax receivable 2,812 - 2,812
Insurance receivables 37,505 - 37,505
Deferred expenses e(8) 4,698 6,779 11,477
Accrued income 2,157 - 2,157
Cash and cash equivalents 4,283 - 4,283
Total assets 211,266 6,750 218,016

Equity
Issued share capital 8,385 - 8,385
Additional paid-in capital 1,047 - 1,047
Revaluation reserves 455 3,338 3,793
Retained earnings 451 4,824 5,275
Total ordinary shareholders equity 10,338 8,162 18,500
Other equity instruments - - -
Total equity 10,338 8,162 18,500
Liabilities
Insurance contract liabilities e(5),(6) 137,922 (11,662) 126,260
Investment contract liabilities e(5) - 11,558 11,558
Net asset value attributable to unit-holders 367 - 367
Pension benefit obligation e(3) 3,275 877 4,152
Borrowings 23,064 - 23,064
Other financial liabilities 7,272 - 7,272
Deferred tax liability e(10) (338) 2,395 2,057
Insurance payables 4,841 - 4,841
Deferred revenue e(7) 2,995 1,339 4,334
Trade and other payables e(1) 19,772 (5,919) 13,853
Total liabilities 200,928 (1,412) 199,516
Total equity and liabilities 211,266 6,750 218,016

(c) Reconcilation of the income statement reported under Euroland GAAP to the income statement reported IFRS 1.39(b)
under IFRS.
for the year ended 31 December 2007 Appendix 1 Notes Previous GAAP Adjustments IFRS
000 000 000
Gross premiums e(5) 74,665 (1,218) 73,447
Reinsurers share of gross premiums (19,111) - (19,111)
Net premiums 55,554 (1,218) 54,336
Fees and commission income e(7) 2,610 (379) 2,231
Investment income 7,682 - 7,682
Realised gains 93 - 93
Fair value gains and losses e(4), e(9) 1,402 (410) 992
Other operating revenue 498 - 498
Other revenue 12,285 (789) 11,496
Total income 67,839 (2,007) 65,832
Gross benefits and claims paid (39,410) - (39,410)
Reinsurers share of gross benefits and claims
paid 10,530 - 10,530
Gross change in contract liabilities e(5), e(6) (8,397) 1,223 (7,174)
Reinsurers share of gross change in contract
liabilities 1,691 - 1,691
Net benefits and claims (35,586) 1,223 (34,363)
Finance costs (1,336) - (1,336)

Profit attributable to unit-holders (111) - (111)
Other operating and administrative expenses e(2), e(8), e(9) (20,447) (1,123) (21,570)
Other expenses (21,894) (1,123) (23,017)
Total benefits, claims and expenses (57,480) 100 (57,380)
Profit before share of associates profit 10,359 (1,907) 8,452
Share of associates profit 230 - 230
Profit before tax 10,589 (1,907) 8,682
Income tax expense e(10) (906) (1,067) (1,973)
Profit before dividends 9,683 (2,974) 6,709
Dividends paid e(1) (9,319) 9,319 -
Profit for the year 364 6,345 6,709
(d) Cash flow statement IFRS 1.40
The Group did not present a cash flow statement under Euroland GAAP and is therefore not required to
explain the material adjustments to the cash flow statement upon first time adoption of IFRS.
(e) Adjustments between Euroland GAAP and IFRS IFRS 1.40
The basis of material adjustments between Euroland GAAP and IFRS are as follows.
(1) Dividends
Derecognition of dividends declared and approved by shareholders subsequent to balance sheet date.
Under Euroland GAAP, shareholders dividends are accrued in the year to which they relate regardless of
when these are selected and approved by the shareholders. From 1 January 2007, under IAS 10 Events after
the Balance Sheet Date, shareholders dividends are accrued when declared and approved by the
shareholders. This has resulted in the derecognition of accrued dividends.
31 December 2007 1 January 2007

000 000
Reversal of final dividend provision 5,919 5,687

(e) Adjustments between Euroland GAAP and IFRS continued
Total dividends charged in the year

Under Euroland GAAP, the total dividends charge in the year is recorded within the income statement, but
under IFRS it is recorded within the statement of changes in equity. Under Euroland GAAP, the dividends for
the year ended 31 December 2007 charged to the income statement were 9,319,000.
(2) Goodwill
Reversal of goodwill amortisation and the recognition of a goodwill impairment adjustment
Under Euroland GAAP, goodwill arising on acquisition is amortised on a straight line basis over a period of up
to 20 years. Goodwill was only reviewed for impairment whenever there was an indicator of impairment.
Under IFRS, goodwill arising on business combinations is no longer amortised, rather, it is subject to an
annual impairment test at a cash-generating unit level. Consequently, the 2007 Euroland amortisation charge
of 190,000 has been reversed and an impairment loss of 243,000 has been recognised due to the
different level of testing required under IFRS.
(3) Full recognition of cumulative unrecognised actuarial losses on post retirement benefits
Under Euroland GAAP, the cost of pension benefits is recorded in the income statement using actuarial
valuation methods that provide a substantially even charge over the expected service lives of employees.
Under IAS 19 Employee Benefits, the pension obligation is calculated by using the projected unit credit
method which matches the fair value of the obligation against the fair value of the underlying plan assets. The
cumulative unrecognised actuarial gains or losses on first time adoption are fully recognised within the
statement of changes in equity. Subsequent actuarial gains or losses are recognised within the income
statement by applying the corridor method.
31 December 2007 1 January 2007

000 000
Recognition of cumulative unrecognised actuarial losses on
post retirement benefits 877 845
(4) Available-for-sale financial assets fair value adjustment

Under Euroland GAAP, available-for-sale financial assets are measured at fair value at each reporting date,
with changes recorded in the income statement. Under IAS 39: Financial Instruments: Recognition and
Measurement, fair value adjustments are recorded in the statement of changes in equity.
Year ended
31 December 31 December 1 January
2007 2007 2007
000 000 000
Fair value adjustment for available-for-sale

financial assets 444 3,338 2,894

(e) Adjustments between Euroland GAAP and IFRS continued
(5) Insurance and investment contract classification
IFRS 4 requires that only contracts which meet the definition of an insurance contract can be classified as
insurance contracts. This requires that the contracts transfer significant insurance risk. Under Euroland GAAP
contracts were classified as insurance contracts if they were regulated as insurance contracts regardless of
whether significant insurance risk was transferred. As a result technical provisions in respect of contracts that
do not transfer significant insurance risk have been reclassified as investment contracts. Further, in respect
of investment contracts without DPF, these contracts are now accounted for under IAS 39 and not as
insurance contracts. Consequently, premium income previously recognised in 2007 of 1,218,000 has been
derecognised with a corresponding entry to gross change in contract liabilities.
Year ended
2007 2007 2007
000 000 000
Reclassification of insurance contracts - 11,558 11,300
(6) Equalisation provision

Under Euroland law, an equalisation provision is required (even though there is no actual liability at the
balance sheet date) for a general insurer, to eliminate or reduce the volatility of incurred claims arising from
exceptional levels of claims. Under IFRS, no equalisation provision is recorded as a liability, as there is no
present obligation for the losses.
Year ended
2007 2007 2007
000 000 000
Derecognition of equalisation provision 5 104 99
(7) Deferred revenue

Under Euroland GAAP, income is recorded within the period the cash is received. Under IFRS, initial and other
front-end fees for future investment management services relating to investment contracts without DPF, are
deferred and recognised as revenue when the related services are rendered.
Year ended
2007 2007 2007
000 000 000
Deferral of revenue 381 1,359 978

Recognition of deferred revenue amortisation charge (2) (20) (18)
Total deferred revenue adjustment 379 1,339 960

(8) Deferred expenses
Under Euroland GAAP, all incremental costs relating to securing investment contracts without DPF, under
which the Group will render investment management services, is recognised within the income statement.
Under IFRS, incremental costs incurred during the financial period directly attributable to securing those
contracts, are deferred and recognised as an asset, to the extent that they can be identified separately,
measured reliably and it is probable that they will be recovered out of future revenue margins. These costs are
amortised on a straight line basis in line with fee income.
Year ended 31 31 December 1 January

December 2007 2007 2007
000 000 000
Deferral of expense (77) 15,801 15,878

Recognition of deferred expenses amortisation charge (983) (9,022) (8,039)
Total deferred expenses adjustment (1,060) 6,779 7,839
(9) Owner-occupied property

Owner-occupied properties with a fair value of 340,000 previously recorded within investment properties
have been reclassified to property and equipment. The Group has elected to use the notional GAAP
revaluation value as the deemed cost at the date of transition and therefore there was no adjustment at the
date of transition. Property and equipment are carried at cost less accumulated depreciation, therefore the
fair value adjustment recorded in the 2007 income statement under Euroland GAAP of 34,000 has been
reversed and a depreciation charge of 10,000 recognised under IFRS.
(10) Deferred tax

Under Euroland GAAP deferred tax assets and liabilities are recognised under the liability method for all timing
differences that are expected to reverse in the foreseeable future. Under IAS 12 Income Taxes full provision is
made for deferred tax assets and liabilities arising from temporary differences between the recognition of
gains and losses in the financial statements and their recognition in the income tax return. Deferred tax assets
are recognised for unused tax losses and tax credits to the extent that it is probable that future profits will be
utilised against the unused tax losses and tax credits.
Year ended
2007 2007 2007
000 000 000
Additional deferred tax expense adjustment (1,067) (2,395) (1,328)

Appendix 2 Shadow accounting
Commentary
If shadow accounting is applicable to the Group, the following disclosures will be required.
A2.1. Shadow accounting IFRS 4.30
In some of the accounting policies for insurance liabilities that have been adopted for the group, realized
gains or losses on certain assets have a direct effect on the measurement of certain related insurance assets
and liabilities. This is either because of the way that the accounting model works or because the policyholder
has a contractual right linked to realised gains and losses only.
In these situations, if unrealised gains or losses on these assets exist, the group applies shadow accounting.
By applying shadow accounting the Group treats the impact of unrealised gains or losses on insurance assets
and liabilities affected by an unrealised gain or loss on a financial asset in the same way as the gain or loss on
that asset.
In particular, the related adjustment to insurance liabilities or DAC is recognised in equity if the unrealised
gains or losses are recognised directly in equity.
A2.2. Accounting policy Shadow accounting

Shadow accounting is consistently applied to all those situations where realised gains and losses on IFRS 4.30
investments would influence insurance assets and/or insurance liabilities, and unrealised gains and losses on
those investments exist. Where applicable, the adjustment to PVIF, DAC and the insurance liabilities is
recognised in a manner consistent with the recognition of the unrealised gains and losses on the investments.

A2.3. Consolidated statement of changes in equity
Attributable to equity holders of the parent
Revaluation reserves
Additional Available- Total
Issued paid-in for- sale Cash ordinary Other
share capital financial flow Retained shareholders equity Total
capital assets hedging Earnings equity instruments equity
Notes 000 000 000 000 000 000 000 000
At 1 January 2007 8,382 1,000 1,716 (5) 7,643 18,736 - 18,736

assets 9(e) - - 3,338 - - 3,338 - 3,338
Cash flow hedging - - - (24) - (24) - (24)
Realised gain transfer to
the income statement on
sale of available-for-sale
financial assets 30 - - (41) - - (41) - (41)
Shadow accounting
adjustment - - (15) - - (15) - (15) IFRS 4.30
Aggregate tax effect of
items recognised directly in
equity 36(b) - - (1,193) 2 - (1,191) - (1,191)
directly in equity - 2,089 (22) - 2,067 - 2,067
Profit for the year - - - 6,709 6,709 - 6,709
and expense for the year - - 2,089 (22) 6,709 8,776 - 8,776
Issue of share capital 25 3 47 - - - 50 50
Dividends paid during the
year 39 - - - - (9,087) (9,087) - (9,087)
Share-based payment 37 - - - - 10 10 - 10
At 31 December 2007 8,385 1,047 3,805 (27) 5,275 18,485 - 18,485
assets 9 (e) - - 6,230 - - 6,230 - 6,230
Cash flow hedging - - - (36) - (36) - (36)
Realised gain transfer to
the income statement on
sale of available-for-sale
financial assets 30 - - (46) - - (46) - (46)
Shadow accounting
adjustment - - (25) - - (25) - (25) IFRS 4.30
Aggregate tax effect of
items recognised directly in
equity 36(b) - - (40) 4 - (36) - (36)
directly in equity - - 6,119 (32) - 6,087 - 6,087
Profit for the year - - - - 5,261 5,261 - 5,261
and expense for the year - - 6,119 (32) 5,261 11,348 - 11,348
Issue of share capital 25 3 63 - - - 66 - 66
Issue of other equity
instruments 26 - - - - - - 52 52
Coupon interest on other
equity instruments accrued
during the year - - - - (1) (1) - (1)
Dividends paid during the
year 39 - - - - (10,236) (10,236) - (10,236)
Share-based payment 37 - - - - 14 14 - 14
At 31 December 2008 8,388 1,110 9,924 (59) 313 19,676 52 19,728

A2.4. Notes to the financial statements
Deferred expenses
Investment
Deferred acquisition management
costs (DAC) services
Insurance contracts contracts
contracts with DPF without DPF Total
Notes 000 000 000 000
At 1 January 2007 6,042 4,027 295 10,364
Amortisation 34 (1,224) (808) (77) (2,109)
Shadow accounting adjustment (15) - - (15) IFRS 4.30
At 31 December 2007 6,429 4,295 738 11,462

Amortisation 34 (1,978) (1,311) (110) (3,399)
Shadow accounting adjustment (25) - - (25) IFRS 4.30
At 31 December 2008 7,175 4,810 1,421 13,406

Appendix 3 Embedded value (EV)
Commentary
In addition to IFRS, EV is an alternative performance measure for reporting the underlying value of the Groups life insurance
operations. The EV methodology adopted is in accordance with the EV principles introduced by the Euroland Institute of Actuaries.
The total profit recognised over the full lifetime of the life insurance policy is the same as under the IFRS basis of reporting. EV
however gives a clearer indication of the profitability of the life insurance business on inception. Shareholders funds also incorporates
internally generated additional value of in-force business (VIF); this is not the case under IFRS
A3.1 Reconciliation
The table below shows the reconciliation between the IFRS and EV reported equity. Adjustments reflect the
difference in the recognition and measurement bases.
31 December 2008 Investment

insurance insurance services Unallocated Total
000 000 000 000 000
Total assets before acquired additional

value of in-force life insurance business 144,241 78,210 5,823 4,287 232,561
Acquired additional value of in-force
life insurance business 285 - - - 285
Total assets included in the IFRS
balance sheet 144,526 78,210 5,823 4,287 232,846
Liabilities (122,875) (67,541) (5,109) (17,553) (213,078)

Net assets included in the IFRS
balance sheet 21,651 10,669 714 (13,266) 19,768
Additional value of in-force life

insurance business 5,428 - - - 5,428
Net assets included in the EV
balance sheet 27,079 10,669 714 (13,266) 25,196
Issued share capital, revaluation

reserves and other equity instruments 19,455
IFRS basis retained earnings 313
IFRS basis total equity 19,768
Additional EV basis retained earnings 5,428
EV basis total equity 25,196

A3.1 Reconciliation continued
31 December 2007 Investment

insurance insurance services Unallocated Total
000 000 000 000 000
Total assets before acquired additional

value of in-force life insurance business 119,247 73,361 21,001 4,159 217,768
Acquired additional value of in-force
life insurance business 248 - - - 248
Total assets included in the IFRS
balance sheet 119,495 73,361 21,001 4,159 218,016
Liabilities (96,011) (61,688) (20,926) (20,891) (199,516)

Net assets included in the IFRS
balance sheet 23,484 11,673 75 (16,732) 18,500
Additional value of in-force life

insurance business 5,019 - - - 5,019
Net assets included in the EV
balance sheet 28,503 11,673 75 (16,732) 23,519
Issued share capital, revaluation

reserves and other equity instruments 13,225
IFRS basis retained earnings 5,275
IFRS basis total equity 18,500
Additional EV basis retained earnings 5,019
EV basis total equity 23,519
A3.2. Sensitivity disclosures

The table below provides EV sensitivity disclosures. IFRS 4.39
(d)(ii), 39A(a),
IFRS 7.41

Increase/(decrease) Increase/(decrease)
Change in in Embedded value of in Embedded value of
assumption/variables life insurance life insurance
000 000
Interest rate + 25 basis points 63 52

Risk discount rate +1% (137) (93)
Lapse rates + 10 % (163) (118)
Mortality rate for life business + 10 % (265) (226)
Mortality rate for annuity business - 10 % (248) (208)
Morbidity rates + 10 % (257) (217)
Expenses + 10 % (188) (123)
Equity +2% 94 74

A3.3. Additional disclosures IFRS 4.39 (d)ii,
39A(a), IFRS
7.41
When an entity prepares a sensitivity analysis that reflects interdependencies between risk variables and uses
it to manage financial risks on explanation of the method used, limitations and objectives should also be
disclosed. The following commentary should therefore be considered.
The Group uses a number of sensitivity based risk management tools to understand volatility of earnings and
manage its business more efficiency.
The Groups life insurance business is accounted for using the embedded value approach which provides a
comprehensive framework for the evaluation of insurance and related risks. Sensitivities of embedded value
to changes in both economic and non-economic experience are used on an ongoing basis in order to
understand volatility of earnings and inform managements decision making and planning processes. A key
feature of life insurance business is the importance of managing the assets, liabilities and risks in a
coordinated way, as this reflects the interdependence of these three elements.
The analysis provided under A3.2 above shows the effect on closing embedded value of reasonably possible
changes in the main economic and non-economic variables across the Groups insurance underwriting
subsidiaries. The effects are illustrative only and employ simplified scenarios. In addition the variables
are non-linear.
As far as the economic assumptions are concerned the analysis shows the sensitivity of closing embedded
value to the following:
u A 1% increase in the discount rate compared to that used for the calculation of EV.
u A 2% increase in the assumed investment return for equity investments (for the portion of policyholders
funds consisting of equities) excluding consequential changes to the risk discount rate. This assumption
is used in projecting future fund growth and the level of distributable cash flows arising as a result.
Assumed future bond returns are unaffected by this test.
u A 25 basis point increase in interest rates, including all consequential changes such as assumed
investment returns for applicable asset classes, the market value of fixed interest securities and risk
discount rates. This assumption is used in projecting future fund growth and the level of distributable cash
flows arising as a result.
In each sensitivity calculation provided above for changes in key economic variables all other assumptions
remain unchanged except when they are directly affected by the revised economic conditions.
For non-economic assumptions the analysis shows the sensitivity of closing embedded value to the following:
u A 10% increase in maintenance expenses (a 10% sensitivity on a base expense assumption of 10 per
annum would represent an expense assumption of 9 per annum.) It should be noted that external
commissions (a significant component of maintenance expenses) are typically fixed, for example as a
proportion of premiums, and are therefore not subject to changes in expenses inflation. When there is a
look through into service company expenses, the fee charged by the service company in this test is
unchanged while the underlying expenses increase.
u A 10% increase in lapse rates (a 10% sensitivity on a base assumption of 5% would represent a lapse rate
of 4.5% per annum.) The lapse rate represents the percentage of in-force policies that terminate as a
result of non-payment of renewal premiums or surrenders.
u A 10% increase in both mortality and morbidity rates (i.e., increased longevity) compared to that used
for the calculation of EV. This is disclosed separately for life assurance and morbidity business.
Changes to key non-economic variables do not incorporate management actions that could be taken to
mitigate effects nor do they take account of consequential changes in policyholder behaviour. In each
sensitivity calculation all other assumptions are therefore unchanged.
Some of the sensitivity scenarios shown above in respect of changes to both economic and non-economic
variables may have a consequential effect on the valuation basis when a product is valued on an active basis
which is updated to reflect current economic conditions.
While the magnitude of these sensitivities will, to a large extent, reflect the size of closing embedded value,
each variable will have a different impact on different components of the embedded value. In addition, other
factors such as the intrinsic cost and time value of options and guarantees, the proportion of investments
between equities and bonds and the type of business written, including for example, the extent of with-profit
business versus non-profit business and extent to which the latter is invested in matching assets, will also
have a significant impact on sensitivities.

Appendix 4 Glossary of insurance terms
Asset liability matching (ALM) ALM forms an integral part of the financial and insurance risk management
policy of the company, mainly to ensure in each period sufficient cash
flow is available to meet liabilities arising form insurance and
investment contracts.
Assumptions The underlying variables which are taken into account in determining the
value of insurance and investment contract liabilities.
Benefits and claims experience variation The difference between the expected and the actual benefit payout.
Claims development table* A table that compares actual claims with previous estimates.
Deferred expenses deferred acquisition Those direct and indirect costs incurred during the financial period arising
costs (DAC) form the writing or renewing of insurance contracts and/or investment
contracts with DPF, which are deferred to the extent that these costs are
recoverable out of future premiums.
Deferred expenses investment management Those incremental costs incurred during the financial period directly
services attributable to securing investment contracts without DPF, under which
investment management services are rendered, which are deferred to the
extent that these costs can be identified separately, measured reliably
and it is probable that these costs will be recoverable out of future
revenue margins.
Deferred revenue Initial and other front-end fees received for rendering future investment
management services relating to investment contracts without DPF, which
are deferred and recognised as revenue when the related services
are rendered.
Discretionary participation features (DPF)* A contractual right given to a policyholder to receive, as a supplement to
guaranteed benefits, additional benefits that are:
u likely to be a significant portion of the total contractual benefits,
u whose amount or timing is contractually at the discretion of the issuer,
and
u that are contractually based on the
u performance of a specified pool of contracts or a specified type
of contract,
u realised and or unrealised investment returns on a specified pool of
assets held by the issuer, or
u the profit or loss of the company, fund or other entity that issues
the contract.
General insurance An insurance contract which provides motor, household, commercial and
business interruption cover to the policyholder.
Embedded value (EV) This is an estimate of the adjusted net worth of a life insurance business
plus the value of in-force business. The measurement principles differ from
the measurement principles under IFRS.
Euroland GAAP The previous national accounting basis that will be used as the
grandfathered accounting basis for the recognition and measurement of
insurance contracts, as allowed under IFRS 4, until Phase II of IFRS 4 is
completed, which will then regulate the recognition and measurement of
insurance contracts.
Financial risk* The risk of a possible future change in one or more of a specified interest
rate, financial instrument price, commodity price, foreign exchange rate,
index of prices or rates, credit rating or credit index or other variable,
provided in the case of a non-financial variable that the variable is not
specific to a party to the contract.
Healthcare An insurance contract which provides medical cover to a policyholder.
Incurred but not reported (IBNR) Claims to be made by a policyholder but not yet reported to the
insurance company.

Appendix 4 Glossary of insurance terms
Intangible assets present value of acquired The difference between the fair value and the carrying amount of a portfolio
in-force business (PVIF) of acquired insurance and/or investment contracts with DPF.
Intangible assets future servicing rights The present value of future servicing rights from a portfolio of acquired
investment contracts without DPF, under which the company will render
investment management services.
Insurance contract* A contract under which one party (the insurer) accepts significant
insurance risk from another party (the policyholder) by agreeing to
compensate the policyholder if a specified uncertain future event (the
insured event) adversely affects the policyholder.
Insurance risk* Risk, other than financial risk, transferred from the holder of a contract to
the issuer.
Investment contract A contract, which contains significant financial risk and may contain
insignificant insurance risk, but does not meet the definition of an
insurance contract.
Investment management services The managing of an investment contract on behalf of a policyholder, for
which an investment management service fee, is charged.
Liability adequacy test An annual assessment of the sufficiency of insurance and/or investment
contract with DPF liabilities, to cover future insurance obligations.
Life insurance A contract which provides whole life, term assurance, unitised pension,
guaranteed pension, pure endowment pension and mortgage endowment
cover to the policyholder.
Non-life insurance Comprises general insurance and healthcare and includes an insurance
contract that is not life insurance.
Outstanding claims provision Comprises claims incurred by the policyholder and reported to the insurance
company, and IBNR claims.
Premiums earned Earned premiums are when a contracted amount becomes payable due from
a policyholder.
Premiums written Written premiums are insurance contract amounts that have been accepted
by an insurance company.
Provision for unearned premiums A liability for premiums received for which the underlying risk has not yet
expired. This liability is released over the term of the contract as the
underlying risk expires.
Provision for unexpired risk The provision for unexpired risk reflects management assessment of future
claims in respect of current insurance contracts that will exceed future
premiums expected to be received.
Reinsurance Insurance risk that is ceded to another insurer to compensate for losses, but
the ultimate obligation to the policyholder remains with the entity who
issued the original insurance contract.
Shadow accounting An accounting adjustment to allow for the impact of recognising unrealised
gains or losses on related insurance assets and liabilities, in a consistent
manner to the recognition of the unrealised gains or losses on financial
assets that have a direct effect on the measurement of the related insurance
assets and liabilities, (i.e., in the income statement or in the statement of
changes in equity).
Unallocated divisible surplus Unallocated DPF returns which a policyholder is entitled to.
Unit-holder/unit-linked Investor in a unit-linked product, when the investment risk is born by the
policyholder and not by the insurance company.
* Definition sourced from IFRS 4 Appendix A

Index
IAS 1 Presentation of financial IAS 1.124B(a)(iii) 77 IAS 12.81(e) 56

statements IAS 1.124B(b) 77 IAS 12.81(f) 56
IAS 1.8(d) 16 IAS 1.124B(c) 77 IAS 12.81(g)(i) 55
IAS 1.8(e) 21 IAS 1.124B(d) 76
IAS 1.14 17 IAS 1.124C 78 IAS 16 Property, plant and
IAS 1.32 17 IAS 1.125(a) 76 equipment
IAS 1.46(a) 11, 12, 14 IAS 1.126 17 IAS 16.1 25
IAS 1.46(b) 11, 12, 14, 16 IAS 16.12 25
IAS 1.46(c) 11, 12, 14, 16 IAS 7 Cash flow statements IAS 16.14 25
IAS 1.46(d) 11, 12, 14 IAS 7.6 32 IAS 16.30 25
16, 17, 21 IAS 7.8 32 IAS 16.51 25
IAS 1.46(e) 11, 12, 14, 16 IAS 7.10 16 IAS 16.67 25
IAS 1.51 17 IAS 7.16(a) 16 IAS 16.68 25
IAS 1.52 17, 47, 66, 67 IAS 7.16(b) 16 IAS 16.71 25
68, 98, 101 IAS 7.17(a) 16 IAS 16.73(a) 25
IAS 1.57 57 IAS 7.18(b) 16 IAS 16.73(b) 25
IAS 1.68(a) 12 IAS 7.21 16 IAS 16.73(c) 25
IAS 1.68(b) 12 IAS 7.28 16 IAS 16.73(d) 48
IAS 1.68(c) 12 IAS 7.31 16 IAS 16.73(e)(i) 48
IAS 1.68(d) 12 IAS 7.35 16 IAS 16.73(e)(vii) 48
IAS 1.68(e) 12 IAS 7.45 16 IAS 16.73(e)(ix) 48
IAS 1.68(i) 12 IAS 16.74(a) 48
IAS 1.68(j) 12 IAS 8 Accounting policies,
IAS 1.68(k) 12 changes in accounting estimates IAS 17 Leases
IAS 1.68(l) 12 and errors IAS 17.8 18
IAS 1.68(m) 12 IAS 17.35(d) 110
IAS 8.14 18
IAS 1.68(n) 12 IAS 17.56(a) 110
IAS 8.28 18
IAS 1.68(p) 12 IAS 17.56(c) 110
IAS 8.30 38
IAS 1.69 12
IAS 1.75(a) 48 IAS 18 Revenue
IAS 10 Events after the balance
IAS 1.75(a)(iv) 78
sheet IAS 18.8 31
IAS 1.75(d) 12
IAS 10.3 38 IAS 18.30(a) 37
IAS 1.75(e) 12, 68
IAS 10.12 37, 112 IAS 18.30(c) 37
IAS 1.76(a) 69
IAS 10.13 37 IAS 18 Appendix 14(b)(ii) 37
IAS 1.76(a)(i) 68, 69
IAS 10.17 17 IAS 18 Appendix 14(b)(iii) 23
IAS 1.76(a)(ii) 69
IAS 10.21 112 32, 36, 56, 68, 69
IAS 1.76(a)(iii) 68, 69
IAS 1.81(a) 11
IAS 19 Employee benefits
IAS 1.81(b) 11 IAS 12 Income taxes
IAS 1.81(c) 11 IAS 19.46 34
IAS 12.15 30
IAS 1.81(d) 11 IAS 19.54 34
IAS 12.15(b) 30
IAS 1.81(f) 11 IAS 19.58 34
IAS 12.24 30
IAS 1.83 11 IAS 19.64 34
IAS 12.37 31
IAS 1.88 11, 72 IAS 19.92 34
IAS 12.39 30
IAS 1.93 72 IAS 19.93 34
IAS 12.44 30
IAS 1.95 14, 76 IAS 19.96 34
IAS 12.46 30
IAS 1.96(a) 14 IAS 19.110(a) 34
IAS 12.47 30, 31
IAS 1.96(b) 14 IAS 19.120A(b) 34, 64
IAS 12.56 31
IAS 1.96(c) 14 IAS 19.120A(c) 64
IAS 12.61 31
IAS 1.97(a) 14 IAS 19.120A(e) 64
IAS 12.74 31
IAS 1.97(b) 14 IAS 19.120A(f) 64
IAS 12.77 11
IAS 1.97(c) 14, 69 IAS 19.120A(g) 64
IAS 12.79 73
IAS 1.108 17 IAS 19.120A(j) 65
IAS 12.80(a) 73
IAS 1.113 18 IAS 19.120A(k) 65
IAS 12.80(b) 73
IAS 1.116(b) 19, 20 IAS 19.120A(l) 65
IAS 12.80(c) 73
IAS 1.124A 77 IAS 19.120A(m) 64
IAS 12.80(d) 73
IAS 1.124B(a) 77 IAS 19.120A(n) 65
IAS 12.80(g) 73
IAS 1.124B(a)(ii) 77 IAS 19.120A(p) 65
IAS 12.81(a)(i) 14, 73
IAS 19.120A(q) 64
128 Good Insurance (International) Limited 128

Index
IAS 21 The effects of changes in IAS 33.70(a) 76 IAS 39.39 36
foreign exchange rates IAS 33.70(b) 76 IAS 39.40 36
IAS 21.21 21 IAS 33.70(c) 76 IAS 39.43 26, 27, 33, 36
IAS 21.23(a) 21 IAS 33.70(d) 76 IAS 39.45 26
IAS 21.23(b) 21 IAS 39.46(a) 26
IAS 21.23(c) 21 IAS 36 Impairment of assets IAS 39.46(c) 28
IAS 21.28 21, 53 IAS 36.9 24 IAS 39.47 36, 38
IAS 21.30 21 IAS 36.60 24 IAS 39.49 34
IAS 36.80 22 IAS 39.55(a) 26, 27
IAS 23 Borrowing costs IAS 36.86 22, 24 IAS 39.55(b) 26
IAS 36.90 24 IAS 39.56 26, 59
IAS 23.26 48
IAS 36.110 24 IAS 39.58 28
IAS 23.27 25
IAS 36.114 24 IAS 39.63 28
IAS 36.117 24 IAS 39.64 28
IAS 24 Related party disclosures
IAS 36.118(d) 47 IAS 39.65 29
IAS 24.12 110 IAS 39.67 29
IAS 36.119 24
IAS 24.16 112 IAS 39.68 29
IAS 36.124 24
IAS 24.16(a) 112 IAS 39.69 29
IAS 36.129(a) 42, 43
IAS 24.16(b) 112 IAS 39.70 29
IAS 36.130(a) 47
IAS 24.16(e) 112 IAS 39.86 27
IAS 36.134 45
IAS 24.17 112 IAS 39.88 27
IAS 36.134(a) 46
IAS 24.17(a) 111 IAS 39.89 27
IAS 36.134(c) 46
IAS 24.17(b) 111 IAS 39.91 28
IAS 36.134(d) 46
IAS 24.17(c) 111 IAS 39.92 28
IAS 24.20(b) 112 IAS 39.93 28
IAS 37 Provisions, contingent
IAS 24.21 111 IAS 39.95 27
liabilities and contingent assets
IAS 39.97 27
IAS 27 Consolidated and IAS 37.14 36
IAS 39.98 27
separate financial statements IAS 37.45 36
IAS 39.99 27
IAS 37.47 36
IAS 27.12 17 IAS 39.100 27
IAS 37.53 36
IAS 27.24 17 IAS 39.AG76 20
IAS 37.54 36
IAS 27.25 17
IAS 37.60 36
IAS 27.26 17 IAS 40 Investment property
IAS 37.68 36
IAS 27.28 17 IAS 40.18 25
IAS 37.86 110
IAS 27.30 17 IAS 40.19 25
IAS 38 Intangible assets IAS 40.20 25
IAS 28 Investments in IAS 40.38 25
associates IAS 38.24 22
IAS 40.57 25
IAS 38.74 22
IAS 28.11 23 IAS 40.60 25
IAS 38.88 22
IAS 28.13 23 IAS 40.61 25
IAS 38.97 22
IAS 28.23(a) 23 IAS 40.65 25
IAS 38.104 22
IAS 28.26 47 IAS 40.66 25
IAS 38.107 22
IAS 28.37(a) 47 IAS 40.69 25, 38
IAS 38.109 22
IAS 28.37(b) 47 IAS 40.75(a) 25
IAS 38.118(a) 23
IAS 28.37(c) 23 IAS 40.75(d) 48, 71
IAS 36.118(b) 23
IAS 28.38 11, 12 IAS 40.75(e) 48
IAS 38.118(c) 45
IAS 28.76 23 IAS 40.75(f) 48
IAS 38.118(d) 22
IAS 40.75(f)(i) 70
IAS 38.118(e) 45
IAS 32 Financial instruments : IAS 40.76 48
presentation IAS 39 Financial instruments:
IAS 32.16 36, 69 Recognition and Measurement IFRS 1 First-time adoption of
IAS 32.33 37 International Financial Reporting
IAS 39.9 26
IAS 32.35 36, 69 Standards
IAS 39.9(a) 26
IAS 32.42 17 IAS 39.9(b) 26 IFRS 1 Appendix 1
IAS 39.17 29
IAS 33 Earnings per share IAS 39.18 29 IFRS 2 Share-based payment
IAS 33.45 35 IAS 39.20(c) 29 IFRS 2.10 35
IAS 33.66 11, 76 IAS 39.30(b) 29 IFRS 2.20 35
IAS 39.38 26 IFRS 2.21 35

Index
IFRS 2.27 35 IFRS 4 Appendix B29 21 IFRS 7.37(c) 97
IFRS 2.28 35 IFRS 4 Appendix B30 21 IFRS 7.39(a) 98, 99, 100
IFRS 2.29 35 IFRS 4.IG24 11 IFRS 7.39(d)(i) 98
IFRS 2.30 35 IFRS 7.40(a) 104, 107, 108
IFRS 2.32 35 IFRS 7 Financial instruments: IFRS 7.40(b) 104, 107, 108
IFRS 2.33 35 disclosures IFRS 7.40(c) 105, 106, 107
IFRS 2.44 35 108
IFRS 7.6 51, 52
IFRS 2.45 35
IFRS 7.8 12, 57
IFRS 2.45(a) 74 IFRS 8 Operating segments
IFRS 7.8(a) 51, 52
IFRS 2.45(a)(ii) 75 IFRS 8.22(a) 41
IFRS 7.8(a)(i) 52
IFRS 2.45(b) 74 IFRS 8.22(b) 41
IFRS 7.8(a)(ii) 52
IFRS 2.45(c) 75 IFRS 8.23 42, 43, 44
IFRS 7.8(b) 51
IFRS 2.45(d) 75 IFRS 8.23(a) 42, 43
IFRS 7.8(c) 51
IFRS 2.46 74 IFRS 8.23(c) 42, 43
IFRS 7.8(d) 51
IFRS 2.47(a) 75 IFRS 8.23(d) 42, 43
IFRS 7.8(f) 66
IFRS 2.47(a)(i) 75 IFRS 8.23(e) 42, 43
IFRS 7.14(a) 48
IFRS 2.50 14 IFRS 8.23(f) 42, 43
IFRS 7.14(b) 48
IFRS 2.51(a) 72 IFRS 8.23(g) 42, 43
IFRS 7.16 97
IFRS 2.51(b) 74, 75 IFRS 8.24(a) 44
IFRS 7.20(a) 109
IFRS 2.56 75 IFRS 8.25 41
IFRS 7.20(a)(i) 68, 71
IFRS 2.80 74 IFRS 8.33(a) 45
IFRS 7.20(a)(ii)14, 27, 53, 70
IFRS 7.20(b) 53, 72, 109 IFRS 8.33(b) 45
IFRS 3 Business combinations IFRS 8.34 45
IFRS 7.20(c) 109
IFRS 3.51(b) 22 IFRS 7.20(c)(i) 11
IFRS 3.54 22 IFRS 7.20(e) 72 IFRIC 8 Scope of IFRS 2
IFRS 3.55 22 IFRS 7.22(a) 50 IFRIC 8.11 35
IFRS 7.22(b) 27, 49, 50
IFRS 4 Insurance contracts IFRS 7.22(c) 50
IFRS 4.7 21 IFRS 7.23(a) 50
IFRS 4.8 21 IFRS 7.23(c) 14
IFRS 4.9 21 IFRS 7.23(d) 50
IFRS 4.14(c) 30 IFRS 7.24(a)(i) 50, 71
IFRS 4.15 33 IFRS 7.24(a)(ii) 50
IFRS 4.16 33 IFRS 7.24(b) 50
IFRS 4.17 33 IFRS 7.25 52, 55, 57, 63,
IFRS 4.18 33 67, 68
IFRS 4.19 33 IFRS 7.27(a) 28, 52, 66
IFRS 4.20 29 IFRS 7.27(b) 28, 53, 63
IFRS 4.30 Appendix 2 IFRS 7.27(c) 54, 63
IFRS 4.31(b) 23 IFRS 7.27(d) 54, 63
IFRS 4.37(a) 21, 29, 31, 32 IFRS 7.28 54, 63
33, 34, 37, 38 IFRS 7.29 55, 57, 63, 67, 68
IFRS 4.37(b) 12, 29, 55, 56, IFRS 7.29(a) 52, 66
57, 68, 69, 71 IFRS 7.29(c) 62
IFRS 4.37.(b)(i) 55 IFRS 7.30 62
IFRS 4.37(c) 45, 83, 84, 87 IFRS 7.33(a) 78, 91, 98,
IFRS 4.37(d) 58, 59, 60, 62 102, 105, 107
IFRS 4.37(e) 56, 58, 59, IFRS 7.33(b) 76, 78, 91, 98,
60, 61, 62 102, 105, 107
IFRS 4.38 79, 86 IFRS 7.34(a) 92, 93, 94, 95,
IFRS 4.39(a) 79, 80, 86 96, 103, 104, 107
IFRS 4.39(c)(i) 84, 87 IFRS 7.34(c) 96, 104, 105
IFRS 4.39(c)(ii) 80, 81, 82, IFRS 7.36(a) 92, 93, 95, 96
86, 87 IFRS 7.36(b) 98
IFRS 4.39(c)(iii) 88, 89, 90 IFRS 7.36(c) 93, 94, 95, 96,
IFRS 4.39(d)(i) 98, 99, 100 98
IFRS 4.39A(a) 84, 87 IFRS 7.36(d) 93, 94
IFRS 4.44 88 IFRS 7.37(a) 97
IFRS 4 Appendix A 21 IFRS 7.37(b) 97

Notes
Notes
Notes
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Illustrative nancial statements for
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limited by guarantee, does not provide services
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Based on International Financial Reporting
About Ernst & Youngs International Financial
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nternational) Limited International GAAP Illustrative nancial statements 2008

2008 EYGM Limited.

In line with Ernst & Youngs commitment to minimize

This publication contains information in summary form and is

Good Insurance (International) Limited 1

2 Good Insurance (International) Limited

Good Insurance (International) Limited 3

Basis of preparation and presentation

IFRS 1 First-time Adoption of International Financial Reporting Standards

4 Good Insurance (International) Limited

IFRS 8 - Operating Segments

IAS 23 Amendment Borrowing Costs (Revised)

IAS 1 Presentation of Financial Statements (Revised)

IFRS 3 Business Combinations (Revised)

IFRIC 13 Customer Loyalty Programmes

Good Insurance (International) Limited 5

6 Good Insurance (International) Limited

Financial statement presentation

Allowed alternative accounting treatments

Good Insurance (International) Limited 7

Financial review by management

8 Good Insurance (International) Limited

Consolidated Financial Statements

Good Insurance (International) Limited 9

Managements responsibility for the financial statements

10 Good Insurance (International) Limited

IAS 1.46 (a),(b),(c)

Gross premiums 27(a) 72,143 73,447 IFRS 4.IG24

Premiums ceded to reinsurers 27(b) (18,755) (19,111) IFRS 4.IG24

Net premiums 53,388 54,336 IAS 1.83

Fees and commission income 28 5,364 2,231 IFRS 7.20(c)(i)

Investment income 29 8,221 7,682

Total revenue 68,723 65,832 IAS 1.81(a)

Claims ceded to reinsurers 32(b) 10,271 10,530 IFRS 4.IG24

Gross change in contract liabilities 32(c) (6,837) (7,174) IFRS 4.IG24

Net benefits and claims (33,394) (34,363) IAS 1.83

Finance costs 33 (1,504) (1,336) IAS 1.81(b)

Profit attributable to unit-holders 18 (267) (111)

Other expenses (28,628) (23,017) IAS 1.83

Profit before share of profit of an associate 6,701 8,452

Share of profit of an associate 5 129 230 IAS 1.81(c), IAS 28.38

Profit before tax 6,830 8,682 IAS 1.83

Income tax expense 36 (1,569) (1,973) IAS 1.81(d), IAS12.77

Profit for the year 5,261 6,709 IAS 1.81(f)

Earnings per share

Diluted earnings per ordinary share () 38 0.62 0.80 IAS 33.66

Good Insurance (International) Limited 11

Investment in an associate 5 2,120 1,991 IAS 1.68(e), IAS 28.38

Property and equipment 6 4,292 6,050 IAS 1.68(a)

Investment properties 7 4,199 3,943 IAS 1.68(b)

Financial instruments IAS 1.68(d), IFRS 7.8

Derivative financial instruments 8 2,165 1,240

Insurance receivables 12 40,620 37,505 IFRS 4.37(b)

Deferred expenses 13 13,446 11,477 IFRS 4.37(b)

Accrued income 14 2,298 2,157 IAS 1.69

Cash and cash equivalents 15 6,646 4,283 IAS 1.68(i)

Total assets 232,846 218,016

Equity and liabilities

Equity IAS 1.68(p)

Issued share capital 25 8,388 8,385 IAS 1.75(e)

Additional paid-in capital 1,110 1,047

Revaluation reserves 9,905 3,793 IAS 1.75(e)