CONSOLIDATED
2015
2014
$m
$m
Net central estimate of present value of expected future cash flows from future claims
3,481
4,013
Risk margin of the present value of expected future cash flows
81
93
3,562
4,106
Risk margin percentage
2.3%
2.3%
Probability of adequacy
60.0%
60.0%
The risk margin used in testing individual portfolios is calculated by using a probability of adequacy methodology based on
assessments of the levels of risk in each portfolio for the liability adequacy test. The methodology of using probability of adequacy as a
basis for calculating the risk margin, including diversification benefit, is consistent with that used for the determination of the risk
margin for the outstanding claims liability. The process used to determine the risk margin, including the way in which diversification of
risks has been allowed for, is explained in the claims note. The probability of adequacy represented by the liability adequacy test
differs from the probability of adequacy represented by the outstanding claims liability. The reason for this difference is that the former
is in effect an impairment test used only to test the sufficiency of net premium liabilities whereas the latter is a measurement
accounting policy used in determining the carrying value of the outstanding claims liability.
NOTE 14. INVESTMENTS
CONSOLIDATED
2015
2014
$m
$m
A. COMPOSITION
I. Interest bearing investments
Cash and short term money held in investment
1,127
2,554
Government and semi-government bonds
2,915
2,248
Corporate bonds and notes
8,158
7,538
Subordinated securities
1,769
1,307
Fixed interest trusts
71
63
Other
85
74
14,125
13,784
II. Equity investments
a. DIRECT EQUITIES
Listed
598
808
Unlisted
304
119
b. EQUITY TRUSTS (INCLUDING PROPERTY TRUSTS)
Listed
58
69
Unlisted
182
426
1,142
1,422
III. Other investments
Other trusts
268
158
268
158
IV. Derivatives
Investment related derivatives
-
13
-
13
15,535
15,377
The Group's equity investments include the exposure to convertible securities.
As at 30 June 2014 $728 million of other interest bearing securities have been reclassified to corporate bonds and notes within the
above disclosure to conform to the current year's presentation.
B. DETERMINATION OF FAIR VALUE
The table below separates the total investments balance based on a hierarchy that reflects the significance of the inputs used in the
determination of fair value. The fair value hierarchy is determined using the following levels:
I. Level 1 quoted prices
Quoted prices (unadjusted) in active markets for identical assets and liabilities are used.
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