NOTE 30. CONTINGENCIES
The Group is exposed to a range of contingencies. Some are specific to instruments or transactions, others relate more to risks faced
in the normal course of business.
A. CONTINGENT LIABILITIES
Contingent liabilities are not recognised on the balance sheet but are disclosed here where the possibility of settlement is less than
probable but more than remote. Provisions are not required with respect to these matters as it is not probable that a future sacrifice
of economic benefits will be required or the amount is not reliably measurable. If settlement becomes probable, a provision is
recognised. The best estimate of the settlement amount is used in measuring a contingent liability for disclosure. The measurement
involves judgement.
In the normal course of business, transactions are entered into that may generate a range of contingent liabilities. These include:
litigation arising out of insurance policies; and
undertakings for maintenance of net worth and liquidity support to subsidiaries in the Consolidated entity. It is normal practice to
provide wholly owned subsidiaries with support and assistance as may be appropriate with a view to enabling them to meet their
obligations and to maintain their good standing. Such undertakings constitute a statement of present intent only and are not
intended to give rise to any binding legal obligation.
It is not believed that there are any other potential material exposures to the Consolidated entity and there are no known events that
would require it to satisfy the guarantees or take action under a support agreement.
B. FIDUCIARY ACTIVITIES
The Consolidated entity’s fiduciary activities consist of investment management and other fiduciary activities conducted as manager,
custodian or trustee for a number of investments and trusts. The funds managed on behalf of third parties which are not included in
the Consolidated entity’s balance sheet had a fair value as at the current reporting date of $407 million (2014-$638 million). This
does not include the investment by third parties in the IAG Asset Management Wholesale Trusts presented as non-controlling interests
in unitholders’ funds on the balance sheet. The Consolidated entity is exposed to operational risk relating to managing these funds on
behalf of third parties.
NOTE 31. RELATED PARTY DISCLOSURES
A. CONTROLLING ENTITIES
The ultimate parent entity in the Consolidated entity is Insurance Australia Group Limited which is incorporated in Australia.
The Consolidated entity consists of Insurance Australia Group Limited and its subsidiaries (information in relation to ownership
interests is provided in the subsidiaries note).
The Group at 30 June 2015 operated with business divisions supported through shared services (such as Enterprise Operations
providing accounting and processing services to Australian operational entities) and entities (such as dedicated entities that provide
employee services and reinsurance services) which provide services across the Group. All such intragroup transactions are charged to
the relevant entities on normal commercial terms and conditions and on a direct and actual cost recovery basis or time allocation
basis. Certain entities are economically dependent on other entities in the Group. There are also loans between entities in the Group.
All transactions that have occurred among the subsidiaries within the Group have been eliminated for consolidation purposes.
B. KEY MANAGEMENT PERSONNEL
I. Details of compensation
Key management personnel (KMP) are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including any Director (whether Executive or otherwise) of that entity. It is important to note
that the Company’s Non-Executive Directors are specifically required to be included as KMP in accordance with AASB 124 Related
Party Disclosures. However, the Non-Executive Directors do not consider that they are part of 'management'.
The aggregate compensation of the KMP is set out below:
CONSOLIDATED
2015
2014
$000
$000
Short term employee benefits
19,371
17,349
Post-employment benefits
429
308
Other long term benefits
199
203
Share based payments
12,676
11,278
32,675
29,138
The compensation disclosed in the table above represents the KMP’s estimated compensation received from the Group in relation to
their involvement in the activities within the Consolidated entity.
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