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Notes to the consolidated fnancial statements (continued)

for the year ended 30 June 2011

25. Fair values of fnancial instruments (continued)

25.2 Fair value hierarchy (continued)

Level 3 investment securities consist of interest-bearing securities and holdings in unlisted unit trusts which have suspended daily redemptions. The valuation methodology used for these Level 3 investment securities is based on the discount rate determined by the relative trading value to face value for interest-bearing securities and the latest available redemption price published by the external manager for the unlisted unit trusts.

Level 3 managed funds on issue consist of a property trust with the signifcant input being the valuation of property. Level 3 derivatives relate to long-dated interest rate swaps and cross currency swaps in relation to the Apollo securitisation trusts where a signifcant input is the amortisation profle of the mortgage portfolio. The valuation methodology for derivative fnancial instruments classifed within Level 3 of the fair value hierarchy is based on market data using observable quoted rights for actively traded tenor points. Where interpolation is used to value an instrument for the correct time period observable inputs such as Bank Bill Swap Rate (BBSW), yield curve and swap curve rates are used.

The Suncorp Group’s exposure to Level 3 fnancial instruments is restricted to an insignifcant component of the portfolios to which they belong, such that any change in the assumptions used to value the instruments to a reasonably possible alternative do not have a material effect on the portfolio balance or the Suncorp Group’s results.

CONSOLIDATED

Asset Liability Asset Liability Managed Managed Investment funds units Investment funds units securities Derivatives Derivatives on issue securities Derivatives Derivatives on issue Financial instruments classifed as 2011 2011 2011 2011 2010 2010 2010 2010 Level 3 in the fair value hierarchy $m $m $m $m $m $m $m $m

Balance at the beginning

of the fnancial year 67 48 (168) (3) 262 97 (46) (3) Total gains or losses included in proft or loss for the fnancial year 1 :

Investment revenue 1 – – – (3) – – – Change in fair value recognised in other

comprehensive income – – (13) – – (72) (10) – Transfers in 4 – – – – – – – Transfer out to Level 2 (4) – – – (17) – – – Purchases – – – – 75 – – – Sales (30) – – – (224) – – – Issues – – – – 14 – – – Settlements – – – – (40) – – – Other movements – (13) 17 – – 23 (112) – Balance at the end of

the fnancial year 38 35 (164) (3) 67 48 (168) (3)

Note

1 All relate to assets and liabilities held at the end of the fnancial year.