Page 143 - Suncorp_Review

Suncorp Group Limited Annual Report 2010/11 141

The table provides an overview of the key variables upon which the timing and uncertainty of future cash fows of the various life insurance and investment contracts issued by the Suncorp Group depend.

TYPE OF CONTRACT DETAILS OF CONTRACT WORKINGS

NATURE OF COMPENSATION FOR CLAIMS

KEY VARIABLES AFFECTING THE TIMING AND UNCERTAINTY OF FUTURE CASH FLOWS

Long-term non-participating insurance contracts with fxed and guaranteed terms (Term Life and Disability)

Guaranteed benefts paid on death, ill health or maturity which are fxed and are not at the discretion of the issuer.

Benefts, defned by the insurance contract, are not directly affected by the performance of underlying assets or the performance of the contracts as whole.

Mortality, morbidity, lapses, expenses and market earning rates on the assets backing the liabilities

Conventional life insurance contracts with discretionary participating benefts (Endowment and Whole of Life)

These policies combine life insurance and savings. The policyowner pays a regular premium and receives the specifed sum assured plus any accruing bonuses on death or maturity. The sum insured is specifed at inception and guaranteed. Reversionary bonuses are added annually, which once added (vested) are guaranteed. A further terminal bonus may be added on surrender, death or maturity.

Operating proft arising from these contracts is allocated 80:20 between the policyowners and shareholders in accordance with the Life Act . The amount allocated to policyowners is held as an unvested policy liability until it is distributed to specifc policyowners as bonuses.

Mortality, surrenders, expenses and market earning rates on the assets backing the liabilities

Investment account contracts with discretionary participating features

The gross value of premiums received is invested in the investment account with fees and premiums for any associated insurance cover being deducted from the account balance. Interest is credited regularly.

The payment of the account balance is guaranteed. Operating proft arising from these contracts is allocated between the policyowners and shareholders in accordance with the Life Act . The amount allocated to policyowners is held as an unvested policy liability until it is distributed to specifc policyowners as interest credits.

Surrenders, expenses and market earning rates on the assets backing the liabilities

Unit Linked Investment Contracts

The gross value of premiums received is invested in units and the policyowner investment account is the value of the units. Investment management fees are deducted from policyowners annually based on the average value of funds under management.

The investment return is equal to the earnings on assets backing the investment contracts less any applicable management fees.

Market risk, expenses and withdrawals

Lifetime Annuity In exchange for an initial single

premium, these policies provide a guaranteed regular income for the life of the insured.

The amount of guaranteed regular income is set at inception of the policy, including any indexation.

Longevity, expenses and market earning rates on assets backing liabilities