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Notes to the consolidated fnancial statements (continued)

for the year ended 30 June 2011

34. Group risk management (continued)

34.3 General insurance risk management for fnancial instruments

34.3.1 Credit risk

General Insurance is exposed to and manages the following key sources of credit risk.

KEY SOURCES OF CREDIT RISK HOW THESE ARE MANAGED

Premiums receivable Outstanding premiums on policies which are generally paid on a monthly instalment basis.

Late payments will result in the cancellation of the insurance contract with the policy holder, eliminating both the credit risk and insurance risk for the unpaid balance.

Investments in fnancial instruments Investments in fnancial instruments in the investment portfolios are held in accordance with

the investment mandates. Credit limits have been established within these guidelines to ensure counterparties have appropriate credit ratings.

Reinsurance recoveries Reinsurance arrangements are monitored and managed internally and by specialised

reinsurance brokers operating in the international reinsurance market. Concentration of credit risk is mitigated by placement of cover with a number of reinsurers with Standard & Poor’s (or equivalent) credit ratings of A– or better, with participation limits and minimum security requirements imposed.

The carrying amount of the relevant asset classes in the statement of fnancial position represents the maximum amount of credit exposures as at the end of the fnancial year, except for derivatives. The fair value of derivatives recognised in the statement of fnancial position represents the current risk exposure, but not the maximum risk exposure. The nominal value and fair value of derivatives are illustrated in note 6.3.

The following table provides information regarding credit risk exposure of General Insurance fnancial assets, classifed according to Standard & Poor’s counterparty credit ratings. AAA is the highest possible rating. Rated assets falling outside the range of AAA to BBB are classifed as non-investment grade.

GENERAL INSURANCE

Credit Rating

Non-investment Not

AAA AA A BBB grade rated Total $m $m $m $m $m $m $m

2011

Cash and cash equivalents – 98 96 1 – – 195 Investment securities 4,976 4,409 1,234 145 18 – 10,782 Derivatives – 9 14 – – – 23 General Insurance assets 1 415 1,224 2,754 1 – 2,522 6,916 Other 37 62 21 2 – – 122 5,428 5,802 4,119 149 18 2,522 18,038

2010

Cash and cash equivalents – 90 65 1 – – 156 Investment securities 5,260 4,360 1,253 140 11 127 11,151 Derivatives – 15 21 – – – 36 General Insurance assets 1 483 319 521 – – 2,500 3,823 Other 45 56 14 2 – – 117 5,788 4,840 1,874 143 11 2,627 15,283

Note

1 Only include components of General Insurance assets that are classifed as fnancial assets.

The following table provides information regarding those General Insurance fnancial assets which have balances which have been impaired or are past due but not impaired at balance date. An amount is considered past due when a contractual payment falls overdue by one or more days. When an amount is classifed as past due, the entire balance is disclosed in the past due analysis presented.