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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 (continued)

34.3.2 Liquidity risk (continued)

GENERAL INSURANCE

Carrying 1 year 1 to 5 Over Total cash amount or less years 5 years fows $m $m $m $m $m

2010

Payables and other liabilities 729 693 34 10 737 Unearned premiums liabilities 3,670 3,663 7 – 3,670 Net discounted outstanding claims liabilities 6,335 2,046 3,128 1,161 6,335 Subordinated notes 690 44 348 552 944 Managed funds units on issue 15 15 – – 15 11,439 6,461 3,517 1,723 11,701

Gross settled derivatives

Amounts receivable – (13) (53) (240) (306) Amounts payable 48 17 19 90 126 48 4 (34) (150) (180)

34.3.3 Market risk

(a) Foreign exchange risk

General Insurance is exposed to foreign exchange risk through its outstanding claims liability from previously written offshore reinsurance business, predominantly denominated in United States dollars (USD). This exposure is managed using a USD forward exchange contract. A sensitivity analysis showing the impact on proft or loss and equity reserves for changes in foreign exchange rate for exposure as at the balance date with all other variables including interest rates remaining constant is shown in the table below. The movements in foreign exchange rate used in the sensitivity analysis for 2011 have been revised to refect updated assessment of the reasonable possible changes in foreign exchange rate over the next twelve months given renewed observations and experience in the investment markets during the fnancial year.

GENERAL INSURANCE

2011 2010

Exposure Change in Proft (loss) Equity Exposure Change in Proft (loss) Equity at 30 June FX rate after tax reserves at 30 June FX rate after tax reserves $m % $m $m $m % $m $m

USD 11 +15 (1) – 11 +10 (1) – –15 1 – –10 1 –

(b) Interest rate risk

Interest rate risk exposure arises mainly from investment in interest-bearing securities and from ongoing valuation of insurance liabilities. The investment portfolios hold signifcant interest-bearing securities in support of corresponding outstanding claims liabilities and are invested in a manner consistent with the expected duration of claims payments. Interest rate risk is also managed by the controlled use of interest rate derivative instruments. The sensitivity of proft and loss after tax and equity reserves to movements in interest rates in relation to interest-bearing fnancial assets held at the balance date is shown in the table below. It is assumed that all residual exposures for the shareholder after tax are included in the sensitivity analysis, that the percentage point change occurs at the balance date and there are concurrent movements in interest rates and parallel shifts in the yield curves. The movements in interest rate used in the sensitivity analysis for 2011 have been revised to refect updated assessment of the reasonable possible changes in interest rate over the next 12 months given renewed observations and experience in the investment markets during the fnancial year.