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Suncorp Group Limited Annual Report 2010/11 83

8.7 Life – Net policy liabilities

8.7.1 Life liability estimation process

The Suncorp Group conducts its Life business in Australia through Suncorp Life & Superannuation Limited (SLSL) and Asteron Life Limited (Australia) (ALL) and in New Zealand through Asteron Life Limited (New Zealand) (ALLNZ), collectively referred to as the Life companies.

Policy liabilities in Australia have been calculated in accordance with APRA Prudential Standard LPS 1.04 Valuation of Policy Liabilities issued under Section 230A(1) of the Life Act . Policy liabilities in New Zealand have been calculated in accordance with Professional Standard Number 3, Determination of Life Insurance Policy Liabilities issued by the New Zealand Society of Actuaries.

For life insurance contracts, policy liabilities are calculated in a way which allows for the proper and timely release of profts over the life of the business as services are provided to policyowners and premiums are received. The release of profts is based on a proft carrier. For life investment contracts, policy liabilities are calculated as the fair value of liabilities in accordance with accounting standards.

Life insurance contract liabilities are determined using statistical or mathematical methods, which are expected to give approximately the same results as if an individual liability was calculated for each contract. The computations are made by suitably qualifed personnel on the basis of recognised actuarial methods, with due regard to relevant actuarial principles and standards. The methodology takes into account the risks and uncertainties of the particular classes of life insurance business written.

Actuarial reports with an effective date of 30 June 2011 were prepared in relation to policy liabilities and solvency reserves. All reports indicated that the Appointed/Company Actuaries are satisfed as to the accuracy of the data upon which policy liabilities have been determined. The actuarial reports for SLSL and ALL were prepared by Mr Michael Lubke, Appointed Actuary BSc (Hons) FIAA and the actuarial report for ALLNZ was prepared by Mr Daniel Wong, Company Actuary MMgt FIAA FNZSA.

The methods and proft carriers for the major policy types of life insurance contracts are as follows:

BUSINESS TYPE METHOD LIFE COMPANY PROFIT CARRIER

SLSL ALL ALL NZ

Individual

Conventional Projection ✓ ✓ ✓ Participating business – bonuses

Non-participating business – expected claim payments

Investment account Projection ✓ ✓ n/a Interest credits

Accidental cash back Projection n/a ✓ n/a Expected payments

Allocated pension Projection ✓ ✓ n/a Interest credits

Lump sum risk Projection ✓ ✓ ✓ Expected claim payments

Disability income risk Projection ✓ ✓ ✓ Expected claim payments

Annuity Projection ✓ ✓ ✓ Annuity payments

Group

Investment account Projection ✓ ✓ ✓ Interest credits

Disability income risk Accumulation ✓ n/a n/a Not applicable

Disability income risk Projection n/a ✓ ✓ Expected claim payments

Lump sum risk Accumulation ✓ n/a n/a Not applicable

Lump sum risk Projection n/a ✓ ✓ Expected claim payments