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Suncorp Group Limited Annual Report 2010/11 85

8.7.2 Actuarial assumptions, judgements and estimates used in calculating policy liabilities (continued)

ASSUMPTION BASIS OF ASSUMPTION SIGNIFICANT CHANGES SINCE 2010

Mortality – annuitants Mortality rates for annuitants have been determined using the

standard table IM/IF80 with adjustments for assumed future age-related improvements. Tables IM/IF80 were developed by the Institute of Actuaries and Faculty of Actuaries based on UK annuitant lives experience from 1979 to 1982. See following table for applicable adjustment rates.

SLSL and ALL: Adjustments applied to the base factors (60%) from a base year of 1996.

ALLNZ: Base tables as above. Adjustments applied to the base factors (67%) from a base year of 1996, allowing for assumed future age-related improvements.

Based on an analysis of Australian population mortality and other industry data, the bases between ALL and SLSL have been aligned, with a strengthening of the SLSL basis (both base factors and future rate of mortality improvement) and a weakening of the ALL basis (both base factors and future rate of mortality improvement).

Morbidity – lump sum Morbidity rates on lump sum Total and Permanent Disablement (TPD)

policies have been based on industry and population experience with adjustments to refect experience.

For trauma policies, assumed incidence rates are based on Australian/New Zealand population statistics with adjustments to refect experience and policy conditions.

For ALL, the basis has been strengthened overall, with reductions assumed for some trauma conditions, offset by increases in other conditions and TPD incidence.

For ALLNZ, the basis has been reduced overall, with reductions assumed for some trauma conditions and TPD incidence, partially offset by an increase in the incidence assumption for some legacy trauma products.

Disability – income Morbidity rates on income policies have been determined using the

IAD89-93 table with adjustments to refect experience, including New Zealand specifc factors for ALLNZ. IAD89-93 was developed by the Institute of Actuaries of Australia based on Australian industry experience from 1989 to 1993.

For ALL, based on experience over recent years, the incidence basis has been strengthened, as has the recovery rate basis, with reductions made to assumed recovery rates, primarily at longer durations.

Group lump sum (Asteron)

In ALL, claim rates are set as a proportion of premiums net of commission and stamp duty. In ALLNZ, claim rates are set as a proportion of premiums net of commission and GST where applicable.

Slight increase in assumed claims cost for ALL

Group disability income (Asteron)

In Australia, claim rates are set as a proportion of premiums net of commission and stamp duty. Claim termination rates are determined using CIDA85 with adjustments to refect ALL’s experience. In New Zealand, claim rates are set as a proportion of premiums net of commission and GST where applicable. Claim termination rates are determined using IAD89-93 with adjustments to refect ALLNZ’s experience.

None

Future supportable bonuses and interest credits to participating policies

Future bonus rates and interest credits assumed are those supported by the policy liabilities and the assumed future experience, including allowance for the shareholder’s right to participate in distributions. Using these rates the net present value of expected future cash fows equals the value of assets supporting the business.

For participating whole of life and endowment business, the Suncorp Group’s policy is to set bonus rates such that, over long periods, the returns to policyowners (as a group, but not necessarily individually) are commensurate with the investment returns achieved on relevant assets, together with other sources of proft arising from this business. For participating investment account business, crediting rates are set such that over long periods policyowners (as a group, but not necessarily individually) receive full investment earnings on their accounts less a deduction of explicit fees and charges. Distributions are split between policyowners and shareholders with the valuation allowing for the shareholders to share in distributions at the maximum allowable rate of 20%.

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