Annual Report 2015 Motor Accidents (Compensation) Commission (MACC)
Tabled paper 1556
Tabled Papers for 12th Assembly 2012 - 2016; Tabled Papers; ParliamentNT
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Northern Territory Motor Accidents (Compensation) Commission Notes to the Financial Statements - 30 June 2015Annual Report 2015 Page 89 Motor Accidents (Compensation) Commission Notes to the Financial Statements 30 June 2015 Motor Accidents (Compensation) Commission Annual Report 2014/2015 75 33. Risk management and financial instruments information continued At 30 June 2014 there were no significant concentrations of credit risk (nil: 2015). The following tables provide information regarding the aggregate credit risk exposure of MACC as at 30 June in respect of the major classes of financial assets, excluding units in unlisted unit trusts, loans and receivables. The analysis classifies the assets according to recognised counterparty credit ratings. Credit Ratings MACC AAA or A1+ AA or A1 A or A2 Unrated Total 30 June 2015 $000 $000 $000 $000 $000 Cash at bank and on hand 7,576 60 6,515 (682) 13,469 Short term securities and floating rate notes 16,176 - 10,000 - 26,176 Other instruments - 13,901 - - 13,901 Bonds 275,214 5,475 - - 280,689 Derivative financial instruments - - - (258) (258) Total 298,966 19,436 16,515 (940) 333,977 30 June 2014 Cash at bank and on hand 42,243 7,446 - 160 49,850 Short term securities and floating rate notes 54,210 29,132 28,192 3,265 114,799 Other instruments 2,506 - - - 2,506 Bonds 297,576 14,375 13,265 15,716 340,932 Derivative financial instruments - (234) - (1,360) (1,594) Total 396,535 50,719 41,457 17,781 506,493 The credit risk exposure in 2015 represents MACCs financial assets and liabilities, whereas the 2014 comprises of TIO Insurance and Banking business and MAC Fund financial assets. The following table provides further information regarding the carrying balance of MACCs financial assets that have been impaired and the ageing of those that are past due but not impaired at the reporting date. Information relating to the ageing of reinsurance financial assets on paid claims is disclosed in note 4 (g). MACC Past due but not impaired 30 June 2015 Neither past due nor impaired 0 to 3 months 3 to 6 months Greater than 6 months Impaired Total $000 $000 $000 $000 $000 $000 Insurance receivables -premiums - 1,194 - - - 1,194 Non-insurance receivables - 67 - - - 67 Investment receivables 1,631 - - - - 1,631 Loans and advances - - - - - - Total 1,631 1,261 - - - 2,892 30 June 2014 Insurance receivables -premiums 30,613 27,029 447 631 136 58,857 Non-insurance receivables - 2,222 - - - 2,222 Investment receivables 3,797 - - - - 3,797 Loans and advances 569,064 12,802 1,484 929 460 584,739 Total 603,474 42,053 1,931 1,560 596 649,615 Motor Accidents (Compensation) Commission Notes to the Financial Statements 30 June 2015 Motor Accidents (Compensation) Commission Annual Report 2014/2015 74 33. Risk management and financial instruments information continued Interest bearing Investments The credit risk associated with interest bearing investments is managed by MACC as follows: ! The setting and review of credit limits as they relate to recognised external credit assessment institutions ratings. ! The setting and review of credit limits as it relates to exposures to individual entities. ! The monitoring of limit usage for both the credit ratings and the individual entities. MACC has a maximum exposure equal to the carrying amount of each financial asset, including derivatives, on the Statement of Financial Position. Units held in unlisted unit trusts Fund managers are selected pursuant to a strategic asset allocation approved by the MACC Commissioner (TIO Board: 2014). Fund managers manage applicable credit risk in accordance with their product disclosure statements. Their approach to credit risk is one of the factors in the selection process and their compliance with their product disclosure statements is confirmed annually. Loans and advances The credit risk associated with TIO Banking business retail financial loan assets including securitised loans were managed by the TIO Board as follows: ! Clearly defined credit policies. ! The established credit policies set out specific requirements for different loan types based on the purpose for which they are made and includes an assessment of a counter partys repayment capacity and security (where applicable). ! The established policies specify the acceptable terms and conditions for all loan types. ! The Credit Policy incorporates Delegated Lending Authorities (DLA) according to different classes of security and the lending officers experience. ! The regular monitoring of compliance with the credit risk policy. The TIO Banking business operations manages all loan arrears on a daily basis. The nature of credit risk varies between business and retail loans and is managed accordingly. With the securitisation program in place over some home loans, TIO has taken out insurance contracts on every loan that has been securitised to cover the risk of borrowers defaulting on their loan repayments. Although credit risk associated with these loans is insured with a third party, there is the residual risk that TIO may not be eligible in some exceptional cases to seek recovery under the policy.
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