lampiran good insurance ifrs

7/30/2019 Lampiran Good Insurance IFRS

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Good Insurance

(International) LimitedInternational GAAP

Illustrative financial statements for

the year ended 31 December 2010

Based on International Financial Reporting

Standards in issue at 30 June 2010


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Good Insurance (International) Limited i

Contents

Abbreviations and key .............................................................................................................................................. 1Introduction............................................................................................................................................................. 2Independent auditors report to the shareholders of Good Insurance (International) Limited .................................... 12Group consolidated income statement .................................................................................................................... 13Group consolidated statement of comprehensive income ........................................................................................ 15Group consolidated statement of financial position ................................................................................................. 16Group consolidated statement of changes in equity ................................................................................................ 17Group consolidated statement of cash flows ........................................................................................................... 19Notes to the consolidated financial statements ...................................................................................................... 20

1. Corporate information .................................................................................................................................... 202.1 Basis of preparation ...................................................................................................................................... 202.2 Basis of consolidation ................................................................................................................................... 202.3 Summary of significant accounting policies ..................................................................................................... 212.4 Changes in accounting policy and disclosures .................................................................................................. 462.5 Significant accounting judgments, estimates and assumptions .......................................................................... 482.6 Standards issued but not yet effective ............................................................................................................ 513. Business combinations and acquisition of non-controlling interests ..................................................................... 52 4. Segment information ...................................................................................................................................... 545. Net premiums ................................................................................................................................................ 586. Fees and commission income ........................................................................................................................... 597. Investment income ......................................................................................................................................... 598. Realised gains ................................................................................................................................................ 599. Fair value gains and losses .............................................................................................................................. 6010. Net benefits and claims ................................................................................................................................. 6011. Finance costs ............................................................................................................................................... 6112. Other operating and administrative expenses .................................................................................................. 6113. Employee benefits expense ........................................................................................................................... 6114. Income tax expense ...................................................................................................................................... 6215. Dividends paid and proposed ......................................................................................................................... 6316. Earnings per share........................................................................................................................................ 6317. Income tax effects relating to other comprehensive income.............................................................................. 64 18. Components of other comprehensive income .................................................................................................. 6419. Share-based payment ................................................................................................................................... 6420. Goodwill ...................................................................................................................................................... 6621. Intangible assets .......................................................................................................................................... 6822. Investment in an associate ............................................................................................................................ 6823. Property and equipment................................................................................................................................ 69

24. Investment properties ................................................................................................................................... 7025. Derivative financial instruments ..................................................................................................................... 7026. Financial instruments other than derivative financial instruments and fair values of financial instruments ............ 7327. Reinsurance assets ....................................................................................................................................... 8428. Taxation ...................................................................................................................................................... 8429. Insurance receivables ................................................................................................................................... 8530. Deferred expenses ........................................................................................................................................ 8631. Accrued income ........................................................................................................................................... 8632. Cash and cash equivalents ............................................................................................................................. 8633. Insurance contract liabilities .......................................................................................................................... 8634. Investment contract liabilities ........................................................................................................................ 9035. Net asset value attributable to unitholders .................................................................................................... 9236. Pension benefit obligation ............................................................................................................................. 9237. Borrowings .................................................................................................................................................. 94


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ii Good Insurance (International) Limited

38. Other financial liabilities ................................................................................................................................ 9539. Insurance payables ....................................................................................................................................... 9640. Deferred revenue ......................................................................................................................................... 9641. Trade and other payables .............................................................................................................................. 9642. Issued share capital ...................................................................................................................................... 9743. Other equity instruments .............................................................................................................................. 9744. Risk management framework ........................................................................................................................ 9745. Insurance and financial risk ......................................................................................................................... 10046. Cash generated from operating activities ...................................................................................................... 13447. Contingencies and commitments .................................................................................................................. 13548. Related party disclosures ............................................................................................................................ 13649. Events after the reporting date .................................................................................................................... 137

Appendix 1 Firsttime adoption of IFRS ............................................................................................................. 138Appendix 2 Shadow accounting .......................................................................................................................... 145Appendix 3 Embedded value (EV) ....................................................................................................................... 149Appendix 4 Noncontrolling interests measured at fair value in business combination ........................................ 152Appendix 5 Consolidated cash flow statement direct method ........................................................................... 154Appendix 6 Glossary of insurance terms ............................................................................................................ 155Index ................................................................................................................................................................... 157


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Good Insurance (International) Limited 1

Abbreviations and key

The following styles of abbreviation are used in this set of International GAAP illustrative financial statements:

IFRS International Financial Reporting Standards

Interpretations

Committee

IFRS Interpretations Committee (formerly International Financial Reporting Interpretations

Committee, IFRIC)

IASB International Accounting Standards BoardGAAP Generally Accepted Accounting Principles/Practice

Commentary The commentary explains how the requirements of IFRS have been implemented in arriving at the

illustrative disclosure

IAS 33.41 International Accounting Standard No.33, paragraph 41

IAS 1.BC13 International Accounting Standard No.1 (Revised), Basis for Conclusions, paragraph 13

IAS 39.AG71 IAS 39 Finance Instruments: Recognition and Measurement Appendix A Application Guidance,

paragraph AG71

IAS 39.IG.G2 IAS 39 Financial Instruments: Recognition and Measurement Guidance on Implementing IAS 39

Section G: Other, paragraph G.2

ISA 700.25 International Standard on Auditing No. 700, paragraph 25

IFRIC 4.6 International Financial Reporting Interpretations Committee Interpretation No.4, paragraph 6

IFRS 3.60 International Financial Reporting Standard No.3 (Revised), paragraph 60

IFRS 4.44 International Financial Reporting Standard No.4, paragraph 44

IFRS 7.27A International Financial Reporting Standard No.7, paragraph 27A (Amended as at 5 March 2009)

SIC 29.6 Standing Interpretations Committee Interpretation No.29, paragraph 6

SIC Standing Interpretations Committee

IFRS references are shown on the right hand side of each page of the primary financial statements and the notes, indicating

the specific IFRS paragraph that outlines the accounting treatment or disclosure adopted for that particular line item or

block of narrative in the publication.

The IFRS references to IAS 1, IAS 27 and IFRS 3 are to the revised versions of these standards found in the 2010 Bound

Volume of International Financial Reporting Standards, approved at 1 January 2010.


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2 Good Insurance (International) Limited

Introduction

This publication contains the consolidated financial statements of a fictitious company, Good Insurance (International)

Limited, a limited liability insurance company with subsidiaries (the Group) incorporated and listed in Euroland, with a

reporting date of 31 December 2010. Euroland is a fictitious country within Europe. The functional currency of the parent

and presentation currency of the group is the euro.

These illustrative financial statements have been produced in accordance with the International Financial Reporting

Standards (IFRS), for an insurance company that issues life and non-life insurance products (which comprise both generalinsurance and healthcare products) as well as some investment products. The Group also performs investment management

services to policyholders of investment products that do not contain an insurance component.

The aim of this publication is to illustrate common IFRS-based disclosures that are specific to the insurance industry.

Therefore, some commonly found transactions and their disclosures have either been deliberately omitted or simplified

because they are illustrated in other Ernst & Young illustrative financial statement publications. Our series of model

accounts includes:

X Good Group (International) Limited

X Good Group (International) Limited Illustrative interim condensed consolidated financial statements

X Good Bank (International) Limited

X Good Insurance (International) Limited

X Good Real Estate Group (International) Limited

X Good Investment Fund Limited

Illustrative financial statements of a fund whose puttable shares are classed as equity instruments

Illustrative financial statements of a fund whose puttable shares are classed as financial liabilities

X Good Petroleum (International) Limited

X Good Mining (International) Limited

Look for other industry specific illustrative financial statements that will be added in the future.

We strongly encourage readers of this publication to refer to the other model financial statements in our series (available at

www.ey.com/ifrs) to gain a greater understanding of other presentation and disclosure requirements. Users should also beaware that the comparative disclosures do not necessarily correspond to the published Good Insurance (International)

Limited 2009.

IFRS 4 Insurance Contracts is a transaction-based standard built around the definition of an insurance contract. It is not an

industry-based entity specific financial reporting standard. Care should be taken to determine when a transaction falls

within the scope of this standard.

In this publication, we illustrate what we consider to be best practice disclosure and we focus on those areas of IFRS

reporting that are heavily reliant on the professional judgment of management.

These illustrative disclosures should not be considered as the only acceptable form of presentation, as they are based on

best practices observed in the insurance industry and do not attempt to show all possible accounting and disclosure

requirements. These illustrative financial statements are not intended to satisfy country or stock market regulations in any

given jurisdiction and so what we have illustrated may have to be altered to meet such requirements. The form and contentof financial statements are the ultimate responsibility of Group management. It is essential to seek appropriate professional

advice in case of doubt in relation to any financial reporting requirement. These illustrative disclosures have reflected

professional judgment on the fairness of the various presentations.

We believe you will find this a useful guide when preparing your next set of IFRS-based financial statements. If you require

any further information on matters included in this publication, please contact your nearest Ernst & Young office, details of

which can be found on the Ernst & Young website www.ey.com/ifrs.

International Financial Reporting Standards

The abbreviation IFRS is defined in paragraph 5 of the Preface to International Financial Reporting Standards to include

standards and interpretations approved by the IASB, and International Accounting Standards (IASs) and Standing

Interpretations Committee (SIC) interpretations issued under previous Constitutions. The abbreviation IFRS is also noted in

IAS 1.7 and IAS 8.5. Thus, when financial statements are described as complying with IFRS, it means that they comply withthe entire hierarchy of pronouncements sanctioned by the IASB including International Accounting Standards, International

Financial Reporting Standards and Interpretations originated by the IFRS Interpretations committee (formerly International

Financial Reporting Interpretations Committee, IFRIC or the former Standing Interpretations Committee, SIC).


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The IFRS Interpretations Committee

The IFRS Interpretations Committee (Interpretations Committee) is appointed by the IASC Foundation Trustees to assist the

IASB in establishing and improving standards of financial accounting and reporting for the benefit of users, preparers and

auditors of financial statements.

The Interpretations Committee addresses issues of reasonably widespread importance, rather than issues of concern to

only a small set of entities. Its interpretations cover:

X Newly identified financial reporting issues not specifically addressed in IFRS

X Issues where unsatisfactory or conflicting interpretations have developed, or are likely to develop in the absence ofauthoritative guidance, with a view to reaching a consensus on the appropriate treatment

Basis of preparation and presentationThe consolidated annual financial statements of the Group have been produced in accordance with IFRS and, whereapplicable, the interpretations issued by the Interpretations Committee. The financial statements do not include the standalone disclosures for the parent. In certain jurisdictions, IFRS may apply to the parent entity and, hence, disclosures shouldalso be made for this reporting entity.

The Group is an existing preparer of IFRS consolidated financial statements and, therefore, IFRS 1 First-time Adoption ofInternational Financial Reporting Standards is not applicable. However, Appendix 1 of this publication illustrates the first-time adoption requirements had the Group been a first-time adopter for the period ending 31 December 2010.

IFRS as at 30 June 2010The standards applied in these illustrative financial statements are the versions that were in issue as at 30 June 2010.Disclosures have not been illustrated for a number of IFRS which are either not relevant to the insurance industry or notapplicable to the Groups circumstances.

IFRS comprises of standards and interpretations adopted by the International Accounting Standards Board (IASB) and is

illustrated across our various illustrative financial statements as follows:

Good

Group

Good

Group

Inter

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Good

Ban

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Good

Insurance

Good

Inves

t(Eq.)

Good

Inves

t(Liab

.)

Good

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Good

Mining

Good

Pe

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International Financial Reporting Standards (IFRS)

IFRS 1 First-time Adoption of International Financial Reporting Standards 9

IFRS 2 Share-based Payment 9999

IFRS 3Business Combinations (2005) for acquisition completed before1 January 2010

999

999

IFRS 3 Business Combinations (Revised in 2008) 9 9 9

IFRS 4 Insurance Contracts 9

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations 99 9

IFRS 6 Exploration for and Evaluation of Mineral Resources 99

IFRS 7 Financial Instruments: Disclosures 999999999

IFRS 8 Operating Segments 9999999 9

IFRS 9 Financial Instruments: Classification and Measurement(1)


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Goo

dGroup

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dGroup

Inter

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Goo

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Goo

dInves

t(Eq.)

Goo

dInves

t(Liab

.)

Goo

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Goo

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International Accounting Standards (IAS)IAS 1 Presentation of Financial Statements 999 999999

IAS 2 Inventories 99 999

IAS 7 Statement of Cash Flows 999 999999

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors 999 999999

IAS 10 Events after the Reporting Period 999 999999

IAS 11 Construction Contracts 9

IAS 12 Income Taxes 999 999999

IAS 16 Property, Plant and Equipment 9 9 9 999

IAS 17 Leases 999 9 999

IAS 18 Revenue 999 999999

IAS 19 Employee Benefits 999 9 99

IAS 20 Accounting for Government Grants and Disclosure of GovernmentAssistance

99

IAS 21 The Effects of Changes in Foreign Exchange Rates 999999999

IAS 23 Borrowing Costs 99 9 999

IAS 24 Related Party Disclosures 999999999

IAS 26 Accounting and Reporting by Retirement Benefit Plans

IAS 27 Consolidated and Separate Financial Statements (Revised in 2008) 9999 999

IAS 28 Investments in Associates 99 9 9

IAS 29 Financial Reporting in Hyperinflationary Economies

IAS 31 Interests in Joint Ventures 99 999

IAS 32 Financial Instruments: Presentation 999999999

IAS 33 Earnings per Share 99999 999

IAS 34 Interim Financial Reporting 9

IAS 36 Impairment of Assets 99 9 999

IAS 37 Provisions, Contingent Liabilities and Contingent Assets 999999999

IAS 38 Intangible Assets 9999 999

IAS 39 Financial Instruments: Recognition and Measurement 999999999

IAS 40 Investment Property 99 9 9 IAS 41 Agriculture


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Goo

dGroup

Goo

dGroup

Inter

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Goo

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Goo

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t(Eq.)

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dInves

t(Liab

.)

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Interpretations

IFRIC 1Changes in Existing Decommissioning, Restoration and SimilarLiabilities

99

99

IFRIC 2 Members Shares in Co-operative Entities and Similar Instruments

IFRIC 4 Determining Whether an Arrangement Contains a Lease 99 99

IFRIC 5Rights to Interests arising from Decommissioning, Restoration andEnvironmental Rehabilitation Funds

9

99

IFRIC 6Liabilities arising from Participating in a Specific Market WasteElectrical and Electronic Equipment

99

IFRIC 7Applying the Restatement Approach under IAS 29 FinancialReporting in Hyperinflationary Economies

IFRIC 9 Reassessment of Embedded Derivatives 9999IFRIC 10 Interim Financial Reporting and Impairment 99

IFRIC 12 Service Concession Arrangements

IFRIC 13 Customer Loyalty Programmes 999

IFRIC 14IAS 19 The Limit on a Defined Benefit Asset, Minimum FundingRequirements and their Interaction

999

IFRIC 15 Agreements for the Construction of Real Estate 9

IFRIC 16 Hedges of a Net Investment in a Foreign Operation 99IFRIC 17 Distributions of Non-cash Assets to Owners

IFRIC 18 Transfers of Assets from Customers

IFRIC 19 Extinguishing Financial Liabilities with Equity Investments

SIC 7 Introduction of the Euro

SIC 10 Government Assistance No Specific Relation to Operating Activities SIC 12 Consolidation Special Purpose Entities 999SIC 13

Jointly Controlled Entities Non-Monetary Contributions byVenturers

99 SIC 15 Operating Leases Incentives 99 9SIC 21 Income Taxes Recovery of Revalued Non-Depreciable Assets 99 9SIC 25

Income Taxes Changes in the Tax Status of an Entity or its

Shareholders

SIC 27Evaluating the Substance of Transactions Involving the Legal Formof a Lease

99 SIC 29 Service Concession Arrangements: Disclosures

SIC 31 Revenue Barter Transactions Involving Advertising Services

SIC 32 Intangible Assets Web Site Costs 999 This standard or interpretation is reflected in the accounting policies and/or individual transactions with appropriate

note disclosures

(1) The impact of IFRS 9 is presented in a separate publication.


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All standards and interpretations listed above incorporate amendments effective on 1 January 2010, unless otherwise

stated. These amendments also include the amendments resulting from Improvements to IFRS issued in May 2008 and April

2009.

It is important to note that the IASB may issue new and revised standards and interpretations subsequent to 30 June 2010.

Therefore, users of this publication are advised to verify that there has been no change in the IFRS requirements between

30 June 2010 and the date on which their financial statements are authorised for issue. Any standards issued, but not yet

effective, need to be considered in the disclosure requirements of a reporting entity.

Changes contained in 2010 edition of Good Insurance (International) Limited AnnualFinancial StatementsThe Good Insurance (International) Limited financial statements have been updated to reflect all new standards and

interpretations issued or amended since 31 March 2009. The following standards and interpretations have been illustrated

in the 2010 edition, resulting in consequential changes to the accounting policies and other note disclosures.

IFRS 3 Business Combinations

The IASB issued the revised Business Combinations standard in January 2008 which is effective for financial years

beginning on or after 1 July 2009. The standard introduces changes in the accounting for business combinations that will

impact the amount of goodwill recognised, the reported results in the period when an acquisition occurs and future

reported results. The revised standard has been adopted by the Group together with the revised IAS 27 Consolidated and

Separate Financial Statements (see Note 3), including consequential amendments to IFRS 7, IAS 21, IAS 28, IAS 31 and IAS

39 in the reporting period commencing 1 January 2010.

IAS 27 Consolidated and Separate Financial Statements

In January 2008, the IASB issued the revised IAS 27, affecting consolidated and separate financial statements. IAS 27

(as issued in 2008) requires that a change in the ownership interest of a subsidiary (without loss of control) is accounted for

as an equity transaction. Therefore, such transactions will no longer give rise to goodwill, nor will they give rise to a gain or

loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss

of control of a subsidiary. The amended standard has been adopted by the Group together with IFRS 3 (Revised) Business

Combinations (see Note 3), including consequential amendments to IAS 21, IAS 28, IAS 31 and IAS 39.

Improvements to IFRSs

In April 2009 and April 2010, the IASB issued its annual amendments to International Financial Reporting Standards (IFRSs)

and the related Bases for Conclusions and guidance made. The amendments primarily remove inconsistencies and clarify

wording. These amendments, unless otherwise stated, are effective for financial years beginning on or after 1 January

2010. The Group has adopted these revised standards as considered appropriate, however, there are no impacts on thefinancial statements.

Commentary

In some jurisdictions, the adoption of IFRS for reporting purposes may be subject to a specific legal process (e.g., in the European Union or

Australia). In those jurisdictions the effective date may therefore be different from the IASB's.


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Listed below are standards and interpretations that have been issued and are effectivefor financial years 2010 or later, but are not illustrated in these illustrative financialstatements

IFRS 1 First-time Adoption of International Financial Reporting Standards (Revised 2009)

In July 2009, the IASB issuedAdditional Exemptions for First-time Adopters (Amendments to IFRS 1). The Group is not afirst-time IFRS adopter, therefore, amendments to IFRS 1 have no impact on the financial statements.

IFRS 2 Share-based PaymentThe IASB also issued an amendment to IFRS 2 in June 2009 on the accounting for group cash-settled share-based payment

transactions. This amendment is effective for financial years beginning on or after 1 January 2010. This amendment also

supersedes IFRIC 8 and IFRIC 11.The Group adopted all amendments that came into effect on 1 January 2010. However,

this did not have an impact on the financial position or performance of the Group.

IAS 24 Related Party Disclosures (Amendment)The amended standard is effective for annual periods beginning on or after 1 January 2011. It clarifies the definition of arelated party to simplify the identification of such relationships and to eliminate inconsistencies in its application. Therevised standard introduced a partial exemption of disclosure requirements for government-related entities. Early adoptionis permitted for either the partial exemption for government-related entities or for the entire standard. The Group does notexpect any impact on its financial position or performance although additional disclosure is required for commitments withrelated parties after the initial application.

IAS 32 Financial Instruments: Presentation Classification of Rights IssuesThe amendment to IAS 32 is effective for annual periods beginning on or after 1 February 2010 and amended the definitionof a financial liability in order to classify rights issues (and certain options or warrants) as equity instruments in cases wheresuch rights are givenpro rata to all of the existing owners of the same class of an entitys non-derivative equity instruments,or to acquire a fixed number of the entitys own equity instruments for a fixed amount in any currency. This amendment willhave no impact on the Group after initial application.

IAS 39 Financial Instruments: Recognition and Measurement Eligible Hedged Items

This amendment was issued in July 2008 and is effective for financial years beginning on or after 1 July 2009. It addresses

the designation of a one-sided risk in a hedged item, and the designation of inflation as a hedged risk or portion in particular

situations. The Group has concluded that the amendment will have no impact on the financial position or performance of the

Group, as the Group has not entered into any such hedges.

IFRS 9 Financial Instruments: Classification and MeasurementIFRS 9 reflects Phase 1 of the Boards work on the replacement of IAS 39 and applies to classification and measurement offinancial assets as defined in IAS 39. The standard is effective for annual periods beginning on or after 1 January 2013. Insubsequent phases, the Board will address classification and measurement of financial liabilities, hedge accounting andderecognition. The completion of this project is expected in early 2011. The adoption of IFRS 9 will have an effect on theclassification and measurement of the Groups financial assets. However, the Group determined that the effect will bequantified in conjunction with the other phases when issued to present a comprehensive picture.

IFRIC 14 Prepayments of a Minimum Funding Requirement (Amendment)The amendment to IFRIC 14 is effective for annual periods beginning on or after 1 January 2011 with retrospectiveapplication. The amendment provides guidance on assessing the recoverable amount of a net pension asset. Theamendment permits an entity to treat the prepayment of a minimum funding requirement as an asset. The amendment isdeemed to have no impact on the financial statements of the Group.

IFRIC 17 Distribution of Non-cash Assets to OwnersThis interpretation provides guidance on accounting for arrangements whereby an entity distributes non-cash assets toshareholders either as a distribution of reserves or as dividends. An entity shall apply this Interpretation prospectively forannual periods beginning on or after 1 July 2009. The interpretation has no effect on either the financial position or on theperformance of the Group.

IFRIC 19 Extinguishing Financial Liabilities with Equity InstrumentsIFRIC 19 is effective for annual periods beginning on or after 1 July 2010. The interpretation clarifies that equityinstruments issued to a creditor to extinguish a financial liability qualify as consideration paid. The equity instruments issuedare measured at their fair value. In case this cannot be reliably measured, they are measured at the fair value of the liabilityextinguished. Any gain or loss is recognised immediately in profit or loss. The adoption of this interpretation will have noeffect on the financial statements of the Group.


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Background facts

The following list highlights a series of important matters that have driven the presentation and disclosures illustrated in

this publication.

Business environment

Stable economic and business environments and product offerings were assumed for both the 2010 and 2009 financial

reporting periods. During the year, the Group acquired 80% of the common stock of Good American Life Co, but did not

dispose of any businesses. The Group accounted for the 20% non-controlling interests based on the share of the total netassets (see Note 3). In addition, Appendix 4 illustrates the option to fair value the non-controlling interests.

Operations

Good Insurance (International) Limited is the parent company which operates in three principal areas of business, according

to the nature of products and services offered. It provides life insurance, non-life insurance (which comprises general

insurance and healthcare) and investment management services to its customers through its four subsidiaries: Good Life

Insurance Limited, Good American Life Co Ltd (80% owned), Good Non-Life Insurance Limited and Good Investment

Management Services Limited. The parent and the four subsidiaries throughout this publication are collectively referred to

as the Group.

X The life insurance products offered include a wide range of whole life, term assurance, unitised pensions, guaranteedannuity pensions, pure endowment pensions and mortgage endowments.

X The non-life general insurance products offered include motor, household, commercial and business interruptioninsurance.

X The non-life healthcare products provide medical cover to policyholders.

X Investment management services are provided solely to customers through an investmentmanagement services subsidiary.

The Group also has a 20% interest in one non-life insurance entity, Power Insurance Limited, which is involved in the

insurance of power stations in Euroland. The Group has no joint venture agreements with any other external parties.

Operating segments

The Group has determined that the operating segments described above are those under IFRS 8 Operating Segments.

IFRS status

The Group is an existing preparer of IFRS consolidated financial statements, but to enhance the usability of this publication,additional disclosures have been illustrated if the Group is a first time adopter of IFRS in 2010. These disclosures, as set out

under IFRS 1 (Revised 2009) First-time Adoption of International Financial Reporting Standards can be found in Appendix 1.

As permitted under IFRS 4 Insurance Contracts, an insurance company is allowed to grandfather its existing local Generally

Accepted Accounting Policies (GAAP) adopted for its insurance contracts and investment contracts with discretionary

participation features (DPF), within its IFRS accounting framework. The requirement will continue until the IASBs Insurance

Contracts Phase II project is completed, which will then determine the recognition and measurement of all insurance

contracts on a consistent basis. The Group, therefore, continues with local GAAP for insurance contracts and for

investment contracts with a DPF.

Product accounting

Under local GAAP, the same accounting treatment is applied to insurance contracts with and without DPF and for

investment contracts with DPF. Deferred acquisition costs (DAC) and the present value of in-force business (PVIF), i.e.,intangible assets, relating to the above contracts are also accounted for under local GAAP.

Investment contracts without DPF and the related acquisition costs and intangible assets, are accounted for under IAS 39

Financial Instruments: Recognition and Measurement, IAS 18 Revenue and IAS 38 Intangible Assets, respectively.

DPF provide the policyholder with a contractual right to receive, as a supplement to guaranteed benefits, additional benefits

payable at the discretion of the insurance company and which are contractually based on the performance of a specified

pool of contracts on the profit or loss of the insurance company or other entity that issued the contracts. Under IFRS 4, DPF

can be either treated as an element of equity or as a liability, or can be split between the two elements. The Group policy is

to treat all DPF as a liability within insurance or investment contract liabilities as appropriate.

Risk management

As part of the Groups investment strategy to reduce both insurance and financial risk, the Group matches its investments

to the liabilities arising from insurance and investment contracts, by reference to the type of benefits payable to contract

holders. For each distinct category of liabilities, a separate portfolio of investments is maintained for policyholders and

customers.


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Taxation

Income tax on profit and loss for the year comprises current and deferred tax. Income tax is determined in accordance with

Euroland tax law.

Financial statement presentationThe primary financial statements have been drawn up on a basis consistent with IAS 1 (Revised 2007) which was effective

for financial years beginning on or after 1 January 2009, and the following key presentation decisions have been made.

Consolidated income statement and consolidated statement of comprehensive incomeThe Group has elected to present comprehensive income in two separate statements, being the consolidated income

statement and the consolidated statement of comprehensive income. Information about the individual components of

comprehensive income as well as the tax effects have been disclosed in the notes to the financial statements.

The analysis of expenses uses a classification based on their nature rather than their function.

Reinsurance premiums and claims on the face of the income statement have been presented as negative items within

premiums and net benefits and claims, respectively, because this is consistent with how the business is managed.

Statement of changes in equity

The Group presents a statement of changes in equity as part of its primary financial statements showing the following

items: (a) total comprehensive income for the period, showing separately the total amounts attributable to owners of the

parent and to minority interest; (b) the amounts of transactions with owners in their capacity as owners, showing separately

contributions by and distributions to owners; and (c) for each component of equity, a reconciliation between the carrying

amount at the beginning and the end of the period, separately disclosing each change.

Statement of financial position

The statement of financial position represents the statement of financial position for the group following the revision to

IAS 1. It follows the presentation convention for previous balance sheet. It is presented in broad order of liquidity, with a

distinction based on expectations regarding recovery or settlement within 12 months after the reporting date (current) and

more than 12 months after the reporting date (non-current), presented in the notes. A permissible alternative is to present

the assets and liabilities in the statement of financial position in a current/non-current format.

Deferred acquisition costs are disclosed as a separate line item on the face of the statement of financial position by the

Group. Alternative disclosure options would be to include these as part of intangible assets or as part of other assets.

As required by IFRS 4, reinsurance assets are disclosed as assets on the face of the statement of financial position and arenot offset against the related insurance liabilities.

Statement of cash flows

The Group represents its cash flow based on the indirect method, rather than the direct method. For cash flow purposes,

the Group classifies the cash flows for the acquisition and disposal of financial assets as operating cash flows, as the

purchase of these investments is funded from the net cash flows associated with the origination of insurance and

investment contracts. The payment of benefits and claims in relation to insurance and investment contracts are treated as

operating activities. Appendix 5 has provided an illustration of the statement of cash flow based on the direct method.

Allowed alternative accounting treatments

In some cases, IFRS permits alternative accounting treatments for similar transactions and events. Preparers of financial

statements may choose the treatment that is most relevant to their business.

IAS 8 requires an entity to select and apply its accounting policies consistently for similar transactions, and/or other events

and conditions, unless IFRS specifically requires or permits categorisation of items for which different policies may be

appropriate. Where IFRS requires or permits such categorisation, an appropriate accounting policy is selected and applied

consistently to each category. Therefore, once a choice of one of the alternative treatments has been made, it becomes

accounting policy and must be applied consistently. Changes in accounting policy should only be made if it is required by a

standard or interpretation, or if the change results in the financial statements providing reliable and more relevant

information.

In some accounting models, recognised realised gains or losses on an insurers assets have a direct effect on the

measurement of some or all of the insurance liabilities, related deferred acquisition costs and related intangible assets.

An insurer is permitted, but not required, to change its accounting policies so that a recognised but unrealised gain or loss

on an asset affects those measurements in the same way that a realised gain or loss does. The related adjustment to the

insurance liability (or deferred acquisition costs) shall be recognised in equity if, and only if, the unrealised gains arerecognised in equity. This practice is often described as shadow accounting. The group does not apply shadow accounting

but additional disclosures have been provided in Appendix 2 in case users would like to refer to the required treatment if

shadow accounting were applied.


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IFRS 4 permits the use of alternative sensitivity analysis such as embedded value (EV) or economic capital (EC) instead of

IFRS basis for insurance and market risk sensitivity disclosures. This option is only allowed if insurance and market risk

sensitivities are managed on that alternate basis. For illustrative purposes EV sensitivity disclosures have been provided in

Appendix 3 in accordance with embedded values (EV) principles.

In this publication, where a choice is permitted by IFRS, the Group has adopted one of the alternative treatments as

appropriate to the circumstances of the Group. The commentary gives further details of which policy has been selected,

and why, and summarises the difference in the disclosure requirements.

Financial review by managementMany entities present a financial review by management that is outside the scope of the financial statements. IFRS does not

require the presentation of such information, although paragraph 13 of IAS 1 gives a brief outline of what may be included

in such a report. The IASB issued an Exposure Draft (ED) Management Commentary in June 2009 with a proposal for a non-

binding, broad framework for the preparation and presentation of a Management Commentary.

The content of a financial review by management is often determined by local market requirements or issues specific to a

particular jurisdiction. Therefore, no financial review by management has been included for Good Insurance

(International) Limited.


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Good Insurance

(International) Limited

Consolidated financial statements

31 December 2010


15/164


Independent auditors report to the shareholders of GoodInsurance (International) Limited

We have audited the accompanying consolidated financial statements of Good Insurance (International) Limited and its

subsidiaries (the Group), which comprise the consolidated statement of financial position as at 31 December 2010, the

consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in

equity and consolidated statement of cash flows for the year then ended, together with a summary of significant accounting

policies and other explanatory information.

Managements responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in

accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of

consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We have

conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with

ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated

financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of

material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk

assessments, the auditors consider internal control relevant to the entitys preparation and fair presentation of the

consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for

the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating

the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as

well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group asat 31 December 2010, and of its financial performance and cash flows for the year then ended in accordance with

International Financial Reporting Standards.

Professional Accountants & Co.

29 January 2011

17 Euroville High Street

Euroville

Commentary

The auditors report has been prepared in accordance with ISA 700 (Redrafted) Forming an Opinion and Reporting on Financial Statements

which is applicable for audits of financial statements for periods beginning on or after 15 December 2009. The auditors report may differ

depending on the requirements of different jurisdictions.


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Group consolidated income statement

for the year ended 31 December 2010

IAS 1.10(b)

IAS 1.51 (b), (c)

2010 2009Notes 000 000 IAS 1.51(d), (e)

Gross premiums 5(a) 74,146 73,451 IFRS 4.IG24

Premiums ceded to reinsurers 5(b) (18,756) (19,112) IFRS 4.IG24

Net premiums 55,390 54,339 IAS 1.85

Fees and commission income 6 5,364 2,231 IFRS 7.20(c)(i)

Investment income 7 8,221 7,682

Realised gains 8 213 93

Fair value gains and losses 9 1,044 992

Other operating revenue 91 85

Other revenue 14,933 11,083 IAS 1.85

Total revenue 70,323 65,422 IAS 1.82(a)

Gross benefits and claims paid 10(a) (38,418) (39,410) IFRS 4.IG24

Claims ceded to reinsurers 10(b) 10,273 10,546 IFRS 4.IG24

Gross change in contract liabilities 10(c) (7,837) (7,172) IFRS 4.IG24

Change in contract liabilities ceded to reinsurers 10(d) 1,592 1,691 IFRS 4.IG24

Net benefits and claims (34,390) (34,345) IAS 1.85

Finance costs 11 (1,066) (954) IAS 1.82(b), IFRS 7.20

Profit attributable to unit-holders 35 (267) (111)

Other operating and administrative expenses 12 (22,242) (20,378) IAS 1.99

Other expenses (23,575) (21,443) IAS 1.85

Total benefits, claims and other expenses (57,965) (55,788) IAS 1.85

Profit before share of profit of an associate 12,358 9,634

Share of profit of an associate 22 129 230 IAS 1.82(c), IAS 28.38

Profit before tax 12,487 9,864 IAS 1.85

Income tax expense 14 (1,569) (1,973) IAS 1.82(d), IAS 12.77

Profit for the year 10,918 7,891 IAS 1.82(f)

Profit attributable to:

Equity holders of the parent 10,063 7,891 IAS 1.83(a) (ii)

Non-controlling interests 855 IAS 1.83(a) (i)

10,918 7,891

Earnings per share

Basic, profit for the year attributable to ordinary equityholders of the parent () 16 1.26 1.07 IAS 33.66

Diluted, profit for the year attributable to ordinary equityholders of the parent () 16 1.25 1.06 IAS 33.66


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Group consolidated income statement

Commentary

Paragraph 82(a) of IAS 1 requires disclosure of total revenue as a line item on the face of the income statement. In addition to this, The

Group has presented the various types of revenues on the face of the income statement. Note that this information could also be given in the

notes (per IAS 1.97).

Paragraph 99 of IAS 1 requires expenses to be analysed by either their nature or their function within the entity, whichever provides

information that is reliable and more relevant. The Group has presented the analysis of expenses by nature.

Premiums and claims on the face of the income statement have been presented on a gross basis, with premiums ceded to reinsurers shown

as negative revenue and claims ceded to reinsurers shown as negative net benefits and claims. An alternative disclosure option is to present

premiums ceded to reinsurers as expenses and claims ceded to reinsurers as revenue.

The comparative numbers do not necessarily correspond to the 2009 Good Insurance financial statements as they are purely for illustrative

purposes. The Group has no discontinued operations and all profit has been generated from continuing operations.


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Group consolidated statement of comprehensive income


IAS 1.51 (b), (c)

2010 2009

Notes 000 000 IAS 1.51(d), (e)

Profit for the year 10,918 7,891 IAS 1.81(b), 82 (f), 88

Other comprehensive income IAS 1.82(g)

Exchange differences on translating foreign operations 18 (67)

Net loss on cash flow hedges 18 (36) (24)

Net gain on available-for-sale assets 18 6,184 3,297

Income tax relating to components of other comprehensiveincome 17 (1,824) (982) IAS 1.90

Other comprehensive income for the year, net of tax 18 4,257 2,291 IAS 1.85

Total comprehensive income for the year, net of tax 15,175 10,182 IAS 1.82(i)

Total comprehensive income attributable to:

Equity holders of the parent 14,121 10,182 IAS 1.83(b)(ii)

Non-controlling interests 1,054 IAS 1.83(b)(i)

15,175 10,182

Commentary

The components of comprehensive income are presented on an aggregated basis in the statement above. Therefore, an additional note is

required to present the amount of reclassification adjustments and current year gains or losses. Alternatively, the individual components

could have been presented within the statement of comprehensive income.

The income tax effect has also been presented on an aggregated basis. Therefore, an additional note disclosure presents the income tax

effect of each component. Alternatively, this information could have been presented within the statement of comprehensive income.

Paragraph 96 of IAS 1 requires the Group to present a statement of changes in comprehensive income in either a single statement or two

statements. The Group has elected to present the statement of comprehensive income in two statements: a statement displaying

components of profit or loss (separate income statement) and a second statement beginning with profit and loss and displaying components

of other comprehensive income.

The Group applies the corridor method for its actuarial gains and losses from its defined benefit pension plan. If entities apply the policy in

IAS 19.93A to recognise all actuarial gains and losses in the period in which they occur outside of the income statement, then paragraph 93B

of IAS 19 requires entities to present those gains and losses as part of other comprehensive income.


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Group consolidated statement of financial position

as at 31 December 2010

IAS 1.51 (b) (c)

IAS 1.10 (a)

2010 2009Notes 000 000 IAS 1.51(d), (e)

Assets IAS 1.60Goodwill 20 9,445 2,924 IAS 1.54(c)Intangible assets 21 39,138 444 IAS 1.54(c)Deferred expenses 30 13,446 11,477 IFRS 4.37(b)Property and equipment 23 4,066 3,750 IAS 1.54(a)Investment properties 24 4,199 3,943 IAS 1.54(b)Investment in an associate 22 2,120 1,991 IAS 1.54(e), IAS 28.38Financial instruments IAS 1.54(d), IFRS 7.8

Derivative financial instruments 25 2,182 1,240Held to maturity financial assets 26(a) 2,104 1,677Loans and receivables 26(b) 7,264 6,137Available-for-sale financial assets 26(c) 109,677 79,417Financial assets at fair value through profit or loss 26(d) 35,249 21,189

Reinsurance assets 27 36,521 34,711 IFRS 4.37(b)Income tax receivable 28(a) 2,995 2,812 IAS 1.54(n)

Insurance receivables 29 35,272 19,914 IFRS 4.37(b)Accrued income 31 1,698 1,557 IAS 1.77Cash and cash equivalents 32 22,723 27,798 IAS 1.54(i)

Total assets 328,099 220,981

Equity and liabilitiesEquity attributable to equity holders of parent IAS 1.54(r)Issued share capital 42 8,638 7,385 IAS 1.54(r)Additional paid-in capital 42 27,415 1,045 IAS 1.54(r)Retained earnings 20,297 13,457 IAS 1.54(r)Revaluation reserves 8,060 4,002 IAS 1.54(r)Total ordinary shareholders equity 64,410 25,889 IAS 1.54(r)Other equity instruments 43 52 IAS 1.54(r)

64,462 25,889

Non-controlling interests 8,368

IAS 1.54(q)

Total equity 72,830 25,889

LiabilitiesInsurance contract liabilities 33 176,712 126,260 IFRS 4.37(b)Investment contract liabilities 34 15,220 11,558 IAS 1.54(m), IFRS 4.37(b)Pension benefit obligation 36 4,449 4,152 IAS 1.55, IAS 1.78(d)Deferred revenue 40 4,365 4,334 IAS 1.55Borrowings 37 16,562 21,064 IAS 1.54(m), IFRS 7.8(e), (f)Derivative financial instruments 25 1,782 1,758 IAS 1.54(m), IFRS 7.8 (e), (f)Other financial liabilities 38 7,743 7,272 IAS 1.54(m), IFRS 7.8 (e), (f)Deferred tax liability 28(b) 5,452 1,848 IAS 1.54(o),Net asset value attributable to unit-holders 35 520 367 IAS 1.54(o)Insurance payables 39 5,157 4,841 IFRS 4.37(b)

Trade and other payables 41 17,307 11,638 IAS 1.54(k)Total liabilities 255,269 195,092

Total equity and liabilities 328,099 220,981

Commentary

Paragraph 60 of IAS 1 requires companies to present assets and liabilities either in order of their liquidity or by a separate classification onthe face of the statement of financial position for current and non-current assets, and current and non-current liabilities, whichever providesinformation that is most reliable and relevant. The Group has presented its assets and liabilities in order of liquidity. Deferred acquisitioncosts are included within deferred expenses rather than within intangible assets or other assets, which are alternative classification optionsin insurance practice.

The previous version of IAS 1 used the titles balance sheet and cash flow statement to refer to two of the financial statements consideredto be part of the complete set. The current standard refers to these statements as the statement of financial position and statement ofcash flows. However, the revised standard does not require the use of these terms (IAS 1.10).

The Group has not presented three statements of financial position in these financial statements because it has not applied an accountingpolicy retrospectively, made a retrospective restatement of items in its financial statements, or reclassified items in its financial statementsthat affected the statement of financial position at the beginning of the earliest comparative period (IAS 1.10(f)). Good Group (International)Limited contains an illustrative disclosure of a statement of financial position at the beginning of the comparative period and related noteswhere the changes affect the beginning of the earliest comparative period.


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Group consolidated statement of changes in equity


IAS 1.10(c)

Attributable to equity holders of the parent IAS 1.51 (b), (c)

Other reserves

Notes

Issuedshare

capital(Note

42)

Additionalpaid-incapital

(Note 42)Retainedearnings

Available-for-sale

financialassets

Cash flowhedging

Foreigncurrency

translationreserve

Totalordinary

share-holders

equity

Otherequity

instruments

Non-controlling

interestsTotal

equity IAS 1.106

000 000 000 000 000 000 000 000 000 000 IAS 1.51(d), (e)

At 1 January2010 7,385 1,045 13,457 4,024 (22) 25,889 25,889 IAS 1.106(d)

Profit for theyear 10,063 10,063 855 10,918 IAS 1.106(d) (i)

Othercomprehensiveincome 18 4,121 (25) (38) 4,058 199 4,257 IAS 1.106(d) (ii)

Totalcomprehensiveincome 10,063 4,121 (25) (38) 14,121 1,054 15,175 IAS 1.106(a)

Issue of sharecapital 42 1,253 26,672 27,925 27,925 IAS 1.106(d)(iii)

Transaction costsfor equity issue 42 (302) (302) (302) IAS 32.39

Issue of otherequityinstruments 43 52 52

Coupon on otherequityinstruments paidduring the year 43 (1) (1) (1)

Share-basedpaymenttransactions 19 14 14 14 IFRS 2.50

Dividends paidduring the year 15 (3,236) (3,236) (3,236) IAS 1.107

Non-controllinginterests arisingon businesscombination 3 7,314 7,314

At 31 December2010 8,638 27,415 20,297 8,145 (47) (38) 64,410 52 8,368 72,830 IAS 1.106(d)

Commentary

The Group has elected to present all the information required for the statement of changes in equity on the face of the statement. However,

transactions with equity holders acting in their capacity as equity holders and the reconciliation of retained earnings, contributed equity and

other reserves could alternatively be presented in the notes to the financial statements.

Paragraph 7 of IFRS 2 requires entities to recognise an increase in equity when goods or services are received in an equity-settled share-

based payment transaction. However, IFRS 2 does not specify where in equity this should be recognised. The Group has elected to recognise

the credit in retained earnings.


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Group consolidated statement of changes in equity


Attributable to equity holders of the parent IAS 1.51(a), (b), (c)

Other reserves

Notes

Issuedshare

capital

(Note42)

Additionalpaid-in

capital(Note 42)

Retainedearnings

Available-for-sale

financialassets

Cash flowhedging

Foreigncurrency

translationreserve

Totalordinary

share-

holdersequity

Other

equityinstruments

Non-

controllinginterests

Totalequity IAS 1.106

000 000 000 000 000 000 000 000 000 000 IAS 1.51(d), (e)

At 1 January2009 7,382 1,000 7,643 1,716 (5) 17,736 17,736 IAS 1.106(d)

Profit for theyear 7,891 7,891 7,891 IAS 1.106(d) (i)

Othercomprehensiveincome 18 2,308 (17) 2,291 2,291 IAS 1.106(d) (ii)

Totalcomprehensiveincome

7,891 2,308 (17) 10,182 10,182 IAS 1.106(a)

Issue of sharecapital 42 3 47 50 50

Transactioncosts for equityissue 42 (2) (2) (2) IAS 32.39

Share-basedpayment 19 10 10 10 IFRS 2.50

Dividends paidduring the year 15 (2,087) (2,087) (2,087)

IAS 1.107

At 31December 2009 7,385 1,045 13,457 4,024 (22) 25,889 25,889

IAS 1.106(d)


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Group consolidated statement of cash flows


IAS 1.10(d)

IAS 1.51(b), (c)

2010 2009 IAS 7.10

Notes 000 000 IAS 1.51(d), (e)

Operating activities IAS 7.10, IAS 7.18(b)

Cash generated from operating activities 46 4,518 6,310 IAS 7.18(b)

Dividend income received 3,157 3,015 IAS 7.31

Interest income received 3,709 4,435 IAS 7.31

Finance costs paid (422) (312) IAS 7.31

Rental income on investment properties 178 170

Purchase of investment properties 24 (203) (219) IAS 7.14

Income tax paid 28(a) (1,564) (1,444) IAS 7.35

Net cash flows from operating activities 9,373 11,955 IAS 7.10

Investing activities IAS 7.21

Acquisition of subsidiaries, net of cash acquired 3 (6,219) IAS 7.39

Interest income received on loans to related parties 21 18 IAS 7.31

Proceeds from sale of property and equipment 1,964 1,095 IAS 7.16(b)

Purchase of intangible assets 21 (116) (318) IAS 7.16(a)

Increase in loans to related parties (65) (50) IAS 7.16(c)

Purchase of property and equipment 23 (1,414) (1,683) IAS 7.16(a)

Net cash flows from investing activities (5,829) (938) IAS 7.10

Financing activities IAS 7.10, IAS 7.21

Proceeds from exercise of share options 42 66 50 IAS 7.17(a)

Transaction costs for equity issue 42 (302) (2)

Issue of other equity instruments 43 51 IAS 7.17(a)

Proceeds from bank loans 5,500 IAS 7.17(c)

Repayment of bank loans (3,500) IAS 7.17(d)

Finance costs paid on bank loan and bond borrowings (642) (450) IAS 7.31

Dividends paid to equity holders of the parent 15 (3,236) (2,087) IAS 7.31

Net cash flows from financing activities (7,563) 3,011 IAS 7.10

Net (decrease)/increase in cash and cash equivalents (4,019) 14,028

Cash and cash equivalents at 1 January 20,876 6,848

Effects of exchange rate changes on cash and cash equivalents (52) IAS 7.28

Cash and cash equivalents at 31 December 32 16,805 20,876 IAS 7.45

Commentary

Paragraph 18 of IAS 7 permits a company to report its cash flows from operating activities using either the direct method or the indirect

method. The Group presents its cash flows using the indirect method. The direct method is illustrated in Appendix 5.

The Group reconciled from profit before tax to net cash flow from operating activities. However, a reconcilliation from profit after tax is also

acceptable under IAS 7.

Cash flows representing the assets backing equity holders are classified as investment activities. The cash flows in the operating activities

are all attributable to policyholders.

Paragraph 33 of IAS 7 permits interest paid to be shown as operating or financing activities, and interest received to be shown as operating

or investing activities, as deemed relevant for the entity. For cash flow purposes, the Group classifies the cash flows for the acquisition and

disposal of financial assets as operating cash flows, as the purchase of these investments is funded from the net cash flows associated with

the origination of insurance and investment contracts and the payment of benefits and claims incurred for such insurance and investment

contracts, which are respectively treated under operating activities.

For cash flow purposes, cash and cash equivalents consist of cash and cash equivalents as defined in paragraph 6 of IAS 7, net of

outstanding bank overdrafts, as permitted by paragraph 8 of IAS 7.


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Notes to the consolidated financial statements

1. Corporate information IAS 1.138

Good Insurance (International) Limited (the Company) is a limited liability company incorporated and

domiciled in Euroland, whose shares are publicly traded on the Euroland stock market. The principal activities

of the Company and its subsidiaries (the Group) are described in Note 4.

The Group has a 20% interest in its only associate, Power Insurance Limited, which is involved in the insurance

of power stations in Euroland.On 30 April 2010, the Group acquired 80% of the common stock of Good American Life Co. Further details of

the acquisition are provided in Note 3.

The registered office of the Group is Homefire House, 18 Ashdown Square, Euroville, Euroland. The

consolidated financial statements of Good Insurance (International) Limited for the year ended 31 December

2010 were authorised for issue in accordance with a resolution of the directors on 29 January 2011.

IAS 10.17

2.1 Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with International

Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).

IAS 1.16

The consolidated financial statements have been prepared on an historic cost basis except for investment

properties and those financial assets and financial liabilities that have been measured at fair value. The

carrying values of recognised assets and liabilities that are designated as hedged items in fair value hedges

and that are otherwise carried at amortised cost, are adjusted to record changes in the fair values attributable

to the risks that are being hedged in effective hedge relationships.

As permitted by IFRS 4 Insurance Contracts, the Group has applied Euroland Generally Accepted Accounting

Practice (GAAP) for its insurance contracts and investment contracts with a discretionary participation

feature (DPF).

IAS 1.112(a)

IAS 1.117

The consolidated financial statements values are presented in Euros () rounded to the nearest thousand

(000), unless otherwise indicated.

IAS 1.51(d), (e)

Commentary

Paragraph 13 of IFRS 4 permits an insurance company to grandfather its previous Generally Accepted Accounting Principles (Local GAAP).

Local GAAP can be used for any insurance contracts and investment contracts with aDiscretionary Participation Feature DPF that it issues(including related acquisition costs and intangible assets). The requirement will continue until the IFRS Phase 2 project is completed by the

IASB, which will then regulate the recognition and measurement of all insurance contracts on a consistent basis.

The Group presents its statement of financial position broadly in order of liquidity. An analysis regarding

recovery or settlement within twelve months after the reporting date (current) and more than 12 months

after the reporting date (non-current) is presented in the notes.

IAS 1.60, 61

2.2 Basis of consolidation IAS 27.12

Basis of consolidation from 1 January 2010

The consolidated financial statements comprise the financial statements of the Group as at 31 December each

year.

IAS 27.12

IAS 27.26

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtainscontrol, and continue to be consolidated until the date when such control ceases. The financial statements of

the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting

policies.

IAS 27.22

IAS 27.23

IAS 27.24

All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group

transactions and dividends, are eliminated in full.

IAS 27.20


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2.2 Basis of consolidation (contd)

Losses within a subsidiary are attributed to the non-controlling interest even if this results in a deficit balance. IAS 27.28

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity

transaction. If the Group loses control over a subsidiary, it:

X Derecognises the assets (including goodwill) and liabilities of the subsidiary

X Derecognises the carrying amount of any non-controlling interest

X Derecognises the cumulative translation differences recorded in equity

X Recognises the fair value of the consideration received

X Recognises the fair value of any investment retained

X Recognises any surplus or deficit in profit or loss

X Reclassifies the parents share of components previously recognised in other comprehensive income toprofit or loss or retained earnings, as appropriate.

IAS 27.30

IAS 27.34

The Group has invested in a number of specialised investment vehicles such as open-ended investment

companies (OEICs) and unit trusts. The Groups percentage ownership in these vehicles can fluctuate from

day to day according to the Groups participation in them. Where the Group controls such vehicles, they are

consolidated with the interest of third parties shown as net asset value attributable to unit-holders in the

statement of financial position. Where the Group does not control such vehicles, these are designated asfinancial investments held at fair value through profit or loss.

Basis of consolidation prior to 1 January 2010

Certain of the above-mentioned requirements were applied on a prospective basis. The following differences,

however, are carried forward in certain instances from the previous basis of consolidation:

X Acquisitions of non-controlling interests, prior to 1 January 2010, were accounted for using the parententity extension method, whereby the difference between the consideration and the book value of theshare of the net assets acquired were recognised in goodwill.

X Losses incurred by the Group were attributed to the non-controlling interest until the balance wasreduced to nil. Any further excess losses were attributed to the parent, unless the non-controllinginterest had a binding obligation to cover these. Losses prior to 1 January 2010 were not reallocatedbetween non-controlling interest and the parent shareholders.

X Upon loss of control, the Group accounted for the investment retained at its proportionate share of netasset value at the date control was lost. The carrying value of such investments at 1 January 2010 hasnot been restated.

IAS 27.33

(2003)

2.3 Summary of significant accounting policies

(a) Product classification

IAS 1.112,

IAS 1.117(a),(b)

IFRS 4.37(a)

Insurance contracts are those contracts when the Group (the insurer) has accepted significant insurance risk

from another party (the policyholders) by agreeing to compensate the policyholders if a specified uncertain

future event (the insured event) adversely affects the policyholders. As a general guideline, the Group

determines whether it has significant insurance risk, by comparing benefits paid with benefits payable if the

insured event did not occur. Insurance contracts can also transfer financial risk.

IFRS 4 Appendix

A

Investment contracts are those contracts that transfer significant financial risk. Financial risk is the risk of apossible future change in one or more of a specified interest rate, financial instrument price, commodity price,

foreign exchange rate, index of price or rates, credit rating or credit index or other variable, provided in the

case of a non-financial variable that the variable is not specific to a party to the contract.

IFRS 4 Appendix

A

Once a contract has been classified as an insurance contract, it remains an insurance contract for the

remainder of its lifetime, even if the insurance risk reduces significantly during this period, unless all rights

and obligations are extinguished or expire. Investment contracts can, however, be reclassified as insurance

contracts after inception if insurance risk becomes significant.

IFRS 4.B29, B30


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2.3 Summary of significant accounting policies (contd)

(a) Product classification (contd)

IAS 1.112,

IAS 1.117(a),(b)

IFRS 4.37(a)

Insurance and investment contracts are further classified as being either with or without DPF. DPF is a

contractual right to receive, as a supplement to guaranteed benefits, additional benefits that are:

IFRS 4 Appendix

A

X

Likely to be a significant portion of the total contractual benefitsX The amount or timing of which is contractually at the discretion of the issuer

X That are contractually based on:

X The performance of a specified pool of contracts or a specified type of contract

X Realised and or unrealised investment returns on a specified pool of assets held by the issuer

X The profit or loss of the company, fund or other entity that issues the contract

Commentary

Paragraphs 34 and 35 of IFRS 4 require the guaranteed element of an insurance or investment DPF contract to be recognised as a liability,

but permit the discretionary element of a DPF to be treated as either an element of equity or as a liability, or tobe split between the two

categories. The Groups accounting policy is to treat all DPF features, both guaranteed and discretionary, as liabilities and to include them

within insurance or investment contract liabilities as appropriate in the statement of financial position.

Derivatives embedded in an insurance contract or an investment contract with DPF are separated and fair

valued through the income statement unless the embedded derivative is itself an insurance contract or

investment contract with DPF. The derivative is also not separated if the host insurance contract and/or

investment contract with DPF is measured at fair value through the income statement.

IFRS 4.7, 8, 9

(b) Business combinations and goodwill

Business combinations from 1 January 2010

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured

as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of

any non-controlling interest in the acquiree. For each business combination, the Group has an option to

measure any non-controlling interests in the acquiree either at fair value or at the non-controlling interests

proportionate share of the acquirees identifiable net assets. In respect of the acquisition of Good American

Life Co in 2010, the Group has measured the non-controlling interests at its proportionate share of the net

assets acquired.

IFRS 3.4

IFRS 3.10

IFRS 3.19

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate

classification and designation in accordance with the contractual terms, economic circumstances and

pertinent conditions at the acquisition date. This includes the separation of embedded derivatives in host

contracts by the acquiree. No reclassification of insurance contracts is required for business combination.

However, this does not preclude the Group from reclassifying insurance contracts to accord with its own policy

only if classification needs to be made on the basis of the contractual terms and other factors at the inception

or modification date.

IFRS 3.15

IFRS 3.16

If the business combination is achieved in stages, the acquisition date fair value of the acquirers previously

held equity interest in the acquiree is remeasured to fair value as at the acquisition date through profit or loss.

IFRS 3.42

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the

acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be

an asset or a liability, will be recognised as measurement period adjustments in accordance with the applicable

IFRS. If the contingent consideration is classified as equity, it will not be remeasured and its subsequent

settlement will be accounted for within equity

IFRS 3.58

Goodwill is initially measured at cost, being the excess of the fair value of the consideration transferred over

the Groups share in the net identifiable assets acquired and liabilities assumed and net of the fair value of any

previously held equity interest in the acquiree. Fair values for life Insurance contracts are derived from

embedded value (EV) principles developed by the Euroland Institute of Actuaries. Fair values for non-life

insurance contracts are derived by calculating the present value of claims reserves. If this consideration is

lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or

loss.

IFRS 3.54

IFRS 3.B63(a)

IAS 36.80


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2.3 Summary of significant accounting policies (contd) IAS 1.10,

(b) Business combinations and goodwill (contd)

Business combinations from 1 January 2010 (contd)

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the

purposes of impairment testing, goodwill acquired in a business combination is allocated to an appropriate

cash-generating unit that is expected to benefit from the combination, irrespective of whether other assets orliabilities of the acquiree are assigned to those units.

IAS 36.80

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of,

the goodwill associated with the operation disposed of is included in the carrying amount of the operation

when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is

measured based on the relative values of the operation disposed of and the portion of the cash-generating

unit retained.

IAS 36.86

Business combinations prior to 1 January 2010

In comparison with the above-mentioned requirements, the following differences applied:

Business combinations were accounted for using the purchase method. Transaction costs directly attributable

to the acquisition formed part of the acquisition costs. The non-controlling interest (formerly known as

minority interest) was measured at the proportionate share of the acquirees identifiable net assets.

Business combinations achieved in stages were accounted for as separate steps. Any additional acquired

share of interest did not affect previously recognised goodwill.

When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree

were not reassessed on acquisition unless the business combination resulted in a change in the terms of the

contract that significantly modified the cash flows that otherwise would have been required under the

contract.

Contingent consideration was recognised if, and only if, the Group had a present obligation, the economicoutflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to thecontingent consideration affected goodwill.

Commentary

The previous version of IFRS 3 was silent on whether the classification of insurance contracts needs to be revisited on an acquisition.

Paragraph 17(b) of the revised standard (effective for annual periods beginning or after 1 July 2009) explicitly exempts insurance

contracts from having to be reclassified on acquisition. This exemption, however, only applies to insurance contracts classified as such

under IFRS.

(c) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets

acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition,

intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment

losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and

expenditure is reflected in the income statement in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed to be either finite or indefinite.

IAS 38.24

IAS 38.83

IAS 38.74

IAS 38.57

IAS 38.88

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairmentwhenever there is an indication that the intangible asset may be impaired. The amortisation period and the

amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year

end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits

embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and

are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives

is recognised in the income statement in the expense category consistent with the function of the intangible

asset.

IAS 38.97

IAS 38.9

IAS 38.104

IAS 38.118(d)

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the

cash generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an

indefinite life is reviewed annually to determine whether indefinite life assessment continues to be

supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective

basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the

net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when

the asset is derecognised.

IAS 38.107

IAS 38.108

IAS 38.109

IAS 38.113


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2.3 Summary of significant accounting policies (contd) IAS 1.10,

(c) Intangible assets (contd)

Present value of acquired in-force business (PVIF)

When a portfolio of insurance contracts and/or investment contracts with a DPF is acquired, whether directly

from another insurance compan

lampiran good insurance ifrs

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