annual report 2020 - Flipbook - Side 23
INDUSTRIENS PENSIONSFORSIKRING A/S ANNUAL REPORT 2020
INDEPENDENT AUDITORS’ REPORT
Central matters related to the audit
How we have treated the central matters related to the audit
Measurement of unlisted investments
Unlisted investments primarily include investments in private equity funds and unlisted shares. These
are disclosed in the balance sheet under “Other financial investment assets” and “Investment assets
linked to market-rate products” at a total of DKK 49,671 mill. corresponding to 24% of total investment
assets.
We reviewed, assessed and tested procedures and relevant internal controls for measuring unlisted
investments.
Unlisted investments also include investments in property and infrastructure (offshore turbines and
solar installations) that are disclosed in the balance sheet under 'Investments in group and associated
undertakings' and 'Investment assets linked to market-interest-rate products' at a total of DKK 6,537
mill., corresponding to 3% of total investment assets.
Unlisted investments are measured at an estimated fair value based on valuation models and
assumptions, including accounting estimates that are not directly observable for a third party. Changes
in the assumptions included in the accounting estimates could have a significant impact on the financial
statements.
We assessed and tested the valuation models applied by the management.
We sample-tested the relationship between the assumptions applied, the data and the calculation of
fair values.
We sample-tested the fair values applied in relevant reports from external fund managers. We also
reviewed and tested relevant internal controls for valuation in the internal process to verify valuations.
We challenged the assumptions included in the accounting estimate behind calculations of fair values
on the basis of our knowledge about the portfolio and market developments.
We focused on measuring unlisted investments because such measurements are complex and
subjective by nature and therefore rely heavily on accounting estimates.
See the section in the financial statements on "Accounting estimates" in note 1, as well as the sections
on “Equity investments in group undertakings”, equity investments in associated undertakings and
“Investment assets linked to market-interest-rate products” in notes 10, 11, 12 and 22.
Measurement of provisions for insurance and investment contracts
The company has provisions for insurance and investment contracts totalling DKK 189,071 mill.
corresponding to 92% of the balance-sheet total.
We reviewed, assessed and tested the procedures and relevant internal controls implemented by the
company to ensure that the provisions for insurance and investment contracts are exhaustive and are
measured correctly.
Provisions primarily consist of life-assurance provisions for the market interest rate of DKK 172,763 mill.
and provisions for average interest rate of DKK 7,451 mill. as well as claims provisions on sickness and
accident insurance of DKK 7,988 mill.
In our audit, we used our own actuaries to assess actuarial models and assumptions applied by the
company, as well as the calculations made, including calculations of future cash flows.
The calculations are based on the fair value of the relevant assets in relation to the market interest rate
and actuarial principles in relation to other provisions and they involve significant accounting estimates
that are linked to the actuarial assumptions regarding the timing and scope of future payments to
members.
We assessed and challenged the most important actuarial assumptions and estimates, including the
yield curves for discounting, life expectancy, mortality, disability, probability of surrender and costs,
based on our knowledge about the sector, in order to assess whether these assumptions are in line
with regulatory and accounting requirements. This included an assessment of continuity in the basis
for the calculation of the provisions.
The actuarial assumptions include the yield curves for discounting, life expectancy, mortality, disability,
probability of surrender and costs.
We focused on measuring provisions for insurance and investment contracts, because the calculation
of provisions is complex and subjective and therefore relies heavily on accounting estimates.
See the sections in the financial statements on "Accounting estimates" in note 1, as well as “Provisions
for insurance and investment contracts” in notes 14 and 15.
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