IPF årsrapport 2018 (eng) - Flipbook - Side 21
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Central matters related to the audit
How we have treated the central
matters related to the audit
We sample-tested the relationship
between the assumptions applied and the
calculation of the fair value.
Unlisted investments also include investments in property and
infrastructure (offshore turbines) that are disclosed in the
balance sheet under “Investments in group and associated
undertakings” and “Investment assets linked to market-interestrate products” at a total of DKK 4,976 mill., corresponding to 3% We sample-tested the fair values applied
of total investment assets.
in relevant reports from external
managers. We also reviewed and tested
Unlisted investments are measured at an estimated fair value
relevant internal controls for valuation in
based on valuation models and assumptions, including
the internal process to verify valuations.
management estimates, which are not directly observable for a
third party. Changes in assumptions and estimates could have We challenged the management
a significant impact on the financial statements.
estimates behind calculations of fair
values on the basis of our knowledge
We focused on measurement of unlisted investments, because about the portfolio and market
calculations are complex and involve significant management
developments.
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" and “Investment assets
linked to market-interest-rate products" in notes 11 and 13.
Measurement of provisions for insurance and investment
contracts
The company has provisions for insurance and investment
contracts totalling DKK 158,596 mill., corresponding to 92% of
the balance-sheet total.
Provisions primarily consist of life-assurance provisions for the
market interest rate of DKK 143,937 mill. and provisions for
average interest rate of DKK 7,220 mill. as well as claims
provisions on sickness and accident insurance of DKK 7,440
mill.
The calculations are partly 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 the
future payments to members.
The actuarial assumptions include the yield curves for
discounting, life expectancy, mortality, probability of surrender
and costs.
We focused on measurement of provisions for insurance and
investment contracts, because the calculation of the provisions
is complex and involves significant accounting estimates and
assumptions.
We reviewed and assessed by the
procedures and internal controls
implemented by the company to ensure
that the provisions for insurance and
investment contracts are measured
correctly.
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.
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. We compared this with our
experience and knowledge about the
sector in order to assess whether these
are in accordance with market practice as
well as regulatory and accounting
requirements. This also included an
assessment of continuity in the basis for
the calculation of the provisions.