EXAMPLE PAGE - ANNUAL REPORT - THE SWEDISH CLUB - Flipbook - Sida 63
NOTES - FINANCIAL STATEMENTS
guarantees is limited and the associated
risks are relatively small. In December
2021, outstanding premiums older than
three months were 0.7 (0.6)% of the 2021
gross premiums written.
Following a favourable development
regarding a liability for damage the Club
estimates receivables amounting to USD
73 million to be collected. Concurrently, a
liability towards the reinsurance
programme arises amounting to USD 59
million. The net exposure amounts to
USD 14 million.
Operational risk
Operational risks might arise as a result of
inadequate processes, systems and
human factors. In the Club’s quality
system, critical activities have been
documented and updated as needed.
These, together with directives and
instructions, help ensure that its processes
are both appropriate and effective. For
example, dependence on key individuals is
lowered by spreading knowledge within the
organisation and by having good job
descriptions. The Club also continuously
strives to lower the risk that it participates
in money laundering in the business by
maintaining adequate knowledge of its
customers and their operations.
Furthermore, it ensures that it is aware of
any sanctions in place (pertaining to trade
with companies/counterparties in certain
countries).
Important operational risks also include
risks that can arise in conjunction with a
Currency exposure
catastrophe scenario, such as an office fire,
IT systems breakdown, a lengthy power
failure, and so on. The Club has an
established contingency plan for such
situations, which is evaluated annually. The
Club has implemented new guidelines on
security and corporate governance
pertaining to information and
communication technology that were
published by EIOPA in October 2020. The
guidelines apply as of 1 July 2021. For
insurance companies, it means that the
requirements on corporate governance and
risk management in the Solvency II
Directive and Solvency II Delegated
Regulation have now been updated to
include the new guidelines.
Financial risk
Market, credit and liquidity risks are
classified as financial risks. Here, the
Club’s primary objective is to identify an
acceptable risk level from which it can
maximise long-term investment income.
The investment portfolio’s currency mix
also plays an important role when
matching the Club’s assets and
liabilities. The investment philosophy is
based on risk diversification and
investing primarily in assets with a high
level of creditworthiness. To minimise
and control risks, the Board of Directors
establishes an investment policy
(Investment Directive), which governs
the composition, control and authority
over asset management. A model has
been developed to stress the
investments and measure the total
value-at-risk. It measures exposure in
equities, currencies, interest rates and
maturities. According to the model, the
risk exposure of USD 29 million that
existed at the beginning of the year
remains at that level through the end of
2021, which is in line with the goal of
keeping risk exposure within the
tolerance limit, which is 30 per cent of
free reserves. Performance and other
factors are measured and reported to
the Managing Director on a monthly
basis.
Market risks include fluctuations in
interest rates, exchange rates and share
prices. The Club operates in an
international environment, with revenue,
expenditures and investments in various
currencies.
As of 31 December 2021 the duration of
fixed income securities was 2.3 (2.1)
years. A change in interest rates of 1%
would result in a change in the value of
the bond portfolio of approximately USD
7 (6) million.
Currency exposure for the Club's most
important currencies (see the table,
below) was, as of 31 December 2021
USD 28.6 (39.8) million. As all decisions
regarding currency positions are based
on a US dollar perspective, the Club has
chosen to regard free reserves as
consisting entirely of US dollars. However,
operating costs arise in a variety of
currencies.
EUR
GBP
SEK
Investment assets
Receivables
Other assets
26,339
3,741
949
948
1,506
10
699
2,654
Total assets
31,029
2,454
3,363
Equity and untaxed reserves
Technical provisions, net
Other liabilities and provisions
-1,644
-1,260
-28
-1,582
-106
-3,611
Total liabilities and provisions
-2,903
-1,610
-3,718
Net exposure
28,126
844
-354
THE SWEDISH CLUB ANNUAL REPORT 2021
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