JUST GROUP PLC Annual Report and Accounts 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
33 FINANCIAL AND INSURANCE RISK MANAGEMENT continued • Reinsurance – reinsurance is used to manage longevity risk and to fund new business but, as a consequence, credit risk exposure arises should a reinsurer fail to meet its claim repayment obligations. Credit risk on reinsurance balances is mitigated by the reinsurer depositing back more than 100% of premiums ceded under the reinsurance agreement and/or through robust collateral engagements or recapture plans. • Cash balances – credit risk on cash assets is managed by imposing restrictions over the credit ratings of third parties with whom cash is deposited. • Credit risk for loans secured by mortgages has been considered within “property risk” above. The following table provides information regarding the credit risk exposure for financial assets of the Group, which are neither past due nor impaired at 31 December:
UK gilts £m
AAA £m
AA £m
A £m
BBB £m
BB or below £m
Unrated £m
Total £m 69.6
2021
–
–
– – –
69.6
– – –
–
–
Investment property Units in liquidity funds
– 1,304.9
– –
5.6
– 1,310.5
–
–
–
301.8 301.8
Investment funds
741.8 894.0 2,132.3 3,279.7 5,554.2 322.0
– 12,924.0
Debt securities and other fixed income securities
– – – – – – – – –
– – – – –
–
11.1
39.2
2.6
– –
52.9
Deposits with credit institutions
0.3 519.3 171.6
–
691.2
Derivative financial assets
– – –
– – –
– – –
– 7,422.8 7,422.8
Loans secured by residential mortgages Loans secured by commercial mortgages
– –
677.8
677.8
189.7 189.7
Loans secured by ground rents
82.4 116.6 180.9
567.5
45.7
–
993.1 117.9 497.3
Infrastructure loans
– – –
–
–
–
12.5 105.4
Other loans Reinsurance
214.7
277.0
5.1
– –
0.5
–
–
–
35.4
35.4
Insurance and other receivables
Total
741.8 2,281.3 2,463.9 4,337.6 6,337.6 388.4 8,733.4 25,284.0
UK gilts £m
AAA £m
AA £m
A £m
BBB £m
BB or below £m
Unrated £m
Total £m
2020
Units in liquidity funds
– 1,123.2
– –
– –
– –
5.3
– 1,128.5
Investment funds
–
–
–
176.1
176.1
Debt securities and other fixed income securities
205.6
838.8 1,519.3 3,030.5 5,124.4
342.8
– 11,061.4
Deposits with credit institutions
– – – – – – – – –
– – – – –
– – – – –
58.6
39.2
1.9
– –
99.7
Derivative financial assets
594.2
205.8
–
800.0
Loans secured by residential mortgages Loans secured by commercial mortgages
– – –
– – –
– 8,261.1 8,261.1
– –
592.1 114.9
592.1 114.9 945.0
Loans secured by ground rents
Infrastructure loans
87.2
125.8
176.0
509.4
46.6 11.8
–
Other loans Reinsurance
– – –
–
–
–
79.2
91.0
273.0
309.1
6.2
– –
0.5
588.8
Insurance and other receivables
–
–
–
32.0
32.0
Total
205.6 2,049.2 1,918.1 4,168.4 5,885.0
408.4 9,255.9 23,890.6
There are no financial assets that are either past due or impaired. The credit rating for Cash available on demand at 31 December 2021 was between a range of AA and BB (2020: between a range of AA and BB). The carrying amount of those assets subject to credit risk represents the maximum credit risk exposure. (d) Liquidity risk The investment of cash received from Retirement Income sales in corporate bonds, gilts and lifetime mortgages, and commitments to pay policyholders and other obligations, requires liquidity risks to be taken. Liquidity risk is the risk of loss because the Group, although solvent, either does not have sufficient financial resources available to it in order to meet its obligations as they fall due, or can secure them only at excessive cost. Exposure to liquidity risk arises from: • deterioration in the external environment caused by economic shocks, regulatory changes, reputational damage, or an economic shock resulting from the COVID-19 pandemic or from Brexit; • needing to realise assets to meet liabilities during stressed market conditions; • increasing cash flow volatility in the short-term giving rise to mismatches between cash flows from assets and requirements from liabilities; • needing to support liquidity requirements for day-to-day operations; • ensuring financial support can be provided across the Group; and • maintaining and servicing collateral requirements arising from the changes in market value of financial derivatives used by the Group.
168
Powered by FlippingBook