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TCI NIB Annual Report 2018 & 2019

Published by gfxdsns, 2020-08-05 17:05:37

Description: Turks & Caicos Islands
National Insurance Board
Annual Report 2018 & 2019

Keywords: TCI NIB Annual Report 2018 & 2019

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TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 3. Significant accounting policies, continued (c) Property and equipment, continued (iii) Depreciation Depreciation is recognised in the statement of income, expenses and reserves on a straight-line basis over the estimated useful lives of each part of an item of property and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Land is not depreciated. Estimated useful lives for the current and comparative periods are as follows: Buildings 25 years Furniture & Fixtures 3-10 years Computer Equipment 3-10 years Motor Vehicles 4 years Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted, if necessary. (d) Reserves The TCI National Insurance (Financial and Accounting) Regulations (the Regulations) require benefits and reserves to be grouped into separate benefit branches (the Benefit Branches) and reserves, respectively, as follows: (i) Long-term Benefit Branch, comprising retirement benefit, invalidity pension, FINANCIAL survivors’ benefit, funeral grant and non-contributory old age pension. STATEMENTS A Long-term Benefit Reserve is constituted by annually transferring the excess 2018 of income over expenses of the Long-term Benefit Branch. (ii) Short-term Benefit Branch, comprising sickness benefit and maternity benefit. A Short-term Benefit Reserve is constituted by annually transferring the excess of income over expenses of the Short-term Benefit Branch. (iii) Employment Injury Benefit Branch, comprising injury benefit, disablement benefit, death benefit, death grant payable on death due to employment injury and medical care. An Employment Injury Benefit Reserve is constituted to finance employment injury benefit, disablement grant, death grant and medical care by annually transferring that part of the net income of the Employment Injury Benefit Branch that is sufficient to maintain the level of the reserve at one-half of the amount paid for the said benefits in the two previous financial years. 47 17

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2018 Year ended March 31, 2018 48 3. Significant accounting policies, continued (d) Reserves, continued (iv) A Disablement and Death Benefit Reserve is constituted by annually transferring the remaining net income of the Employment Injury Benefit Branch, after the aforementioned transfer has been made to the Employment Injury Benefit Reserve in accordance with the Regulations. Further information on the allocation of income and expenses to the reserves is shown at note 3(e)(v). (e) Revenue and expense recognition (i) Contribution and surcharge income Contribution income is recognised on an accruals basis, at the requisite statutory rates, utilising employer monthly contribution statements, which are settled in arrears. Surcharges are recognised on an accruals basis at the requisite statutory rates. (ii) Rental income Rental income is recognised in the statement of income, expenses and reserves on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income over the term of the lease. (iii) Investment income Investment income comprises interest income on funds invested (including available-for-sale financial assets), dividend income, gains on the disposal of available-for-sale financial assets and change in market value of available-for- sale financial assets. Interest income is recognised in the statement of income, expenses and reserves as it accrues, using the effective interest rate method. Dividend income is recognised in the statement of income, expenses and reserves on the date that NIB’s right to receive payment is established, which, in the case of quoted securities, is the ex-dividend date. Gains on the disposal of available-for-sale financial assets are included in the statement of income, expenses and reserves in the period in which they arise. (iv) Benefits, general and administrative expenses Expenditure on benefits is recognised when NIB’s obligation to make a payment has been established, which is generally upon approval of a claim. General and administrative expenses are recognised on an accruals basis. 18

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2018 Year ended March 31, 2018 3. Significant accounting policies, continued (e) Revenue and expense recognition, continued (iv) Benefits, general and administrative expenses, continued Long-term benefits such as retirement pension, old age non contributory, survivors, invalidity pension, retirement, funeral and survivors grants are generally recognised upon approval of a claim subject to the provisions of sections 3(1), 53(1), 14(1), 7(1), 3(4), 20(1) and 14(2) of the TCI National Insurance (Benefit) Regulations (the Benefit Regulations), respectively. Short-term benefits such as maternity allowance, sickness and maternity grants are generally recognised upon approval of a claim subject to the provisions of sections 28(1), 22(1) and 33(1) of the Benefit Regulations, respectively. Employment injury benefits such as disablement, death and injury are generally recognised upon approval of a claim subject to the provisions of sections 39(1), 45 and 35(1) of the Benefit Regulations, respectively. As disclosed at notes 3(i) and 23, NIB has chosen to disclose the actuarial present value of promised retirement benefits and other long-term benefits in the notes to these financial statements as per IAS 26. An actuarial valuation is performed every 3 years. The latest valuation was performed as at March 31, 2016. Certain results of the actuarial valuation as at March 31, 2016 are disclosed further at note 23. The actuarial present value of long-term benefits, other than retirement benefits, was quantified by an independent actuary at March 31, 2017 and 2018 (note 23) and recognised in NIB’s financial statements in accordance with IAS 37. (v) Basis of apportionment of income and expenses The statutory rates of total contributions, which are applied on an employed and self-employed person’s earnings and stipulated under sections 4, 14 and 19 of the TCI National Insurance (Contributions) Regulations (the Contributions Regulations), are as follows: Civil Servants 6.85%; Private Sector (general) 8.00%; Private Sector (under section 4(3) of the Contributions Regulations) 2.50%; Self Employed 6.80%; and Voluntary 5.50%. Section 4(3) of the Contributions Regulations relates to the employment of a temporary resident employed person on which contributions are payable at a rate of 2.5% and not the standard 8% for all other private sector workers. 49 19

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 3. Significant accounting policies, continued (e) Revenue and expense recognition, continued (v) Basis of apportionment of income and expenses, continued Section 13(1) of the Regulations provides that the aforementioned total contribution and surcharge income (note 3(e)(i)) shall be allocated among the Benefit Branches as follows: Contributions from: Long-Term Short-Term Employment Benefit Benefit Injury Benefit Civil Servants Branch Branch Private Sector (general) Branch Private Sector (under section 5.50 / 6.85 0.15 / 6.85 5.50 / 8.00 1.30 / 8.00 1.20 / 6.85 4(3) of the Contributions 1.20 / 8.00 Regulations) – Self Employed 5.50 / 6.80 1.30 / 2.50 1.20 / 2.50 Voluntary 10.0 / 10.0 1.30 / 6.80 – – – FINANCIAL Effective April 1, 2016 a new contribution ceiling was implemented by NIB STATEMENTS increasing from US$700/week or US$3,000/month to US$810/week or US$3,500/month. Effective April 1, 2017 the contribution ceiling further 2018 increased to US$925/week or US$4,000/month. 50 Section 13(2) of the Regulations provides that income from investments of reserves shall be allocated to the Benefit Branches in proportion to the amount of the reserve of each Benefit Branch at the beginning of the respective year. Investment income and expenses for the year ended March 31, 2018 and 2017 were allocated as follows: Long-Term Benefit Branch 2018 2017 Short-Term Benefit Branch Employment Injury Benefit Branch 71.81% 73.08% 11.96% 11.71% 16.23% 15.21% 100.00% 100.00% Section 14(1) of the Regulations provides that expenditure on each benefit shall be ascribed to the appropriate branch. Section 14(2) of the Regulations provides that the administrative expenditure of NIB shall be distributed among the Long-Term Benefit Branch, Short-Term Benefit Branch and Employment Injury Benefit Branch in the proportion of 67%, 17% and 16%, respectively. 20

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2018 Year ended March 31, 2018 3. Significant accounting policies, continued (f) Impairment (i) Non-derivative financial assets Financial assets not held for investment purposes are assessed at each reporting date to determine whether there is objective evidence of impairment. Objective evidence that financial assets are impaired includes:  default or delinquency by a debtor;  restructuring of an amount due to NIB on terms that NIB would not consider otherwise;  indications that a debtor or issuer will enter bankruptcy;  adverse changes in the payment status of borrowers or issuers;  the disappearance of an active market for a security because of financial difficulties; or  observable data indicating that there is a measurable decrease in the expected cash flows from a group of financial assets. In addition, for an investment in an equity security, objective evidence of impairment includes a significant or prolonged decline in its fair value below its cost. NIB considers a decline of 20% to be significant and a period of nine months to be prolonged. Financial assets measured at amortised cost NIB considers evidence of impairment for these assets (loans and receivables) at both an individual asset and a collective level. All individually significant assets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that has been incurred but not yet individually identified. Assets that are not individually significant are collectively assessed for impairment. Collective assessment is carried out by grouping together assets with similar risk characteristics. In assessing collective impairment, NIB uses historical information on the timing of recoveries and the amount of loss incurred, and makes an adjustment if current economic and credit conditions are such that the actual losses are likely to be greater or lesser than suggested by historical trends. 51 21

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2018 Year ended March 31, 2018 52 3. Significant accounting policies, continued (f) Impairment, continued (i) Non-derivative financial assets, continued Financial assets measured at amortised cost, continued An impairment loss is calculated as the difference between an asset’s carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in the statement of income, expenses and reserves and reflected in an allowance account against loans and receivables. When NIB considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed in the statement of income, expenses and reserves. Available-for-sale financial assets Impairment losses on available-for-sale financial assets are recognised by NIB in the statement of income, expenses and reserves. Changes in cumulative impairment losses attributable to application of the effective interest rate method are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt and equity security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised in the statement of income, expenses and reserves, then the impairment loss is reversed by NIB, with the amount of the reversal recognised in the statement of income, expenses and reserves. (ii) Non-financial assets At each reporting date, NIB reviews the carrying amounts of its non-financial assets to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units (CGU). The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. 22

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 3. Significant accounting policies, continued (f) Impairment, continued (ii) Non-financial assets, continued Impairment losses are recognised in the statement of income, expenses and reserves. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (g) Leases (i) Operating leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as operating leases. Assets leased out under operating leases are included in investment property on the statement of financial position. Rental expenses and rental income are recognised in the statement of income, expenses and reserves on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total rental expenses, over the term of the lease. (ii) Finance leases Assets held by NIB under leases which transfer substantially all of the risks and FINANCIAL rewards of ownership to NIB are classified as finance leases. On initial STATEMENTS recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent 2018 to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Assets held under other leases are classified as operating leases and are not recognised on NIB’s statement of financial position. NIB considers whether a lease is a finance lease or an operating lease based on the substance of the transaction rather than the form. The following characteristics are considered by NIB that would normally lead to a lease being classified as a finance lease:  the lease transfers ownership of the underlying asset to the lessee by the end of the lease term;  the lessee has the option to purchase the underlying asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception date, that the option will be exercised; 53 23

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2018 Year ended March 31, 2018 54 3. Significant accounting policies, continued (g) Leases, continued (ii) Finance leases, continued  the lease term is for the major part of the economic life of the underlying asset even if title is not transferred;  at the inception date, the present value of the lease payments amounts to at least substantially all of the fair value of the underlying asset; and  the underlying asset is of such a specialised nature such that only the lessee can use it without major modifications. (h) Taxation Under current TCI law, NIB is not required to pay any taxes in TCI on either income or capital gains. Consequently, no tax liability or expense has been recorded in these financial statements. (i) Actuarial present value of promised retirement benefits IAS 26 permits the recognition of long-term liabilities for retirement benefits on the statement of financial position, in the notes to the financial statements or in an accompanying actuarial report. NIB has elected to recognise the actuarial present value of its promised retirement benefits in the notes to the financial statements (note 23). The actuarial present value of other long-term benefits have been recognised as a liability for all reporting periods. (j) Related parties A related party is a person or entity that is related to the entity that is preparing its financial statements. (i) A person or a close member of that person’s family is related to a reporting entity if that person:  has control or joint control over the reporting entity;  has significant influence over the reporting entity; or  is a member of the key management personnel of the reporting entity, or of a parent of the reporting entity. (ii) An entity is related to a reporting entity if any of the following conditions apply:  The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).  One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). 24

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 3. Significant accounting policies, continued (j) Related parties, continued (ii) An entity is related to a reporting entity if any of the following conditions apply:, continued  Both entities are joint ventures of the same third party.  One entity is a joint venture of a third entity and the other entity is an associate of the third entity.  The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.  The entity is controlled, or jointly controlled, by a person identified above.  A person identified above has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).  The entity, or any member of a group of which it is a part, provides key management personnel services to the reporting entity or to the parent of the reporting entity. Related party transactions pertain to transfer of resources, services or obligations FINANCIAL between a reporting entity and a related party, regardless of whether a price is STATEMENTS charged. (k) New standards, amendments to standards and interpretations not yet adopted The following are new standards, amendments and interpretations to published 2018 standards, issued but not effective for the financial year beginning April 1, 2017 and not early adopted by NIB:  IFRS 9, Financial Instruments – IFRS 9, published in July 2014, replaces the existing guidance in IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. Although the permissible measurement bases for financial assets, amortised cost, fair value through other comprehensive income and fair value through profit or loss, are similar to IAS 39, the criteria for classification into the appropriate measurement categories are significantly different. IFRS 9 also replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ model, which means that a loss event will no longer need to occur before an impairment allowance is recognised. 55 25

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued Year ended March 31, 2018 3. Significant accounting policies, continued (k) New standards, amendments to standards and interpretations not yet adopted, continued  IFRS 9, Financial Instruments, continued The expected credit loss model is more forward looking and will require use of reasonable and supportable forecasts of future economic conditions to determine increases in credit risk and measurement of expected credit losses. It may also result in an increase in the total level of impairment allowance as all financial assets will be assessed for impairment, and the population size will be greater than that for financial assets with objective evidence of impairment under IAS 39. IFRS 9 is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted.  IFRS 15, Revenue from Contracts with Customers – IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18, Revenue, IAS 11, Construction Contracts and International Financial Reporting Interpretations Committee (IFRIC) 13, Customer Loyalty Programmes. IFRS 15 is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted.  IFRS 16, Leases – IFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose leases. IFRS 16 provides a single lessee accounting model, requiring lessees to recognise assets and liabilities on the statement of financial position for all leases unless the lease term is 12 months or 2018 less or the underlying asset has a low value. It replaces existing leases guidance, including IAS 17, Leases, IFRIC 4, Determining whether an Arrangement contains a Lease, Standard Interpretations Committee (SIC)-15, Operating Leases - Incentives and SIC-27, Evaluating the Substance of Transactions involving the Legal Form of a Lease. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17. IFRS 16 is effective for annual reporting periods beginning on or after January 1, 2019, with early adoption permitted only for entities that also apply IFRS 15. 56 26

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 3. Significant accounting policies, continued (k) New standards, amendments to standards and interpretations not yet adopted, continued  IFRS 17, Insurance Contracts – IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the standard. The objective of IFRS 17 is to ensure that an entity provides relevant information that faithfully represents those contracts. This information gives a basis for users of financial statements to assess the effect that insurance contracts have on the entity's financial position, financial performance and cash flows. IFRS 17 is effective for annual reporting periods beginning on or after January 1, 2021, with early adoption permitted only for entities that also apply both IFRS 9 and 15. NIB is currently assessing the potential future impact on its financial statements resulting from the application of IFRS 9, 15, and 16. IFRS 17 is expected by management to be either not relevant or not significant to NIB’s operations and, accordingly, will not have a material impact on the NIB’s accounting policies. 4. Determination of fair values A number of NIB’s accounting policies and disclosures require the determination of fair FINANCIAL value, for both financial and non-financial assets and liabilities. Fair values have been STATEMENTS determined for measurement and/or disclosure purposes, as described below. Where applicable, further information about the assumptions made in determining fair value has been disclosed in the notes specific to that asset or liability. The fair value of a financial instrument is the amount at which the instrument could be 2018 exchanged in a current transaction between willing parties. (a) Available-for-sale financial assets The fair value of available-for-sale financial assets is determined by reference to their quoted prices in active market at the reporting date. (b) Investment in, and assets held with, TCI Bank NIB’s investment in TCI Bank Limited (TCI Bank) has been accounted for using the fair value model so as to comply with IAS 26. Changes in fair value are recognised in the statement of income, expenses and reserves. The fair value of NIB’s investment in TCI Bank was assessed by NIB’s management to be US$nil at March 31, 2018 and March 31, 2017 as a consequence of TCI Bank entering provisional liquidation on April 9, 2010 and liquidation on October 29, 2010. The fair value of NIB’s other, non-secured, assets held with TCI Bank was reduced by 56% of the total amounts held at the date TCI Bank entered provisional liquidation, being management’s best estimate of an appropriate fair value adjustment in the circumstances. 57 27

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2018 Year ended March 31, 2018 58 4. Determination of fair values, continued (c) Provisions for long-term benefits, other than retirement benefits The fair value of provisions for long-term benefits, other than retirement benefits, is estimated as the present value of future cash out flows discounted at a rate of 4.5% at the reporting date (note 23). (d) Other financial instruments Due to their short-term nature the carrying amounts of other financial assets and liabilities of NIB approximate their fair value. The fair value of financial assets and liabilities with no fixed terms of repayment cannot be determined reliably. NIB has an established control framework with respect to the measurement of fair values. NIB regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then NIB assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified. Significant valuation issues are reported to the Board of Directors of NIB (the Board). When measuring the fair value of a financial instrument, NIB uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:  Level 1: inputs that are quoted market prices (unadjusted) in active markets for identical instruments;  Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques in which all significant inputs are directly or indirectly observable from market data; and  Level 3: inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instruments’ valuation. This category includes instruments that are valued based on quoted prices for similar instruments for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments. Valuation techniques include net present value, discounted cash flow models and comparison with similar instruments for which an observable market exists. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates. 28

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 4. Determination of fair values, continued The objective of the valuation technique is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date. If the inputs used to measure the fair value of a financial instrument fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. NIB recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. 5. Cash and cash equivalents 2018 2017 Cash at banks – savings and current accounts US$ 17,804,615 13,230,034 Cash at investment managers US$ 6,943,530 7,405,642 Cash on hand 3,627 3,611 24,751,772 20,639,287 The US$17,804,615 cash at banks – savings and current accounts at March 31, 2018 (2017: US$13,230,034) were held as follows: 2018 2017 FINANCIAL STATEMENTS CIBC First Caribbean International Bank (Bahamas) Limited (CIBC) US$ 14,818,311 10,532,342 2018 744,632 465,087 Interest bearing account Non-interest bearing account 2,241,012 2,231,945 Scotiabank (Turks and Caicos) Ltd. (Scotiabank) 660 660 Interest bearing account Non-interest bearing account US$ 17,804,615 13,230,034 During the year, interest bearing accounts with CIBC and Scotiabank earned interest at rates of 0.41% to 0.43% (2017: 0.40% to 0.42%). 29 59

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 5. Cash and cash equivalents, continued The US$6,943,530 cash held with investment managers at March 31, 2018 (2017: US$7,405,642) was held in the following investment accounts: 2018 2017 Fixed income US$ 2,005,844 1,264,725 Non U.S. equities 2,161,193 2,800,286 U.S. equities 531,779 656,617 Large cap growth 489,221 900,687 Large cap value Mid cap growth 91,676 83,977 Small cap core 317,373 767,087 Convertibles 1,073,746 654,428 Hedge funds 271,227 277,835 Commodities 1,471 – US$ 6,943,530 7,405,642 During the year, cash held with investment managers earned interest at rates of 0.01% (2017: 0.01%). For NIB’s internal investment guidelines cash held with investment managers is considered to be part of available-for-sale financial assets (note 21(c)(ii)). 6. Contributions and other receivables FINANCIAL 2018 2017 STATEMENTS Contributions receivable US$ 4,467,110 4,198,260 2018 Other receivables – net US$ 542,929 617,272 Allowance for impairment 5,010,039 4,815,532 (1,530,165) (1,136,000) 3,479,874 3,679,532 The movement on the allowance for impairment of contributions receivable for the year ended was as follows: 2018 2017 At April 1 US$ 1,136,000 1,072,718 Impairment losses recognised (note 17) US$ 577,099 183,394 Contributions receivable written-off (182,934) (120,112) At March 31 1,530,165 1,136,000 60 30

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 6. Contributions and other receivables, continued The US$542,929 other receivables at March 31, 2018 (2017: US$617,272) comprised the following: 2018 2017 Interest receivable – net of change in fair value US$ 233,327 363,194 of US$97,012 (2017: US$97,012) US$ 208,494 149,877 Surcharges receivable – net of change in fair value of US$1,777,367 (2017: US$1,399,322) 101,108 104,201 542,929 617,272 Other receivables – net of change in fair value of US$143,003 (2017: US$143,003) The movement on the allowance for impairment of surcharges receivable for the year ended was as follows: 2018 2017 At April 1 US$ 1,399,322 1,391,449 Impairment losses recognised (note 17) US$ 608,257 163,706 Surcharges receivable written-off (230,212) (155,833) At March 31 1,777,367 1,399,322 7. Short-term investment The US$4,322,933 short-term investment at March 31, 2018 (2017: US$4,200,000) FINANCIAL represented a certificate of deposit with a maturity period of more than three months, but STATEMENTS less than one year, with CIBC. The deposit earns annual interest at 1.89% and matures on March 29, 2019 (2017: 1.63% and matured on May 25, 2017). 2018 8. Available-for-sale financial assets Available-for-sale financial assets at March 31, 2018 and 2017 can be analysed as follows: Cost Market Value 2018 US$ 2017 2018 2017 US$ US$ US$ Equity securities 183,734,728 155,144,928 215,107,215 166,315,175 Government debt securities 31,433,170 29,628,045 30,718,692 29,251,113 Corporate debt securities 9,199,917 18,951,339 9,048,291 19,543,172 224,367,815 203,724,312 254,874,198 215,109,460 61 31

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 8. Available-for-sale financial assets, continued During the year, equity securities earned dividends with rates of return of 0.81% to 4.26% (2017: 0.03% to 5.63%) while government and corporate debt securities earned interest at rates of 2.13% to 2.82% (2017: 1.28% to 2.81%) with coupon rates ranging from 0.25% to 6.75% (2017: 0.25% to 7.63%). The US$254,874,198 available-for-sale financial assets at March 31, 2018 (2017: US$215,109,460) were held by UBS Financial Services Inc. and managed by investment managers. Available-for-sale financial assets, excluding cash held with investment managers (note 5), at March 31, 2018 and 2017 were classified per NIB’s Investment Policy Statement (IPS) (note 21(c)(ii)) as follows: 2018 2017 FINANCIAL Non U.S. equities US$ 70,899,391 54,529,054 STATEMENTS Fixed income 38,579,157 38,874,962 Hedge Funds 27,520,140 24,228,196 U.S. equities 31,684,941 25,717,063 Large cap value 30,283,292 26,032,847 Large cap growth 11,794,528 10,359,550 Mid cap growth 10,079,342 Small cap core 9,955,374 13,086,418 Convertibles 19,556,472 Private equity 5,335,626 Commodities 9,025,463 6,866,402 5,575,440 215,109,460 US$ 254,874,198 2018 A total of US$1,187,826 corporate debt securities in available-for-sale financial assets at March 31, 2018 (2017: US$9,919,323) were classified as convertibles per NIB’s IPS. 9. Long-term receivables 2018 2017 FortisTCI Limited bonds US$ 5,000,000 5,000,000 TCIG bonds US$ 526,750 697,584 Less current portion 5,526,750 5,697,584 (150,000) (150,000) 5,376,750 5,547,584 62 32

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 9. Long-term receivables, continued (a) FortisTCI Limited bonds On July 1, 2017, FortisTCI Limited (Fortis) issued to NIB a US$5,000,000 unsecured bond (Fortis Bonds) with a coupon rate of 5.14% per annum and a maturity date of July 1, 2031. The Fortis Bonds are repayable in full on July 1, 2031 and interest is payable every quarter of each calendar year (January 1, April 1, July 1 and October 1). Fortis can redeem, in whole or any part, the Fortis Bonds at any time prior to June 30, 2026 at a price agreed with NIB. During the year NIB earned US$257,000 (2017: US$192,750) of interest on the Fortis Bonds which was included as part of interest and other income in the statement of income, expenses and reserves. (b) TCIG bonds 2018 2017 Face value of TCIG bonds US$ 1,500,000 1,500,000 Repayment of face value US$ (1,050,000) (900,000) 600,000 Premium 450,000 250,000 Accumulated change in fair value 250,000 (152,416) Fair value (173,250) 697,584 526,750 During the year the change in fair value of TCIG bonds was US$20,834 (2017: FINANCIAL US$20,795) (note 15). STATEMENTS 2018 2017 2018 Fair value US$ 526,750 697,584 Less current portion (150,000) (150,000) 547,584 US$ 376,750 On December 28, 2009 TCI Bank, a beneficial owner of 150 non-callable bonds issued by TCIG, transferred these bonds to NIB pursuant to a Deed of Assignment. The TCIG bonds have a US$10,000 par value each, a coupon rate of 8% and a maturity date of November 30, 2021. The TCIG bonds are repayable in twenty equal semi-annual instalments of US$75,000 on the 31st day of May and the 30th day of November in each and every year commencing on May 31, 2011. The 150 non-callable bonds were transferred for a total cash consideration of US$1,750,000. Interest is payable on a semi-annual basis and secured by TCIG’s reserves and assets. The premium paid is being recognised as a fair value change over the period to maturity. 33 63

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 9. Long-term receivables, continued (b) TCIG bonds, continued During the year NIB earned US$20,008 (2017: US$31,991) of interest on the non- callable bonds which was included as part of interest and other income in the statement of income, expenses and reserves. The total remaining face value of TCIG bonds due at year end was as follows: 2018 2017 Within one year US$ 150,000 150,000 More than one year, less than two years US$ 150,000 150,000 More than two years, less than three years 150,000 150,000 More than three years, less than four years 150,000 – 600,000 450,000 10. Long-term deposits 2018 2017 FINANCIAL Current account US$ 53,849 53,849 STATEMENTS Certificates of deposit 17,298,642 17,298,642 17,352,491 17,352,491 2018 Less: first and second interim distributions Current account (21,540) (21,540) 64 Certificates of deposit (6,919,456) (6,919,456) (6,940,996) (6,940,996) Balance Current account 32,309 32,309 Certificates of deposit 10,379,186 10,379,186 10,411,495 10,411,495 . (30,155) (30,155) Less: reductions in fair value (9,687,240) (9,687,240) Current account (9,717,395) (9,717,395) Certificates of deposit 694,100 . US$ 694,100 The carrying value of long-term deposits at year-end were as follows: 2018 2017 Current account US$ 2,154 2,154 Certificates of deposit 691,946 691,946 694,100 US$ 694,100 34

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 10. Long-term deposits, continued All long-term deposits are held with TCI Bank. TCI Bank was placed into provisional liquidation on April 9, 2010 and liquidation on October 29, 2010. NIB management estimated a 56% reduction in fair value of NIB’s deposits with TCI Bank as being appropriate at March 31, 2018 and March 31, 2017, representing NIB management’s best estimate of an appropriate fair value adjustment in the circumstances. On September 10, 2012 NIB received a first interim distribution of US$3,511,002 from the liquidator of TCI Bank representing 20 cents on the dollar for NIB’s current account (US$10,770), certificates of deposit (US$3,459,728) and interest receivable (US$40,504) held with TCI Bank. On May 20, 2015 NIB received a second interim distribution of US$3,511,002 from the liquidator of TCI Bank representing 20 cents on the dollar for NIB’s current account (US$10,770), certificates of deposit (US$3,459,728) and interest receivable (US$40,504) held with TCI Bank. Due to the uncertainty regarding when, and how much, of NIB’s deposits with TCI Bank will be repaid, NIB’s management determined it appropriate to classify the current account and certificates of deposit held with TCI Bank as non-current assets for financial reporting purposes. 11. Property and equipment Land and Furniture & Computer Motor Total FINANCIAL Buildings Fixtures Equipment Vehicles US$ STATEMENTS US$ US$ US$ US$ Cost: 2018 April 1, 2016 Additions 5,108,756 550,304 945,584 272,481 6,877,125 Disposals 10,000 6,930 46,143 65,400 128,473 March 31, 2017 – – – – – April 1, 2017 5,118,756 557,234 991,727 337,881 7,005,598 Additions Disposals 5,118,756 557,234 991,727 337,881 7,005,598 March 31, 2018 – – 21,800 10,655 32,455 – – – (85,000) (85,000) 5,118,756 557,234 1,013,527 263,536 6,953,053 65 35

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 11. Property and equipment, continued Land and Furniture & Computer Motor Total Buildings Fixtures Equipment Vehicles US$ US$ US$ US$ US$ Accumulated depreciation: 1,677,268 459,078 899,360 259,235 3,294,941 203,197 22,974 33,317 9,275 268,763 April 1, 2016 – – – – – Charge for the year Disposals 1,880,465 482,052 932,677 268,510 3,563,704 March 31, 2017 April 1, 2017 1,880,465 482,052 932,677 268,510 3,563,704 Charge for the year 203,766 22,035 27,795 24,901 278,497 Disposals – – – (85,000) (85,000) March 31, 2018 2,084,231 504,087 960,472 208,411 3,757,201 Carrying amounts: 3,238,291 75,182 59,050 69,371 3,441,894 March 31, 2017 3,034,525 53,147 53,055 55,125 3,195,852 March 31, 2018 FINANCIAL The cost of land included in land and buildings was US$70,500 representing US$500 for STATEMENTS land transferred by TCIG to NIB in April 2003 and US$70,000 for land leased for 999 years by TCIG to NIB in November 2012. 2018 Included in land and buildings is the Hon. L. Headley Durham building (previously TC 66 Invest building) located on Grand Turk and the aforementioned 999 year lease from TCIG on 0.56 acres of land where the building is located. NIB purchased the building from TCIG in November 2012. The original cost of the building was US$1,257,808 plus incidentals of US$15,070 while the total lease payment for the land for the entire 999 years is US$70,000. The cost of the building and the total payments for the leased land were paid in full by NIB in November 2012 as part of an Omnibus Agreement between NIB and TCIG. No impairment losses were recognised for the years ended March 31, 2018 and 2017. 12. Investment in TCI Bank Limited At March 31, 2018 NIB owned 2,000,000 (2017: 2,000,000) ordinary shares in TCI Bank with an issued value of US$2,000,000 (2017: US$2,000,000), representing approximately 15.95% of the total issued ordinary shares of TCI Bank. NIB was represented on the board of directors of TCI Bank. As disclosed at notes 10 and 21 to these financial statements NIB also held a current account and certificates of deposit with TCI Bank at March 31, 2018 and 2017. The fair value of this investment at March 31, 2018 and 2017 was assessed by NIB’s management to be US$nil as a consequence of TCI Bank entering provisional liquidation on April 9, 2010 and liquidation on October 29, 2010. 36

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 13. Accounts payable and accrued expenses 2018 2017 Deferred contribution income US$ 479,243 1,004,675 Accrued employment injury costs US$ 495,058 718,058 Accounts payable 305,270 259,536 Accrued short-term benefits 207,904 221,032 Other accrued expenses 209,852 96,879 1,584,354 2,413,153 NIB is liable, per the Ordinance, for the cost of medical services provided in connection FINANCIAL with employment injuries. STATEMENTS NIB’s liabilities for medical costs relating to employment injuries for the period from its 2018 establishment to March 31, 2010 were settled as part of an Omnibus Agreement with TCIG. For the period from April 1, 2010 to March 31, 2012 NIB made an advance payment to the TCI National Health Insurance Board (NHIB) of US$612,000 towards medical costs in connection with employment injuries in the year ended March 31, 2011 and recognised this payment as an expense in that year. In addition, in November 2016, NIB made another payment to NHIB of US$522,000 towards medical costs in connection with employment injuries in the years ended March 31, 2013 to 2015 and US$223,000 towards medical costs in connection with employment injuries in the years ended March 31, 2016 to 2018. No medical care costs were paid or provided for during the years ended March 31, 2012 and March 31, 2013. Medical costs in connection with employment injuries of US$340,058, US$450,000 and US$450,000 were provided for during the years ended March 31, 2014, March 31, 2015 and March 31, 2016, respectively. No medical care costs were provided for during the years ended March 31, 2018 and March 31, 2017. At March 31, 2018 NIB included in accounts payable and accrued expenses US$495,058 (2017: US$718,058) representing NIB’s best estimate of its remaining obligation for medical costs in connection with employment injuries as at that date. Subsequent to the reporting date, and having reached agreement with NHIB, in compliance with the Ordinance, NIB settled its obligations to NHIB for medical costs in connection with employment injuries at March 31, 2018 for US$278,267. 14. Income from, and net realised gains on, available-for-sale financial assets Dividend income, interest income 2018 2017 and realised gains from equity securities US$ 6,419,407 7,884,821 Interest income and realised gains 5,106,164 1,759,706 from government and corporate debt securities 9,644,527 US$ 11,525,571 67 37

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 15. Interest and other income 2018 2017 Interest income from loans and receivables US$ 297,842 245,536 Interest income from savings and current accounts US$ 127,282 107,376 Rental income 425,124 352,912 Other income 128,000 138,667 Change in fair value of TCIG Bond (note 9(b)) 121,016 (20,834) 27,155 (20,795) 653,306 497,939 Rental income of US$128,000 (2017: US$138,667) is from TCIG. It relates to the rental of office space included in property and equipment. 16. Benefits 2018 2017 FINANCIAL Long-term benefits US$ 10,015,345 8,766,189 STATEMENTS Retirement pension benefit 1,249,319 1,082,621 Survivors benefit 853,178 2018 Invalidity pension 679,318 810,670 Old age non contributory 207,970 710,207 68 Funeral grant 119,348 203,840 Retirement grant 15,525 145,403 Survivors grant 13,140,003 5,825 Short-term benefits 11,724,755 Maternity allowance 1,289,572 Sickness benefit 1,155,036 1,189,622 Maternity grant 966,911 244,700 223,387 Employment injury benefits/disablement 2,689,308 and death benefits 2,379,920 Disablement benefit 276,120 259,662 Injury benefit 105,245 84,002 Death benefit 85,610 Constant attendance allowance 73,170 7,800 Death grant 7,800 – 2,390 437,074 464,725 US$ 16,294,036 14,541,749 Refer to note 23 for additional information on long-term benefits. No medical care costs were provided for in the years ended March 31, 2018 and 2017 (note 13). 38

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 17. General and administrative expenses 2018 2017 Salaries and wages US$ 2,570,386 2,531,745 Impairment loss on surcharges receivable (note 6) US$ 608,257 163,706 Impairment loss on contributions receivable (note 6) 577,099 183,394 Depreciation 278,497 268,763 Professional fees 214,129 202,523 Maintenance expenses 192,600 198,008 Security 142,324 130,379 Board of directors and committee allowances 139,526 134,132 Travel and subsistence 132,106 92,607 Other expenses 115,782 272,349 Insurance 114,612 126,375 Office supplies, stationery and postage 110,055 53,376 Training 101,532 89,836 Rent and utilities 99,717 106,572 Communications 78,178 99,036 Vehicle expenses 36,209 37,194 Computer services 32,915 14,844 Advertising 26,462 45,382 Employee allowances 19,805 21,529 Impairment loss on other receivables – 4,731 5,590,191 4,776,481 18. Investment expenses 2018 2017 FINANCIAL STATEMENTS Brokers’ fees on available-for-sale financial assets 2018 UBS Financial Services Inc. US$ 1,341,974 1,112,890 Salaries of NIB’s investment personnel 78,000 78,000 44,354 Other investment expenses 40,080 1,235,244 US$ 1,460,054 19. Other comprehensive income The US$19,121,235 other comprehensive income for the year ended March 31, 2018 (2017: US$7,409,373) related to changes in market value of available-for-sale financial assets in the year ended March 31, 2018 and 2017, respectively. 69 39

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 19. Other comprehensive income, continued The changes in market value of available-for-sale financial assets included in NIB’s reserves at March 31, 2018 and 2017 can be analysed as follows: Unrealised changes in market value at March 31 Movement 2018 2017 2018 Equity securities US$ 31,372,487 11,170,247 20,202,240 Government debt securities US$ (714,478) (376,932) (337,546) Corporate debt securities (151,626) 591,833 (743,459) 30,506,383 11,385,148 19,121,235 Unrealised changes in Movement market value at March 31 2017 2017 2016 Equity securities US$ 11,170,247 3,541,538 7,628,709 Government debt securities US$ (376,932) 396,024 (772,956) Corporate debt securities 591,833 38,213 553,620 11,385,148 3,975,775 7,409,373 20. Related party balances and transactions The following are transactions and balances with TCI Bank and TCIG, related parties by FINANCIAL virtue of significant influence and common directors, including transactions with key STATEMENTS management personnel, which are not separately disclosed elsewhere in these financial statements. 2018 2018 2017 TCI Bank transactions US$ –– US$ –– Partial repayment of long-term deposits Partial repayment of interest on long-term deposits TCI Bank balances US$ 10,411,495 10,411,495 Long-term deposits (gross of change in fair value) US$ (9,814,407) (9,814,407) Reduction in fair value of assets held with TCI Bank US$ 2,000,000 2,000,000 Investment (before change in fair value) US$ (2,000,000) (2,000,000) Reduction in fair value of investment US$ Interest receivable (gross of change in fair value) 98,084 98,084 70 40

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 20. Related party balances and transactions 2018 2017 TCIG transactions US$ 4,936,994 4,529,350 Collection of contributions US$ 3,069,706 2,832,184 (Employer and employees’ contributions) US$ 1,867,288 1,697,166 Contributions – private sector (Employer and employees’ contributions) US$ 297,842 245,536 Contributions – civil servants US$ 223,000 522,000 Interest income Payment of employment injury costs to NHIB US$ 154,708 149,324 NIB’s payment of NIB contributions Repayment of Treasury bond US$ 150,000 150,000 NIB’s payment of NHIB contributions US$ 141,607 151,940 Rental income Repayment of TCI Investment US$ 128,000 138,667 Agency Ltd. loans US$ – – Employment injury costs accrued US$ – – TCIG balances US$ 495,058 718,058 FINANCIAL Accrued NHIB employment injury costs US$ 450,000 600,000 STATEMENTS Treasury bonds – at par US$ Interest receivable 12,103 16,008 Per the Ordinance, contributions from TCIG of US$1,867,288 (2017: US$1,697,166) 2018 comprise contributions relating to TCIG officers only and these are reflected in the statement of income, expenses and reserves as contributions from civil servants. Contributions for TCIG employees are charged at the same rates as the private sector and, on this basis, have been included within the private sector contributions in the statement of income, expenses and reserves and for the purpose of allocating contributions amongst branches. Key management personnel compensation US$ 2018 2017 Salary of the director and deputy director US$ Allowances of the board of directors US$ 181,053 216,000 Housing and gratuity benefits of the director US$ 85,200 84,000 Other benefits of the director and deputy director 39,295 12,000 4,899 8,344 71 41

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2018 Year ended March 31, 2018 72 21. Financial instruments NIB has exposure to the following risks from its use of financial instruments: (a) Credit risk (b) Liquidity risk (c) Market risk This note presents information about NIB’s exposure to each of the above risks, NIB’s objectives, policies and processes for measuring and managing risk, and NIB’s management of capital. Further quantitative disclosures are included throughout these financial statements. Risk management framework The Minister with responsibility for National Insurance (the Minister) appoints the Directors. The Directors have full discretionary power to direct, manage, allocate and rebalance or liquidate NIB’s investments in compliance with the terms of the IPS. The Directors established the IPS which communicates the investment philosophy of the Directors regarding NIB’s investments. The IPS creates a general framework within which the investment assets of NIB can be managed. The IPS envisages a rebalancing exercise at least semi-annually to keep asset allocations within recommended ranges. At March 31, 2018 and 2017 NIB kept within its asset allocation. The Directors may appoint such person(s) as necessary to achieve NIB’s investment objectives. The pursuit of these objectives also involves assuming responsibility for the establishment and oversight of NIB’s risk management framework and for developing and monitoring NIB’s risk management policies. NIB’s risk management policies are established to identify and analyse the risks faced by NIB, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and NIB’s activities. The Directors appoint an Investment Committee and designate its Chairman who is a Director. The Directors also appoint an Investment Manager who has responsibility for the day to day management of NIB’s assets. NIB’s investment portfolio is comprised of mainly quoted equity securities and debt securities, long-term receivables and deposits. (a) Credit risk Credit risk is the risk that a contributor or counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with NIB, resulting in a financial loss to NIB. Credit risk is monitored on a regular basis by the Investment Committee. 42

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 21. Financial instruments, continued (a) Credit risk, continued NIB management are of the opinion that NIB’s policies governing delinquent accounts and provisions for impairment / fair value adjustments ensure that these financial statements accurately reflect any credit risk associated with amounts due from contributors and other debtors. As explained at note 3(e)(i), NIB recognises surcharges on an accruals basis. The maximum exposure to credit risk is represented by the carrying amount of each financial asset on the statement of financial position. The maximum exposure to credit risk at the reporting date was: Carrying Amount 2018 2017 Current assets: US$ 24,751,772 20,639,287 Cash and cash equivalents 3,479,874 3,679,532 Contributions and other receivables 4,322,933 4,200,000 Short-term investment 150,000 150,000 Current portion of long-term receivables 32,704,579 28,668,819 Non-current assets: Available-for-sale financial assets 254,874,198 215,109,460 FINANCIAL Long-term receivables 5,376,750 5,547,584 STATEMENTS Long-term deposits 694,100 694,100 260,945,048 221,351,144 US$ 293,649,627 250,019,963 2018 The exposure to credit risk for contributions receivable, excluding surcharges, at the reporting date, by type of counterparty and by type of contribution risk accepted, was as follows: Carrying Amount 2018 2017 Private employers US$ 2,836,470 2,972,193 Self-employed 100,475 90,067 US$ 2,936,945 3,062,260 73 43

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 21. Financial instruments, continued (a) Credit risk, continued The exposure to credit risk for contributions receivable at the reporting date, by geographical location, was as follows: 2018 Carrying Gross Impairment Amount Providenciales US$ 4,034,712 1,393,228 2,641,484 Grand Turk US$ 293,104 79,909 213,195 North Caicos 82,799 27,319 55,480 South Caicos 32,820 20,091 12,729 Pine Cay 10,304 1,030 9,274 Middle Caicos 12,181 7,756 4,425 Salt Cay 1,190 832 358 4,467,110 1,530,165 2,936,945 2017 Carrying Gross Impairment Amount Providenciales US$ 3,813,221 1,021,984 2,791,237 Grand Turk 259,601 61,837 197,764 North Caicos 80,412 29,101 51,311 FINANCIAL South Caicos 30,697 19,963 10,734 STATEMENTS Pine Cay 9,182 918 8,264 Middle Caicos 3,502 1,172 2,330 2018 Salt Cay 1,645 1,025 620 US$ 4,198,260 1,136,000 3,062,260 NIB’s activities may give rise to risk at the time of settlement of transactions. Settlement risk is the risk of loss due to the failure of an entity to honour its obligations to deliver cash, securities or other assets as contractually agreed. For certain transactions NIB mitigates this risk by conducting settlements through a compliance officer to ensure that a contribution is settled only when both parties have fulfilled their contractual settlement obligations. 74 44

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 21. Financial instruments, continued (a) Credit risk, continued The aging of contributions receivable, excluding surcharges, at the reporting date, by type of counterparty, was as follows: 2018 2017 Gross Impairment Gross Impairment Private employers US$ 191,198 38,239 109,259 21,853 Past due 132,746 53,098 88,623 35,449 Not later than one month 1,468,475 1,037,707 1,044,659 686,552 Later than one month but 2,414,549 2,748,342 274,836 4,206,968 241,454 3,990,883 1,018,690 not later than two months 1,370,498 Later than two months Outstanding but not past due 21,216 4,242 17,348 3,469 Self-employed 19,678 7,871 17,792 7,117 Past due 162,304 141,860 127,016 102,202 Not later than one month 56,944 5,694 45,221 4,522 Later than one month but 260,142 159,667 207,377 117,310 not later than two months Later than two months Outstanding but not past due US$ 4,467,110 1,530,165 4,198,260 1,136,000 FINANCIAL STATEMENTS The movement in the allowance for impairment in respect of contributions receivable during the year is disclosed at note 6 to these financial statements. 2018 The allowance for impairment reflects estimates of losses arising from the failure or inability of NIB’s contributors to make required payments. The allowance is based on the aging of contributor accounts, contributor credit worthiness and NIB’s historical write-off experience. Changes to the provision may be required if the financial condition of its contributors improve or deteriorate. An improvement in financial condition may result in lower actual write-offs. Historically, changes to the estimate of losses have not been material to NIB’s financial position and results of operations. There was no change to the basis for estimating the impairment allowance for contributions receivable in the years ended March 31, 2018 and 2017. 45 75

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 21. Financial instruments, continued (a) Credit risk, continued Provision is made against outstanding contributions receivable and surcharges on the following basis: 2018 2017 Outstanding but not past due 10% 10% Past due: 20% 20% 40% 40% Not later than one month 90% 90% Later than one month but not later than two months Later than two months Contributions receivable with pending legal matters that are past due for more than 90 days are 50% provided for (2017: 50%) and all surcharges receivable with pending legal matters at March 31, 2018 were 90% provided for (2017: 90%). At the reporting date, NIB held financial assets with the following TCI entities: 2018 2017 CIBC 10,997,429 Cash at banks – savings and current accounts US$ 15,562,943 Short-term investment 4,322,933 4,200,000 Scotiabank Cash at banks – savings and current accounts 2,241,672 2,232,605 FINANCIAL FortisTCI Limited STATEMENTS Fortis bonds 5,000,000 5,000,000 TCIG 2018 Treasury bonds – at par 450,000 600,000 TCI Bank (gross of change in fair value) 10,509,579 10,509,579 US$ 38,087,127 33,539,613 The following summarises financial assets held with TCI Bank at March 31, 2018 and 2017 including those deemed to have suffered a reduction in fair value: 2018 2017 Reduction in Reduction Gross fair value Gross in fair value Other receivables US$ 98,084 97,012 98,084 97,012 Long-term deposits US$ 10,411,495 9,717,395 10,411,495 9,717,395 10,509,579 9,814,407 10,509,579 9,814,407 76 46

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 21. Financial instruments, continued FINANCIAL STATEMENTS (b) Liquidity risk 2018 Liquidity risk is the risk that NIB will encounter difficulty in meeting obligations arising from its financial liabilities that are settled by delivering cash or another financial asset, or that such obligations will have to be settled in a manner disadvantageous to NIB. NIB’s policy for managing liquidity is to have sufficient liquidity to meet its liabilities, including estimated payments of benefits, as and when due, without incurring undue losses or risking damage to NIB’s reputation. NIB’s financial assets include long-term receivables which are generally illiquid. In addition, NIB’s deposits with TCI Bank are now subject to restrictions over their future redemption. NIB also holds a TCIG issued debt security investment which is exposed to redemption restrictions (note 9(b)). Consequently, NIB may not be able to quickly liquidate some of its investments in these instruments in order to meet its liquidity requirements. NIB’s U.S. equity securities are considered to be readily realisable as they are listed on United States stock exchanges. NIB’s overall liquidity risks are monitored on a regular basis by the Investment Committee. At the reporting date there were no significant concentrations of liquidity risk. NIB ensures that it has sufficient liquid financial assets comprising cash and cash equivalents to meet its current financial liabilities. NIB’s management believe the placing of TCI Bank into liquidation has not affected NIB’s ability to meet its current financial liabilities. The following are the contractual maturities of non-derivative financial instruments, including estimated interest payments and the impact of netting agreements: 2018 Carrying Contractual Under 1 1-2 years 2-4 years More than 4 Amount cash flows year US$ years US$ US$ US$ US$ US$ Cash and cash equivalents 24,751,772 24,751,772 24,751,772 –– – Contributions and other receivables 3,479,874 3,479,874 3,479,874 –– – Short-term investment 4,322,933 4,404,697 4,404,697 –– – Available-for-sale financial assets 4,467,804 207,520,963 10,531,814 51,010,885 Long-term receivables 254,874,198 273,531,465 7,441,500 (current and non-current) 5,526,750 8,982,500 440,000 428,000 673,000 694,100 Long-term deposits 694,100 694,100 – – – Accounts payable and accrued – (1,584,354) (1,584,354) (1,584,354) –– 59,146,485 expenses 292,065,273 314,260,054 35,959,793 207,948,963 11,204,814 77 47

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 21. Financial instruments, continued (b) Liquidity risk, continued Carrying Contractual 2017 1-2 years More than 4 Amount cash flows US$ 2-4 years years Under 1 US$ US$ year US$ US$ US$ Cash and cash equivalents 20,639,287 20,639,287 20,639,287 – –– Contributions and other receivables 3,679,532 3,679,532 3,679,532 – –– Short-term investment 4,200,000 4,274,046 4,274,046 – –– Available-for-sale financial assets 3,974,172 174,306,156 16,324,717 73,118,835 Long-term receivables 215,109,460 267,723,880 (current and non-current) 5,697,584 9,434,500 452,000 440,000 844,000 7,698,500 Long-term deposits 694,100 694,100 – – – 694,100 Accounts payable and accrued (2,413,153) (2,413,153) (2,413,153) – – – expenses 247,606,810 304,032,192 30,605,884 174,746,156 17,168,717 81,511,435 Due to the uncertainties regarding the status of NIB’s assets held at TCI Bank, NIB management consider it appropriate to recognise the maturity period of assets held at TCI Bank, net of the current portion, as greater than four years for liquidity disclosure purposes. (b) Market risk FINANCIAL Market risk is the risk that changes in market prices, such as interest rates and equity STATEMENTS prices, will affect NIB’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. NIB’s strategy for the management of market risk is driven by NIB’s investment 2018 objectives as reflected in its IPS. NIB’s market risk is managed on a regular basis by the Investment Committee. NIB may not invest in margin transactions, acquisition of shares that would permit the portfolio to exercise control over the issuer, uncovered speculative positions, direct investments in physical commodities, futures contracts and options and derivative investments. (i) Interest rate risk NIB’s operations are subject to the risk of interest rate fluctuation to the extent that interest-earning assets mature or reprice at different times or in differing amounts. Risk management activities are aimed at optimising net interest income, given market interest rate levels consistent with NIB’s strategies. 78 48

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 21. Financial instruments, continued (c) Market risk, continued (i) Interest rate risk, continued At the reporting date, the interest rate profile of NIB’s interest-bearing financial instruments was: Cash flow sensitivity analysis for fixed rate instruments 2018 2017 Fixed rate instruments: US$ 4,322,933 4,200,000 Financial assets 39,766,983 48,794,285 Short-term investment Available-for-sale financial assets 5,526,750 5,697,584 Long-term receivables – – (current and non-current) US$ 49,616,666 58,691,869 Financial liabilities A change of 100 basis points in interest rates for fixed rate instruments at the FINANCIAL reporting date would have increased/(decreased) income in the statement of STATEMENTS income, expense and reserves by US$496,167/(US$496,167) (2017: US$586,919/(US$586,919)) assuming all other variables remained constant. 2018 While long-term deposits held at TCI Bank were interest bearing, following TCI Bank being placed into provisional liquidation on April 9, 2010, and liquidation on October 29, 2010, interest has ceased to accrue on these amounts. These have therefore been excluded from the above analysis. NIB’s investment portfolio is permitted to utilise derivatives for hedging and income enhancing strategies. However, derivatives are not used to expressly employ leverage or other speculative strategies. Therefore, unless a specific type of security is allowed by the IPS, the Investment Manager must seek permission from the Investment Committee to invest in derivative instruments. Cash flow sensitivity analysis for variable rate instruments 2018 2017 Variable rate instruments: US$ 24,002,853 20,169,929 Financial assets US$ – – Cash and cash equivalents 24,002,853 20,169,929 Financial liabilities 79 49

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 21. Financial instruments, continued (c) Market risk, continued (i) Interest rate risk, continued A change of 100 basis points in interest rates for variable rate instruments at the reporting date would have increased/(decreased) income in the statement of income, expenses and reserves by US$240,029/(US$240,029) (2017: US$201,699/(US$201,699)) assuming all other variables remained constant. NIB’s interest rate risks are monitored on a regular basis by the Investment Committee and third party investment managers. (ii) Price risk Price risk is the risk that the fair value of the financial instrument will fluctuate as a result of changes in market prices other than those arising from interest rate risk, whether caused by factors specific to an individual investment, its issuer or factors affecting all instruments traded in the market. NIB’s procedures require price risks to be monitored on a regular basis by the Investment Committee and third party investment managers. NIB’s policy over concentration of its investment portfolio profile, based on its IPS, was as follows at March 31: Asset Class 2018 2017 FINANCIAL Cash and money market instruments 0–10% 0–10% STATEMENTS Non U.S. equities 5–30% 5–30% Fixed income 10–40% 10–40% 2018 Hedge Funds 5–15% 5–15% U.S. equities Large cap value 6–15% 6–15% Large cap growth 6–15% 6–15% Mid cap growth 0–05% 0–05% Small cap core 0–05% 0–05% Convertibles 2–08% 2–08% Commodities 0–08% 0–08% Private equity 0–10% 0–10% 80 50

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 21. Financial instruments, continued (c) Market risk, continued (ii) Price risk, continued The following table sets out concentration of the investment portfolio held by NIB at March 31: Asset Class According to IPS 2018 % Amount Cash and money market instruments US$ 17,804,615 6.2% Non U.S. equities 73,060,584 25.3% Fixed income 50,434,684 17.4% Hedge Funds 27,791,367 U.S. equities 9.6% 32,174,162 Large cap value 30,815,071 11.1% Large cap growth 11,886,204 10.7% Mid cap growth 10,272,747 Small cap core 20,630,218 4.1% Convertibles 3.5% Commodities 5,576,911 7.1% Private equity 9,025,463 1.9% US$ 289,472,026 3.1% 100% Asset Class According to IPS 2017 % FINANCIAL Amount STATEMENTS Cash and money market instruments US$ 13,230,034 5.4% Non U.S. equities 57,329,340 23.3% Fixed income 50,037,271 20.4% 2018 Hedge Funds 24,506,031 10.0% U.S. equities 26,617,750 10.8% Large cap value 26,689,464 10.9% Large cap growth 10,443,527 Mid cap growth 10,846,429 4.2% Small cap core 13,740,846 4.4% Convertibles 5.6% Commodities 6,866,402 2.8% Private equity 5,335,626 2.2% US$ 245,642,720 100.0% NIB kept its asset allocation within ranges recommended by the IPS at March 31, 2018 and March 31, 2017. 51 81

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 21. Financial instruments, continued (c) Market risk, continued (ii) Price risk, continued The investment portfolio held by NIB at March 31, 2018 and March 31, 2017 was presented in these financial statements as follows: 2018 2017 Cash and cash equivalents US$ 6,943,530 7,405,642 Cash at investment managers Cash at banks – savings and 17,804,615 13,230,034 current accounts 4,322,933 4,200,000 Short-term investment 254,874,198 215,109,460 Available-for-sale financial assets 5,526,750 5,697,584 Long-term receivables US$ 289,472,026 245,642,720 FINANCIAL In compliance with internal investment guidelines cash held with investment STATEMENTS managers is considered by NIB as part of available-for-sale financial assets (note 5). Effective April 1, 2011 the long term deposits held with TCI Bank were, for IPS reporting purposes, written down to zero. The balance reported per the financial statements of US$694,100, net of impairment, (note 10) at March 31, 2018 (2017: US$694,100) has therefore been excluded from the above tables. (iii) Fair value 2018 The following table sets out the carrying amounts and fair values of financial assets, including their levels in the fair value hierarchy. It does not include the 82 fair value information for short-term financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Due to their short-term nature, the carrying amounts of NIB’s certain financial assets and liabilities approximate their fair value. Carrying Level 1 2018 Level 3 Amount US$ US$ Fair Value US$ Level 2 US$ Available-for-sale financial assets: 215,107,215 178,561,612 36,545,603 – Equity securities 30,718,692 – 30,718,692 – Government securities 9,048,291 – – Debt securities 5,376,750 – 9,048,291 5,376,750 694,100 – – 694,100 Long-term receivables 6,070,850 Long-term deposits 260,945,048 178,561,612 – 76,312,586 52

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 21. Financial instruments, continued (c) Market risk, continued (iii) Fair value, continued Carrying Level 1 2017 Level 3 Amount US$ US$ Fair Value US$ Level 2 US$ Available-for-sale financial assets: 166,315,175 136,751,353 29,563,822 – Equity securities 29,251,113 – 29,251,113 – Government securities 19,543,172 – 19,543,172 – Debt securities 5,547,584 – 5,547,584 694,100 – – 694,100 Long-term receivables 6,241,684 Long-term deposits 221,351,144 136,751,353 – 78,358,107 Observable prices or model inputs are usually available in the market for listed debt and equity securities. Availability of observable market prices and model inputs reduces the need for management judgement and estimation and also reduces the uncertainty associated with determining fair values. Availability of observable market prices and inputs varies depending on the products and markets and is prone to changes based on specific events and general conditions in the financial markets. The fair value of investment in private equity funds is determined using FINANCIAL unadjusted net asset value (level 2 valuation). The unadjusted net asset value STATEMENTS is used when the units in a fund are redeemable at the reportable net asset value at, or approximately at, the measurement date. 2018 If the inputs used to measure the fair value of an asset or liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. NIB’s equity securities classified as available-for-sale financial assets are listed on US and non-US stock exchanges. For such investments, a five percent increase in value at the reporting date would have increased income in the statement of income, expenses and reserves by US$10,755,361 (2017: US$8,315,759) and an equal change in the opposite direction would have decreased income in the statement of income, expenses and reserves by US$10,755,361 (2017: US$8,315,759). The method applied to determine the fair value of long-term receivables at the reporting date was a discounted cash flow model. This valuation model considers the present value of expected payment, discounted using a risk- adjusted discount rate. 83 53

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 FINANCIAL 21. Financial instruments, continued STATEMENTS (c) Market risk, continued (iii) Fair value, continued The value of NIB’s investment holdings with TCI Bank has been reduced by management’s best estimate following TCI Bank entering provisional and then full liquidation. A 10% decrease in the provision on the gross, non-secured, non-equity, balance would have increased the change in fair value and net income in the statement of income, expenses and reserves for the year by US$1.75 million (2017: US$1.75 million). 22. Capital management Under the Regulations NIB is required to maintain the following reserves: (a) The minimum level of the Long-term Benefit Reserve shall be equivalent to the expenditure for benefits under the Long-term Benefit Branch during the three previous financial years. (b) The minimum level of the Short-term Benefit Reserve shall be equivalent to one- fourth of the expenditure for benefits under the Short-term Benefit Branch during the two previous financial years. (c) An Employment Injury Benefit Reserve shall be constituted to finance injury benefit, disablement grant, death grant and medical care by transferring thereto annually as much of the excess of income over expenses of the Employment Injury Benefit Branch as is needed to maintain the level of the Employment Injury Benefit Reserve at one-half of the amount paid for the said benefits in the two previous financial years. 2018 The Employment Injury Benefit Reserve at March 31, 2018 and 2017 was determined as follows: Paid benefits Required 2018 2017 reserve at March 31, 2018 Injury benefit US$ 328,245 606,002 467,124 Death grant 2,390 – 1,195 Accrued employment – – 495,058 injury costs (note 13) US$ 330,635 606,002 963,377 84 54

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 22. Capital management, continued Paid benefits Required 2017 2016 reserve at March 31, 2017 Injury benefit US$ 606,002 102,393 354,198 Accrued employment – – 718,058 injury costs (note 13) US$ 606,002 102,393 1,072,256 At March 31, 2018 NIB management decided to include in the Employment Injury Benefits Reserve the accrued employment injury costs of US$495,058 (2017: US$718,058) as these were the expected amounts that would ultimately be paid from this reserve. During the year ended March 31, 2018 US$108,879 was transferred to the Disablement and Death Benefit Reserve from the Employment Injury Benefit Reserve (2017: US$241,487) so as to maintain the required reserve for Employment Injury Benefit at March 31, 2018 and March 31, 2017. There was no change to NIB’s management of capital during the years ended March 31, 2018 and 2017. NIB has complied with the above regulatory imposed capital requirements at the year-end. NIB is not subject to any externally imposed capital requirements. 23. Actuarial review FINANCIAL STATEMENTS Actuarial present value of promised retirement benefits NIB has elected to apply IAS 26 for retirement benefits which requires the actuarial 2018 present value of promised retirement benefits to be recognised on the statement of financial position, in the notes to the financial statements or in an accompanying actuarial report. NIB has chosen to disclose the actuarial present value of promised retirement bMeanrecfhits3i1n, t2h0e1n2otes to these financial statements. The 8th actuarial review of NIB was conducted by Trinity Consulting Ltd. (the Actuary) at March 31, 2016 and a report issued on March 9, 2017 (the 7th actuarial review was conducted by the Actuary at March 31, 2013 and a report issued on June 25, 2014). NIB provides retirement and other benefits to qualifying beneficiaries. A summary of these benefits is disclosed at note 3(e)(iv) to these financial statements. NIB currently finances the Fund by considering expected cash inflows from contributors and cash outflows to beneficiaries over an extended period, alongside the assets that have accumulated to date from contributions exceeding benefit payments. The actuarial present value of promised retirement benefits has been calculated on an accrued benefits basis using a current salary approach. 85 55

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2018 Year ended March 31, 2018 86 23. Actuarial review, continued Actuarial present value of promised retirement benefits, continued Under this methodology the actuarial present value of promised retirement benefits at March 31, 2016, the date of NIB’s latest actuarial review, was US$459 million (March 31, 2013: US$388 million). The next actuarial review is scheduled to be conducted as at March 31, 2019. The key assumptions and methods used in this calculation were as follows:  Inflation – 2.3% per annum (2013: 2.5% per annum)  Discount rate – 4.5% per annum (2013: 4.5% per annum)  Average retirement age – 65 years old (2013: 63 years old)  Other than in death, all active insured persons in 2015/16 are assumed to reach age 65 (2012/13: 63) and qualify for a retirement pension  Mortality rate – The average life expectancy in 2016 is assumed to be as follows: i. A 65 year old current male beneficiary – 16.2 years (2013: 16.2 years) ii. A 65 year old current female beneficiary – 17.5 years (2013: 17.5 years) The calculation of the actuarial present value of promised retirement benefits is sensitive to the key assumptions and methods used. The Fund had total reserves of US$191 million at March 31, 2016 (2013: US$153 million excluding provisions for long-term benefits, other than retirement benefits). At March 31, 2016 there was therefore a shortfall of US$268 million (2013: US$235 million) between the total reserves of the Fund of US$191 million (2013: US$153 million) and the actuarial present value of promised retirement benefits of US$459 million (2013: US$388 million (excluding provisions for long-term benefits, other than retirement benefits)). The Directors are examining ways in which this shortfall can be resolved. All key assumptions remained the same for the actuarial present value of promised retirement benefits calculations at March 31, 2016 and at March 31, 2013 with the exception of the inflation rate, which decrease from 2.5% to 2.3%, and the average retirement age, which increased from 63 to 65 years old. If the average retirement age assumption had remained the same the actuarial present value of promised retirement benefits at March 31, 2016 would have increased by US$71 million to US$530 million. If the discount rate had increased from 4.5% to 5% the actuarial present value of promised retirement benefits at March 31, 2016 would have decreased by US$44 million to US$415 million. 56

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 23. Actuarial review, continued Actuarial present value of promised retirement benefits, continued The actuarial present value of promised retirement benefits at March 31, 2016 and 2013 can be classified as follows: Vested Unvested Total At March 31, 2016 US$ 80,500,000 378,500,000 459,000,000 At March 31, 2013 US$ 59,300,000 328,700,000 388,000,000 Vested benefits are benefits, the rights to which, under the conditions of National FINANCIAL Insurance (Benefit) Regulations, are not conditional on continued employment. STATEMENTS The conditions for the promised retirement benefits to become vested are as follows: 2018 (a) An insured person other than a temporarily resident employed person has attained the age of sixty-five years; and (b) has retired from insurable employment or shows to the satisfaction of NIB that the insured person is no longer substantially employed in insurable employment; and (c) satisfies the relevant contribution conditions; I. that not less than one hundred and fifty contributions (three years) have been paid by the insured person; and II. that not less than five hundred contributions (ten years), including those referred to above, have been paid by or credited to the insured person. The actuarial present value of long-term benefits, other than retirement benefits The actuarial present value of long-term benefits, other than retirement benefits, was quantified by the Actuary at March 31, 2016, 2017 and 2018 and recognised in NIB’s financial statements in accordance with IAS 37, as follows: Present value at Change reporting date during the year At March 31, 2018 US$ 36,120,000 3,840,000 At March 31, 2017 US$ 32,280,000 1,880,000 At March 31, 2016 US$ 30,400,000 1,300,000 The change in present value of long-term benefits, other than retirement benefits, of US$3,840,000 during the year ended March 31, 2018 (2017: US$1,880,000) was recognised in the statement of income, expenses and reserves. 87 57

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2018 23. Actuarial review, continued The actuarial present value of long-term benefits, other than retirement benefits, continued The details of the actuarial present value of long-term benefits, other than retirement benefits, at the reporting date was as follows: Long-term benefit branch 2018 2017 Change Invalidity pension US$ during the year Survivors’ benefit US$ Non-contributory old aged pension US$ 12,933,000 Employment injury benefit branch 13,995,000 10,890,000 2,043,000 Employment injury benefit 13,280,000 715,000 Total 3,950,000 310,000 30,878,000 3,640,000 3,068,000 5,242,000 27,810,000 36,120,000 4,470,000 772,000 32,280,000 3,840,000 FINANCIAL The key assumptions and methods used in this calculation of present value of other long- STATEMENTS term benefits for 2018 and 2017 were as follows: 2018  Inflation – 2.3% per annum (2017: 2.3% per annum) 88  Discount rate – 4.5% per annum (2017: 4.5% per annum)  For widows/widowers pension – assume to be paid for life (2017: assume to be paid for life)  For orphan pension – assume to be paid until age of 21 (2017: assume to be paid until age of 21)  For invalidity pensions NIB is liable for insured persons who are invalid and less than sixty years of age.  For employment injuries NIB is liable for the period the insured person is incapacitated. 24. Contingent liabilities In the ordinary course of its activities NIB is a party to several legal actions. NIB is contingently liable for costs and damages in the event of any adverse finding by the TCI court (the Court) in relation to any of these legal actions. However, it is not possible to predict the decision of the Court or estimate the amount of such awards, if any. Accordingly, no provision has been made in these financial statements regarding these legal proceedings. Management is of the opinion that the resolution of these matters will not have a material impact on NIB’s financial statements. 58

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2018 Year ended March 31, 2018 25. Commitments Employment injury costs NIB is liable, per the Ordinance, for the cost of medical services provided in connection with employment injuries. At March 31, 2018 NIB included in accounts payable and accrued expenses US$495,058 (2017: US$718,058) representing NIB’s best estimate of its remaining obligation for medical costs in connection with employment injuries as at that date. Subsequent to the reporting date, and having reached agreement with NHIB, in compliance with the Ordinance, NIB settled its obligations to NHIB for medical costs in connection with employment injuries at March 31, 2018 for US$278,267. Refer to note 13 for further information. Investments NIB has committed to contribute capital to the following private equity funds: (a) In 2015 NIB committed to contribute US$2.5 million to the capital of Strategic Value Special Situations Feeder Fund III, L.P. (Strategic Value Fund), a private equity fund. This obligation to contribute capital to the Strategic Value Fund is irrevocable, unconditional and not subject to any defense, counterclaim or offset of any kind whatsoever. At March 31, 2018 NIB had a remaining contribution commitment to the Strategic Value Fund of US$225,000 (2017: US$525,000). (b) In 2016 NIB committed to contribute US$5 million to the Portfolio Advisors Private Equity Fund 2015 (Offshore), L.P. (2015 Portfolio Advisors Fund), a private equity fund. This obligation to contribute capital to the Portfolio Advisors Fund is irrevocable and can only be withdrawn or cancelled with the consent of certain partners in accordance with the terms and conditions stipulated in the 2017 Portfolio Advisors Fund’s partnership agreement. At March 31, 2018 NIB had a remaining contribution commitment to the 2017 Portfolio Advisors Fund of US$1.61 million (2017: US$2.26 million). (c) In 2016 NIB committed to contribute US$5 million to the NB Strategic Co. – Investment Cayman Partners III LP (NB Strategic Fund), a private equity fund. This obligation to contribute capital to the NB Strategic Fund is irrevocable and can only be withdrawn or cancelled with the consent of certain partners in accordance with the terms and conditions stipulated in the NB Strategic Fund’s partnership agreement. At March 31, 2018 NIB had a remaining contribution commitment to the NB Strategic Fund of US$2.91 million (2017: US$4.15 million). 89 59

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued Year ended March 31, 2018 25. Commitments Investments, continued (d) In 2018 NIB committed to contribute US$5 million to the Portfolio Advisors Private Equity Fund 2015 (Offshore), L.P. (2017 Portfolio Advisors Fund), a private equity fund. This obligation to contribute capital to the Portfolio Advisors Fund is irrevocable and can only be withdrawn or cancelled with the consent of certain partners in accordance with the terms and conditions stipulated in the Portfolio Advisors Fund’s partnership agreement. At March 31, 2018 NIB had not yet contributed to the 2017 Portfolio Advisors Fund. 26. Subsequent events As stated at notes 13, 16 and 25, at March 31, 2018 NIB included in accounts payable and accrued expenses US$495,058 (2017: US$718,058) representing NIB’s best estimate of its remaining obligation for medical costs in connection with employment injuries as at that date. In September 2018, a further payment of US$278,267 in connection with employment injuries as at March 31, 2018, was made by NIB to NHIB. In 2018 NIB committed to contribute US$5 million to the Pretium Residential Real Estate Fund II Offshore, L.P. (Pretium Fund), a private equity fund. This obligation to contribute capital to the Pretium Fund is irrevocable and can only be withdrawn or cancelled with the consent of certain partners in accordance with the terms and conditions stipulated in the Pretium Fund’s partnership agreement. As at the date of approval of these financial statements NIB had a remaining contribution commitment to the Pretium Fund of US$332,729. In 2019 NIB committed to contribute US$5 million to the EnTrustPermal Special 2018 Opportunities Fund IV Ltd. (EnTrustPermal Fund), a private equity fund. This obligation to contribute capital to the EnTrustPermal Fund is irrevocable and can only be withdrawn or cancelled with the consent of certain partners in accordance with the terms and conditions stipulated in the EnTrustPermal Fund’s partnership agreement. As at the date of approval of these financial statements NIB had a remaining contribution commitment to the EnTrustPermal Fund of US$4,525,000. In 2019 NIB committed to contribute US$5 million to the Madison International Real Estate Liquidity Fund VII (Intl), L.P. (Madison Fund), a private equity fund. This obligation to contribute capital to the Madison Fund is irrevocable and can only be withdrawn or cancelled with the consent of certain partners in accordance with the terms and conditions stipulated in the Madison Fund’s partnership agreement. As at the date of approval of these financial statements NIB had a remaining contribution commitment to the Madison Fund of US$5,000,000. 90 60

ANNUAL REPORT 2018 & 2019 FINANCIAL STATEMENTS OF FINANCIAL STATEMENTS TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD YEAR ENDED MARCH 31, 2019 2019 91

FINANCIAL CONTENTS STATEMENTS TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Financial Statements | Year Ended - March 31, 2019 Independent Auditors' Report 93-96 Statement of Financial Position 97 Statement of Income, Expenses and Reserves 98 Long-Term Benefit Branch 99 Short-Term Benefit Branch 100 Employment Injury Benefit / Disablement and Death Benefit 101 Statement of Changes in Reserves 102 Statement of Cash Flows 103 2019 Notes to Financial Statements 104-161 92

KPMG Ltd. KPMG Building 18 The Village at Grace Bay PO Box 357 Providenciales Turks and Caicos Islands, BWI Telephone: 649 946 4613, Fax: 649 946 4619 INDEPENDENT AUDITORS’ REPORT FINANCIAL STATEMENTS To the Directors of the Turks and Caicos Islands National Insurance Board: 2019 Report on the Audit of the Financial Statements Qualified Opinion We have audited the financial statements of the Turks and Caicos Islands National Insurance Board (NIB), which comprise the statement of financial position as at March 31, 2019, the statements of income, expenses and reserves, changes in reserves and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information. In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial statements give a true and fair view of the financial position of NIB as at March 31, 2019, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS). Basis for Qualified Opinion As disclosed at notes 10 and 12 to these financial statements on April 9, 2010, TCI Bank Limited (TCI Bank) was placed into provisional liquidation and on October 29, 2010, TCI Bank was placed into liquidation. At March 31, 2019 and 2018, NIB held substantial long- term deposits with TCI Bank, a current account with TCI Bank and an investment in TCI Bank. NIB’s management have made certain fair value adjustments in relation to NIB’s various asset holdings with TCI Bank. Such fair value adjustments are disclosed more fully in the aforementioned notes to these financial statements and they include, but are not restricted to, a 45% (2018: 56%) fair value adjustment against the carrying value of NIB’s long-term deposits and current account with TCI Bank. As at the date of this report NIB had received interim distributions of 55 cents on the dollar from the liquidator in respect of its long term deposits and current account. KPMG Ltd., a Turks and Caicos Islands limited liability company incorporated 93 under the Turks and Caicos Islands’ Companies Ordinance, is the Turks and Caicos Islands member firm of KPMG International, a Swiss cooperative.

FINANCIAL Turks and Caicos Islands National Insurance Board STATEMENTS Independent Auditors’ Report March 31, 2019 2019 Basis for Qualified Opinion, continued 94 The ultimate outcome of this matter cannot presently be determined with certainty and the actual fair value adjustment that will ultimately be needed against the carrying value of NIB’s various asset holdings with TCI Bank under IFRS 13, ‘Fair Value Measurement’ , and IFRS 9, ‘Financial Instruments, can only be estimated using information available as at the date of this report and could vary significantly from the estimate provided because of the considerable inherent uncertainty involved. Consequently, the impact on the statement of financial position of the carrying value of these asset holdings with TCI Bank and the impact of the changes in fair value reported in the statements of income, expenses and reserves, as a consequence of TCI Bank being placed into provisional liquidation and subsequently into liquidation, cannot currently be estimated with any reasonable certainty and may be material. We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of NIB in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Emphasis of Matter Without further qualifying our opinion, we draw attention to note 23 to these financial statements. As disclosed at note 23 to these financial statements, NIB has elected to apply International Accounting Standard 26, ‘Accounting and Reporting by Retirement Benefit Plans’, which requires the actuarial present value of promised retirement benefits to be recognised on the statement of financial position, in the notes to the financial statements or in an accompanying actuarial report. NIB has chosen to disclose the actuarial present value of promised retirement benefits of US$636 million at March 31, 2019 (2016: US$459 million), the date of NIB’s latest actuarial review, using a current salary approach, in the notes to these financial statements. NIB had total reserves of US$282 million at March 31, 2019 (2016: US$191 million) and there was therefore a shortfall of US$354 million (2016: US$268 million) between the total reserves and the actuarial present value of promised retirement benefits. As of the reporting date the Directors of NIB are examining ways in which this shortfall can be addressed. KPMG Ltd., a Turks and Caicos Islands limited liability company incorporated under the Turks and Caicos Islands’ Companies Ordinance, is the Turks and Caicos Islands member firm of KPMG International, a Swiss cooperative. 2

Turks and Caicos Islands National Insurance Board Independent Auditors’ Report March 31, 2019 Responsibilities of Management and Those Charged with Governance for the Financial FINANCIAL Statements STATEMENTS Management is responsible for the preparation of financial statements that give a true 2019 and fair view in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing NIB’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate NIB or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing NIB’s financial reporting process. Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  Obtain an understanding of internal control relevant to the audit 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 NIB’s internal control. KPMG Ltd., a Turks and Caicos Islands limited liability company incorporated 95 under the Turks and Caicos Islands’ Companies Ordinance, is the Turks and Caicos Islands member firm of KPMG International, a Swiss cooperative. 3

FINANCIAL Turks and Caicos Islands National Insurance Board STATEMENTS Independent Auditors’ Report March 31, 2019 2019 Auditors’ Responsibilities for the Audit of the Financial Statements, continued 96  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.  Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on NIB’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause NIB to cease to continue as a going concern.  Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Turks and Caicos Islands’ National Insurance Ordinance 1991 and National Insurance (Financial and Accounting) Regulations (hereafter referred to collectively as ‘the Ordinance’), we also confirm that the presentation, structure and content of the financial statements of NIB at March 31, 2019 and for the year then ended are consistent with the requirements of the Ordinance. Intended Use of Report This report is intended solely for the information and use of the Minister of Finance of TCI and the Directors of NIB and should not be relied on by anyone other than these specified parties. Chartered Accountants Providenciales, Turks and Caicos Islands September 26, 2019 KPMG Ltd., a Turks and Caicos Islands limited liability company incorporated under the Turks and Caicos Islands’ Companies Ordinance, is the Turks and Caicos Islands member firm of KPMG International, a Swiss cooperative. 4


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