TCI NIB Annual Report 2016 & 2017

ANNUAL REPORT 2016 & 2017



ANNUAL REPORT 2016 & 2017



TABLE OF CONTENTS 1 Vision and Mission Statement 2 Message from Chairperson 3 Offices and Locations 4 Corporate Information 5 Board of Directors 6 Investment Committee 7 Audit Committee 8 Tender Committee Members 9 Budget Committee Members 10 Management Team 11 General Staff 12 Registrations 12 Contributions 12 Benefits 1

VISION MISSION “To Be “The NIB will be Fiscally Prudent the Most Caring, in the Provision of Trusted, Fiscally Sound Provider of Dependable, Social Security Transparent and Services”. Excellent Social Security Services to our Beneficiaries.” 2

MESSAGE FROM CHAIRPERSON From its humble nascent beginning to its 25th Anniversary, the Turks and Caicos Islands National Insurance Board provides a beacon of hope for many. In the context of its 25th Birthday, I seize this opportunity to reflect on the changes that have taken place over the five (5) year period from 2012 to 2017, as it is this period that I can speak most confidently and eloquently to. In this regard I wish to highlight seven important facts: The National Insurance Board acquired the permanent national headquarters in Grand Turk. In the five years, administrative costs were reduced to a more acceptable level moving it from $5.6m to 3.7m. We made significant strides in reducing arrears from $2.4m to $1.8m. Our Investment policy was reviewed to ensure it is realistic and sufficiently agile to respond to the dynamics of the international and domestic markets. We should note with pride that up to 10 % of the total value of the fund has been earmarked for Domestic investment. Our investment portfolio grew from $158M, and currently stands at approximately $240M, (2017) an accomplishment that contributed significantly to the BBB+ rating this country received by Standard & Poors in 2014. A number of legislative changes were made to the National Insurance Ordinance to ensure that the contributors receive what is justifiably theirs, while simultaneously ensuring the sustainability of the Fund and the continuance of that safety net for all contributors. No institution can run effectively and efficiently without its human resources, and this NIB is no exception. The Board recognized the inadequacies and deficiencies that the staff faced, and it committed to facilitating the necessary changes to ensure openness, fairness, and equity in the institution. Whilst It took several years, on its 25th anniversary, the commissioning and completion of an HR Review/Strategic Plan with the involvement and collaboration of ALL staff of the NIB was scheduled to be implemented April 1, 2017. A Board Governance Policy Manual is being developed, which will institutionalize the governance framework of the organization that, in addition to managing roles and relationships of the staff and Board, will more importantly provide a guiding light for the future Boards of Directors. So, as this noble institution celebrates its 25th year of financial services such as pension, maternity, sick benefits to the people of the TCI, it is on a sound footing. I would hasten to add however that there is no room for complacency and I would urge those currently entrusted with providing the necessary oversight of the NIB to be mindful of the wise words of Judge Benjamin Cardozo back in 1928: “A trustee is held to something stricter than the morals of the marketplace.” To management and the staff, I wish to express my sincere thanks and appreciation to you for an interesting five years. I leave with you something Frank Sesno, Director of the School of Media and Public Affairs at the Georgetown University said: “Your credibility is the only currency you have.” Lillian Misick OBE Chairman 2012 – 2017 3

OFFICES & LOCATIONS HEAD OFFICE – GRAND TURK Headley Durham Building P.O. Box 250 Church Folly Grand Turk Phone: (649)946-1045/8/9 Fax: (649)-946-1362 Email: [email protected] PROVIDENCIALES OFFICE Hon. Hilly A. Ewing Building 1292 Leeward Highway P.O. Box 283 Providenciales Phone: (649)941-5806/5906 Fax: (649)941-5854 SOUTH CAICOS OFFICE Lewis Cox Building Andrews Street Phone: (649)946-3280 Fax: (649)946-3664 NORTH CAICOS OFFICE High Rock, Bottle Creek Phone: (649)946-7200 4

BOARD OF DIRECTORS The Board shall be responsible to the Minister for the administration of the NIB Ordinance. The composition of the Board as at March 31, 2017 LILLIAN MISSICK FLOYD SEYMOUR WALTER GARDINER Chairperson TREVOR COOKE MADELINE POTTER JAMELL ROBINSON CLAYTON BEEN ATHENEE HARVEY-BASDEN 5

SUB-COMMITTEES OF THE BOARD AUDIT COMMITTEE Trevor Cooke CHAIRMAN Hartley Coalbrooke MEMBER MEMBER Clayton Thomas TENDER COMMITTEE MEMBERS Clayton Thomas CHAIRMAN Hartley Coalbrooke MEMBER MEMBER Madeline Potter BUDGET COMMITTEE MEMBERS Floyd Seymour CHAIRMAN Hartley Coalbrooke MEMBER MEMBER Madeline Potter INVESTMENT COMMITTEE Floyd Seymour CHAIRMAN Clayton Thomas MEMBER Jamel Robinson MEMBER Sandy Lightbourne MEMBER Kendric Walters MEMBER 6

MANAGEMENT TEAM WALTER GARDINER RHESA CARTWRIGHT MARIE SMITH LEROY TULL Director Deputy Director Financial Controller Legal Officer KEITH JENNINGS RICHARD TAYLOR DIANDRA MILLS I.S. Manager Internal Auditor Investment Manager MICHAEL DEANE CHRISTA QUELCH DOREAN WILLIAMS CHERRIE FORBES-INGHAM Providenciales Grand Turk Marketing Manager Research & Business Branch Manager Branch Manager Process Analyst 7

GENERAL STAFF GRAND TURK & SOUTH CAICOS EMPLOYEE POSITION Patricia Dunbar Liaison Office Philemon Jennings Data Entry Clerk Nahshon Braithwaite Compliance Officer Denise Bovie Data Entry Supervisor Lyndon Lewis Customer Recon. Officer Grethen Been Customer Care Officer Rowena Roberts Claims Adjuster Christa Quelch Branch Manager Andrenique Ewing Transaction Clerk Walter Gardiner Deputy Director Operations Vanessa Kennedy HR & Administration Officer Teodora Watkins Cleaner Reita Basden Receptionist Keith Jennings Information Technology Manager Almondo Ingham IT Support Officer Richard Taylor Internal Auditor Zalmunna Dickenson Audit Officer Marie Smith Financial Controller Chantal Williams Accounting Clerk Maxine Baptiste Corporate Secretarial Assistant Cherrie Forbes Research & Business Process Analyst Robert Ferrier Accountant (Resigned) Zoe Saunders Account Clerk Carolina Cox Transaction Clerk STAFF MEMBERS AS OF MARCH 2017 8

GENERAL STAFF PROVIDENCIALES & NORTH CAICOS EMPLOYEE POSITION Diandra Mills Investment Officer Rhesa Cartwright Deputy Director Corporate Services Doreen Williams Marketing & PR Manager Leroy Tull Legal Counsel John Ewing Legal Assistant Dexter Parker Senior Compliance Officer Sonovia Clare Compliance Officer Sauricio Mills Compliance Officer Cheryl Hamilton Compliance Officer Emily Parker Compliance Officer Arthur Ashton Compliance Officer Karen Gardiner Data Entry Supervisor Barbara Wilson Customer Reconciliation Clerk Darcia Forbes Transaction Clerk Dianne Ellis Liaison Officer Roschard Bethel Transaction Clerk Claudette Blenman Customer Reconciliation Clerk Michael Dean Branch Manager Oraley Williams Administrative Officer Ronald Seymour Customer Care Officer Elwood Harvey Network Systems Administrator (Resigned) STAFF MEMBERS AS OF MARCH 2017 9

OPERATIONS REPORT REGISTRATIONS The number of new insured persons registration was 2,146 for 2017, an increase of 505 registrants or 30.8% over 2016; 46% being female and 54% were male. REGISTRATION BY AGE GROUP FOR 2016 & 2017 FEMALE MALE AGE RANGE 2017 2016 2017 2016 16-20 213 213 195 171 21-25 149 145 138 107 26-30 151 129 200 135 31-35 178 128 231 159 36-40 134 73 168 118 41-45 72 57 103 74 46-50 41 26 62 32 51-55 32 15 35 17 56-60 10 6 15 18 61-65 5 5 67 66-70 2 3 42 71-75 12 TOTAL 987 801 1159 840 Providenciales represented 85% of employee registrations for 2017 and 86% of employee registration for 2016; Grand Turk follows with 9% in 2017, and 11% in 2016. 10

REGISTRATION BY ISLAND ISLAND 2017 2016 Grand Turk 185 1 171 19 Salt Cay 0 17 1 1 1 1384 Providenciales 1796 16 1 South Caicos 89 1 19 21 North Caicos 20 20 3 Middle Caicos 2 1 2 22 Pine Cay 19 3 Parrot Cay 13 1620 2126 Other TOTAL REGISTRATION BY OCCUPATION GROUP# REGISTRATION BY OCCUPATION 2017 % OF TOTAL 2016 % OF TOTAL CLASSIFICATIONS REGISTERED REGISTERED 1 86 2 Legislators, Senior Officials and Mangers 75 4% 201 6% 3 169 13% 4 Professionals 250 12% 124 11% 5 474 8% 6 Technicians and Associated Professionals 194 9% 4 29% 7 115 1% 8 Clerks 144 7% 30 7% 9 423 2% Services, Shops and Market Sales Workers 632 30% 15 26% 1% Skilled Agricultural and Fishing Workers 18 1% Craft and related Trade Workers 158 8% Plant and Machine operators and assemblers 44 2% Elementary Occupations 621 29% Undefined 10 1% The table above is categorized by International Standard Industrial Classification (ISIC). 11

EMPLOYER REGISTRATION EMPLOYER REGISTRATION BY ISLAND ISLAND 2017 2016 GRAND TURK 60 41 SALT CAY 1 1 497 350 PROVIDENCIALES 13 7 SOUTH CAICOS 8 12 NORTH CAICOS 1 3 MIDDLE CAICOS 0 0 1 0 PINE CAY 580 414 PARROT CAY TOTAL Using International Standards of Industry Codes Standards 59% of employers registered as domestic in 2017; followed by 12% of employers operating stores. 12

EMPLOYER REGISTRATION BY INDUSTRY ISIC INDUSTRY CATEGORY 2017 2016 A Agriculture, Forestry and fishing 6 4 B Mining and quarry 1 5 1 C Manufacturing 5 20 D Electricity, Gas, steam and air conditioning supply 1 39 4 E Water supply; sewerage, waste management and remediation 2 25 4 F Construction 26 4 4 G Wholesale and retail trade; repair of mother vehicles and 67 18 motorcycles 5 H Transportation and storage 6 1 2 I Accommodation and food service activities 36 14 30 J Information and communication 4 231 K Financial and Insurance activities 2 3 L Real Estate Activities 8 414 M Professional, Scientific and technical activities 15 N Administrative and support service activities 6 O Public administration and defense; compulsory social security 1 P Education 4 Q Human health and social work activities 1 R Arts, entertainment and recreation 13 S Other Services activities 34 T Activities of households as employers; undifferentiated goods and 341 services-producing activities of households for own use U Activities of extraterritorial organizations and bodies 1 No recorded TOTAL 580 13

CONTRIBUTIONS Total number of active employers who would have made at least one payment during the year 2016/2017 is 3,107; total number of Active insured persons is 23,349. CONTRIBUTION INCOME 2017 2016 52% 48% CONTRIBUTION INCOME 2017 2016 Private Sector 29,265,197 27,251,478 Civil Servants 1,697,166 1,492,903 Self Employed 738,516 792533 Voluntary 277 TOTAL $31,700,879 $29,537,191 ACTIVE EMPLOYERS 2017 2016 ACTIVE CONTRIBUTORS 3,129 2,756 21,501 20,348 14

BENEFITS SHORT TERM 2016 2017 LONG TERM EMPLOYMENT INJURY 2,322,151 2,379,920 10,786,926 11,724,755 898,053 437,074 COMPARISON OF BENEFIT TYPE BY CATEGORY 12000000 10000000 8000000 6000000 4000000 2000000 0 SHORT TERM LONG TERM EMPLOYMENT INJURY 2016 2017 15

LONG TERM 2016 2017 Retirement Pension 8,051,419 8,766,189 Survivors Benefit 943,702 1,082,621 Old Age Non Contributory 769,833 810,670 Invalidity Pension 783,681 710,207 Funeral Grant 152,180 203,840 Retirement Grant 81,034 145,403 Survivors Grant 5,077 5,825 10,786,926 11,724,755 SHORT TERM Maternity Allowance 1,142,260 1,189,622 Sickness Benefit 943,891 966,911 Maternity Grant 236,000 223,387 2,322,151 2,379,920 EMPLOYMENT INJURY Injury Benefit 552,393 259,662 Disablement Benefit 242,872 85,610 Death Benefit 94,988 84,002 7,800 7,800 Constant Attendance Allowance 898,053 437,074 TOTAL 16

FUNERAL GRANT APPLICATIONS 2017 Male Female Total 21-25 1 1 26-30 145 31-35 325 36-40 426 41-45 325 46-50 527 51-55 415 56-60 336 61-65 5 6 11 66-70 549 71-75 426 76-80 145 >81 10 18 28 99 applications were submitted for Funeral Grant in 2017. 17

MATERNITY GRANT CASES AGE RANGE 2016 2017 16-20 16 15 21-25 83 68 26-30 108 97 31-35 128 116 36-40 68 100 41-45 23 26 46-50 36 51-55 4 Grand Total 429 432 SICKNESS BENEFITS YEAR 2017 APPLICATIONS AGE RANGE MALE FEMALE 16-20 12 29 21-25 38 70 26-30 30 83 31-35 51 84 36-40 61 96 41-45 66 91 46-50 57 62 51-55 46 65 56-60 40 28 61-65 23 24 66-70 11 Grand Total 425 633 1058 applications were submitted for Sickness Benefit. 9% were denied because the applicant did not qualify. Female applicants makes up 60% of the total, and applicants in the 36-40 and 41-45 ages ranges submitted the highest number of claims. 18

COMPLIANCE COLLECTIONS REPORT COMPLIANCE COLLECTIONS 2015-2016 COMPLIANCE COLLECTIONS 2016-2017 Period Total Collections Period Total Collections Apr-15 $135,797.75 Apr-16 $139,517.72 May-15 $109,737.69 May-16 $221,999.15 Jun-15 $91,487.76 Jun-16 $131,623.48 Jul-15 $90,023.77 Jul-16 $128,514.22 Aug-15 $140,942.07 Aug-16 $112,340.43 Sep-15 $113,704.61 Sep-16 $158,153.09 Oct-15 $135,630.28 Oct-16 $132,434.39 Nov-15 $137,810.85 Nov-16 $ 98,769.80 Dec-15 $221,999.15 Dec-16 $119,859.31 Jan-16 $266,806.57 Jan-17 $119,336.35 Feb-16 $221,534.30 Feb-17 $140,765.22 Mar-16 $139,517.72 Mar-17 $159,215.30 TOTAL $1,804,992.52 TOTAL $1,662,528.46 For the periods April 2015 to March 2016 and April 2016 to Mach 2017, the amounts of $1,804,992.52 and $1,662,528.46 respectively, were collected through compliance efforts. These amounts include contributions and late fines. 19

INVESTMENTS This is the report of the National Insurance Board’s investment performance, operations and initiatives for the two-year period ending March 31, 2017. The National Insurance Fund (NIF) earned a time-weighted return of -4.44% in fiscal year 2016 and 7.91% in fiscal year 2017, with the ending fair value of investments at $246 million. The 12-month returns in fiscal 2016 were primarily the result of a downturn in risk assets, particularly equities, hedge funds and commodities. The year was dominated by declines in commodity prices, particularly oil; the continued strengthening of the US dollar, soft economic growth and currency devaluation in China and uncertainty around the pace of the Federal Reserve’s interest rate hikes. The Fund underperformed its benchmark by 0.97% owing primarily to underperformance in hedge funds. In fiscal 2017, the Fund rebounded against the backdrop of strong economic growth in the US, accommodative global central bank policies, low interest rates and rebounding commodity prices. Though returns were positive, the Fund underperformed its benchmark by 2.61%. Detractors from performance were the underweight position in Commodities, which rebounded, and underperforming managers in the equities and convertibles sleeves. While periods of volatility are inevitable, the NIF’s focus remained on the long-term sustainability of the Fund. MULTI-YEAR RETURNS (YEAR ENDING MARCH 2016 & MARCH 2017) ASSET CATEGORY 2017 2016 INDEX NAME 2017 2016 FUND FUND INDEX INDEX TOTAL FUND RETURN RETURN POLICY INDEX RETURN RETURN US & Int’l Equity 7.91% -4.44% US Equity Benchmark 10.47% -3.47% Barclay Capital Aggregate Fixed Income 6.58% -2.81% 8.17% -2.55% Convertibles 0.19% 0.24% ML All Convertible 0.09% 0.40% Hedge Funds 0.66% -0.24% HFRI FOF: Conservative 1.08% -0.39% Private Equity -0.15% -0.83% Absolute Return Strategies 0.16% -0.02% Commodities 0.18% -0.22% 0.20% 0.17% 0.40% -0.65% DBIQ Optimum Yield 0.77% -1.08% Cash 0.05% 0.06% 90-Day T-Bill 0.01% 0.00% 20

The NIB is a long-term investor and performance over time illustrates a broader perspective of overall performance of the Fund. The actuarial targeted rate of return was 5% for the period under review. Though the NIF missed this target in fiscal 2016, it was able to surpass it in fiscal 2017. The NIF also benchmarks itself against an absolute return of US CPI inflation plus 3%. In fiscal 2017, the NIF beat this benchmark by 508 basis points. As the markets navigate periods of volatility, the NIB remains disciplined by employing a moderately aggressive investment strategy focusing on long-term growth of capital, maintaining a diversified portfolio and a disciplined approach to maintaining the strategic asset allocation. The NIB’s portfolio of assets consists of equities, fixed income, alternative investments and cash. The Board approves an asset allocation framework designed to obtain the highest expected return on investments with an acceptable level of risk. The Board’s policy targets during the 2-year period were: • Global Equities at 52% (comprised of US equities at 26% and international equities at 26%) • Fixed Income and Convertibles at 26% (comprised of fixed income at 20% and convertibles at 6%). • Alternative Investments at 15% (comprised of hedge funds at 10% and private equity at 5%). • Commodities at 5% • Cash & Money Market Instruments at 2% During the two-year period, there were no changes to the Fund’s Investment Policy Statement and therefore the above allocation and strategy remained intact. The 8th Actuarial Review of the system was conducted in early 2017 as well as a revision of the investment consultant’s capital market assumptions (an integral component of developing the asset allocation). These reviews prompted a revision of the Investment Policy Statement by end of the fiscal year. 21

2016 ASSET ALLOCATION 2017 ASSET ALLOCATION Actual Asset Mix Actual Asset Mix PRIVATE HEDGE PRIVATE HEDGE EQUITY FUNDS EQUITY FUNDS 1% COMMODITIES 10% 2% COMMODITIES 9% 3% CASH 3% 14% CASH BONDS 7% 17% BONDS 19% EQUITIES CONVERTIBLES EQUITIES CONVERTIBLES 51% 5% 53% 6% The charts above show the asset allocation of the Fund in the respective years and highlights the change from one year to the next. During the period under review, the Fund continued to invest excess contribution income into the Fund by reallocating cash into other parts of the portfolio through periodic rebalancing exercises. The largest variances in the portfolio were primarily in the alternative investments space (specifically private equity) and cash. Over the period, approximately $38M was reallocated from Cash to other asset classes. As private equity opportunities are not always readily available, and even when identified would take several years to reach full investment, there was a buildup of cash in the portfolio and an underweight in private equity. In lieu of private equity opportunities, public equities were used as a proxy. At the end of fiscal year 2017, all asset classes were within their allowable ranges. 22

While the NIB invests globally, we are also proud to make investments in the Turks and Caicos Islands. In June 2016, the NIB participated in a bond issuance by the local utility company, FortisTCI. The purchase was a part of a larger issuance to finance a portion of the company’s capital expenditure. The closing consisted of a $5M, 5.14% bond issue due 2031. This represented a local investment that had good investment merit and enabled the people of the Turks and Caicos Islands to benefit both from better infrastructure and investment in an investment grade local company. The NIB remained committed to local investing and earmarked over $18M at year-end for investments. The NIB is committed to the sustainability of the Fund and aims to manage it in a cost-effective, risk-aware and prudent manner in order to fulfill its mandate of providing social protection to the people of the Turks and Caicos Islands. While returns were volatile over the period, we continue to endeavor to be fully invested to maximize returns across all market cycles. INVESTMENT COMMITTEE The Investment Policy Statement states that the Investment Committee shall consist of, but not limited to: ✓ At least two non-executive members of the Board of Directors, whom shall be the Chairman ✓ The Director of the National Insurance Board ✓ Two local community members experienced in investment matters ✓ The investment Manager of the National Insurance Board COMMITTEE MEMBERS: FLOYD SEYMOUR Chairman SANDY LIGHTBOURNE KENDRIC WALTERS TREVOR COOKE DIANDRA MILLS NIB Investment Manager 23

TRAINING HUMAN RESOURCES The National Insurance Board remains committed to investing in the development of its staff. The following opportunities were extended during the reporting period: 1. Ms. Oraley Williams, Administrative Assistant, Provo and Vanessa Kennedy, HR Officer attended Administration Professional Course hosted by Fenelon Empowerment Services in April 2015. 2. The Internal Auditor attended an Auditors course in Orlando, Florida, April 20th -22nd. 3. Training was conducted for all Heads of Departments and Supervisory staff on the Board’s Performance Management System to prepare supervisors for the 2015/2016 performance appraisals cycle. 4. The Internal Auditor, Financial Controller, Deputy Director Corporate Services and Accountant participated in KPMG International Financial Report Standard training held October 29th-30th in Providenciales. 5. Mr. Michael Dean, Providenciales Branch Manager, successfully completed a Bachelor Degree in Leadership & Management. 6. Members of Executive Management including the Director, Deputy Director, Financial Controller and Internal Auditor participated in training hosted by TCIG on Procurement & Payments, and Audit Awareness in January 2016. 7. Ms. Rhesa Cartwright, Deputy Director Corporate Services attended and successfully completed the Caribbean Governance Training Institute Chartered Director’s program in March 2016 . 8. Ms. Dorean Williams, Marketing Manager, returned from Study Leave in July 2016 having successfully completed an MBA. 9. Ms. Rhesa Cartwright, DDCS and Ms. Cherrie Ingham, Research & Business Analyst attended a Service Quality workshop in Barbados in June 2016, hosted by International Social Security Association (ISSA). 10. Mr. Dexter Parker completed a Bachelor of Science Degree in Business Studies with concentration in HRM, December 2016. 11. All Staff participated in Change Management and Performance Appraisal Training facilitated by Dr. Valda Henry, Consultant for the 2016 HR Review & Strategic Planning Consultancy, August 2016. 12. Dr. Valda Henry also conducted Governance Training for Management and the Board of Directors in August 2016. 13. An Investment Retreat was hosted in September 2016 in Providenciales, members of the Board, Investment Committee and Management participated in the retreat. 24

OTHER ACTIVITIES Farewell Colin Heartwell During the year, Mr. Colin Heartwell, Diretor, resigned from the National Insurance Board. Below, he is seen at a farewell function in Grand Turk on April 28, 2015. Staff members bade him warm wishes as he venture into forming the new Investment Promotion Agency. International Women’s Sports Day Eleven (11) ladies from the Grand Turk and Providenciales Offices participated in the International Women’s Sports Day held on March 11, 2016. The team took home medals for the Tug of War and Egg & Spoon race. The day was filled with excitement. 25

International Women’s Sports Day Staff Christmas Function Mr. Richard Taylor, 20 Members of the Board of Directors and staff at the Annual Christmas Miss Rowena Roberts, 15 Internal Auditor Dinner held at the Osprey Beach Hotel - December 2016. Claims Adjudicator Years Long Service Award Years Long Service Award 26

Work Experience As part of the NIB work experience program organized by the Helena Jones Robinson High school, the Board took on one student, Miss Chelsea Williams. Miss Williams was attached to the Operations Department. Summer Employment The National Insurance Board also hired students during the summer to aid them in gaining valuable work experience. (i) Miss Mary Fulford, first (ii) Mr. Cordel Ingham, a student at the year student at the TCICC University of Westminster pursuing a Bachelor’s in pursuit of an Associate’s Degree in Business Management - Finance & Degree in Humanities was Financial Services, had an opportunity to work in attached to the Operations our Investment, Accounts and Human Resources Department. Departments during his stint with the Board. STAFF JOINING EMPLOYEE EMPLOYMENT DATE DEPARTMENT POSITION Narada Robinson January 26, 2015 Operations, Providenciales Driver/Messenger Laquille Robinson Transaction Clerk February 2, 2015 Operations, Providenciales Transaction Clerk Dorian Garland Transaction Clerk (part-time) Carolina Cox February 9, 2015 Operations, Providenciales June 6, 2016 Operations, South Caicos STAFF LEAVING EMPLOYEE EMPLOYMENT DATE DEPARTMENT POSITION Wilner Pierre May 22, 2015 Operations, Providenciales Registration Clerk Dalton Daniel Driver/Messenger Robert Ferrier September 22 ,2015 HR & Administration Elwood Harvey Accountant February 8, 2017 Accounts & Finance Systems Network Administrator December 11, 2016 Information Technology 27

STATEMENT ON INTERNAL CONTROL SCOPE OF RESPONSIBILITY As Accounting Officer, I have responsibility for maintaining a sound system of internal control that supports the achievement of the National Insurance Board policies, aims and objectives, whilst safeguarding the public funds and departmental assets for which I am personally responsible, in accordance with the responsibilities assigned to me in the Public Finance Management Ordinance. The Internal Controls of the National Insurance Board (NIB) are all the Policies and Procedures that the NIB have designed to give reasonable assurance regarding the achievement of organizational objectives in the following areas: • Reliability of Financial Reporting • Operational effectiveness and efficiency • Compliance with applicable laws and regulation THE PURPOSE OF THE SYSTEM OF INTERNAL CONTROL The system of internal control is designed to manage risk to a reasonable level rather than to eliminate all risk of failure to achieve policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritize the risks to the achievement of NIB policies, aims and objectives, to evaluate the likelihood of those risks being realized and the impact should they be realized, and to manage them efficiently, effectively and economically. The system of internal control has been in place in the NIB for the years ended March 31, 2016 to March 31, 2017 to and up to the date of approval of the annual report and accounts. The NIB has developed a system of internal control that not only includes policies and procedures but also includes control activities which fall into two categories namely that of prevention and detection. These activities are applied throughout the organization at all levels to the various functions and processes and include the following: • Authorization • Documentation • Reconciliation • Security • Separation of duties 28

REVIEW OF EFFECTIVENESS As Accounting Officer, I have responsibility for reviewing the effectiveness of the system of internal control. My review is informed by the work of the internal auditor and the executive managers within the National Insurance Board, who have responsibility for the development and maintenance of the internal control framework, and comments made by the external auditors in their management letter and other reports. The effectiveness of the internal control system has been reviewed via our current governance processes and these include: • Monthly management reports to the Board of Directors • Monthly Internal Auditors reports to the Board of Directors • Audit Committee Reports to the Board • Agreed upon Procedures review by the National Audit Office • Annual External Audit and Management Letter I am therefore satisfied based upon the reviews conducted that the control environment of the NIB has been effective for the years ended March 31, 2016 and March 31, 2017. Where areas of weaknesses have been identified management has made the necessary adjustments and changes to strengthen the internal controls thus improving overall effectiveness of the system of controls. 29

2016 FINANCIAL STATEMENT TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD YEAR ENDED MARCH 31, 2016 30

CONTENTS FINANCIAL STATEMENTS TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Financial Statement | Year Ended - March 31, 2016 2016 Independent Auditor’s Report 32-35 Statement of Financial Position 36 Statement of Income, Expenses and Reserves 37 Long-Term Benefit Branch 38 Short-Term Benefit Branch 39 Employment Injury Benefit / Disablement and Death Benefit 40 Statement of Changes in Reserves 41 Statement of Cash Flows 42 Notes to Financial Statement 43-95 31

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 FINANCIAL INDEPENDENT AUDITORS’ REPORT STATEMENTS To the Directors of the Turks and Caicos Islands National Insurance Board: 2016 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, 2016, 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, 2016, 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 9 and 11 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, 2016 and 2015, 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 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 40 cents in 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 under the Turks and Caicos Islands’ Companies Ordinance, is the Turks and Caicos Islands member firm of KPMG International, a Swiss cooperative. 32

Turks and Caicos Islands National Insurance Board FINANCIAL Independent Auditors’ Report STATEMENTS March 31, 2016 2016 Basis for Qualified Opinion, continued 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 IAS 39, ‘Financial Instruments: Recognition and Measurement’, 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 22 to these financial statements. As disclosed at note 22 to these financial statements, NIB has elected to apply IAS 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$459 million at March 31, 2016 (2013: US$388 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$191 million at March 31, 2016 (2013: US$153 million) and there was therefore a shortfall of US$268 million (2013: US$235 million) between the total reserves and the actuarial present value of promised retirement benefits. 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 33

FINANCIAL Turks and Caicos Islands National Insurance Board STATEMENTS Independent Auditors’ Report March 31, 2016 2016 Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation of the financial statements that give a true 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 under the Turks and Caicos Islands’ Companies Ordinance, is the Turks and Caicos Islands member firm of KPMG International, a Swiss cooperative. 34 3

Turks and Caicos Islands National Insurance Board FINANCIAL Independent Auditors’ Report STATEMENTS March 31, 2016 2016 Auditors’ Responsibilities for the Audit of the Financial Statements, continued  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, 2016 and for the year then ended is 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 October __, 2018 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 35

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Statement of Financial Position At March 31, 2016 with comparative figures at March 31, 2015 2016 2015 Assets US$ 37,006,816 35,275,365 3,696,239 3,243,570 Current assets: 150,000 562,721 Cash and cash equivalents (note 5) – 3,470,498 Contributions and other receivables (note 6) 28,416 27,953 Current portion of long-term receivables (note 8) Current portion of long-term deposits (note 9) 40,881,471 42,580,107 Other assets 178,039,019 172,540,089 Non-current assets: 718,379 2,330,303 Available-for-sale financial assets (note 7) 694,100 694,100 Long-term receivables (note 8) 3,645,835 Long-term deposits (note 9) 3,582,184 – Property and equipment (note 10) – Investment in TCI Bank Limited (note 11) 179,210,327 183,033,682 US$ 223,915,153 221,790,434 Liabilities and Reserves US$ 2,174,757 1,629,910 Liabilities: 30,400,000 29,100,000 Accounts payable and 32,574,757 30,729,910 accrued expenses (note 12) FINANCIAL Provisions for long-term benefits, 139,838,179 141,970,000 STATEMENTS other than retirement benefits (note 22) 22,406,428 21,935,220 1,313,743 837,091 2016 Reserves: 27,782,046 26,318,213 Long-term benefit branch Short-term benefit branch 191,340,396 191,060,524 Employment injury benefit (note 21) Disablement and death benefit US$ 223,915,153 221,790,434 The accompanying notes are an integral part of these financial statements. These financial statements were approved on behalf of the Board of Directors on October __, 2018 by the following: Samuel Swann Chairman Rhesa Cartwright Director 36 5

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Statement of Income, Expenses and Reserves Year ended March 31, 2016 with comparative figures for year ended March 31, 2015 2016 2015 Income: US$ 27,251,478 24,469,381 Contributions: 1,492,903 1,282,678 Private sector 792,533 703,833 Civil servants 277 1,910 Self employed Voluntary 29,537,191 26,457,802 Income from, and net realised gains on, available-for-sale financial assets (note 13) 4,039,994 10,204,428 Surcharges 579,293 2,089,689 Interest and other income (note 14) 407,032 451,797 Expenses: 34,563,510 39,203,716 Benefits (note 15) General and administrative expenses (note 16) (14,007,130) (12,700,444) Change in provisions for long-term benefits, (4,518,997) (6,604,836) other than retirement benefits (note 22) Investment expenses (note 17) (1,300,000) (2,300,000) (1,164,008) (1,146,915) (20,990,135) (22,752,195) Net income before other comprehensive loss 13,573,375 16,451,521 Other comprehensive loss (note 18) (2,806,827) Net income for year (13,293,503) 13,644,694 US$ 279,872 Net income for year transferred to: US$ (2,131,821) 8,218,091 Long-term benefit branch reserve US$ 471,208 2,250,695 Short-term benefit branch reserve 476,652 (3,465,451) Employment injury benefit reserve 6,641,359 Disablement and death benefit reserve 1,463,833 13,644,694 279,872 FINANCIAL The accompanying notes are an integral part of these financial statements. STATEMENTS 2016 6 37

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Long-Term Benefit Branch Statement of Income, Expenses and Reserve Year ended March 31, 2016 with comparative figures for year ended March 31, 2015 2016 2015 Income: US$ 18,735,391 16,822,700 Contributions: 1,198,682 1,029,887 Private sector 641,019 569,277 Civil servants 277 1,910 Self employed Voluntary 20,575,369 18,423,774 Income from, and net realised gains on, available-for-sale financial assets 3,001,970 7,693,010 Surcharges 415,883 1,452,385 Interest and other income 302,451 Expenses: 340,605 Benefits (note 15) 24,295,673 27,909,774 General and administrative expenses Change in provisions for long-term benefits, (10,786,926) (9,985,759) other than retirement benefits (3,027,728) (4,425,240) Investment expenses (1,870,000) (2,300,000) (864,931) (864,647) (16,549,585) (17,575,646) Net income before other comprehensive loss US$ 7,746,088 10,334,128 Other comprehensive loss (9,877,909) (2,116,037) Net (loss)/income for year (2,131,821) 8,218,091 The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS 2016 38 7

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Short-Term Benefit Branch Statement of Income, Expenses and Reserve Year ended March 31, 2016 with comparative figures for year ended March 31, 2015 2016 2015 Income: US$ 4,428,365 3,976,274 Contributions: 151,514 134,556 Private sector 32,691 28,088 Self employed Civil servants 4,612,570 4,138,918 Income from, and net realised gains on, available-for-sale financial assets 463,822 1,132,195 Surcharges 98,300 343,291 Interest and other income 46,730 50,127 Expenses: 5,221,422 5,664,531 Benefits (note 15) General and administrative expenses (2,322,151) (1,852,341) Investment expenses (768,229) (1,122,822) (133,637) (127,252) (3,224,017) (3,102,415) Net income before other comprehensive loss 1,997,405 2,562,116 Other comprehensive loss (311,421) Net income for year (1,526,197) 2,250,695 US$ 471,208 The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS 2016 8 39

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Employment Injury Benefit / Disablement and Death Benefit Statement of Income, Expenses and Reserves Year ended March 31, 2016 with comparative figures for year ended March 31, 2015 2016 2015 Income: US$ 4,087,722 3,670,407 Contributions: 261,530 224,703 Private sector Civil servants 4,349,252 3,895,110 Change in provisions for long-term benefits, other than retirement benefits 570,000 – Income from, and net realised gains on, available-for-sale financial assets 574,202 1,379,223 Surcharges 65,110 294,013 Interest and other income 57,851 61,065 Expenses: 5,616,415 5,629,411 Benefits (note 15) General and administrative expenses (898,053) (862,344) Investment expenses (723,040) (1,056,774) (165,440) (1,786,533) (155,016) (2,074,134) Net income before other comprehensive loss 3,829,882 3,555,277 Other comprehensive loss (379,369) Net income for year (1,889,397) 3,175,908 US$ 1,940,485 Net income for year transferred to: US$ 476,652 (3,465,451) Employment injury benefit reserve US$ 1,463,833 6,641,359 Disablement and death benefit reserve 1,940,485 3,175,908 The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS 2016 40 9

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Statement of Changes in Reserves Year ended March 31, 2016 with comparative figures for year ended March 31, 2015 Long-term Short-term Employment Disablement and benefit branch benefit branch injury benefit death benefit Total US$ US$ US$ US$ US$ 177,415,830 Balance at April 1, 2014 133,751,909 19,684,525 4,302,542 19,676,854 Transfer from net income for year 8,218,091 2,250,695 (3,465,451) 6,641,359 13,644,694 Balance at March 31, 2015 141,970,000 21,935,220 837,091 26,318,213 191,060,524 Balance at April 1, 2015 141,970,000 21,935,220 837,091 26,318,213 191,060,524 Transfer from net income for year (2,131,821) 471,208 476,652 1,463,833 279,872 Balance at March 31, 2016 139,838,179 22,406,428 1,313,743 27,782,046 191,340,396 The accompanying notes are an integral part of these financial statements. 41 FINANCIAL STATEMENTS 2016

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Statement of Cash Flows Year ended March 31, 2016 with comparative figures for year ended March 31, 2015 2016 2015 Cash flows from operating activities: US$ 13,573,375 16,451,521 Net income before other comprehensive loss (2,620) Adjustments for: – 20,776 Gain on sale of property and equipment 20,834 Change in fair value of TCIG bonds (note 14) 315,101 321,639 Depreciation of property and equipment (276,720) (327,159) Interest income (note 14) 942,804 Investment expenses on available-for-sale 1,036,123 (10,204,428) financial assets (note 17) 7,202,533 Income from, and net realised gains on, (4,039,994) (480,140) available-for-sale financial assets 10,628,719 (747) Changes in operating assets: (560,557) 458,487 Change in contributions and other receivables (463) 2,300,000 Change in other assets 9,480,133 544,847 Changes in operating liabilities: (60,017,134) Change in accounts payable and accrued expenses 1,300,000 40,956,805 Change in provisions for long-term benefits, 11,912,546 other than retirement benefits – (50,602,475) Net cash from operating activities 34,813,913 493,082 354,296 FINANCIAL Cash flows used in investing activities: 3,470,498 150,000 STATEMENTS Net additions to available-for-sale financial assets Net proceeds from available-for-sale financial assets 1,853,811 2,620 2016 Proceeds from repayment of long-term deposits 384,608 (1,049,932) Proceeds from repayment of TCI Investment 150,000 (19,110,263) Agency Ltd. loans – Interest income received (251,450) Proceeds from partial repayment of TCIG bonds Proceeds from sale of property and equipment (10,181,095) Additions to property and equipment Net cash used in investing activities Net increase/(decrease) in cash and cash equivalents 1,731,451 (9,630,130) Cash and cash equivalents at beginning of year US$ 35,275,365 44,905,495 Cash and cash equivalents at end of year 37,006,816 35,275,365 The accompanying notes are an integral part of these financial statements. 42 11

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements 2016 Year ended March 31, 2016 1. General information The Turks and Caicos Islands National Insurance Board (NIB) is a body corporate established in the Turks and Caicos Islands (TCI) on April 6, 1992 pursuant to section 27 of the National Insurance Ordinance 1991 (the Ordinance), as revised. NIB’s primary purpose is to control and manage the National Insurance Fund (“the Fund”) established under section 45 of the Ordinance so as to provide various benefits to persons insured under the Ordinance. NIB’s registered office address is at the Hon. L. Headley Durham building, Grand Turk, TCI. 2. Basis of preparation (a) Statement of accounting These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and with the requirements of the Ordinance. Details of NIB’s significant accounting policies are included at note 3. These financial statements have been prepared on a fair value basis for all assets held for investment purposes and under the historical cost convention for all other assets and liabilities. The methods used to measure fair values are discussed further at note 4. (b) Functional and presentation currency These financial statements are presented in United States (US) dollars, which is NIB’s functional currency. All financial information presented in US dollars has been rounded to the nearest dollar. (c) Use of estimates and judgements The preparation of these financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. Information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes: 12 43

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2016 Year ended March 31, 2016 2. Basis of preparation, continued (c) Use of estimates and judgements, continued  Note 6 – Contributions and other receivables  Note 9 – Long-term deposits  Note 11 – Investment in TCI Bank Limited  Note 12 – Accounts payable and accrued expenses  Note 15 – Benefits  Note 22 – Actuarial review  Note 23 – Contingent liabilities  Note 24 – Commitments These financial statements have been prepared on a going concern basis. No adjustments or reclassifications have been made that might be necessary if a basis of accounting other than a going concern basis were to be used. 3. Significant accounting policies The accounting policies set out below have been applied to all periods presented in these financial statements, and have been applied consistently by NIB. Certain comparative amounts have been reclassified to conform with the current year’s financial statement presentation. (a) Non-derivative financial instruments NIB classifies non-derivative financial assets into the following categories: loans and receivables and available-for-sale financial assets. NIB classifies non-derivative financial liabilities as other financial liabilities. (i) Non-derivative financial assets and financial liabilities – Recognition and derecognition NIB initially recognises loans and receivables and debt securities issued on the date when they are originated. All other financial assets and financial liabilities are initially recognised on the trade date when the entity becomes a party to the contractual provisions of the instrument. NIB derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognised financial assets that is created or retained by NIB is recognised as a separate asset or liability. 44 13

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2016 Year ended March 31, 2016 3. Significant accounting policies, continued (a) Non-derivative financial instruments, continued (i) Non-derivative financial assets and financial liabilities – Recognition and derecognition, continued NIB derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. Financial assets and financial liabilities are offset and the net amount presented on the statement of financial position when, and only when, NIB currently has a legally enforceable right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. The gross carrying amount of a financial asset is written-off (either partially or in full) to the extent that there is no prospect of recovery. This is generally the case when NIB determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to write-off. However financial assets that are written -off could still be subject to enforcement activities in order to comply with NIB's procedures for the recovery of the amounts due. (ii) Non-derivative financial assets – Measurement Loans and receivables Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using the effective interest rate method. The effective interest rate method is a method that is used in the calculation of the amortised cost of a financial asset or a financial liability and in the allocation and recognition of the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortised cost of a financial liability. Subsequent to initial recognition loans and receivables held for investment purposes are measured at fair value with changes in fair values recognised in the statement of income, expenses and reserves in accordance with International Accounting Standard 26, ‘Accounting and Reporting by Retirement Benefit Plans’ (IAS 26). 14 45

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2016 Year ended March 31, 2016 3. Significant accounting policies, continued (a) Non-derivative financial instruments, continued (ii) Non-derivative financial assets – Measurement, continued Loans and receivables, continued Loans and receivables not held for investment purposes are measured at amortised cost subsequent to initial recognition. Loans and receivables comprise: cash and cash equivalents, contributions and other receivables, long-term receivables and long-term deposits. Cash and cash equivalents comprise cash on hand, cash at investment managers and cash at banks - savings and current accounts. Cash equivalents are short-term highly liquid investments with maturities of three months or less from the acquisition date that are subject to an insignificant risk of change of value and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. Debt instruments that are not quoted in an active market are classified as loans and receivables. Contributions and other receivables comprise outstanding contributions from private employers and the self-employed, interest receivable and other receivables. Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and that are not classified in any of the previous categories. NIB’s investments in equity and debt securities are classified as available-for- sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein are recognised as other comprehensive income in the statement of income, expenses and reserves. (iii) Non-derivative financial liabilities – Measurement Non-derivative financial liabilities are initially measured at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest rate method. NIB’s non-derivative financial liabilities are accounts payable and accrued expenses. 46 15