TCI NIB Annual Report 2016 & 2017

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2016 Year ended March 31, 2016 47 3. Significant accounting policies, continued (b) Provisions A provision is recognised if, as a result of a past event, NIB has a present legal or constructive obligation that can be reliably estimated, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a rate that reflects current market assessments of the time value of money and the risks specific to the liability. Per IAS 26 NIB has an option as to whether it discloses the actuarial present value of promised 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 disclose the actuarial present value of promised retirement benefits in a note to the financial statements (note 22). The actuarial present value of long-term benefits, other than retirement benefits, was quantified by an independent actuary at March 31, 2015 and 2016 (note 22) and recognised in NIB’s financial statements in accordance with IAS 37 and IAS 1, Presentation of Financial Statements. (c) Property and equipment (i) Recognition and measurement Property and equipment are measured at cost less accumulated depreciation and impairment losses (note 3(f)(ii)). Cost includes expenditures that are directly attributable to the acquisition of property and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment. Gains or losses arising from the disposal of property and equipment are reflected in the statement of income, expenses and reserves. (ii) Subsequent costs The cost of replacing an item of property and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to NIB and its cost can be reliably measured. The carrying amount of the replaced part is derecognised. The cost of the day- to-day servicing of property and equipment is recognised in the statement of income, expenses and reserves, as incurred. 16

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 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, survivors’ benefit, funeral grant and non-contributory old age pension. A Long-term Benefit Reserve is constituted by annually transferring the excess of income over expenses of the Long-term Benefit Branch. FINANCIAL (ii) Short-term Benefit Branch, comprising sickness benefit and maternity benefit. STATEMENTS A Short-term Benefit Reserve is constituted by annually transferring the excess 2016 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. 48 17

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 (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 49

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 (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 22, 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 22. The actuarial present value of long-term benefits, other than retirement benefits, was quantified by an independent actuary at March 31, 2015 and 2016 (note 22) 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. 50 19

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 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 Branch Branch Branch Civil Servants 5.50 / 6.85 0.15 / 6.85 1.20 / 6.85 Private Sector (general) 5.50 / 8.00 1.30 / 8.00 1.20 / 8.00 Private Sector (under section – 1.30 / 2.50 1.20 / 2.50 4(3) of the Contributions 5.50 / 6.80 1.30 / 6.80 – Regulations) 10.0 / 10.0 Self Employed – – Voluntary Effective April 1, 2015 a new contribution ceiling was implemented by NIB increasing from US$600/week or US$2,600/month to US$700/week or US$3,000/month. Effective April 1, 2016 the contribution ceiling will further increase to US$810/week or US$3,500/month and effective April 1, 2017, to US$925/week or US$4,000/month. 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, 2016 and 2015 FINANCIAL were allocated as follows: STATEMENTS Long-Term Benefit Branch 2016 2015 2016 Short-Term Benefit Branch Employment Injury Benefit Branch 74.31% 75.39% 11.48% 11.09% 14.21% 13.52% 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 51

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 (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. 52 21

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2016 Year ended March 31, 2016 53 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 CGUs. 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

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 (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 rewards of ownership to NIB are classified as finance leases. On initial 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 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; 54 23

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2016 Year ended March 31, 2016 55 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 22). 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

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 (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 between a reporting entity and a related party, regardless of whether a price is charged. (k) New standards, amendments to standards and interpretations not yet adopted The following are new standards, amendments and interpretations to published standards, issued but not effective for the financial year beginning April 1, 2015 and not early adopted by NIB:  Disclosure initiative (amendments to IAS 1, Presentation of Financial Statements) – The amendments to IAS 1 relate to (i) materiality; (ii) order of the notes; (iii) subtotals; (iv) accounting policies; and (v) disaggregation and are designed to further encourage companies to apply professional judgment in determining what information to disclose in their financial statements. The amendments are effective for annual reporting periods beginning on or after January 1, 2016, with early adoption permitted.  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. 56 25

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2016 Year ended March 31, 2016 57 3. Significant accounting policies, continued (k) New standards, amendments to standards and interpretations not yet adopted, continued  IFRS 9, Financial Instruments, continued 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. 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 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. 26

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 (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 amendments to IAS 1, IFRS 9, 15, 16 and 17. 58 27

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2016 Year ended March 31, 2016 4. Determination of fair values A number of NIB’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been 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 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, 2016 and March 31, 2015 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 were 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. (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 22). (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. 28 59

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2016 Year ended March 31, 2016 4. Determination of fair values, continued 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;  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. 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. 60 29

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 5. Cash and cash equivalents 2016 2015 Cash at investment managers US$ 21,115,259 4,643,918 Cash at banks – savings and current accounts US$ 15,888,130 30,628,019 Cash on hand 3,427 3,428 37,006,816 35,275,365 The US$21,115,259 cash held with investment managers at March 31, 2016 (2015: US$4,643,918) was held for the following investment accounts: 2016 2015 Fixed income US$ 16,432,719 294,023 Non U.S. equities 2,243,666 1,971,562 U.S. equities 529,976 400,459 Large cap growth 539,119 705,471 Large cap value 347,966 Mid cap growth 8 142,389 Small cap core 736,564 402,709 Convertibles 528,736 379,339 Hedge funds 104,471 4,643,918 21,115,259 US$ During the year, cash held with investment managers earned interest at rates of 0.01% (2015: 0.01%). For NIB’s internal investment guidelines cash held by investment managers is considered to be part of available-for-sale financial assets (note 20(c)(ii)). The US$15,888,130 cash at banks – savings and current accounts at March 31, 2016 (2015: US$30,628,019) were held as follows: 2016 2015 FINANCIAL STATEMENTS CIBC First Caribbean International Bank (Bahamas) Limited (CIBC) 2016 Interest bearing account US$ 7,839,381 22,898,003 Non-interest bearing account 830,036 540,007 Scotiabank (Turks and Caicos) Ltd. (Scotiabank) Interest bearing account 7,218,053 7,189,164 Non-interest bearing account 660 845 US$ 15,888,130 30,628,019 During the year, interest bearing accounts with CIBC and Scotiabank earned interest at rates of 0.40% to 0.44% (2015: 0.40% to 0.45%). 30 61

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 6. Contributions and other receivables 2016 2015 Contributions receivable US$ 4,248,512 3,959,971 Other receivables – net US$ 520,445 683,354 Allowance for impairment 4,768,957 4,643,325 (1,072,718) (1,399,755) 3,696,239 3,243,570 The movement on the allowance for impairment of contributions receivable for the year ended was as follows: 2016 2015 At April 1 US$ 1,399,755 906,601 Impairment (recovery)/losses recognised (note 16) US$ (149,644) 612,457 Contributions receivable written-off (177,393) (119,303) At March 31 1,072,718 1,399,755 The US$520,445 other receivables at March 31, 2016 (2015: US$683,354) comprised the following: 2016 2015 Interest receivable – net of change in fair value US$ 197,506 305,394 of US$97,012 (2015: US$97,012) US$ 162,867 199,146 Other receivables – net of change in fair value of US$138,272 (2015: US$129,477) 160,072 178,814 520,445 683,354 Surcharges receivable – net of change in fair value of US$1,391,449 (2015: US$1,543,617) FINANCIAL The movement on the allowance for impairment of surcharges receivable for the year STATEMENTS ended was as follows: 2016 2016 2015 At April 1 US$ 1,543,617 – Impairment losses recognised (note 16) US$ 163,020 1,543,617 Surcharges receivable written-off (315,188) At March 31 – 1,391,449 1,543,617 62 31

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 7. Available-for-sale financial assets Available-for-sale financial assets at March 31, 2016 and 2015 can be analysed as follows: Cost Market Value 2016 US$ 2015 2016 2015 US$ US$ US$ Equity securities 133,422,489 109,374,542 136,964,027 125,429,367 Government debt securities 26,101,808 24,496,251 26,497,832 25,130,562 Corporate debt securities 14,538,947 21,400,018 14,577,160 21,980,160 174,063,244 155,270,811 178,039,019 172,540,089 During the year, equity securities earned dividends with rates of return of 0.73% to 5.77% (2015: 0.72% to 5.38%) while government and corporate debt securities earned interest at rates of 1.29% to 2.99% (2015: 1.41% to 3.23%) with coupon rates ranging from 0.25% to 7.63% (2015: 0.25% to 8.5%). The US$178,039,019 available-for-sale financial assets at March 31, 2016 (2015: US$172,540,089) were held by UBS Financial Services Inc. and managed by investment managers. Available-for-sale financial assets, excluding cash held with investment managers (note 5), at March 31, 2016 and 2015 were classified per NIB’s Investment Policy Statement (IPS) (note 20(c)(ii)) as follows: 2016 2015 Non U.S. equities US$ 49,407,949 42,101,306 FINANCIAL Fixed income 34,101,543 38,894,978 STATEMENTS Hedge Funds 19,968,064 21,908,504 U.S. equities 2016 18,026,417 16,516,746 Large cap value 18,560,835 18,386,736 Large cap growth Mid cap growth 8,160,011 9,715,558 Small cap core 10,903,237 6,259,040 Convertibles 10,096,854 11,152,341 Commodities 6,554,880 Private equity 5,486,112 1,050,000 3,327,997 172,540,089 US$ 178,039,019 A total of US$6,973,449 corporate debt securities in available-for-sale financial assets at March 31, 2016 (2015: US$8,215,744) were classified as convertibles per NIB’s IPS. 32 63

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 8. Long-term receivables 2016 2015 Loans to TCI Investment Agency Ltd. US$ – 1,853,811 TCIG bonds US$ 868,379 1,039,213 Less current portion 868,379 2,893,024 (150,000) (562,721) 718,379 2,330,303 (a) Loans to TCI Investment Agency Ltd. Loan one US$ 2016 2015 Loan two US$ – 125,000 Loan three – 500,000 Less current portion – 1,228,811 1,853,811 – (412,721) – 1,441,090 – (i) Loan one On September 20, 1997, NIB entered into a US$1 million loan agreement with TCI Investment Agency Ltd., an inward investment agency in TCI with a mandate to attract new inward investment, encourage entrepreneurship amongst residents and provide financing to the local population. The remaining outstanding balance of US$125,000 at March 31, 2015 bore interest at a rate of 4.75% per annum. The maturity date of the loan was September 30, 2017 and it was being repaid in equal quarterly instalments of US$12,500 of principal plus related interest, however, by mutual agreement, this loan was repaid in full during the year ended March 31, 2016. FINANCIAL During the year ended March 31, 2016, NIB collected US$125,000 (2015: STATEMENTS US$62,500) in principal and recognised US$5,090 (2015: US$7,424) in interest income. The loan was guaranteed by TCIG. 2016 (ii) Loan two On February 24, 2005, NIB entered into a second US$1 million loan agreement with TCI Investment Agency Ltd. The remaining outstanding balance of US$500,000 at March 31, 2015 bore interest at a rate of 5.00% per annum. The maturity date of the loan was March 31, 2025 and it was being repaid in equal quarterly instalments of US$12,500 of principal plus related interest, however, by mutual agreement, this loan was repaid in full during the year ended March 31, 2016. 64 33

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 8. Long-term receivables, continued (a) Loans to TCI Investment Agency Ltd., continued (ii) Loan two, continued During the year ended March 31, 2016, NIB collected US$500,000 (2015: US$62,500) in principal and recognised US$24,313 (2015: US$26,565) in interest income. The loan was guaranteed by TCIG. (iii) Loan three On January 30, 2006, NIB entered into a US$3 million loan agreement with TCI Investment Agency Ltd. as follows: Purpose of loan Interest rate Maturity date Loan per annum granted Low income support lending 5.0% December 31, 2025 US$ 600,000 Educational lending 5.0% December 31, 2017 US$ 1,200,000 Commercial lending 6.0% December 31, 2017 1,200,000 3,000,000 The remaining outstanding balance of US$1,228,811 at March 31, 2015 was being repaid in equal quarterly instalments of principal including interest, however, by mutual agreement, this loan was repaid in full during the year ended March 31, 2016. During the year ended March 31, 2016, NIB collected US$1,228,811 (2015: US$368,082) in principal and recognised US$59,138 (2015: US$75,128) in interest income. The loan was guaranteed by TCIG. Principal payment Interest earned 2016 2015 2016 2015 US$ US$ US$ US$ FINANCIAL STATEMENTS Low income support lending 396,539 33,490 5,381 20,675 Educational lending 467,255 192,175 30,876 28,227 2016 Commercial lending 365,017 142,417 22,881 26,226 1,228,811 368,082 59,138 75,128 34 65

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 8. Long-term receivables, continued (a) Loans to TCI Investment Agency Ltd., continued The contractual maturity of total outstanding loans to TCI Investment Agency Ltd. at year end, which will be repaid by TCIG, were as follows: 2016 2015 Within one year US$ – 412,721 More than one year, less than two years US$ – 429,920 More than two years, less than three years – 353,845 More than three years, less than four years – 82,885 More than four years – 574,440 – 1,853,811 As stipulated in loan agreements of TCI Investment Agency Ltd. with NIB, outstanding loans may prepay the whole or any part of loan together with interest up to the date of prepayment. All outstanding loans at March 31, 2015 were repaid in full during the year ended March 31, 2016. (b) TCIG bonds 2016 2015 Face value of TCIG bonds US$ 1,500,000 1,500,000 Repayment of face value US$ (750,000) (600,000) 750,000 900,000 Premiums 250,000 250,000 Accumulated change in fair value (131,621) (110,787) Fair value 868,379 1,039,213 FINANCIAL During the year the change in fair value of TCIG bonds was US$20,834 (2015: STATEMENTS US$20,776) (note 14). 2016 2016 2015 Fair value US$ 868,379 1,039,213 Less current portion (150,000) (150,000) 889,213 US$ 718,379 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. 66 35

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 8. Long-term receivables, continued (b) TCIG bonds, continued 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. During the year NIB earned US$43,967 (2015: US$56,034) of interest on the non- callable bonds which was included as part of interest and other income in the statement of income, expenses and reserves. The total remaining face value of TCIG bonds due at year end was as follows: 2016 2015 Within one year US$ 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 150,000 150,000 More than four years 150,000 300,000 750,000 900,000 9. Long-term deposits 2016 2015 Current account US$ 53,849 53,849 Certificates of deposit 17,298,642 17,298,642 17,352,491 Less: first and second interim distributions 17,352,491 Current account (10,770) Certificates of deposit (21,540) (3,459,728) FINANCIAL (6,919,456) (3,470,498) STATEMENTS Balance (6,940,996) Current account 43,079 2016 Certificates of deposit 32,309 13,838,914 . 10,379,186 13,881,993 Less: reductions in fair value 10,411,495 Current account (30,155) Certificates of deposit (30,155) (9,687,240) . (9,687,240) (9,717,395) (9,717,395) US$ 694,100 4,164,598 36 67

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 9. Long-term deposits, continued The carrying value of long-term deposits at year end were as follows: 2016 2015 Current account US$ 2,154 12,924 Certificates of deposit US$ 691,946 4,151,674 Less current portion 694,100 4,164,598 (3,470,498) – 694,100 694,100 FINANCIAL All long-term deposits are held with TCI Bank. TCI Bank was placed into provisional STATEMENTS 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 2016 appropriate at March 31, 2016 and March 31, 2015, 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, net of subsequent collections, as non-current assets for financial reporting purposes. 68 37

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 10. Property and equipment Land and Furniture & Computer Motor Buildings Fixtures Equipment Vehicles Total US$ US$ US$ US$ US$ Cost: 3,853,576 727,361 1,110,492 272,481 5,963,910 April 1, 2014 1,027,063 12,482 10,387 – 1,049,932 Additions – (388,167) Disposals – (192,429) (195,738) 6,625,675 March 31, 2015 4,880,639 547,414 925,141 272,481 April 1, 2015 4,880,639 547,414 925,141 272,481 6,625,675 Additions 228,117 2,890 20,443 – 251,450 Disposals – – – – – March 31, 2016 5,108,756 550,304 945,584 272,481 6,877,125 Accumulated depreciation: 1,318,792 580,762 1,000,478 146,336 3,046,368 April 1, 2014 165,075 41,635 59,183 55,746 321,639 Charge for the year – – (388,167) Disposals (192,429) (195,738) March 31, 2015 1,483,867 429,968 863,923 202,082 2,979,840 April 1, 2015 1,483,867 429,968 863,923 202,082 2,979,840 Charge for the year 193,401 29,110 35,437 57,153 315,101 Disposals – – – – – March 31, 2016 1,677,268 459,078 899,360 259,235 3,294,941 Carrying amounts: March 31, 2015 3,396,772 117,446 61,218 70,399 3,645,835 FINANCIAL March 31, 2016 3,431,488 91,226 46,224 13,246 3,582,184 STATEMENTS The cost of land included in land and buildings was US$70,500 representing US$500 for 2016 land transferred by TCIG to NIB in April 2003 and US$70,000 for land leased for 999 years by TCIG to NIB in December 2012. Included in land and buildings is the Hon. L. Headley Durham building (previously TC Invest building) located on Grand Turk and a 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 was US$70,000. 38 69

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 FINANCIAL 10. Property and equipment, continued STATEMENTS The fair value of the property, including land, in November 2012 was approximately 2016 US$1.33 million based on a September 2012 valuation, using a cost approach, by BCQS International, an external, independent valuation company, with recognised and relevant professional qualifications and recent experience in the location and category of property being valued. On January 18, 2013 TCIG granted a lease, in accordance with the provisions of the Crown Land Ordinance, to NIB for the aforementioned 0.56 acres of land. The term of the lease agreement is 999 years from the date of commencement of the lease term, being December 28, 2012. The total lease payment throughout the term of the lease is US$70,000 amortised over the lease term. Annual amortisation is included as part of depreciation expense in the statement of income, expenses and reserves. 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. In 2015 NIB spent US$1.018 million for the renovation and modernisation of the Hon. L. Headley Durham building. No additional renovation cost was spent in 2016. No impairment losses were recognised for the years ended March 31, 2016 and 2015. 11. Investment in TCI Bank Limited At March 31, 2016 NIB owned 2,000,000 (2015: 2,000,000) ordinary shares in TCI Bank with an issued value of US$2,000,000 (2015: US$2,000,000), representing approximately 15.95% of the total issued ordinary shares of TCI Bank. NIB was represented on the board of directors of TCI Bank. As disclosed at notes 9 and 20 to these financial statements NIB also held a current account and certificates of deposit with TCI Bank at March 31, 2016 and 2015. The fair value of this investment at March 31, 2016 and 2015 was assessed by NIB’s management to be US$nil as a consequence of TCI Bank entering provisional liquidation on April 9, 2010 and liquidation on October 29, 2010. 12. Accounts payable and accrued expenses 2016 2015 Accrued employment injury costs US$ 1,240,058 790,058 Other accrued expenses US$ 322,796 156,749 Deferred contribution income 263,486 372,207 Accounts payable 177,626 Accrued short-term benefits 170,791 76,879 234,017 2,174,757 1,629,910 70 39

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 12. Accounts payable and accrued expenses, continued NIB is liable, per the Ordinance, for the cost of medical services provided in connection with employment injuries. NIB’s liabilities for medical costs relating to employment injuries for the period from its 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, 2016 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. 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. At March 31, 2016 NIB included in accounts payable and accrued expenses US$1,240,058 (2015: US$790,058) representing NIB’s best estimate of its remaining obligation for medical costs in connection with employment injuries as at that date. Subsequent to the reporting date, and having reached agreement with NHIB, in compliance with the Ordinance, NIB settled its obligations to NHIB for medical costs in connection with employment injuries at March 31, 2016. 13. Income from, and net realised gains on, available-for-sale financial assets Dividend income, interest income 2016 2015 and realised gains from equity securities US$ 3,167,724 7,596,368 Interest income and realised gains 872,270 2,608,060 from government and corporate debt securities 10,204,428 US$ 4,039,994 FINANCIAL 14. Interest and other income STATEMENTS 2016 2015 2016 Interest income from loans and receivables US$ 153,342 188,222 Interest income from savings and current accounts US$ 123,378 138,937 Rental income 276,720 327,159 Other income 128,000 128,000 Change in fair value of TCIG Bond (note 8(b)) 23,146 17,414 (20,834) (20,776) 407,032 451,797 Rental income of US$128,000 (2015: US$128,000) is from TCIG. It relates to the rental of office space included in property and equipment. 40 71

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 15. Benefits 2016 2015 Long-term benefits US$ 8,051,419 7,357,129 Retirement pension benefit 943,702 911,555 Survivors benefit 769,833 740,918 Old age non contributory 783,681 719,228 Invalidity pension 152,180 147,810 Funeral grant 81,034 86,653 Retirement grant 5,077 22,466 Survivors grant Short-term benefits 10,786,926 9,985,759 Maternity allowance Sickness benefit 1,142,260 843,509 Maternity grant 943,891 828,482 Employment injury benefits/disablement 236,000 180,350 1,852,341 and death benefits 2,322,151 Injury benefit Disablement benefit 552,393 499,089 Death benefit 242,872 247,037 Constant attendance allowance 108,418 94,988 7,800 7,800 862,344 898,053 US$ 14,007,130 12,700,444 FINANCIAL Refer to note 22 for additional information on long-term benefits. STATEMENTS For the period from April 1, 2010 to March 31, 2016 NIB made an advance payment to 2016 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. 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. At March 31, 2016 NIB included in accounts payable and accrued expenses US$1,240,058 (2015: US$790,058) representing NIB’s best estimate of its remaining obligation for medical costs in connection with employment injuries as at that date. 72 41

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 16. General and administrative expenses 2016 2015 2,565,210 Salaries and wages US$ 2,408,221 Professional fees 331,407 242,473 Depreciation 315,101 321,639 Maintenance expenses 228,760 Office supplies, stationery and postage 187,921 94,928 Impairment loss on surcharges receivable (note 6) 163,020 79,712 Other expenses – net 148,516 1,543,617 Insurance 125,880 104,878 Board of directors and committee allowances 119,309 139,846 Computer services 111,971 136,017 Security 105,945 18,432 Rent and utilities 104,269 114,082 Travel and subsistence 82,621 259,211 Communications 76,978 78,705 Vehicle expenses 49,588 101,698 Training 44,281 53,317 Advertising 40,661 33,225 Employees' allowances 15,397 16,198 Impairment loss on other receivables 8,795 23,791 Impairment (recovery)/loss on contributions receivable (note 6) (149,644) 4,401 Restoration and moving expenses – 612,457 Gain on sale of property and equipment – 63,619 (2,620) US$ 4,518,997 6,604,836 17. Investment expenses 2015 2016 942,804 132,044 Brokers’ fees on available-for-sale financial assets US$ 1,036,123 FINANCIAL UBS Financial Services Inc. US$ 74,000 72,067 STATEMENTS 53,885 1,146,915 Salaries of NIB’s investment personnel 2016 Other investment expenses 1,164,008 42 73

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 18. Other comprehensive loss The US$13,293,503 other comprehensive loss for the year ended March 31, 2016 (2015: US$2,806,827) related to changes in market value of available-for-sale financial assets in the year ended March 31, 2016 and 2015, respectively. The changes in market value of available-for-sale financial assets included in NIB’s reserves at March 31, 2016 and 2015 can be analysed as follows: Unrealised changes in Movement market value at March 31 2016 2016 2015 Equity securities US$ 3,541,538 16,054,825 (12,513,287) Government debt securities US$ 396,024 634,311 (238,287) Corporate debt securities 38,213 580,142 (541,929) 3,975,775 17,269,278 (13,293,503) Unrealised changes in Movement market value at March 31 2015 2015 2014 Equity securities US$ 16,054,825 19,174,760 (3,119,935) Government debt securities US$ 634,311 (134,800) 769,111 Corporate debt securities 580,142 1,036,145 (456,003) 17,269,278 20,076,105 (2,806,827) FINANCIAL 19. Related party balances and transactions STATEMENTS The following are transactions and balances with TCI Bank and TCIG, related parties by 2016 virtue of significant influence and common directors, including transactions with key management personnel, which are not separately disclosed elsewhere in these financial statements. 2016 2015 TCI Bank transactions US$ 3,470,498 – Partial repayment of long-term deposits US$ 40,504 – Partial repayment of interest on long-term deposits TCI Bank balances US$ 10,411,495 13,881,993 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 US$ (2,000,000) (2,000,000) Investment (before change in fair value) US$ 98,084 166,205 Reduction in fair value of investment Interest receivable (gross of change in fair value) 74 43

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 19. Related party balances and transactions, continued 2016 2015 TCIG transactions US$ 3,953,121 3,429,253 Collection of contributions US$ 2,460,218 2,146,575 (Employer and employees’ contributions) Contributions – private sector US$ 1,853,811 493,082 US$ 1,492,903 1,282,678 (Employer and employees’ contributions) US$ Repayment of TCI Investment US$ 450,000 450,000 US$ 146,495 154,976 Agency Ltd. loans US$ 150,000 150,000 Contributions – civil servants US$ 128,000 128,000 Employment injury costs accrued US$ 132,550 124,295 NIB’s payment of NHIB contributions 153,342 188,222 Repayment of Treasury bond Rent income US$ 1,240,058 790,058 NIB’s payment of NIB contributions US$ 750,000 900,000 Interest income US$ 20,065 US$ – 35,017 TCIG balances 1,853,811 Accrued NHIB employment injury costs Treasury bonds – at par Interest receivable TCI Investment Agency Ltd. loans Per the Ordinance, contributions from TCIG of US$1,492,903 (2015: US$1,282,678) FINANCIAL comprise contributions relating to TCIG officers only and these are reflected in the STATEMENTS statement of income, expenses and reserves as contributions from civil servants. Contributions for TCIG employees are charged at the same rates as the private sector 2016 and, on this basis, have been included within the private sector contributions in the statement of income, expenses and reserves and for the purpose of allocating contributions amongst branches. Key management personnel compensation US$ 2016 2015 Salary of the director and deputy directors US$ Housing and gratuity benefits of the director US$ 198,739 300,986 Other benefits of the director and deputy directors US$ 7,574 23,000 Allowances of the board of directors 8,344 10,707 85,200 77,500 44 75

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2016 Year ended March 31, 2016 20. 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, 2016 and 2015 NIB kept its asset allocation, except for Small cap core U.S. equities at March 31, 2016 and cash and money market instruments at March 31, 2015, within ranges recommended by the IPS (note 20 (c)(ii)). 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. 76 45

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 20. Financial instruments, continued (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. NIB’s credit risk policy is to minimise its exposure to counterparties with perceived higher risk of default by taking collateral. Credit risk is monitored on a regular basis by the Investment Committee. 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 provision for impairment represents the estimate of incurred losses in respect of contributions receivable, excluding surcharges, and is made up of a specific loss component relating to individual exposures. 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 2016 2015 Current assets: US$ 37,006,816 35,275,365 Cash and cash equivalents 3,696,239 3,243,570 Contributions and other receivables 150,000 562,721 FINANCIAL Current portion of long-term receivables – 3,470,498 STATEMENTS Current portion of long-term deposits 40,853,055 42,552,154 2016 Non-current assets: Available-for-sale financial assets 178,039,019 172,540,089 Long-term receivables 718,379 2,330,303 Long-term deposits 694,100 694,100 179,451,498 175,564,492 US$ 220,304,553 218,116,646 46 77

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 20. Financial instruments, continued (a) Credit risk, continued 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 2016 2015 Private employers US$ 3,088,503 2,470,796 Self-employed 87,291 89,420 US$ 3,175,794 2,560,216 The exposure to credit risk for contributions receivable at the reporting date, by geographical location, was as follows: 2016 Carrying Gross Impairment Amount Providenciales US$ 3,940,140 984,277 2,955,863 Grand Turk US$ 207,155 50,887 156,268 North Caicos 56,518 14,667 41,851 Pine Cay 32,780 20,166 12,614 South Caicos 7,589 759 6,830 Middle Caicos 2,417 682 1,735 Salt Cay 1,913 1,280 633 4,248,512 1,072,718 3,175,794 FINANCIAL 2015 Carrying STATEMENTS Gross Impairment Amount 2016 Providenciales US$ 3,513,844 1,251,874 2,261,970 Grand Turk US$ 250,258 53,681 196,577 North Caicos 83,252 16,990 66,262 South Caicos 97,004 73,454 23,550 Pine Cay 10,265 1,027 9,238 Middle Caicos 3,088 1,409 1,679 Salt Cay 2,260 1,320 940 3,959,971 1,399,755 2,560,216 78 47

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 20. Financial instruments, continued (a) Credit risk, continued 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 the vast majority of 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. The aging of contributions receivable, excluding surcharges, at the reporting date, by type of counterparty, was as follows: 2016 2015 Gross Impairment Gross Impairment Private employers US$ 156,387 31,276 117,736 23,547 Past due 62,440 24,975 89,323 35,729 Not later than one month 1,077,407 608,060 1,294,057 976,581 Later than one month but 2,729,533 272,953 2,228,375 222,838 4,025,767 937,264 3,729,491 1,258,695 not later than two months Later than two months 20,842 4,169 16,032 3,206 Outstanding but not past due 13,233 Self-employed 146,169 5,293 11,952 4,781 Past due 42,501 121,740 151,504 127,974 Not later than one month 222,745 Later than one month but 4,252 50,992 5,099 135,454 230,480 141,060 not later than two months Later than two months Outstanding but not past due US$ 4,248,512 1,072,718 3,959,971 1,399,755 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. 2016 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. 48 79

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 20. Financial instruments, continued (a) Credit risk, continued There was no change to the basis for estimating the impairment allowance for contributions receivable in the years ended March 31, 2015 and 2016. Provision is made against outstanding contributions receivable and surcharges on the following basis: 2016 2015 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 (2015: 50%) and all surcharges receivable with pending legal matters at March 31, 2016 were 90% provided for (2015: 90%). The credit quality of available-for-sale financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (Standard & Poor’s Ratings Services and Moody's Investor Services, Inc.) or to historical information about counterparty default rates: 2016 2015 UBS Financial Services Inc. A+; A1 A; A2 At the reporting date, NIB held financial assets with the following TCI entities: FINANCIAL CIBC 2016 2015 STATEMENTS Cash at banks – savings and current accounts US$ 8,669,417 23,438,010 2016 Scotiabank 7,218,713 7,190,009 Cash at banks – savings and current accounts – 1,853,811 900,000 TCI Investment Agency Ltd. 750,000 Loans 10,509,579 14,020,581 US$ 27,147,709 47,402,411 TCIG Treasury bonds – at par TCI Bank (gross of change in fair value) 80 49

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 20. Financial instruments, continued (a) Credit risk, continued The following summarises financial assets held with TCI Bank at March 31, 2016 and 2015 including those deemed to have suffered a reduction in fair value: 2016 2015 Reduction in Reduction Gross fair value Gross in fair value Other receivables US$ 98,084 97,012 138,588 97,012 Long-term deposits US$ 10,411,495 9,717,395 13,881,993 9,717,395 10,509,579 9,814,407 14,020,581 9,814,407 As stated at note 9 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. (b) Liquidity risk Liquidity risk is the risk that NIB will encounter difficulty in meeting obligations arising FINANCIAL from its financial liabilities that are settled by delivering cash or another financial STATEMENTS asset, or that such obligations will have to be settled in a manner disadvantageous to NIB. 2016 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 8(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. 50 81

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 20. Financial instruments, continued (b) Liquidity risk, continued 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: Carrying Contractual 2016 1-2 years 2-4 years More than 4 Amount cash flows US$ years Under 1 US$ US$ year US$ US$ US$ Cash and cash equivalents 37,006,816 37,006,816 37,006,816 ––– Contributions and other receivables Available-for-sale financial assets 3,696,239 3,696,239 3,696,239 ––– Long-term receivables 178,039,019 226,636,432 1,565,727 141,269,397 16,255,077 67,546,231 (current and non-current) Long-term deposits 868,379 915,000 207,000 195,000 354,000 159,000 Accounts payable and accrued 694,100 694,100 – – – 694,100 expenses (2,174,757) (2,174,757) (2,174,757) ––– 218,129,796 266,773,830 40,301,025 141,464,397 16,609,077 68,399,331 Carrying Contractual 2015 1-2 years 2-4 years More than 4 Amount cash flows US$ years Under 1 US$ US$ year US$ US$ US$ Cash and cash equivalents 35,275,365 35,275,365 35,275,365 – –– – Contributions and other receivables 3,243,570 3,243,570 3,243,570 – Current portion of long-term deposits 3,470,498 3,470,498 3,470,498 – –– Available-for-sale financial assets 1,561,951 128,915,704 Long-term receivables 172,540,089 189,670,683 –– (current and non-current) 9,682,265 49,510,763 Long-term deposits Accounts payable and accrued 2,893,024 3,313,825 719,660 702,785 889,023 1,002,357 694,100 694,100 – – – 694,100 expenses FINANCIAL (1,629,910) (1,629,910) (1,629,910) ––– STATEMENTS 216,486,736 234,038,131 42,641,134 129,618,489 10,571,288 51,207,220 2016 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. 82 51

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 20. Financial instruments, continued (c) Market risk Market risk is the risk that changes in market prices, such as interest rates and equity 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 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. At the reporting date, the interest rate profile of NIB’s interest-bearing financial instruments was: Cash flow sensitivity analysis for fixed rate instruments 2016 2015 Fixed rate instruments: US$ 41,074,992 47,110,722 FINANCIAL Financial assets STATEMENTS 868,379 2,893,024 Available-for-sale financial assets – – 2016 Long-term receivables (current and non-current) US$ 41,943,371 50,003,746 Financial liabilities A change of 100 basis points in interest rates for fixed rate instruments at the reporting date would have increased/(decreased) income in the statement of income, expense and reserves by US$419,434/(US$419,434) (2015: US$500,037/(US$500,037)) assuming all other variables remained constant. 52 83

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 20. Financial instruments, continued (c) Market risk, continued (i) Interest rate risk, continued 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 2016 2015 Variable rate instruments: US$ 36,172,693 34,731,085 Financial assets – – Cash and cash equivalents US$ 36,172,693 34,731,085 Financial liabilities 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$361,727/(US$361,727) (2015: US$347,311/(US$347,311)) assuming all other variables remained constant. FINANCIAL NIB’s interest rate risks are monitored on a regular basis by the Investment STATEMENTS Committee and third party investment managers. 2016 (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. 84 53

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 20. Financial instruments, continued (c) Market risk, continued (ii) Price risk, continued NIB’s policy over concentration of its investment portfolio profile, based on its IPS, was as follows at March 31: Asset Class 2016 2015 Cash and money market instruments 0–10% 0–10% Non U.S. equities 5–30% 5–30% Fixed income 10–40% 10–40% Hedge Funds 5–15% 5–15% U.S. equities 6–15% 6–15% 6–15% 6–15% Large cap value 0–05% 0–05% Large cap growth 0–05% 0–05% Mid cap growth 2–08% 2–08% Small cap core 0–08% 0–08% Convertibles 0–10% 0–10% Commodities Private equity The following table sets out concentration of the investment portfolio held by NIB at March 31: Asset Class According to IPS 2016 % Amount Cash and money market instruments US$ 15,888,130 7.4% FINANCIAL Non U.S. equities US$ 51,651,615 23.9% STATEMENTS Fixed income 51,402,641 23.8% Hedge Funds 20,072,535 2016 U.S. equities 9.3% 18,565,536 Large cap value 19,090,811 8.6% Large cap growth 8.9% Mid cap growth 8,160,019 3.8% Small cap core 11,639,801 5.4% Convertibles 10,625,590 4.9% Commodities 2.5% Private equity 5,486,112 1.5% 3,327,997 100.0% 215,910,787 54 85

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 20. Financial instruments, continued (c) Market risk, continued (ii) Price risk, continued Asset Class According to IPS 2015 % Amount Cash and money market instruments US$ 30,628,019 14.5% Non U.S. equities US$ 44,072,868 20.9% Fixed income 42,082,025 20.0% Hedge Funds 22,287,843 10.6% U.S. equities 17,222,217 8.2% Large cap value 18,787,195 8.9% Large cap growth 10,063,524 4.8% Mid cap growth 3.0% Small cap core 6,401,429 5.5% Convertibles 11,555,050 3.1% Commodities 0.5% Private Equity 6,554,880 100.0% 1,050,000 210,705,050 NIB kept its asset allocation within ranges recommended by the IPS at March 31, 2016 and 2015, with the exception of Small cap core U.S. equities at March 31, 2016 and cash and money market instruments at March 31, 2015. The investment portfolio held by NIB at March 31, 2016 and March 31, 2015 was presented in these financial statements as follows: 2016 2015 Cash and cash equivalents US$ 21,115,259 4,643,918 Cash at investment managers FINANCIAL Cash at banks – savings and 15,888,130 30,628,019 STATEMENTS current accounts 178,039,019 172,540,089 2016 Available-for-sale financial assets 868,379 2,893,024 Long-term receivables 215,910,787 210,705,050 US$ In compliance with internal investment guidelines a money market fund held by investment 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 9) at March 31, 2016 (2015: US$4,164,598) has therefore been excluded from the above tables. 86 55

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 20. Financial instruments, continued (c) Market risk, continued (iii) Fair value The following table sets out the fair values of financial instruments measured at fair value/historical value at the reporting date and analyses them by the level in the fair value hierarchy into which each fair value measurement is categorised: Carrying Level 1 2016 Level 3 Amount US$ US$ Fair Value US$ Level 2 US$ Cash and cash equivalents 37,006,816 – 37,006,816 – Contributions and other receivables 3,696,239 –– 3,696,239 Current portion of long-term 150,000 – – 150,000 receivables 178,039,019 136,964,027 41,074,992 – Available-for-sale financial assets Long-term receivables 718,379 – – 718,379 Long-term deposits 694,100 – – 694,100 Accounts payable and accrued (2,174,757) –– (2,174,757) expenses 3,083,961 218,129,796 136,964,027 78,081,808 Carrying Level 1 2015 Level 3 Amount US$ US$ Fair Value US$ Level 2 US$ Cash and cash equivalents 35,275,365 – 35,275,365 – Contributions and other receivables 3,243,570 –– 3,243,570 Current portion of long-term 562,721 – – 562,721 FINANCIAL receivables 3,470,498 – – 3,470,498 STATEMENTS Current portion of long-term deposits 172,540,089 125,429,367 47,110,722 Available-for-sale financial assets 2,330,303 – – – 2016 Long-term receivables – – 2,330,303 Long-term deposits 694,100 Accounts payable and accrued 694,100 (1,629,910) –– expenses (1,629,910) 8,671,282 216,486,736 125,429,367 82,386,087 Due to their short-term nature, the carrying amounts of NIB’s certain financial assets and liabilities approximate their fair value. 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. 56 87

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2016 Year ended March 31, 2016 20. Financial instruments, continued (c) Market risk, continued (iii) Fair value, continued 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. 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$6,848,201 (2015: US$6,271,468) and an equal change in the opposite direction would have decreased income in the statement of income, expenses and reserves by US$6,848,201 (2015: US$6,271,468). 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 increase the change in fair value and net income in the statement of income, expenses and reserves for the year by US$1.75 million (2015: US$1.75 million). 21. 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. 88 57

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 21. Capital management, continued (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. The Employment Injury Benefit Reserve at March 31, 2016 and 2015 was determined as follows: Paid benefits Required 2016 2015 reserve at March 31, 2016 Injury benefit US$ 102,393 44,976 73,685 Accrued employment – – 1,240,058 injury costs (note 12) 102,393 44,976 1,313,743 US$ Paid benefits Required 2015 2014 reserve at March 31, 2015 Injury benefit US$ 49,089 44,976 47,033 Accrued employment – – 790,058 injury costs (note 12) 49,089 44,976 837,091 US$ The US$450,000 expense for medical care costs (note 12) which was recognised during FINANCIAL the year ended March 31, 2016 was not included in the Employment Injury Benefit STATEMENTS Reserve calculation as it had not been paid at March 31, 2016. At March 31, 2016 NIB management decided to include in the Employment Injury Benefits Reserve the accrued 2016 employment injury costs of US$1,240,058 (2015: US$790,058) as these were the expected amounts that would ultimately be paid from this reserve once the exact liability 89 had been determined. During the year ended March 31, 2016 US$476,652 was transferred from the Disablement and Death Benefit Reserve to the Employment Injury Benefit Reserve (2015: US$3,465,451 was transferred to the Disablement and Death Benefit Reserve from the Employment Injury Benefit Reserve) so as to maintain the required reserve for Employment Injury Benefit at March 31, 2016 and March 31, 2015. There was no change to NIB’s management of capital during the years ended March 31, 2016 and 2015. NIB has complied with the above regulatory imposed capital requirements at the year-end. NIB is not subject to any externally imposed capital requirements. 58

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2016 Year ended March 31, 2016 22. Actuarial review Actuarial present value of promised retirement benefits NIB has elected to apply IAS 26 for retirement benefits 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 in the notes 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. 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. 90 59

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 22. Actuarial review, continued Actuarial present value of promised retirement benefits, continued 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$415 million. The actuarial present value of promised retirement benefits at March 31, 2016 and 2013 can be classified as follows: Vested Unvested Total At March 31, 2016 US$ 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: 2016 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 60 91

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2016 22. Actuarial review, continued Actuarial present value of promised retirement benefits, continued The conditions for the promised retirement benefits to become vested are as follows:, continued 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, 2014, 2015 and 2016 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, 2016 US$ 30,400,000 1,300,000 At March 31, 2015 US$ 29,100,000 2,300,000 At March 31, 2014 US$ 26,800,000 (2,800,000) FINANCIAL The change in present value of long-term benefits, other than retirement benefits, of STATEMENTS US$1,300,000 during the year ended March 31, 2016 (2015: US$2,300,000) was recognised in the statement of income, expenses and reserves. 2016 The details of the actuarial present value of long-term benefits, other than retirement benefits, at the reporting date was as follows: Long-term benefit branch 2016 2015 Change Invalidity pension US$ during the year Survivors’ benefit US$ Non-contributory old aged pension US$ 11,620,000 Employment injury benefit branch 10,220,000 10,500,000 1,120,000 Employment injury benefit 8,900,000 1,320,000 Total 3,730,000 4,300,000 (570,000) 25,570,000 23,700,000 1,870,000 4,830,000 30,400,000 5,400,000 (570,000) 29,100,000 1,300,000 92 61

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2016 Year ended March 31, 2016 22. Actuarial review, continued The actuarial present value of long-term benefits, other than retirement benefits, continued The key assumptions and methods used in this calculation of present value of other long- term benefits for 2016 and 2015 were as follows:  Inflation – 2.3% per annum (2015: 2.5% per annum)  Discount rate – 4.5% per annum (2015: 4.5% per annum)  For widows/widowers pension – assume to be paid for life (2015: assume to be paid for life)  For orphan pension – assume to be paid until age of 21 (2015: 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. 23. 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. 24. Commitments Employment injury costs NIB is liable, per the Ordinance, for the cost of medical services provided in connection with employment injuries. NIB’s liabilities for medical costs relating to employment injuries for the period from its 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, 2016 NIB made an advance payment to 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. 62 93

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2016 Year ended March 31, 2016 24. Commitments, continued Employment injury costs, continued 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. At March 31, 2016 NIB included in accounts payable and accrued expenses US$1,240,058 (2015: US$790,058) 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, 2016. Investments NIB has committed to contribute capital to the following private equity funds:  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, 2016 NIB had a remaining contribution commitment to the Strategic Value Fund of US$800,000 (2015: US$1.45 million).  In 2016 NIB committed to contribute US$5 million to the Portfolio Advisors Private Equity Fund 2015 (Offshore), L.P. (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, 2016 NIB had a remaining contribution commitment to the Portfolio Advisors Fund of US$3.41 million (2015: US$nil).  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, 2016 NIB had a remaining contribution commitment to the NB Strategic Fund of US$4.62 million (2015: US$nil). 94 63

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued Year ended March 31, 2016 2016 25. Subsequent events At March 31, 2017 NIB had US$215 million of available-for-sale financial assets held at UBS Financial Services Inc. and managed by various investment managers. From April 1, 2016 to March 31, 2017 NIB reported fair value increases of its available-for-sale financial assets of US$9.35 million. As stated at notes 12, 15 and 24, at March 31, 2016 NIB included in accounts payable and accrued expenses US$1,240,058 (2015: US$790,058) representing NIB’s best estimate of its remaining obligation for medical costs in connection with employment injuries as at that date. In November 2016, March 2018 and September 2018, further payments of US$522,000, US$73,000 and US$278,267, respectively, in connection with employment injuries as at March 31, 2016, were made by NIB to NHIB. On July 1, 2016, Fortis TCI 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. 64 95

2017 FINANCIAL STATEMENT TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD YEAR ENDED MARCH 31, 2017 96