Managing Money

Chesnara is required to provide a range of financial reports as prescribed by the Companies Act 2006, Listing Rules, Disclosure and Transparency Directive and the UK Corporate Governance Code. The Company has a Reporting and Disclosure Policy outlining the reporting and disclosure requirements, including those of Solvency II and the International Financial Reporting Standards (IFRS).

All Group companies comply with all relevant statutory and regulatory requirements to prevent Money Laundering activities. Each division has an Anti-Money Laundering Policy signed off by their Board, which includes a clear allocation of responsibility and accountability for Money Laundering controls and audit trail.  

The group aims to make profits by running insurance businesses rather than through investment in the market. Managing these insurance businesses and any surplus funds sees the application of an investment strategy underpinned by appropriate principles.

The Group aims to minimise the risk of not being able to meet its outgoings, be it to policyholders or other creditors. To meet this risk appetite, minimum levels of liquid assets are established across the group and must be adhered to.

The Group outsources business services and support activities when appropriate. The relevant Board is regularly updated on supplier performance in material contracts.

A core outsourcing principle is the selection criteria for outsourcing business. Selection is based on financial standing and management and evidence of controls designed to minimise the impact of an outsource provider failing to meet its obligations or quality service standard.

When considering the financial position of the company, any appropriate allowance is required for likely cost of future payments to policyholders and for the costs of running the business, leading to the holding of reserves. The nature of insurance means these future costs have an inherent uncertainty within them, so the Group considers it important that suitable governance and controls are applied to these assessments, ensuring that all regulatory considerations are applied, group principles and practices followed, and appropriate oversight applied to challenge the resultant valuations.

Each regulated entity will have a suitably experienced actuary responsible for advising the relevant Board, which takes appropriate responsibility for the assumptions and methodology used.

The Company’s Finance Function is responsible for overseeing the valuation of the assets and liabilities held by Chesnara as outlined in the Assets and Liabilities Valuation Policy. 

This policy addresses the requirements of: 
• Directive 2009/138/EC (articles 41, 46 and 75) 
• Delegated Acts (article 267) 
• EIOPA 14-253 Final report on Governance (guidelines 52 to 59). 

It provides a summary of the bases, methods and inputs used in asset and liability valuation for IFRS and Solvency II reporting, including assumptions and judgements concerning tax liabilities.  

For solvency valuation purposes, the Group is required to value its assets at their market value.  The vast majority of these assets are traded on stock exchanges and therefore the market value is determined with reference to quoted prices.  For the minority of assets that are not traded on exchanges, the group uses valuation models that use inputs that can be observed in the market, for example longer term interest rates.