Annual Report 2023 (eng) - Flipbook - Side 54
INDUSTRIENS PENSIONSFORSIKRING A/S ÅRSRAPPORT 2023
INDEPENDENT AUDITOR'S REPORT
Key audit matter
How our audit addressed the key audit matter
Measurement of unlisted investment assets
We performed risk assessment procedures with the purpose of achieving an understanding of IT
systems, procedures and relevant controls relating to measurement of unlisted investments.
Unlisted investments primarily include investments in private equity funds and unlisted shares. These
are disclosed in the balance sheet under “Other financial investment assets” and “Investment assets
linked to market-rate products” at a total of DKK 65,860 mill., corresponding to 28% of total
investment assets.
Unlisted investments also include investments in property and infrastructure (offshore turbines and
solar installations) that are disclosed in the balance sheet under 'Investments in group and associated
undertakings' and 'Investment assets linked to market-interest-rate products' at a total of DKK 9,515
mill., corresponding to 4% of total investment assets.
Unlisted investment assets are measured at estimated fair value. The accounting estimate of fair
value is based on valuation models, data and significant assumptions, which are not directly
observable by a third party. Changes in significant assumptions, which are included in the accounting
estimate, may have a material effect on the Financial Statements.
We focused on the measurement of unlisted investments, as the accounting estimate is by nature
complex and influenced by subjectivity and thus to a large extent associated with estimation
uncertainty.
In respect of controls, we assessed whether these were designed and implemented effectively to
address the risk of material misstatement. For selected controls, on which we planned to rely, we tested
whether these controls had been performed on a consistent basis.
We assessed and tested the valuation models applied by Management.
We tested on a sample basis the consistency between the assumptions applied, data and the
calculation of fair values.
We tested on a sample basis the applied fair values against relevant reporting from external fund
managers.
We challenged the significant assumptions forming the basis of the accounting estimate incorporated
in the calculation of the fair values based on our knowledge of the portfolio and the market
development.
We assessed whether the disclosures on the unlisted investments were adequate.
Reference is made to the description in the Financial Statements of “Accounting estimates” in note 1
and “Equity investments in group undertakings”, “Equity investments in associated undertakings” and
“Investment assets related to market-rate products” in notes 10, 11, 12 and 22.
Measurement of provisions for insurance and investment contracts
The Company has provisions for insurance and investment contracts totalling DKK 220,871 million,
which constitutes 90% of the balance sheet total.
The provisions primarily comprise life insurance provisions for market-rate contracts of DKK 205,594
million and average-rate contracts of DKK 6,563 million as well as provisions for claims relating to
health and accident insurance DKK 7,607 million.
The calculations are based on the fair value of the relevant assets in relation to the market interest rate
and actuarial principles in relation to other provisions and they involve significant accounting estimates
that are linked to the actuarial assumptions regarding the timing and scope of future payments to
members.
The actuarial assumptions comprise yield curve used for discounting, longevity, mortality, disability,
probability of buy-backs and lapses as well as costs.
We focused on the measurement of provisions for insurance and investment contracts, as the
accounting estimate is by nature complex and influenced by subjectivity and thus to a large extent
associated with estimation uncertainty.
Reference is made to the description in the Financial Statements of “Accounting estimates” in note 1
and “Life-assurance provisions at average rate" and "Life-assurance provisions at market rate” in notes
14 and 15.
We performed risk assessment procedures with the purpose of achieving an understanding of IT
systems, procedures and relevant controls relating to providing for insurance and investment contracts.
In respect of controls, we assessed whether these were designed and implemented effectively to
address the risk of material misstatement. For selected controls, on which we planned to rely, we tested
whether these controls had been performed on a consistent basis.
We used our own actuary to assess the actuarial methods and models applied by the Company as well
as assumptions applied, and calculations made.
We assessed and challenged the methods, models and actuarial assumptions applied comprising yield
curve used for discounting, longevity, mortality, disability, probability of buy-backs and lapses as well
as costs based on our experience and knowledge of the sector with a view to assess, whether these
assumptions are in accordance with regulatory and accounting requirements. This comprised an
assessment of the continuity of the basis for the calculation of provisions.
We tested the calculation of provisions for insurance and investment contracts on a sample basis.
We assessed whether the disclosures on the provisions were adequate.
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