NOTES TO F I NANC I AL STATEMENTS 19.1.1. Claims development table Any claim pay-outs are made shortly after the end of the underlying risk years for each respective policyholder. The risk years, as explained in Note 4.2.5.3., are the growing seasons for each participating country. Practically, this means that within four weeks of the growing season ending, any relevant claim pay-out shall be made, subject to conditions around Financial Implementation Plan (“FIP”) and other required documentation being in order. Claims paid for in the current period net of recoveries of $18,106,688 (2022: $22,348,561) represent claim pay-outs under the drought program for $17,532,771 to The Gambia, Togo, Niger, Somalia, Burkina Faso and Madagascar; pay- outs under the non-sovereign program for $272,940 and pay-outs under the tropical cyclone program for $300,977. Figures in USD 31 DEC 2023 31 DEC 2022 Claims development: At the end of the year 19,689,753 20,224,803 19.2. Financial risk 19.2.1. Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with insurance liabilities that are settled by delivering cash or another financial asset. In respect of catastrophic events, there is also a liquidity risk associated with the timing differences between gross cash outflows and expected reinsurance recoveries. Prudent liquidity risk management implies maintaining sufficient cash and deposits and the availability of funding through an adequate amount of committed credit facilities. The Company’s cash and cash equivalents have a maturity profile that ensures that it is able to meet liabilities arising from claims received. The Company shall also mitigate future liquidity risks by holding highly liquid financial assets which may be sold quickly in response to needs for liquidity. The Company holds derivatives, whose maturities are disclosed in Note 7. All claims stated in the financial statements are expected to be settled within one year after the reporting date. 19.2.2. Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument, insurance contract issued, or reinsurance contract held will fluctuate because of changes in market prices. Market risk comprises three types of risk: foreign exchange rates (currency risk); market interest rates (interest rate risk), and market prices (price risk). 19.2.2.1. Currency risk Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign currency exchange rates. Management assesses that, there is minimal risk of significant losses due to exchange rate fluctuations, based on the fact that the GBP denominated financial liability and grant equity are hedged by the GBP denominated marketable investments. All premium and risk exposures are denominated in USD. 133
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