249 ANNUAL REPORT 2010 Guaranteed benefits  are payments or other benefits to which  a particular policyholder or investor has an unconditional right  that is not subject to the contractual discretion of the issuer. Financial instrument  is any contract that gives rise to both  a financial asset of one entity and a financial liability or equity  instrument of another entity. Hedge effectiveness  is the degree to which changes in the fair  value or cash flows of the hedged item that are attributable to a  hedged risk are offset by changes in the fair value or cash flows  of the hedging instrument. Incremental cost  is one that would not have been incurred  if the entity had not acquired, issued or disposed of a financial  instrument. Insurance asset  is an insurer’s contractual right under an  insurance contract. Insurance contract  is a contract under which one party  (the insurer) accepts significant insurance risk from another  party (the policyholder) by agreeing to compensate the  policyholder if a specified uncertain future event (the insured  event) adversely affects the policyholder. Insurance liability  is an insurer’s contractual obligation under  an insurance contract. Insurance risk  is a risk, other than financial risk, transferred  from the holder of a contract to the issuer. Financial liability  is any liability that is: ■ A contractual obligation to deliver cash or another fi nancial  asset to another entity or to exchange financial assets or  financial liabilities with another entity under conditions  that are potentially unfavorable to the entity; or ■ A contract that will or may be settled in the entity’s own  equity instruments; and is  • A non-derivative for which the entity is or may be obliged  to deliver a variable number of the entity’s own equity  instruments; or • A derivative that will or may be settled other than by the  exchange of a fixed amount of cash or another fi nancial  asset for a fixed number of the entity’s own equity  instruments. Financial risks  are risks of a possible future change in one  or more of the following variables: a specified interest rate,  financial instrument price, commodity price, foreign exchange  rate, index or prices or rates, credit rating or credit index or  other variable, provided in the case of a non-financial variable,  that the variable is not specific to a party to the contract. Firm commitment  is a binding agreement for the exchange  of a specified quantity of resources at a specified price on a  specified future date or dates. Joint control  is the contractually agreed sharing of control  over an economic activity, which exists when the strategic  and operating decisions relating to the activity require the  unanimous consent of the parties sharing control. Liability adequacy testing  is an assessment of whether the  carrying amount of an insurance liability needs to be increased  (or the carrying amount of related deferred acquisition costs or  related intangible assets decreased) based on a review of future  cash flows. Foreign currency  is a currency other than the functional  currency of an entity within the Group. Foreign operation  is an entity that is a subsidiary, associate,  joint venture or branch of a reporting entity within the Group,  the activities of which are based or conducted in a country  or currency other than those of the reporting entity. Functional currency  is the currency of the primary economic  environment in which an entity within the Group operates. Liquidity risk  is the risk that an entity will encounter difficulty  in raising funds to meet commitments associated with financial  instruments. Master netting agreement  is an agreement providing for  an entity that undertakes a number of financial instrument  transactions with a single counterparty to make a single net  settlement of all financial instruments covered by the  agreement in the event of default on, or termination of,  any contract. General account investments  are investments of which the  financial risks are not borne by the policyholder. Goodwill  is the amount of future economic benefits arising  from assets that are not capable of being individually identified  and separately recognized as an asset in a business  combination. SHARPENING OUR FOCUS