2020 INTEGRATED REPORT

The Group only enters into reinsurance agreements with reinsurers registered with the Prudential Authority. The reinsurers contracted with, represent subsidiaries of large international reinsurance companies. No instances of default have been encountered. As such the Group has selected reinsurers with a minimum credit rating of A+ for Long-Term insurance and A- for Short-Term insurance. Cash and cash equivalents are invested with financial institutions holding credit ratings within the guidelines set by the Board, similar to corporate and government debt indicated below, as well as restrictions in the Collective Investment Schemes Control Act, No. 45 of 2002, as amended. The spread of cash between financial institutions is determined in line with limits specified in the Insurance Act 18 of 2017, as substituted and/or amended from time to time. The financial soundness of counterparties holding the Group’s cash is monitored by management on a monthly basis. Exposure to credit risk The maximum exposure to credit risk at the reporting date from financial assets, including unit trusts, and insurance contracts was: Group R'm 2020 2019 Debt securities* 20 224 18 188 Reinsurance assets 43 18 Insurance receivables 232 123 Cash and cash equivalents* 3 096 3 329 Other receivables 534 290 Reinsurance receivables 197 145 Total 24 326 22 093 * Including assets held in unit trust funds Corporate and government debt Included in the category designated at fair value through profit or loss are interest instruments of corporate and government debt. Management recognises and accepts that losses may occur through the inability of corporate debt issuers to service their debt. To mitigate this risk, management has formulated guidelines based on ratings from Standard & Poor’s, an industry accepted credit ratings agent. The Group’s total exposure to corporate debt amounted to R20.2 billion (2019: 18.2 billion) at 31 December 2020. The following represent the major industry sectors to which the Group is exposed as at 31 December 2020: Group R'm 2020 2019 Government 11 182 8 023 Banks 6 772 7 464 Utilities 694 479 Corporate 1 576 2 222 Total 20 224 18 188 PPS INTEGRATED REPORT 2020 | 191