2020 INTEGRATED REPORT

Financial assets that are past due Group 2019 Neither past due nor Between 0 – 2 Between 2 – 5 More than Carrying R’m impaired months months 5 months value Insurance receivables 96 3 1 23 123 Reinsurance assets 18 – – – 18 Reinsurance receivables 119 4 22 – 145 Other receivables 226 62 1 1 290 Cash and cash equivalents 3 329 – – – 3 329 The Group does not have collateral or other credit enhancements for its credit risk exposure from financial assets and insurance contract assets during the current or prior year. Insurance receivables can be settled from the Profit-share Account on arrangement with the policyholder. Expected credit losses on Insurance receivables are determined using a provision matrix. Receivables are categorised per individual policyholder arrangement. Impairment rates applied to various categories are set out below: Category 1 Balances older than 60 days in excess of recoverable Profit-Share Account balance Category 2 Balances in excess of recoverable Profit-Share Account balance Category 3 Total balances for members aged 51 and older. Before age 51, balances in excess of recoverable Profit-Share Account balance There are no financial assets where the terms have been renegotiated for the current or prior year. Individually impaired assets The analysis of overall credit risk exposure indicates that the Group has receivables from contract holders that are impaired at the reporting date. The assets are analysed below: 2020 2019 Group Impairment Impairment R'm Gross losses Net Gross losses Net Due from contract holders 245 13 232 136 13 123 Loan to associate company 334 234 100 234 234 – Due from investment property lessees 10 3 7 5 1 4 Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in raising funds to meet commitments to policyholders under policy contracts and in respect of financial liabilities. The Group’s approach to managing its liquidity risk is as follows: ~ Policyholder funds are invested in assets that in aggregate match the reasonable benefit expectation of policyholders, which includes the expectation that funds will be available to pay out benefits as required by the insurance contract. ~ Policyholder funds are primarily invested in assets that are listed financial instruments on various stock and bond exchanges and cash or cash equivalents that are actively traded on the various stock and bond exchanges, resulting in the ability to liquidate most of these investments at relatively short notice to be able to timeously pay out benefits as required by the policy contract. Some policyholder funds are invested in less liquid assets, such as fixed property, but not to the extent that this creates a material liquidity risk in meeting commitments to policyholders. ~ Furthermore, the operational cash flow is sufficient to cover cash flow of a normal operational nature for example, in order to settle outstanding trade creditor balances. PPS INTEGRATED REPORT 2020 | 193