2020 INTEGRATED REPORT

Group Contractual cash flows 2019 Carrying Total cash Within 1 2 – 5 6 – 10 11 – 20 Over 20 R'm amount flows year years years years years Insurance contract liabilities – DPF 28 975 28 975 1 796 4 338 6 290 10 821 5 730 Insurance contract liabilities – non-DPF 3 973 (98 664) 961 3 101 2 180 (216) (104 690) Short-term Insurance liabilities 39 39 33 6 – – – Reinsurance payables 39 39 39 – – – – Third-party financial liabilities arising on consolidation of unit trusts 14 908 14 908 14 908 – – – – Investment contract liabilities 2 589 2 589 2 589 – – – – Borrowings 166 166 26 110 2 28 – Other financial liabilities 941 941 941 – – – – Lease liabilities 75 75 21 54 Market risks Market risk is the risk that changes in market prices, such as interest rate, foreign exchange rates and equity prices will affect the value of the Group’s financial assets and the amount of the Group’s liabilities as well as the Group’s insurance contract assets and liabilities. Market risk arises in the Group due to fluctuation in the value of liabilities and the value of investments held. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on assets. The nature of the Group’s exposure to market risk and its objectives, policies and procedures for managing market risks have not changed significantly from the prior period although rigour has been applied to these in light of current market conditions and volatility. Refer below for more detail. Management of market risk The management of each of these major components of market risk and the exposure of the Group at the reporting date to each major risk is addressed below. a. Interest rate risk Interest rate risk arises primarily from the Group’s investments in debt securities, cash and cash equivalents and its long-term debt obligations. However, changes in investment values attributable to interest rate changes are mitigated by corresponding and partially offsetting changes in the economic value of insurance and investment contract liabilities. As a result of this, the exposure to interest rate risk is managed by the asset managers through the limit in the investment mandates with regard to investing in debt securities, as well as the internal benchmark performance that the asset managers are measured against. The nature of the Group’s exposure to interest rate risk and its objectives, policies and procedures for managing interest rate risk have not changed significantly from the prior period. PPS INTEGRATED REPORT 2020 | 195