2020 INTEGRATED REPORT

DPF and Investment policies Group excluding Investment Choice Investment Choice (DPF) 2019 R'm % R'm % Local Equity 12 805 48.4 1 437 32.6 Fixed interest 5 068 19.1 1 906 43.2 Cash 2 192 8.3 253 5.7 International Equity 6 407 24.2 816 18.5 Total 26 472 100.0 4 412 100.0 The assets held to back the non-DPF component of the liabilities similarly reflect the Group’s risk appetite and the results of the asset liability modelling exercises undertaken in the past. Investment profits or losses arising from the impact of fluctuations in market values of assets and interest rates on the value of assets and non-DPF policy liabilities will be transferred to policyholders by adjusting the allocations made to the DPF component of their benefits. Younger policyholders have more time to recover from the volatility in the financial markets. For that reason the strategic asset allocation for the invested portfolio representing these policyholders has a higher exposure to equity and thus risk. Older policyholders have less time to recover from negative market performance, and are thus given a voluntary option each year to switch to more conservative investment portfolios from age 55 (‘Investment Choice’), i.e. portfolios where there is reduced exposure to equities. The assets held to back the non-DPF component of the policy liabilities are as follows: 2020 2019 Group R'm % R'm % Local Equity 540 10.4 428 10.8 Fixed interest 3 923 75.8 3 086 77.7 Cash 29 0.6 51 1.3 International Equity 680 13.2 408 10.2 Total 5 172 100.0 3 973 100.0 The assets backing the non-DPF liabilities are invested in such a manner as to try and minimise the asset liability mismatch for interest rate risk and duration risk. PPS INTEGRATED REPORT 2020 | 197