2020 INTEGRATED REPORT

CONVERSION OF PPS INSURERS AND GOVERNANCE FRAMEWORK The conversion of PPS Insurance and PPS Short-Term Insurance licenses in terms of the Insurance Act, 18 of 2017, has been completed. PPS Insurance has been designated as an insurance group and controlling company in terms of sections 10(1) and 10(2) of the Insurance Act. PPS Insurance as the controlling company of the PPS Insurance Group has established an effective governance framework that provides for sound and prudent management of the PPS Group’s business, including adequate protection of the interests of policyholders of insurers that are part of the PPS Group in accordance with the Prudential Standard for Governance and Operational Standards for Insurance Groups (GOG). The governance framework for the PPS Group is comprehensive and consistent, covering both regulated and non-regulated entities: a. allows for the prudential and legal obligations of individual entities within the PPS Group to be met; b. appropriately balances any divergence in governance requirements applicable to different entities within the PPS Group. The PPS Group’s governance framework includes adequate policies and processes to enable potential intra-insurance group conflicts of interest to be identified, avoided if possible, and managed if avoidance is not possible. The governance framework consists of three parts being: ~ Boards and board committees – This pertains to the composition, governance and structure of the PPS Holdings Trust Board of Trustees, the PPS Insurance Board of Directors and the boards of directors of the operating subsidiary companies, with well-defined roles and responsibilities, as well as statutory and other board committees, being the PPS Holdings Trust Audit Committee, the PPS Group Audit, Risk, Social and Ethics, Actuarial, Remuneration, Nominations and Technology Steering Committees, as well as the Risk and Audit Committees established by certain subsidiaries. ~ Risk management system – The risk management system includes all required key risk management policies, as required by Prudential Standard GOI3: Risk Management and Internal Controls for insurers. ~ Internal control system. The PPS Group Governance Framework provides for the prudent management and oversight of the PPS Group, as well as adequately protecting the interests of PPS’ members. The framework is appropriate, given the nature, scale and complexity of the PPS Group and its associated risks and is based on key principles as set out in this report. TRANSPARENT ORGANISATIONAL STRUCTURE The governance framework provides an adequate, transparent organisational structure with a clear allocation and appropriate segregation of responsibilities and controls to ensure that segregation is observed. The roles and responsibilities of persons accountable for the management and oversight of the PPS Group are clearly defined. The PPS Group is governed by a unitary board of trustees, assisted by boards of directors, board committees and management committees. An appropriate system of delegation is in place, in terms of which the direction of the operations of the PPS Group has been delegated to the PPS Insurance Board. The PPS Insurance Board has delegated some of the activities and tasks associated with its role and responsibilities to board committees, the Group Executive Committee, senior management and other employees of the PPS Group. FIT AND PROPER The PPS Group Boards are ultimately responsible for ensuring that PPS complies with the fitness and propriety principles and requirements. The PPS Group Fit and Proper Policy read with the Prudential Standard GOI 4: Fitness and Propriety of Key Persons of Insurers and Joint Standard 1 of 2020: Fitness, propriety and other matters related to Significant Owners state that the following persons must, at all times, meet Fit and Proper requirements: ~ Trustees and directors. ~ Key Persons, being directors and trustees, the Group Chief Executive (Chief Executive) and persons reporting directly to the Chief Executive with decision-making powers. ~ Heads of Control Functions. ~ Auditors. ~ Significant owners of insurance companies in the PPS Group. Fit and proper checks for the aforementioned persons are conducted on an annual basis. CORPORATE GOVERNANCE REPORT | 79