2019 Integrated Report

PPS INTEGRATED REPORT 2019 | 163 The Group has factored the impact of contract holders behaviour into the assumptions used to measure these liabilities (see note 12). (b) Sources of uncertainty in the estimation of future benefit payments and premium receipts Uncertainty in the estimation of future benefit payments and premium receipts for long-term insurance contracts arises from the unpredictability of long-term changes in overall levels of mortality and morbidity and the variability in contract holder behaviour. The Group uses appropriate base tables of standard mortality and morbidity rates. An investigation into the actual experience of the Group over the last or previous year is carried out, to produce a best estimate of the expected morbidity and mortality for the future. The best estimate of future mortality is based on standard industry tables adjusted for the Group’s overall experience and where no such table exists, tables are developed specifically on PPS historic experience. Lapse experience can have a significant impact on the Group. To manage lapse risk, the Group conducts monthly lapse analyses for each of the product lines. Where experience is worse than long-term valuation expected lapse experience management intervention is taken, over and above normal ongoing retention efforts to reduce overall lapse and exits. Risk exposure and concentrations of risk The following table shows the Group’s exposure to insurance risk (based on the carrying value of the long-term insurance liabilities at the reporting date) per category of business. The table also shows the geographical concentration of these risks and the extent to which the Group has covered these risks by reinsurance: Non-DPF DPF Group component of component of 2019 insurance insurance R'000 liabilities liabilities Total South Africa Gross 3 576 629 27 709 811 31 286 440 Net of reinsurance 3 649 518 27 709 811 31 359 329 Namibia Gross 329 338 1 016 376 1 345 714 Net of reinsurance 323 890 1 016 376 1 340 266 Non-DPF DPF Group component of component of 2018 insurance insurance R'000 liabilities liabilities Total South Africa Gross 4 160 658 25 001 473 29 162 131 Net of reinsurance 4 096 524 25 001 473 29 097 997 Namibia Gross 344 001 869 076 1 213 077 Net of reinsurance 337 326 869 076 1 206 402