PPS Integrated Report 2021 Notes to the Consolidated Financial Statements | 206 Notes to the Consolidated Financial Statements (continued) for the year ended 31 December 2021 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. The following are the contractual maturities of financial liabilities and insurance contract liabilities, including interest payments and excluding the impact of netting agreements: For long-term obligations with non-DPF components, the amounts in the table represent the estimated cash flows, consistent with the valuation methodology followed by the calculation of the non-DPF component of the insurance liabilities on the published reporting basis. All the cash flows are shown net of reinsurance. Nominal cash flows are shown and the effect of discounting is taken into account to reconcile to total policy liabilities under insurance contracts. Since the DPF component is a retrospective accumulation of past profit declarations, the current value is taken as the value of the underlying assets (shown in the tables below). Group Contractual cash flows 2021 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 33 219 33 219 2 127 5 006 7 190 12 571 6 325 Insurance contract liabilities – non-DPF 5 254 (101 267) 856 3 180 2 240 (144) (107 399) Short-term Insurance liabilities 109 109 78 31 – – – Reinsurance payables 67 67 67 – – – – Third-party financial liabilities arising on consolidation of unit trusts 12 454 12 454 12 454 – – – – Investment contract liabilities 4 205 4 205 4 205 – – – – Borrowings 98 98 29 69 – – – Other financial liabilities 1 216 1 216 1 216 – – – Lease liabilities 62 62 19 43 – – – 38. MANAGEMENT OF RISKS (continued) 38.3 Financial risk management (continued)
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