PPS Integrated Report 2021 207 | Notes to the Consolidated Financial Statements Group Contractual cash flows 2020 Restated 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 29 467 29 467 1 805 4 448 6 386 11 212 5 616 Insurance contract liabilities – non-DPF 5 172 (98 722) 958 3 092 2 168 (239) (104 701) Short-term Insurance liabilities 64 64 40 24 – – – Reinsurance payables 58 58 58 – – – – Third-party financial liabilities arising on consolidation of unit trusts 9 297 9 297 9 297 – – – – Investment contract liabilities 3 194 3 194 3 194 – – – – Borrowings 152 152 27 122 3 – – Other financial liabilities 1 092 1 092 1 092 – – – Lease liabilities 65 65 21 44 – – – 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.
RkJQdWJsaXNoZXIy NzI4MzY4