1. Note Financial assets and liabilities classified as fair value through profit or loss on initial recognition Financial assets and liabilities at amortised cost PPS ProfitShare accounts and reinsurance contracts Total carrying amount Fair value 7 15 691 – – 15 691 15 691 7 6 607 – – 6 607 6 607 7 20 042 – – 20 042 20 042 7 57 – – 57 57 7 11 500 – – 11 500 11 500 9 – – 1 382 1 382 1 382 13 – 1 069 – 1 069 1 069 14 – 2 915 – 2 915 2 915 10 – – (32 293) (32 293) (32 293) – – (7 290) (7 290) (7 290) – – (240) (240) (240) 9 – – (118) (118) (118) 15 (4 495) – – (4 495) (4 495) 16 (15 086) – – (15 086) (15 086) 9 – – (13) (13) (13) 20 – (221) – (221) (221) (a) * Fair value analysis of financial statement line items with a fair value (continued) The note has been restated to align with IFRS 17 disclosures and to remove prepayments from the table Qualifying policyholders’ residual interest in the net assets of the PPS Group Group R’m 2022 Restated* Equity securities(a) Local listed International listed Debt securities(a) Government and local bonds International listed Unit trusts and pooled funds(a) Reinsurance contract assets Receivables Cash and cash equivalents PPS Profit-Share accounts Liability for remaining coverage and incurred claims Short-term insurance policy liabilities Investment contract liabilities Debt securities are designated at fair value through profit and loss and Equity securities and Unit trusts and pooled funds are mandatorily held at fair value through profit and loss. Payables Liabilities to unit trust holders Reinsurance contract liabilities NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) for the year ended 31 December 2023 33 37. 37.3 a. Insurance contracts net of reinsurance Interest rate decrease: 1% Interest rate increase: 1% Total interest rate risk Interest rate decrease: 1% Interest rate increase: 1% Cash and cash equivalents Interest rate decrease: 1% Interest rate increase: 1% Debt Securities Interest rate decrease: 1% Interest rate increase: 1% Insurance contracts gross of reinsurance Interest rate decrease: 1% Interest rate increase: 1% (230) 181 168 (159) Group 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. Interest rate risk Management of risks (continued) Financial risk management (continued) (162) R'm (224) 224 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 and multi 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 and multi 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. The cash and cash equivalents and debt securities (including unit trust funds assets) interest rate sensitivity on profit before tax is shown below: Market risks 2022 R'm (61) 61 Restated (30) 30 2023 (250) 250 (743) 645 (41) 59 (228) 179 171 (continued) 220 Notes to the Consolidated Financial Statements
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