NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) for the year ended 31 December 2022 2022 2021 Group R'm % R'm % Equity - local 752 14.1 646 12.3 Interest - local and international 4 171 78.4 3 909 74.4 Cash - local and international 62 1.2 42 0.8 Equity - international 336 6.3 657 12.5 Total 5 321 100.0 5 254 100.0 The assets backing the non-DPF liabilities are invested in such a manner as to try and minimise the asset liability mismatch for interest rate risk and duration risk. b. Currency risk The Group’s operations in Namibia created no additional sources of foreign currency risk due to the fact that there is no exchange difference between the Namibian Dollar and the South African Rand. The asset managers actively manage the currency risk when decisions are made in regard to investing internationally. All international investment returns are shown in US Dollars and the effect of the trading in different currencies is reflected in the investment performance which is measured against an internal benchmark. In terms of legislation, up to 45% of the South African long-term insurance company’s investments may be invested in foreign currency and hence that Company has less than 30% exposure to currency risk. The limit for the Namibian long-term insurance company in terms of local legislation is 55% of assets can be invested outside of Namibia, of which 45% may be invested outside of South Africa. The potential impact of currency movements on the share prices of domestic equities with significant foreign currency earnings is addressed by the asset managers in their assessment of the appropriate equities to hold in their mandates with PPS. The international assets’ currency sensitivity on profit before movement in insurance liabilities is shown below: 2022 2021 Group R'm R'm Currency risk South African Rand exchange rate decrease: 1% (136) (142) South African Rand exchange rate increase: 1% 136 142 c. Equity price risk The Group holds a significant portfolio of equities which are subject to price movements. The majority of these assets are held to support contractual liabilities arising from unit-linked insurance contracts, contracts with DPF and investment contracts and therefore the price movements are matched with corresponding 39. Management of risks (continued) 39.3 Financial risk management (continued) 188 Notes to the Consolidated Financial Statements
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