profits) on the Group’s capital is also presented to the Board. The results of the ALM investigations may lead to changes in the approved asset class mixes contained in the Investment Policy, in order to address any increases in the risk of volatility identified in the ALM investigation. During 2022, the PPS Insurance Board supported a proposal to reduce the required capital cover from 2.6 times to 2.1 times which still provides adequate capital cover based on the analysis performed. This decision has resulted in R49 million allocated from (2021: R7 million allocated to) accumulated funds. Short-Term Insurance The Board’s policy is to maintain an adequate capital base to protect policyholders’ and creditors’ interests and satisfy regulators whilst still creating value for shareholders. The level of accumulated funds required by the Group is determined by the Prudential Standards under the Insurance Act 18 of 2017. The minimum capital requirements are maintained at all times during the year. The Board considers the capital of the Group to be the total of all accumulated funds held. The Group has a level of SCR cover at 1.60 times (2021: 1.60 times). The Group has complied with all externally and internally imposed capital requirements throughout the period. PPS Collective Investment Scheme funds managed by PPS Multi-Managers (Pty) Ltd The Group invests in various registered unit trusts in order to match obligations provided in policyholder contracts. Each fund has its own legal constitution and operates within a defined fund mandate delegated to the appointed fund manager. Market and credit risks assumed within the assets held are controlled by various protection mechanisms within the mandate and in law. For example, the Collective Investment Schemes Control Act, No. 45 of 2002 as amended, in South Africa prescribes maximum limits for the concentration of risk exposures. The Collective Investment Scheme’s oversight board appoints administrators who are responsible to ensure that the fund’s mandate and any internal and legislated control procedures are adhered to. In the event of a breach they are obligated to immediately bring it to the attention of the fund’s trustees, Board and management for remedial action. The unit trust fund vehicle and related procedures for offering investments is mature within South Africa and is well-regulated. The unit trust funds which are defined as portfolios are grouped under entities named Professional Provident Society Collective Investment Scheme and Prescient Global Funds ICAV (PPS Global Equity Fund). Described below is the unit trust subsidiary manager and asset manager and its respective mandate and objective. Funds managed by PPS Multi-Managers (Pty) Ltd PPS Investments Group employs a combination of single- and multi-manager investment approach that is designed to generate acceptable levels of returns at lower than average levels of risk. This is achieved by: • thorough and ongoing quantitative and qualitative research of potential managers in the domestic market; • selecting specialist and multi-asset managers, taking their investment style and specific areas of expertise 39. Management of risks (continued) 39.3 Financial risk management (continued) 193 Notes to the Consolidated Financial Statements
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