2019 
R’000 		    2018 
R’000 		   
28.  Life assurance fund             
   The carrying value of the assurance funds agree with the amount of the actuarial values of liabilities under life insurance policies and contracts at that date. Policyholder liabilities include liabilities for insurance contracts and investment contracts.             
   Insurance contract (assets) liabilities  (44 175)    (21 324)   
      Balance at beginning of year  (21 324)    15 605    
      Movement during the year  (22 851)    (36 929)   
   Investment contract liabilities  –     10 545    
      Balance at beginning of year  10 545     295 750    
      Movement during the year  (10 545)    (285 205)   
                 
   Net assurance fund at end of year  (44 175)    (10 779)   
   Gross assurance fund  (180 106)    (46 643)   
   Reinsurer’s share  135 931     35 864    
   Net assurance fund  (44 175)    (10 779)   
 

Insurance contracts

Insurance contracts are predominantly credit life policies sold by motor dealerships and life insurance policies, distributed by independent financial advisors, that provide for death, disability and critical illness benefits.

The insurance contract reserves are established by discounting future expected net claims, net expense and commission outgo less the future net office premiums (if any) on a policy-by-policy basis using the following main assumptions (before the compulsory margins required by SAP104):

  • FSB SAM Nominal yield curve is used to determine investment returns;
  • Inflation curve as derived from the FSB SAM yield curves;
  • Mortality and disability assumptions are set with reference to standard tables or reinsurance rates where appropriate (mortality and morbidity investigations are conducted annually to confirm assumptions);
  • Per policy expense assumptions are based on the medium term projected level of expenses and volume of business; and
  • Lapse rates are based on the most recent lapse experience investigation.

IBNR (incurred but not recorded) provisions have been created for both Individual and Group business. IBNR’s are calculated based on the run-off period on claims reported in the last 12 months. A combination of the basic chain ladder method and simplistic deterministic methods are used depending on the product and the statistical significance of data available.

Policyholder reasonable benefit expectations have been allowed for, all contractual obligations have been considered and all business is written on a non-profit-sharing basis.

Investment contracts

Investment contracts are linked living annuities sold by independent financial advisors. The Group has exited this business completely during the year.