Life insurance

 
The Group's life insurance businesses are exposed to financial risk through the design of some policyholder solutions, and in respect of the value of the businesses' capital. Non-participating policyholder solutions and those that provide investment guarantees, such as market-related business, stable and reversionary bonus business and non-participating annuity business, expose the life insurance businesses to financial risk. Other business, such as linked policies (where the value of policy benefits is directly linked to the fair value of the supporting assets) does not expose the life insurance businesses to financial risk as this risk is assumed by the policyholder. The life insurance businesses' capital is invested in financial instruments and properties, which also exposes the businesses to financial risk, in the form of market, credit and liquidity risk.

The table below summarises the various risks associated with the different policyholder solutions as well as the capital portfolio. Please refer to the "Policy liabilities and profit entitlement section" for a description of the different policyholder solutions; as well as to note 15, which discloses the monetary value of the Group's exposure to the various solutions. 
 
  Market risk  Credit
risk
 
Liquidity
risk
 
Insurance
risk
 
Life insurance
businesses exposed
to risk via:
 
Equity Interest
rate
Currency Property     Persistency Other
insurance
risks
Policyholder solutions                
Linked and market-related    (1)     (1)     (1)     (1)     (1)     (3)     
Smoothed-bonus business                
   Stable bonus    (2)     (2)     (2)     (2)     (2)     (3)     
   Reversionary bonus    (2)     (2)     (2)     (2)     (2)     (3)     
   Participating annuities    (2)     (2)     (2)     (2)     (2)     (3)     
Non-participating annuities        (4)     (4)       (3)     
Other non-participating liabilities                
   Guarantee plans        (4)         (3)     
   Other    (4)       (4)         (3)     
Capital portfolio          (4)         
(1). Only market-related policies (not linked policies) expose the life insurance businesses to this risk, due to these policies providing guaranteed minimum benefits at death or maturity.
(2). The life insurance businesses are exposed to this risk, only if the assets backing these policies have underperformed to the extent that there are negative bonus stabilisation reserves that will not be recovered by declaring lower bonuses in the subsequent years.
(3). Although liquidity risk is present, it is not a significant risk for the insurance businesses due to appropriate matching of asset and liability cash flow values and duration.
(4). An immaterial amount of assets are exposed to this risk.
Risk applicable to item.
Risk not applicable to item.
 
The management of these risks is described below.
 
1. Market risk
 
Life insurance businesses exposed to risk via:  Equity  Interest rate  Currency  Property 
Policyholder solutions        
Linked and market-related        
Smoothed-bonus business        
   Stable bonus        
   Reversionary bonus        
   Participating annuities        
Non-participating annuities        
Other non-participating liabilities        
   Guarantee plans        
   Other        
Capital portfolio        
Risk applicable to item.
Risk not applicable to item.
 
Linked and market-related
Linked and market-related business relates to contracts where there is a direct relationship between the returns earned on the underlying portfolio and the returns credited to the contract. Policyholders carry the full market risk in respect of linked business. Market-related policies, however, provide for guaranteed minimum benefits at death or maturity, and therefore expose the life insurance businesses to market risk. The risk relating to guaranteed minimum benefits is managed by appropriate investment policies, determined by the Asset Liability committee (ALCO), and by adjusting the level of guarantees for new policies to prevailing market conditions. These investment policies are then reflected in the investment guidelines for the policyholder portfolios. The Group's long-term policy liabilities include a specific provision for investment guarantees. The current provision for investment guarantees in insurance contracts has been calculated on a market-consistent basis in accordance with guidance issued by the Actuarial Society of South Africa.
 
Smoothed-bonus business
These policies provide for the payment of an after-tax and after-cost investment return to the policyholder, in the form of bonuses. The use of bonuses is a mechanism to smooth returns to policyholders in order to reduce the effects of volatile investment performance, and bonus rates are determined in line with the product design, policyholder reasonable expectations, affordability and the approved bonus philosophy. Any returns not yet distributed are retained in a policyholder bonus stabilisation reserve, for future distribution to policyholders. In the event of adverse investment performance, this reserve may become negative. Negative bonus stabilisation reserves are allowed for in the valuation of these liabilities to the extent that the shortfall is expected to be recovered by declaring lower bonuses in the subsequent three years. The funding level of portfolios is bolstered through loans from the capital portfolio in instances where negative stabilisation reserves will not be eliminated by these management actions. At 31 December 2010, all stable and reversionary bonus business portfolios had a funding level in excess of the minimum reporting level of 92,5%.

Market risk is borne by policyholders to the extent that the after-tax and after-cost investment return is declared as bonuses. The capital portfolio is however exposed to some market risk as an underperformance in investment markets may result in an underfunded position that will require financial support by the capital portfolio. The Group manages this risk through an appropriate investment policy. ALCO oversees the investment policy for the various smoothed-bonus portfolios, while the Sanlam Personal Finance Investment committee also considers these portfolios as part of its overall brief. The aim is to find the optimum balance between high investment returns (to be able to declare competitive bonus rates) and stable investment returns given the need to meet guaranteed benefits and to support the granting of stable bonus rates. The requirements for the investment management of each portfolio are set out in investment guidelines, which cover, inter alia, the following: 
 
> Limitations on exposure to volatile assets;
> The benchmarks for the performance measurement of each asset class and limits on deviations from these benchmarks;
> Credit risk limits;
> Limits on asset concentration – with regard to strategic investments, the exposure of policyholders' portfolios to these investments is based on portfolio investment considerations and restricted with reference to a specific counter's weight in the benchmark portfolio;
> Limits on exposure to some particular types of assets, such as unlisted equities, derivative instruments, property and hedge funds; and
> Regulatory constraints.
 
Feedback on the investment policy and its implementation and the performance of the smoothed-bonus portfolios is provided quarterly to the Sanlam Life Board and the Policyholders' Interest committee.
 
Non-participating annuities
Non-participating annuity business relates to contracts where income is paid to an annuitant for life or for a fixed term, in return for a lump sum consideration paid on origination of the policy. The income may be fixed, or increased at a fixed rate or in line with inflation. The Group guarantees this income and is therefore subject to interest rate risk. Liabilities are matched as far as possible with assets, mostly interest-bearing, to ensure that the change in value of assets and liabilities is closely matched for a change in interest rates. The impact of changes in interest rates is continuously tested, and for a 1% parallel movement in interest rates the impact on profit will be immaterial. The management of credit risk is also of particular importance for non-participating annuities given the exposure to interest-bearing instruments (refer to section 2 below).
 
Guarantee plans
These single premium policies provide for guaranteed maturity amounts. The life insurance businesses are therefore exposed to interest rate risk, if the assets backing these liabilities do not provide a comparable yield to the guaranteed value. Interest rate risk is managed by matching the liabilities with assets that have similar investment return profiles as the liabilities.
 
Other non-participating business
The Group is exposed to market risk to the extent of the investment of the underlying assets in interest-bearing and property investments. The risk is managed through investments in appropriate asset classes.
 
Currency risk
The majority of currency exposure within the policyholder portfolios results from offshore assets held in respect of linked and smoothed-bonus business. Offshore exposure within these portfolios is desirable from a diversification perspective.
 
Capital
Comprehensive measures and limits are in place to control the exposure of the life insurance businesses' capital to market and credit risks. Continuous monitoring takes place to ensure that appropriate assets are held in support of the capital and investment return targets. Limits are applied in respect of the exposure to asset classes and individual counters.

The exposure of the capital portfolio to currency risk is for the purpose of seeking international diversification of investments. Exposure to different foreign currencies is benchmarked against the currency composition of the Morgan Stanley Developed Equity Markets Index and the Barclays Capital Global Aggregate Bond Index. This exposure is analysed in the table below: 
 
R million
Euro
United
States
dollar
British
pound
Botswana
pula
Other
currencies
Total
31 December 2010
           
Equities and similar securities
181
906
103
298
406
1 894
Interest-bearing instruments
23
22
193
235
46
519
Cash, deposits and similar securities
7
453
67
364
75
966
Investment properties
101
44
145
Net working capital
13
147
276
(48)
18
406
Total
224
1 528
639
950
589
3,930
Exchange rates (rand):
           
Closing rate 8,88 6,62 10,36 1,05 371 2 294
Average rate 9,68 7,30 11,29 1,10 48 443
31 December 2009
           
Equities and similar securities 212 1 081 221 409 17 1 014
Interest-bearing instruments 27 22 4 342 54 203
Cash, deposits and similar securities 6 436 243 312 77 458
Investment properties 149 567 4 412
Net working capital 6 31 73 271    
Total 251 1 570 541 1 483    
Exchange rates (rand):
           
Closing rate 10,56 7,36 11,89 1,13    
Average rate 11,62 8,31 13,04 1,20    
 
The capital portfolio has limited exposure to investment properties and accordingly the related property risk. Diversification in property type, geographical location and tenant exposure are all used to reduce the risk exposure.
 
Sensitivities
Refer to the analysis of the Group's sensitivity to market risk.
 
2. Credit risk – policyholder solutions and capital
 
Life insurance businesses exposed to risk via: Credit risk
Policyholder solutions  
Capital portfolio  
Risk applicable to item.
 
Sanlam recognises that a sound credit risk policy is essential to minimise the effect on the Group as a result of loss owing to a major corporate failure and the possible systemic risk such a failure could lead to. The Sanlam Investment Cluster Credit Risk policy and strategy has been established for this purpose. Credit risk occurs owing to trading, investment, structured transactions and lending activities. These activities in the Group are conducted mostly by either Sanlam Capital Markets (SCM) or Sanlam Investments in terms of the investment guidelines granted to them by the life insurance operations. The Boards of SIM and SCM have delegated responsibility for credit risk management to the Central Credit committee. On a smaller scale, Botswana Insurance Fund Management (BIFM) also performs investment activities in the Group.

The governance structures ensure that an appropriate credit culture and environment is maintained, such that no transactions are concluded outside areas of competence, nor without following normal procedures. This credit culture is the product of a formal credit risk strategy and credit risk policy.

The credit risk strategy stipulates the parameters for approval of credit applications, such as: economic sector; risk concentration; maximum exposure per obligor, group and industry; geographical location; product type; currency; maturity, anticipated profitability or excess spread; economic capital limits; and cyclical aspects of the economy. The credit risk policy highlights the processes and procedures to be followed in order to maintain sound credit granting standards, to monitor and manage credit risk, to properly evaluate new business opportunities and identify and administer problem credits. Credit analysis is a structured process of investigation and assessment, involving identifying the obligor, determining whether a group of connected obligors should be consolidated as a group exposure, and analysing the financial information of the obligor. A credit rating, being a ranking of creditworthiness, is allocated to the obligor. External ratings (e.g. Moody's Investor Services, Standard and Poors, Fitch Ratings and Global Credit Ratings) are used when available. In addition to external ratings, internal rating assessments are conducted, whereby the latest financial and related information is analysed in a specified and standardised manner, to ensure a consistent and systematic evaluation process.

All facilities are reviewed on at least an annual basis by the appropriate approval authority. Where possible, Sanlam's interest is protected by obtaining acceptable security. Covenants are also stipulated in the loan agreements, specifying actions that are agreed to. A credit administration and reporting department is in place to implement risk control measures and maintain ongoing review of the credit reports and conditions, to ensure overall compliance with the credit risk strategy and policy.

In addition to the above measures, the portfolios are also managed in terms of the investment guidelines of the life insurance operations, which place limits in terms of the lowest credit quality that may be included in a portfolio, the average credit quality of instruments in a portfolio as well as limits on concentration risk. 
 
The Group is also exposed to credit risk in respect of its working capital assets. The following are some of the main credit risk management actions:
 
> Unacceptable concentrations of credit risk to groups of counterparties, business sectors and product types are avoided by dealing with a variety of major banks and spreading debtors and loans among a number of major industries, customers and geographic areas;
> Long-term insurance business debtors are secured by the underlying value of the unpaid policy benefits in terms of the policy contract;
> General insurance premiums outstanding for more than 60 days are not accounted for in premiums, and an appropriate level of provision is maintained; and
> Exposure to external financial institutions concerning deposits and similar transactions is monitored against approved limits.
 
The Group has considered the impact of changes in credit risk on the valuation of its liabilities. Credit risk changes will only have an impact in extreme situations and are accordingly not material for the 2010 and 2009 financial years. Given the strong financial position and rating of the Group, the credit rating of its liabilities will only be impacted by a material deterioration in the solvency position of the Group.

The tables below provide an analysis of the ratings attached to the Group's exposure to instruments subject to credit risk. 
 
Credit risk concentration by credit rating*:
 
AAA
AA+
AA
AA-
A+
A
A-
BBB
Other
Not
rated
Total
Carrying
value
Assets backing policy liabilities
%
%
%
%
%
%
%
%
%
%
%
R million
31 December 2010
                       
Public sector stocks and loans
76,7
0,1
7,8
0,9
0,7
0,2
0,6
1,8
0,3
10,9
100,0
51 790
Debentures, insurance policies, preference shares and other loans
3,5
8,0
21,0
22,6
8,7
3,2
0,3
3,5
1,8
27,4
100,0
23 131
Cash, deposits and similar securities
6,1
9,3
23,6
18,4
5,4
4,7
0,9
0,4
4,7
26,5
100,0
36 940
Net working capital
0,1
99,9
100,0
1 155
Total
37,9
4,7
15,6
11,1
3,8
2,3
0,6
1,7
2,1
20,2
100,0
113 016
31 December 2009
                       
Public sector stocks and loans 76,4 0,3 1,8 0,4 0,3 0,1 0,4 9,6 0,1 10,6 100,0 43 865
Debentures, insurance policies, preference shares and other loans 10,2 8,5 25,0 8,7 9,0 3,2 3,8 8,3 2,2 21,1 100,0 22 756
Cash, deposits and similar securities 16,2 2,6 22,0 20,6 2,2 4,0 0,5 2,2 4,8 24,9 100,0 36 527
Net working capital (0,1) 100,1 100,0 1 477
Total 39,9 2,9 13,9 9,2 2,9 2,1 1,1 6,6 2,2 19,2 100,0 104 625
*Rated externally or by using internationally recognised credit rating techniques.
 
Credit risk concentration by credit rating*:
 
AAA
AA+
AA
AA-
A+
A
A-
BBB
Other
Not
rated
Total
Carrying
value
Capital portfolio
%
%
%
%
%
%
%
%
%
%
%
R million
31 December 2010
                       
Public sector stocks and loans
71,0
16,2
6,1
0,1
2,7
2,2
1,7
100,0
742
Debentures, insurance policies, preference shares and other loans
1,2
1,8
14,3
20,3
20,5
5,6
3,3
2,6
30,4
100,0
4 277
Cash, deposits and similar securities
6,3
19,8
29,9
16,9
7,2
4,5
0,5
2,1
5,7
7,1
100,0
8 192
Net working capital
151,6
26,8
0,1
(0,4)
(78,1)
100,0
2 051
Total
7,2
31,5
20,8
18,4
9,9
4,0
0,4
2,1
3,7
2,0
100,0
15 262
31 December 2009
                       
Public sector stocks and loans 41,1 5,6 2,2 2,7 3,5 1,1 43,8 100,0 1 134
Debentures, insurance policies, preference shares and other loans 0,5 6,3 15,5 10,2 15,5 3,2 3,2 6,6 3,1 35,9 100,0 5 378
Cash, deposits and similar securities 25,8 3,2 22,0 18,7 1,8 4,2 1,6 4,4 5,8 12,5 100,0 6 642
Net working capital 104,6 2,9 0,1 4,4 0,3 0,2 (12,5) 100,0 2 982
Total 33,0 3,4 15,2 11,3 6,1 3,6 1,8 4,3 3,6 17,7 100,0 16 136
*Rated externally or by using internationally recognised credit rating techniques.
 
Equity derivatives are included in equities and similar securities and interest-rate swaps are included in debentures, insurance policies, preference shares and other loans above. The majority of the counterparties to these agreements are institutions with at least an AA- rating. The Group's short-term positions are included in the above table under the counterparties' long-term rating where Sanlam has both a long-term and short-term exposure to the entities.
 

Maximum exposure to credit risk

The life insurance businesses' maximum exposure to credit risk is equivalent to the amounts recognised in the Statement of financial position, as there are no financial guarantees provided to parties outside the Group, nor are there any loan commitments provided that are irrevocable over the life of the facility or revocable only in adverse circumstances.

The credit quality of each class of financial asset that is neither past due nor impaired, has been assessed as acceptable within the parameters used to measure and monitor credit risk, as described above. There are no assets that would have been past due or impaired, had the terms not been renegotiated. 
 
Reinsurance credit risk
Sanlam makes use of reinsurance to:
 
> Access underwriting expertise;
> Access product opportunities;
> Enable it to underwrite risks greater than its own risk appetite; and
> Protect its mortality/risk book against catastrophes.
 
The use of reinsurance exposes the Group to credit risk. The counterparty risks of reinsurers are managed under the Group's credit risk framework. The Group's reinsurance arrangements include proportionate, excess and catastrophe coverage. All risk exposures in excess of specified monetary limits are reinsured. Catastrophe insurance is in place for single-event disasters. Credit risk in respect of reinsurance is managed by placing the Group's reinsurance only with subsidiaries of companies that have high international or similar credit ratings.
 
3. Liquidity risk
 
Life insurance businesses exposed to risk via: Liquidity risk
Policyholder solutions   3.5
Linked and market-related   3.4
Smoothed-bonus business    
   Stable bonus   3.1
   Reversionary bonus   3.1
   Participating annuities   3.4
Non-participating annuities   3.2
Other non-participating liabilities    
   Guarantee plans   3.3
   Other   3.4
Capital portfolio   3.6
Risk applicable to item.
Risk not applicable to item.
 
3.1 These policyholder solutions do not expose the Group to significant liquidity risks. Expected cash flows are taken into account in determining the investment guidelines and asset spread of the portfolios. Limits are also placed on the exposure to illiquid investments.
3.2 As discussed above, the liabilities are matched as far as possible with assets, mostly interest-bearing, to ensure that the duration of assets and liabilities are closely matched. The average duration of non-participating annuity policy liabilities and the supporting assets held by the Group's life insurance operations are reflected in the table below, indicating that the Group's non-participating annuity books are well matched, which also limits the interest rate risk exposure.
 
 
2010
2009
Years
Assets
Policy
liabilities
Assets Policy
liabilities
Sanlam Life
8,2
8,4
7,9 7,9
Sanlam Developing Markets
9,0
9,4
8,4 8,0
Weighted average
8,2
8,5
7,9 7,9
 
3.3 Liquidity risk is managed by matching the liabilities with assets that have similar maturity profiles as the liabilities.
3.4 Policyholder portfolios supporting linked and market-related business, participating annuities and other non-participating life business are invested in appropriate assets, taking into account expected cash outflows.
3.5 The following table summarises the overall maturity profile of the policyholder business:
R million
< 1 year
1 – 5 years
> 5 years
Open ended
Total
31 December 2010
         
Insurance contracts
4 665
18 357
56 293
53 670
132 985
Investment contracts
3 891
15 753
45 469
67 597
132 710
Total policy liabilities
8 556
34 110
101 762
121 267
265 695
Properties
10
11
31
16 083
16 135
Equities and similar securities
123
149
355
135 948
136 575
Public sector stocks and loans
4 349
5 987
39 833
1 621
51 790
Debentures, insurance policies, preference shares and other loans
7 003
9 510
5 373
1 245
23 131
Cash, deposits and similar securities
27 299
7 856
1 342
443
36 940
Deferred acquisition cost
604
604
Long-term reinsurance assets
19
52
517
588
Net working capital
483
(551)
(68)
Total policyholder assets
39 286
23 565
47 451
155 393
265 695
31 December 2009
         
Insurance contracts 4 299 17 092 53 886 48 830 124 107
Investment contracts 3 353 14 263 42 167 62 440 122 223
Total policy liabilities
7 652 31 355 96 053 111 270 246 330
Properties 6 9 26 13 301 13 342
Equities and similar securities 187 269 747 127 226 128 429
Public sector stocks and loans 3 035 4 115 34 210 2 505 43 865
Debentures, insurance policies, preference shares and other loans 7 002 7 918 6 963 873 22 756
Cash, deposits and similar securities 28 130 5 683 1 470 1 244 36 527
Deferred acquisition cost 631 631
Long-term reinsurance assets 64 44 387 4 499
Net working capital 1 012 333 (1 064) 281
Total policyholder assets
39 436 18 371 43 803 144 720 246 330
3.6 The life insurance businesses' capital is not subject to excessive levels of liquidity risk. The publicly issued unsecured bonds issued by Sanlam Life are managed on a corporate level (refer to Corporate for more information).
 
4. Insurance risk
 
Insurance risk
Life insurance businesses exposed to risk via: Persistency Other
insurance risks
Policyholder solutions    
Linked and market-related    
Smoothed-bonus business    
   Stable bonus    
   Reversionary bonus    
   Participating annuities    
Non-participating annuities    
   Other non-participating liabilities    
  Guarantee plans    
Other    
Capital portfolio    
Risk applicable to item.
Risk not applicable to item.
 
Insurance risk arises from the writing of non-participating annuity and other non-participating life business, as these products expose the Group to risk if actual experience differs from that which is assumed. The Group is however also exposed to persistency risk in respect of other policyholder solutions and insurance risk in respect of universal life solutions.
 

Persistency risk

Distribution models are used by the Group to identify high-risk clients. Client relationship management programmes are aimed at managing client expectations and relationships to reduce lapse, surrender and paid-up rates. The design of insurance products excludes material lapse, surrender and paid-up value guarantees, subject to regulatory constraints, to limit financial loss at surrender. Persistency experience is monitored to ensure that negative experience is timeously identified and corrective action taken. The Group's reserving policy is based on actual experience, adjusted for expected future changes in experience, to ensure that adequate provision is made for lapses, surrenders and paid-up policies. 
 

Other insurance risk

Underwriting risk:
The Group manages underwriting risk through:
 
> Its product development process and underwriting policy to prevent anti-selection and ensure appropriate premium rates (loadings) for substandard risks;
> Adequate reinsurance arrangements to limit exposure per individual and manage concentration of risks;
> Claims handling policy; and
> Adequate pricing and reserving.
 
Quarterly actuarial valuations and the Group's regular profit reporting process assist in the timely identification of experience variances. The following policies and practices are used by the Group as part of its underwriting strategy to mitigate underwriting risk:
 
> All long-term insurance product additions and alterations are required to pass through the approval framework that forms part of the life insurance business's governance process. The statutory actuaries approve the policy conditions and premium rates of new and revised products;
> Specific testing for HIV/Aids is carried out in all cases where the applications for risk cover exceed a set limit. Product pricing and reserving policies also include specific allowance for the risk of HIV/Aids;
> Applications for risk cover are reviewed by experienced underwriters and evaluated against established standards. Retention limits are applied to limit the exposure per individual life;
> Appropriate income replacement levels apply to disability insurance;
> The experience of reinsurers is used where necessary for the rating of substandard risks;
> The risk premiums for Group risk business and some of the in-force individual risk business can be adjusted within 12 months should claims experience deteriorate to the extent that such an adjustment is considered necessary. Most of the individual new business is sold with a guarantee that risk premiums would not be increased for the first 5 to 15 years;
> Risk profits are determined on a regular basis; and
> Regular investigations into mortality and morbidity experience are conducted to ensure that corrective action, for example rerating of premiums, is taken where necessary.
 
Expense risk:
Expenses are managed through the Group's budgeting process and continuous monitoring of actual versus budgeted expenses is conducted and reported on.
 
Concentration risk:
The Group writes a diverse mix of business, and continually monitors this risk and the opportunities for mitigating actions through reinsurance. The Group's life insurance businesses are focused on different market segments, resulting in a mix of individual and institutional clients, as well as entry-level, middle market and high net worth clients.

The Group's operations in the entry-level market segment is not exposed to excessive concentration risk given the nature of business sold in this market, which comprises small value policies to a large number of policyholders. The main concentration risk is assumed by Sanlam Life, which serves the middle-income and high net worth market segments in South Africa and Namibia. The tables below provide an analysis of the exposure to the value of benefits insured in respect of non-participating life business as well as the annuity payable per policy in respect of non-participating annuities for the Group's operations in the middle income and high net worth markets. 
 
Non-participating annuity payable per annum per life insured
 
Number of lives
Before reinsurance
After reinsurance
 
2010
R’000
2009
R’000
2010
%
2009
%
2010
%
2009
%
0 – 20
216 107
213 491
50
48
50
48
20 – 40
17 046
16 091
17
18
17
18
40 – 60
5 218
4 947
9
10
9
10
60 – 80
2 428
2 181
6
6
6
6
80 – 100
1 212
1 124
4
4
4
4
>100
2 067
1 908
14
14
14
14
 
244 078
239 742
100
100
100
100
 
Value of benefits insured: non-participating life business
 
Number of lives
Before reinsurance
After reinsurance
Benefits insured per individual life
2010
R’000
2009
R’000
2010
%
2009
%
2010
%
2009
%
0 – 500
1 035 183
1 306 645
24
30
27
34
500 – 1 000
161 912
164 216
19
20
20
20
1 000 – 5 000
133 884
122 478
42
38
42
38
5 000 – 8 000
6 330
5 371
7
6
6
5
>8 000
3 636
2 863
8
6
5
3
 
1 340 945
1 601 573
100
100
100
100
 
The tables indicate that the Group's exposure is spread over a large number of lives insured, thereby mitigating concentration risk.

The geographical exposure of the Group's life insurance operations is illustrated in the table below, based on the value of policy liabilities in each region. The majority of life insurance exposure is to the South African market. 
 
R million
2010
2009
South Africa
228 034
208 478
Africa
19 823
18 968
Other International
17 838
18 884
Total policy liabilities
265 695
246 330