ECIC IR 2023

ANNUAL Financial Statements for the year ended 31 March 2023

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1

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E X P O R T C R E

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A S

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D I

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Notes to the Financial Statements

5.3 Credit risk Credit risk is the risk of financial loss resulting from a counterparty or customer’s failure to meet its contractual obligations. The Corporation is exposed on the following levels: c Amounts due from insurance policyholders and other trade debtors; c Salvages receivable; c Re‑insurance contract assets; and c Financial assets and cash and cash equivalents. The Corporation limits the levels of credit risk that it accepts by placing limits on its exposure to a single counterparty or group of counterparties. Exposures to third parties are monitored as part of the credit control process which takes into account among other things sector limits, counterparty limits and country limits. Reputable financial institutions are used for investing and cash handling purposes. The Corporation only contracts with re‑insurers with the minimum rating of A‑ or above. All money market instruments and cash and cash equivalents are placed with institutions that have long term credit ratings. Financial assets placed with fund managers are governed by investment mandates which provide for counterparty limits, counterparty type, concentration limits and investment grade. The carrying amount of assets included on the statement of financial position represents the maximum credit exposure. Accounts receivable The Corporation’s insurance debtors are limited to parties with a valid insurance policy. These are followed up on a regular basis. Another component of accounts receivable relates to assessment fees which are only charged to policies which have been assessed to avoid high volumes of bad debts. Impairment allowance is raised only after an assessment of each individual balance. Financial assets and cash and cash equivalents Where possible, the Corporation has defined minimum acceptable counterparty credit ratings on financial assets being managed by fund managers. The Finance, Investment and Insurance Committee also fulfils an oversight role in ensuring adherence to defined credit ratings. 5.3.1 Credit rating The following table provides information on the credit quality of the Corporation’s financial and insurance assets.

BBB and lower R’000

AAA- A+ R’000

A- BBB+ R’000

Not Rated R’000

Total R’000

2023

Financial assets at fair value and derivative instruments Trade and other receivables Cash and cash equivalents Reinsurance contract assets

4 033 803

616 556

918 229

1 956 050 1 178 700

7 524 638 1 178 700 2 355 461

-

- - -

- - -

2 355 461

- -

144 911

144 911

6 534 175

616 556

918 229

3 134 750

11 203 710

BBB and lower R’000

AAA- A+ R’000 2 664 324

A- BBB+ R’000 731 784

Not Rated R’000 1 182 203 1 000 755

Total R’000

2022

Financial assets at fair value Trade and other receivables Cash and cash equivalents

- - - -

4 578 311 1 000 755 4 487 620

-

-

4 481 620 7 145 944

6 000

-

737 784 10 066 686 A National rating was applied to all South African investments, while a National equivalent of the International ratings were applied to all foreign investments. 2 182 958

YOUR EXPORT RISK PARTNER

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