PPS ends year positively despite increased claims in year two of pandemic

12 April 2022 PPS
Izak Smit, PPS Group CEO

Izak Smit, PPS Group CEO

The Professional Provident Society (PPS Insurance Company), the financial services company focused solely on providing financial solutions for graduate professionals, has ended its 2021 financial year in a favourable position amid an increase in life insurance claims payments in the second year of the COVID-19 pandemic, exceeding anything witnessed in its 80-year history.

While claims reduced operating profit, PPS credits its performance to its ability to stay true to its purpose of assisting professionals in protecting their income and assets and enhancing their financial security. This is a testament to the strength of PPS’s unique mutuality model, which continued to provide a high level of stability in a very unpredictable environment. In 2021, PPS was able to return enormous value to members through meeting claims and making special benefit allocations to the members’ Profit-Share Accounts due to its solid business strategy, fiscal management and long-term investment approach.

“Given the extraordinary events of the past two years, our focus was on paying valid claims. We were able to go further than our competitors were able to. This allowed us to assist our members as much and as fairly as possible,” says Izak Smit, PPS Group CEO.

“In 2021, the Group paid R6.1 billion in total benefits to members, up 27% from the R4.8 billion in 2020. With PPS’s strong balance sheet and solvency ratio, we were able to absorb this increase (excluding investment returns) without dipping into negative territory” adds Smit.

Sickness and Life claims amounted to R4.3 billion in 2021, up 36% on the R3.1 billion in 2020. Of this, PPS paid almost 12 000 COVID-19-related claims – or one in 12 members – amounting to R1.4 billion. There were 11 587 COVID-19 sickness claims at R424 million in total. COVID-19 death claims at 193 totalled R975 million in 2021.

Commenting on the performance, Smit says: “Although the claims increased, PPS was still able to allocate R5.5 billion as Profit-Share to our members with qualifying products this year (R2.2 billion in 2020). Contributing to this was a great year in the investment markets where our assets performed brilliantly. At PPS, we follow a well-diversified and long-term approach in our investment strategy. This long-term view is a competitive investment edge for PPS. Like a good financial adviser would caution, it is important to remember that past performance is no guarantee of future results.”

Smit adds that new business is the lifeblood of a life assurance business, with the annual premium income of new business written in 2021 in South Africa and Namibia increasing by 23%.

The Group’s insurance gross earned premiums was up 4.7% on the R5.1 billion of 2020. The financial impact of the second and third waves of COVID-19 was felt in 2021. The effects of the third wave came through in the claims experience in the third and fourth quarters of 2021.

All the subsidiaries showed good growth. PPS Investments, which reached its 15-year milestone, has grown into a significant business, recording another excellent year. Gross new investment flows to PPS Investments were R7.1 billion. Surplus before interest and tax of R103 million was up 57% in 2021 This growth is due to fiscal discipline in expense management, good new business and individual fund performance.

We believe in innovating according to the evolving needs of graduate professionals to bolster their benefits and savings capabilities across product portfolios. We are passionate about investing in developing the next generation of professionals who will have a profound impact on South Africa’s future.

Through the University Support, Bursary, Graduate Development and the Learned, Engaged, Accelerated Professionals Work-Readiness (LEAP) programmes, the PPS Foundation makes career journeys a reality.

Looking ahead, Smit says:

“PPS remains in a strong financial position to honour future long-term commitments to our members. We continue to be grateful to our employees and members for their loyalty and our financial adviser network for their immense contribution. There can be no doubt that our shared resilience is what has guided our actions and decisions in supporting and returning value to our members”.

PPS Namibia achieves growth in unprecedented claims year, allocates N$248 million in profits to members

PPS Insurance Namibia (PPS Namibia), a provider of intelligent financial solutions exclusively for graduate professionals, demonstrated resilience in a challenging 2021 financial year amid a weak economic environment and high COVID-19 mortality. Despite these uncertainties and significant claims paid, PPS Namibia was still able to allocate N$248 million in profits to its members after paying benefits and valid claims of N$214.1 million.

This was achieved as a result of an exceptional increase of 52% in new membership and investment market returns in a volatile market, contributing favourably to Profit-Share Accounts of members.

Pleased with the company’s resilience in an unparalleled 2021, Johan van der Westhuizen, Chief Executive Officer of PPS Namibia, says: “PPS’s ethos of mutuality ensures that our priority is to pay all valid claims so that we assist our members through difficult times such as that experienced in 2021. We achieved our purpose and protected our members.”

What differentiated 2021 from the previous financial year was the 48% surge in net claims at N$81 million (2020: N$55million). COVID-19 sickness and death claims over 700 contributed N$36 million (including four COVID-19-related death claims).

PPS Namibia is the largest financial services company of its kind in Namibia that focuses exclusively on graduate professionals, creating products and designing services that cater specifically for their needs. This is achieved through the ethos of mutuality, where PPS Namibia members benefit significantly as company profits are allocated to them through allocations to their PPS Profit-Share Accounts. The PPS Profit-Share Account also accumulates investment returns and vests upon retirement or is payable upon a member’s death.

Van der Westhuizen added that PPS Namibia stood firm in a defining year where the country was one of the most hard-hit in the world with new infections per capita per million people and was able to achieve a new annual premium income of N$19.9 million, which represents a growth of 18% on 2020. New membership also grew by 52% compared to 2020, exceeding its annual new member growth target.

PPS Namibia made significant strides to expand the business through a combination of cross-selling and product initiatives and strengthening its distribution footprint at universities, the far northern region, the coastal region and far outlying areas in the far northeast.

PPS Namibia launched an enhanced Critical Illness product to provide immunotherapy, a first in the insurance industry, assisting members to recover faster and get back to their lives and professions. This provides for a lump-sum benefit payment for a wide range of illnesses so that they can plan and make decisions on their medical and financial needs in the event of immunotherapy cancer treatments. This allows for multiple claims on a wide range of illnesses. In addition, a functional disability product with an occupational disability offering was added to support members after retirement when cover is most needed.

Izak Smit, Group CEO of PPS Insurance in South Africa, says that the professional way that PPS Namibia supported members during the challenging year no doubt contributed to new member growth. “Namibian members can look forward to launching fiduciary services in 2022. Our commitment to protect and enhance the lives of our members remains unwavering.”

Van der Westhuizen concludes, “looking ahead, our resolve as a team is strong to continue protecting graduate professionals in Namibia in a mutual way. We thank all our members, brokers and staff for their continued support and valued contribution.”

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