Professional Provident Society (PPS), the financial services company focused solely on providing financial solutions for graduate professionals, produced a resilient 2020 performance. This was amid a year in which COVID-19 impacted lives and livelihoods. Despite this, PPS stood focused on delivering its core purpose of paying valid claims and protecting its members’ financial health.
PPS’s strategy of delivering value to members, its strong balance sheet, coupled with growth of the business, contributed to its solid performance in this tumultuous period.
“We entered 2020 with solid capital reserves and with good momentum. This meant that we could act swiftly to put relief measures in place, pay claims reliably, secure our adviser network and maintain our full staff complement throughout the lockdown. The unique situation presented by the pandemic also served as a catalyst to accelerate the process of expanding and implementing our digitalisation strategy,” says Izak Smit, PPS Group CEO.
“Our resilience as a business, strong organisational values, the performance-driven culture of our people and our trusted relationship with financial advisers added to the sustainability of PPS through this difficult year,” he adds.
PPS is unique in the South African financial services industry, differentiated by its ethos of mutuality.
“This has proved its value as we mark 80 years since PPS was founded by a group of hard-working dentists who chose a methodology which is nowadays not so common in financial institutions. Mutuality permeates every aspect of our business, from the way we are structured to how new innovations are designed. The past year has again confirmed the purpose of our existence: to protect our members and their families so that they can focus on their professions and the lives they want to live.
“Our performance is significant against the backdrop of spending nine months of our 2020 financial year operating under lockdown. These results demonstrate the effectiveness of mutuality in providing financial security and long-term benefits to our members.
“In 2020, the Group paid R4.84 billion in benefit pay-outs and valid claims to members. This is 29% up from R3.74 billion in 2019. Focusing on life claims in particular, this amounted to R3.12 billion in 2020, up 45% on the R2.38 billion in 2019. Of this, PPS paid more than 4 200 COVID-19-related claims to the value of R389.8 million between March and December 2020. As expected, medical professionals were most affected by the pandemic and accounted for 74% of these claims.”
Commenting on the performance, Smit says: “PPS has been able to provide a reliable financial safety net for its members. Because there were no outside shareholder interests to protect – we do not have such stakeholders – we looked for opportunities to assist members adjusting claim and premium protocols specific to the pandemic, while ensuring fairness between different cohorts of members. Despite this, due to our strong balance sheet and inherent profitability of the risk pool and the businesses, PPS was still able to allocate R2.2 billion in 2020 in total profit to our members with qualifying products.”
Smit adds that the Group’s life insurance gross earned premiums was R5.12 billion and were 7% up on the R4.77 billion in 2019. While many members’ finances were strained, and they remained cautious about spending, their awareness of the need to protect themselves and their families against unforeseen shocks increased. This, and assistance with premiums where members were struggling, helped to keep lapses low. Despite the challenges of 2020, all the subsidiaries showed incremental growth. PPS Investments had a strong year. Gross new investment flows to PPS Investments of R7.5 billion were 22% up on the prior year.
Among the innovations introduced in 2020 to address the evolving needs of professionals is the enhanced PPS Profit-Share Cross-Holdings Booster. This makes loyal members’ Profit-Share work even harder for them in the long term, rewarding them based on the combination of products from PPS Investments, PPS Short-Term Insurance and Profmed medical aid that they hold over and above their PPS Life Risk Products.
Looking ahead, Smit says that it is impossible to make firm predictions for 2021 as the pandemic continues to evolve, and the long-term impact thereof is not yet known. A certainty is that the effects of COVID-19 will continue to be a market disruptor and a creator of opportunities.
“We are bracing ourselves for further waves, but an aspect that works in our favour is that many professionals in the frontline in fighting the pandemic, particularly those in the health professions, were the first to be vaccinated. We are confident that the professionals for which PPS was founded will continue to show the significant role that they play in ensuring the health and well-being of South Africa’s citizens and economy.
“I want to extend PPS’s special thanks to our members for their boundless service to the community. South Africa is indebted to them. Thank you for your continued support and trust,” concludes Smit.
PPS is a Licensed Insurer and Financial Services Provider.