<strong>By: PPS</strong>

<strong>( <a href="https://www.cover.co.za/pps-releases-solid-results-despite-tough-environment/">Listen to COVER's Podcast with Izak Smit, CEO of PPS</a> ) </strong>

<span style="font-weight: 400;">Professional Provident Society (PPS), the financial services company focused solely on solutions for graduate professionals, and the only diversified financial services company in South Africa operating under the ethos of mutuality, weathered challenging market conditions during 2018 to continue to show solid growth.  By definition, mutuality is shared, and while members benefited from an increased value of valid claims payouts, operating profit continued to grow. </span>

<span style="font-weight: 400;">“Our main life insurance business has once again recorded a healthy profit for our members in 2018, and even managed to grow this profit from 2017,” says CEO of PPS, Izak Smit.  “Our first and foremost purpose is to be there for our members in times of need, to protect them. But it is always pleasing when we can also set aside a worthwhile profit share for our members, after we have honoured valid claims.  It provides a compounding opportunity for members to glean benefits from the peace of mind of professional cover, while also building a valuable nest-egg in the longer term: a utopian win-win for PPS and its members.”</span>

<span style="font-weight: 400;">The investment markets proved disappointing in 2018, in a challenging local economic environment.  The JSE All Share Index recorded its worst year in ten years since the 2008 economic crisis. “Our medium-term investment objective remains to outperform inflation for our members by a handsome margin,” says Smit.  “The way to achieve this objective is to invest in a well-diversified and sensibly constructed portfolio that contains a sizable portion of growth assets such as equities and property. Our asset managers and investment strategy succeeded in protecting our members from the worst that the markets had to offer, but unfortunately the returns on our members’ Profit-Share Accounts were in slight negative territory at the end of the year.”</span>

<span style="font-weight: 400;">Despite this challenging economic environment, PPS was still able to allocate R634.6 million to members’ unique Profit-Share Accounts, irrespective of whether those members claimed or not.  “For most of our members, the positive effect of operating profit was more than adequate to compensate for the negative market return impact. This demonstrates the power of our model, where most members could still enjoy positive additions to their Profit-Share Accounts after the most brutal year in the investment markets since the Great Recession of more than a decade ago,” Smit says. “And this is in addition to having paid R3.2 billion in claims and benefits to members during 2018.”</span>

<span style="font-weight: 400;">PPS Profits are allocated to members with qualifying products annually, and accumulate with investment returns over members’ working lives.  When members eventually retire, these profits can be transferred to PPS Investments for further investment growth. “This bucks the trend of insurance companies offering the instant gratification of cash-back rewards, but suits the approach of our members who value an ultimately bigger tax-free reward,” says Smit.</span>

<span style="font-weight: 400;">The global trend of societal and technological changes has presented an opportunity for PPS to adapt and evolve. Creating tailored solutions that embrace the latest technologies available allows PPS to create value for its members and provides an opportunity for them to own more products within their portfolios, ultimately contributing more to their profit share.  “It is evident that the world is transforming digitally and graduate professionals will, themselves, be pioneers of that transformation,” says Smit.</span>

<span style="font-weight: 400;">As far as the Group’s subsidiaries are concerned, PPS Investments grew assets under administration by 10% to R31.4 billion, mainly due to good new investments inflows.  “We signed 46% more business than the previous year, which was above an optimistic target, a very good achievement in a very tough environment. More members are starting to realise that, after the profit-share benefit, what PPS Investments has to offer is superb value,” says Smit.</span>

<span style="font-weight: 400;">Short-Term Insurance (STI) became a wholly owned subsidiary of the PPS Group during 2018. An undeniably tougher claims environment coupled with the unfavourable economy resulted in below budget results.  On the upside, PPS continued to see evidence that the professional market segment is a relatively benign risk pool. A new professional indemnity solution will provide much needed cover for members in the medical professions after its launch early in 2019.</span>

<span style="font-weight: 400;">In a move that has caught many unawares, PPS has also partnered with Standard Bank to launch the PPS Platinum Credit Card and Payment Solutions offering in January 2019. The PPS Platinum Credit Card has a unique Profit-Share Booster programme where professionals can turn their accumulated rewards points into profit-share savings over the long-term. PPS members who are business owners enjoy reduced fees from the PPS Payment Solutions offering that ranges from point-of-sale devices, including SnapScan, to online transaction processing. “New and expanded financial offerings, which complement our current range of insurance and investment solutions, will deliver additional value to our members in 2019 and beyond,” concludes Smit.</span>