South African ICMIF member The Professional Provident Society (PPS Insurance Company), a financial services company focused solely on providing financial solutions for graduate professionals has announced that the Group paid ZAR 6.1 billion (USD 0.39 billion) in total benefits to members in 2021, up 27% from the ZAR 4.8 billion (USD 0.31 billion) it paid in 2020.

Earlier this month, PPS announced that it had ended its 2021 financial year in a favourable position despite 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 ZAR 6.1 billion (USD 0.39 billion) in total benefits to members, up 27% from the R4.8 billion (USD 0.31 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.

PPS says it believes in innovating according to the evolving needs of graduate professionals to bolster their benefits and savings capabilities across product portfolios. The mutual is 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”.