- PPS, which exclusively caters to professionals, says 2020 confirmed the purpose of its existence.
- Its niche market not only proved resilient to the pandemic, but the company made more profit-sharing millionaires.
- PPS is the only mutual financial services company in SA, and it returned R2.2 billion to its policyholders in 2020.
With a global pandemic in place, displacing people from their jobs and sinking any businesses, the year 2020 proved to be a tough one for many insurers and other financial services firms, but not so much for the insurer that caters exclusively for professionals, Professional Provident Society (PPS).
The company, which published its 2020 integrated report on Wednesday, still grew its gross life insurance gross premiums by 7% to R5.12 billion. PPS Investments recorded gross new investment flows of R7.5 billion, a 22% increase from 2019.
PPS CEO Izak Smit says if anything, the pandemic has "confirmed" that its model is the way to go.
"A crisis has the ability to either expose the flaws in a model and a team or to prove its robustness and to make a team stronger. I count myself fortunate to be part of a team and a model that can look back at 2020 with immense pride," wrote Smit in the report.
He said that the niche market segment that PPS serves remained resilient.
PPS is uniquely structured compared to its peers as it is the only mutual financial services company in SA and has remained so for 80 years since it was founded when companies like Old Mutual did away with the mutual model.
The company is not listed and therefore has no external shareholders to pay dividends to. Its policyholders share the profits, and after paying all claims in 2020, PPS returned R2.2 billion to its members who had qualifying products for profit sharing.
It gave its members R27.7 billion in profit share allocations in the past ten years, and said in 2020, the number of profit-share millionaires it has created rose to 7 561.
PPS is also a very exclusive insurer. Only professionals with an honours-level qualification or higher qualify to become members. The company says this membership profile significantly reduces its risks, which is why it can keep its head above water and return billions of rands to policyholders even in years of global crisis like 2020.
The company says certain behavioral traits are common to professionals as they aspire to uphold the ethos of their chosen professions. These traits have proven beneficial in many ways.
"They typically embrace certain personal risk management principles, an unwillingness to unnecessarily terminate insurance cover and an urgency to return to their professions after a period of illness. This leads to lower lapses and claims, which supports profitability," wrote PPS in the report.
PPS said it paid out R4.84 billion in claims last year, a 29% increase from R3.74 billion in 2019. Of this, PPS went to more than 4 200 in Covid-19-related claims, which cost the company R389.8 million between March and December 2020. It said medical professionals accounted for 74% of these claims.