Our concerns focus on three aspects of the article:
THE MISREPORTING OF THE PRINCIPAL OFFICER’S REMUNERATION Your assertion that the principal officer’s remuneration for the year 2012 was R 4.8m is incorrect as that amount includes fees paid to the curator during the period.
The current principal off icer was appointed with effect from 1 January 2012, and his remuneration for the FY2012 was R2.2m as disclosed in the audited annual financial statements.
The scheme was placed under curatorship on 27 May 2011. The fees reflected as principal off icer remuneration for the FY2011 include fees paid to the curator amounting to R1.9m for the period May to December 2011. The curatorship continued during 2012 and was lifted by a court order on 31 August 2012. The total fees paid to the curator during this period were R2.5m. This fact was also disclosed in the audited annual financial statements of the scheme as curator fees.
The payment in respect of curator fees and the remuneration of the principal officer were combined as per the compliance requirement of the Council for Medical Schemes.
THE MISINTERPRETATION OF THE DROP IN SOLVENCY RATIOS Your article places the sustainability of the fund in doubt by asking “whether such schemes are sustainable in the long run?” and states that “the Bonitas solvency ratio has steadily eased to 35.5%”.
Bonitas has reported the following solvency ratios and net surpluses (i.e. bottomline results) over the previous three years: As the table demonstrates, Bonitas has preserved a healthy solvency ratio, which is significantly greater than the statutory requirement, and has managed to successfully manage the solvency within a narrow range of less than 2% as per our strategy. This also shows that the fund has experienced surpluses every year since 2010.
The increase or decrease in solvency ratio cannot simply be attributable to the “operational loss”. Underlying factors that are beyond Bonitas’ control, such as returns on investments, also play a role in determining the extent to which the Scheme is able to maintain solvency levels.
By comparison, the solvency ratios in respect of the 10 largest open enrolment medical schemes as reported for the past three years are evident in Table 2.
Despite having a large beneficiary base, Bonitas has consistently maintained an extremely high level of solvency.
Bonitas’ sustained f inancial strength has allowed the Board of Trustees to grant numerous benefit enhancements to members over the past few years along with very reasonable contribution increases. The point should also be made that it is not in the best interests of our members to maintain artificially high solvency ratios. Bonitas balances the need for implementing contribution increases against the need for maintaining a prudent solvency ratio which is comfortably