PSG Konsult not quitting SA
• Despite challenges, CEO optimistic of future growth
Although its biggest unit, PSG Wealth, struggled with lower trade volumes than usual, PSG Konsult says it remains exceptionally optimistic about SA and will not turn offshore for better performance. The financial services group, with operations including wealth management, asset management and shortterm insurance, reported an 18% rise in headline earnings for the six months to August.
Although its biggest unit, PSG Wealth, struggled with lower trade volumes than usual, PSG Konsult says it remains exceptionally optimistic about SA and will not turn offshore for better performance.
The financial services group, with operations including wealth management, asset management and short-term insurance, reported an 18% rise in headline earnings for the six months to August.
But its wealth business had a decline in trade volume and earnings rose only 7%, compared with the average of 18% achieved in the past five years. The division offers individuals and businesses a platform to directly trade shares and other securities, among other things.
PSG Konsult CEO Francois Gouws said it was a difficult equity market, but the company increasing its total assets under management 19% was encouraging. “We are very optimistic about SA. I think many South African companies have been getting questions about why they are not diversifying and investing offshore, but our stance is: we are a South African company. I think the recent political and policy changes afford the country the opportunity to recover quite a lot,” Gouws said on Thursday.
PSG Konsult had recorded good trade volumes and funds inflows for many years and so the company regarded market difficulties in 2018 as a minor setback, Gouws said. “We’ve got a resilience business model. We are gaining market share even during periods of difficulty.
“I think it’s because we have a different approach to our competitors. We are advice led rather than product led.”
PSG Konsult’s total assets under management rose to R230bn in the period under review, of which R182bn was attributable to PSG Wealth and R48bn to PSG Asset Management. Short-term insurance arm PSG Insure increased its gross written premium 25% to R2bn.
“Our business is heavily orientated towards retail clients, which is what sets us apart from most asset managers. Most inflows to our asset management business went to highermargin funds because of our focus on the retail market.”
Gouws said that PSG Konsult’s strategy was to avoid lowmargin, high-volume operations. The short-term insurance business mainly focused on the commercial lines, mostly servicing small and micro-sized enterprises. PSG Insure’s net underwriting margin improved to 10.5% while the country’s biggest short-term insurer, Santam, reported a margin of 8.4% at end-June.
Even in 2017, when most short-term insurers’ profits were ravaged by catastrophic events such as the Western Cape storms and the Knysna fires, PSG Insure’s net underwriting margin stood at 7.4% in the first half of 2017.
The division increased its adviser force to increase its market share in the commercial lines insurance after acquiring Absa Insurance and Financial Advisers in June 2018.
WE ARE VERY OPTIMISTIC ABOUT SA. …RECENT POLITICAL, POLICY CHANGES AFFORD SA THE OPPORTUNITY TO RECOVER QUITE A LOT