PPS paid R6.1bn in total benefits to members last year
PROFESSIONAL Provident Society (PPS), an unlisted insurance and investment group, ended its 2021 financial year in a favourable position despite a record hike in life insurance claims payments in the second year of the Covid-19 pandemic and as it was hit by a cyberattack.
It said yesterday that the record claims amid the Covid-19 pandemic exceeded anything witnessed in its 80-year history.
PPS Group chief executive Izak Smit said the group paid R6.1 billion in total benefits to members last year, up 27 percent from the R4.8bn 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,” Smit said.
Sickness and life claims amounted to R4.3bn in 2021, up 36 percent on the R3.1bn in 2020. Of this, PPS paid almost 12 000 Covid-19-related claims – or one in 12 members – amounting to R1.4bn. There were 11 587 Covid19 sickness claims at R424 million in total. Covid-19 death claims at 193 totalled R975m in 2021.
While claims reduced operating profit, PPS credited 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.
“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,” Smit said. And although the claims increased, PPS was still able to allocate R5.5bn as profit share to their members with qualifying products in 2021 from R2.2bn in 2020.
Smit added that new business was the lifeblood of a life assurance business, with the annual premium income of new business written last year in South Africa and Namibia increasing by 23 percent.
The group’s insurance gross earned premiums was up 4.7 percent on the
R5.1bn of 2020. The effects of the third wave came through in the claims experience in the third and fourth quarters of 2021.
PPS said that all the subsidiaries showed good growth as PPS Investments, reaching its 15-year milestone, had grown into a significant business, recording another excellent year. Gross new investment flows to PPS Investments were R7.1bn. Surplus before
interest and tax of R103m was up 57 percent in 2021.
Meanwhile, last month the insurer alerted the public that it had suffered a cyberattack last month where no member data was breached.
However, Smit said this put the business through a tough three months where it did not necessarily focus on its general operations as it was recovering from the attack.