PPS is booming – with professionals set to benefit

The Professional Provident Society (PPS), a financial services group for graduate professionals, returned high profits to its members in 2023 thanks to strong investment returns and lower life insurance claims.

PPS is a financial services group focused solely on providing customised financial services solutions for graduate professionals in South Africa and Namibia.

Today, the company announced that it returned exceptional value to its members in 2023 as its operating performance improved. 

It announced that the total profits added to its members’ notional PPS Profit-Share Accounts in South Africa and Namibia amounted to R4.54 billion.

“Our operating performance in 2023 demonstrates the resilience of our mutual model, which has

served and added value to graduate professionals in South Africa for more than eighty years,” said CEO Izak Smit. 

“The Covid-19 era has shown that it is professionals who – through their disciplined training and experience – drive the solutions that society needs for various challenges.” 

“They are also key to the country’s tax base and create millions of jobs. By serving them, our business has a very big impact on society.”

PPS returned R6.12 billion in total benefits to its members in South Africa and Namibia in 2023, compared to R5.04 billion in 2022.

Of this, R2.12 billion was in the form of profit-share payouts to members who have exited their life risk cover phase, mainly due to retirement. 

“If we did not operate in a mutual framework, this value would have been paid to outside shareholders,” said Smit.

“The beauty of our model is that this value was returned to our members with qualifying products, over and above the cover they enjoyed and claims paid to them.”

Total gross insurance claim payments were R4 billion, R165 million in short-term insurance claims and R3.84 billion in life claims. Total life claims were R3.4 billion in 2022. 

“Although we have seen the number of life claims returning closer to the levels before the Covid-19 pandemic, it is still somewhat higher than our longer-term actuarial expectations, and average claims values were also slightly up. There is still a small COVID-19 impact. However, it is difficult to say what this impact is exactly, because fewer people test these days.”

PPS’ life insurance gross earned premiums in South Africa reached R6.0 billion, an increase of 8.7% compared to 2022. 

This strong growth was supported by the company’s enviable low life insurance lapses, which remained at just under 4.7%. This is despite the challenging economic conditions in South Africa. 

Life new business in South Africa in 2023 amounted to R254.4 million, slightly down from a record performance in 2022. 

In the R4.54 billion profit that was announced, R1.2 billion was operational profits, and R3.34 billion was investment returns. 

“It is good to see operating profit returning to more than R1 billion, the level it was before the Covid-19 era. This is, of course, very much impacted by the claims experience.”

The strong investment returns were supported by good returns on overseas equities and rand weakness. 

The last quarter of 2023 was especially strong in the equity markets, pushing annual returns in balanced portfolios for 2023 to double digits after a flat performance in 2022.

“Our subsidiary and associate businesses are also starting to make a meaningful contribution to the profits that we are able to allocate to our members,” he said. 

“Here, we can especially mention strong growth in PPS Investments, where assets under management have grown to R84 billion in 2023, while the investor number grew to more than 66,500. Net inflows were a positive R2.5 billion.”