The year 2016 was an extremely challenging year for the South African economy. Fears of lingering political uncertainty and a sluggish economic environment saw the country narrowly avoiding credit rating downgrades by major ratings agencies to sub-investment grade.
Economic growth is expected to slump to 1% in 2016, whilst the South African currency gained 12.88% against the dollar amidst great volatility; partly due to the fact that the South African currency is the most liquid among the emerging market currencies.
In aggregate, emerging market equities outperformed developed market equities for the first time since 2012. The Alsi delivered a negative 0.08% (excluding dividends) and grew by a muted 2.6% for the year on a total return basis.
At PPS, the year held several exciting developments. A total of 7 662 new members were enrolled, bringing the membership up to 353 502. The year under review saw the appointment of a dynamic new CEO at PPS, Mr Izak Smit, on the retirement of Mr Mike Jackson, an icon of the insurance industry. The growth among student members from across a broad spectrum of campuses is particularly pleasing.
Total assets of the group grew to R31.4 billion and gross premium income to over R3.5 billion.
Despite the difficult investment market the dedication of our investment team increased the allocation to our members’ PPS Profit-Share Accounts to over R2.7 billion. PPS now has more than 4 000 members with more than R1 million in their PPS Profit-Share Accounts.
A major development for the group was the establishment and launch of PPS Short-Term Insurance, which has been operating successfully as a brokerage for the past seven years, into a registered short-term insurance company. The company will in this new capacity continue to focus solely on the short-term insurance needs of the South African graduate professional market.
PPS Mutual was launched in Australia, following extensive research that indicated a gap in the market for a specialised mutual organisation dedicated to the needs of the growing graduate professional market in the region.
PPS continues to operate under an ethos of mutuality. It remains a mutual organisation and is owned by its members to provide financial services to graduate professionals. The benefits of mutuality accrue to its members via the PPS Profit-Share Accounts.
The structure allows for board members to be elected and to be nominated by professional associations. In terms of best practice in corporate governance, PPS strives to ensure a balance of skills resides in the board and representatives encompass professionals from all spheres.
The economic environment is expected to remain weak. Economic growth is expected to improve marginally to 1% in 2017 and 1.6% in 2018, but political uncertainty will have a bearing on the rate of growth.
There is still a strong chance of a foreign ratings downgrade by ratings agencies to sub-investment grade due to sluggish economic growth and political uncertainty.
Combined with low economic growth, we can expect another volatile year on the markets.
PPS will continue to serve its members by providing world-class financial services. To enhance our service offering PPS will launch innovative technological solutions to cater for the new generation of millennials. The aim is to introduce “robo-advice” to assist brokers to meet the needs of the digital generation.
The members remain at the centre of all our strategic decisions as part of our commitment to the communities we serve.
I would like to record my sincere gratitude to Mike Jackson, CEO of PPS Group, who retired at the end of September 2016. During his 13-year tenure, the group has experienced many changes, and the company has experienced magnificent growth under his inspired and exceptional leadership.
We welcome Izak Smit, the former Managing Executive of Absa Financial Services Distribution in South Africa, who was appointed as CEO of PPS. We look forward to work with him to take the business into the future, ensuring that the platform we have built together will continue to grow and guarantee that PPS remains the financial services home for all professionals.
It remains for me to record my deep indebtedness to Dr Sybil Seoka, the Vice-Chairman of the PPS Holdings Trust, for her ongoing support, counsel and the strong work ethic that she brings to the Board.
Deep recognition of the outstanding leadership, commitment, counsel and energy applied to the business of the PPS Group by Mr Charles Erasmus, the Chairman of PPS Insurance, is acknowledged with much appreciation. Likewise, to the members of the various boards and committees within the PPS Group, I record my unqualified appreciation for your guidance, input and on-going support.
In conclusion, on behalf of our Board of trustees and the PPS Group entities, I record my sincere gratitude to the executive management as well as to all our staff members. Collectively, their joint efforts have led to the growth, prosperity and sustainability of PPS, and have positioned PPS as a preferred provider of premium financial and risk products to the professional community.
|30 March 2017|