2019 Integrated Report

PPS INTEGRATED REPORT 2019 | 185 Value of Investments Potentially reduced investment values due to reductions in market values of the Group’s investments in equities, bonds and unit trusts & pooled funds. Up to the date of publication of the 2019 financial statements, markets have shown significant decline, and all the investment gains reported in the 2019 financial statements had reversed. It is unknown whether, and to what extent markets will recover during 2020. Claims Potentially increased claims in 2020 due to possible higher mortality and morbidity of members, especially older members and members with an underlying immune deficiency, as well as members working in the health sector. Policy lapse rates A potential increase in the extent of policy lapses in 2020 as a result of the contracted economy and its potential financial effect on members. Impact on service levels Only companies rendering essential services are allowed to maintain trading during the lock down period. The Group, as a financial services provider, qualifies as an essential services provider, and operations are continuing during the lockdown. The operations are monitored on a daily basis, to ensure continued high level of service to the Group’s policyholders and members. All essential functions, such as the Group’s call centres, claims processing and payments, as well as Intermediary Servicing and new business administration are all operating uninterrupted, and at service levels comparable to the Group’s normal standards. Going concern and Solvency PPS has prepared scenarios of the potential impact of the pandemic on its operations. These scenarios included qualitative and quantitative analyses based on a high, medium and low impact scale. The results of these scenarios indicate that the pandemic will not change the going concern status of the Group, as assets are estimated to be sufficient to settle liabilities. Although the pandemic could have a material negative impact on investments, and possibly operating profits in 2020, the solvency of the Group remains resilient and is expected to meet regulatory requirements, even under extreme stressed conditions. Management’s response The Group had in place an Epidemic Management Policy and a Business Continuity Plan (BCP), which sets out its response to the management of epidemics. These were activated after the financial year end. If the level of risk associated with the pandemic reaches predefined levels in the Policy, appropriate responses set in the BCP are followed. The Group’s BCP was invoked, leading to the establishment of the associated control structures involving all business units. As a consequence, as the Covid-19 crisis evolved, an increasing proportion of our workforce were enabled to work from home, whilst arrangements for those who remained in the office were adjusted to ensure appropriate ‘social distancing’ to protect our employees. Importantly, by the date of the initiation of the lockdown, we had already successfully migrated all of our operational teams to be capable of working from home, with well over 90% of our total workforce enabled to do so.