2019 Integrated Report

PPS considers the following as matters that are material to the Group, its members, its staff and other stakeholders: WEAK ECONOMIC ENVIRONMENT Defining the issue The constrained economic environment in South Africa influences all aspects of life. For PPS, it makes it more challenging to signupnewmembers, threatens to increase lapse rates, impacts on costs, affects investment returns and can have a negative influence on profitability. Existing members may also choose to reduce their premiums or forego certainproductswhenbudgets become restrained. PPS’s response PPS takes a long-term view of wealth creation and focuses on delivering lifetime value for its members. A variety of asset managers, asset classes and types are used to diversify investment risk. The asset manager portfolios are positioned appropriate to market conditions. This approach yields the best results in the medium to long term, mitigating the negative effects of short-term conditions. Normal economic cycles and key events are taken into account when developing investment strategies in order to either maximise or mitigate their effect. As far as lapse rates are concerned, management implements retention initiatives on an ongoing basis to mitigate controllable lapses. Costs are also stringently managed. Initiatives to attract the younger graduate market are also a key focus. SUSTAINING STAKEHOLDER VALUE Defining the issue PPS’s purpose is to create sustainable financial and lifestyle value for members and their families during their working lives and beyond. The principles of mutuality are key considerations in determining the risk appetite for PPS. These principles include endeavouring to ensure inter-generational fairness and include operating the business for the benefit of all members, without favouring any specific group of members over another. PPS’s response In order to fulfil this objective, the Group consistently improves on and expands its range of products and services, which are designed to meet members’ changing needs throughout their lives. Highly qualified and experienced PPS advisers not only assist with developing unique financial solutions for every member but also minimise the time that busy professionals need to spend on financial planning. The Group also adds value through its Specialist Support Services (S 3 ) business unit, which is staffed by a team of highly qualified individuals who assist financial advisers with specialised and complex financial research and advice. DEVELOPING INNOVATIVE PRODUCTS, SERVICES AND SOLUTIONS Defining the issue In a constantly changing socio-economic environment defined by the rapid emergence of new technologies, insurers are able to analyse customer data and bring new products to market quickly. PPS has to maintain a deep understanding of its target market and its needs in order to design and launch customised and relevant products, services and solutions timeously. PPS’s response The Group continuously engage with its members in order to maintain understanding and insight into their dreams, goals and requirements. Drawing on this, it endeavours to develop, launch and improve its products and services. Details on recent innovations are in the Innovations section of this report. DIGITAL TRANSFORMATION Defining the issue Digitalisation has fundamentally changed the way in which people engage. Professionals operating in an internet-enabled 24/7 information-sharing and transacting environment measure the standard of service provided by their insurer against the standard of service they receive from all other providers, including their banks and online retailers like Amazon. They have come to expect constant multi-channel access to providers as well as features such as paperless transactions, speed, efficiency, transparency and remote advice. PPS’s response At PPS, technology is used to improve all aspects of the business. This includes a member and adviser engagement platform, a tool to calculate actual and potential Profit-Share, a data analytics platform that draws on various data points, a security platform powered by AI and a robotics initiative. Analysing and responding to technological developments is a fundamental aspect of PPS’s commitment to continuous improvement. COVID-19 PANDEMIC Defining the issue A global pandemic develops. The global impact is severe. A global macro-economic slowdown is looming, and future growth forecasts have been adjusted to the downside as a result of the pandemic. The volatility in financial markets and negative investor sentiment impacts adversely on investment market performance. It also has a devastating effect on supply chains and business. MATERIAL MATTERS AND RISK MANAGEMENT | 49