12 / 203
thrive in the commercial realities now taking shape.
I commented last year that PPS is now one of the few
South African financial services providers presenting
an end-to-end portfolio of solutions, and indeed the
only one that focuses exclusively on the needs of
professionals. If you are a professional looking for
one ‘home’ to take care of your end-to-end financial
services needs, PPS is that home.
STRATEGISING FOR THE FUTURE
OF PROFESSIONALS
In the strategy section of this report we outline why
and how PPS is developing the professional space
for our members. For 2018, PPS continued rolling out
strategy in terms of seven focus areas:
• Our exclusive member value proposition
• Digitalisation of our services for members
• Expand our value proposition to advisers, both inside
and outside of the organisation
• Develop holistic solutions for our members, and
cross-market these products and services
• Create alternative revenue streams to boost value
and profit share for our members
• Position the PPS brand as the undeniable financial
services provider of choice for professionals
• Develop the PPS community culture (where
community includes our whole ecosystem, our staff
and our members)
In-depth strategic planning revealed that the future for
professionals is digital and mobile, especially as newer
generations become dominant. Younger professionals
expect efficient online transacting as a matter of course,
while older members and advisers will appreciate the
added reach and convenience that PPS tools bring to
established practices.
In brief, PPS is creating an appealing and productive
PPS online community featuring multiple means of
communication with and between our members,
PPS representatives and advisers. This omnichannel
environment will enable more efficient claims and
other processes, while also encouraging members to
network and collaborate for mutual benefit.
An important part of our future strategy remains
to partner with professional associations across the
various professional disciplines. These partnerships
allow us to understand the needs of professionals
better, and to develop bespoke solutions for particular
professional needs. We value these partnerships with
the various associations deeply.
At the same time, we are creating value through
revenue streams adjacent to our traditional offerings,
to accelerate member profit share and mitigate against
equity market and foreign exchange volatility.
PERFORMANCE SNAPSHOTS FOR
2018
PPS Insurance
Our main life insurance business again recorded a
healthy profit for our members in 2018, and even
managed to grow this profit from 2017. This profit was
supported by claims experience that remained within
budgeted assumptions, and good expense control.
Our first and foremost purpose is to be there for our
members in times of need, to protect them. But it is
always pleasing when we are able to set aside a profit
share for our members, after we have honoured valid
claims. If we did not operate under the mutual ethos,
this profit distribution would have been to shareholders
but at PPS our members enjoy these benefits.
The one big disappointment of 2018 was the investment
markets. Our medium-term investment objective
remains to outperform inflation for our members by a
handsome margin. The way to achieve this objective is
to invest in a well-diversified and sensibly constructed,
balanced portfolio. Such a portfolio will contain a
significant portion of growth assets such as equities and
property. As most of our members are aware, growth
assets had a torrid time in 2018. Our asset managers
and investment strategy succeeded in protecting our
members from the worst that the markets had to
offer, but unfortunately the investment returns on our
members’ Profit Share Accounts were slightly negative
by the end of the year.
The impact will of course differ between members.
Members who have only recently joined us, or are
approaching retirement and have de-risked their PPS
Profit-Share Account through the Portfolio Choice
option, will not feel as much of the impact of the
investment markets in their profit-share allocations.
Members who have been with us for many years and
who have built up sizeable Profit-Share Accounts, will
of course be more impacted – most of the additions to
such accounts are typically from investment returns on
previous years’ profit. It is especially the powerful effect
of compounding over time that yields the sizeable
profit share that so many of our members eventually
11