FROM THE
CEO ’ S DESK
As I write this message for the sixth edition of The Professional , we are heading towards half-year 2022 and like most years , there have been the good and the not-so-good to deal with .
Sharing our financial results for 2021 with our members and other stakeholders in April this year was a highlight . There was no life underwriting profit this time — in non-pandemic years , PPS is very profitable from an underwriting perspective due to the unique ( professional ) market segment that we serve . In 2021 the right thing was to assist our members with claims to the maximum extent . But there were huge investment profits to distribute . 2021 was one of those years in the markets that do not come along very frequently , perhaps once or twice in a decade . The returns on past profits that have built up in our members ’ Profit-Share Accounts were extraordinary . There were many smiles in April !
But therein also lies the danger — expectations need to be managed . A great year such as 2021 is often followed by a mediocre or even negative year or two . When we look around us , there is much happening in the world that is not great news for growth assets : wars , inflation and supply chain disruptions ... Our asset managers do not expect much investment returns this year and it could even be negative . However , their eyes are firmly on the longer term . Shorter-term challenges there always will be , but our experience is that , if a good long-term investment strategy is in place and if you do not knee-jerk , then you will be well-rewarded over time .
On the good side though , we are seeing profits returning on the sickness and life insurance side as COVID-19 waves become shorter and shallower , which is very good news for our members . That is because all profits are ultimately returned to our members with qualifying products .
I had to explain our model the other day to somebody and I said that professionals , like all individuals , need financial services and much of it : income protection , life cover , medical aid cover , insurance on vehicles and other assets , retirement savings , investments for other goals … the list is long . Many businesses provide these services , but where PPS differs from them is that , at other companies all the profits from providing these services go to shareholders who have put up the capital for these companies . And in good years , these profits can be a lot . At PPS , these profits go to our members with qualifying products . They enjoy the product benefits as with other businesses , but they also get the profits . This model is such a good deal for them .
Our integrated report has all the detail on our 2021 performance and is available on our website . The theme for this report was “ cycles ” – it resonated with PPS coming full circle again , as we have done throughout our history , assisting our members in their hours of need . It is , therefore , no surprise why The Professional followed suit and chose “ cycles ” as its theme for this edition . As always , there is much to peruse , and we trust that you will find it enjoyable , educational and value-adding .
As for my take on the cycle theme , I share some thoughts on life cycles on page 8 .
Best wishes for the second half of the year !
PPS Group Executive
Izak Smit
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