huge balance sheet, investment returns are a significant component of the overall profit we can allocate to our members’ PPS Profit-Share Accounts™. Our (non-Life) subsidiaries are also starting to make a meaningful contribution. Our members should be pleased by the returns we generated in 2023. The overall profit that we can allocate to our members’ Profit-Share Accounts™ is one of the strongest ever. Our members will know from past reports that, after such a strong year in the investment markets, I am always quick to add that the long-term average returns matter and not a single year’s performance. It has become a cliché but it remains as true as ever: It is about time in the markets, not timing the markets. At PPS, we have an advantage due to the long-term nature of our members’ Profit-Share assets – they often remain on our books for a generation or more. This enables us to take a long-term investment approach, giving us a unique competitive advantage. More specifically, it allows us to focus on investing in growth assets, enabling us to ride out shortterm market volatility and corrections. A significant part of our members’ Profit-Share portfolio is invested in overseas assets, where the local currency’s weakness boosted returns in 2023. Years such as 2023 assist longer-term average returns. We do not want to miss out on these years. But, like a good personal financial adviser, I must again caution against exuberant future expectations. Financial reporting cut-offs are somewhat artificial snapshots in a continuous cycle and the 2023 year-end was again a good cut-off in terms of financial reporting. That said, the value returned to our members in 2023 remains exceptional. This was delivered through our integrated advisory services, our comprehensive products and services range, the timeous payment of claims, meaningful support in times of need, an expanding range of added values and, for qualifying members, of course, allocations to their PPS Profit-Share Accounts™. From a membership perspective, members with PPS life products in South Africa and Namibia increased from 131 073 at the end of 2022 to 132 934 at the end of 2023. Members with a product across the Group (including Namibia) increased from 157 440 at the end of 2022 to 161 054 at the end of 2023. Many of our professional members nevertheless continued to find their businesses under stress due to constrained economic conditions. As a result, we saw a slight uptick in lapses, from 4.07% in 2022 to 4.70% in 2023. These rates are still very low by any standard and our low attrition contributes much to the business’s profitability. In keeping with our commitment to assisting members throughout their lives and through all of life’s challenges, our advisers – both internal and external – are always on hand to aid our members with advice and solutions that would enable them to manage the difficulties they are facing. From a business development perspective, it is fair to say that 2023 was as difficult as the previous three periods, with our advisers having to work hard to recruit new members and provide cross-solutioning to existing members. After very good new business numbers in 2022 – bucking industry trends at the time – new life business slipped somewhat in 2023. It was influenced to some extent by a channel restructuring, which we believe is very necessary for future growth and cross-solutioning. This has been completed and we look forward to good new business growth in 2024. Strategy and opportunities We remain committed to the seven strategic themes outlined in previous reports, but we have added an eighth: Sustainability. Businesses today cannot afford to ignore sustainability as a theme in their strategy. Integrated reports across companies and industries devote more space every year to this important topic. As an organisation where mutuality stands central and as a business of which one of our three core values is always striving to do the right thing, PPS is able and willing to go much further. It is tough at times for businesses driven by shareholder returns to make the right decisions. At PPS we do not have that type of stakeholder. Our purpose is only focused on our members, assisting them to hedge against life’s catastrophes and adding value to their lives, assisting them to live the lives they want to live in a world worth living in. This purpose gels with the sustainability theme. Companies such as PPS where mutuality is a core focus, can play a unique role. This is particularly true when such a company focuses on serving the professional segment, because ultimately, it is professionals who – through their training and experience – will drive the solutions. The younger generations expect environmental responsibility from the brands that they support. Hence, sustainability will and should become essential to our strategy development. 23 Leadership commentary
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