PPS Short-Term Insurance The PPS Short-Term Insurance team continued to focus on innovation and futureproofing the business. In 2021, the personal and commercial lines business had to deal with a high number of claims due to civil unrest, and in 2022, it had to deal with an unexpectedly high number of claims due to the catastrophic flooding in KwaZuluNatal. While PPS was not as severely affected as some other insurers, many of our members still experienced significant loss or damage because of the floods. Since our primary goal is to support our members in times of need, the short-term insurance team processed flood damage claims quickly and efficiently. The loss ratio for the business’s personal and commercial lines side came in at 66% for the year, up from 55% in 2021, and just above a target ratio of 65%. New business was 21% below plan, still impacted by the COVID-19 lockdowns in the first half of the year but picked up significant momentum in the second half with many months in line with the business plan. We expect this momentum to continue in 2023 and the business should grow to scale over the next two years to start delivering underwriting profit. Gross written premiums for these business lines were just above R200 million over the year. Lapse rates were on a pleasing downward trajectory, reducing to 14% per annum at the end of the year. Total business expenses of R73 million were well managed. The deficit before tax of R20 million was smaller than the business plan, a pleasing performance. Regarding PPS Health Professions Indemnity, it is pleasing to note that this business line generated a net profit before tax of R4.2 million in its fourth year of operations against a budgeted loss. This business has now grown to scale and our members can look forward to good profit growth in future years. The demise of other providers in the industry presented good opportunities in 2022 to grow the business. Gross written premiums increased by 78% from R50.4 million in 2021 to R89.6 million for the period under review. At year-end, 9 933 active policies provided indemnity protection to 6 640 insured medical professionals. From a claims perspective, the business continues to have a very favourable loss experience. This is evidence of a well-diversified, low-risk insurance portfolio. PPS Healthcare Administrators PPS Healthcare Administrators again delivered a good performance in 2022. Revenue of R344 million was 9% up on 2021. Expenses were 11% up on 2021 and within budget. Profit before interest, tax and lease modification was flat on 2021. A disappointment is that membership of the Profmed scheme decreased slightly over the year. Affordability remains an industrywide challenge for members of medical schemes. We undertook several initiatives to help alleviate financial pressures on members. These included the introduction of the PPS Wallet and the PPS Gap solution for Profmed members. An essential part of the strategy of PPSHA is the provision of additional services to existing clients (such as disease and dental management), which supported the growth in revenue. Improvement in operational efficiencies continues to be a major focus. It should again be noted that PPS members with qualifying life products who are also Profmed members essentially get administration services at cost, since most of the profit generated from these administration services is returned to them in the form of ProfitShare. At the same time, they enjoy industry-leading administration services from a highly professional team. An especially notable achievement for the business was that it was awarded Level 2 B-BBEE accreditation ahead of its planned schedule. CEO’S MESSAGE TO MEMBERS 26 Leadership commentary
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