THE Professional Provident Society (PPS) has announced its highest-ever profit-share allocation of R5.33 billion to members for the 2024 financial year, reinforcing its commitment to mutuality in an increasingly competitive financial services landscape.

The figure marks a significant increase from the R4.35bn allocated in 2023 and comprises an operating profit allocation of R1.74bn and an investment return allocation of R3.59bn. PPS, which caters exclusively to graduate professionals in South Africa, Namibia, and Australia, operates on a mutual model, meaning profits are returned to members rather than external shareholders.

PPS group chief executive Izak Smit hailed the results as a testament to the company’s resilience and member-focused approach.

“Last year’s performance demonstrates our commitment to mutuality and shared success,” Smit said. “We support our members in building a strong financial foundation for today and retirement while also fostering individual financial resilience and contributing to broader economic growth.”

Despite economic headwinds, PPS reported robust growth across its divisions. Life insurance gross earned premiums rose 7.3% to R6.44bn, while new life-risk annual premium income grew 5% to R257.5 million.

The company’s investment arm saw total assets under management surge 14.9% to R96.52bn, supported by gross inflows of R9.67 billion — a reflection of strong investor confidence even amid global market volatility.

Meanwhile, PPS’s short-term insurance business exceeded expectations, with gross written premiums climbing 23% to R421.5m, and its personal and commercial lines segment recording its first profit of R6.8m.

While PPS returned R5.95bn in total benefits to members in South Africa and Namibia — a slight dip from R6.12bn in 2023 — the breakdown reveals shifting trends. Permanent incapacity benefits rose 14.7% to R973.6m, likely reflecting workplace stress and health challenges, while life cover benefits paid fell 16.5% to R1.15bn, possibly due to improved mortality trends post-pandemic.

The company also disbursed R972.7m in sickness claims, R536.2m in critical illness benefits, and R161.3m in lump-sum disability payouts, highlighting the growing health burdens on professionals.

Despite financial pressures on South Africa’s graduate professionals amid stagnant economic growth and rising living costs, PPS maintained a low lapse rate of just 4.42%, demonstrating member loyalty and the perceived value of its offerings.

PPS is eyeing new markets, with plans to enter New Zealand later this year, pending regulatory approval. Its Australian affiliate, PPS Mutual, continues to thrive, boasting 13 000 members and A$90m in annual in-force premiums, while retaining its title as Best Retail Life Insurer in Australia for the second consecutive year.

Locally, PPS launched glu Mutual (glu) in January, targeting younger professionals aged 25 to 55 with diploma or degree qualifications. “Our goal is to extend mutuality to previously untapped segments,” Smit said, signalling the company’s ambition to broaden its reach beyond traditional graduate professionals.

While PPS’s results are impressive, some analysts highlight potential risks. The company’s heavy reliance on South Africa’s economy leaves it vulnerable to prolonged stagnation, which could pressure premium growth and claims.

Additionally, its expansion into New Zealand faces regulatory hurdles that could delay market entry. In the short-term insurance space, PPS remains a niche player competing against industry giants such as Santam and Old Mutual Insure, raising questions about its ability to sustain rapid growth in this segment.

PPS’s record profit-share allocation underscores the strength of its mutual model. As Smit said: “Our unique approach ensures that success is shared — allowing members to safeguard their financial well-being while benefiting from long-term value creation.”

With strategic expansions and a relentless focus on member benefits, PPS appears well-positioned for sustained growth — even in uncertain times.

mutual model

PPS allocates record R5. 33bn in profit-share to members