Latest news with #PPSMutual
Business Wire
25-07-2025
- Business
- Business Wire
AM Best Assigns Credit Ratings to PPS Mutual Limited
SINGAPORE--(BUSINESS WIRE)-- AM Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of 'bbb-' (Good) to PPS Mutual Limited (PPS Mutual) (New Zealand). The outlook assigned to these Credit Ratings (ratings) is stable. The ratings reflect PPS Mutual's balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). In addition, the ratings factor in a neutral holding company impact from PPS Mutual's ownership by PPS Holdings Limited (PPS Holdings). AM Best expects PPS Mutual's risk-adjusted capitalisation, as measured by Best's Capital Adequacy Ratio (BCAR), to be at the strongest level over the medium term. Despite the planned business expansion driving increased capital consumption during the company's start-up phase, AM Best expects PPS Mutual to have appropriate capital management, supported by capital injections from PPS Holdings, as needed. PPS Mutual has a conservative investment strategy, with its investment portfolio consisting of cash and term deposits. In addition, AM Best views PPS Mutual to have a high reliance on third-party reinsurance for risk transfer and upfront commission financing. This risk is partially mitigated by the high credit quality of the reinsurance counterparty. Other offsetting balance sheet strength factors include PPS Mutual's small absolute capital base over the medium term, which exposes its capital adequacy to potential volatility in the event of stress scenarios. PPS Mutual's balance sheet strength assessment also factors in a neutral holding company assessment, following a review of PPS Holdings. Whilst PPS Holdings' financial leverage is expected to be elevated, servicing of the long-dated loan at PPS Holdings is not expected to impact capital adequacy at PPS Mutual, given the ability to defer interest payments. AM Best assesses PPS Mutual's operating performance as adequate. During its start-up phase, AM Best expects the company to record operating losses in the first few years of operation, primarily driven by elevated expenses associated with information technology and system infrastructure. However, the company is expected to benefit from reinsurance commission income, which should help to offset outward acquisition costs during the initial growth phase. AM Best expects PPS Mutual to achieve a break-even position within the first five years of operation, as it grows in scale and executes its business plan. AM Best views PPS Mutual's business profile as limited, reflecting its small operational scale and start-up nature. The company is a member-owned insurer domiciled in New Zealand, distributing life insurance policies to a target segment of the professional market, through independent financial advisers. PPS Mutual is expected to adopt a fast-growing business strategy over the medium term, exposing the company to elevated execution risk. However, this risk is partially mitigated by the support from Professional Provident Society Insurance Company Limited, an affiliated South African insurer. PPS Mutual's ERM is assessed as appropriate given the size and complexity of the company's operations. AM Best considers continual risk management developments necessary in order to support its increasing operational scale and evolving risk profile. Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication. This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best's Credit Ratings, Best's Performance Assessments, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings & Assessments.
IOL News
22-04-2025
- Business
- IOL News
PPS allocates record R5.33bn in profit-share to members
THE Professional Provident Society (PPS) has announced its highest-ever profit-share allocation of R5.33 billion to members for the 2024 financial year. 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.
