Growing organically will keep us focused, says PSG Konsult
PSG insurance unit reports a 4% increase in recurring net profit when most life insurers posted declines for the 2018
PSG’s wealth and asset management unit PSG Konsult said it is going to stick to its strategy of growing existing businesses following its strong performance during the year to February.
The group, whose operations comprise of wealth management unit, PSG Wealth, PSG Asset Management and short-term insurer PSG Konsult, reported a 4% increase in recurring net profits when most life insurers posted declines for the 2018 financial year as a result of the JSE losses. The JSE closed 11.37% down in 2018.
“We often get asked if we plan to be acquisitive and it’s very difficult to predict if we will be in future but we don’t envisage that right now. We try and focus and we try to be consistent. We still managed to grow when most life insurers’ earnings were down and I think we can attribute that to us being highly focused,” said PSG Konsult CEO Francois Gouws.
The 4% growth in earnings is low by PSG Konsult’s standard as the company has in the long-term been growing its profits by high single digits and double digits. In 2018 it recorded a 16% increase in earnings for the year to February.
Gouws said achieving double-digit growth in profits when the market is down and the company’s costs are rising would have been impossible. PSG Konsult’s cost increased as the company invested in a new technology platform, it acquired Absa Insurance and Financial Advisers businesses and set up a new business operation in Botswana, which is expected to break even in the new financial year.
Gouws said if it was not for the company’s highly focused strategy, the combination of high costs and equity market losses would have caused its profit to fall.
What helped the company record earnings growth was a string of asset flows to its wealth and asset management businesses. The wealth business experienced R10bn of new inflows and the asset management unit increased clients’ assets under management by 11% to R47bn. The asset management business suffered a 64% decline in performance fees as a result of market losses but net asset inflows helped it record a 7% increase in profit. PSG Konsult’s total assets under management increased 8% to R222bn.
“Our client franchise has grown substantially but unfortunately market performance did affect our headline earnings,” said Gouws.
PSG Insure, with the help of newly-acquired financial advisers, grew recurring profit by 19% following a 36% increase in gross written premiums. PSG Insure’s acquisition of Absa advisers helped it increase sales agents in that business by 58% to 386 and add 43 new offices across the country.