Despite sluggish economic growth, Assupol Holdings’ net profit after tax grew by a considerable 113% from R268.3 million to R570.5 million on the back of strong investment markets, increased sales volumes, strong expense management and a once-off release due to the reinsurance modelling review.

Sustainable earnings, excluding the once-off reinsurance review, saw an increase of 18% from R284 million to R335 million, allowing the insurer to declare its maiden dividend of R0.30/share and a special dividend of R0.48/share in September.

Assupol Life Ltd, a wholly-owned subsidiary of Assupol Holdings, is a leading provider of funeral, life, savings and retirement products that has serviced the lower-to-middle income market segment for over 100 years. It focuses on the LSM 3-7 group to offer a tight yet effective range of products.

According to Assupol Group CEO Rudi Schmidt, the key drivers behind the insurer’s strong performance are affordability, customer satisfaction, consistency and relevance.

‘Our brand is trusted to deliver on our promises. We go out of our way to ensure that we offer the best customer experience. While we undertake to pay out a claim within 48 hours, 86% of our claims are in fact settled in half that time,’ he says.

‘We also evaluate products continually to ensure that they remain relevant and in keeping with changing market conditions and consumer needs.’

The most recent offering, On-Call Plus, is a rider benefit that can either be linked to an existing funeral or life policy. It attracted over 50 000 buyers within the first five months of its launch and pays R2 500 at a cost of only R10 per month per life insured. The payout happens straight to the mobile phone of the beneficiary in less than an hour in order to take care of immediate out-of-pocket expenses that typically occur at times of death. This innovation is designed to prevent a debilitating cash-flow crisis when, for instance, no airtime is available to contact the family of the deceased.

Schmidt says On-Call Plus further illustrates Assupol’s commitment to affordability. ‘The constrained economic conditions that consumers presently face have a major impact on their ability to spend on any non-essential goods and services.

‘However, the need to provide a loved one with a dignified funeral is important to our customers and we therefore strive to go the extra mile to keep prices at realistic levels.’

He expects strong growth in funeral cover and education to continue in the year ahead. However, Schmidt also points out that for insurers, Assupol included, to be able to grow and create employment, legislative and regulatory certainty remains a key requirement.

Referring to the government’s recent proposal that commission fees on insurance and savings products be scrapped in a bid to reduce product cost and afford greater consumer protection, he cautions that it may have unintended consequences that would adversely impact on the delivery of retirement and savings products to the lower income sector, further deteriorating SA’s saving levels.

‘In our target market it is not feasible to expect consumers to pay for financial advice. Such expenses belong in the realm of top earners who deal with complex products,’ he says. ‘The broadening of financial literacy education is the appropriate way to go to achieve maximum consumer protection and financial products.’

Schmidt reckons any significant growth in the savings levels of the low- to middle-income group will remain slow during 2015 and only take off once GDP improves and the employment rate in the country picks up.

This, however, did not detract from continued wealth creation for shareholders through Assupol’s over-the-counter (OTC) share platform in which its shares almost doubled in value in a year; values jumped from R2.68/share in November 2013 to R4.65/share 12 months later.

Even at current prices, Schmidt believes that, for those who have an appetite for shares as well as patience, Assupol still offers considerable value. Assupol shares can be bought via the OTC share platform at assupol.co.za

‘We have obtained exemption from the Financial Services Board [FSB] to have to comply with the new regulations around OTC transactions until 31 May 2015. Furthermore, we are in the process of submitting a proposal to the FSB regarding the proposed process to fall within the Financial Markets Act,’ says Schmidt.

‘Finally, our continued commitment to making a difference in the lives of communities and conduct our business responsibly is to be found in “Assupol Cares”, an employee initiative that enables our employees – in their own time and money – to run charitable projects of their choice among our communities.

‘The Assupol Community Trust, which was created through our demutualisation, has been registered as a public benefit organisation, the shares have been transferred and the dividend received. The trust focuses on early childhood development (ECD) and will operate in the communities that we do business.’

308 Brooks Street,
Menlo Park, 0081,
Pretoria, SA
Tel: +27 (0)12 366 3700
Fax: +27 (0)12 362 3500
[email protected]
www.assupol.co.za