PPS Mutual has announced its profit-share pool has surpassed A$10.7 million for the 2023-24 financial year.
The company says this marks the eighth consecutive year of its profit-share arrangement, where each member is entitled to share in the profits of the business. For this financial year, PPS Mutual has allocated more than $3.07 million to its members.
It says that since its inception in 2016 it has shared profits with members each year.
“The profit-share pool has more than quadrupled in four years – from A$2.4 million in 2019-20 to A$10.7 million in 2023-24. This growth highlights the strong performance of PPS Mutual’s business and the effectiveness of the mutual model.”
The company notes it’s the only retail life insurance company in Australia with a profit-share arrangement.
“Insurance premiums are pooled to cover claims, operational costs, and future capital reserves; any surplus is deemed profit, and all members are entitled to a share. Assignment rates vary each year, and members enjoy profit-sharing privileges even in the event of a claim. The 2023-24FY allocation reflects an assignment rate of 3.5% of premiums, based on a pre-tax profit margin of 5%.”
PPS Mutual Chief Executive Michael Pillemer says the company is proud to surpass A$10 million in its profit-share pool “…a testament to the value we bring to the …professionals we serve in Australia. Our members continue to see growth in their profit-share accounts—one has even accrued over $40,000…”
… profit-sharing also supports the firm’s network of accredited advisers…
He says that profit-sharing also supports the firm’s network of accredited advisers “…who play a key role in delivering this value. This approach generates sustainable, higher-value business for advisers—one advisory firm has over $1 million in total profit-share assignments for their clients, while one adviser alone has over $700,000 in client profit-share balances.”
Pillemer attributes PPS Mutual’s strong client retention and satisfaction to its profit-sharing model and mutual structure, which has also driven substantial growth across the business.
He notes the insurer also has a lapse rate at 4.9%, compared to an industry average of 15.3%. It’s also seen its market share increase from 4% to 5% during the year to June 2024 and a 34.5% compound annual growth rate in in-force premium income since 2021.
The company’s life insurance policies are available only through independent financial advisers. Members must retain their policies for 10 years to gain partial access to their profit-share funds and can withdraw up to 5% of the balance of their profit-share account balance annually. Full access is granted after 20 years or when members reach 65, and on death, terminal illness and certain other events.
