2016’s Ones to Watch in Actuarial Services

As South Africa’s largest privately-owned insurance group, the Hollard Insurance Group includes the Hollard Insurance Company, Hollard Life Assurance Company and Hollard Investment Managers. We spoke to Annemarie Sinclair, Statutory Actuary at the Holland Insurance Company, to find out more about their firm and how they provide a ‘win-win-win’ situation for themselves, their clients and partners.

The Hollard Insurance Company began in 1980, and today the group provides short-term and life insurance as well
as investment products to a diverse customer base including individual consumers, commercial entities and corporate clients. We have an incredibly broad range of insurance products to cater for the needs of an amazingly diverse set of customers, and serve them through the most extensive range of distribution channels imaginable.

We write most classes of insurance business – from simple personal lines policies, through complex corporate policies, incorporating specialist risks such as marine, engineering and liability cover. Individual consumers in almost all income categories, as well as small, medium and large commercial and corporate clients all trust us with their stuff. In addition, we serve them through agents, brokers, retailers, direct channels and even through their favourite sports teams.

As the Hollard Insurance Company is family-owned and unlisted, we are able to adopt a long-term view, and to pursue sustainable business instead of chasing quarterly returns. This long-term view has led us into exciting businesses, that in turn have earned us an enviable reputation for innovation throughout the firm’s history. Our innovations span products, marketing methods, distribution channels, partnership structures and even the organisational model underlying the business.

Furthermore, partnership is at the heart of the Hollard Insurance Company’s business model because we partner throughout the insurance value chain. That is with brokers, distribution owners (such as banks and retailers), product underwriting specialists and reinsurers among others. These strong, long-term relationships are all constructed in a way that recognises the unique contribution and capabilities that each partner brings to the creation of a “win-win-win” relationship, whereby the consumer (our partners) and the Hollard Insurance Company all benefit in a meaningfully and sustainably way.

Perhaps most importantly, the Hollard Insurance Company do not believe in being measured by financial returns alone. In the foreword to the firm’s Integrated Annual Report, CEO Nic Kohler said, “At the very heart of our values system is a belief that we can do well by doing good and by being a catalyst for positive and enduring change. This is not purely altruistic, it also flows naturally from thinking deeply about the impact a company has on the society in which it operates and vice versa. The firm’s belief remains that for a company to succeed on a sustainable basis, it must support and nurture the community and environment from which it draws its resources.”

Achieving sustained success is at the heart of the Hollard Insurance Company, which is why we always have our eyes on any emerging trends or developments in the industry we work in. Globally, the uncertainty in the economic environment has had a far-reaching impact on the way companies operate. The impact can be seen in interventions such as new or improved strategies around sales and distribution (as it has become increasingly difficult to attract and retain new and existing policyholders), to the more focused management of expenses.

From an actuarial perspective, the change in insurance companies’ investment strategies is of particular interest. Considerable effort is required to ensure that the duration and volatility of assets and liabilities are matched. In addition, South Africa has also experienced huge currency fluctuations over the last few years, and my impression is that companies have had to actively manage the increased risk that results from the volatile Rand.

As such, companies have been forced to focus on identifying risks not only as a result of the economic pressures they now face, but because of changes in legislative requirements. South Africa is in the process of introducing a solvency regime called Solvency Assessment and Management (SAM) that follows the same principles as the European Solvency II. According to SAM, required capital is based on the risks inherent in the insurance business, as well as the assets on the balance sheet. This has forced the industry to be a lot more focused on risk selection, always trying to ensure that an appropriate return on capital is achieved.

With this in mind, the ability to manage risk requires companies to think holistically about their approach to managing their business. This in turn has enabled companies to make better business decisions, and to be more confident in the actions taken as a result of these decisions. For example, companies have a better appreciation for capital planning and expenditure, and how this can be optimised in order to meet shareholder demands. Other areas of focus have been reinsurance optimisation, and operational risk and expense management.

Apart from the more traditional roles that actuaries play in the insurance industry, they are also increasingly employed in the banking sector and positions in enterprise risk management. In Hollard specifically, actuaries play a pivotal role in management, with various executive committee and senior management positions in risk, finance and investment being filled by actuaries.

In fact, the majority of positions in the investment team are filled by actuaries, which was not always the case previously. Additionally, the actuarial teams within the life and non-life companies are responsible for, inter alia, pricing of insurance and investment products, capital management, valuation of insurance liabilities and reinsurance optimisation Looking towards the future, the Hollard Insurance Company are confident that the firm’s approach towards sustained success will continue to serve us well in the future. Of course, there will be many headwinds ahead, but we are confident that our tried and tested approach will allow us to continuously build on the firm’s success.

Name: Annemarie Sinclair

Company: The Hollard
Insurance Company