LIBERTY MEDICAL SCHEME ANNUAL REPORT 2014
LIBERTY MEDICAL SCHEMEANNUAL REPORT 2014
1Liberty Medical Scheme Annual Report 2014
Chairman’s Report 2
Notice of the 17th Annual General Meeting 5
Group and Scheme Summarised Financial Statements 6A full set of the Audited Financial Statements and Board of Trustees report are available at the offices of the Scheme for review. The reports and statements set out below comprise the Group and Scheme summarised financial statements.
Report of the Board of Trustees 6
Report of the Independent Auditor on the Summarised Financial Statements 20
Statements of Financial Position 21
Statements of Comprehensive Income 22
Statements of Changes in Funds and Reserves 23
Statement of Cash Flows 24
Notes to the Summarised Financial Statements 25
Proxy Form for the 17th Annual General Meeting 42
Minutes of the 16th Annual General Meeting 43
Inside this Report
2 Liberty Medical Scheme Annual Report 2014
The following synopsis provides an overall view of the Scheme in 2014 as well as a forward looking view.
Highlights of Liberty Medical Scheme: 2014 financial year• The LMS total gross contribution income for the year increased to R2 084 533 000.• A successful 2014 trustee election created a Board of Trustees with a good balance of skills and experience.• A further reduction in non-healthcare expenditure: 2013 – 15.5%, 2014 - 14.5%, 2015 - 14%.• A clean financial audit for the 16th year running.
Solvency and ReservesUnder difficult trading conditions, the solvency ratio ended lower than anticipated at year end. The Scheme’s solvency was 17.2% on 31 December 2014. This was predominantly due to a proliferation of high cost cases, the ageing population of the Scheme and the higher than budgeted claims profile. Hospital claims increased by 19% year-on-year. This cost escalation was significant when viewed against the historical claims of the Scheme and resulted in the loss recorded in the financial statements. This trend can also be directly attributed to the membership losses since 2010.
5 Year Business PlanThe Scheme budget determination is a delicate balance to ensure the future sustainability of the Scheme, as well as attempting to provide affordable healthcare to its members.
Numerous measures have been introduced to increase the Scheme’s solvency to the regulated 25%. These include contribution increases for 2015 averaging 11.4% across the various options. This is in line with the industry average for 2015, with more emphasis being placed on the loss making options.
The Board of Trustees has assessed the Scheme’s ability to continue as a going concern. Various key financial data and the Scheme’s operational and strategic plans have been considered by the respective levels of management. Indicators chosen for assessment were based on generally accepted practices and medical scheme industry requirements by the Council for Medical Schemes (CMS). Notwithstanding the Scheme’s solvency ratio of 17.2% as at 31 December 2014, the Scheme believes that it is in a position to meet the short-term obligations through conservatively managing all costs and growing the Scheme in line with its growth projections.
The Scheme is confident that with the following initiatives it will achieve, in the medium-term, the solvency level of 25%:
• Ongoing alignment and further collaboration with Liberty Group;• A joint and multi-faceted growth strategy driven predominantly through Liberty’s Retail distribution force;• A Liberty Individual and Corporate Customer Value Proposition that includes healthcare products and other product offerings;• Decreasing non-healthcare expenditure (NHE);• Addressing benefit design and pricing, with minimum member impact; and• A 5-year conservative business plan formulating the desired output, measurement and action plans.
This would not only see the Scheme maintain its position, but these interventions will considerably improve the Scheme’s position moving forward.
The Scheme’s liquidity risk and the availability of liquid funds to meet short-term cash requirements are closely and regularly monitored by management. Key financial indicators were also assessed as at 31 December 2014.
The above-mentioned risks are closely monitored by the Scheme through the Board of Trustees, the Finance and Investment Committee, the Risk Committee and the Scheme actuaries. This is achieved through regular monitoring of the monthly actuarial, financial and operational reports and by regular monitoring meetings with the Council for Medical Schemes.
Non Healthcare Expenses (NHE)NHE refers to the costs incurred to run the Scheme within a defined and regulated framework, which do not constitute benefits paid for member claims. This is in essence for the effective running of the Scheme with the predominant costs being Administration fees, Managed Care fees and Marketing and distribution costs. With the loss in membership from 2010: 82 000 principal members to 2014: 56 685 principal members, the NHE increased due to the fixed cost element becoming a higher component of the total NHE. The reduction of NHE from 15.5 % in 2013, to 14.5% in 2014, and a further reduction in the current year, is a clear demonstration of the Scheme’s serious endeavours to cut costs.
Trustee Fees – The Remuneration Committee compares the Trustee Fees to industry benchmarks on an annual basis. The Liberty Medical Scheme Trustee fees are well within acceptable levels when compared to industry benchmarks. In line with good governance principles as set out in the King III report and Circular 41 of 2014 from the Council for Medical Schemes, a new Trustee Remuneration Policy (TRP) with legal guidance from Werksman’s Attorneys and the Remuneration Committee was finalised in 2014. Amongst other key principles, it ensures the Chairman of the Remuneration Committee presents the Trustee remuneration and policy to the Scheme members at the AGM. The current Board of Trustees has agreed to hold their remuneration at the same level until the 2016 AGM.
Chairman’s Report
3Liberty Medical Scheme Annual Report 2014
Executive remuneration – An independent survey was conducted by 21st Century Pay solutions, which specialise in executive remuneration levels. An extensive benchmarking exercise was conducted to evaluate the remuneration levels of the Scheme Executive in comparison to the healthcare industry. Liberty Medical Scheme is a significant sized business with revenue of R2 billion per annum which operating in a highly complex and challenging industry. Principal Officer packages for 29 medical schemes, categorised according to size, were compared. Comparing the overall package of the Liberty Medical Scheme, Executive Principal Officer (EPO) to the rest of the industry places him in the 86th percentile in terms of the maximum allowable package and in the 50th percentile when compared to similar large commercial entities. Due to timing differences in the measurement and payment against achieved targets, the 2014 financial statements do not fairly reflect the EPO remuneration for the year under review. The Board of Trustees and the Remuneration Committee measured the EPO’s performance against both the EPO’s Key Performance Areas (KPAs) and the Scheme’s performance for the 2014 financial year. Although the EPO performed well against specific criteria under difficult circumstances, the Board agreed that the variable portion of the EPO’s remuneration for the 2014 financial year be at a level of 60%, i.e. less than that of the 2013 financial year.
Other cost saving measures – In order to further reduce the NHE, the Scheme reviewed the value derived from various services and took certain decisions such as discontinuing membership of the Board of Healthcare Funders and the rating services provided by GCR (Global Credit Ratings). Various third party providers have also re-evaluated the fees being charged for services and granted the Scheme certain concessions to assist in reaching the target of a 25% solvency ratio. Legal fees are managed very closely.
MembershipIn line with industry trends, a large portion of membership losses have been due to Government employees migrating to GEMS (Government Employees Medical Scheme). Membership numbers have stabilised considerably. In 2014, the Scheme had 56 685 principal members and 59 803 beneficiaries, resulting in a total membership of 116 488. The Scheme continues with its focused retention initiative to help educate members about the Scheme’s products, to assist in managing financial concerns and to prevent lapses in membership. With renewed focus on both retail and corporate growth, membership growth is expected to continue on an upward trajectory.
Legal MattersThe legal matters were mainly due to ensuing regulatory compliance matters and addressing historical issues. The intention of these actions was to protect the interest of members and to recoup previously incurred losses.
Property loans granted during Medicover curatorship
Subsequent to the Medicover merger with Liberty Health Medical Scheme during 2010, the Scheme was advised that these loans were not fully recoverable. In order to ascertain whether the funds which were lost to the Scheme were fully recoverable, the Scheme utilised the forensic services of KPMG. The Scheme instituted legal proceedings against the previous Medicover curator, Mr D Gihwala, and the firm in which he was a Partner, Cliffe Dekker Hofmeyr, in order to recoup these funds. During 2015, the judgement of the arbitration was awarded in favour of the Scheme in respect of two of the property loans and another two property loans are currently subject to litigation, pending a decision by the Cape High Court.
Recovery of severance agreement with Advocate Mkhize
Based on Senior Counsel and other legal opinions, and weighing up the potential reputational and financial damage to the Scheme of a protracted legal battle, at the time, the then Board entered into a severance agreement with Advocate Mkhize in 2011. After protracted legal challenges and a court ruling in this regard, the current Board of Trustees decided that any funds owing to the Scheme would be recovered in full. Advocate Mkhize appealed the Court ruling and subsequently lost the case. The Scheme has thus requested the Scheme’s legal representatives to pursue the matter to recover the full outstanding amount with interest.
OpportunitiesOwn Your Life Rewards (OYL), Liberty Group’s new rewards programme, has been made available to Scheme members on a voluntary basis. The aim of this arrangement is to attract new members to the Scheme as a whole, thereby improving the retention of members resulting in sustainability of the Scheme. The Scheme has made a decision to move the management of the Scheme’s HIV Management Programme to Liberty Health. In the past, this was an outsourced agreement, which the Scheme is confident can now be managed more effectively by system integration and proactive engagement.
The Scheme further created a Specialist Network to help manage its claims and specifically to protect the Scheme against abuse by service providers with respect to Prescribed Minimum Benefits (PMBs). The relevant information and benefits to members will be communicated to the members. The Scheme believes that the introduction of National Health Insurance (NHI) will be of great value to the country and the Scheme is confident that it can make a valuable contribution in this regard. The Scheme continues to monitor all developments on the NHI.
Chairman’s Report, continued
4 Liberty Medical Scheme Annual Report 2014
Chairman’s Report, continued
The Scheme continues to look for growth opportunities in a rapidly consolidating industry. Merger negotiations with a number of schemes are underway and will continue for the remainder of 2015 and 2016. Growth through acquisition will provide the Scheme with a way to grow membership, leverage economies of scale and benefit from the competitive advantages that a larger membership base brings. The costs inherent in merger transactions are very carefully considered and only expended if there will be a direct benefit to the members.
To align with best practice and good governance, the Trustees decided to review the service offering of the Scheme’s investment consultants and after conducting a stringent tender process, MenteNova (Pty) Ltd was appointed on 1 February 2015.
GovernanceThe Scheme held a successful election in 2014 by outsourcing the function to PricewaterhouseCoopers (PWC), who acted as the Independent Electoral Body. This ensured the process was independent and objective in terms of good governance principles. To further lend integrity to the process, the Regulator had a representative closely monitor the process and outcome, with BDO Risk and Advisory Services contracted to audit the overall process. The process was a success. The Scheme is proud to welcome the following new trustees who bring a wealth of skills: Dr Peter Hill (member elected), Mr Leon Smith (member elected), myself (member elected), Mr Jonny Bagg (Board appointed), and Dr Ephraim Nematswerani (Board appointed) all of who joined the Board in 2014. Ms Christine Kinsman resigned as Chairperson on 30 June 2014 and continued to serve as a Trustee until her term of office ended in August 2014. Mr Mike Garland did not stand for election. The Scheme would like to thank these long-serving Trustees for their selfless service to the Scheme and its members over the many years.
The Scheme was awarded a clean annual financial audit for the 16th year running, demonstrating that governance structures and controls are effective.
The Way ForwardThe Scheme managed capital risk through benefit design, managed care interventions and pricing of contributions. A comprehensive Combined Assurance Model underpins the effective running of the Scheme. In addition, the Trustees and the Executive ensure that robust mitigation processes are in place to manage all risks.
The relationship between the Council for Medical Schemes and the Scheme continues to strengthen as the Scheme continues to grow its relations with all its contractual partners and members.
Specific mention needs to be made of the improved alignment between the Scheme, Liberty Health and Liberty Group. This relationship is imperative to capitalise on the brand agreement, unlock economies of scale and to eliminate the duplication of work and save costs. A new Marketing and Distribution Contract was entered into, providing the Scheme with access to the infrastructure and services of a new distribution channel within Liberty Group called Group Initiatives. This is predominantly created to increase health sales to employer groups and individuals, which will improve the sustainability and long-term viability in the member’s interests.
A co-operation agreement with Liberty Group and Liberty Health, contained in a 5-Year Business Plan submitted to the CMS, focuses on containing Administration Fees, Managed Care Fees, Marketing and Distribution costs and other Scheme Expenses in order to reduce the Scheme’s collective NHE even further. Liberty Group has generously made some large concessions with regard to fees and funding certain Scheme initiatives. These actions will contribute substantially towards the Scheme’s objective of achieving the statutory reserve level of 25% in the required time.
Service LevelsThe Scheme continues to exert pressure on all its third party providers to extract the best value and quality of service from these entities. This is borne out by the quality service levels currently provided by the Administrator to all stakeholders.
Thank YouThe Scheme extends its thanks to all its members, intermediaries, providers and its administrator, Liberty Health, for their continued support to the Board of Trustees and the Scheme Executive.
I would like to thank each member of the Board for their effort and commitment in the past year, each of whom discharged their duty with professionalism, dedication and energy.
To the Scheme Executive who work tirelessly to ensure the smooth running of the Scheme, we thank you for your efforts!
Otto PretoriusChairman, Liberty Medical Scheme
5Liberty Medical Scheme Annual Report 2014
Notice is hereby given of the 17th Annual General Meeting of Liberty Medical Scheme. Should you wish to attend, the details are as follows:
Date: 25 June 2015Time: 12h00Venue: Ground Floor Liberty Life Building Century Boulevard The Estuary Precinct Century City Cape Town
Identification
Members attending the Annual General Meeting are required to bring along a form of identification and their membership card. A South African ID book, passport or driver’s licence will suffice for identification purposes.
Agenda
1. Welcome and Quorum2. Chairman’s Report3. To receive and adopt the audited annual financial statements for the year ended 31 December 2014, together with the reports of the Trustees
and the Auditors4. To note the appointment of the Auditor5. Business of which due notice has been received6. Closure
You are advised that should you have business which is to be transacted at the AGM, you are required, in terms of Rule 26.1.5, to ensure that details of such matter reach the Executive Principal Officer at least seven days prior to the meeting (by end of business on 18 June 2015) for consideration.
All matters sought to be placed on the agenda, including any such competent motions as may be received, must be accompanied by a full supporting explanation with supporting documentation regarding the background of the motion and the purpose for which the motion is sought, so as to determine whether there is a basis for it to serve before the AGM.
You are further reminded that should you intend to be represented by proxy at the AGM, you are required to:
• Fill out the official proxy form that can be requested electronically per e-mail from [email protected]• Ensure that the completed proxy form reaches the Scheme at least seven days prior to the meeting (by end of business on 18 June 2015).
Notices of motions may be sent by post to:Mr Andrew Edwards, Private Bag X10, Florida Hills, 1716or by email: [email protected]
In order to ensure sufficient space, you are required to RSVP should you or your proxy wish to attend the AGM. Please RSVP to Heike Mackenzie at [email protected]
By order of the Board of TrusteesLiberty Medical Scheme
Notice of the 17th Annual General Meeting
In the interest of economy, FINANCIAL STATEMENTS are not included with this notice. A full and final set of the FINANCIAL STATEMENTS and the 2014 ANNUAL REPORT will be available for inspection at the Liberty Medical Scheme Office in Sandton City, Corner Rivonia & 5th Street, Office Towers, 8th Floor.
An electronic copy of the Scheme’s 2014 Annual Report will be available on the Scheme’s website: www.libmed.co.za
Should you wish to receive a copy of the 2014 Annual Report, please contact the Call Centre on 0860 000 LMS / 567 or download it from www.libmed.co.za
6 Liberty Medical Scheme Annual Report 2014
The Board of Trustees hereby presents its report for the year ended 31 December 2014.
1 Description of the Group
1.1 Terms of registration
The Liberty Medical Scheme (the “Scheme”) is an open medical scheme registered in terms of the Medical Schemes Act of South Africa, No. 131 of 1998, as amended (the Act), under registration number 1576. The Scheme is administered by Vmed Administrators (Pty) Ltd.
The Group comprises the Scheme and its wholly owned subsidiary, LMS Management and Auxillary Services (Pty) Ltd (the “Subsidiary”).
1.2 Subsidiary
During the 2012 year LMS Management and Auxillary Services (Pty) Limited was acquired as a wholly owned subsidiary of Liberty Medical Scheme. The Subsidiary commenced business on 1 July 2012, and rendered marketing and associated services exclusively to Liberty Medical Scheme. The Subsidiary ceased operations on 30 June 2014 and all remaining assets and liabilities were transferred to the Scheme.
1.3 Benefit options within the Liberty Medical Scheme
The Scheme offers nine benefit options to employers and members of the public. In 2014, the names of the benefit options changed in line with its marketing strategy. These are Complete Plus (previously Platinum Complete), Saver Plus (previously Platinum Saver), Hospital Plus (previously Platinum Focus), Saver Standard/Select (previously Gold Saver/Select), Hospital Standard/Select (previously Gold Focus/Select), Complete Standard/Select (previously Titan/Select), Traditional Standard (previously Bona Plus), Traditional Ultimate (previously Prestige) and Traditional Basic (previously Gateway).
1.4 Savings facility
In order to provide a facility for Scheme members to set funds aside to meet future healthcare costs not covered in the benefit options, the Scheme have made savings plan options available to meet this objective.
The Complete Plus, Saver Plus, Saver Standard/Select and Complete Standard/Select options allow members the facility to pay a fixed sum, up to a maximum of 18.5% of their gross contributions, into a savings account, so as to help pay the members’ portion of healthcare costs. Unexpended savings amounts are accumulated for the long-term benefit of members and interest is paid monthly based on the effective interest rate method. This earned amount, less any bank or investment charges is pro-rated amongst the members based on the month-end closing savings account balance. The liability to the members in respect of the member’s savings plan is reflected as a financial liability in the financial statements, repayable in terms of Regulation 10 of the Act. This is ring-fenced in a separate trust account, in line with the CMS Circular 38 of 2011 and Circular 5 of 2012.
In terms of the Scheme rules, the Scheme carries the risk related to the savings accounts, which effectively means that bad debt arising from savings advances is carried by the Scheme. Savings contributions are refundable after four months of a member leaving the Scheme or moving to a non-savings option. In the event that a member transfers schemes and enrolls in another medical scheme benefit option with a personal medical savings account such savings balance will be transferred to the new scheme.
Report of the Board of Trustees
Group and Scheme Summarised Financial Statements
7Liberty Medical Scheme Annual Report 2014
2 Management
2.1 Board of Trustees in office during the year under review
2014 2013
Member/Board – elected Trustee
Appointed, re-appointed/
(resigned)
Fees
(R’000)
Travel and accommodation
(R’000)
Fees
(R’000)
Travel and accommodation
(R’000)
Ms CM Kinsman (Chairperson) Member (August 2014) 490 8 776 30
Mr RM Garland Trustee (August 2014) 170 - 272 2
Mr T Murasiki Member (May 2013) - - 128 -
Mr DLC Pienaar (Chairperson) Member (May 2013) - - 309 18
Mr O Pretorius (Chairperson) Member August 2014 592 22 182 22
Mr J Bagg (Vice - Chairperson) Trustee August 2014 514 2 215 6
Ms C Zazela Member (May 2013) - - 181 71
Ms D Kotzen Member July 2012 513 - 411 4
Dr EH Nematswerani Trustee August 2014 378 14 120 28
Dr P Hill Member August 2014 85 17 - -
Mr L Smith Member August 2014 122 1 - -
Ms CM Kinsman resigned as Chairperson on 30 June 2014 and continued to serve as a Trustee until the term of office ended in August 2014.Mr O Pretorius (member-elected) and Mr J Bagg (Board of Trustee-appointed) were appointed as Chairperson and Vice-Chairperson respectively on 29 August 2014. Both joined the Board of Trustees in June 2013.
Ms Kotzen served as Chairperson for the period 1 July to 29 August 2014, during the transition phase. Mr Smith and Dr Hill were the other two member-elected Trustees and Dr Nematswerani was elected by the Board of Trustees.
At least half of the Trustees must be elected by members at an annual general meeting to serve terms of office of a maximum of three years each. The Trustees act in a non-executive capacity.
2.2 Finance and Investment Committee
The members of the Finance and Investment Committee are as follows: Chairperson: Mr RM Garland (resigned August 2014) Chairperson: Mr J Bagg (appointed August 2014)* Trustee: Mr L Smith (appointed August 2014) *Mr Bagg served as a Trustee on the Committee for the duration of the year up until being appointed as Chairperson in August 2014. The Finance and Investment Committee meets every quarter and is mandated to review and maintain oversight of the Scheme finances and finance management function.
Report of the Board of Trustees, continued
Group and Scheme Summarised Financial Statements
8 Liberty Medical Scheme Annual Report 2014
2 Management, continued
2.3 Sales, Marketing and Communication Committee
The members of the Sales, Marketing and Communication committee are as follows: Chairperson: Ms D Kotzen Trustee: Mr O PretoriusTrustee: Ms CM Kinsman (ended term of office August 2014) Trustee: Mr J Bagg (appointed August 2014)
The Sales, Marketing and Communications Committee meets every quarter and is mandated to define and implement the Scheme’s marketing and communication strategies and to make recommendations to the Board of Trustees regarding product offerings.
2.4 Product Committee
The members of the Product Committee were as follows: Chairperson: Ms D Kotzen Trustee: Ms C Kinsman Trustee: Mr O Pretorius Trustee: Mr J Bagg The Product Committee met on an ad hoc basis and was mandated to review the product offerings. This Committee was operational until the end of July 2014, after which this was incorporated within the Sales, Marketing and Communications Committee to reduce costs.
2.5 Clinical Risk Committee
The members of the Clinical Risk Committee are as follows: Chairperson: Ms CM Kinsman (ended term of office August 2014) Chairperson: Dr EH Nematswerani (appointed August 2014)* Trustee: Mr O Pretorius (appointed August 2014) Trustee: Dr P Hill (appointed August 2014) *Dr EH Nematswerani served as a Trustee on the Committee for the duration of the year up until being appointed as Chairperson in August 2014. The Clinical Risk Committee meets regularly, at least quarterly, and is mandated to monitor the Scheme’s clinical risk and to implement the appropriate risk management strategies and measures.
2.6 Procurement Committee
The members of the Procurement Committee were as follows: Chairperson: Mr O Pretorius Trustee: Mr J Bagg Trustee: Ms CM Kinsman The Procurement Committee met on an ad hoc basis and was mandated to review third party contracts. This Committee was operational for the period up until the end of May 2014, after which it discontinued to save costs. The procurement function is overseen by the Board of Trustees and managed by the Executive Management of the Scheme through the delegated authority as contained in the Board Charter, Terms of Reference and Risk and Compliance policy.
Report of the Board of Trustees, continued
Group and Scheme Summarised Financial Statements
9Liberty Medical Scheme Annual Report 2014
2 Management, continued
2.7 Remuneration Committee
The independent members of the Audit Committee also fulfil the function of the Remuneration Committee of the Scheme, which consists of the following members: Independent member: Mr M Brown (Chairperson) Independent member: Mr LB Williams Independent member: Mr G Franck Trustee: Ms CM Kinsman (ended term of office August 2014) Trustee: Ms D Kotzen (resigned August 2014) Trustee: Mr O Pretorius (appointed August 2014) Trustee: Mr J Bagg (appointed August 2014) The Remuneration committee meets twice a year and is mandated to review the remuneration of the officials and management of the Scheme annually.
2.8 Executive Principal Officer
Mr AC Edwards Liberty Medical Scheme 8th Floor, Office Towers Sandton City 2146
2.9 Registered office address and postal address
Liberty Medical Scheme 8th Floor, Office Towers Private Bag X35Sandton City Claremont2146 7735
2.10 Medical scheme administrator
Vmed Administrators (Pty) Ltd(Subsidiary of Liberty Holding Limited) PO Box 44741Liberty Building ClaremontEstuary Precinct 7735Century Boulevard Century City 7441
Accreditation Number: 45
Report of the Board of Trustees, continued
Group and Scheme Summarised Financial Statements
10 Liberty Medical Scheme Annual Report 2014
Report of the Board of Trustees, continued
2 Management, continued
2.11 Third party service providers
2.11.1 Managed Healthcare service providers:
CareCross Health (Pty) Ltd 10 Mill Street Newlands 7700 Prime Cure Health (Pty) Ltd 2 Sunninghill Crescent 1st Floor 3 Eglin Road Sunninghill 2191
2.11.2 Risk transfer service providers:
ER24 EMS (Pty) Ltd Manor 1 Cambridge Manor Cnr Witkoppen & Stonehaven Streets Paulshof Johannesburg
2.12 Investment consultants
Independent Actuarial Consultants (Pty) Ltd MenteNova (Pty) Ltd (up until 31 January 2015) (from 1 February 2015)6th Floor 4th Floor Wale Street Chambers Rosebank Corner 38 Wale Street 191 Jan Smuts Avenue Cape Town Rosebank
Financial Services Provider Number: 6832 Financial Services Provider Number: 43937
2.13 Actuaries
NMG Consultants and Actuaries (Pty) Ltd Liberty Health Actuarial services Belvedere Office Park Vmed Administrators (Pty) Ltd Block B Liberty Building Pasita Street Estuary Precinct Bellville Century Boulevard 7530 Century City 7441
Group and Scheme Summarised Financial Statements
11Liberty Medical Scheme Annual Report 2014
Report of the Board of Trustees, continued
2 Management, continued
2.14 Auditors
KPMG Inc. MSC House PO Box 46091 Mediterranean Street Cape TownForeshore 8001Cape Town 8001
3 Investment Strategy
The Scheme’s investment objective is to maximise the return on its investments on a medium and long-term basis at minimal risk. The investment strategy takes into consideration both constraints imposed by legislation and those imposed by the Board of Trustees. The Scheme’s Finance and Investment Committee mandate is to ensure that: • the Scheme remains liquid, • investments are placed at minimum risk and at the best possible rate of return, • investments made are in compliance with the Regulations of the Act, and • a risk assessment is performed with feedback to the Board of Trustees with recommendations on the risks identified. The Scheme invested in property, bonds, money market instruments, collective investment schemes, pooled life policy, loans, debentures, equity and preference shares during 2014. This investment policy is reviewed annually, taking into consideration compliance with the Act, the risk and returns of the various investment portfolios and the surplus of funds available. Investment performance is reviewed on a monthly basis by the investment consultants. Considering the volatility of the financial markets and the nature of the medical schemes industry, the Trustees implemented an investment strategy which aimed to yield the best risk adjusted returns whilst safeguarding member funds. The budgeted return on investments was projected at 6.5% and the Scheme achieved 6.9%. This was largely due to the dividend passing through the financials from LMS Management and Auxillary Services (Pty) Ltd, which bolstered this achieved amount. The total interest return was lower than desired due to the significant spike in claims and the consequential divestments that was necessary to pay claims.
The Scheme incurred the following investment losses, due to impairments, in the financial period:
Investment portfolio
STANLIB Asset Management
ABIL (African Bank Limited)
Subordinated debt R6.1m
Senior unsecured debt and money market collective instruments, due to side-pocket investments
R1.8m
Prescient Investment Management R4.2m
Total impairment of investment incurred in 2014 R12.1m
These losses occurred outside of the control of the Scheme.
As at the end of December 2014, the Scheme has exposure to ABIL investment instruments of R16.1m, relating to senior unsecured debt and money market collective investment schemes, side-pockets of R0.4m. Tactically it would not be in the Scheme’s interests to divest from this investment at this juncture.
To align with best practice and good governance, the Trustees decided to review the service offering of the Scheme’s investment consultants and after conducting a stringent tender process, MenteNova (Pty) Ltd was appointed on 1 February 2015.
Group and Scheme Summarised Financial Statements
12 Liberty Medical Scheme Annual Report 2014
4 Management of Insurance Risk
The primary insurance activity carried out by the Scheme assumes the risks relating to healthcare provider costs and their dependants who are directly subject to the risk. This risk relates to the health of the Scheme members. As such the Scheme is exposed to the uncertainty surrounding the timing and severity of claims under the contract. The Scheme entered into a risk transfer arrangement with Emergency Medical Care (Pty) Ltd (ER24) to provide services for the duration of the year. The services provided include emergency medical assistance and emergency medical response or transport. The Scheme entered into a risk transfer agreement with Prime Cure (Pty) Ltd (Prime Cure) to provide primary care, out-of-hospital specialist and HIV managed care to the beneficiaries registered on the Traditional Basic (previously Gateway) option of the Scheme. A profit and loss sharing arrangement exists. The Scheme manages its insurance risk through benefit limits and sub-limits, approval procedures for transactions that involve pricing guidelines, pre-authorisation and case management, centralised management of risk transfer arrangements, and the monitoring of emerging issues.
The Scheme uses several methods to assess and monitor insurance risk exposures both for individual types of risks insured and overall risks. These methods include internal risk measurement models, sensitivity analyses and scenario analyses. The theory of probability is applied to the pricing and provisioning for a portfolio of insurance contracts. The principal risk is that the frequency and severity of claims are greater than expected. Insurance events are, by nature, random, and the actual number and size of events during any one year may vary from those estimated with established statistical techniques. There are no changes to assumptions used to measure insurance assets and liabilities that have a material effect on the financial statements and there are no terms and conditions of insurance contracts that have a material effect on the amount, timing and uncertainty of the Scheme’s cash flows. The Scheme is exposed to the risk of default on member debt arising from insurance contracts. Once such debt is considered irrecoverable it is impaired and then written off.
Report of the Board of Trustees, continued
Group and Scheme Summarised Financial Statements
13Liberty Medical Scheme Annual Report 2014
5 Re
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649
16
3 1
710
Aver
age
num
ber o
f liv
es fo
r the
acc
ount
ing
perio
d 11
6 52
2 10
310
2
145
12 3
81
12 9
14
19 8
27
44
352
11 9
85
335
2
274
Aver
age
net c
ontr
ibut
ions
per
prin
cipal
mem
ber p
er m
onth
(R)
2 7
75
5 2
14
3 3
16
3 2
10
2 2
46
2 14
0 2
792
2
087
7
924
1
231
Aver
age
net c
ontr
ibut
ions
per
life
per m
onth
(R)
1 34
3 2
595
1
765
1 58
2 1
134
1 0
99
1 24
5 9
83
3 8
45
926
Aver
age
claim
s inc
urre
d pe
r prin
cipal
mem
ber p
er m
onth
(R)
2 5
56
4 9
22
3 6
14
3 10
9 1
859
1 80
6 2
594
1
994
8 13
3 1
046
Aver
age
claim
s inc
urre
d pe
r life
per
mon
th (R
) 1
237
2 4
49
1 92
3 1
532
939
9
28
1 15
7 9
40
3 9
46
787
Aver
age
rele
vant
hea
lthca
re e
xpen
ditu
re p
er lif
e pe
r mon
th (R
) 1
233
2 4
42
1 89
2 1
527
938
9
27
1 15
5 9
26
3 9
49
847
Aver
age
non-
healt
hcar
e ex
pend
iture
per
life
per m
onth
(R)
179
193
210
18
7 19
1 19
2 17
1 15
1 18
0 2
37
Rele
vant
hea
lthca
re e
xpen
ditu
re a
s a p
erce
ntag
e of
gro
ss
cont
ribut
ion
inco
me
(Cla
ims r
atio
) (%
) 8
2.7
80.
1 9
6.8
96.
6 7
0.3
84.
4 7
8.9
94.
3 10
3.4
91.6
Non
-hea
lthca
re e
xpen
ditu
re a
s a p
erce
ntag
e of
gro
ss
cont
ribut
ion
inco
me
(%)
14.5
7.
6 12
.9
14.1
17.3
2
0.9
14.5
17
.3
5.6
3
2.0
Aver
age
age
at y
ear-e
nd 5
0.2
6
0.5
54.
5 5
8.9
45.
3 5
0.2
40.
4 4
7.3
53.
5 3
1.9
Retu
rn o
n in
vest
men
ts as
a pe
rcen
tage
of a
vera
ge in
vest
men
ts (%
) 6
.9
6.9
6
.9
6.9
6
.9
6.9
6
.9
6.9
6
.7
6.8
Aver
age
adm
inist
ratio
n co
sts p
er p
rincip
al m
embe
r per
mon
th (R
) 3
14
326
3
41
323
3
25
324
3
20
270
3
07
279
Aver
age
adm
inist
ratio
n co
sts p
er lif
e pe
r mon
th (R
)15
2 16
2 18
1 15
9 16
4 16
6 14
3 12
7 14
9 2
10
Aver
age
man
aged
car
e: M
anag
emen
t ser
vice
s per
prin
cipal
m
embe
r per
mon
th (R
) 7
5 7
5 7
6 74
7
5 7
3 8
8 4
0 7
0 7
5
Aver
age
accu
mul
ated
fund
s per
prin
cipal
mem
ber a
t yea
r-end
(R)
6 3
42
586
12
9 6
96
772
1
230
2 2
79
650
2
2 2
50
Dep
enda
nt ra
tio a
t yea
r-end
1.1
1.0
0.9
1.
0 1.
0 0
.9
1.2
1.1
1.0
0.3
Net
clai
ms a
s a p
erce
ntag
e of
net
cont
ribut
ions
(%)
91.8
9
4.1
107.3
9
6.6
82.
7 8
4.3
92.
8 9
4.2
102.
6 8
5.0
Man
aged
car
e: M
anag
emen
t ser
vice
s as a
per
cent
age
of n
et
cont
ribut
ions
(%)
2.7
1.
4 2
.3
2.3
3
.3
3.4
3
.2
1.9
0.9
6
.1
Adm
inist
ratio
n ex
pens
es as
a pe
rcen
tage
of n
et co
ntrib
utio
ns (%
) 11
.3
6.2
10
.3
10.1
14.5
15
.1 11
.5
12.9
3
.9
22.
7
Pens
ione
r rat
io (%
) 13
.5
28.
0 2
1.7
25.
0 9
.5
14.2
9
.0
10.2
16
.9
3.1
Report of the Board of Trustees, continued
Group and Scheme Summarised Financial Statements
14 Liberty Medical Scheme Annual Report 2014
Report of the Board of Trustees, continued
5 Re
view
of t
he A
ccou
ntin
g Pe
riod’
s Act
iviti
es
5.1
Ope
ratio
nal s
tatis
tics
2013
Sche
me
Tota
lPl
atin
um
Com
plet
ePl
atin
um
Save
rPl
atin
um
Focu
sG
old
Save
r/
Sele
ct
Gol
d Fo
cus/
Se
lect
Tita
n/
Sele
ctBo
na P
lus
Pres
tige
Gat
eway
Num
ber o
f prin
cipal
mem
bers
at t
he e
nd o
f the
acc
ount
ing
perio
d 5
6 55
5 5
477
1
306
6 4
87
6 3
26
9 9
40
19 7
58
6 0
63
96
1 10
2
Num
ber o
f liv
es a
t the
end
of t
he a
ccou
ntin
g pe
riod
118
281
11 18
7 2
522
13
287
12
692
19
517
4
4 43
3 12
938
2
16
1 48
9
Aver
age
num
ber o
f prin
cipal
mem
bers
for t
he ac
coun
ting
perio
d 5
5 92
3 5
647
1
349
6 6
71
6 0
40
9 4
98
19 7
82
6 3
55
95
486
Aver
age
num
ber o
f liv
es fo
r the
acc
ount
ing
perio
d 11
8 16
3 11
630
2
616
13
755
12
249
18
847
4
4 63
6 13
613
2
17
601
Aver
age
net c
ontr
ibut
ions
per
prin
cipal
mem
ber p
er m
onth
(R)
2 5
92
4 7
96
3 0
03
2 9
35
2 0
51
1 97
2 2
529
1
904
7 0
48
943
Aver
age
net c
ontr
ibut
ions
per
life
per m
onth
(R)
1 22
7 2
328
1
548
1 42
4 1
011
994
1
121
889
3
083
7
63
Aver
age
claim
s inc
urre
d pe
r prin
cipal
mem
ber p
er m
onth
(R)
2 2
43
4 3
47
3 0
95
2 5
89
1 69
6 1
509
2 2
57
1 47
2 7
007
5
45
Aver
age
claim
s inc
urre
d pe
r life
per
mon
th (R
) 1
061
2
111
1 59
6 1
256
836
7
61
1 0
00
687
3
065
4
41
Aver
age
rele
vant
hea
lthca
re e
xpen
ditu
re p
er lif
e pe
r mon
th (R
) 1
057
2
099
1
593
1 25
2 8
32
755
9
95
686
3
064
5
42
Aver
age
non-
healt
hcar
e ex
pend
iture
per
life
per m
onth
(R)
173
192
198
188
189
192
159
147
177
244
Rele
vant
hea
lthca
re e
xpen
ditu
re a
s a p
erce
ntag
e of
gro
ss
cont
ribut
ion
inco
me
(Cla
ims r
atio
) (%
) 7
7.5
76.
8 9
2.9
88.
0 7
0.0
76.
0 7
5.5
77.3
10
0.8
71.2
Non
-hea
lthca
re e
xpen
ditu
re a
s a p
erce
ntag
e of
gro
ss
cont
ribut
ion
inco
me
(%)
15.5
8
.7
14.3
16
.1 19
.3
23.
2 15
.0
18.4
7.
6 3
9.2
Aver
age
age
at y
ear-e
nd 4
9.4
58.
5 5
1.8
56.
8 4
3.6
48.
5 4
8.6
46.
0 5
6.1
31.5
Retu
rn o
n in
vest
men
ts as
a pe
rcen
tage
of a
vera
ge in
vest
men
ts (%
) 7.
8 7.
7 7.
7 7.
7 7.
7 7.
1 7.
7 7.
1 7.
1 6
.5
Aver
age
adm
inist
ratio
n co
sts p
er p
rincip
al m
embe
r per
mon
th (R
) 3
15
337
3
33
333
3
33
334
3
03
270
3
42
273
Aver
age
adm
inist
ratio
n co
sts p
er lif
e pe
r mon
th (R
) 14
9 16
3 17
2 16
1 16
4 16
8 13
4 12
6 15
0 2
21
Aver
age
man
aged
car
e: M
anag
emen
t ser
vice
s per
prin
cipal
m
embe
r per
mon
th (R
) 7
7 9
3 8
9 8
3 7
9 7
6 8
4 3
7 11
3 6
1
Aver
age
accu
mul
ated
fund
s per
prin
cipal
mem
ber a
t yea
r-end
(R)
8 5
40
845
2
01
1 0
01
976
1
533
3 0
48
935
-
-
Dep
enda
nt ra
tio a
t yea
r-end
1.1
1.0
0.9
1.
0 1.
0 1.
0 1.
2 1.
1 1.
3 0
.4
Net
clai
ms a
s a p
erce
ntag
e of
net
cont
ribut
ions
(%)
86.
1 9
0.2
102.
9 8
8.0
82.
4 7
6.0
88.
8 7
7.0
99.
4 5
6.9
Man
aged
car
e: M
anag
emen
t ser
vice
s as a
per
cent
age
of n
et
cont
ribut
ions
(%)
3.0
1.
9 3
.0
2.8
3
.8
3.8
3
.3
1.9
1.6
6.4
Adm
inist
ratio
n ex
pens
es as
a pe
rcen
tage
of n
et co
ntrib
utio
ns (%
) 12
.1 7.
0 11
.1 11
.3
16.2
16
.9
12.0
14
.2
4.9
2
8.9
Pens
ione
r rat
io (%
) 12
.8
25.
5 18
.0
22.
7 9
.4
13.6
8
.3
9.7
17
.5
2.4
Group and Scheme Summarised Financial Statements
15Liberty Medical Scheme Annual Report 2014
5.2 Results of operations
The results of the Group are set out in the financial statements and the Trustees believe that further clarification is required. The Scheme budgeted for an operating loss of R64m, a delicate balance to ensure the future sustainability of the Scheme, as well as attempting to provide affordable healthcare to the members. Due to a proliferation of high cost cases, the aging population of the Scheme and the higher than budget claims profile, the hospital claims year-on-year increased by 19%. This cost escalation was significant when viewed against the historical claims of the Scheme and resulted in the significant loss recorded over budget of R90m in the financial statements. The Board of Trustees have developed a 5 year business plan to ensure the Scheme continues as a going concern as well as entering into a robust marketing and distribution agreement with Liberty Health to gain direct access to Liberty Group’s retail capability.
5.3 Solvency ratio
Group Scheme
2014R’000
2013R’000
2014R’000
2013R’000
Total members’ funds per Statement of financial position 359 469 488 070 359 469 482 991
Less:
Regulation 29 exclusion of unrealised gains on investments (814) (11 558) (814) (11 558)
Accumulated funds per Regulation 29 358 655 476 512 358 655 471 433
Gross contributions 2 084 533 1 932 362 2 084 533 1 932 362
Solvency ratio 17.2% 24.7% 17.2% 24.4%
5.4 Reserves
Movements in the reserves are set out in the Statement of changes in funds and reserves. The reserves decreased by 7.2% due to the deficit of R123.5m incurred in the current year. The deficit is largely due to the increase in claims expenditure experienced as a result of an increase in utilisation, high cost claims and the aging membership profile of the Scheme. The Scheme, actuarial consultants and management are closely monitoring the situation, with frequent meetings with the Regulator and have constructed a five year business plan to achieve the 25% solvency ratio through a growth strategy with the Liberty Group and other initiatives including decreasing non-healthcare expenditure, addressing benefit design and assessing pricing, with minimum impact to the members.
The unrealised gains on investments decreased due to investment losses incurred during the financial period as disclosed in note 3 of the Report of the Board of Trustees. The Scheme continues to be a going concern, and is well positioned to provide value-for-money benefits to all of the existing members.
5.5 Outstanding claims
Movements in the outstanding claims provision are set out in note 5 of the financial statements. There have been no material unusual movements in the provision for outstanding claims, although, as a percentage of the total claims paid for the year, a small increase is evident year-on-year that the Trustees believe should be brought to the attention of the members of the Scheme. The increase in the outstanding claims provision is due to a slower settlement pattern in comparison to prior years, and an increase in high cost claims and volumes in the 2015 year, relating to prior year services.
6 Actuarial Services
The Scheme’s actuaries have been consulted in the determination of the contribution and benefit levels, as well as the outstanding claims provision calculation.
Report of the Board of Trustees, continued
Group and Scheme Summarised Financial Statements
16 Liberty Medical Scheme Annual Report 2014
7 Marketing and Distribution
The Liberty Group has been contracted as a primary distribution partner to the Liberty Medical Scheme. The Liberty Group has a corporate health distribution channel with the sole purpose of targeting and marketing to their extensive book of employee benefit funds and corporate brokers. In addition to the above Liberty Medical Scheme is embarking on a strategy to activate distribution channels outside of the Liberty Group. The Scheme has appointed dedicated resources to focus on and implement the complementary distribution strategy whose focus will include direct sales initiatives.
8 Events after the reporting period
There have been no other events, other than elsewhere disclosed in this report, that have occurred subsequent to the financial year-end that materially affect the financial statements and that the Trustees believe should be brought to the attention of the members of the Group.
9 Prescribed Minimum Benefits
The Scheme pays Prescribed Minimum Benefits (PMBs) in terms of the Scheme rules whereby PMBs are paid at cost on application by members. The Council for Medical Schemes interprets Regulation 8(1) of the Regulations to the Medical Schemes Act as requiring PMBs to be settled by the Scheme at full invoice price.
10 Legal Matters
The industry being a highly regulated one lends itself to a variety of legal challenges, with legal costs coming under the spotlight in the industry as a whole. The costs incurred were mainly due to ensuring regulatory compliance and addressing historic issues which need to be seen through to conclusion. These actions are all intended to protect the members interests and to recoup any losses previously incurred.
Property loans granted during Medicover curatorship
Medicover merged with Liberty Health Medical Scheme during 2010. All the assets and liabilities were transferred to Liberty Medical Scheme pursuant to this merger, including loan agreements Medicover entered into between 2001 and 2006 while under curatorship. These loan agreements were classified as “fair value investments” relating to the types of investments that medical schemes are allowed to make in terms of the regulation. Subsequently, the Scheme has been advised that these loans are not fully recoverable. In order to ascertain whether the funds which were lost to the Scheme are recoverable, the Scheme utilised the forensic services of KPMG. The Scheme instituted legal proceedings against the previous Medicover curator, Mr D Gihwala and the firm to which he belonged, Cliffe Dekker Hofmeyr, in order to recoup these funds. The judgement has been awarded in favour of the Scheme in respect of two of the property loans and another two property loans are currently subject to litigation, pending in the Cape High Court.
Recovery of severance agreement with Advocate Mkhize
Based on Senior Counsel and other legal opinions, and weighing up the potential reputational and financial damage to the Scheme, of a protracted legal battle, the then Board entered into a severance agreement with Advocate Mkhize. As such the Board took a decision at that time to apply the legal opinion in the best interests of the members. After protracted legal challenges and a court ruling in this regard, the current Board of Trustees decided that any funds owing to the Scheme would be recovered. Advocate Mkhize appealled the Court ruling and has subsequently lost the case. The Scheme has thus requested the Scheme’s legal representatives to pursue the matter to recover the full outstanding amount with interest. The writ of execution was served on Advocate Mkhize in the first quarter of 2015.
11 Investments in and loans to participating employers of members of the medical scheme and to other related parties
The Scheme holds no direct investments in, nor has it made loans to, participating employers of Scheme members, or other related parties other than those investments which may occur through pooled assets.
Report of the Board of Trustees, continued
Group and Scheme Summarised Financial Statements
17Liberty Medical Scheme Annual Report 2014
Report of the Board of Trustees, continued
12 Compliance
During the year under review the Scheme complied with the Medical Schemes Act, No. 131 of 1998, except for the following items:
12.1 Section 26(7) “All subscriptions or contributions shall be paid directly to a Medical Scheme not later than three days after payment thereof becoming due.”
The responsibility to deduct contributions and pay them over to the Scheme rests with the employer/member. The majority of payments to the Scheme comply with this requirement. There were certain instances noted where members and employers did not pay within the stipulated period, however the necessary suspensions were applied in line with the debt mandate and no financial risk was incurred by the Scheme.
12.2 Section 33(4) “The Registrar shall not approve any benefit option…unless the Council is satisfied that such benefit option shall be self-supporting in terms of membership and financial performance.”
Nine (2013: seven) of the Scheme’s options incurred a net healthcare loss for the year under review, as set out in note 3 to the financial statements. Nine (2013: six) options also incurred a net deficit, after investment income. The deficit experienced is due to the increase in claims expenditure experienced as a result of an increase in utilisation and investment losses. The performance of each option is closely monitored on a monthly basis and reported back to the Finance and Investment Committee meeting on a bi-monthly basis for review and action should it be needed. The Registrar receives the Scheme’s management accounts on a monthly basis for review and the Scheme’s business plan has also been presented to the Council for Medical Schemes. In addition to this the Scheme has also attended quarterly monitoring meetings with the Registrar’s office to address any questions it might have. Over time the Scheme will through a combination of benefit design, expense management, pricing and a concerted growth strategy in conjunction with the Liberty Group to grow the Scheme with younger and healthier lives, aim to achieve more profitable, self-supporting benefit options, over a period of 5 years.
12.3 Section 59(2)&(3) “A Medical Scheme shall, in the case where an account has been rendered, …, pay a member or a supplier of service, …, within 30 days after the day on which the claim in respect of such benefit was received by the Medical Scheme.”
The Scheme processes and pays the majority of all claims within 30 days from date of receipt. There were instances noted where certain paper claims submitted via electronic claims indexing were not processed timeously as claims in a pre-captured status were not detected on the reports servicing pending or re-worked claims. This has been rectified and an additional report implemented to detect and process these claim lines.
12.4 Regulation 29 “Minimum accumulated funds to be maintained by a Medical Scheme...”
A Scheme must maintain accumulated funds, expressed as a percentage of gross annual contributions, of 25%. The Scheme’s solvency ratio was 17.2% at 31 December 2014 (2013: 24.4%) and the Group’s 17.2% (2013: 24.7%). The deficit experienced is due to the increase in claims expenditure experienced as a result of an increase in utilisation and the investment losses. The performance of the Scheme is being closely monitored on a monthly basis by the management of the Scheme, a five year business plan has been submitted to the Council for Medical Schemes and quarterly meetings are held with the Regulator to discuss the financial performance of the Scheme. Over time the Scheme will through a combination of benefit design, expense management, pricing and a concerted growth strategy, aim to achieve the required 25% level over a period of 5 years.
12.5 Section 35(8) “A Medical Scheme shall not invest any of its assets in the business of or grant loans to... (a) an employer who participates in the medical scheme or any administrator or any arrangement associated with the medical schemes; (b) any other medical scheme; (c) any administrator; and (d) person associated with any of the above-mentioned.”
The Scheme may, through its investment managers from time-to-time have exposure to preference shares, bonds and money market instruments of which the issuer’s holding company may be in breach of Section 35(8) c of the Act. The Scheme has received exemption from the Act insofar as it relates to investments placed with asset managers who invest on behalf of the Scheme and where such investment choices are not influenced by the Scheme.
Group and Scheme Summarised Financial Statements
18 Liberty Medical Scheme Annual Report 2014
13 Audit Committee
In terms of the Scheme Rules and the provisions of the Act, an Audit Committee is appointed. The Committee is mandated by the Board of Trustees by means of written terms of reference as to its membership, authority and duties. The Committee consists of five members of whom two are members of the Board of Trustees. More than fifty percent of the members, including the Chairman, are not officers of the Scheme or its third party administrator.
The Audit Committee comprised: Appointed/ (Resigned)
Qualification Audit meetings Fees (R’000)
A B 2014 2013
Independent members:
Mr M Brown (Chair) 28/01/2010 CA(SA) 5 5 80 68
Mr LB Williams 28/01/2010 BCom CA(SA) 5 5 77 62
Mr G Franck 27/01/2011 CIMA, CIS 5 5 58 51
Trustees: Dr EH Nematswerani (29/8/2014) MB ChB 4 3 - -
Ms D Kotzen 18/7/2012 5 5 - -
Mr L Smith 29/8/2014 AIAC, AICB 1 1 - -
Ex officio: Ms CK Kinsman (29/8/2014) SBIcb(SA) 4 4
Mr O Pretorius 29/08/2014 1 1 - -
A = number of meetings at which attendance was applicable B = meetings attended Fees paid to the Trustees for attending these meetings are included under note 2.1 of the Report of the Board of Trustees. The Executive Principal Officer of the Scheme, the Finance manager of the administrator, the external auditors of the Scheme and internal auditors of the administrator, have an invitation to attend all Audit Committee meetings and have unrestricted access to the Chairman of the Committee. In accordance with the provisions of the Act, the primary responsibility of the Committee is to assist the Board of Trustees in carrying out its duties relating to the Scheme’s accounting policies, internal control systems and financial reporting practices. The external and internal auditors of the administrator formally report to the Committee on critical findings arising from audit activities. The Audit Committee is pleased to report that: • It has carried out its duties in terms of the Medical Schemes Act and the Board of Trustee written Audit Committee charter;• The external auditors have confirmed their independence; • The assurances provided by management, the external auditors and the internal auditors have satisfied the Committee that internal controls
are adequate and effective; and• It has reviewed the Group and Scheme’s Financial Statements, reviewed the accounting policies, and the opinion of the external auditors and
recommend the adoption of the financial statements by the Board of Trustees for presentation to members.
Report of the Board of Trustees, continued
Group and Scheme Summarised Financial Statements
19Liberty Medical Scheme Annual Report 2014
Report of the Board of Trustees, continued
14 T
rust
ee M
eetin
g At
tend
ance
The
follo
win
g sc
hedu
le se
ts o
ut B
oard
of T
rust
ee m
eetin
g at
tend
ance
s by
mem
bers
of t
he B
oard
. Tru
stee
rem
uner
atio
n is
disc
lose
d in
2.1 o
f the
Rep
ort o
f the
Boa
rd o
f Tru
stee
s.
Trus
tee
Boar
d of
Tr
uste
esFi
nanc
e an
d in
vest
men
tA
udit
Sale
s,
mar
ketin
g an
d co
mm
unic
atio
ns
Prod
uct
Clin
ical
risk
Pr
ocur
emen
tRe
mun
erat
ion
AB
AB
AB
AB
AB
AB
AB
AB
Mr O
Pre
toriu
s8
82
21
16
63
31
12
21
1
Ms C
M K
insm
an5
52
24
44
43
32
22
21
1
Mr R
M G
arlan
d5
52
20
00
00
00
00
00
0
Ms D
Kot
zen
88
00
55
66
33
00
00
11
Mr J
Bag
g7
74
40
05
53
20
02
21
1
Dr E
H N
emat
swer
ani
77
00
43
00
00
33
00
00
Dr P
Hill
22
00
00
00
00
10
00
00
Mr L
Sm
ith2
21
11
10
00
00
00
00
0
Exec
utiv
e Pr
inci
pal O
ffice
r
Mr A
C Ed
war
ds8
84
45
56
63
23
33
32
2
A =
num
ber o
f mee
tings
at w
hich
atte
ndan
ce w
as a
pplic
able
B =
mee
tings
atte
nded
Mr O
Pre
toriu
sCh
airp
erso
n23
Apr
il 201
5
Group and Scheme Summarised Financial Statements
20 Liberty Medical Scheme Annual Report 2014
To the members of the Liberty Medical Scheme.
The summarised financial statements of Liberty Medical Scheme (the Scheme), as set out on pages 21 to 41, which comprise the summarised statement of financial position at 31 December 2014 and the summarised statements of comprehensive income, changes in funds and reserves and cash flows for the year then ended, and related notes, are derived from the audited financial statements of the Scheme for the year ended 31 December 2014.
We expressed an unmodified audit opinion on those financial statements in our report dated 23 April 2015.
The summarised financial statements do not contain all the disclosures required by International Financial Reporting Standards and the Medical Schemes Act of South Africa. Reading the summarised financial statements, therefore, is not a substitute for reading the audited financial statements of the Scheme.
Trustees’ Responsibility for the Summarised Financial Statements
The Trustees are responsible for the preparation of a summary of the audited financial statements in accordance with the content and disclosure requirements of Circular 6 of 2013 issued by the Council for Medical Schemes.
Auditor’s Responsibility
Our responsibility is to express an opinion on the summarised financial statements based on our procedures, which were conducted in accordance with International Standards on Auditing (ISA) 810, Engagements to Report on Summary Financial Statements.
Opinion
In our opinion, the summarised financial statements derived from the audited financial statements of the Scheme for the year ended 31 December 2014 are consistent, in all material respects, with those financial statements, in accordance with the content and disclosure requirements of Circular 6 of 2013 issued by the Council for Medical Schemes.
KPMG Inc.
Per LM SeptemberChartered Account (SA)Registered AuditorDirector
23 April 2015
1 Mediterranean StreetForeshoreCape Town8001
Report of the Independent Auditor on the Summarised Financial Statements
Group and Scheme Summarised Financial Statements
21Liberty Medical Scheme Annual Report 2014
Group Scheme
Notes2014
R’0002013
R’0002014
R’0002013
R’000
AssetsNon-current assets 305 870 303 220 305 870 301 230
Equipment 475 768 475 24
Investment in subsidiary - - - -
Financial assets held at fair value through profit or loss 4 305 395 301 206 305 395 301 206
Deferred tax asset - 1 246 - -
Current assets 386 916 508 228 386 916 497 256
Financial assets held at fair value through profit or loss 4 39 155 27 182 39 155 27 182
Trade and other receivables 32 094 35 481 32 094 35 153
Cash and cash equivalents 315 667 445 565 315 667 434 921
Group and Scheme 112 318 243 006 112 318 232 362
Personal medical savings account trust monies invested 203 349 202 559 203 349 202 559
Total assets 692 786 811 448 692 786 798 486
Funds and LiabilitiesMembers' funds
Accumulated funds 359 469 488 070 359 469 482 991
Current liabilities 333 317 323 378 333 317 315 495
Outstanding claims provision 5 80 798 62 165 80 798 62 165
Personal medical savings account trust liability 6 204 863 203 311 204 863 203 311
Trade and other payables 47 656 56 500 47 656 50 019
Taxation payable - 1 402 - -
Total funds and liabilities 692 786 811 448 692 786 798 486
Statements of Financial Positionat 31 December 2014
Group and Scheme Summarised Financial Statements
22 Liberty Medical Scheme Annual Report 2014
Group Scheme
Notes2014
R’0002013
R’0002014
R’0002013
R’000
Risk contribution income 7 1 877 288 1 739 558 1 877 288 1 739 558
Relevant healthcare expenditure (1 724 550) (1 498 521) (1 724 550) (1 498 521)
Risk claims incurred 8 (1 723 929) (1 497 970) (1 723 929) (1 497 970)
Claims incurred (1 729 058) (1 505 096) (1 729 058) (1 505 096)
Third party claim recoveries 5 129 7 126 5 129 7 126
Net expense on risk transfer arrangements 10 (621) (551) (621) (551)
Risk transfer arrangement premiums (17 927) (10 871) (17 927) (10 871)
Risk transfer arrangement recoveries 15 800 10 320 15 800 10 320
Profit share on risk transfer arrangements 1 506 - 1 506 -
Gross healthcare result 152 738 241 037 152 738 241 037
Managed care: management services (50 868) (51 757) (50 868) (51 757)
Broker service fees (38 272) (34 661) (38 272) (34 661)
Administration expenditure (210 775) (220 609) (212 510) (211 129)
Net impairment losses on insurance receivables (1 368) (1 217) (1 368) (1 217)
Net healthcare result (148 545) (67 207) (150 280) (57 727)
Other income 40 364 51 651 45 933 49 379
Investment income 9 40 017 47 135 45 574 46 805
Group and Scheme 29 417 37 700 34 974 37 370
Personal medical savings account trust monies invested 10 600 9 435 10 600 9 435
Sundry income 347 4 516 359 2 574
Other expenditure (19 174) (11 830) (19 175) (11 830)
Impairment of loans receivables (6 568) (770) (6 568) (770)
Impairment of financial asset held at fair value through profit or loss (300) - (300) -
Investment management fees (1 707) (1 625) (1 707) (1 625)
Interest on personal medical savings accounts 6 (10 600) (9 435) (10 600) (9 435)
Deficit for the year before taxation (127 355) (27 386) (123 522) (20 178)
Taxation (1 246) 1 421 - -
Net deficit for the year (128 601) (25 965) (123 522) (20 178)
Total comprehensive loss for the year (128 601) (25 965) (123 522) (20 178)
Statements of Comprehensive Incomefor the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
23Liberty Medical Scheme Annual Report 2014
Group Accumulatedfunds
Total members’funds
R’000 R’000
Balance as at 1 January 2013 514 035 514 035
Total comprehensive loss for the year (25 965) (25 965)
Balance as at 31 December 2013 488 070 488 070
Total comprehensive loss for the year (128 601) (128 601)
Balance as at 31 December 2014 359 469 359 469
Scheme Accumulatedfunds
Total members’funds
R’000 R’000
Balance as at 1 January 2013 503 169 503 169
Total comprehensive loss for the year (20 178) (20 178)
Balance as at 31 December 2013 482 991 482 991
Total comprehensive loss for the year (123 522) (123 522)
Balance as at 31 December 2014 359 469 359 469
Statements of Changes in Funds and Reserves for the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
24 Liberty Medical Scheme Annual Report 2014
Group Scheme
Notes2014
R’0002013
R’0002014
R’0002013
R’000
Cash flows from operating activities
Cash flows utilised in operations before working capital changes (145 685) (61 250) (147 572) (53 944)
Working capital changes
(Increase)/decrease in trade and other receivables (4 548) 1 533 (4 875) (4 104)
(Increase)/decrease in trade and other payables (8 844) 9 597 (2 363) 10 451
Increase in outstanding claims provision 18 633 2 521 18 633 2 521
Decrease in savings account liability (957) (9 714) (957) (9 714)
Interest paid on members’ personal medical savings accounts trust monies (10 600) (9 435) (10 600) (9 435)
Taxation paid (1 402) (2 648) - -
Investment income received 50 765 49 376 55 746 49 021
Group and Scheme 40 165 39 941 45 146 39 586
Personal medical savings account trust monies 10 600 9 435 10 600 9 435
Cash utilised in operations (102 637) (20 020) (91 988) (15 204)
Cash flows from investing activities
Purchase of equipment (79) (873) (59) (20)
Disposal of equipment 29 11 4 -
Purchase of financial assets held at fair value through profit or loss 4 (130 531) (50 164) (130 531) (50 164)
Disposal of financial assets held at fair value through profit or loss 4 103 320 52 117 103 320 52 117
Cash (utilised in)/generated by investing activities (27 261) 1 091 (27 266) 1 933
Net cash decrease in cash and cash equivalents (129 898) (18 929) (119 254) (13 271)
Cash and cash equivalents at beginning of year 445 565 464 494 434 921 448 192
Cash and cash equivalents at the end of the year 315 667 445 565 315 667 434 921
Group and Scheme 112 318 243 006 112 318 232 362
Personal medical account trust monies invested 203 349 202 559 203 349 202 559
Statement of Cash Flowsfor the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
25Liberty Medical Scheme Annual Report 2014
1 General Information
The Scheme is a registered non-profit, open medical scheme which is domiciled in the Republic of South Africa in terms of the Medical Scheme Act 131 of 1998 (“the Act”). The Scheme is administered by Vmed Administrators (Pty) Ltd. The Group (“Group”) comprises of Liberty Medical Scheme (the “Scheme”) and its wholly owned subsidiary, LMS Management and Auxillary services (Pty) Ltd (the “Subsidiary”). The Subsidiary commenced business on 1 July 2012 and rendered marketing and associated services exclusively to Liberty Medical Scheme with the main focus on sales and marketing initiatives that support and promote the Liberty Medical Scheme brand and membership growth. The Subsidiary ceased operations on 30 June 2014 and all remaining assets transferred to the Scheme.
2 Significant Accounting Policies
The Financial Statements, from which these Summarised Financial Statements are derived, are prepared in accordance with International Financial Reporting Standards (IFRS) and in accordance with the requirements of the Medical Schemes Act of South Africa. In addition the statement of comprehensive income is prepared in accordance with Circular 41 of 2012, issued by the Council for Medical Schemes, that sets out their interpretation of IFRS as it relates to the Statement of Comprehensive Income for Medical Schemes in South Africa.
Basis of preparation
The Summarised Financial Statements provide information about the financial position, results of operations and changes in financial position of the Scheme. These have been prepared under the historical cost convention, except for certain investments which are carried at fair value.
The Summarised Financial Statements are prepared: • In accordance with the recognition and measurement requirements of IFRS; • In the manner required by the Act; and • In accordance with the presentation and disclosure requirements of International Financial Reporting Standards IAS 34, Interim
Financial Reporting. The financial statements are prepared in Rand which is the Group and Scheme’s functional and presentation currency. Critical accounting judgments and areas of key sources of estimation uncertainty The preparation of summarised financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Scheme’s accounting policies. The areas involving a higher degree of judgement and complexity, or areas where assumptions and estimates are significant for the summarised financial statements are disclosed in note 12.
Notes to the Summarised Financial Statementsfor the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
26 Liberty Medical Scheme Annual Report 2014
3 (D
efici
t)/Su
rplu
s fro
m O
pera
tions
per
Ben
efit O
ptio
n, co
ntin
ued
20
14 -
Sche
me
only
R’0
00
Com
plet
e Pl
us
Save
r Plu
sH
ospi
tal
Plus
Sa
ver
Stan
dard
/Se
lect
Hos
pita
l St
anda
rd/
Sele
ct
Com
plet
e St
anda
rd/
Sele
ct
Trad
ition
al
Stan
dard
Trad
ition
al
Ulti
mat
eTr
aditi
onal
Ba
sic
Sche
me
Tota
l
(pre
viou
sly
Plat
inum
Co
mpl
ete)
(pre
viou
sly
Plat
inum
Sav
er)
(pre
viou
sly
Plat
inum
Fo
cus)
(pre
viou
sly
Gol
d Sa
ver/
Sele
ct)
(pre
viou
sly
Gol
d Fo
cus/
Sele
ct)
(pre
viou
sly
Tita
n/Se
lect
)(p
revi
ousl
y Bo
na P
lus)
(pre
viou
sly
Pres
tige)
(pre
viou
sly
Gat
eway
)
Risk
con
trib
utio
n in
com
e 3
21 0
50
45
423
235
022
17
5 80
0
261
461
6
62 6
98
141 4
30
15 4
59
18 9
45
1 87
7 28
8
Rele
vant
hea
lthca
re e
xpen
ditu
re (3
02
144)
(48
701)
(226
937
) (1
45 4
15)
(220
445
) (6
14 5
99)
(133
102)
(15
879)
(17
328)
(1 7
24 5
50)
Risk
clai
ms i
ncur
red
(302
261
) (4
8 74
3) (2
27 0
70)
(145
423
) (2
20 4
81)
(614
756
) (1
33 2
29)
(15
867)
(16
099
) (1
723
929
)
Clai
ms i
ncur
red
(303
043
) (4
9 50
5) (2
27 5
88)
(145
502
) (2
20 7
18)
(615
589
) (1
35 14
7) (1
5 86
7) (1
6 0
99)
(1 7
29 0
58)
Third
par
ty cl
aim
reco
verie
s 7
82
762
5
18
79
237
8
33
1 91
8 -
-
5
129
Net
(inc
ome)
/exp
ense
on
risk
tran
sfer
arr
ange
men
ts 11
7 4
2 13
3 8
3
6 15
7 12
7 (1
2) (1
229
) (6
21)
Risk
tran
sfer
arr
ange
men
t pre
miu
ms
(978
) (2
17)
(1 15
9) (1
233
) (1
925
) (3
765
) (1
070
) (3
1) (7
549
) (1
7 92
7)
Risk
tran
sfer
arr
ange
men
t rec
over
ies
1 0
95
259
1
292
1 24
1 1
961
3 9
22
1 19
7 19
4
814
15
80
0
Profi
t sha
re o
n ris
k tr
ansf
er a
rran
gem
ents
-
-
-
-
-
-
-
-
1
506
1 50
6
Gro
ss h
ealth
care
resu
lt 18
90
6 (3
278
) 8
085
3
0 3
85
41 0
16
48
099
8
328
(4
20)
1 61
7 15
2 73
8
Man
aged
car
e: m
anag
emen
t ser
vice
s (4
60
9) (1
038
) (5
424
) (5
856
) (8
949
) (2
1 002
) (2
697
) (1
37)
(1 15
6) (5
0 86
8)
Brok
er se
rvice
fees
(3 8
42)
(743
) (4
183)
(4 15
5) (6
055
) (1
5 19
1) (3
430
) (1
24)
(549
) (3
8 27
2)
Adm
inist
ratio
n ex
pend
iture
(20
043
) (4
665
) (2
3 62
9) (2
5 46
0) (3
9 59
3) (7
5 93
5) (1
8 28
7) (5
98)
(4 3
00)
(212
510
)
Net
impa
irmen
t (lo
sses
)/gai
ns o
n in
sura
nce
rece
ivab
les
27
(36)
23
(364
) (5
) (9
61)
(3)
(2)
(47)
(1 3
68)
Net
hea
lthca
re re
sult
(9 5
61)
(9 7
60)
(25
128)
(5 4
50)
(13
586)
(64
990)
(16
089
) (1
281
) (4
435
) (1
50 2
80)
Oth
er in
com
e 4
172
925
4
937
5
318
8
234
16
254
4
60
8 12
8 1
357
45
933
Inve
stm
ent i
ncom
e 4
135
923
4
921
5
299
8
207
16
015
4
589
12
8 1
358
45
574
Sche
me
2 8
41
793
4
912
4
586
8
196
7 6
34
4 5
28
128
1 35
6 3
4 97
4
Pers
onal
med
ical
savi
ngs a
ccou
nt tr
ust m
onie
s 1
294
130
9
713
11
8
381
6
1 -
1
10 6
00
Sund
ry in
com
e 3
7 2
16
19
2
7 2
39
19
-
-
359
Oth
er e
xpen
ditu
re (2
054
) (2
99)
(911
) (1
716
) (1
596
) (1
1 346
) (9
10)
(28)
(315
) (1
9 17
5)
Impa
irmen
t of l
oans
rece
ivab
les
(579
) (1
28)
(687
) (7
70)
(1 2
21)
(2 2
63)
(647
) (2
2) (2
51)
(6 5
68)
Impa
irmen
t of fi
nanc
ial a
sset
hel
d at
fair
valu
e th
roug
h
profi
t or l
oss
(26)
(6)
(31)
(35)
(56)
(103
) (3
0) (1
) (1
2) (3
00)
Inve
stm
ent m
anag
emen
t fee
s (1
55)
(35)
(184
) (1
98)
(30
8) (5
99)
(172
) (5
) (5
1) (1
707
)
Inte
rest
on
pers
onal
med
ical
savi
ngs a
ccou
nts
(1 2
94)
(130
) (9
) (7
13)
(11)
(8 3
81)
(61)
-
(1)
(10
600)
Net
defi
cit f
or th
e ye
ar (7
443
) (9
134)
(21 1
02)
(1 8
48)
(6 9
48)
(60
082
) (1
2 39
1) (1
181)
(3 3
93)
(123
522
)
Notes to the Summarised Financial Statements for the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
27Liberty Medical Scheme Annual Report 2014
3 (D
efici
t)/Su
rplu
s fro
m O
pera
tions
per
Ben
efit O
ptio
n, co
ntin
ued
20
13 -
Sche
me
only
R’0
00
Plat
inum
Co
mpl
ete
Plat
inum
Sa
ver
Plat
inum
Fo
cus
Gol
d Sa
ver/
Se
lect
Gol
d Fo
cus/
Se
lect
Tita
n/
Sele
ctBo
na
Plus
Pres
tige
Gat
eway
Sche
me
Tota
l
Risk
con
trib
utio
n in
com
e 3
24 9
51
48
596
234
989
14
8 62
7 2
24 7
44
60
0 3
45
145
166
8 0
14
4 12
6 1
739
558
Rele
vant
hea
lthca
re e
xpen
ditu
re (2
92 9
79)
(50
015
) (2
06
742)
(122
329
) (1
70 7
39)
(532
732
) (1
12 0
91)
(7 9
63)
(2 9
31)
(1 4
98 5
21)
Risk
clai
ms i
ncur
red
(292
986
) (5
0 01
5) (2
06
752)
(122
410
) (1
70 8
70)
(532
840
) (1
11 78
4) (7
964
) (2
349
) (1
497
970
)
Clai
ms i
ncur
red
(294
549
) (5
0 0
93)
(207
288
) (1
22 8
90)
(172
021
) (5
35 6
68)
(112
234
) (7
967
) (2
386
) (1
50
5 0
96)
Third
par
ty cl
aim
reco
verie
s 1
563
78
536
4
80
1 15
1 2
828
4
50
3
37
7 12
6
Net
(inc
ome)
/exp
ense
on
risk
tran
sfer
arr
ange
men
ts 7
-
10
8
1 13
1 10
8 (3
07)
1 (5
82)
(551
)
Risk
tran
sfer
arr
ange
men
t pre
miu
ms
(90
8) (2
16)
(1 0
69)
(956
) (1
507
) (3
168)
(1 3
07)
(15)
(1 7
25)
(10
871)
Risk
tran
sfer
arr
ange
men
t rec
over
ies
915
2
16
1 07
9 1
037
1 63
8 3
276
1
00
0 16
1
143
10 3
20
Gro
ss h
ealth
care
resu
lt 3
1 972
(1
419
) 2
8 24
7 2
6 29
8 5
4 0
05
67
613
33
075
5
1 1
195
241
037
Man
aged
car
e: m
anag
emen
t ser
vice
s (6
323
) (1
438
) (6
610
) (5
70
5) (8
647
) (1
9 83
2) (2
807
) (1
29)
(266
) (5
1 757
)
Brok
er se
rvice
fees
(3 9
68)
(836
) (4
431
) (3
594
) (5
280
) (1
3 03
9) (3
315
) (7
1) (1
27)
(34
661)
Adm
inist
ratio
n ex
pend
iture
(22
817)
(5 3
90)
(26
627)
(24
118)
(38
032)
(71 9
37)
(20
625)
(389
) (1
194)
(211
129)
Net
impa
irmen
t (lo
sses
)/gai
ns o
n in
sura
nce
rece
ivab
les
(11)
(20)
(31)
(315
) (1
02)
(797
) 9
4 (1
0) (2
5) (1
217
)
Net
hea
lthca
re re
sult
(1 14
7) (9
103)
(9 4
52)
(7 4
34)
1 94
4 (3
7 99
2) 6
422
(5
48)
(417
) (5
7 72
7)
Oth
er in
com
e 5
054
1
159
5 7
69
5 2
10
8 2
32
17 7
43
5 7
44
81
387
4
9 37
9
Inve
stm
ent i
ncom
e 4
732
1
130
5 5
90
5 0
58
7 9
51
16 5
72
5 3
22
79
371
4
6 80
5
Sche
me
3 5
62
1 01
4 5
578
4
492
7
928
9
089
5
257
7
9 3
71
37
370
Pers
onal
med
ical
savi
ngs a
ccou
nt tr
ust m
onie
s 1
170
116
12
566
2
3 7
483
6
5 -
-
9
435
Sund
ry in
com
e 3
22
29
179
152
281
1
171
422
2
16
2
574
Oth
er e
xpen
ditu
re (1
40
7) (1
72)
(292
) (8
30)
(438
) (8
325
) (3
30)
(4)
(32)
(11 8
30)
Impa
irmen
t of l
oans
rece
ivab
les
(73)
(17)
(86)
(88)
(138
) (2
67)
(80)
(1)
(20)
(770
)
Impa
irmen
t of fi
nanc
ial a
sset
hel
d at
fair
valu
e th
roug
h
profi
t or l
oss
-
-
-
-
-
-
-
-
-
-
Inve
stm
ent m
anag
emen
t fee
s (1
64)
(39)
(194
) (1
76)
(277
) (5
75)
(185
) (3
) (1
2) (1
625
)
Inte
rest
on
pers
onal
med
ical
savi
ngs a
ccou
nts
(1 17
0) (1
16)
(12)
(566
) (2
3) (7
483
) (6
5) -
-
(9
435
)
Net
defi
cit f
or th
e ye
ar 2
50
0
(8 11
6) (3
975
) (3
054
) 9
738
(2
8 57
4) 11
836
(4
71)
(62)
(20
178)
Notes to the Summarised Financial Statements for the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
28 Liberty Medical Scheme Annual Report 2014
4 Financial Assets Held at Fair Value through Profit or Loss
Group Scheme
2014R’000
2013R’000
2014R’000
2013R’000
Balance at the beginning of the year 328 388 332 583 328 388 332 583
Interest income reinvested 31 499 28 505 31 499 28 505
Dividend income reinvested 1 297 1 128 1 297 1 128
Additions 97 735 20 530 97 735 20 530
Proceeds on disposal (103 320) (52 117) (103 320) (52 117)
Impairment (300) - (300) -
Net fair value losses on fair value assets through profit or loss (10 749) (2 241) (10 749) (2 241)
Balance at end of year 344 550 328 388 344 550 328 388
Non-current 305 395 301 206 305 395 301 206
Current* 39 155 27 182 39 155 27 182
344 550 328 388 344 550 328 388
*The Scheme classifies current investments as short term less than 12 months and greater than 3 months.
Split by category:
Preference shares 758 846 758 846
Equities 15 669 17 143 15 669 17 143
Bonds 246 262 229 408 246 262 229 408
Cash and money market 44 337 40 313 44 337 40 313
Property 2 100 2 400 2 100 2 400
Market linked policy 11 201 15 794 11 201 15 794
Collective investment schemes 24 223 22 484 24 223 22 484
344 550 328 388 344 550 328 388
Notes to the Summarised Financial Statements for the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
29Liberty Medical Scheme Annual Report 2014
Notes to the Summarised Financial Statements for the year ended 31 December 2014
5 O
utst
andi
ng C
laim
s Pro
visio
n
20
14
R’0
00
Tota
lG
roup
Tota
lSc
hem
e
Not
cove
red
by ri
sk tr
ansf
er
arra
ngem
ent
Cove
red
by
risk
tran
sfer
ar
rang
emen
ts
Not
cove
red
by ri
sk tr
ansf
er
arra
ngem
ent
Cove
red
by
risk
tran
sfer
ar
rang
emen
ts
Prov
ision
for o
utst
andi
ng cl
aim
s inc
urre
d bu
t not
repo
rted
80
798
7
9 85
0 9
48
80
798
7
9 85
0 9
48
Anal
ysis
of m
ovem
ents
in o
utst
andi
ng cl
aim
s
Balan
ce a
t beg
inni
ng o
f the
yea
r 6
2 16
5 6
1 394
7
71
62
165
61 3
94
771
Paym
ents
in re
spec
t of p
rior y
ear
(65
140)
(64
369)
(771
) (6
5 14
0) (6
4 36
9) (7
71)
Ove
r pro
visio
n in
prio
r yea
r (2
975
) (2
975
) -
(2
975
) (2
975
) -
Prov
ision
writ
ten
back
in cu
rrent
yea
r (no
te 8
) 2
975
2
975
-
2
975
2
975
-
Adju
stm
ent f
or cu
rrent
yea
r (no
te 8
) 8
0 7
98
79
850
948
8
0 7
98
79
850
948
Balan
ce a
t end
of t
he y
ear
80
798
7
9 85
0 9
48
80
798
7
9 85
0 9
48
Anal
ysis
of o
utst
andi
ng cl
aim
s pro
visi
on
Estim
ated
gro
ss cl
aim
s per
regi
ster
ed ru
les
84
256
83
308
948
8
4 25
6 8
3 30
8 9
48
Less
: est
imat
ed re
cove
ries f
rom
per
sona
l med
ical
savi
ngs
acco
unts
(3 4
58)
(3 4
58)
-
(3 4
58)
(3 4
58)
-
Balan
ce a
t end
of t
he y
ear
80
798
7
9 85
0 9
48
80
798
7
9 85
0 9
48
Group and Scheme Summarised Financial Statements
30 Liberty Medical Scheme Annual Report 2014
5 O
utst
andi
ng C
laim
s Pro
visio
n, co
ntin
ued
20
13
R’0
00
Tota
lG
roup
Tota
lSc
hem
e
Not
cove
red
by ri
sk tr
ansf
er
arra
ngem
ent
Cove
red
by
risk
tran
sfer
ar
rang
emen
ts
Not
cove
red
by ri
sk tr
ansf
er
arra
ngem
ent
Cove
red
by
risk
tran
sfer
ar
rang
emen
ts
Prov
ision
for o
utst
andi
ng cl
aim
s inc
urre
d bu
t not
repo
rted
62
165
61 3
94
771
6
2 16
5 6
1 394
7
71
Anal
ysis
of m
ovem
ents
in o
utst
andi
ng cl
aim
s
Balan
ce a
t beg
inni
ng o
f the
yea
r 5
9 64
4 5
8 50
0 1
144
59
644
58
500
1 14
4
Paym
ents
in re
spec
t of p
rior y
ear
(60
021
) (5
8 87
7) (1
144)
(60
021
) (5
8 87
7) (1
144)
Ove
r pro
visio
n in
prio
r yea
r (3
77)
(377
) -
(3
77)
(377
) -
Prov
ision
writ
ten
back
in cu
rrent
yea
r (no
te 8
) 3
77
377
-
3
77
377
-
Adju
stm
ent f
or cu
rrent
yea
r (no
te 8
) 6
2 16
5 6
1 394
7
71
62
165
61 3
94
771
Balan
ce a
t end
of t
he y
ear
62
165
61 3
94
771
6
2 16
5 6
1 394
7
71
Anal
ysis
of o
utst
andi
ng cl
aim
s pro
visi
on
Estim
ated
gro
ss cl
aim
s per
regi
ster
ed ru
les
65
344
64
573
771
6
5 34
4 6
4 57
3 7
71
Less
: est
imat
ed re
cove
ries f
rom
per
sona
l med
ical
savi
ngs
acco
unts
(3 17
9) (3
179)
-
(3 17
9) (3
179)
-
Balan
ce a
t end
of t
he y
ear
62
165
61 3
94
771
6
2 16
5 6
1 394
7
71
Notes to the Summarised Financial Statements for the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
31Liberty Medical Scheme Annual Report 2014
5 Outstanding Claims Provision, continued
The outstanding claims provision as at 31 December 2014 provides for all risk/insured claims with 2014 treatment dates not yet reported by 31 December 2014. The provision was determined by estimating total 2014 claims incurred and subtracting actual 2014 claims treated and processed as at 31 December 2014. 2014 claims incurred were estimated, using the chain ladder method based on claims processed as at 27 February 2015.
Process used to determine assumptions
Total incurred claims for each month are estimated by considering the proportion of claims treated in the month that are expected to have been settled by the end of that month and subsequent months. These proportions are based on historical claims settlement patterns, specific to the Scheme, with more emphasis on the most recent years of claims experience. As the assumptions are based on historical experience, the method assumes that the past settlement patterns will be a good predictor of future experience. The settlement pattern may, however, not be stable from year to year or month to month owing to, inter alia, a change in administration processes, holiday periods and the timing of claims payment runs. Random fluctuations, including the impact of large claims, also affect the settlement pattern. Where identifiable and possible these factors have been allowed for. As different disciplines have different settlement patterns the claims experience is divided into relatively homogeneous groups: Hospital; GPs, Specialists, Radiology, Pathology and Other; Chronic medicine; Oncology; Dental and Dialysis for the Major Medical Benefit and: Acute Medicine, Specialists, GPs, Radiology and Pathology, Dental and Other for other risk benefits. Assumptions are determined for each of these groups. Any significant events/cases pre-authorised with accounts yet to be submitted and/or settled were individually considered and the assumptions/provision adjusted accordingly.
Notes to the Summarised Financial Statements for the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
32 Liberty Medical Scheme Annual Report 2014
5 Outstanding Claims Provision, continued
Assumptions
The assumptions that have the greatest effect on the measurement of the outstanding claims provision are the proportions of claims, in particular those claims categorised as Hospital , settled by the end of the third, second and first (calendar) months after treatment; that is, the assumptions used to determine the claims provision for the October, November and December 2014 treatment months respectively. These assumptions are shown in the following tables:
2014Settlement portion within period after
treatment months
Major Medical Risk Benefits 1 2 3
Hospital, Prostheses 90% 97% 98%
Specialists, Other, Appliances 87% 94% 97%
GPs 91% 96% 98%
Chronic and HIV Medicine 99% 99% 100%
Oncology 91% 96% 98%
Radiology 92% 96% 98%
Pathology, Bloods 94% 97% 98%
Dental 93% 97% 99%
Preventative Care 98% 99% 99%
Dialysis 93% 97% 98%
Above Threshold Risk Benefits 1 2 3
Acute Medicine 99% 100% 100%
Specialists 88% 94% 97%
GPs 93% 96% 97%
Radiology and Pathology 94% 97% 98%
Dental 87% 94% 98%
Other 83% 92% 96%
Notes to the Summarised Financial Statements for the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
33Liberty Medical Scheme Annual Report 2014
Notes to the Summarised Financial Statements for the year ended 31 December 2014
5 Outstanding Claims Provision, continued
Assumptions, continued
2013Settlement portion within period after
treatment months
Major Medical Risk Benefits 1 2 3
Hospital, Prostheses 89% 96% 99%
Specialists, Other, Appliances 83% 93% 98%
GPs 81% 91% 96%
Chronic and HIV Medicine 99% 99% 100%
Oncology 90% 96% 99%
Radiology 88% 94% 98%
Pathology, Bloods 90% 96% 99%
Dental 88% 94% 99%
Preventative Care 96% 98% 100%
Dialysis 84% 92% 97%
Above Threshold Risk Benefits 1 2 3
Acute Medicine 99% 100% 100%
Specialists 88% 95% 98%
GPs 94% 98% 99%
Radiology and Pathology 90% 95% 98%
Dental 87% 94% 97%
Other 82% 93% 97%
Sensitivity analysis
Although the Scheme believes that the outstanding claims provision estimated is adequate, it recognises that the estimation of the liability is based on a number of assumptions and that the actual experience could differ from those assumptions. The following table outlines the sensitivity of the claims liability to reasonable possible movements in the assumptions used to estimate it. Only those assumptions deemed material were considered.
2014 Assumption scenarios
Major medical risk benefits Central -2% Central -1% Central* Central +1% Central +2%
Other risk benefits Central Central Central Central Central
Claims liability (R’000) 84 562 82 181 79 850 77 635 75 634
Change in claims liability (R’000) 4 712 2 331 - (2 215) (4 216)
Change in claims liability (%) 5.9% 2.9% 0.0% -2.8% -5.3%
2013 Assumption scenarios
Major medical risk benefits Central -2% Central -1% Central* Central +1% Central +2%
Other risk benefits Central Central Central Central Central
Claims liability (R’000) 71 759 67 553 61 394 59 575 56 508
Change in claims liability (R’000) 10 365 6 159 - (1 818) (4 886)
Change in claims liability (%) 16.9% 10.0% 0.0% -3.0% -8.0%
*Central: assumptions used to determine the outstanding claims provision
Group and Scheme Summarised Financial Statements
34 Liberty Medical Scheme Annual Report 2014
6 Personal Medical Savings Account Trust Liability Group Scheme
2014R’000
2013R’000
2014R’000
2013R’000
Balance due to members on personal medical savings account liability at the beginning of the year
203 311 210 651 203 311 210 651
Less:
Advances on savings account (4 160) (3 848) (4 160) (3 848)
Net balance on savings account liability at the beginning of the year 199 151 206 803 199 151 206 803
Add:
Savings contributions received or receivable (note 7) 207 245 192 804 207 245 192 804
Transfers from other schemes in terms of Regulation 10(4) 1 600 107 1 600 107
Interest on personal medical savings account 10 600 9 435 10 600 9 435
Less:
Claims paid on behalf of members (note 8) (199 446) (187 366) (199 446) (187 366)
Refunds on death or resignation in terms of Regulation 10(5) (18 142) (23 464) (18 142) (23 464)
Transfers to other schemes in terms of Regulation 10(5) (202) (131) (202) (131)
Administration fees* (1 354) (1 411) (1 354) (1 411)
Add:
Advances on savings accounts 2 902 4 160 2 902 4 160
Advances on savings accounts written off 2 509 2 374 2 509 2 374
Balance due to members on personal medical savings account liability at the end of the year
204 863 203 311 204 863 203 311
At year-end the carrying amount of the members’ personal medical savings accounts approximate its fair value due to its short term nature.
*Administration fees relate to the recovery costs of resigned member debit balances.
Notes to the Summarised Financial Statements for the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
35Liberty Medical Scheme Annual Report 2014
6 Personal Medical Savings Account Trust Liability, continued
The personal medical savings account trust liability contains a demand feature in terms of Regulation 10 of the Act. This means that any credit balance on a member’s personal medical savings account must be taken as a cash benefit when the member terminates his or her membership of the scheme or benefit option, and then enrols in another benefit option or medical scheme without a personal medical savings account or does not enrol in another medical scheme. Interest is paid on the personal medical savings accounts monthly based on the actual interest earned on the underlying investments. It is estimated that claims to be paid out of members’ personal medical savings accounts in respect of claims incurred in 2014 but not recorded amounted to R3.5m (2013: R3.2m) (refer note 5). Advances on personal medical savings accounts are funded by the Scheme and are included in trade and other receivables. The Scheme does not charge interest on advances on personal medical savings accounts. The personal medical savings accounts were invested on behalf of members in the following assets at 31 December 2014 in both the Scheme and Group accounts:
2014 2013
R’000 R’000
Current accounts 21 19
Call accounts 203 328 202 540
Total members' personal medical savings account trust monies invested 203 349 202 559
The effective interest rate on short-term bank deposits was 5.2% (2013: 4.6%) and these deposits have an average maturity of 30 days. The mismatch between the personal medical savings liability and asset relates to timing differences and are rectified in the new year with cashflows, as this is balanced weekly in arrears.
Notes to the Summarised Financial Statements for the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
36 Liberty Medical Scheme Annual Report 2014
7 Risk Contribution Income Group Scheme
2014R’000
2013R’000
2014R’000
2013R’000
Gross contribution per registered rules 2 084 533 1 932 362 2 084 533 1 932 362
Less: Savings contributions received and receivable * (207 245) (192 804) (207 245) (192 804)
Risk contribution income 1 877 288 1 739 558 1 877 288 1 739 558
*The savings contributions are received by the Scheme in terms of Regulation 10(1) and the Scheme’s registered rules and held in trust monies on behalf of its members. Refer to note 6 to the financial statements for more detail on how these monies were utilised.
8 Risk Claims Incurred Group Scheme
2014R’000
2013R’000
2014R’000
2013R’000
Claims incurred excluding claims incurred in respect of risk transfer arrangements
1 713 258 1 494 776 1 713 258 1 494 776
Current year claims per the registered rules 1 693 673 1 509 684 1 693 673 1 509 684
Movement in outstanding claims provision 82 825 61 771 82 825 61 771
Under provision in prior year (note 5) 2 975 377 2 975 377
Current year provision (note 5) 79 850 61 394 79 850 61 394
1 776 498 1 571 455 1 776 498 1 571 455
Managed care: healthcare services 136 206 110 687 136 206 110 687
Less: Claims paid from personal medical savings accounts* (199 446) (187 366) (199 446) (187 366)
Claims incurred in respect of risk transfer arrangements (Note 10) 15 800 10 320 15 800 10 320
Current year claims 14 852 9 549 14 852 9 549
Movement in outstanding claims provision 948 771 948 771
Current year provision (note 5) 948 771 948 771
Less: Third party claims recoveries (5 129) (7 126) (5 129) (7 126)
Risk claims incurred per the statement of comprehensive income 1 723 929 1 497 970 1 723 929 1 497 970
*Claims are paid on behalf of members from their personal medical savings accounts in terms of Regulation 10(3) and the Scheme’s registered benefits. Refer to note 6 to the financial statements for a breakdown of the movement in these balances.
Notes to the Summarised Financial Statements for the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
37Liberty Medical Scheme Annual Report 2014
9 Investment Income Group Scheme
2014R’000
2013R’000
2014R’000
2013R’000
Group and Scheme:
Cash and cash equivalents interest income 4 770 7 609 4 543 7 279
Financial assets held at fair value through profit or loss 32 796 29 633 32 796 29 633
Dividend income 1 297 1 128 1 297 1 128
Interest income 31 499 28 505 31 499 28 505
Dividend income from Subsidiary* - - 5 784 -
Interest on loans receivable 2 600 2 699 2 600 2 699
40 166 39 941 45 723 39 611
Net fair value losses on financial assets at fair value through profit or loss (10 749) (2 241) (10 749) (2 241)
29 417 37 700 34 974 37 370
Personal medical savings account trust monies invested:
Interest income 10 600 9 435 10 600 9 435
Total investment income 40 017 47 135 45 574 46 805
*The Subsidiary ceased operations on 30 June 2014 and the net assets transferred to the Scheme and distributed as a dividend, in terms of section 47 of the Income Tax Act.
10 Net Expense from Risk Transfer Arrangements Group Scheme
2014R’000
2013R’000
2014R’000
2013R’000
Premiums for risk transfer arrangements (17 927) (10 871) (17 927) (10 871)
ER24 (10 701) (8 917) (10 701) (8 917)
Prime Cure (7 226) (1 954) (7 226) (1 954)
Recoveries from risk transfer arrangements* 15 800 10 320 15 800 10 320
ER24 11 203 9 358 11 203 9 358
Prime Cure 4 597 962 4 597 962
Profit share on risk transfer arrangement - Prime Cure 1 506 - 1 506 -
Net expense from risk transfer arrangements (621) (551) (621) (551)
*Recoveries: ER24 is based on actual utilisation at Scheme tariffs and Prime Cure is based on Department of Health 2009 rates adjusted for inflation. The Scheme entered into a risk transfer agreement with Emergency Medical Care (Pty) Ltd (ER24) to provide services for the duration of the year. The services provided include emergency medical assistance and emergency medical response or transport. The agreement came into effect on 1 January 2011 and was renewed for the 2014 financial year. The Scheme has the right to terminate the agreement in not less than 90 days written notice prior to the annual anniversary date. The Scheme entered into a risk transfer agreement with Prime Cure (Pty) Ltd (Prime Cure) to provide primary care, out-of-hospital specialist and HIV managed care to the beneficiaries registered on the Traditional Basic (previously Gateway) option of the Scheme. A profit and loss sharing arrangement exists. The agreement came into effect on 1 January 2013 and was renewed for the 2014 financial year. The Scheme has the right to terminate the agreement in not less than 90 days written notice prior to the annual anniversary date.
Notes to the Summarised Financial Statements for the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
38 Liberty Medical Scheme Annual Report 2014
11 Related Parties
Parties with significant influence over the Scheme
The Administrator does not fall within the definition of a related party, however, the information has been included due to the significance of the outsourcing relationship. Vmed Administrators (Pty) Ltd has significant input over the Scheme’s financial and operating decisions, but does not control the Scheme. This is in respect of administration and managed care services. Vmedical Solutions (Pty) Ltd provided marketing and distribution services to LMS Management and Auxillary Services (Pty) Ltd (Subsidiary) until 30 June 2014 and the Scheme from 1 July 2014 and has significant input over the Group, as it provides input into Group’s financial and operating decisions, but does not control the Group.
LMS Management and Auxillary Services (Pty) Ltd (LMS MAS) was a wholly owned Subsidiary of the Scheme, which ceased operations and the remaining assets transferred to the Scheme on 1 July 2014. LMS MAS was required to provide various services including marketing, retention and related services in respect of the Scheme.
Independent Actuarial Consultants (Pty) Ltd has a significant input on the Scheme’s investment portfolio which it manages on behalf of the Scheme, participating in the Scheme’s investment decisions but without control of the Scheme.
Key management personnel and their close family members
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group. Key management personnel include the Board of Trustees and the Executive Principal Officer in relation to the Scheme and the Director in relation of the Subsidiary. The disclosure deals with full time personnel that are compensated on a salary basis (Executive Principal Officer), and Trustees who are compensated on a fee basis. Close family members includes dependants of the Trustees and Executive Principal Officer.
Terms and conditions of the administration agreement
The administration agreement with Vmed Administrators (Pty) Ltd is in terms of the Scheme rules and in accordance with instructions given by the Trustees of the Scheme. The previous contract was for a period of 3 years, from 2012. The current contract was renewed on 1 January 2015, for a 3 year period to ensure members interests are preserved.
Terms and conditions of the marketing agreement
The marketing agreement with Vmedical Solutions (Pty) Ltd is in terms of the Scheme and Subsidiary’s rules and in accordance with instructions given by the Trustees of the Scheme and Director of the Subsidiary. The contract with Vmedical Solutions (Pty) Ltd was transferred from the Subsidiary to the Scheme on 30 June 2014 and is for 4 and a half years and can be terminated by either party, subject to twelve month’s notice.
Terms and conditions of the broker agreement
The broker agreement with Liberty Life (Pty) Ltd is in terms of the Scheme rules and in accordance with instructions given by the Trustees of the Scheme. The agreement commenced on 1 January 2002 and shall continue indefinitely until terminated by either party at any time. The broker fees are paid in accordance with the requirements contained in the Act.
Terms and conditions of the investment management agreement
The investment management agreements with Independent Actuarial Consultants (Pty) Ltd is in terms of the investment policy of the Scheme and in accordance with mandates given by the Trustees of the Scheme. The agreement operates on a month-to-month basis and may be terminated by either party at any time, subject to one month’s notice. This contract was terminated with an effective date 31 January 2015.
Notes to the Summarised Financial Statements for the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
39Liberty Medical Scheme Annual Report 2014
11 Related Parties, continued
Terms and conditions of the marketing and distribution agreement
The marketing and distribution agreement with LMS Marketing and Auxillary Services (Pty) Ltd was terminated on 30 June 2014.
Group Scheme
2014R’000
2013R’000
2014R’000
2013R’000
Transactions with related parties during the period
Vmed Administrators (Pty) Ltd
Administration fees 124 926 111 398 124 926 111 398
Managed care fees 41 924 43 843 41 924 43 843
Consultancy fees - 4 104 - -
Independent Actuarial Consultants (Pty) Ltd
Investment management fees 381 440 203 -
Liberty Life (Pty) Ltd
Broker service fees 21 746 18 489 21 746 18 489
Vmedical Solutions (Pty) Ltd
Consulting fees - 10 216 - -
Merger expenses - 8 007 - -
Marketing fees 31 894 22 480 23 293 -
Key management personnel (including close family members):
Remuneration and other considerations paid (in aggregate) 8 157 6 488 7 757 5 560
Contributions received (in aggregate) (293) (489) (293) (489)
Claims (in aggregate) 254 493 254 493
LMS Management and Auxillary Services (Pty) Ltd (Subsidiary)
Marketing fees - - 33 781 76 220
Dividend income received - - (5 784) -
Balances at the end of the period
Key management personnel (including close family members):
Personal medical savings accounts payable at year-end - (14) - (14)
Remuneration and other considerations due at year-end 1 663 1 663 1 663 1 663
Vmedical Solutions (Pty) Ltd
Marketing fees payable (3 887) (6 035) (3 887) - Marketing penalty receivable 2 354 - 2 354 -
Vmed Administrators (Pty) Ltd
Performance incentive and administration fees payable - (7 952) - (7 952)
Claim recovery receivable - 1 869 - 1 869
LMS Management and Auxillary Services (Pty) Ltd (Subsidiary)
Marketing fees payable - - - (2 496)
Notes to the Summarised Financial Statements for the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
40 Liberty Medical Scheme Annual Report 2014
11 Related Parties, continued
The terms and conditions of the related party transactions were as follows:
Transaction Nature of transactions and terms and conditions thereof
Contributions received This constitutes the contributions paid/due by the related party as a member of the Scheme, in their individual capacity. All contributions were at the same terms as applicable to third party members.
Claims incurredThis constitutes amounts claimed by the related parties, in their individual capacity as members of the Scheme. All claims were paid out in terms of the registered benefits of the Scheme, as applicable to third party members.
Personal medical savings accounts
The amounts owing to the related parties relate to savings balances to which the parties have a right. The amounts are all current, and would need to be payable on demand should an appropriate claim be issued, or the member exits the Scheme.
Administration fees Fees paid/due to an administrator. Fees are paid on the same basis as applicable to third parties.
Managed care fees Fees paid/due to a managed care provider. Fees are paid on the same basis as applicable to third parties.
Marketing, distribution and penalty fees
Fees paid/due to or by a marketing service provider. Fees are paid and recovered on the same basis as applicable to third parties.
Investment management fees
Fees paid/due to an investment manager. Fees paid are in terms of agreement and market related and on the same basis as applicable to third parties.
Broker service fees Fees paid/due to brokers. Fees are paid in terms of the regulations and on the same basis as applicable to third parties.
Remuneration and other considerations
This constitutes fees paid/due to key management for the services provided to the Scheme. All remuneration was paid in terms of the registered rules and policies with the Scheme and on the same basis as applicable to third parties.
12 Critical Accounting Judgements and Areas of Key Sources of Estimation Uncertainty
In the process of applying the Group’s accounting policies and making key assumptions concerning the future and other key sources of estimation uncertainty at the statement of financial position date, the Trustees have made the following judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities in the next financial year:
(a) The ultimate liability arising from claims made under insurance contracts
There are some sources of uncertainty which need to be considered in the estimate of the liability that the Scheme will ultimately pay for such claims. Initial estimates are based on calculations of reported claims and derived as the claims process develops. All estimates are revised and adjusted at year-end by management. For details of assumptions included in the provision for outstanding claims, covered and not covered by risk transfer arrangements, refer to note 9. (b) Risk transfer arrangements The critical accounting estimates and judgements relating to risk transfer arrangements are set out in note 10.
13 Events after the Reporting Period
There have been no other events, other than elsewhere disclosed in this report, that have occurred subsequent to the financial year-end that materially affect the financial statements and that the Trustees believe should be brought to the attention of the members of the Group.
Notes to the Summarised Financial Statements for the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
41Liberty Medical Scheme Annual Report 2014
14 Contingent Assets
The Scheme has 762 (2013: 720) outstanding road accident claims receivable to the value of R51.1m (2013: R48.3m). Due to the uncertain outcome of claims from the Road Accident Fund, the Scheme has not accounted for the inflow of economic benefits. The income is accounted for on a cash basis.
15 Significant Matters
The Board of Trustees has assessed the Scheme’s ability to continue as a going concern for at least the next reporting period of twelve months. Various key financial data and the Scheme’s operational and strategic plans have been considered by the respective levels of management. Indicators chosen for assessment were based on generally accepted practices and medical scheme industry requirements. Notwithstanding the Scheme’s solvency ratio as at 31 December 2014 was 17.2%, the Scheme believes that it is in a position to meet the short-term obligations through conservatively managing all of the costs and growing the Scheme in line with the growth projections.
The Scheme also believes that with the following initiatives it will achieve, in the medium-term, the solvency level of 25%:
• On-going alignment and further collaboration with Liberty Group;• A joint and multi-faceted (although realistic) growth strategy being driven predominantly through Liberty’s Retail distribution force;• A Liberty Individual and Corporate Customer Value Proposition that includes healthcare products and other product offerings;• Decreasing non-healthcare expenditure;• Addressing benefit design and pricing, with minimum member impact; and• A 5 year conservative business plan formulating the desired output, measurement and action plans.
This would not only see the Scheme maintain this position, but these interventions will actually improve the Scheme’s position moving forward.
The Scheme is not in a net liability position, and the Scheme is satisfied it is able to meet its liabilities at all times for the period under review. The Scheme has assessed the capital adequacy requirements as mentioned above. The Scheme’s liquidity risk and the availability of liquid funds to meet short-term cash requirements are closely and regularly monitored by management. Key financial indicators were also assessed at 31 December 2014. The above-mentioned risks are closely monitored by the Scheme through the Board of Trustees, the Finance and Investment Committee and the Scheme actuaries through the monitoring of monthly actuarial, financial and operational reporting. In the Scheme’s opinion it is therefore appropriate to adopt the going concern basis in preparation of the results for the year ended 31 December 2014.
Notes to the Summarised Financial Statements for the year ended 31 December 2014
Group and Scheme Summarised Financial Statements
42 Liberty Medical Scheme Annual Report 2014
Proxy Form for the 17th Annual General Meeting
This proxy form is to be completed and returned by post to:LIBERTY MEDICAL SCHEMEATTENTION: The Executive Principal OfficerPrivate Bag X10Florida Hills, 1716
Or hand-delivered to the Scheme offices at:Corner Rivonia and 5th Street 8th Floor Office Tower Sandton City Sandton
Or emailed to: [email protected]
I,______________________________________________________________________________________, being a member of the Scheme, do hereby appoint:
Please tick:
Member name ________________________________________________________________________________ Membership number _____________________________________________ Signature ______________________________________________________________________________________ as my proxy to attend, speak and vote on my behalf at his/her discretion at the Annual General Meeting.
As Alternative
Please tick:
the Chairperson of the meeting, as my proxy to vote at his/her discretion on my behalf at the Annual General Meeting which will be held at 12h00 on Thursday, 25 June 2015 at Century City, Ground Floor, Liberty Life Building, Century Boulevard, The Estuary Precinct.
1. A member whose contributions are not in arrears is entitled to attend, speak and vote at the meeting or is entitled to appoint a proxy who must be a member of the Scheme, or as alternative, the Chairperson of the meeting, who is a member of the Scheme, to attend, speak and vote in his/her stead (rule 27.1).
2. This proxy must reach the Scheme by no later than seven (7) days prior to the meeting (rule 26.1.5). Any alteration(s) made on this proxy form must be initialed.
3. Incomplete forms will be declared null and void.4. Only duly completed and signed proxy forms shall be valid. A member is entitled to submit one proxy form only.
Signed at on 2015
Signature Membership number
43Liberty Medical Scheme Annual Report 2014
Held on Friday, 29 August 2014 at 10:00 at The Wanderers Club 21 North Road Illovo, Johannesburg
Trustees present:
Ms Debbie Kotzen ChairmanMr Otto Pretorius TrusteeMr Leon Smith Trustee Mr Andrew Edwards Executive Principal Officer Members Present (Including Chairman and Trustees): 23 Members Proxies Received: 233 Valid Proxies Received: 204 Invalid Proxies Received: 29 Apologies: Dr Peter Hill
1 Welcome and quorum
The Chairman welcomed all to the 16th Annual General Meeting of the Liberty Medical Scheme. She welcomed and handed over to Mr Louis Strydom from PwC who greeted everyone present and read out all the names of the members of the Scheme present. He declared that the meeting was dully constituted and quorate based on the 23 members present at the meeting. Mr Strydom confirmed that there are 233 proxies received and of those 204 are valid proxies.
Mr Leon Smith: 3 ProxiesMr Keith Atkins: 1 ProxyMs Tia Niemand: 195 ProxiesMr Bheki Maphungose: 1 ProxyMs Debbie Kotzen: 5 Proxies
Mr Strydom handed back to the Chairman.
The Chairman continued to welcome members of the scheme, members of the Board, representatives of auditors PwC, KPMG & BDO, representatives of the scheme’s legal team and Mr Stephen Mmatli of the Council for Medical Schemes, staff members of the scheme and the administrator with the necessary quorum of 15 paid – up members being present, she declared the meeting open.
Before the mandated business could commence, the Chairman reminded all present that the purpose of the meeting is to:
introduce the newly elected Trustees;receive and adopt the Report of the Board of Trustees for 2013;receive and adopt the audited annual financial statements;receive and adopt the Auditors’ report for 2013;to note the appointment of the Auditors; andto discuss business of which due notice has been received.
Due to the fact that matters concerning any individual member’s health cannot be discussed in a public forum the Chairman requested that queries relating to membership and claims be held to the end of the meeting as there is staff from the administrator present to assist with any of these matters.
She further reminded the members that the building the AGM was being held in did not belong to the Scheme and that the owner of the building does have a right of admission policy.
Minutes of the 16th Annual General Meeting
44 Liberty Medical Scheme Annual Report 2014
Minutes of the 16th Annual General Meeting, continued
2 Notice of Meeting
The Chairman confirmed that due notice of the AGM was given in accordance with the provisions of the Scheme Rules. Non-receipt of the notice does not invalidate the meeting. She therefore considers the meeting duly constituted.
3 2014 Trustee and Election Results
The Chairman reminded the members present that in terms of the Scheme Rules the management and control of the Scheme vested in a Board of Trustees.
The Chairman announced that in terms of the Scheme Rules, the tenure of Ms Christine Kinsman, Ms Shauneen Beukes, Mr Mike Garland, Mr Jonny Bagg, Dr Ephraim Nematswerani and Mr Otto Pretorius as trustees expired today, the 29th August 2014.
Due to changes in the Scheme Rules, the Board of Trustees is to comprise of no less than 6 and no more than 7 trustees. In terms of the Medical Schemes Act and the Scheme Rules, the Board of Trustees is obliged to have at least 4 elected trustees. The remaining trustees are appointed by the elected trustees. Accordingly, 3 vacant seats had to be filled by election. The Chairman was elected in 2012, and remains in office for another year.
The Board of Trustees therefore embarked on an election process to have trustees elected in accordance with the provisions of the Scheme Rules. The Chairman invited PwC to the podium to announce the successful candidates.
Mr Louis Strydom from PwC announced the election results:
1. Mr Otto Pretorius: 672 votes2. Mr Leon Smith: 568 votes3. Mr Peter Hill: 553 votes4. Mr Jonathan Bagg: 439 votes5. Mr Keith Atkins: 282 votes6. Mr Yaswat Gordham: 194 votes
Mr Strydom handed over to the Chairman who introduced the 3 newly elected Trustees
1. Mr Otto Pretorius2. Mr Leon Smith3. Dr Peter Hill who was out of the country
The Chairman mentioned that the elected trustees will embark on a process of identifying suitable persons to be appointed as trustees in accordance with the rules of the Scheme. She thanked PwC for the efficient process followed and congratulated the newly elected trustees. The Chairman thanked the outgoing trustees for all their hard work and wished them all the best for the future.
4 The Report of the Board of Trustees
The Chairman confirmed that the Board of Trustees’ Report to the members of the Scheme for the year ended 31 December 2013 was duly available to all members.
The Chairman requested that questions be held off until the questions section towards the end of the AGM. The Chairman proposed that the report be taken as received and read. The Chairman gave an overview of the year under review.
Liberty Medical Scheme, albeit smaller than the top three schemes in the market is a very large business with revenue of just under R2 billion a year and claims of R1.5 billion per annum. In anybody’s book, the Scheme is a very large entity. The Scheme is like the rest of the industry under solvency ratio pressures and has taken a reasonably conservative approach in its investment strategy in order to remain less affected in times when the world economies are affected by financial turmoil. Even with this conservative strategy, the Scheme achieved a 7.8% return on its investments.
45Liberty Medical Scheme Annual Report 2014
Minutes of the 16th Annual General Meeting, continued
4 The Report of the Board of Trustees, continued
The average claims ratio over the year was 86.1% with an average net contribution per beneficiary per month being R1227 versus average net claims per beneficiary per month being R1061. The 2013 financial year was a good year with the Scheme delivering results of R55.5 million better than budget. The Regulation 29 Scheme reserves at the end of 2013 were R471 million equating to a Scheme solvency ratio of 24.4%. The Scheme had assets of approximately R800 million as at 31 December 2013. The industry as a whole is under tremendous pressure to maintain healthy solvency levels and at the same time implement contribution increases which are anywhere close to normal inflation. The Scheme has an A+ credit rating which indicates stability and high claims paying ability. This is on the higher side of the rating spectrum. The larger Schemes enjoy higher ratings due to much larger risk pools and larger membership. The pressures being brought upon Liberty Medical Scheme are similar to other Schemes and are mainly due to a lack of a set tariff in the industry, prescribed minimum benefit claims which make 60% of the total claims, a very competitive landscape to compete in with no new entrants into the medical schemes pool, and the loss of GEMS members. The government employees are being cohersed to GEMS from open Schemes and these are predominantly low claimers. As a result this has a negative claim bearing on Liberty Medical Scheme. The Scheme has lost members due to these reasons.
The Chairman was pleased with the implementation and progress of the new sales strategy. The Liberty group has affirmed their commitment to Health by buying out the minority shareholders in the aAministration Company for a purchase price of R134 million. In addition to this, Liberty Group has formed a new distribution area with a retail arm to specifically focus on health distribution.
They have seconded a long standing senior retail executive to head up the distribution area and drive the sales strategy. Liberty Group has further invested financial resources to bolster this operation. The agreed targets will benefit the Scheme and the average age of the Scheme will also considerably drop once these targets are achieved. The sales force as bonuses will be impacted if sales targets are not achieved. Liberty Medical Scheme looks forward to a long mutually beneficial relationship with Liberty Group. There has been a 33% improvement on new member registrations. This growth has come from a younger demographic which helps the Scheme overcome its aging profile to improve claims and sustainability. A robust retention strategy is also paying dividends with fewer members resigning from the Scheme compared to 2013.
The Scheme was in the final stages of concluding a merger transaction with Spectramed. Due to circumstances out of the Scheme’s control, the merger was called off after member and Competition Commission approval. At the same time, other merger transactions were explored and significant headway was made in terms of the merger blueprint going forward. Due to complexity and specific skills required to support such complex transactions, there are associated costs. The Scheme continues to explore more merger opportunities with Schemes in order to ensure the long term sustainability of Liberty Medical Scheme.
Liberty Medical Scheme strives to remain below the 15% level for non-healthcare expenditure which is the accepted industry norm. Unfortunately with the loss of membership, as it happened since the Medicover merge, the fixed costs component had a detrimental effect on the non- healthcare expenses, just exceeding the 15% in 2013. This was also due to extraneous costs. However, the Scheme was pleased to advise that year to date, non-healthcare expenditure for 2014 has been maintained at a level below 15%.
The Remuneration Committee comprise of three independent members to provide objective oversight to the Scheme’s remuneration practices. The Scheme commissioned PwC to do an industry benchmark study. The total Trustee remuneration has continued to decline in quantum per annum and not per Trustee as incorrectly stated in the member pack. The Scheme recognises the sensitivity associated with Trustee remuneration and it is the stated intention of the Board to ensure that Trustees are not excessively remunerated for their time and responsibility. It is also the stated intention of the Board to ensure that the correct resources are obtained and retained on the Board of Trustees. The Remuneration Committee gives due consideration to benchmarks and the time and contribution of individual Trustees. The Board awaits the remuneration guidelines for the CMS and will follow it to ensure Trustee remuneration is in line with industry standards and its accepted norms. The governance of medical schemes comes with an ever increasing liability which requires specific skills and experience with increased responsibility. This results in a smaller pool of suitable individuals.
The healthcare industry is unfortunately an extremely unstable environment. Legal fees of most schemes in the market have increased considerably over the recent years. There are considerable challenges that require legal input. An example is the scheme having to defend itself against an un-registered regimen of medicines prescribed by a practitioner that would cost the scheme between R7m and R9m per annum for one member. In this case the regimen of medicine is not yet registered in terms of efficacy and other measures. The scheme won this Appeal and it goes without saying that cases that could set precedence have to be defended by highly competent individuals. There have also been numerous legacy issues with regards to certain property loans that were transferred to Liberty Medical Scheme during the Medicover Merger.
46 Liberty Medical Scheme Annual Report 2014
Minutes of the 16th Annual General Meeting, continued
4 The Report of the Board of Trustees, continued
The Scheme is duty bound to recover these monies which comes with increased legal fees. However, the recoveries far outweigh the expenditure. The Scheme would like to reduce this line item although the 2014 election will have a negative bearing on it. The matter relating to the payment to Advocate Mkhize is being resolved with the termination fee being recouped. However, this is being delayed with Appeal processes that Advocate Mkhize has embarked on.
Post balance sheet item is the closure of MAS due to the changes in strategic direction. This is being done in consultation with the Regulator and the transfer of assets to the Scheme is in the order of R6m and R7m. The 2014 year has shown an increased claims strain in Liberty Medical Scheme as well as the industry. High cost cases are up year on year and the aging profile with expensive technology and the weaker rand are real obstacles to managing claims costs within acceptable norms. The Scheme with its administrator will continue to manage the Scheme’s finances and resources prudently as well as aggressively attempting to improve the demographic profile. Generally the Scheme’s options are viewed as highly competitive in the industry offering generous benefits by actively improving the profile, the Scheme’s options and sustainability will improve even more over time.
The Chairman took the opportunity to thank all of the Scheme’s suppliers, contracted providers for all they are bringing to the Scheme. On behalf of the new Board of Trustees, the Chairman thanked the members for their keen interest in the Scheme. The Board would like to continue to ensure that members enjoy the top quality cover they have had for so many years. The Scheme encourages dialogue and questions that impacts the members. The working relationship with the CMS will be fostered even further. The trustees will ensure that the Scheme membership is grown and the sustainability of the Scheme is improved going forward. They will employ the highest governance standards throughout all the Scheme’s dealings.
The Chairman thanked the members for their continued support. The Chairman further thanked the outgoing Trustees. The motion to adopt the report of the Board of Trustees was supported by 223 members with two members voting against the motion. The motion to approve the report of the Board of Trustees was carried.
5 Administrator Presentation
Ms Mbali Khumalo representing Liberty Health, the administrator of the Scheme, gave a brief overview of the administration services which was well received by the members.
6 To receive and adopt the Audited Financial Statements for the Year ended 31 December 2013, having been made available to members
The Annual Financial Statements and Auditor’s Report for the year ended 31 December 2013, having been made available to members, were taken as read. The Chairman moved that the audited financial statements be adopted and approved. Ms Mackenzie seconded the motion. 118 members were in favour of the motion to approve the audited financial statements and one member was against the motion. The motion to approve the audited annual financial statements was carried.
7 To note the Appointment of the Auditor
The Chairman proposed that KPMG be appointed as auditors for the 2014 financial year as recommended by the Audit Committee which comprises three independent members. 211 members were in favour of KPMG being appointed as Liberty Medical Scheme external auditors for the 2014 financial year. One member was against the appointment of KPMG. The motion to approve the appointment of KPMG as the external auditors for the 2014 financial year was carried.
47Liberty Medical Scheme Annual Report 2014
8 Business of which due notice has been received
8.1 Motion 1: Amendment to Liberty Medical Scheme Main Rule 18.2
Mr Atkins thanked the Chairman and congratulated the new Trustees on their successful election to the Liberty Medical Scheme Board. Mr Atkins mentioned that in the current Scheme Rules the elected Trustees hold office for three years and shall Trustee shall be available for re-election for further terms of 3 years each, ad infititum.
Mr Atkin proposed that an elected Trustee shall hold office for three years and should be eligible for re-election for one further term only. As it stands you can have one Trustee on Liberty Medical Scheme’s Board forever. Mr Atkins felt that it wasn’t the correct way for such a dynamic organisation like Liberty Medical Scheme. There should be change and he believed that a maximum of two three year terms will enable new people to serve and bring new skills to the Board.
The Chairman called on Mr Bagg to share his views and respond on behalf of Liberty Medical Scheme’s Board. Mr Bagg responded that the Trustees were not in support of the motion because it was invaluable for Board to have trustees with experience. The Board believed that the democratic rights of members were protected by trustees having to be re-elected every three years. It was also incumbent on the Trustees to go for the on-going training. The Chairman put the motion to the meeting and six members were in favour of the motion and 203 members were against. The motion was not carried.
8.2 Motion 2: Amendment to Liberty Medical Scheme Main Rule 18.4.3
Mr Atkins stated that the current rule states that “Existing elected Trustees whose term is ending will automatically be nominated as such for a further term unless such a Trustee informs the scheme in writing that he does not wish to be elected as a Trustee for a further term.” Mr Atkins proposed that Rule 18.4.3. be deleted as there is no valid reason why existing Trustees should be subject to a different and preferential form of nomination process than other members of the scheme. The Chairman put the motion to the meeting to delete Main Rule 18.4.3 and 207 members were in favour of the motion. The motion was carried.
9 General
9.1 Trustee Remuneration
Mr Hennig stated that Trustees can only govern within the Scheme rules. Trustee remuneration fall under the governance of the Scheme. He mentioned that the disclosure of Trustee remuneration is in the Scheme rules and that it was not presented to the members at today’s AGM. He further stated that amendments to the rules were being done without informing the members. He gave an example of a rule change that was not communicated.
Mr Hennig recommended that the Remuneration Committee do an annual presentation at the AGM on Trustee Remuneration.
The Chairman thanked Mr Hennig and requested Mr Pretorius to respond to Mr Hennig’s recommendation. Mr Pretorius mentioned that the Board gets its mandate from members and governs by mandate rather than referendum. The rules provide for an independent Remuneration Committee. The Board has no objection to the Remco doing an annual presentation at the AGM. The Board commissioned a benchmarking study in 2013 and awaits the guidelines from the CMS in 2014. He explained the committee structure and the division of the workload amongst the trustees. He pointed out the preference of members to have highly skilled members serving as trustees.
Mr Hennig was concerned that the financial statements were not made available to members. The Chairman confirmed that the electronic financials were made available to members and that the highlights report was posted on the Scheme’s website. Mr Dalmas commented that the financials were not available to the members. Mr Hennig read a section from the Scheme rules and asked why the financials were not mailed to members on request. Mr Van Jaarsveldt responded that this was costing the Scheme a lot of money and in order to contain costs, the financials are made available to members electronically on request. Mr Hennig asked how members can be expected to adopt financials that they have not seen. Mr Smith mentioned that he went to the office and obtained the financials. Ms Smith also said that the Trustee expenses have decreased considerably compared to the previous financial year. Mr Dalmas concurred with Mr Smith’s observation regarding the noted decrease in Trustee expenses. Mr Atkins asked Mr Pretorius regarding the point contained in Scheme Rule 18.1.7 which state that members of the Board are “reimbursed”. Mr Pretorius thanked Mr Atkins and agreed that the wording must be reviewed.
Minutes of the 16th Annual General Meeting, continued
48 Liberty Medical Scheme Annual Report 2014
9 General, continued
The EPO requested Mr Hennig to table his recommendation regarding Trustee remuneration an annual presentation on as a motion in order for members to vote on it. Mr Hennig requested that the Remuneration Committee present the remuneration of the Trustees annually to the AGM. 294 were in support that the remuneration of Trustees be presented to members at the AGM. It was agreed that Trustee remuneration will be presented at the next AGM.
Mr Hennig’s complaint regarding the minutes of the previous AGM which were not tabled for approval was noted. It was further noted that Mr Hennig intended laying a formal complaint with the CMS for not tabling these minutes at the AGM for approval by the members. Mr Van Jaarsveldt explained that then reason for not tabling the minutes for approval was because the majority of members present were not present at last year’s AGM in East London and would therefore not be in a position to approve it.
Mr Van Jaarsveldt confirmed that the AGM minutes were approved by the BOT at a meeting held by the Board prior to the AGM. Mr Van Jaarsveldt further confirmed that the Scheme obtained an opinion that confirmed that it was not necessary to table the minutes for approval at the AGM. Mr Hennig reiterated that it was important for the minutes to be available in order to review and learn from the matters raised at the previous AGM. Members can also refer to the minutes in order to have a sense of the matters discussed at the AGM. Mr Van Jaarsveldt mentioned that the approved AGM minutes will be made available to members and posted on the website for ease of access.
The following questions were raised by the members:
1. Mr Jankelowitz asked when Mr Dan Pienaar is going to repay the Scheme for his legal fees. The EPO responded that Mr Jankelowitz raised a historic matter that started 4-5 years ago. The EPO requested Mr Jankelowitz
to put his question and the proof of its validity in writing directly to him. The EPO will respond in writing and copy the Board of Trustees. Mr Jankelowitz was pleased with the EPO’s response.
2. Mr Jankelowitz mentioned that there were concerns regarding the Scheme’s competitiveness in the market as the exclusions are becoming more. Mr Jankelowitz asked how the Product Committee was structured and asked if there can more member participation in the Committee.
The EPO responded that by extension the members are represented in the Committee by the Trustees that they have elected. He requested Mr Jankelowitz to put all his concerns on a list. It will be referred to the specialists that provide advice to the Scheme.
3. Mr Hennig commented that year on year the Scheme spends exorbitant amounts obtaining legal advice and questioned the
effectiveness thereof. He asked if there was a tender process in place for appointing new legal advisors. The EPO responded that it was incumbent on the Board of Trustees to review all Scheme contracts including the services of the
Scheme legal’s advisors going forward.
10 Closure
The Chairman thanked the members of the Scheme for attending the AGM. There being no further business to discuss, the Chairman declared the meeting closed at 11h42.
Signed as a True Record
EPO: Date
Chairman: Date
Minutes of the 16th Annual General Meeting, continued
Liberty Medical SchemePrivate Bag X3, Century City, 7446 Call Centre 0860 000 567www.libmed.co.za
© Liberty Medical Scheme 2015
STUDIO-GV-20150601