Sasria Annual Report 2016 2017pmg-assets.s3-website-eu-west-1.amazonaws.com › ... · 4 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 Sasria SOC Ltd Corporate Plan & Budget

Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 3

1. Overview ..........................................................................................................................................3

2. Purpose of Sasria .............................................................................................................................4

3. Vision ................................................................................................................................................4

4. Mission .............................................................................................................................................4

5. Core Values ......................................................................................................................................4

6. Mandate ...........................................................................................................................................5

7. Operating Principles .......................................................................................................................5

8. Business Model ................................................................................................................................6

9. Delegation of authority ..................................................................................................................8

10. Governance Framework..................................................................................................................8

11. Organisational Structure ..............................................................................................................13

12. Financial Resources Income .........................................................................................................16

13. Risk Management .........................................................................................................................16

13.1 Enterprise Risk Management process ................................................................................................. 16

14. Analysis of Competencies & Environment ..................................................................................19

14.1 Current competencies & resources ...................................................................................................... 19

14.2 Environment within which Sasria operates ...................................................................................... 19

15. Strategic Focus Areas & Strategic Objectives .............................................................................23

15.1 Sustainable revenue growth .................................................................................................................. 24

15.2 Capital management ................................................................................................................................ 24

15.3 Innovation (products & services) .......................................................................................................... 24

15.4 Infrastructure & cost management ...................................................................................................... 24

15.5 People, capacity and capability ............................................................................................................ 25

15.6 Regulatory environment ......................................................................................................................... 25

15.7 Customer-centricity ................................................................................................................................... 25

15.8 Brand development .................................................................................................................................. 25

16. Beyond 2020 ..................................................................................................................................26

16.1 LSM/SME feasibility project .................................................................................................................... 27

16.2 Agriculture insurance administration project .................................................................................. 29

16.3 Enterprise Architecture project ............................................................................................................. 31

16.4 Incubation programme ............................................................................................................................ 34

16.5 IFRS 17 project ............................................................................................................................................. 35

17. SWOT Analysis ...............................................................................................................................36

18. Dividend Policy .............................................................................................................................37

19. Key Strategic & Financial Assumptions .......................................................................................37

20. Key Performance Indicators .........................................................................................................37

21. Alignment of Strategic Objectives to the National Development Plan ....................................45

22. Borrowing Plan ..............................................................................................................................46

23. Supporting Documents ................................................................................................................76

24. Approval ........................................................................................................................................47

ANNEXURE 1: SIGNIFICANCE & MATERIALITY FRAMEWORK .....................................................................48

ANNEXURE 2: FINANCIAL PLAN ....................................................................................................................49

ANNEXURE 3: TOP 10 RISK REGISTER ...........................................................................................................52

ANNEXURE 4: FRAUD PREVENTION PLAN ...................................................................................................66

Corporate Plan & Budget 2018 - 2019

1. OVERVIEW

Sasria SOC Limited (Sasria) is a public enterprise listed under Schedule 3B of the Public Finance Management Act No. 1 of 1999. It is a Short-Term Insurance Com-pany that provides coverage for damage caused by special risks such as politically motivated malicious acts, riots, strikes, terrorism and public disorders.

During the 1976 Soweto uprisings, the Short-Term Insurance Industry decided that it could no longer underwrite losses arising from politically motivated acts of civil disobedience and unrest of the time as the risk was too high and it was dif-fi cult, if not impossible, to purchase reinsurance cover. This resulted in the incorporation of the South African Special Risk Insurance Association (SASRIA) as a Section 21 Company under the old Companies Act (No. 61 of 1973).

The operational structure of Sasria comprised a membership network pool that included all registered Short-Term Insur-ance Companies that underwrite the fi re peril.

Section 6 of the Finance Act No. 94 of 1978 empowered the then Minister of Finance to enter into a Reinsurance Contract with Sasria as a Stop Loss Re-insurer. This Section also aff orded a monopoly to Sasria as the only Insurer with authority to underwrite political perils in the Republic of South Africa. The Reinsurance of Material Damage and Losses Act No. 56 of 1989 had the same eff ect as Section 6 of the Finance Act 94 of 1978.

In terms of Section 10 (i) (t) of the Income Tax Act No. 58 of 1962, Sasria was exempted from paying tax from the date of incorporation. This Section was however repealed, and from January 1996 Sasria became a tax paying entity.

Financially, Sasria started with a zero base. Due to lack of worldwide reinsurance coverage, it was reinsured to a limited ex-tent by the Members of Sasria. In addition, the stop loss coverage aff orded by Government gave cover in excess of Sasria’s reserves and reinsurances in an unlimited amount. Initial rates were agreed with the industry as the risks which Sasria cov-ers were actuarially considered to be uninsurable.

At the time, the mission statement was to underwrite any perils that the conventional insurance market was unwilling or unable to underwrite. Consequently, the perils of Sasria were expanded and encapsulated in the Reinsurance of Material Damage and Losses Act No. 56 of 1989 read in conjunction with the Conversion of Sasria Act No. 134 of 1998.

From the mid 1980’s to date, Sasria perils comprised of the following:i. any act (whether on behalf of any organisation, body or person, or group of persons) calculated or directed to over-

throw or infl uence any State or Government, or any provincial, local or tribal authority with force, or by means of fear, terrorism or violence

ii. any act which is calculated or directed to bring about loss or damage in order to further any political aim, objective or cause, or to bring about any social or economic change, or in protest against any State or Government, or any provin-cial, local or tribal authority, or for the purpose of inspiring fear in the public, or any section thereof

iii. any riot, strike or public disorder, or any act or activity which is calculated or directed to bring about a riot, strike or pub-lic disorder (the term “Public Disorder” shall be deemed to include civil commotion, labour disturbances or lockouts)

iv. any attempt to perform any act referred to in clause (i), (ii) or (iii) abovev. the act of any lawfully established authority in controlling, preventing, suppressing or in any other way dealing with any

occurrence referred to in clause (i), (ii), (iii) or (iv) above.

Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019 | 54 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019

Given the monopoly, tax exempt status and low loss history over the years, Sasria accumulated substantial reserves. Ac-cordingly, in the mid 1980’s it was able to purchase reinsurance coverage in the international markets obviating the need for the insignifi cant coverage provided by its members.

In 1998, the Government together with Sasria and its Members reached consensus that the assets of Sasria should be dis-tributed for the benefi t of the people of South Africa. As a Section 21 Company, Sasria was unable to distribute any surplus-es generated. To remedy this situation, the Conversion of Sasria Act No. 134 of 1998 (the Act) was passed and it eff ectively:

• Converted Sasria to a Limited Company.• Made the State the sole shareholder of Sasria Limited.• Allowed an actuarial determination of assets surplus to the needs of Sasria.• Allowed for the payment of the determined surplus as a special dividend payable to the Shareholder to be used to

off -set interest on State debt.• Allowed for the privatisation of Sasria Limited.

The Act was eff ectively implemented and over a two-year period, Sasria was able to pay special dividends totalling approxi-mately R11 billion, to Government.

Currently Sasria functions through a network of agents, the underlying insurance companies. The agents issue the Sasria Coupons and Policies on behalf of Sasria, permit Sasria to attach to the terms and conditions of the underlying policy and are responsible for the premium collection.

During 2012, the new Companies Act (No. 71 of 2008) came into eff ect. One of the requirements was the inclusion of “SOC” in the company name for all State Owned Companies. Sasria Limited became known as Sasria SOC Limited.

2. PURPOSE OF SASRIA

The principal purpose of Sasria is to provide cover for damage caused by those risks listed in the Reinsurance of Material Damage and Losses Act No. 56 of 1989, and any other risks which may be deemed necessary or viable by management and board of directors of Sasria. In addition, it is the purpose of Sasria to research and investigate coverage for any special risk that can be considered to be of national interest.

3. VISION

The vision of Sasria is “To protect the assets of all in South Africa against special risks”.

4. MISSION

The vision will be achieved via our mission of driving a sustainable and vibrant business by:• Balancing shareholder value creation with positive social impact;• Providing excellent customer service;• Being clear and consistent in our communication to our stakeholders;• Developing the skills and capacity of our employees;• Improving our current strategic partnerships and establishing new ones; and• Providing innovative and relevant products.

5. CORE VALUES

The following values underpin Sasria’s pursuit of its stated vision and mission:

Professionalism: We will treat our stakeholders, being customers, employees and shareholder with respect and dedication while remaining accountable to them.

Integrity: We will conduct ourselves in a manner that is fair, transparent and ethical, and uphold high levels of equality and trust.

Teamwork: In the performance of our tasks we will be guided by the ideals of unity of purpose, cooperation and mutual respect.

Innovation: We will create opportunities for creativity and learning, and encourage the same amongst our employees.

Customer centric: We will strive at all times to meet and exceed our customer’s expectations.

6. MANDATE

Sasria is the only short-term insurer in South Africa that provides cover against special risks such as civil commotion, public disorder, strikes, riots and terrorism.

Sasria is accountable to the Minister of Finance via National Treasury. Like all the other insurance companies in South Af-rica, Sasria operates within a well-developed framework regulated by the Financial Services Board (FSB), the non-banking fi nancial services industry regulator. Sasria is a member of various industry associations.

Sasria has a dual mandate:

• Our legislative mandate as a short-term insurance company is to provide cover for special risk events in terms of the Reinsurance of Material Damages Act; and

• Our broader strategic mandate as a state-owned company is to make a positive contribution to transforming the fi nancial services industry in line with the National Development Plan (NDP), in order to create a better, sustainable economic environment for all South Africans.

Sasria delivers on this mandate in a number of ways. These range from delivering continued solid fi nancial results, which enables the company to remain self-funded as a state-owned company, whilst growing and transforming the insurance market and fi nancial sector through a number of initiatives; and Sasria’s Corporate Social Investment (CSI) spend.

7. OPERATING PRINCIPLES

Sasria conducts business in a responsible, disciplined, professional and well-governed way. As a state-owned company, Sasria plays a meaningful role in society by off ering products that will assist in the protection of assets in South Africa against potentially catastrophic special risk events. The company is proudly South African and passionately committed to accelerating its growth and business transformation goals. Sasria’s operating principles are:

• To operate with a core staff compliment.• To operate via an outsourced distribution network (agents) comprising of other short-term insurance companies.• To have suffi cient reinsurance treaties and covers in place• To strive to achieve optimal investment returns.

Sasria also:• Identifi es the insurance needs of the public through research and development.• Conducts itself in a manner that promotes co-operation, mutual understanding and fosters good relations with

relevant third parties, agent companies and intermediaries (brokers) and end-customers in the same manner.• Develops and maintains a work environment that encourages employment equity and skills development.• Establishes a co-operative relationship with employees in order to work towards common goals of profi tability and

high performance.


8. BUSINESS MODEL

Sasria’s unique business model (Figure 1) enables the company to minimise its operating expenses, off er an extremely af-fordable product to protect the assets of the people of South Africa against special risks, and sustain its solid track record of fi nancial performance.

The company does not sell its products directly to end-customers. Instead, it enters into agreements with other short-term insurance companies and intermediaries in South Africa,who then as agents, represent and sell the special risks cover to the end-customers, be they individuals, businesses, government or corporate entities. The agents and brokers (intermedi-aries) engage with the end-customers on policy administration and collect premiums on behalf of Sasria, in exchange for a service fee.

The only contact that Sasria has with end-customers is on the settlement of claims. Customers submit claims to the inter-mediaries or insurance companies, which confi rm their validity prior to submission to Sasria. Sasria receives and verifi es all claims before payment directly to the customer.

Profi ts, after payment of all claims are invested, subject to retention of adequate liquid reserves. Sasria’s investments earn good investment returns in the form of interest and/or dividends and capital growth.

Operational costs for managing the business include reinsurance premium to reinsurers, the salary bill for employees, compensation to directors and procurement of goods and services. Sasria also pays all the relevant taxes and statutory fees to the authorities, including dividends to the shareholder from the reserves.

Agent

companies and

brokers

Reinsurers

Investments

People

Suppliers

Authorities

Shareholder

Customers

S a s r i a

Pay

clai

ms

Pay commission

Receive

premiums, claim

s

Receive return commission

and reinsurance recoveries

Pay reinsurance

premiums

Invest profit

Pay premiums Submit claims

Pay salaries, directors’ and consulting fees

Make paymentsPay taxes and fees

Pay dividendReceive interest,

dividends, capital growth

Receive servicesProcure products and

services

Figure 1: Sasria’s business model.


9. DELEGATION OF AUTHORITY

The Board of Directors of Sasria derives its authority from the following:

• Companies Act No. 71 of 2008• Conversion of Sasria Act No. 134 of 1998• Reinsurance of Material Damages and Losses Act No. 56 of 1989• Public Finance Management Act No. 1 of 1999• Short-Term Insurance Act No. 53 of 1998• King IV Report on Governance for South Africa 2016• FSB License• FSB Regulations• National Treasury’s Signifi cance- and Materiality Frameworks.

10. GOVERNANCE FRAMEWORK

Sasria will continue its practice of applying sound governance structures, procedures and processes during the next fi nancial year. We consider these fundamental to the eff ective delivery of our dual mandate, as well as ensuring our company’s long-term sustainability.

The Board is committed to the principles of openness, transparency, integrity and accountability as advocated in the King IV Report on Corporate Governance for South Africa 2016 (King IV). This commitment to good governance is formalised in the company’s charters, policies and procedures.

The Board has fi ve committees which assist it to drive Sasria’s strategic mandate. These include the four statutory committees, namely the Audit Committee, Risk Committee, Remuneration and Nomination Committee and the Social and Ethics Commit-tee, as well as the Investment Committee (Figure 2).

Figure 2: Sasria’s corporate governance framework.

Currently, the Board of Directors comprises eight Non-Executive Directors, of whom seven are independent and one Executive Director, with the vacancy of the Finance Director position (Table 1). They meet minimum four times a year to provide strategic direction of the company.

Board members have been assigned committee responsibilities in accordance with the Public Finance Management Act No. 1 of 1999, Companies Act No. 71 of 2008, and the King IV Report on Corporate Governance.

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11. ORGANISATIONAL STRUCTURE

The company has an envisaged staff complement of 103 permanent positions (Figure 3) in six divisions (Table 2) for 2018-2019. Interns and temporary positions are not refl ected.

The Executive Management comprises the following:• Managing Director• Finance Director• Chief Risk Offi cer• Executive Manager: Governance & Company Secretariat• Executive Manager: Insurance Operations & Stakeholder Management• Executive Manager: Business Operations & IT• Executive Manager: Human Capital & Facilities

Table 2: Sasria’s business and functional structure for 2018-2019.

DIVISIONS DEPARTMENTS

Insurance Opera-tions

Underwriting Claims Reinsurance Marketing & Communi-cations

Customer Relationship Management

Finance Finance Investment Procurement

Governance & Company Secre-tariat

Compliance Legal Company Secretariat

Control Functions Internal Audit Risk Management Actuarial Services Quality Assurance

Human Capital Human Capital Facilities Corporate Social Investment

Business Opera-tions & IT

Project Manage-ment

Process Manage-ment

Information Tech-nology

The Underwriting, Claims, Customer Relationship Management and Actuarial Services departments represent the core functions of Sasria.


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12. FINANCIAL RESOURCES INCOME

Sasria holds a legislative monopoly on the sale of its current product and its assured source of revenue is through insurance premiums payable by policyholders. Sasria cover is not compulsory, the policyholder has to elect to include our product.

The other source of income is investment income. Asset allocation and benchmarking according to the company’s risk profi le is determined by the company’s Investment Committee, Risk Committee and the Board, which as a targeted return requires investment performance returns equal to Consumer Price Index, plus an allocated percentage of 2% over a three-year rolling period.

13. RISK MANAGEMENT

The Risk Appetite Policy and Risk Strategy was fi rst developed and approved by the Board in 2012. The policy was reviewed in March 2017 in accordance with the FSB Solvency Assessment and Measurement (SAM) regime, and the nature of Sasria’s business. The Risk Appetite Framework (Framework) document provides details for development and application of the risk appetite as referred to in the Enterprise Risk Management Policy.

Enterprise Risk Management (ERM) enables management to eff ectively deal with uncertainty and associated risk and op-portunity, enhancing the capacity to build value.

Eff ective risk management is crucial to the company’s continued growth and success and this can only be achieved if all three elements of risks – namely threat, uncertainty and opportunity – are recognised and managed accordingly.

Through executing its business strategy, Sasria is exposed to a range of risks which need to be managed within its risk ap-petite and tolerances. This assists the Board and Management in achieving its business goals and objectives.

Sasria aims to align strategy, processes, people and technology for the purpose of evaluating and managing the uncertain-ties that are faced by the company.

Value is maximized when management sets strategy and objectives to strike an optimal balance between growth and return goals, and related risks, and effi ciently and eff ectively deploys resources in pursuit of the entity’s objectives.

ERM policies and processes are updated on a yearly basis to include new legislation and regulatory requirements (espe-cially regarding SAM). The policies form part of Sasria’s governance framework.

13.1 Enterprise Risk Management process

Processes are implemented to ensure all aspects and categories of risks are identifi ed, assessed and monitored and that risks are managed within the risk appetite.

Risk identifi cation, risk assessment and management are fundamental components of the business, in planning the com-pany’s future and executing its strategy. Internal fi nancial and other controls ensure a focus on critical risk areas, which are closely monitored and are subject to management oversight and internal audit reviews.

In ensuring that the risk universe is complete as much as possible, the risk management value chain is used across all divi-sions within Sasria.

The following are the elements of the risk management value chain:

13.1.1 Identifi cation

Risk workshops are facilitated by the risk function annually for the identifi cation of risks, risk drivers and the taxonomy. The sources of risks are obtained from strategic objectives, process fl ows, internal and external loss data, policies and processes, previous internal and external audit reports, previous risk registers (Risk and Control Self-Assessment results) and regula-tory reports.

13.1.2 Assessment

Once the risks are identifi ed, they are assessed in accordance with the company’s Risk Assessment matrix which articulates the likelihood and severity impact. The impact assessment defi nes impact into four categories namely- fi nancial, reputa-tional, stakeholder and customer. The impact is rated on a scale of 1 to 5, with 1 being insignifi cant and 5 being signifi cant. Whereas the likelihood of the event occurring is rated on a scale of 1 to 5, with 1 being unlikely and 5 almost certain.

13.1.3 Mitigation

Controls for each of the risks are identifi ed. Where controls are found to be inadequate and/or ineff ective, actions to im-prove controls are identifi ed to further strengthen them and reduce residual risks to an acceptable level. The controls are assessed for adequacy and eff ectiveness, considering the design of the control in question and whilst determining how well the control should function in practice when applied and implemented consistently across the division. Control eff ec-tiveness refers to the operating effi ciency of the control in question and is assessed by determining whether the control is operating as intended, and has been in place at all times, and whether it has been applied consistently across the division or the company.

13.1.4 Monitoring

The risks are monitored monthly by the risk function with the risk champions in the diff erent divisions, and on a quarterly basis by the Chief Risk Offi cer and the Executive Manager of each division.

13.1.5 Reporting

The risk function reports on the risk activities to the Risk Committee on a quarterly basis.The Internal Auditors annually perform risk-based audits throughout the organisation and give assurance on the overall eff ectiveness of controls.

13.1.6 Risk strategy

Sasria’s Board of Directors and Management are aware of the implications that strategic decisions have on the risk and overall capital needs of Sasria, and encourage careful consideration of whether such strategic decisions are desirable and aff ordable.

13.1.7 Risk appetite

Sasria’s risk appetite is the amount of risk that Sasria is willing to accept in pursuit of shareholder value and the attain-ment of strategic objectives. The risk appetite framework is embedded in key decision-making processes and supports the implementation of the company’s strategy. This is used to maximise returns without exposing the company to risk levels above its appetite. The risk appetite framework assists in protecting Sasria’s fi nancial performance, improves management responsiveness and debate regarding the risk profi le, assists executive management in improving the control and coordi-nation of risk-taking across business divisions, and identifi es available risk capacity in pursuit of profi table opportunities.

Measure 1: Capital at Risk

Sasria will at all times hold suffi cient eligible fi nancial resources to ensure it meets the relevant statutory solvency capital requirement, as well as its internal (economic) assessment of the capital required to deliver on its business plans, reason-able policyholder expectations and claim payments as they fall due.

The minimum capital requirement will be the greater of the Economic Capital at Risk (ECR) and the Solvency Capital Re-quirement (SCR) limits.

Appetite SCR % ECR %

Target 230% 230%

Threshold 150% 150%

Limit 130% 130%


Sasria developed an economic capital model for the calculation of the Economic Capital at Risk. The model simulates attri-tional, large and catastrophic losses separately. The model is currently only used for internal reporting purposes on the risk appetite measure (capital at risk) and has been used for Sasria’s Own Risk and Solvency Assessment (ORSA).

Measure 2: Earnings at risk

Sasria defi nes Earnings at Risk (EaR) as the diff erence in actual EBITDA compared to the budgeted EBITDA:

Appetite % of EBITDA

Target 5%

Threshold 10%

Limit 15%

Measure 3: Operational risk

Sasria operates at a high standard regarding the management, prevention and mitigation of losses caused by operational risk events. It has a low tolerance for operational risk but recognises it represents a cost of doing business.

Appetite Million

Target R 0

Threshold R 2

Limit R 10

13.1.8 Key risk indicators & triggers

We aim to manage our risk profi le in a proactive way. To support this, key risk indicators (KRI) and triggers have been es-tablished during the year. The KRI were developed to act as early warning signals in the event that one of the scenarios or stress situations may materialise. The indicators and triggers are monitored routinely and considered by the Risk Commit-tee with any breaches in the limits communicated to the Board.

13.1.9 Top risks

The table of the top 10 key risks is attached in Annexure 3. The Chief Risk Offi cer and Risk Manager meet with the risk champions from each business division on a monthly basis. Quarterly meetings are held with the Executive Managers of all divisions. The following issues are discussed and reviewed during the monthly and quarterly meetings:

• The division’s risks• Assessment of risks based on likelihood and impact• Eff ectiveness of the controls• Movement in risks, changes made to risks and new risks• Actions required to be addressed per risk• Changes in the industry and business division• New contracts entered into by the division• Review of risk ratings• Discussions on monitoring and review of risks• Emerging risks in the department, division or companyDiscussion regarding the achievement of strategic objectives.

13.1.10 Own Risk and Solvency Assessment

The Own Risk and Solvency Assessment (ORSA) as defi ned by the FSB, is the entirety of processes and procedures em-ployed to identify, assess, monitor, manage, and report the short and long term risks an insurance undertaking faces or may face. It also defi nes the process to determine the own funds necessary to ensure that insurers’ overall solvency needs are met at all times and are suffi cient to achieve its business objectives.

The regulatory balance sheet is currently projected once a year as part of the ORSA stress testing and risk budgeting process. Projected regulatory capital requirements are considered together with the risk appetite, to ensure that Sasria’s business is managed within the risk appetite on an ongoing basis.

A key part of Sasria’s ORSA process is to evaluate the potential adverse impact to the current and future fi nancial condition of the company resulting from changes to key risk factors from unexpected events.

Sasria submitted its second ORSA report during September 2017 to the FSB. Sasria is currently in the process of further embedding the ORSA process into the business for the next business cycle, and preliminary ORSA results which are based on the fi nancial budget for the business planning period were submitted to the Risk Committee during November 2017.

14. ANALYSIS OF COMPETENCIES & ENVIRONMENT

14.1 Current competencies & resources

Sasria’s current competencies and resources comprise the following:

• A core staff with specifi c and intricate knowledge and experience in the structure of provision and administration of special risk insurance as defi ned in the Reinsurance of Material Damage and Losses Act.

14.2 Environment within which Sasria operates

14.2.1 Regulatory

• Sasria SOC Limited is established in terms of section 3 of the Conversion of Sasria Act No. 134 of 1998. It is also a National Government Business Enterprise listed in Schedule 3B of the Public Finance Management Act No. 1 of 1999, and a registered Short-Term Insurance company operating in the fi nancial services sector overseen by the FSB.

• Sasria operates under a legislated monopoly aff orded by the Reinsurance of Material Damages and Losses Act No. 56 of 1989, read in conjunction with the Conversion of Sasria Act.

• As a state owned company, Sasria is also governed by the Companies Act No. 71 of 2008 and the Public Finance Management Act No. 1 of 1999.

• Like other insurance companies Sasria will be aff ected by a number of new laws that have already commenced or will potentially commence in 2017/2018. These include Protection of Personal Information Act (PoPI), the Financial Sector Regulation Act (Twin Peaks), new King IV Code and others. All these are aimed at enhancing governance and to protect customers. While these regulatory developments are welcome they will also bring about certain fi nancial and risk implications for the organisation that will require strengthening of the governance and compliance re-sponse functions.

• Financial Sector Regulation (FSR) Act – In terms of this Act Sasria will: - Have to apply for a new license in terms of this Act. - Be reporting to two regulators, namely Prudential Authority (under South African Reserve Bank) and Financial

Sector Conduct Authority. - Be obliged not to provide fi nancial product or fi nancial service except in accordance with a licence in terms of

a specifi c fi nancial sector law. Finance sector law includes the Short Term Insurance Act and Financial Advisory and Intermediary Services Act, which requires one to be duly licensed in order to conduct insurance/fi nancial services business.

- Have an obligation to fi nancial institutions to report on contraventions with any fi nancial sector, law, directive, enforcement undertaking, court order, etc.

- Have to note that the responsible authority is empowered to suspend a license if there is contravention with licensing conditions or fi nancial sector laws.

- Have to note that the licence may be revoked if it will be in the best interest of fi nancial customers or would frustrate the object of fi nancial sector laws.

- Have to disclose that it holds a license in all business documentation. - Have to ensure compliance as non-compliance with the Bill is a fi ne not exceeding R15 000 000 or imprisonment

for a period not exceeding 10 years.


• King IV – In terms of King IV Sasria:

- Will include references to King IV in the Shareholder Compact. - Will review the letter of appointment of Managing Director to check if it is in line with the recommendations of

King IV. - Will have to ensure ongoing engagement with National Treasury on Treasury’s needs and expectations as a

shareholder. - Will ensure that all shareholder resolutions are done in line with the King IV Code. - Will ensure that its governing body (board) adheres to the recommendations of King IV. In this regard all Board

and Board Committee charters have been reviewed against King IV requirements and updated where required. - Will ensure that the ethical tone is set at the top and the board should ensure that they conduct themselves in

an ethical manner both in their personal and collective capacity. - Ensure that King IV principles of technology governance and reporting is adhered to.

14.2.2 Economic

• As a consequence of its exclusivity, Sasria has no direct competitors in South Africa. The BMI South Africa Insurance Report (Q4/2017) forecasts that the South African non-life segment will grow its gross written insurance premium y-o-y by 5.5% in 2017, 6% in 2018 and 6% in 2019. The non-life market in South Africa is expected to record steady growth over the forecast period through to 2021, though the sector will continue to lag in annual % growth terms. In infl ation adjusted terms, growth in the short term sector will be close to zero for at least the next year or so, in the context where key segments of this sector are sensitive to economic cycles and Gross Domestic Product (GDP) growth will remain very sluggish.

• Growth in South Africa’s non-life sector is heavily dependent upon the growth trajectory of the South African economy. South Africa’s real GDP growth will accelerate gradually in the years ahead, weighed down by structural headwinds from a challenging operating environment and low commodity prices. Elevated unemployment and a pullback in government spending on subsidies, transfers and wage hikes will tamper the pace of private consump-tion growth in the years ahead. Private consumption is expected to account for 60.9% of GDP by 2026, up from 59.5% in 2016.

• Government spending will grow as a share of overall GDP in the years ahead, as government struggles to sharply pare back spending, South Africa’s fi xed investment will remain relatively subdued in the coming years in the face of tepid foreign and domestic investor sentiment. Sporadic industrial actions, the recent investor unfriendly policy proposal and high operating costs will tamper fi rms’ enthusiasm for operating in the country in the coming quarters.

• BMI Research has revised real GDP growth forecast for 2017, from 1.0% to 0.7%1.• Sasria is subject to the vagaries in the international reinsurance markets as it has to purchase adequate reinsurance

cover. Recent natural disasters and acts of terrorism across the globe are key drivers of catastrophe reinsurance rates. Currently, global reinsurance capacity is in over supply and Sasria is expected to benefi t from this oversup-ply. Sasria will use this oversupply to adequately protect itself against volatility without having to incur a signifi cant increase in reinsurance costs.

• With more than 90% of all debt issued in rand, a downgrade to South Africa’s local currency debt rating would have signifi cant knock-on eff ects on the country. It could prompt a sharp currency sell-off , prompt further rand weakness, and weigh on business confi dence and ramp up government and private fi rms’ borrowing costs2.

• The country is further impacted by global volatility, a slump in commodity prices and weak business and consumer confi dence. Consumer price infl ation is within the Reserve Bank’s target range of 3% to 6% in 2017. This is mainly at-tributable to expected rainfall forecasts, which has driven food prices to stabilise to a moderate level in comparison to 2016 where the economy was impacted by severe drought conditions and the increase in energy tariff s. SARB has noted the medium term infl ation outlook has improved to 5.3% in 2017, 4.9% in 2018 and 5.2% in 2019 in consid-eration of the recent exchange rate appreciation, normalisation of weather patterns, which will aff ect the agricul-ture sector positively, and the interest rate cycle that will stimulate economic growth. A low infl ation rate forecast supports economic growth as it helps to reduce interest rates over time, which creates growth, sustains jobs and encourages long term investing.

• South Africa’s growth expectations have been materially marked down induced by deep-rooted structural prob-lems, political uncertainty and a high unemployment rate. SARB in its economic growth forecasts expects SA’s economy to accelerate by 0.5% in 2017, 1.2% in 2018 and 1.5% in 2019. SARB has raised its concerns over consumer and business confi dence with the latter falling to its worst level since the 2009 recession. Domestic growth pros-

1 BMI South Africa Country Risk Report Q4 20172 BMI South Africa Country Risk Report Q4 2017

pects have deteriorated, as the impact of the ratings downgrades is expected to weigh on domestic investment and consumer sentiment.

• To generate infl ation beating returns over the long term, Sasria must take a balanced approach to risk. Being too conservative is detrimental to long-term wealth creation due to the eff ect of infl ation eroding the real value of capi-tal. Sasria’s current asset allocation includes exposure to growth assets being equities, which have proven to yield higher returns over the long term.

• Following a pessimistic approach (worst-case scenario), a CPI growth of -0.4% is expected, based on the South Africa’s low growth environment and the country offi cially entering into a technical recession. The possibility of a local currency downgrade by rating agencies looms heavily over the economy with concerns raised over weak growth prospects, trade defi cit and the institutional frameworks, which have become less transparent with policymakers’ previous commitments becoming less certain.

• South African markets, like most other emerging markets, are driven by excess liquidity and to some extend inves-tor sentiment. Local markets are extremely vulnerable to a decrease in liquidity. Signifi cant downside risk exist in the South African markets. Sasria’s strategic asset allocation is designed cognisant of these risks. The allocation relies heavily on short-dated cash and near-cash instruments. The strategy is very defensive but will ensure that capital is preserved in real and nominal terms.

14.2.3 Socio-economic

Terrorism

• The Institute for Security Studies has identifi ed South Africa as a high-priority target for terrorist networks across the continent. SA has also been dubbed a ‘top 10 target’ following a spate of terrorist incidents in the last decade that have claimed victims from our country. At least 50 South Africans have been killed, kidnapped or injured by terrorist groups operating in Mali, Yemen, Somalia, Nigeria, Syria and Iraq since 20103.

Unemployment

• South Africa’s unemployment in the third quarter of 2017 increased by 1.2 of a percentage point to 27.7% - the high-est fi gure since September 20034.

• We expect the income gap to widen between the poor and the rich, and political risk will remain elevated, resulting in frequent protests. The gap between the unemployment rate envisaged in the National Development Plan (14% by 2020) and the current rate is also widening.

Service delivery protests

• A record peak in the second quarter of 2017 may mean that 2017 will eclipse other years’ records for service delivery protests, although a downward trend since May could keep it under 2014’s current record. As at the end of Septem-ber 2017, service delivery protests accounted for 11% of service delivery protests recorded since 20045 (Figure 5).

• Gauteng has been the most prominent site for service delivery protests this year; accounting for more than one out of every three protests.

• Other protest-affl icted provinces for the year include the Eastern Cape, KwaZulu-Natal and the North West. Together the four provinces account for three-quarter of protests recorded in 2017 (Figure 6).

3 The Municipal IQ. Published 2017-07-28. https://www.thesouthafrican.com/south-africa-has-become-a-top-10-target-for-terrorist-groups-iss/4 Daily Maverick. Published 2017-06-01. https://www.dailymaverick.co.za/article/2017-06-01-sa-unemployment-rate-rises-to-14-year-high/#.

WhKeh2YUmWs5 Municipal IQ. 2017 service delivery protests in a high range, but downward trend from May peak – for immediate release. Press release 24

October 2017.


Figure 5: Major service delivery protests, by year (2004 – YTD 30th September 2017).

Figure 6: Service delivery protests by province 2017 (as of 30th September 2017).

• Service delivery protests will continue to be a main driver of Sasria claims in 2018-2019. Violent protest activity remains a concern for many South African communities given its adverse impact on schooling, work opportunities and community safety. It is of further concern that policing of protests appears to add another layer of violence, further destabilising the already vulnerable relationship between communities and authority fi gures.

Student protests

• #FeesMustFall at Wits was at the centre of the whole movement and in 2015 major gains were achieved, with the highlight being the 0% fee increase. The movement also brought to the table the debate around free higher educa-tion. The 2016 movement at Wits, although not as successful as it was in 2015, was more about challenging the status quo and was centred around the decolonisation of the university rather than on fees. The decolonisation proj-ect that the movement has started at Wits is an important one, as it seeks to highlight some of the structural issues at the university, most notably the marginalisation of black and African experiences in the curriculum and in how things are done at the university. Black students are forced to assimilate rather than being included in the university.

Decolonisation will not be realised in a day but the fact that it is back on the table has ushered in a new era in terms of how the university does things. Changing the demographics of the student body alone does not mean that the university is decolonised. More needs to be done to ensure that black students and staff feel that they are a part of the university6.

• As universities prepare to announce fee increases for 2018‚ a swirl of unrest is engulfi ng some campuses as students speak out against the proposed increments7.

• Student protests are the cause of a signifi cant rise in Sasria claims and this trend is set to continue in the next fi nan-cial year.

14.2.4 Technological

• In the past Sasria was a “late adopter” on the technology adoption curve. Sasria will close the technological gap over the next three to fi ve years.

• With the desire to be more effi cient and reach a wider market as well as the unreached market, Sasria will use tech-nology as a strategic enabler.

15. STRATEGIC FOCUS AREAS & STRATEGIC OBJECTIVES

Sasria’s goal in the next three years is to ensure that it: remains a professional and effi cient company; establishes itself as a thought leader in the special risk space; is innovative in terms of its product off ering to achieve National Treasury’s and the Financial Services Board’s objectives of fi nancial product inclusivity; while remaining sustainable.

To achieve the above, the strategic direction (purpose) Sasria has chosen for the next year is focused on Sustainable growth, Effi ciency, Customer centricity and Social impact (Figure 7).

Figure 7: Sasria’s strategic direction.

This will be achieved by:• Conducting a feasibility study into additional distribution channels, to reach previously unreached markets to en-

sure fi nancial inclusion of all South Africans.• Leading from the abovementioned, to develop tailor-made LSM & SME products.• Partnering with other companies already active in the LSM & SME space.

6 #Hashtag: An analysis of the #FeesMustFall Movement at South African Universities. Africa Portal. https://www.africaportal.org 7 Times Live. Is this the start of Fees Must Fall protests? Published 25 October 2017. https://www.timeslive.co.za/news/south-africa/2017-10-25-is-

this-the-start-of-fees-must-fall-protests/


• Remaining customer focussed in all business operations, by ensuring that service delivery is enhanced through more eff ective processes.

• Increasing Sasria’s brand and product awareness within the distribution channels as well as end-customers.• Attracting and developing the talent required to execute our strategy.• Ensure alignment of the organisation to its future expansion strategy through the Enterprise Architecture Frame-

work and IT Strategy.

15.1 Sustainable revenue growth

Sustainable revenue growth will be achieved through the following strategic objectives: - To consistently outperform the industry average in premium growth; and - To improve our current strategic partnerships and establish new ones.

These two strategic objectives will be achieved through embedding a strategic stakeholder management approach that is focused on the high income generating distribution channel and high income generating customers. This will be done through brand and product awareness to the target audience, technical support and product training to the distribution channel. Furthermore focus will be given to maximise the current product off ering to existing customers as well as taking the current product off ering to new markets.

The focus on the distribution channel will enable eff ective selling of our product by the distribution channel on our behalf as well as eff ective advice giving and engagements with end customers during underwriting. The focus on end customers is to empower them with the knowledge on special risks in order to create demand for our product.

15.2 Capital management

The following strategic objectives will support the capital management strategic focus area: - To ensure compliance with statutory capital requirements and the calculation of an economic risk basis for capi-

tal value; and - To target a return on equity greater than the government bond yield.

During the 2018-2019 year Sasria will continue to implement the FSB SAM requirements to ensure compliance with statu-tory capital requirements, with the continued focus on the embedding of the ORSA methodology and processes, the paral-lel runs (of the economic capital models and the Solvency Capital requirements. It will further continue to improve on its calculation of an economic risk basis for capital value.

Sasria aims to optimise its return on capital by growing its insurance premium income, managing expenses, yielding a return of CPI + 2% on investments over a three year rolling basis and buying suffi cient reinsurance cover to supplement its current capital, to cover potential maximum losses as per the annual probable maximum loss (PML) study conducted.

15.3 Innovation (products & services)

Sasria will support sustainable business growth through the following strategic objectives: - To become a centre of innovation in special risk insurance;

- Research, benchmarking and best practice. - To conduct feasibility studies for new products; and - To establish new business distribution channels.

Refer to the section “Beyond 2020” for more detailed explanation on the initiatives to be undertaken.

15.4 Infrastructure & cost management

The following strategic objective will supports the strategic focus area: - To optimally enable business while satisfying regulatory requirements.

- Systems/processes/procedures/productivity/knowledge management.

Sasria’s cost management is tightly controlled and all infrastructure spent is governed by Board oversight. Over the me-dium term operational and capital expenditure is expected to increase above CPI in order to deliver on its fi ve year strategy plan as well as the Government’s broader expectations of Sasria.

Sasria is embarking on an IT digital strategy and Enterprise Architecture (EA) Framework to ensure that it is aligned with the company’s future strategy. The EA review will deliver an Architecture Vision (defi ning the future vision and buy-in), Business Architecture (understanding the business; defi ning future business), Information Systems Architecture (defi ning applica-tion and data requirements), as well as a Technology Architecture (defi ning requirements in terms of platforms, software, security and tools).

15.5 People, capacity and capability

The following strategic objectives will support the strategic focus area: - To attract, retain and develop skills that support our aspirations; and - To maintain a high-performance culture.

- Skills development/ incentivisation/ talent management/ professionalism/terms & conditions of employ-ment/ performance management/ employer value proposition.

In 2018-2019, the Human Capital department will facilitate recruitment for all vacant positions, ensure suffi cient staff devel-opment plans are in place, facilitate the implementation of identifi ed initiatives for key talent, and drive succession plan-ning, while it continues to drive performance-based outcomes within the organisation.

Sasria also realises that it needs to help build capacity outside the organisation and in support of the NDP. Sasria supports education of the youth by contributing to school infrastructure projects, sponsoring bursaries and intervention programs.

15.6 Regulatory environment

The following strategic objective will support the strategic focus area: - To proactively manage compliance.

- Compliance management/legal services/risk management.

The implementation of SAM policies and processes will continue in the 2018-2019 in anticipation of the regime’s imple-mentation date of July 2018, to accommodate the legislative timeline for the Insurance Bill enactment. The Financial Sector Regulation Act No. 9 of 2017 (FSR Act) was processed by Parliament ahead of the Insurance Bill. This enables the Insurance Bill to build on the regulatory framework created through the FSR Act. The Insurance Bill, tabled in Parliament in January 2016, is currently being considered in Parliament and is expected to be processed during the second half of 2017 and pos-sibly also the fi rst half of 20188.

15.7 Customer-centricity

The following strategic objectives will support the strategic focus area: - To provide relevant and appropriate products; and - To provide superior service.

Claims settlement turn-around time and communication is central to the customer centricity theme. The Claims Depart-ment aims to settle 90% of all fast-track claims within 30 days in the 2018-2019 year. The department aims to accept liabil-ity on 70% large losses within 60 days (from the date of submission).

15.8 Brand development

The following strategic objective will support the strategic focus area:

- To create a trusted brand that resonates with all our customers. - Loyalty/recognition/association/visibility/advocacy – fi rst commercial & corporate, then the end-consumer.

8 Solvency Assessment and Management (SAM). September 2017 Update. Published 1 September 2017. https://www.fsb.co.za/Departments/insur-ance/Documents/SAM%202017%20Update.pdf


The elevation of the Sasria brand will continue to be focused on the big income generating agents and brokers, corporate and commercial customers, as well as creating internal brand appreciation. Further brand building to the end consumer will be enhanced via consumer education and awareness initiatives.

This will be achieved through the following:• Keeping abreast with market trends as well as developments within the environment in which we operate• Collaborative and relationship marketing with all strategic stakeholders• Elevation of the brand and product awareness to the end-customer• Developing sustainable relations with media partners• Eff ective communication with all stakeholders and• Elevate brand and product awareness.

An integrated marketing and communications approach will be utilised to achieve the above via an “always on” media approach. This, together with a clearly defi ned brand positioning, will enable the Sasria brand to move from an indiff erent brand to become a top-of-mind brand within the stakeholders segments.

16. BEYOND 2020

Sasria has started its journey to identify areas of focus for the strategy beyond 2020. These areas of focus provide opportu-nities to various stakeholders and specifi cally address the risks that the government, insurers and Sasria face.

Our process in identifying the areas of focus or opportunities was based on the risks that are currently faced by the organ-isation, risks which the industry is facing and risks that the government is facing.

In the world where climate change and its impact is a reality, the frequency and severity of disaster is increasing. Special risks, if not adequately addressed, pose a major risk to the economy of the country and also to the attainment of the NDP goals. The impact of special risk is not just economic and social but these risks further pose signifi cant food security risks to the country. They also pose an escalating threat to the three main problems facing South Africa, namely poverty, inequality and unemployment.

Government is the reinsurer of last resort; its citizens expect the Government to intervene and help the citizens in the event of a disaster. Public-private partnerships are crucial in making sure that the country builds fi nancial resilience to withstand any special risk disaster.

Based on the above it can be concluded that the government is currently facing various challenges, which include:• Special risks (as indicated above)• Poverty and inequality• Limited skills capacity and capability• Lack of transformation and inclusive growth

Sasria has started the journey to address these challenges and achieve specifi c objectives which include:• Stimulation of inclusive economic growth• Building of skills and capacity• Protecting South Africans against all types of Special risks• Support of the NDP

The focus areas and opportunities which we have identifi ed to achieve these objective and mitigate the risks are the fol-lowing:• LSM/SME feasibility project• Agriculture insurance administration project• Enterprise Architecture project• Transformation projects:

- Incubation programme - IFRS17 project

16.1 LSM/SME feasibility project

The market failure in delivery of insurance products to the vulnerable communities in South Africa, present one of the highest risks facing government in terms of risk exposure. Coupled with the high unemployment rate, lack of basic services and poverty facing many, the tension gives rise to incidents of protests – with a high probability that violence might lead to further losses which are not covered by general insurance. These losses place additional burden on the local municipali-ties and government.

It was noted that various insurers adopted varying approaches that either support their own business strategies or mere compliance. There are currently fi ve insurers who have products tailor made for the LSM 1-6. The products off ered by these insurers do not entirely meet the requirements by generic standards. Each product is designed to meet the strategic requirements of the various organisations. Other companies have now developed products for the SMEs as well, however, as with the personal lines products, these products do not fully meet the generic standards.

It can be concluded that there is a need for Sasria to develop a product for the target audience.

It is proposed that a phased approach be adopted. The fi rst phase should focus on addressing the existing products by underlying insurers to meet the needs of the target audience as well as focusing on understanding the existing alternative distributors of insurance to the target audience. The second phase should focus on designing a standalone product for special risks in line with the needs and lifestyle of the target audience and the BBBEE requirements, a detailed analysis of how the product will be distributed in order to reach the entire spectrum of the target audience. This will also include a de-tailed analysis of establishing a separate company, fi nancial analysis, analysis of risks and benefi ts, and a resource analysis.This is highlighted in more detail below:

Phase 1 - SME Phase 2 – Lower LSM Phase 3 – Vulnerable Communities

Product Design Sasria “limited” commercial product

Sasria “Standard Personal Asset Cover” stand-alone

Disaster Cover for Floods and Fire and including Sasria Standard cover

Distribution Digital application promot-ed by Field Agents

Digital application promot-ed by Field Agents

Agent model

Retail model

Master policy linked to Social Grant

The objective is to reach the uninsured market in a cost eff ective manner and ensuring access to Sasria, while allowing for new alternative distribution models to be explored; and creating previously unreachable markets to the agent companies and increasing insurance penetration.

The product principles for each of the designs and or phases are displayed in more detail below:

Phase 1 - SME Phase 2 – Lower LSM Phase 3 – Vulnerable Communities

Product Principles Aff ordability Accessibility Consumer education

Aff ordability Accessibility Consumer education

Sustainability


The proposed high-level Phase 1 timeline is as follows:

The project delivery is governed by two committees - a Steering Committee and a Working Committee (WorkCom) with further support from a dedicated Project Manager and Business Analyst. The members of the WorkCom are made up from various representatives of the diff erent business units within Sasria.

Steering Committee WorkCom Project Offi ce

Executive Committee Interdepartmental support team Project Manager

Business Analyst

Market research have been conducted including live surveys in each province.

The success of the distribution is dependent on the acquisition of a robust digital application that allow for instant access to Sasria products. The SMEs will be directed to the platform by fi eld agents from the communities who will be acting as product ambassadors. This will allow for on the ground consumer education and brand building while creating a platform for these agents to enter the market. Servicing and client queries will be outsourced at an external contact centre at a lower cost as we only require limited contact centre assistance.

The Enterprise Architecture project (per 16.3 below) will incorporate the claims processing technology that will allow the Sasria claims team to have end-to-end control of directly registered claims.

The alternative distribution channels are:

Sasria’s current location is adequate for managing the new initiatives. Technologically driven solutions will allow for straight through process handling of claims. Field agents will be contracted via an outsourced platform utilising existing market operators such as INSETA at no additional cost to Sasria.

Initially the digital solution can be sourced through an outsourcing process on a proof of concept basis. There are a number of solutions available in the market with new innovative solutions presented to insurers.

The IT department will perform a feasibility exercise on the various options available and procure the best fi t solution. The solution will include on-line purchase, administration and claims processing capabilities.

In compliance with the PoPI Act, all client information collected and stored will be secured in the digital platform technol-ogy solution.

Phase 1 and Phase 2 of the project does not require any additional mandate or changes to the existing mandate.In order to proceed with Phase 3 – an additional mandate will be required to allow for Sasria to off er natural disaster cover to the vulnerable communities.

Capital requirements and operating cost models are planned to be completed by February 2018 for board approval. A budget of R5m has been allocated towards the project for the 2018-2019 fi nancial year.

16.2 Agriculture insurance administration project

There are certain uninsurable risks that are facing government which are also very volatile. In the past year SA, has experi-enced its worst drought followed by fl oods in various regions. These are expected to continue. Drought is especially aff ect-ing commercial farmers and subsistence farmers. The risk of market failure for the government is therefore high.

The government of South Africa has recognized the impact of weather and climate shocks on agricultural producers and the challenges they pose to the country’s development objectives in terms of food security and rural development.Drought, fl ooding, and storms are key weather risks in South Africa with drought-related losses as the most signifi cant over the period 1980 to 2013, accounting for 42 percent of losses in South Africa.

Disaster spending by the Government between 2009 and 2015 confi rms the signifi cant impact of fl ooding and drought. Sixteen fl ooding disasters and twelve drought disasters were declared during this period.

Only three out of the 81 general insurers in South Africa off er crop and livestock insurance products. In addition to Swiss Re, which has provided reinsurance, only two of the six locally incorporated reinsurers provide reinsurance capacity for the crop and livestock insurance market. The market has experienced signifi cant contraction in the last number of years.Multi-peril crop insurance (MPCI) underwriters have incurred negative underwriting results in six of the past 11 years. These MPCI underwriting results are unsustainable and the MPCI product is likely to be withdrawn from the market in the next few years unless results can be improved.

The restricted supply of MPCI is severely aff ecting insurance penetration among commercial grain producers, approxi-mately 80 percent of whom do not purchase cover, as it is not fi nancially sustainable given their margins. The restricted supply of MPCI is also impacting negatively on commercial banks’ seasonal lending to grain producers. Banks, who had become accustomed to accepting an MPCI policy as collateral for their loans, are declining to extend credit to farmers who no longer have MPCI protection, and who cannot off er adequate balance sheet protection.

Agricultural insurance is one of a range of agricultural risk management solutions, which include mitigation, coping and transfer measures. Recent conditions in South Africa have heightened the focus on agricultural insurance as a potential intervention.

As a result the country and specifi cally the government are facing the following challenges:

• Lack of inclusive economic growth• Lack of economic transformation


• Increase in natural disaster due to climate change (water, drought, etc.)• Worsening of social problems i.e. poverty and income inequality• Food security in times of drought• Sovereign credit downgrade.In addition, the insurance industry is facing risks such as:• Increase in natural disasters due to climate change• Lack of transformation• Slow growth or lack of premium growth• Lack of or low insurance penetration• Skills shortage• Delays in regulation and legislation.

Sasria will assist the State to fi nd solutions to allocate funds on behalf of government, to mitigate against the losses due to drought for commercial, emerging and subsistence farmers. In the long and short term, the intervention will assist in food security, transformation, the increase in insurance penetration and the sustainability of insurers and the agriculture sector.

A public, private partnership (PPP) will be created to ensure that all parties in the PPP benefi t from the arrangements and are committed to the project. The partnership will be possible by adding a special vehicle entity, which will assist in the administration of the PPP and will receive funds from the government and allocate these funds to the insurers for subsidiz-ing of the premiums relating to multi-peril crop insurance. The administration company will be ring fenced and no profi ts or losses will be made in the company. The proposed value chain is as follows:

The following principles and objectives are key to the outcome of the project:• Aff ordability of the proposed insurance product(s)• Accessibility and availability of funds during disasters• Accessibility of agriculture insurance to all farmers• Sustainability of agriculture insurance• Effi ciency and impact:

- Effi ciency in management and control of government funds - Education - Seamless and timely claims management - Food sustainability - Country’s Resilience - Protection against poverty.

The project will be rolled out on a phased approach and is dependent on the commitment and agreement on the rules set out for each of the parties or stakeholders within the public–private partnership (PPP). The phased approach of implemen-tation is set out below:

The steering committee representatives are made up of heads of departments and executives from the industry, which in-clude National Treasury, Department of Fisheries and Forestry, Department of Public Finance, Sasria, Land Bank insurance, Santam, Old Mutual Insure and South Africa Insurance Association.

Market research has been done on some aspects and the World Bank issued a report, which indicated that a PPP is the best option to address the risks relating to drought related risks. A market research is currently underway to look at the specifi c needs and concerns of the farmers relating to insurance.

The operational feasibility assessment is currently underway and in development stage as part of the project phases. Sys-tems and technology relating to data collection and transmission system will be necessary. It is envisaged that between 3-3 staff members will be required to manage the operation.

No legislative and mandate change is currently required.

The costs for the fi rst year is estimated at R20 million, with the project expected to start in the next 12 months.

16.3 Enterprise Architecture project

In line with Sasria’s strategic goals, the Business Operations & IT division will be performing some adjustments to the technology roadmap that is part of building the foundation in order to deliver sustainable Information Technology (IT) services, and to enable and support Sasria. One of the company’s key material matters is technology & data (information) as a cornerstone of the business operations. For this reason, we are continuously improving and enhancing our operational systems to ensure that technology address the business needs and ensure that processes and systems are effi cient. Sasria will stand to benefi t from the impetus of digitalisation by allowing the company to rethink its technology operations from underwriting, customer service to the management of claims.

Digitalisation will allow the company to focus eff orts on product development and distribution management, thus foster-ing change in the foundation of Sasria’s technology, processes, systems and service models.


The division will ensure the following:• Alignment - Strategic alignment of IT and the business with respect to services and projects.• Value delivery – Ensure that IT delivers on the promised benefi ts against the strategy, optimizing costs and proving

the value of IT.• Resource management – Ensuring proper management of critical IT resources. Ensuring that there is adequate IT

capability and infrastructure to support current and expected future business requirements.• Risk management – Processes must be in place to ensure that risks have been well managed and compliance

requirements understood.• Performance measurement – Verify achievement of strategic IT objectives. Review the measurement of IT perfor-

mance and the contribution of IT to business.

To avoid the technical debt, (the price you pay to catch up in technology) in future, technology needs to be kept up-to-date as the systems could become redundant and the cost of total revamp and catch-up could be staggering and could cause a business failure and ineffi ciencies. The useful life of most of the hardware technologies is three years while software could be maximised to fi ve years. Sasria is currently in the ‘catch-up’ mode from 2018-2020, therefore it is expected that the costs of the technology department will increase over the next three years. Innovative products and technologies will be introduced in the fourth year of the strategy when the basic platforms & architecture will be available to build on. This will include:• Infrastructure upgrades (consolidation), services & management• Business, Technology, applications, Innovation, architecture & system integration• Improving of workspace IT (social, mobile, and connectivity).

A more detailed plan and costs is outlined below:

Infrastructure technology

Objective Financial year Business goal Estimated costs

Review and upgrade cur-rent network infrastructure against business strategy requirements

Internet line upgrade to 150Mbps

Internet line upgrade for cloud deployment & Offi ce 365

Review existing SAN infra-structure at year 4

Increase data storage capacity and ensure suf-fi cient storage capacity for new business strategy

Move to call centre IP PBX Call centre PABX with

voice recording as per new legislation for fi nancial intermediaries

Local cloud hosting, Offi ce 365 and SharePoint Online

FY 2018-2020 Customer centricity and ef-fi ciency

R5-10M

The introduction and deployment of new applications (like IMS and ERP) will be a step-change for Sasria, where the use of technology will be transformational and IT used as a strategic enablement tool. Applications and service excellence are central to Sasria business therefore systems need to be built to support those objectives. Sasria further requires a solution where stakeholder and agent data and information can be stored and could be accessible from a central location. This will allow all employees and management immediate access to real time data.

Technology to consider with new IMS and LSM strategic projects:

Application management


Implement enterprise resource planning (ERP) system phase 1

Human resources (talent, payroll, performance man-agement)

Implement ERP phase 2 Implementation of phase

1 Insurance Management system (IMS)

Implementation of phase 2 & phase 3

Integrated big data & ana-lytics environment

Going full-scale digital CRM deployment (ERP)

FY 2018-2019

FY 2018-2019

FY 2019-2020FY 2018-2019

FY 2019-2022

FY 2020-2022

FY 2020-2025

Customer centricity and ef-fi ciency

R37-R50M

Cyber security in this context refers to policies and practices relating to the protection of information, data, systems and networks from attacks and unauthorised access. Cyber-attacks and intrusions have increased dramatically over the years and have the potential to expose sensitive and personal information, disrupt the operations of the business and lead to reputational or other damages.

In order to reduce the threat of cyber-attacks and intrusions, users must comply with the IT Policy. In order to maintain a se-cure, and resilient network it is important that regular assessments are undertaken to assess Sasria’s vulnerability to ensure appropriate security of information. There is a legislative requirement to protect information hence cyber security support the customer centricity business goal.

Information security & cyber security


Information security framework and cyber secu-rity

Cisco PIX fi rewall upgrade and enhance security authentication

Firewall reporting and early warning detections system

Closing the systems tools gap

IT service management tool (ITSM) Tool, includes service desk

Enterprise program man-agement tool (EPM)

FY 2018 – 2019

FY 2018 – 2019

FY 2018 – 2019

FY 2018 – 2019

FY 2018 – 2019

FY2018-2020

Customer centricity R5-R10M

A mobile strategy should evolve and be aligned with Sasria’s strategy. It should describes how mobile capabilities can assist with achieving Sasria’s strategic goals.

There is an opportunity to innovate with mobile technology. Making use of mobile technologies as an extension to the web


as a way of doing things that were not possible with any other technology.

A mobile strategy must focus beyond IT (business-to-employee [B2E]) and marketing (business-to-consumer [B2C or B2B]).Careful consideration to governance and risk assessment will be required. A demand and supply assessment will be com-pleted to ensure that there is a genuine strategic advantage in the development or enablement of a mobile application.

Mobile technologies


Mobility suites (excludes build-ing transactional applications)

FY 2018-2020 Customer centricity and ef-fi ciency

R1-2M

The technology will be considered with the design of the new IMS and new strategic projects including LSM.

Emerging technologies


Artifi cial IntelligenceMachine Learning

FY 2020-2021 Customer centricity and effi ciency

R2-3M

Block Chain in insurance FY 2020-2021 Customer centricity and effi ciency

R1M

People are the most important element in driving company strategy and vision. Attracting the right people with the neces-sary skills, at the right time is key to enable and support the business unit to achieve its strategic objectives by aligning itself to the Sasria fi ve year strategic plan and beyond.

People, Process & Service


Implement IT Governance & processes

Improve maturity levels yearly

Human capital development Workforce plan and succes-

sion planning IT Internship, ICT pipeline Implement IT Service Man-

agement (Service Orienta-tion culture)

Customer experience tech-nology

FY 2018-2019

FY 2017-2020

FY 2018-2022FY 2018-2019

FY 2018-2020FY 2019-2020

Customer centricity and effi ciency

R6M

16.4 Incubation programme

An incubation programme is being set up in Sasria which will target small to medium sized black asset management busi-nesses, to enable them to gain a foothold in the South African market and compete with traditional asset managers.

Transformation in the asset management industry remains slow and highly concentrated with the fi ve largest asset manag-ers managing almost 50% of the industries’ assets, whilst black asset management businesses manage a smaller proportion equivalent to less than 9% of the industries’ assets. The asset management industry remains a high barrier to entry due to majority of the assets being managed by larger asset managers with competitive pricing and high start-up costs.

Sasria acknowledges these shortcomings and wishes to make a positive contribution to the development of the South African economy, particularly the asset management industry. Sasria may not contribute to all these shortcomings but will aim to create a valuable contribution within its risk appetite. Sasria recognises that not all managers will be successful and it is therefore important to identify managers that have a high probability of building a successful and sustainable business that is competitive.

The company’s role as a business and corporate citizen is to create opportunities that will empower individuals, their ca-pabilities and result in a meaningful change in our society. This will contribute to the country’s NDP, which aims to create a prosperous future for all South Africans.

The fi rst phase of approving the concept and guidelines has been completed. The tender will be released in February 2018 and fi nal decision on asset manager allocation will be made in May 2018. The transfer of funds will be completed in July 2018.

16.5 IFRS 17 project

In May 2017, the International Accounting Standards Board (IASB) issued the International Financial Reporting Standard (IFRS) 17 standard for insurance contracts, a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure.

Due to Sasria reporting using IFRS, Sasria has a legal requirement to adhere to the standard. Non-adherence could lead to a qualifi ed audit report and other legal implications.The IFRS 17 model combines a current balance sheet measurement of insurance contract liabilities with the recognition of profi t over the period that services are provided. Insurance contract liabilities are calculated as the present value of future insurance cash fl ows with a provision for risk. Discount rate will refl ect current interest rates. If present value of future cash fl ows would produce a gain at the time a contract is issued, the model would also require a “contractual service margin” to off set the day one gain. The contractual service margin would amortise over the life of the contract.

Certain changes in the estimates of future cash fl ows and the risk adjustments are also recognised over the period that services are provided. Entities will have an option to present the eff ect of changes in discount rates either in profi t and loss or in other comprehensive income.

There will be a new income statement, balance sheet presentation for insurance contracts, including a revised defi nition of revenue, and additional disclosure requirements. The standard includes specifi c guidance on measurement and presenta-tion for insurance contracts with participation features.

IFRS 17 will become eff ective for annual reporting periods beginning on or after 1 January 2021; early application is per-mitted.

The project will be split in the following project phases:

Identify accounting change (November 2017 to March 2018)• Understand the issues/gaps• Engage stakeholders• Train aff ected staff and management• Identify all contracts and source dataDetermine the roadmap (2018)• Determine the transition method• Create roadmap• Identify data gaps• Defi ne key metrics• Validate data quality, accuracy and reliabilityUnderstand the business impact (including IT) (2018)• Assess impact on key metrics• Assess the non-fi nancial eff ect on the organisation and stakeholders• Gain overall understanding of IT environment changesDevelop solutions (2019)• Optimise existing arrangements• Establish new policies• Defi ne business and technical requirements to eff ect the change• Modify existing IT architecture or select software vendor.


Implement solutions (2020)• Implement solutions and migrate required data• Test the output• Update governance and risk framework• Performance improvement initiatives• Ensure business as usual

17. SWOT ANALYSIS

The SWOT analysis evaluates Sasria’s strengths, weaknesses, opportunities and threats relative to its internal and external contexts (Figure 8).

Figure 8: Sasria’s SWOT analysis for 2018-2019.

18. DIVIDEND POLICY

Sasria advocates the payment of dividends that return excess cash to its shareholder, provided this does not impair the company’s cash resources and capital structure.

For this reason Sasria has adopted a steady, consistent and transparent dividend policy that will not place undue strain on the cash resources and liquidity of the company, or results in inadequate cash reserves to meet future growth require-ments.

The policy caters for an increase in the capital reserves of 10% per annum needed to maintain the levels of the required capital after due consideration of the increase in insured property values.

Sasria’s policy is to declare 30% of after tax profi t as a dividend to the shareholder. As the policy is based on estimated income, the fi nal dividend will be declared by the Board after due consideration of the audited annual fi nancial statements of the company during August of each year.

19. KEY STRATEGIC & FINANCIAL ASSUMPTIONS

Sasria’s key strategic objectives are based on the following scenarios and assumptions: Sasria aims to outperform the 10-year government bond yield in order to deliver value to its shareholder and remain

fi nancially sustainable. South Africa’s real GDP growth will accelerate gradually in the years ahead, weighed down by structural headwinds

from a challenging operating environment and low commodity prices. The current claims trend is forecasted to continue due to South Africa’s current socio-economic and political envi-

ronments. The main drivers of claims are service delivery protests and labour related strikes. Sasria’s reinsurance costs is expected to increase marginally in line with infl ation, as the reinsurance market is experi-

encing soft conditions. Operational and capital expenditure is expected to increase above CPI in order to accommodate critical investment

in strategic projects, systems applications, and new talent acquisition to achieve the company’s strategic projects and deliver on the new strategy.

Staff expansion as required by the changing regulatory environment, identifi ed key-man risks and capacity building to deliver on Sasria’s future strategy;

The FSB TCF regime is based on delivering six outcomes broadly defi ned as Culture; Products; Customer Communi-cations, Marketing and Financial Promotions; Sales and Advice; After-sales Service; and Complaints Handling. The TCF regime has at its heart, the customers’ interests, and Sasria is committed to entrenching the TCF principles as a way of doing its business.

Sasria’s investment philosophy is to safeguard its capital, ensure adequate liquidity to guarantee payment of claims as they fall due and maximise return within this framework. Sasria aims to grow its investments by Consumer Price Index + 2% over a three-year rolling period. Sasria is a signatory to the United Nations’ Principles of Responsible Investment (PRI). Responsible investment is an approach to investment that explicitly acknowledges the relevance to the investor of environmental, social and governance factors, and of the long-term health and stability of the market as a whole. It recognises that the generation of long-term sustainable returns is dependent on stable, well-functioning and well governed social, environmental and economic systems. Sasria is well on its way in aligning its investment process with the PRI principles.

20. KEY PERFORMANCE INDICATORS

The company has developed several key performance indicators (KPI) that will refl ect whether the business plan was successfully implemented (Table 3). In developing the Corporate Plan 2018-2019 and KPI, the following were taken into consideration: Sasria’s mandate – that the company continues to deliver on its mandate. Alignment to Sasria’s fi ve-year strategic plan and long-term objectives. Sasria’s customers – imbedded TCF principles, customers should always be at the forefront of Sasria’s planning and

decision-making. Capital adequacy – the company should always be able to honour its liabilities. Risk management – making ORSA the way business is managed on a day- to- day basis.


Corporate citizenship – Sasria’s role in supporting the Government’s NDP. Ensuring a balanced scorecard.

Table 3: Key Performance Indicators (KPIs) for the year 2018-2019.

Item # Weight-

ing

Strategic objective KPI Performance targets Budget

1. 10% Sustainable revenue

growth: To consistently outperform the indus-try average in premium growth

GWP income growth9 Achieving GWP income of at least R2 182 320 995 for the year ending 31 March 2019

Budgeted income:GWP: R2 182 320 995

2. 10% Capital management: To target a return on equity greater than the govern-ment bond yield

Maintain sustainable underwriting profi t

Achieving net underwrit-ing profi t10 of between R300 312 066 and R450 468 099 (increase / decrease of 20%) for the year ending 31 March 2019

Budgeted net underwrit-ing profi t

3. 10% Customer centricity: To provide superior customer service

Reduce the internal fast-track11 claims turnaround time12

90%13 of all fast-track claims to be settled within 30 days from the date of submission by 31 March 2019

Included in salary budget


Reduce the internal large loss14 claims turnaround time

70% of large loss claims fi nalised within 60 days by 31 March 2019


5. 5% People, capacity and ca-

pability: To attract, retain and develop skills that support our aspirations

Drive employee engage-ment: Individual Percep-tion Monitor (IPM)

Achieve an overall staff IPM survey score of ≥3.8 by 31 March 2019


6. 5% Brand development: To create a trusted brand that resonates with all our customers

Maintain Sasria brand awareness in the distribu-tion channels

Maintain a ≥95% brand awareness (independent survey) within the distri-bution channels, by 31 March 2019

Included in the marketing budget


Achieve Sasria brand awareness with the end-customer

Achieve a ≥40% brand awareness with the end-customer (independent survey), by 31 March 2019

Included in the marketing budget

8. 5% Infrastructure and

cost management: To optimally enable business while satisfying regulatory requirements

Implement the new IT strategy following the EA review

Implementation of the new IT Strategy against the project plan (by 31 March 2019)

Budgeted expenses:R1 000 000

9. 5% Regulatory environ-

ment: To proactively man-age compliance

Improve transformation scores as per Financial Ser-vices Sector (FSC) codes – Employment equity

Achieve ≥13 points (out of 15 maximum) for recruit-ment and retention of black females at middle and junior management levels and attract people with disabilities, by 31 March 2019


9 Growth is based on the forecast for the year ending 31 March 2018 at the time of preparing the budget for the year ending 31 March 2019.10 Calculated as follows: GWP less movement in unearned premium reserve, less reinsurance premiums, less claims and loss adjustment expenses, less

expenses for the acquisition of insurance contracts, less managing and other expenses (excluding investment manager fees and corporate social investment), plus commission earned from reinsurers.

11 Claims with an estimate below R250 000. 12 Turnaround time is calculated from the time a claim is recorded on the insurance management system to when a release is issued and repairs are

authorised. Should liability be declined (letter sent to the insured), the date of letter will be utilised for the turnaround time calculation.13 The claims turnaround targets on both the fast-track and large claims were reduced from the targets set in the fi ve-year strategic plan. The rationale

is as follows: a) the current increase in claims frequency is set to continue; and b) claims have become more complex in nature and thus take longer to settle.

14 Claims with an estimate above R250 000.



Achieve 80% of the set transformation scores as per FSC codes (excluding binder fees and claims procurement15 – Preferen-tial procurement

Achieve an 80% sub-mini-mum of the requirements of the FSC codes preferen-tial procurement target. The Total Measured Pro-curement Spend (TMPS) (excluding binder fees and claims procurement), will be measured as follows (by 31 March 2019):1. Achieve an 64%

procurement spend from all Empowering Suppliers

2. Achieve an 24% pro-curement spend from 51% and above black-owned suppliers

3. Achieve an 14% procurement spend from Qualifying Small Enterprises

4. Achieve an 10% procurement spend from Exempted Micro Enterprises

5. Achieve an 8% procurement spend from 30% and above black women owned suppliers




Achieve maximum transformation scores as per FSC codes (excluding binder fees and claims procurement) – Supplier development

Achieve a 70% (R3.5 million) spend of the allocated Enterprise and Supplier Development16 (ESD) budget funds on supplier development (by 31 March 2019)




Achieve maximum transformation scores as per FCS codes (excluding binder fees and claims procurement) – Enterprise development

Achieve a 30% (R1.5 million) spend of the al-located ESD budget funds on enterprise develop-ment (by 31 March 2019)




Limit irregular, fruitless, wasteful and unauthorised expenditure17

Limit irregular, fruitless, wasteful and unauthorised expenditure to 0% after recoveries18 (by 31 March 2019)


15 Claims procurement is currently outsourced to 3rd parties.16 Enterprise Supplier Development allocated budget of R5 million.17 Including any procurement-related and any other form of irregular, fruitless, wasteful and unauthorised expenditure.18 Excluding actual costs of recoveries.



Item # Weighting Strategic objective KPI Performance targets Budget


growth: To consis-tently outperform the industry average in premium growth



2. 10% Capital management: To target a return on equity greater than the government bond yield


Achieving net un-derwriting profi t12 of between R299 134 954 and R448 702 431 (increase / decrease of 20%) for the year end-ing 31 March 2020

Budgeted net under-writing profi t


Reduce the internal fast-track21 claims turn-around time22

90%15 of all fast-track claims to be settled within 25 days from the date of submission by 31 March 2020



Reduce the internal large loss24 claims turn-around time




Maintain Sasria brand awareness in the distri-bution channels

Maintain a ≥95% brand awareness (independent survey) within the distribution channels, by 31 March 2020

Included in the market-ing budget



Achieve a ≥50% brand awareness with the end-customer (inde-pendent survey), by 31 March 2020



ment: To proactively manage compliance

Improve transforma-tion scores as per Fi-nancial Services Sector (FSC) codes – Employ-ment equity

Achieve ≥14 points (out of 15 maximum) for recruitment and retention of black females at middle and junior management levels and attract people with disabili-ties, by 31 March 2020


19 Growth is based on the forecast for the year ending 31 March 2019 at the time of preparing the budget for the year ending 31 March 2020.20 Calculated as follows: GWP less movement in unearned premium reserve, less reinsurance premiums, less claims and loss adjustment expenses,

less expenses for the acquisition of insurance contracts, less managing and other expenses (excluding investment manager fees and corporate social investment), plus commission earned from reinsurers.

21 Claims with an estimate below R250 000.22 Turnaround time is calculated from the time a claim is recorded on the Insurance Management System to when a release is issued and repairs are

authorised. Should liability be declined (letter sent to the insured), the date of letter will be utilised for the turnaround time calculation. 23 The claims turnaround targets on both the fast-track and large claims were reduced from the targets set in the fi ve-year Strategic Plan. The ratio-

nale is as follows: a) The current increase in claims frequency is set to continue; and b) Claims have become more complex in nature and thus take longer to settle.




Achieve maximum transformation scores as per FSC codes (ex-cluding binder fees and claims procurement25) – Preferential procure-ment

Achieve a maximum score of the require-ments of the FSC codes preferential procure-ment target. The Total Measured Procurement Spend (TMPS) (exclud-ing binder fees and claims procurement), will be measured as follows (by 31 March 2020):1. Achieve an 80%

procurement spend from all Empowering Sup-pliers

2. Achieve an 30% procurement spend from 51% and above black-owned suppliers


4. Achieve an 12% procurement spend from Exempted Micro Enterprises





Achieve maximum transformation scores as per FSC codes (ex-cluding binder fees and claims procurement) – Supplier development

Achieve 100% scoring of the target set for Enterprise and Supplier Development26 (ESD) programme, in respect of supplier develop-ment (by 31 March 2020)




Achieve maximum transformation scores as per FCS codes (ex-cluding binder fees and claims procurement) – Enterprise development

Achieve 100% scoring of the target set for ESD programme, in respect of enterprise development (by 31 March 2020)




Limit irregular, fruitless, wasteful and unauthor-ised expenditure19

Limit irregular, fruitless, wasteful and unauthor-ised expenditure to 0% after recoveries28 (by 31 March 2020)


12. 5% New KPI to be con-fi rmed


25 Claims procurement is currently outsourced to 3rd parties.26 Enterprise Supplier Development allocated budget (quantum to be determined).27 Including any procurement-related and any other form of irregular, fruitless, wasteful and unauthorised expenditure.28 Excluding actual costs of recoveries.



Item # Weighting Strategic objective KPI Performance targets Budget


growth: To consis-tently outperform the industry average in premium growth



2. 10% Capital management: To target a return on equity greater than the government bond yield


Achieving net un-derwriting profi t30 of between R339 475 659 and R509 213 488 (increase / decrease of 20%) for the year end-ing 31 March 2021

Budgeted net under-writing profi t


Reduce the internal fast-track31 claims turn-around time32

90%25 of all fast-track claims to be settled within 20 days from the date of submis-sion by 31 March 2021



Reduce the internal large loss34 claims turn-around time



5. 5% People, capacity and

capability: To attract, retain and develop skills that support our aspirations

Drive employee en-gagement: Individual Perception Monitor (IPM)

Achieve an overall staff IPM survey score of ≥3.9 by 31 March 2021



Maintain Sasria brand awareness in the distri-bution channels

Maintain a ≥95% brand awareness (independent survey) within the distribution channels, by 31 March 2021




Achieve a ≥60% brand awareness with the end-customer (inde-pendent survey), by 31 March 2021


29 Growth is based on the forecast for the year ending 31 March 2020 at the time of preparing the budget for the year ending 31 March 2021.30 Calculated as follows: GWP less movement in unearned premium reserve, less reinsurance premiums, less claims and loss adjustment expenses, less

expenses for the acquisition of insurance contracts, less managing and other expenses (excluding investment manager fees and corporate social investment), plus commission earned from reinsurers.

31 Claims with an estimate below R250 000.32 Turnaround time is calculated from the time a claim is recorded on the Insurance Management System to when a release is issued and repairs are

authorised. Should liability be declined (letter sent to the insured), the date of letter will be utilised for the turnaround time calculation.33 The claims turnaround targets on both the fast-track and large claims were reduced from the targets set in the fi ve-year Strategic Plan. The rationale

is as follows: a) The current increase in claims frequency is set to continue; and b) Claims have become more complex in nature and thus take longer to settle.




Improve transforma-tion scores as per Fi-nancial Services Sector (FSC) codes – Employ-ment equity

Maintain ≥14 points (out of 15 maximum) for recruitment and retention of black females at middle and junior management levels and attract people with disabili-ties, by 31 March 2021




Achieve maximum transformation scores as per FSC codes (ex-cluding binder fees and claims procurement27) – Preferential procure-ment

Achieve maximum score of the require-ments of the FSC codes preferential procurement target. The Total Measured Procurement Spend (TMPS) (excluding binder fees and claims procurement), will be measured as follows (by 31 March 2021):1. Achieve an 80%

procurement spend from all Empowering Suppliers

2. Achieve a 30% procurement spend from 51% and above black-owned suppliers


4. Achieve a 12% procurement spend from Exempted Micro Enterprises



35 Claims procurement is currently outsourced to 3rd parties.




Achieve maximum transformation scores as per FSC codes (ex-cluding binder fees and claims procurement) – Supply development

Achieve 100% scoring of the target set for Enterprise and Sup-plier Development28 (ESD) programme in respect of supplier development (by 31 March 2021)




Achieve maximum transformation scores as per FCS codes (ex-cluding binder fees and claims procurement) – Enterprise develop-ment

Achieve 100% scoring of the target set for the ESD programme, in respect of enter-prise development (by 31 March 2021)




Limit irregular, fruitless, wasteful and unauthor-ised expenditure29

Limit irregular, fruitless, wasteful and unauthorised expenditure to 0% after recoveries30 (by 31 March 2021)



36 Enterprise Supplier Development allocated budget (quantum to be determined).

21. ALIGNMENT OF STRATEGIC OBJECTIVES TO THE NATIONAL DEVELOPMENT PLAN

Sasria’s objective is to deliver on its mandate which is to protect the assets of all in South Africa against special risk. This is done through provision of guaranteed special risk insurance cover at reasonable cost- irrespective of the political risk in South Africa. Insurance is the backbone for every industrial economy and without the guarantees of assets protection for investors, the country will have diffi culty attracting and retaining foreign investors. Table 6 indicates the alignment between Sasria’s strategic objectives and Government’s NDP priorities, and outlines the specifi c contribution that Sasria makes to Government’s NDP priorities in general.

Table 6: Sasria’s strategic objective alignment to the NDP.

NDP outcomes Sasria’s contribution

• Decent employment through inclusive economic growth

• Quality basic education

• A long and healthy life for all South Africans

• All people in South Africa are and feel safe

• Sustainable human settlements and improved quality of

household life

Ensuring jobs are not lost, by:

• Reimbursing businesses for the loss of income due to business interruptions or damage to assets caused by events related to special risk events

• Restoring their liquidity or business operations quickly and effi ciently

Contributing to economic empowerment and transformation,

by:

• Investing with B-BBEE asset managers

• Increasing procurement spend with black-owned businesses as per the FSC

• Applying these principles in the company’s procurement poli-cies and practices

• Applying these principles in the company’s employment poli-cies and practices

• A skilled and capable workforce to support an inclusive

growth path

Developing skills in the fi nancial sector to ensure sustainabil-

ity and transformation, by:

• Investing 5% of after-tax profi t in CSI initiatives, with 84% of these funds allocated to education and development. This includes a particular focus on specialist skills-sets required in the fi nancial and insurance sectors

• Investing in the fi nancial services sector (developing actuaries) through the support of the SAADP

• Training and developing Sasria’s employees via its talent man-agement strategy

• Taking in graduates and interns, and developing their skills

• An effi cient, competitive and responsive economic infra-

structure network

• Protecting and enhancing our environmental assets and

natural resources

Investing profi ts responsibly, developing infrastructure, by:

• Encouraging and protecting infrastructure development by providing special construction risk insurance

• Investing company profi ts responsibly to ensure that Sasria remains fi nancially sustainable and is able to respond when South Africa needs it to pay the claims

• Investing in infrastructure development through asset manag-ers

• Investing a portion of company profi ts in projects targeted at expanding the infrastructure of schools in underprivileged, underdeveloped and rural communities


• Create a better South Africa, contribute to a better and

safer Africa in a better world

Instilling investor confi dence, by:

• Demonstrating Sasria’s reliability and fi nancial strength to act as a guarantee that all claims will be paid to help encourage businesses both locally and internationally to invest in South Africa

• Instilling an ethical culture in Sasria by fi ghting corruption through ethics and fraud prevention awareness campaigns

• An effi cient, eff ective and development-oriented public

service

• A responsive, accountable, eff ective and effi cient develop-

mental local government system

Contributing to the fi scus of South Africa, by:

• Creating income (dividends) for the shareholder through contributing to government’s revenue for spending in any of its NDP priorities

• Being fi nancially responsible and disciplined as a state-owned company

• Delivering Sasria’s legislative mandate in a highly eff ective and profi table manner

• Researching and investigating coverage for any special perils that could be considered to be of national interest

• Creating jobs for staff and for the insurance industry by provid-ing learnership programmes

• Instilling a strong governance culture in Sasria

• An inclusive and responsive social protection system

• A diverse, socially cohesive society with a common national

identity

• Vibrant, equitable and sustainable rural communities con-

tributing to food security for all

Aff ordable short-term insurance for the huge uninsured

market, by:

• Contributing to the growth and transformation of the insur-ance market and fi nancial sector

• Doing research and making aff ordable short-term insurance protection increasingly available and accessible to the huge uninsured market

• Providing basic fi nancial literacy and consumer education on the benefi ts of fi nancial inclusion and insurance

22. BORROWING PLAN

No Borrowing Plan is included in this document, as Sasria does not have any current or intended plans for foreign or domestic borrowing. The company is self-funded and suffi ciently capitalised.

23. SUPPORTING DOCUMENTS

The supporting framework for this Corporate Plan consists of the following:• Signifi cance & Materiality Framework (Annexure 1);• Financial Plan (Annexure 2);• Corporate Risk Register – Top 10 risks (Annexure 3); and• Fraud Prevention Plan (Annexure 4).

24. APPROVAL

SIGNED at _____________________ on this the ___________ day of ____________ 2018.

AS WITNESS:

__________________________ ______________________________C. M. MASONDO M. A. SAMIE

Managing Director Chairperson of the Board of DirectorsSasria SOC Ltd Sasria SOC Ltd

SIGNED at _____________________ on this the ___________ day of ____________ 2018.

AS WITNESS:

______________________________ ______________________________ N. NENE

Shareholder representative for and on behalf of the Government of the Republic of South Africa. MINISTER OF FINANCE


ANNEXURE 1: SIGNIFICANCE & MATERIALITY FRAMEWORK

SIGNIFICANCE FRAMEWORK

National Treasury will be informed in writing and the relevant particulars of the transaction will be submitted for approval if the transaction entails any of the following, irrespective of the rand amount involved:

Establishment or participation in the establishment of a company:

• Participation is not specifi ed in the 2018-2019 Corporate Plan.

Participation in a signifi cant partnership, trust, unincorporated joint-venture or similar arrangement:

• Participation is not specifi ed in the 2018-2019 Corporate Plan.

Acquisition or disposal or a signifi cant shareholding in a company:

• Acquisition or disposal is not specifi ed in the 2018-2019 Corporate Plan.• Acquisition or disposal is signifi cant if:

a) It aff ects ownership controlb) Sasria’s right to pass or block a special resolution is aff ectedc) There is a change of at least 20% in shareholdingd) For an acquisition, any transaction resulting in shareholding of at least 20% in a company.

Acquisition or disposal of a signifi cant asset:

• Acquisition or disposal is not specifi ed in the 2018-2019 Corporate Plan and participation is for more than or equal to 2% of gross written premium.

Commencement or cessation of a signifi cant business activity:

• If such activity is not specifi ed in the 2018-2019 Corporate Plan.

A signifi cant change in the nature or extent of its interest in a signifi cant partnership, trust, unincorporated joint-

venture or similar arrangement:

• Of 20% of total issued shares or more if not specifi ed in the 2018-2019 Corporate Plan.• Ownership control is aff ected, if not specifi ed in the 2018-2019 Corporate Plan.• The ability to pass or block a special resolution is aff ected, if not specifi ed in the 2018-2019 Corporate Plan.

MATERIALITY FRAMEWORK

National Treasury will be informed in writing and the relevant particulars of the expenditure/recovery/loss will be submit-ted if any of the following conditions are triggered:

Irregular expenditure:

• Any irregular expenditure incurred.

Fruitless or wasteful expenditure:

• Any fruitless and wasteful expenditure incurred.

Material losses through criminal conducts:

• Any individual item that is more than or equal to 2% of gross written premium.• Any class of closely related items that collectively are more than or equal to 2% of gross written premium.

Losses recovered or written off :

• Any individual item that is more than or equal to 2% of gross written premium.• Any class of closely related items that collectively are more than or equal to 2% of gross written premium.

ANNEXURE 2: FINANCIAL PLAN

The fi nancial plan is based on the 2018-2019 forecast and has taken into account the strategic objectives Sasria envisages to meet for the year ending 31 March 2019. The budget is approved by the Board of Directors.

STATEMENT OF FINANCIAL PERFORMANCE

Budget Forecast Budget Budget Budget 2018 2018 2019 2020 2021R'000 R'000 R'000 R'000 R'000

Gross written insurance premium 2 002 614 0.9% 2 020 819 8.0% 2 182 321 9.0% 2 378 730 9.0% 2 592 816Insurance premium ceded to reinsurers (159 952) 0.8% (161 211) 15.6% (186 360) 8.8% (202 772) 8.8% (220 662)Net written insurance premium 1 842 662 0.9% 1 859 608 7.3% 1 995 961 9.0% 2 175 958 9.0% 2 372 154Unearned premium reserve movement (22 100) (9.0%) (20 107) 74.6% (35 097) 20.9% (42 449) 9.0% (46 270)Net insurance premium earned 1 820 562 1.0% 1 839 501 6.6% 1 960 864 8.8% 2 133 509 9.0% 2 325 884Gross claims incurred (773 351) 5.1% (813 047) 8.4% (881 608) 8.8% (959 272) 9.0% (1 045 689)Claims and loss adjustment expenses recovered from reinsurers (7) 100.0% (137) (99.5%) (1) 100.0% (0) - (0)

Expenses for the acquisition of insurance contracts (275 944) 2.1% (281 654) 13.7% (320 235) 12.4% (359 951) 6.4% (383 013)Commission earned from reinsurers 18 218 12.9% 20 574 29.8% 26 708 (4.6%) 25 488 9.0% 27 782Binder fees expense (247 540) 0.6% (249 109) 4.0% (259 114) 8.0% (279 904) 9.0% (305 095)Expenses for administration and marketing (128 656) (0.2%) (128 447) 17.7% (151 223) 23.0% (185 952) 5.1% (195 525)Net underwriting results 413 282 (6.2%) 387 681 (3.2%) 375 390 (0.4%) 373 919 13.5% 424 345Strategic expenses (9 737)Investment income 499 640 (1.2%) 493 808 18.1% 583 316 7.1% 624 814 7.5% 671 540Investment management expenses (29 172) (42.3%) (16 840) (2.3%) (16 445) (12.2%) (14 443) 7.2% (15 488)Corporate social investment expense (25 452) (54.2%) (11 650) 131.7% (26 998) 5.5% (28 493) 9.7% (31 271)Other income - 100.0% 63 100.0% 0 - 0 - 0Net profit before tax 858 298 (0.6%) 853 061 6.2% 905 526 5.6% 955 797 9.8% 1 049 126Income tax expense (237 499) 0.7% (239 231) 3.4% (247 371) 7.5% (265 981) 11.7% (297 157)Net profit after tax 620 798 (1.1%) 613 830 7.2% 658 155 4.8% 689 816 9.0% 751 969

Var%

Var%

Var% Year ending 31 March Var

%

The bonus pool for the year ending 31 March 2019 is capped at a maximum of 2.5% (R15 209 032) of the budgeted net profi t after tax for the year (Forecast 2018: 1.24%, actual 2017: 1.78%, actual 2016: 2.70%).

The bonus pool for the year ending 31 March 2019 is capped at 20% of the total staff expenditure, including bonuses (Fore-cast 2018: 12%, actual 2017: 15.82%, actual 2016: 23.58%).

The bonus pool will only be paid once three gatekeepers have been met as per the Sasria Total Rewards Policy.The gatekeepers are:- Achievement of an unqualifi ed audit report;- Achievement of 60% of the Company’s KPIs as per the corporate plan; and- Achievement of 70% of the forecast underwriting profi t.


STATEMENT OF FINANCIAL POSITION

Budget Forecast Budget Budget Budget2018 2018 2019 2020 2021R'000 R'000 R'000 R'000 R'000

AssetsProperty, plant and equipment 8 813 4 119 10 247 7 114 4 865Intangible assets 65 148 62 377 124 421 137 535 125 753Financial assets‑ at fair value through profit and loss 5 552 755 5 695 797 5 787 619 6 262 177 6 770 556‑ loans and receivables 112 146 180 457 185 103 192 867 201 016Insurance receivables 143 244 179 839 190 614 207 776 226 482Reinsurance contracts 10 384 12 823 13 852 15 019 16 290Current tax receivable - - - - -Cash and cash equivalents 1 418 124 1 282 538 1 771 135 1 664 635 1 800 311Total Assets 7 310 614 7 417 950 8 082 991 8 487 123 9 145 273

EquityShare capital - - - - -Non distributable regulatory reserves 556 727 495 513 495 513 495 513 495 513Retained earnings 5 616 072 5 735 202 6 209 208 6 701 578 7 246 602Total Equity 6 172 799 6 230 715 6 704 721 7 197 091 7 742 115

LiabilitiesDeferred income 3 115 3 847 4 156 4 506 4 887Deferred tax 25 055 20 985 14 809 13 167 16 569Employee benefit liability 1 872 3 433 1 917 1 401 855Insurance contracts 889 724 958 539 1 035 904 1 123 647 1 224 777Payables 218 049 200 431 321 484 147 311 156 070Total Liabilities 1 137 815 1 187 235 1 378 270 1 290 032 1 403 158

Total Equity and Liabilities 7 310 614 7 417 950 8 082 991 8 487 123 9 145 273

Year ended 31 March

STATEMENT OF CASH FLOWS

Budget Forecast Budget Budget BudgetYear ended 31 March 2018 2018 2019 2020 2021

R'000 R'000 R'000 R'000 R'000

Cash flows from operating activitiesCash generated from operations 390 455 (76 736) 260 953 1 875 215 776 Investment income 499 640 272 735 289 561 311 256 334 167 Income tax paid (238 836) (267 408) (221 739) (136 535) (136 535)Net cash inflow from operating activities 651 259 (71 409) 328 775 176 596 413 408

Cash flows from investing activitiesPurchase of property, plant and equipment (3 063) (839) (8 912) (250) (2 750)Purchase relating to intangible assets (8 080) - (53 926) (29 350) (5 000)Purchase of investments (338 779) (1 272 644) 433 038 (64 705) (66 196)Net cash outflow from investing activities (349 922) (1 273 483) 370 200 (94 305) (73 946)

Cash flows from financing activitiesDividends paid (166 934) (162 904) (210 378) (188 791) (203 786)Net cash outflow from financing activities (166 934) (162 904) (210 378) (188 791) (203 786)

Net (decrease)/ increase in cash and cash equivalents 134 403 -1 507 796 488 597 -106 500 135 676 Cash and cash equivalents at the beginning of year 1 283 721 2 790 334 1 282 538 1 771 135 1 664 635 Cash and cash equivalents at the end of year 1 418 124 1 282 538 1 771 135 1 664 635 1 800 311

CAPITAL EXPENDITURE

Year ended 31 MarchBudget 2018 R'000

Forecast 2018 R'000

Budget 2019 R'000

Budget 2020 R'000

Budget 2021 R'000

Computer equipment 1 923 1 923 3 598 - -Computer so ware 8 080 13 080 53 926 34 120 5 000Leasehold improvements 480 480 5 064 - -Furniture and fi ngs 660 660 1 530 250 -Total 11 143 16 143 64 118 34 370 5 000


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are

pe

rfor

med

ann

ually

and

re

view

ed.

Perf

orm

an

annu

al P

ossi

ble

Max

imum

Los

s (P

ML)

stu

dy

on s

elec

ted

know

n in

sure

d pr

oper

ties

(cap

ping

on

ex-

posu

re) t

o en

sure

suffi

cie

nt

rein

sura

nce

is p

urch

ased

. In

addi

tion,

sce

nario

ana

lysi

s is

per

form

ed.

Eff e

ctiv

enes

s an

d effi

cie

ncy

of re

insu

ranc

e ar

e as

sess

ed

on a

n an

nual

bas

is.

Revi

ew n

ewsp

aper

s an

d m

edia

for p

ossi

ble

clai

ms.

Iden

tify

poss

ible

Sas

ria

clai

ms/

even

ts.

Opi

nion

s ar

e gi

ven

for a

ll cl

aim

litig

atio

ns. T

he li

tiga-

tion

mat

ters

are

mon

itore

d.

All

reje

cted

cla

ims

are

logg

ed a

nd s

igne

d off

. Le

t-te

rs a

re is

sued

.Th

e cl

aim

s re

ject

ion

lett

ers

are

mon

itore

d. T

he le

tter

s co

ntai

n de

tails

of w

here

co

mpl

aint

s ca

n be

logg

ed.

Dra

ftin

g of

con

trac

ts to

en

sure

that

they

are

lega

lly

bind

ing

and

cont

ain

all t

he

corr

ect w

ordi

ng.

#R

isk

Na

me

Ris

k C

lass

ifi c

ati

on

Inh

ere

nt

Ris

kR

esi

du

al

Ris

kO

ve

rall

C

on

tro

l E

ff e

ctiv

en

ess

Re

spo

nsi

ble

E

xe

cu

tiv

e

Ma

na

ge

r

Co

ntr

ol

Ke

y a

cti

on

s w

he

re c

on

tro

ls a

re

no

t e

ff e

cti

ve

2In

com

plet

e an

d In

accu

rate

Sa

sria

reve

nue

Und

erw

ritin

g/O

p-er

atio

nal R

isk

Hig

hM

ediu

mFa

irEx

ecut

ive

Man

-ag

er: I

nsur

ance

O

pera

tions

All

sale

s and

pro

duct

aw

are-

ness

pre

sent

atio

ns a

re

revi

ewed

by

the

Exec

utiv

e M

anag

er: I

nsur

ance

Ope

ra-

tions

. The

top

10 a

gent

s are

pr

iorit

ised

for t

he sa

les a

nd

prod

uct a

war

enes

s pre

sen-

tatio

ns a

s the

y co

ntrib

ute

tow

ards

70%

of S

asria

’s in

com

e.

The

seni

or b

ookk

eepe

r re

conc

iles t

he A

nnex

ure

1 re

turn

s rec

eive

d fro

m th

e ag

ents

with

the

prem

ium

s in

the

bank

acc

ount

s bef

ore

the

prem

ium

info

rmat

ion

is c

aptu

red

on IM

S. T

he

CRM

s are

info

rmed

of a

ny

conc

erni

ng a

mou

nts.

AN

NE

XU

RE

3: T

OP

10

RIS

K R

EG

IST

ER


#R

isk

Na

me

Ris

k C

lass

ifi c

ati

on

Inh

ere

nt

Ris

kR

esi

du

al

Ris

kO

ve

rall

C

on

tro

l E

ff e

ctiv

en

ess

Re

spo

nsi

ble

E

xe

cu

tiv

e

Ma

na

ge

r

Co

ntr

ol

Ke

y a

cti

on

s w

he

re c

on

-tr

ols

are

no

t e

ff e

cti

ve

Wee

kly

bank

acc

ount

reco

ncili

a-tio

ns a

re p

erfo

rmed

by

the

book

-ke

eper

and

revi

ewed

by

the

fi nan

-ci

al m

anag

er to

ens

ure

that

ther

e ar

e no

una

lloca

ted

prem

ium

s.Th

e Fi

nanc

e de

part

men

t kee

ps

trac

k of

the

prem

ium

s rec

eive

d m

onth

ly a

nd p

enal

ties a

re is

sued

to

age

nts t

hat d

o no

t pay

pre

mi-

ums.

Prem

ium

ana

lysi

s is c

ondu

cted

m

onth

ly to

mon

itor p

rem

ium

m

ovem

ents

and

fi nd

ings

are

re

port

ed. R

elev

ant a

gent

s are

en

gage

d on

the

fi ndi

ngs.

All

larg

e fl u

ctua

tions

in p

rem

ium

s are

in-

vest

igat

ed a

nd re

port

ed m

onth

ly

to th

e Ex

ecut

ive

Man

ager

: Ins

ur-

ance

Ope

ratio

ns.

The

Cogn

os sy

stem

is

bein

g im

prov

ed to

cat

er

for r

epor

ts th

at c

an b

e us

ed b

y th

e St

akeh

olde

r M

anag

emen

t Div

isio

n to

pe

rfor

m th

eir p

rem

ium

an

alyt

ics.

Ana

lysi

s of a

ll pr

emiu

m re

ver-

sals

pro

cess

ed b

y th

e ag

ents

is

perf

orm

ed b

y th

e CR

Ms m

onth

ly.

All

reve

rsal

s are

que

ried

by th

e CR

Ms a

nd th

e ex

plan

atio

ns a

re

docu

men

ted

on a

n ex

cel s

prea

d-sh

eet.

The

fi ndi

ngs a

re re

port

ed to

th

e Ex

ecut

ive

Man

ager

: Ins

uran

ce

Ope

ratio

ns m

onth

ly a

nd to

the

Exec

utiv

e Co

mm

ittee

qua

rter

ly.

The

prem

ium

reve

rsal

an

alyt

ics c

an b

e im

prov

ed

by e

nsur

ing

that

det

aile

d ev

iden

ce is

obt

aine

d fo

r all

reve

rsal

s.

The

prem

ium

reve

rsal

an

alyt

ics n

eed

to b

e co

m-

mun

icat

ed to

the

Fina

nce

Dire

ctor

mon

thly

.Re

fund

s are

app

rove

d in

line

w

ith th

e pr

emiu

m m

anag

emen

t pr

oces

s. A

ll re

fund

s und

er R

200

000

are

auth

oris

ed b

y th

e CR

Ms.

All

refu

nds o

ver R

200

000

are

auth

oris

ed b

y th

e Ex

ecut

ive

Insu

r-an

ce O

pera

tions

. Sig

n- o

ff of

re-

fund

s is d

one

by b

oth

the

FD a

nd

Exec

utiv

e In

sura

nce

Ope

ratio

ns.

Ther

eaft

er F

inan

ce p

roce

sses

the

tran

sact

ion.

Fina

nce

Dire

ctor

follo

ws u

p on

qu

alifi

ed a

udit

repo

rts.

The

Exec

u-tiv

e M

anag

er: I

nsur

ance

Ope

ra-

tions

follo

ws u

p on

qua

lifi e

d au

dit

repo

rts t

hat h

ave

a si

gnifi

cant

op

erat

iona

l im

pact

.

The

proc

ess f

or fo

llow

-in

g up

on

qual

ifi ed

aud

it re

port

s will

be

clea

rly

docu

men

ted

to e

nsur

e cl

ear s

egre

gatio

n of

dut

ies.

3Fa

ilure

of b

usin

ess

to

resp

ond

to In

form

atio

n Te

chno

logy

dev

elop

men

tsSt

rate

gic

Risk

Hig

hM

ediu

mFa

ir

Exec

utiv

e M

anag

-er

: Bus

ines

s O

pera

-tio

ns a

nd In

form

a-tio

n Te

chno

logy

Ther

e ar

e st

rate

gy s

essi

ons

held

an

nual

ly w

ith a

ll th

e m

anag

ers

and

exec

utiv

e m

anag

ers.

The

stra

-te

gic

obje

ctiv

es o

f the

follo

win

g ye

ar a

re d

iscu

ssed

and

agr

eed

on.

Each

dep

artm

ent t

hen

fi nal

ises

th

eir b

udge

t for

the

follo

win

g ye

ar

afte

r it i

s re

view

ed b

y th

e Fi

nanc

e D

irect

or. I

T m

eets

with

bus

ines

s to

de

term

ine

thei

r IT

requ

irem

ents

fo

r the

follo

win

g ye

ar in

ord

er to

bu

dget

acc

ordi

ngly

.

Com

plet

ion

of a

com

-pr

ehen

sive

Ent

erpr

ise

Arc

hite

ctur

e Re

view

(In

prog

ress

).

Fund

s w

ere

budg

eted

in

the

2017

bud

get t

o en

-ha

nce

soft

war

e sy

stem

s to

in

crea

se e

ff ect

iven

ess

and

effi c

ienc

y.

#R

isk

Na

me

Ris

k C

lass

ifi c

ati

on

Inh

ere

nt

Ris

kR

esi

du

al

Ris

kO

ve

rall

C

on

tro

l E

ff e

ctiv

en

ess

Re

spo

nsi

ble

E

xe

cu

tiv

e

Ma

na

ge

r

Co

ntr

ol

Ke

y a

cti

on

s w

he

re c

on

-tr

ols

are

no

t e

ff e

cti

ve

4

Lack

of p

olic

y ho

lder

dat

aO

pera

tiona

l Ris

kH

igh

Hig

hPo

orCh

ief R

isk

Offi

cer

Ann

ually

per

form

a P

ossi

ble

Max

imum

Los

s st

udy

on s

elec

ted

know

n in

sure

d pr

oper

ties

(cap

-pi

ng o

n ex

posu

re) t

o en

sure

e s

uf-

fi cie

nt re

insu

ranc

e is

pur

chas

ed.

In a

dditi

on, s

cena

rio a

naly

sis

is

perf

orm

ed.

Dat

a re

conc

iled

with

Ann

exur

e 1’

s fo

r eac

h ag

ent.

A le

tter

to re

ques

t inf

orm

atio

n w

as s

end

out t

o al

l age

nts.

We

are

curr

ently

in th

e pr

oces

s of

ens

ur-

ing

that

the

qual

ity a

nd q

uant

ity

of th

e da

ta is

app

ropr

iate

for t

he

agen

ts th

at s

ubm

itted

dat

a. In

ad-

ditio

n th

e pr

ogre

ss is

trac

ked

on a

m

onth

ly b

asis

thro

ugh

the

set k

ey

risk

indi

cato

rs.

Com

mun

icat

ion

has

been

se

nt o

ut to

the

indu

stry

by

the

Stak

ehol

der M

anag

e-m

ent D

ivis

ion

requ

estin

g ris

k da

ta. S

ome

agen

ts

have

resp

onde

d an

d th

ere

is a

nee

d to

ens

ure

that

FT

P fi l

es a

re c

reat

ed fo

r all

agen

ts in

ord

er to

ens

ure

that

dat

a is

sec

urel

y tr

ans-

ferr

ed.


Hig

hH

igh

Poor

Actio

n:1.

Impl

emen

tatio

n of

the

plan

to o

btai

n da

ta fr

om

all a

gent

s.2.

Eng

agem

ent w

ith a

gent

s th

at h

ave

not y

et su

bmit-

ted

data

.3.

Est

ablis

hmen

t of a

syst

em

to e

nsur

e th

at d

ata

fi eld

s co

uld

be u

sed

to a

sses

s da

ta.

4. E

valu

atio

n of

dat

a qu

ality

by

per

form

ing

a re

con-

cilia

tion

betw

een

the

rece

ived

dat

a se

t and

the

paym

ents

rece

ived

from

th

e ag

ent.

A n

ew sy

stem

nee

ds to

be

put i

n pl

ace

to w

areh

ouse

all

the

data

re

ceiv

ed fr

om th

e ag

ents

.

Base

d on

our

initi

al re

ques

t se

nt to

the

indu

stry

, in

orde

r to

obt

ain

polic

yhol

der d

ata,

w

e’ve

rece

ived

lim

ited

data

from

ag

ents

on

a m

onth

ly b

asis.

With

th

e re

sign

atio

n of

the

prev

ious

Ex

ecut

ive

Man

ager

: Ins

uran

ce

Ope

ratio

ns, t

he re

spon

sibi

l-ity

of o

btai

ning

dat

a be

cam

e th

e re

spon

sibi

lity

of th

e ris

k m

anag

emen

t fun

ctio

n. T

he ri

sk

man

agem

ent f

unct

ion

has fi

nal

-is

ed a

new

pla

n th

at w

ill fo

cus

on o

btai

ning

qua

lity,

com

plet

e an

d ac

cura

te d

ata

over

the

next

th

ree

year

s fro

m a

gent

s. Th

e fo

cus w

ill b

e to

obt

ain

data

from

th

e to

p 10

age

nts a

nd a

gent

s w

ith e

ngin

eerin

g co

ntra

cts

with

in th

e ne

xt y

ear.

We

are

in

the

proc

ess o

f rec

onci

ling

data

re

ceiv

ed fr

om a

gent

s and

hav

e st

arte

d in

putt

ing

data

ont

o th

e da

ta w

areh

ouse

.

To a

ddre

ss th

e re

spon

se ra

te a

nd

data

qua

lity

conc

erns

furt

her

actio

ns is

requ

ired.

- M

eetin

gs w

ill b

e he

ld w

ith

the

top

20 a

gent

s, to

dis

cuss

qu

ality

and

qua

ntity

of t

he p

ro-

vide

d da

ta a

nd re

ason

s for

not

pr

ovid

ing

the

nece

ssar

y da

ta.

#R

isk

Na

me

Ris

k C

lass

ifi c

ati

on

Inh

ere

nt

Ris

kR

esi

du

al

Ris

kO

ve

rall

C

on

tro

l E

ff e

ctiv

en

ess

Re

spo

nsi

ble

E

xe

cu

tiv

e

Ma

na

ge

r

Co

ntr

ol

Ke

y a

cti

on

s w

he

re c

on

-tr

ols

are

no

t e

ff e

cti

ve

5In

abili

ty to

att

ract

and

reta

in

spec

ialis

ed sk

ills i

n th

e co

mpa

ny

Ope

ratio

nal R

isk

Hig

hH

igh

Poor

- Fo

llow

up

lett

ers w

ill b

e se

nt to

the

non-

subm

ittin

g ag

ents

to c

omm

unic

ate

thei

r no

n-co

mpl

ianc

e in

term

s of

the

bind

er a

gree

men

ts a

nd

initi

al re

ques

t for

subm

issi

on o

f po

licy

hold

er d

ata

as p

revi

-ou

sly

requ

este

d. a

gent

s will

be

mad

e aw

are

of o

ur re

quire

-m

ent t

o in

form

the

FSB

on

thei

r non

-com

plia

nce.

- N

on-c

ompl

ianc

e w

ill b

e re

port

ed to

the

FSB

with

in a

m

onth

aft

er th

e fo

llow

up

let-

ters

hav

e be

en se

nt.

- In

add

ition

to th

e ab

ove

to sp

eed

up th

e pr

oces

s, an

ad

ditio

nal a

venu

e w

ill b

e ex

plor

ed w

ith sy

stem

pro

vid-

ers t

o es

tabl

ish

if th

e re

quire

d in

form

atio

n ca

n be

obt

aine

d di

rect

ly fr

om th

em.

Hig

hM

ediu

mFa

irEx

ecut

ive

Man

ager

: H

uman

Cap

ital

Cons

ulta

nts

or te

mpo

rary

st

aff a

re u

sed

whe

re v

acan

-ci

es e

xist

. Whe

n te

mpo

rary

st

aff a

re e

mpl

oyed

for m

ore

than

thre

e m

onth

s th

e le

gal

depa

rtm

ent i

s co

nsul

ted.

Ensu

re th

at te

mpo

rary

sta

ff ar

e m

anag

ed w

ithin

the

thre

e m

onth

s re

gula

tory

per

iod.

App

oint

men

t and

on

boar

ding

che

cklis

t com

plet

-ed

, sig

ned

off b

y re

leva

nt

man

agem

ent a

nd re

view

ed.

Corp

orat

e W

elln

ess

pro-

gram

me

is u

sed.

The

corp

orat

e w

elln

ess

plan

is

in th

e pr

oces

s of

bei

ng ro

lled

out.

Crea

ting

succ

essi

on p

ools

fo

r key

pos

ition

s in

the

com

pany

.

Tale

nt a

nd L

eade

r Man

age-

men

t pra

ctic

es a

re in

pla

ce

to e

nsur

e be

st p

ract

ice

in

the

com

pany

.

#R

isk

Na

me

Ris

k C

lass

ifi c

ati

on

Inh

ere

nt

Ris

kR

esi

du

al

Ris

kO

ve

rall

C

on

tro

l E

ff e

ctiv

en

ess

Re

spo

nsi

ble

E

xe

cu

tiv

e

Ma

na

ge

r

Co

ntr

ol

Ke

y a

cti

on

s w

he

re c

on

tro

ls a

re

no

t e

ff e

cti

ve


Hig

hM

ediu

mFa

ir

Empl

oyee

s are

all

coac

hed

whi

le th

ey a

re o

n th

e jo

b an

d th

ere

are

deve

lopm

ent

plan

s in

plac

e fo

r eac

h em

ploy

ee. T

he e

mpl

oyee

s’ KP

Is a

nd P

DPs

are

agr

eed

on

annu

ally

and

cap

ture

d on

th

e Pa

yspa

ce sy

stem

. The

y ar

e re

view

ed b

i-ann

ually

.

Posi

tions

are

fi lle

d w

ithin

in

thre

e m

onth

s for

non

-key

po

sitio

ns a

nd k

ey p

osi-

tions

are

fi lle

d w

ithin

nin

e m

onth

s.

Exit

inte

rvie

w re

sults

.

Qua

lity

recr

uitm

ent s

ervi

ce

prov

ider

s are

use

d to

ens

ure

that

the

best

em

ploy

ees a

re

recr

uite

d. C

urre

nt se

rvic

e pr

ovid

ers w

ere

eval

uate

d ag

ains

t crit

eria

, loo

ked

at

addi

tiona

l age

ncie

s and

m

eetin

gs h

ave

been

hel

d.

Ther

e is

a p

ropo

sed

list t

hat

is c

ompi

led.

#R

isk

Na

me

Ris

k C

lass

ifi c

ati

on

Inh

ere

nt

Ris

kR

esi

du

al

Ris

kO

ve

rall

C

on

tro

l E

ff e

ctiv

en

ess

Re

spo

nsi

ble

E

xe

cu

tiv

e

Ma

na

ge

r

Co

ntr

ol

Ke

y a

cti

on

s w

he

re c

on

tro

ls a

re

no

t e

ff e

cti

ve

#R

isk

Na

me

Ris

k C

lass

ifi c

ati

on

Inh

ere

nt

Ris

kR

esi

du

al

Ris

kO

ve

rall

C

on

tro

l E

ff e

ctiv

en

ess

Re

spo

nsi

ble

E

xe

cu

tiv

e

Ma

na

ge

r

Co

ntr

ol

Ke

y a

cti

on

s w

he

re c

on

tro

ls a

re

no

t e

ff e

cti

ve

6Er

osio

n of

cap

ital d

ue to

de

terio

ratio

n of

inve

stm

ent

mar

kets

Mar

ket R

isk

Hig

hM

ediu

mFa

irFi

nanc

e D

irect

or

Inve

stm

ent m

anda

tes a

re

com

pile

d w

ith re

gard

s to

the

inve

stm

ent p

olic

y (ri

sk/

allo

catio

n). T

his e

nsur

es th

at

that

ass

et m

anag

ers o

nly

inve

st in

cer

tain

inst

rum

ents

. Th

e in

vest

men

t man

date

s ar

e m

onito

red

by th

e In

vest

-m

ent A

ccou

ntan

t to

ensu

re

that

bre

ache

s are

iden

ti-fi e

d an

d lo

sses

reco

rded

. A

repo

rt is

pre

pare

d fo

r th

e Fi

nanc

e D

irect

or o

n a

mon

thly

bas

is.

Hig

hM

ediu

mFa

ir

Inve

stm

ent p

olic

y st

ate-

men

t lim

its th

e us

e of

hig

h ris

k in

stru

men

ts li

miti

ng th

e lo

sses

that

can

be

suff e

red

durin

g a

dete

riora

ting

mar

ket.

The

inve

stm

ents

are

co

ntin

uous

ly m

onito

red

by

the

Inve

stm

ent A

ccou

ntan

t to

iden

tify

any

non-

com

pli-

ance

. A re

port

is p

repa

red

for t

he F

inan

ce D

irect

or o

n a

mon

thly

bas

is.

Qua

rter

ly in

vest

men

t re

port

bac

k se

ssio

ns b

y In

vest

men

t Man

ager

s to

co

mm

unic

ate

perf

orm

ance

an

d fu

ture

str

ateg

ies.

Each

qu

arte

r an

asse

t man

ager

is

invi

ted

to p

rese

nt o

n af

ore-

men

tione

d to

the

Inve

st-

men

t Com

mitt

ee.

Stra

tegi

c as

set a

lloca

tion

prep

ared

bas

ed o

n Sa

sria

’s ris

k ap

petit

e an

d re

turn

ob

ject

ives

and

app

rove

d by

th

e Bo

ard

of D

irect

ors.


Stan

dard

Ban

k is

Sas

ria’s

sing

le c

usto

dian

and

pe

rfor

ms

its in

vest

men

t ad

min

istr

atio

n se

rvic

es.

Stan

dard

Ban

k re

cord

s al

l tr

ades

and

reco

ncile

s to

the

asse

t man

ager

s’ ac

coun

ts

on a

mon

thly

bas

is. S

tan-

dard

Ban

k pr

epar

es a

con

-so

lidat

ed re

port

and

rela

ted

inve

stm

ent j

ourn

als

whi

ch

the

fi nan

ce d

epar

tmen

t pr

oces

ses

in G

reat

Pla

ins.

The

Inve

stm

ent A

ccou

ntan

t th

en p

erfo

rms

a re

conc

ili-

atio

n be

twee

n th

e co

nsol

i-da

ted

Stan

dard

Ban

k re

port

an

d th

e G

ener

al L

edge

r.

Hig

hM

ediu

mFa

ir

An

annu

al d

ue d

ilige

nce

revi

ew is

con

duct

ed o

n al

l Sas

ria a

sset

man

ager

s. A

due

dili

genc

e re

port

is

prep

ared

whi

ch p

rovi

des

high

leve

l fee

dbac

k on

ea

ch o

f the

ass

et m

anag

ers

revi

ewed

and

the

sam

e is

re

port

ed to

the

Inve

stm

ent

Com

mitt

ee o

f Sas

ria. T

his

give

s Sa

sria

com

fort

ove

r th

e st

reng

th o

f the

ass

et

man

ager

s’ co

ntro

l env

iron-

men

t, pe

rfor

man

ce re

sults

an

d ab

ility

to c

ontin

ue a

s a

goin

g co

ncer

n.

The

inve

stm

ent f

unct

ion

prov

ides

the

data

requ

ired

to p

erfo

rm th

e m

arke

t an

d cr

edit

risk

expo

sure

ca

lcul

atio

ns, t

o th

e ac

tuar

ial

depa

rtm

ent w

ho p

erfo

rms

the

calc

ulat

ions

.

#R

isk

Na

me

Ris

k C

lass

ifi c

ati

on

Inh

ere

nt

Ris

kR

esi

du

al

Ris

kO

ve

rall

C

on

tro

l E

ff e

ctiv

en

ess

Re

spo

nsi

ble

E

xe

cu

tiv

e

Ma

na

ge

r

Co

ntr

ol

Ke

y a

cti

on

s w

he

re c

on

tro

ls a

re

no

t e

ff e

cti

ve

Hig

hM

ediu

mFa

ir

The

Inve

stm

ent P

olic

y,

whi

ch in

clud

es th

e in

vest

-m

ent s

trat

egy

and

the

stra

tegi

c as

set a

lloca

tion,

is

revi

ewed

and

upd

ated

by

the

Fina

nce

Dire

ctor

in c

on-

junc

tion

with

the

actu

aria

l te

am a

nd th

e as

set c

onsu

l-ta

nt, a

nd th

en su

bmitt

ed to

th

e Ex

ecut

ive

Com

mitt

ee

and

the

Inve

stm

ent C

om-

mitt

ee fo

r rev

iew

and

rec-

omm

enda

tion

to th

e Bo

ard

of D

irect

ors f

or a

ppro

val.

All

inve

stm

ents

are

gov

erne

d by

the

sam

e po

licy.

The

quan

tifi c

atio

n of

mar

ket

risk

and

cred

it ris

k ex

posu

re

is c

alcu

late

d by

the

actu

aria

l de

part

men

t qua

rter

ly a

nd

revi

ewed

by

the

Chie

f Ris

k O

ffi ce

r and

Fin

ance

Dire

ctor

. Si

gned

off

by h

ead

of a

ctu-

aria

l dep

artm

ent.

Revi

ew a

nd re

conc

iliat

ion

of

inve

stm

ents

hel

d by

Sas

ria.

The

perf

orm

ance

of a

sset

m

anag

ers i

s mon

itore

d an

d re

port

ed b

y th

e in

vest

men

t ac

coun

tant

to th

e Fi

nanc

e D

irect

or a

nd In

vest

men

t Co

mm

ittee

on

mon

thly

and

qu

arte

rly b

asis

resp

ectiv

ely.

#R

isk

Na

me

Ris

k C

lass

ifi c

ati

on

Inh

ere

nt

Ris

kR

esi

du

al

Ris

kO

ve

rall

C

on

tro

l E

ff e

ctiv

en

ess

Re

spo

nsi

ble

E

xe

cu

tiv

e

Ma

na

ge

r

Co

ntr

ol

Ke

y a

cti

on

s w

he

re c

on

tro

ls a

re

no

t e

ff e

cti

ve


7Cy

ber s

ecur

ity ri

skO

pera

tiona

l Ris

kH

igh

Med

ium

Fair

Exec

utiv

e M

an-

ager

: Bus

ines

s O

pera

tions

and

In

form

atio

n Te

ch-

nolo

gy

Fire

wal

ls a

re d

eplo

yed

on

the

perim

eter

net

wor

k w

hich

scre

en in

com

ing

and

outg

oing

traffi

c. W

here

serv

-er

s are

acc

essi

ble

to u

sers

ou

tsid

e of

Sas

ria, a

s in

the

case

of t

he c

usto

mer

web

po

rtal

, a d

emili

taris

ed z

one

(DM

Z), w

hich

rest

rict t

he a

c-ce

ss to

info

rmat

ion

avai

labl

e to

thes

e us

ers i

s use

d. A

ll au

then

ticat

ion

is h

andl

ed b

y SS

L se

curit

y ce

rtifi

cate

s.

The

cybe

r dia

gnos

tic a

sses

smen

t an

d in

tern

al a

nd e

xter

nal v

ulne

r-ab

ility

/pen

etra

tion

test

has

bee

n pe

rfor

med

by

PWC.

A se

cond

te

st is

sche

dule

d fo

r Feb

ruar

y 20

18.

Acce

ss c

ontr

ol is

mon

itore

d an

d lo

gon

cred

entia

ls

regu

larly

upd

ated

. Ant

iviru

s so

ftw

are

is in

stal

led

on a

ll co

mpu

ters

and

serv

ers a

nd

upda

ted

daily

.

Dai

ly b

acku

ps o

f all

data

w

hich

can

be

rest

ored

in

the

even

t tha

t a c

yber

at-

tack

resu

lts in

lost

dat

a or

co

rrup

tion.

Sas

ria a

lso

has

an o

ff -si

te re

cove

ry c

entr

e w

here

bac

k-up

s are

stor

ed.

Dis

aste

r rec

over

y te

stin

g is

pe

rfor

med

bi-a

nnua

lly. A

ll sy

stem

s mus

t be

rest

ored

w

ithin

8 h

ours

dur

ing

thes

e te

sts.

#R

isk

Na

me

Ris

k C

lass

ifi c

ati

on

Inh

ere

nt

Ris

kR

esi

du

al

Ris

kO

ve

rall

C

on

tro

l E

ff e

ctiv

en

ess

Re

spo

nsi

ble

E

xe

cu

tiv

e

Ma

na

ge

r

Co

ntr

ol

Ke

y a

cti

on

s w

he

re c

on

tro

ls a

re

no

t e

ff e

cti

ve

8Fa

ilure

to c

ompl

y w

ith re

gu-

lato

ry re

quire

men

ts a

nd

gove

rnan

ce c

odes

Ope

ratio

nal R

isk

Hig

hM

ediu

mFa

ir

Exec

utiv

e M

an-

ager

Gov

erna

nce

& Co

mpa

ny S

ecre

-ta

riat

Com

plia

nce

Man

agem

ent

KPI f

or a

ll m

anag

ers i

n Sa

sria

to

ens

ure

that

the

man

ager

s m

ake

it a

prio

rity

to e

nsur

e th

at th

eir d

epar

tmen

ts c

om-

ply

with

law

s and

regu

la-

tions

. The

KPI

s are

ass

esse

d an

d ra

ted

bi-a

nnua

lly.

The

Reco

rds M

anag

emen

t and

Re

tent

ion

Polic

y w

as a

ppro

ved

by th

e Bo

ard

of D

irect

ors o

n 11

June

201

5 an

d tr

aini

ng w

as

give

n to

all

staff

. Th

e im

ple-

men

tatio

n of

the

polic

y w

ill b

e m

onito

red

as th

ere

are

vario

us

new

pro

cess

es th

at n

eed

to b

e pu

t in

plac

e in

ord

er to

com

ply

with

the

polic

y.

The

Boar

d no

tice

158

of 2

015

on

fi t a

nd p

rope

r req

uire

men

ts h

as

been

gaz

ette

d. T

he B

oard

Not

ice

is e

ff ect

ive

from

1 O

ctob

er 2

015

and

Sasr

ia h

as 6

mon

ths t

o al

ign

the

Fit a

nd P

rope

r Pol

icy

with

the

boar

d no

tice.

The

Fit

& Pr

oper

ch

ecks

for a

ll re

spon

sibl

e pe

r-so

ns w

ill b

e do

ne in

qua

rter

4.

Prim

ary

and

seco

ndar

y ac

ts

(as p

er C

ompl

ianc

e re

gist

er).

SAM

- O

RSA

and

CPR

(In

clud

ed se

para

tely

due

to

assu

ranc

e th

at n

eeds

to b

e pr

ovid

ed).

All

new

and

pro

pose

d pi

eces

of

legi

slat

ion

are

revi

ewed

fo

r the

ir im

pact

on

Sasr

ia

and

actio

ns a

re d

iscu

ssed

an

d al

loca

ted.

All

regu

lato

ry a

nd g

over

-na

nce

requ

irem

ents

are

ca

ptur

ed in

pol

icie

s. N

on-

com

plia

nce

with

pol

icie

s co

nstit

utes

mis

cond

uct a

s de

fi ned

in th

e H

C po

licie

s an

d ca

n re

sult

in d

isci

plin

ary

actio

n.

Trai

ning

and

Aw

aren

ess

inte

rven

tions

on

regu

latio

n re

quire

men

ts is

don

e du

ring

Gov

erna

nce

Wee

k an

nual

ly.

Cont

rol R

isk

Man

agem

ent

Plan

wor

ksho

ps a

re a

lso

held

.

#R

isk

Na

me

Ris

k C

lass

ifi c

ati

on

Inh

ere

nt

Ris

kR

esi

du

al

Ris

kO

ve

rall

C

on

tro

l E

ff e

ctiv

en

ess

Re

spo

nsi

ble

E

xe

cu

tiv

e

Ma

na

ge

r

Co

ntr

ol

Ke

y a

cti

on

s w

he

re c

on

tro

ls a

re

no

t e

ff e

cti

ve


9N

on-c

ompl

ianc

e of

cla

ims

staff

with

cla

ims

man

ual

and

proc

edur

esO

pera

tiona

l Ris

kM

ediu

mM

ediu

mFa

irEx

ecut

ive

Man

-ag

er: I

nsur

ance

O

pera

tions

Qua

rter

ly a

d-ho

c au

dit o

f cl

aim

fi le

s by

an

inde

pen-

dent

con

sulta

nt a

nd th

e fi n

ding

s ar

e fo

llow

ed u

p an

d th

e im

prov

emen

t is

mon

itore

d.

The

clai

ms

impr

ovem

ent p

roje

ct

is in

pro

gres

s.

Form

al p

roce

sses

hav

e be

en

docu

men

ted

to e

nsur

e th

at

all p

roce

dure

s ar

e co

mpl

eted

w

ithou

t dup

licat

ion.

A c

hang

e re

ques

t has

bee

n co

mpl

eted

to a

void

dup

licat

e cl

aim

pay

men

ts.

A c

hang

e re

ques

t has

bee

n co

mpl

eted

to e

nsur

e th

at s

al-

vage

s ar

e fl a

gged

.

Wee

kly

clai

ms

revi

ew

mee

tings

are

hel

d to

ens

ure

com

plia

nce

with

the

clai

ms

man

ual.

Revi

ew o

f mon

th e

nd

repo

rts

incl

udin

g th

e cl

aim

s es

timat

e re

view

and

exc

ep-

tion

repo

rts.

Segr

egat

ion

of d

utie

s w

hen

proc

essi

ng a

nd p

ayin

g cl

aim

s.

The

clai

ms

reje

ctio

n le

tter

s ar

e m

onito

red.

The

lett

er

cont

ains

det

ails

of w

here

co

mpl

aint

s ca

n be

logg

ed.

Set m

anda

te o

n IM

S sy

stem

en

sure

s th

at c

laim

s ar

e pr

o-ce

ssed

by

the

corr

ect s

taff

mem

bers

.

The

clai

m is

vie

wed

by

the

adm

inis

trat

or, a

lloca

ted

to th

e cl

aim

s co

ntro

ller,

revi

ewed

by

the

clai

ms

con-

trol

ler a

nd th

e se

nior

cla

ims

cont

rolle

r.

#R

isk

Na

me

Ris

k C

lass

ifi c

ati

on

Inh

ere

nt

Ris

kR

esi

du

al

Ris

kO

ve

rall

C

on

tro

l E

ff e

ctiv

en

ess

Re

spo

nsi

ble

E

xe

cu

tiv

e

Ma

na

ge

r

Co

ntr

ol

Ke

y a

cti

on

s w

he

re c

on

tro

ls a

re

no

t e

ff e

cti

ve

Le

ge

nd

:

Inhe

rent

risk

ratin

gs:

Na

vy

(V

ery

Hig

h R

isk

)

Und

erta

ke a

man

agem

ent r

evie

w o

f cur

rent

con

trol

s to

iden

tify

pote

ntia

l opt

ions

for m

itiga

tion

ac-

tion.

Re

d (

Hig

h R

isk

)

Und

erta

ke a

man

agem

ent r

evie

w o

f cur

rent

con

trol

s to

iden

tify

pote

ntia

l opt

ions

for m

itiga

tion

ac-

tion.

Am

be

r (M

ed

ium

Ris

k)

Revi

ew a

nd ta

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ANNEXURE 4: FRAUD PREVENTION PLAN

1. Introduction

Sasria SOC Ltd (Sasria) values the integrity and eff orts of all its employees in dealing with suppliers, stakeholders and other employees. To this end Sasria has adopted these organisational values that are embedded in the business and also form part of staff performance measurements: professionalism, integrity, teamwork, innovation and customer centricity.

Sasria supports and fosters a culture of zero tolerance for the commission or concealment of fraudulent or illegal acts. Al-legations of such acts will be investigated and pursued to their logical conclusion, including legal action, criminal prosecu-tion, and disciplinary action where warranted.

Being cognisant of its responsibility for setting the tone for eff ective leadership based on an ethical foundation, the Sasria Board accepts the need to manage organisational ethics and integrity, to build an ethical corporate culture that is zero tol-erant to fraud. All Sasria employees have a responsibility with respect to the fi ght against fraud and other illegal acts. In this light Sasria employees are specifi cally prohibited from participating in anything that involves fraud and/or illegal activities. The Board has adopted the following ethics promotion/anti–fraud policies: Confl ict of Interest Management Policy, Fraud Prevention and Whistleblowing Policy, Ethics Management Policy, Fit and Proper Requirements Policy.

The Social and Ethics Committee of the Board is mandated by the Board to drive ethics and anti – fraud promotion in the organisation. In terms of its charter, this committee drives Sasria’s standing in terms of the goals and purposes of – - The anti–corruption protocols of the Organisation for Economic Development.- Good Corporate Citizenship, including promotion of equality, prevention of unfair discrimination and reduction of

corrupt activities.

The Social and Ethics Committee further reports to the Shareholder through its Chairperson at the Annual General Meeting of Sasria in terms of the Companies Act 2008. In this regard the Committee submits a formal written report on its activities for the fi nancial year under review.

The fraud prevention plan (fraud plan) is reviewed annually to incorporate relevant changes in the operating environment. The fraud prevention plan is included in the Sasria annual corporate plan to the Shareholder.

2. Purpose of the Fraud Prevention Plan

The purpose of the fraud prevention plan is to provide:• Guidelines within the existing legal framework, to deal with fraud and corruption within Sasria• An outline of what may constitute fraud, theft, corruption and dishonesty, and to detail the procedures where these

acts are suspected or discovered• An overview of Sasria’s approach to the prevention and detection of fraud and corruption.

3. Scope of the Fraud Prevention Plan

The fraud plan applies to any actual or suspected acts of fraud, theft, corruption and dishonesty involving all Sasria’s employees as well as consultants, vendors, contractors, employees with outside agencies and/or any other stakeholders having a business relationship with Sasria. Crime in its broadest defi nition will not be tolerated, irrespective of a person’s position or number of years of service, and will be uniformly and severely dealt with.

4. Defi nition of Fraud & Corruption

4.1 Fraud

The legal defi nition of fraud is based on South African law. For the purpose of this plan, fraud is defi ned as:“Any unlawful act or omission by which a misrepresentation is made with the intention to defraud, which causes actual prejudice or which is potentially prejudicial to another, whether or not there is personal benefi t to the perpetrator.”

Fraud can be perpetrated either internally by persons within the employment of the Sasria, or by clients or other external third parties.The Prevention and Combating of Corrupt Activities Act, No. 12 of 2004, provides that “any person who gives or accepts or agrees or off ers to accept or receives any gratifi cation from another person in order to infl uence such other person in a manner that amounts to”:The illegal or unauthorised performance of such other person’s powers, duties or functions;• An abuse of authority, a breach of trust, or the violation of a legal duty or set of rules;• The achievement of an unjustifi ed result; or• Any other unauthorised or improper inducement to do or not to do anything is guilty of the off ence of corruption.

4.2 Corruption

For purposes of the Sasria fraud plan, corruption is defi ned as lack of integrity or honesty (especially susceptibility to brib-ery) including use of a position of trust for dishonest gain.

The fraud prevention plan in summary prohibits:“the abuse of a position of employment to gain an advantage in contravention of duty. It includes the off ering/giving/soliciting or accepting of an inducement or reward for certain improper actions and any improper approach or solicitation, either directly or through a nominee to act in any way which could be to Sasria’s disadvantage”.

Forms of Corruption

Bribery – involves the promise, off ering or giving of a benefi t that improperly aff ects the actions or decisions of public servants.Embezzlement – this involves theft of resources by persons who control such resources.Fraud – Any conduct or behaviour of which a dishonest representation and/or appropriation forms an element.Extortion – Coercion of a person or entity to provide a benefi t to a public servant, another person or an entity, in exchange for acting or failing to act in a particular manner.Abuse of power – The use by a public servant of his or her vested authority to improperly benefi t another public servant, person or entity or using the vested authority to improperly discriminate against another public servant, person or entity.Confl ict of interest – The failure by a public servant to act or to consciously fail to act on a matter where the public servant has an interest or another person or entity that has some form of relationship with the public servant has an interest.Abuse of privileged information – This involves the use, by a public servant of privileged information and knowledge that a public servant possesses as a result of his or her offi ce to provide unfair advantage to another person or entity to obtain a benefi t.Favouritism – The provision of services or resources according to personal affi liation of a public servant.Nepotism – A public servant ensuring that family members are appointed to public service positions or that family mem-bers receive contracts from the State is regarded as nepotism.

5. Regulatory Framework

5.1 Public Finance Management Act, No. 1 of 1999, as amended

This Act requires accounting authority of a public entity to exercise utmost care, act with fi delity, honesty and integrity, disclose all material facts, including those reasonably discovered, and seeks to prevent any prejudice to the fi nancial inter-ests of the state. The accounting authority must also ensure that there is an eff ective, effi cient and transparent system of internal audit and risk management, fi nancial and internal control.

5.2 Prevention and Combating of Corrupt Activities Act, No. 12 of 2004

This Act provides for the strengthening of measures to prevent and combat corruption and corrupt activities; and also outlines the off ences in respect of corruption and off ences relating to corrupt activities.


5.3 Prevention of Organised Crime Act, No. 121 of 1998 (POCA)

This Act contains provisions that are aimed at achieving the following:• The combating of organised crime, money laundering and criminal gang activities.• The criminalisation of conduct referred to as “racketeering”.• The provision of mechanisms for the confi scation and forfeiture of the proceeds of crime.• The creation of mechanisms for the National Director of Public Prosecutions to obtain certain information required

for the purposes of an investigation; and• The creation of mechanisms for co-operation between investigators and the South African Receiver of Revenue.

5.4 Financial Intelligence Centre Act, No. 38 of 2001 (FICA)

The Act establishes a Financial Intelligence Centre and a Money Laundering Advisory Council. The purpose of these entities is to combat money laundering activities.

5.5 Protection of Constitutional Democracy Against Terrorist and Related Activities Act, No. 33 of 2004

The Act criminalises terrorist activities and terrorist fi nancing and gave Government investigative and asset seizure powers in cases of suspected terrorist activity.

5.6 Protected Disclosures Act, No. 26 of 2000

The Act facilitates reporting by employees of fraud, corruption or other unlawful or irregular actions by their employers or co-employees without fear of any discrimination or reprisal by their employers or co-employees.

6. Fraud and Corruption Strategies

6.1 Structural Strategies – The actions to be undertaken in order to address fraud and corruption at a structural level.

6.1.1 Board of Directors – The Board of Directors bears the ultimate responsibility for management of fraud, corruption and risk within Sasria. This includes the coordination of risk assessments, overseeing the investigation of suspected fraud and corruption, and facilitation for the reporting of such instances.

6.1.2 An ethical culture – Sasria is required to conduct itself in an ethical and moral way. Ethical conduct is based on a set of principles referred to as values and norms. The collective ethical conduct of all the individual employees of Sasria refl ects Sasria’s ethical conduct. Good governance indicates that institutions should develop code of conduct as part of their cor-porate governance frameworks. All employees are expected to abide by the Code of Conduct of Sasria.

6.1.3 Executive Management Commitment – The Executive Management of Sasria is committed to eradicating fraud and corruption and ensuring that Sasria strives to be perceived as ethical in all its dealings with the public and other interested parties. Senior management will also ensure that all the employees and stakeholders are made aware of its overall anti-fraud and corruption activities through various initiatives of awareness and training.

6.2 Operational Strategies

6.2.1 Internal Controls – Internal controls are the fi rst line of defence against fraud and corruption. These are essential ele-ments in the overall Anti-Fraud and Corruption Strategy. The Internal Audit Department will be responsible for implement-ing an audit program which will incorporate steps to evaluate adherence to internal controls.

6.2.2 Employee Awareness – Awareness of Sasria’s Anti-Fraud and Corruption Strategy, Code of Conduct, Whistle Blowing policy and the manifestation of fraud and corruption in the workplace will assist in the creation of an environment which may be considered to be hostile to a would-be transgressor.

6.2.3 Pre-employment Screening and Recruitment Procedures – To be carried out for all the appointments, and evi-dence of such screening will be maintained by the Human Capital Department. Recruitment will be conducted in accor-dance with the requisite recruitment procedures.

6.2.4 Internal Audit Plan – A robust internal Audit Plan which focuses on the prevalent high fraud and corruption risk serves as an eff ective preventative measure.

6.2.5 Fraud and Corruption Prevention Plan – The actions set out in this plan are all focused at mitigating the risk of fraud and corruption in the company.

6.2.6 Disclosure of Interest – All Sasria Directors and staff are required to annually disclose their business interests. The register of disclosures is kept by the Compliance Offi cer. Disclosure of confl ict of interests is also done at all Board and Com-mittee meetings and management committees and forums at which the employees sit either as members or by invitation.

6.3 Detection Strategies

Detection of fraud and corruption may occur through:• Vigilance on the part of the all employees• The Internal Audit function• Ad hoc management reviews• Anonymous reports• Application of detection techniques• External audits.

6.4 Response Strategies

6.4.1 Reporting fraud and corruption – Fraud prevention and Whistle Blowing Policy.The key obstacle in fi ghting fraud and corruption is the fear by employees of being intimidated to identify any corrupt or unethical practices witnessed at the work place. Those who often do whistle blowing end up being victimised and intimi-dated. For this reason Sasria adopted a Fraud prevention and Whistle Blowing Policy setting out the detailed procedure to be followed in order to report any incidents of fraud and corruption.

6.4.2 Investigating fraud and corruption

In the event when fraud or corruption is detected or suspected, investigations will be initiated, and if warranted, the disci-plinary proceedings, prosecution or action aimed at the recovery of losses will be initiated.

6.5 Maintenance Strategies

6.5.1 Fraud and Ethics Awareness Campaigns

Sasria holds an Ethics Awareness/Anti – Fraud campaign at least annually to ensure that staff members are aware of ethics and fraud prevention strategic within Sasria.Ethics is assigned to the Compliance Function of Sasria, which is responsible for ethics awareness campaigns, ethics aware-ness assessments and initial review of ethics management and fraud prevention policies.

6.5.2 Review of the eff ectiveness of the Anti-Fraud and Corruption Strategy and the Prevention Plan

Sasria will conduct a review of the Anti-Fraud and Corruption Strategy and Prevention to determine the eff ectiveness thereof. The Board of Directors is ultimately accountable for this review and may appoint a person to take the responsibility for this.

6.5.3 Review and updating the Anti-Fraud and Corruption Strategy and Prevention Plan

This will involve ongoing review of fraud and corruption risk exposures. Fraud and Corruption risk assessments should be conducted at the same time as the review of the Anti-Fraud and Corruption Strategy and Prevention Plan. The Board of Directors is accountable for the review and may delegate a person to take the responsibility.


NOTES

72 | Sasria SOC Ltd Corporate Plan & Budget 2018 - 2019

Physical address: 36 Fricker Road, Illovo, 2196Postal address: PO Box 653367, Benmore, 2010Tel: +27 11 214 0800Fax: +27 11 447 8630Email: [email protected]: www.sasria.co.za