Life assurance sector makes transformation strides, but BEE equity and skills challenges remain

6 Mar 2024

The drop-off in BEE compliance at junior levels implies that the industry’s skills pipeline may come under pressure, which will stunt further progress at the senior levels in future years.

A report from the Association for Savings and Investment South Africa (Asisa) looking at transformation in the life assurance industry highlights a drop-off in compliance at some of the junior levels compared with 2021 and 2022, accompanied by lower skills spend on non-management staff and the unemployed for life assurers.

The drop-off in BEE compliance at junior levels implies that the industry’s skills pipeline may come under pressure, which will stunt further progress at the senior levels in future years.

Lister Saungweme, Asisa’s senior policy adviser for transformation, skills development and education, said skills development was critical to the savings and investment industry because it determined the growth of the pipeline of black employees with specialised skills.

“Unfortunately, our industry’s skills development efforts were negatively impacted by the Covid-19 pandemic, which is reflected in the progress made towards achieving targets for 2021 and 2022,” Saungweme said.

She explained that the financial impact of Covid on companies resulted in reduced spending on skills development. In addition, the sudden shift to remote working environments slowed the skills development of junior black employees and the onboarding of black interns.

This was despite the fact that Asisa members spent R9.6-billion on skills development over the five years from 2018 to 2022. In 2022 alone, skills development spending by life offices and asset managers amounted to R2.1-billion.

At higher levels, black representation at board level in asset managers improved from 52% in 2020 to 60% in 2023. Asisa believes this may be a result of control being exercised through the appointment of board members by shareholders. The report represents 97% of assets under management (AUM) for life offices and more than 85% of AUM for asset managers.

Steady overall progress

Saungweme said the report showed that the most notable improvement was recorded for the ownership element of the Financial Sector Charter scorecard, which measures the extent to which black people own equity in a company. Overall, life offices and asset managers exceeded most Broad-Based Black Economic Empowerment (BBBEE) ownership targets in 2022.

In one of the more recent BBBEE deals, Old Mutual announced a Bula Tsela deal in 2022, which included a community share scheme and an employee share scheme, and the issue of just over 205 million shares — most of which went to black South Africans.

Contributions by Asisa members towards enterprise and supplier development (ESD) exceeded the targets in 2021 and 2022, with total ESD contributions of R617-million by life officers and asset managers in 2022. Saungweme said the aim of ESD was to create sustainable small and medium enterprises, resulting in job creation and economic growth.

Socioeconomic development and consumer education targets were also surpassed in 2022, with a total spend of R483-million by life offices and asset managers.

Employment equity targets challenge

Saungweme cautioned that reaching management control and employment equity targets remained a challenge for an industry dependent on scarce specialised skills such as actuarial and asset management expertise.

“While we are not where we want to be, we are seeing progress, albeit slow progress, towards meeting management control, employment equity and skills development targets,” she said.

A high-level survey conducted by Asisa last year to establish whether a deliberate focus on achieving employment equity was delivering results in the asset management space revealed that in 2018, 23% of portfolio managers managing some of South Africa’s biggest collective investment schemes were black (African, coloured and Indian). By 2023, this number had increased to 37%.

Of concern, according to Saungweme, is that there was no significant improvement in the number of female portfolio managers, which stayed static at 17%. DM

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Steady overall progress

Employment equity targets challenge