Welcome to Matters of Mind (MM)

May 2024, Second Edition


The ability to destroy your ideas rapidly instead of slowly when the occasion is right is one of the most valuable things. You have to work hard on it. Ask yourself what are the arguments on the other side? It’s bad to have an opinion you’re proud of if you can’t state the arguments for the other side better than your opponents. This is a great mental discipline.

— Charlie Munger

With the above quote in mind, we review the past few weeks and anticipate the future; there is much to look forward to as our young democracy is well founded. The discussion on the NHI is a focus in this edition as is the Two Pot Retirement System. Please do make use of the link to the recording from the ASSA Retirement Matters sessional which is highly informative and engaging. In the About You section we explore the concept of removing what is not necessary from your daily grind to be productive and just how important it is to do the hard work required to formulate your opinion.

Please share MM with your peers and colleagues and enjoy!

MM Editorial Team

Economic matters

Reserve Bank charts illustrate South Africa’s economic and social woes

At the heart of South Africa’s economic and social crises are two worrying trends: slowing economic growth and rising inequality. In its biannual Financial Stability Review published on 5 June, the South African Reserve Bank illustrated this starkly in three charts.

An opinion piece with data from SARB and Bloomberg. 2.5min read

R2,280 pain for South African households

Since pre-Covid May 2019, South Africans are now paying an estimated R2,280 more for a basket of grocery items as of May 2024.This is according to the price comparison of the Pietermaritzburg Economic Justice & Dignity Group (PMBEJD) Food Affordability Index over the past five years.

2min read

Financial Services Industry

Dis-Chem Acquires 50% Stake in OneSpark for R155.9 Million in Strategic Healthcare Deal

This article delves into the details, rationale, and implications of this transaction, which marks a notable development in the intersection of healthcare and financial services.

3min read

Prudential Authority Issues Guidance on Climate-Related Governance/Risk Practices and Disclosures for Insurers

In essence the message to insurers is that they are to:

“build the necessary capacity and capabilities to assess, manage, and disclose climate-related risks and opportunities within existing risk management and governance frameworks, including any metrics or targets developed by the insurer”.

A similar note was issued to banks and you can read that here. 2.5 min read

How would you use the actuarial control cycle to

Life Insurance

Experiencing financial pressure? Do not cancel life insurance and retirement savings

As the cost of living continues to soar, many South Africans are struggling under the financial pressure of rising inflation. The prospect of unchanged interest rates, with the Reserve Bank likely to maintain the repo rate at 8.25%, brings no respite from the mounting pressures on people’s pockets. In these challenging times, it’s crucial to carefully assess every expense to avoid cutting essential items like life cover and retirement savings.

Sound actuarial advice. 2.5min read

General Insurance

How to protect your business income in South Africa’s tough economic climate

In the current volatile economic conditions, South African businesses, whether they are an SME, mid-market or a multinational organisation, must safeguard their b2b transactions against the threat of unpaid debts. As the country grapples with economic fluctuations exacerbated by global events, the importance of trade credit insurance cannot be overstated. This invaluable tool offers a protective shield for businesses, ensuring stability and mitigating risks in an unpredictable market.

This infomercial provides a lot of insight into the risks of a going concern and how to mitigate the risks of nonpayment. 4min read

The Role of Artificial Intelligence Across the Property Insurance Ecosphere

Over the last couple of years, Artificial Intelligence (AI) has changed how everyone lives, works, and plays.

This article is worth reading, it also provides you with free access to the e-book The Role of Artificial Intelligence Across the Property Insurance Ecosphere. The research is based on the USA market, but the principles are universal and would make a good read for the mid-year vacation. There are 11 chapters each in a highly readable format.

Building better futures by marrying insurance and technology

This article from Hollard Insure demonstrates the technology that they use to support clients and mitigate risk in construction.  3min read

Health Insurance

Government open to more talks and ‘collaboration’ on NHI

After taking many by surprise with the signing of the NHI Bill last week, President Cyril Ramaphosa and government Ministers adopted a more placatory tone, emphasising that they were still open to talks with stakeholders and that the implementation process would allow for changes, notes MedicalBrief.

3min read

Let’s be pragmatic to make NHI work for us

The NHI is a wide ranging reform with both positive and controversial aspects, and the key will be to find a middle ground to continue on the journey to universal health coverage, writes Professor Susan Cleary in Spotlight.

Looking at things differently now that we know it is coming. 5min read.

NHI criticism unfounded, says outgoing Health Committee chair

Fairness is at the heart of the NHI Bill, and most criticism is unfounded, says Dr Kenneth Jacobs, outgoing chairperson of the National Assembly’s Portfolio Committee on Health who played a pivotal role in deliberations on the NHI.

This presents another side of the story. 4min read

Why the Constitutional Court may not be best route for NHI challenge

The Constitution does not and should not prevent the democratically elected government from passing laws merely because an economically powerful minority opposes it, writes Pierre de Vos in his Constitutionally Speaking blog, arguing that proposed court action against the NHI Bill may present more hurdles than expected.

More food for thought on the implementation of the NHI. 5min read

CMS loses court appeal: What’s next for low-cost benefit options?

The Supreme Court of Appeal (SCA) has dismissed with costs a Council for Medical Schemes (CMS) application to reconsider its December 2023 judgment upholding a High Court order that it provide documents requested by the Board of Healthcare Funders (BHF).

4min read


Fintech group Lesaka buys Adumo for R1.59bn

Dual-listed fintech firm Lesaka Technologies has signed a definitive agreement to acquire payments services provider Adumo in a R1.59 billion ($85.9 million) deal.

The group will employ 3 300 employees over South Africa, Namibia, Botswana, Zambia and Kenya. 3min read

Discovery Bank launches home loans with dynamic interest rate saving of up to 1%

The Bank will offer clients competitive, personalised rates based on their individual risk profiles, and use its established Shared-value Banking model to enable clients to further reduce their interest rate by up to 1%. This will be done by managing their money well with Vitality Money and protecting their home loan and home with the relevant insurance products Discovery offers.


Economist: ‘The election result was a shock to investors’

Citywire South Africa speaks to six investment professionals about the 2024 elections results and the coalitions that could emerge to govern.

5min read

Dis-Chem Acquires 50% Stake in OneSpark for R155.9 Million in Strategic Healthcare Deal

This article delves into the details, rationale, and implications of this transaction, which marks a notable development in the intersection of healthcare and financial services.

3min read

Why the definition of risk matters for fixed income investors 

The definition of risk significantly influences both the outcome investors are most likely to experience and the probability of whether that outcome is aligned to the objectives they set out to achieve, over a given time period. For investors, the burning question at the heart of their dilemma as they seek to balance risk and return is whether their hard-earned savings are safe.

Lyle Sankar, Head of Income at PSG Asset Management tells us why he believes the Sharpe ratio to be flawed in meeting the three core client objectives.  6min read

Definition according to SimFin

The Sharpe Ratio, named after Nobel Laureate William F. Sharpe, is a measure that helps investors understand the return of an investment compared to its risk. It is the average return earned in excess of the risk-free rate per unit of volatility or total risk.

Retirement / Pensions

ASSA Retirement Matters: Two Pots and DB Funds Sessional 27 May 2024

This was an online sessional, highly rated and informative which you can access by clicking on the title above and using the passcode:  5A^?^#jq

One hour and 26 minutes of viewing.

Research points to the need for regular reviews to ensure a living annuity will last

Research by the Actuarial Society of South Africa (ASSA) highlights why it is important for pensioners with a living annuity to meet regularly with their financial advisers to review their drawdown rates.

The results of the research should be carefully considered by living annuitants who assume they can ensure their capital will last the distance simply by setting a low initial drawdown rate – and hoping for the best.

5min read

With Momentum Wealth’s living annuity, clients can invest up to 100% of their investment assets offshore, but should they?

Many living annuity providers across South Africa can no longer offer unlimited offshore exposure to their clients when they retire. That is because investment companies may not in aggregate invest more than 45% of their assets under management offshore. Once they have reached that limit, which many have, they can only allow individual clients to invest up to 45% of their assets in rand- denominated offshore funds to ensure they stay, on aggregate, within the limit. This limit does not only apply to living annuities, but also to products like endowments and certain tax-free savings investments.

Find out more about how Momentum have found a way to protect their clients’ wealth. 2.5 min read

Allan Gray Pension Fund tax warning in South Africa

Allan Gray and Coronation have warned South Africans to carefully consider the impact of withdrawing from their savings under the new two-pot system.

The two-pot retirement system is a reform that will allow retirement fund members to make partial withdrawals from their retirement funds before retirement.

2.5min read

About YOU

Much of What You’re Going to Do or Say Today is Not Essential

If we can’t work smarter, we resort to working harder. We cut out lunch, skip the gym, and run from one meeting to another so we can fit more in. Being busy seems to matter more than getting stuff done.

If you can relate to the above, then please read the article on cutting out what is not necessary. You will be relieved and encouraged by the effect.  3min read

The Work Required to Have an Opinion

The work is the hard part, that’s why people avoid it. You have to do the reading. You have to talk to competent people and understand their arguments. You have to think about the key variables and how they interact over time. You have to listen and chase down arguments that run counter to your views. You have to think about how you might be fooling yourself. You have to see the issue from multiple perspectives. You have to think. You need to become your most intelligent critic and have the intellectual honesty to kill some of your best-loved ideas.

This is the best form of hard work! 4min read. It reminds of a previous “tiny thought” from Shane Parish below:

There are different types of hard work:

  1. Outthinking (a better strategy, a shortcut)
  2. Pure Effort (working longer, intensity)
  3. Opportunistic (positioning yourself to take advantage of change)
  4. Consistency (doing average things for longer)
  5. Focus (saying no to distractions)

Each of these requires a different type of hard work.


S2E12: Explaining – Vac Work, Immersive Learning and WBL

Soshan Soobramoney, the Head of Actuarial Science at UJ, discusses his career as well as his approach to actuarial education.

44min interview

S2E19: Expanding – Auditing, Reserving and IFRS17

Renaldo De Gouveia, Liberty Group SA’s Lead IFRS17 Specialist, explains the need for reserving and the role of regulation in this space.

44min interview