Episode 9:Bajabulile Mthiyane
Financial Director: Sasria
A finance professional who is about much more than just number crunching. Bajabulile is the Finance Director of Sasria. Affordable cover against special risks is the niche offering provided by this flourishing state-owned company.
19 March 2019
CIARAN RYAN: This is CFO Talks and we are talking to Bajabulile Mthiyane, financial director at Sasria, which is a state-owned company that provides short-term insurance cover against various risks such as public rioting, disorder, strikes, terrorism and civil commotion. South Africa is one of the few countries in the world that provides this kind of insurance. Sasria was launched during the apartheid struggle years because the short-term insurance companies weren’t prepared to cover for damage resulting from riots and other acts of civil commotion. If we look at Sasria’s results for 2018, the figures are quite impressive, gross insurance premiums were up 8.2% to nearly R2 billion, net insurance claims were down 13.5% to R663 million and underwriting profits went up 62% to
R580 million. Sasria has total assets of about R8 billion and a very healthy solvency margin of 260%. So Sasria is the picture of financial health, which is not something you can say about every state-owned company in South Africa. Sasria’s financial director, Bajabulile Mthiyane, has a very interesting career, she’s a chartered accountant, who started her career at Deloitte and has occupied senior roles at Unilever, SA Port Operations, Toyota South Africa and Hewlett-Packard. It’s clear from the variety of positions that she’s occupied that the finance hat is much more than just numbers and that’s one of the subjects we want to explore today. Welcome, Bajabulile.
BAJABULILE MTHIYANE: Thank you for having me.
CIARAN RYAN: First of all can you tell us a little bit about Sasria and what role it plays in the South African economy. Why is it that there are so few organisations like Sasria around the world?
BAJABULILE MTHIYANE: Sasria SOC Ltd is the only short-term insurance company that provides affordable cover against special risks such as strikes, civil commotion, riots, public disorder and terrorism. Our purpose is to provide peace of mind to all South Africans, individuals, businesses, corporate entities, government and the country at large against special risks. We see our role as supporting the insurance industry and the government in finding solutions against these special risks. There are only a few insurers, of course, that would have the appetite to provide cover for special risks because of its nature. By its nature special risks are extraordinary, they are massive, they are unpredictable, making it difficult for an insurer to underwrite.
CIARAN RYAN: I noticed that claims against Sasria dropped 13.5% last year, does that mean that there were less civil protests and disruptive strikes around the country? Reading the newspapers we hear about very serious and damaging strikes in the gold mining sector. For example, the Sibanye-Stillwater’s goldmining strike and in the plastic sector there has also been a very, very disruptive strike. What are the trends in recent years if we look at civil commotion, strikes and that sort of thing?
BAJABULILE MTHIYANE: Between the period April 2017 and March 2018 we had a great year, despite the number of claims having increased it did not lead to big losses. Sasria did not experience big events during this period and this resulted in the company experiencing an underwriting profit of about R580 million. However, we have seen a drastic shift over the last eleven months, April 2018 to February 2019, we have experienced a massive increase in claims, both in frequency and severity. By the end of December 2018 our gross claims incurred had sky-rocketed to over R1.4 billion. This has largely been driven by service delivery protests and labour strikes across the country, small towns and in big towns. The positive story to take, though, by South Africans and the insurance is that Sasria’s balance sheet is strong and resilient, to this date the company has been able to meet both current and its future obligations as they fall due. Our solvency capital requirement is currently around 230%. You’ll recall when you started this talk you referred to our solvency capital requirement being 260% but due to these big claims hitting Sasria we are now at around 230%. But still it’s way above the regulatory requirement of SCR of 100%. So our liquidity is perfectly adequate to meet all the claims as they fall due. The pleasure that I derive out of this as Sasria’s finance director is that we do not need to approach government to provide us with loans or guarantees. However, this keeps our underwriting department and our actuarial team very busy and working hard to analyse these claim trends so as to find long-term solutions for the future and to ensure that Sasria remains profitable.
A wealth of experience
CIARAN RYAN: Tell us a bit about yourself, how did you come to be finance director at Sasria, which I see has a staff of about 90, what did you learn along the way during the course of your career that you now bring to your current position?
BAJABULILE MTHIYANE: Well, I’ll tell you a bit about myself and where I come from. I just stumbled across insurance and having been in insurance for just a year I find that it’s far more exciting, I should have been here much earlier in my career. I kick-started my career at Deloitte in 1996, where I did my articles, I possess just over 23 years’ worth of diverse work experience among different industries. I am fortunate to have occupied business leadership roles and financial leadership roles in multinational companies and strategic local companies like South African Ports, Unilever South Africa, Toyota South Africa and Hewlett-Packard South Africa. From a young age a door was opened for me to serve on boards in the public sector and the private sector. Some of these boards have been highly hostile, complex and challenging. The positive, however, has been that they have contributed to my establishment as a professional and also I have developed an unending business network, coupled with a professional network. Both my executive experience, combined with my board experience, has taught me a couple of important lessons, my perspective has widened, I’d say my emotional intelligence has been sharpened, my ability to grasp important and complex issues in a new environment, an ability to analyse, make sense of things and make decisions fearlessly has been enhanced.
CIARAN RYAN: You mentioned something about a hostile board environment, tell us what does that actually mean because I think it’s quite important for a financial director or a chief financial officer that you might often find yourself in a situation with a chief executive who’s a bully. So if you talk about a hostile board environment, how do you handle that?
BAJABULILE MTHIYANE: Well, in my case let me just explain hostile, you know when political agenda conflicts with business agenda, I would call that hostile and that is where I come from. How you handle that is you need to have a strong backbone and personal conviction.
NICOLAAS VAN WYK: We represent a number of CFO’s and sometimes we get a comment, especially from the CFO members in the public sector that they can’t stand up to the political decision-making. So there’s a feeling that we maybe need to protect them more, I would be interested to hear your views, how do you deal with a political objective, maybe political appointments at the manager level, especially at smaller local government level, but I am sure it’s unbearable in state-owned companies as well, whereas you have to run a business as a CFO.
BAJABULILE MTHIYANE: More often than not political objectives would sometimes be in conflict with business objectives and when there is that clash imagine it also combined with personal objectives and agendas, and when you have to deal with those three – business objectives, political objectives and personal objectives of the parties that are holding positions of power, when you have to deal with those three it can be complex. So what do you rely on, you rely on your personal convictions, you rely on your personal objectivity, your integrity, your will and your drive to act with professionalism.
Role of the modern CFO
CIARAN RYAN: Talk for a minute about the role of the modern finance director, how has that changed over the years? Is more of your time spent on regulatory issues than before or is it people issues or what is it?
BAJABULILE MTHIYANE: I believe the new CFO does not just manage numbers or report on numbers but the new CFO is anchored to assisting the business towards achieving business growth, addressing its risks and uncovering profitable business opportunities. The new CFO relies a lot on technology in organising and analysing relevant data to allow business to be able to make intelligent decisions and also drive innovation. The focus of my position, for example, is more on the future, how to best utilise and invest the resources of the company in order to create value for the shareholder, while also partnering the government in its objectives to achieve sustainable growth and transformation. So people are also important to the CFO, across the business and across level. A CFO is there to ensure that people are productive and people are efficient, therefore, it becomes the CFO’s agenda to continue those conversations with human resources on how people are being skilled, how people are being trained and how people are being developed. For example, at the heart of business is operations and strategy, let’s say I have to make a decision on whether to invest or not in government bonds, it involves people, it involves a strategy and it involves compliance, if you think about it this is a strategic decision because I have to go back to the investment strategy to say what is my investment strategy saying about investing in government bonds and how does it impact on the rest of my asset portfolio. The second one would be, okay, in terms of the people do I have the right people to drive these government bonds, are my people well-skilled to analyse the government bonds that are out there. The third one would involve compliance, that investment decision is everything about the SAM regulation, the risk-related regulations.
CIARAN RYAN: Would you agree with the view put forward by many accountants and CA’s that the profession in South Africa is in crisis and needs reform because of the number of corporate scandals that we’ve been witness to in recent years and if you do agree with that, how do we clean up the profession?
BAJABULILE MTHIYANE: I think you are right to say that there’s been a lot of corporate scandals that have involved the accounting profession and the audit profession but in my view it’s been resting with the institutions more than about the profession. So there have been some very bad decisions that have been taken by individuals, who happen to be part of the profession, but I do not believe that the problem is with the profession itself. There is a lot of contribution that is required from the profession itself in order to drive confidence, there is a lot of work that ought to be done by, say, SAICA, the public accountants and auditors boards to restore confidence in the profession.
CIARAN RYAN: Give us an idea of where you spend most of your time as financial director, is it on strategic issues, is it people issues, is it compliance issues?
BAJABULILE MTHIYANE: I would say I spend time across all the areas you have just mentioned. On a daily basis it’s always important for me as a CFO to streamline my daily tasks towards delivering on our strategy as Sasria and I always have to wear a cap of consciousness as far as key strategic risks are concerned. I always have to understand the opportunities that are posed by all these strategic risks on a daily basis. Secondly, without a healthy workforce and and motivated people it would be difficult for me as a CFO to deliver and for the business to drive growth. For example, I talk to my direct reporting managers on a daily basis, sometimes two or three times a day and sometimes more, and on a quarterly basis I book one-on-ones with the rest of the staff in my department to ensure that I know what they are thinking, to ensure that I understand what is bothering them and that we as a business are addressing whatever may be hindering them to deliver in their respective areas. Compliance is a must for every insurance company to operate in South Africa and in the rest of the world, so compliance provides us in the business with our everyday framework, the rules, the guidelines in which we operate by and it becomes the bible of our operations. So I would say it’s all across the areas you have mentioned.
Reasons for the spike in claims
CIARAN RYAN: Can I just go back to the point you made a little bit earlier about the huge increase in claims to R1.4 billion and I think that was over an eight-month period, you said it’s got to do with service delivery?
BAJABULILE MTHIYANE: That’s correct.
CIARAN RYAN: What has changed about service delivery in the last year that would prompt this, have you any idea, what is your insight into that?
BAJABULILE MTHIYANE: I am not a politician but it’s an obvious reflection that South Africans are generally unhappy.
CIARAN RYAN: They are dissatisfied, right?
BAJABULILE MTHIYANE: Yes, South Africans are dissatisfied with the level of service delivery with our local government entities and there is probably also a message in that to corporates and to business that we ought to become more involved in partnering with the government in ensuring that some of these service delivery gaps are met because if these are not addressed they tend to have a long-term negative effect on business.
CIARAN RYAN: I was down, a month or so ago, in Bethel in Mpumalanga and the water had been cut off due to non-payment to Rand Water. There were protests in the street and what was happening is that farmers with boreholes were helping by bringing in trucks with water to supply the town. I thought, wow, this is something that I haven’t seen before. There are also places in the Free State where there is virtually a breakdown at the local government level in terms of service delivery. The suspicion, of course, is that there’s corruption behind it. However, the point is that the people on the ground are the ones who are suffering, they don’t have lights, they don’t have water or the normal services that you would expect from a local government. I guess this is now being reflected in those kinds of figures that you mentioned?
BAJABULILE MTHIYANE: Absolutely, at Sasria, for example, we are doing our part, where NSFAS has not been able to reach some capable students in providing that funding, as Sasria our CSI initiatives are driving sponsorships and bursaries towards maths and science students in providing those bursaries at university level and tertiary level to ensure that we partner with government in education and in improving.
NICOLAAS VAN WYK: You mentioned earlier that being a CFO requires a variety of skills, it’s not just the technical accounting or compliance and you mentioned specifically project management and working with people. These additional skills because you don’t have them when you qualify with your degree, you don’t have them when you article, at what stage in your career did you develop those additional skills that the CFO needs?
BAJABULILE MTHIYANE: That’s a good question, the roles that I have played in the private and public sector, which are my executive roles, including my non-executive roles in boards like Eskom and Aiports Company, have caused me to develop these skills and competencies over time. I have been fortunate to engage with leaders who have international experience and professional experience from various industries, and through my engagements I have developed people skills, I have developed teamwork skills, I’ve developed analytical skills, which have caused me to become a leader that can bring value to the people who I lead and also bring value in the boardroom.
NICOLAAS VAN WYK: I’ve got three daughters and one or two of them are thinking of studying finance and accounting, what’s the career development for girls in the finance sector? Is there a glass ceiling, what is your experience?
BAJABULILE MTHIYANE: I do not believe there is a glass ceiling; the girls are now able to drive their own career. I believe our government has done a great job in removing all those discriminatory laws and they have enhanced policy to ensure that girls can get on with driving their own career ambitions and there is no ceiling. I am witness to that, I sit as finance director at Sasria, which is a niche industry, and I am still advancing in my career every day.
CIARAN RYAN: Final question, who are some of the big influences in your life?
BAJABULILE MTHIYANE: My dad, who recently retired as a high court judge, Judge KK Mthiyane, he is an inspiration. During apartheid he was a lawyer in Umlazi and helped a lot of people…
CIARAN RYAN: Which high court was he in?
BAJABULILE MTHIYANE: Bloemfontein High Court.
CIARAN RYAN: In the Appeal Court?
BAJABULILE MTHIYANE: Exactly, yes, he was second-highest in command there, so he’s been my inspiration.
CIARAN RYAN: Oh my goodness that is interesting.
BAJABULILE MTHIYANE: He’s a hard-working man, a man of integrity and I looked up to him.
CIARAN RYAN: Is there any particular court case that he’s most proud of, his judgement, do you happen to know or would we have to get him here [laughing]?
BAJABULILE MTHIYANE: Wow, he would tell us about all his milestones but I can’t recall now off the top of my head which one was the most. But he writes well, sometimes I have people who drop me text messages and say, hey, I was just reading your dad’s judgement on this and this, he’s a brilliant writer. So I believe my father is the best judge ever…
CIARAN RYAN: The best judge in the world, of course, yes [laughing].
BAJABULILE MTHIYANE: Yes, the best in the world [laughing].
CIARAN RYAN: Any books you would recommend?
BAJABULILE MTHIYANE: I wouldn’t say there’s a particular book that I recommend because I read books across [different subjects]. Being in insurance and insurance being an exciting industry for me, I am reading books on insurance and then I also read books that drive my passion. For example, I am reading the book that everyone is reading, Becoming by Michelle Obama. I was also reading a book on short-term insurance.
CIARAN RYAN: A technical book.
BAJABULILE MTHIYANE: I’m reading a technical book, yes, it’s Everything you need to know about non-life insurance in South Arica by Liz Still and Gareth Stokes. I would recommend this book because it’s an introductory book to the basics of short-term insurance and it’s been brilliant.
CIARAN RYAN: Is it like of an academic standard or is it more accessible than that?
BAJABULILE MTHIYANE: No, it’s more accessible than academic standard.
CIARAN RYAN: I don’t know if it’s going to make it onto the best seller list but [laughing].
BAJABULILE MTHIYANE: No that’s why I am saying that I’m a reader, I read across subjects, when I get introduced to an industry I look to enhance my technical knowledge in the industry. So it has laid out all the basics about short-term insurance for me, which has enhanced my effectiveness in my role as a financial director. I don’t believe it will make it to the best seller list but it’s helping me in my career.
NICOLAAS VAN WYK: It’s high on your reading list.
BAJABULILE MTHIYANE: It’s highest on my reading list. For my own self-development and for my passion I am reading Michelle Obama’s book.
CIARAN RYAN: Lovely, okay, we are going to leave it there. Thank you so much, Bajabulile. That was Bajabulile Mthiyane, financial director at Sasria.
Are you podcast potential?
Get an interview
Enjoy my point of view?
I'm a CFO(SA)
Get your designation now.