News Africa21 Sep 2020

South Africa:Insurers' financial results reflect impact of pandemic

21 Sep 2020

South Africa's lacklustre economy, which has been affected by the COVID-19 pandemic, has hit big insurance companies, according to the insurers' financial statements for the six months ended June 2020, which show an increase in claims and a decline in business.

Statistics by the Association for Savings and Investment South Africa (ASISA) — showing half-yearly long-term insurance numbers — indicate there has been a slight decrease in the number of individuals holding insurance products.

At the end of June 2020, there were 41.3m individual recurring premium policies in force, compared to 42.5m at the end of December 2019 — a marginal decline of 2.85%, reported Mail & Guardian, quoting ASISA data.

While the fall is slight, ASISA said there was a 3.59% drop in the number of individual recurring premium savings policies, which include endowments and retirement annuities, from 6.5m to 6.3m in the same period.

Financial results

Several insurers have posted their results. Sanlam said life insurance was hard hit, with monthly sales volumes falling by between 50% and 90% in April, May and June.

Sanlam CFO Paul Hanratty, described the trading environment as “probably the most challenging in the group’s more than 100-year history, [due to] adjusting to a very difficult social and working environment”. Sanlam said that COVID-19 impacted on investment market returns, credit spreads, doubtful debt provisions and relief offered to clients and intermediaries.

Hennie de Villiers, deputy chair of the ASISA life and risk board committee, said that while 282,467 new policies were sold during the six months studied, 364,887 policies were surrendered.

“While this is concerning, it did not come as a surprise, given the impact of the COVID-19 lockdown on the earning ability of thousands of South Africans,” he said.

Last month, Liberty Insurance said that the first six months of 2020 were “unprecedented in Liberty’s 62-year history”. The company incurred a normalised operating loss for the six-month period ended 30 June of ZAR1‌.5bn compared to normalised operating earnings of ZAR1.09bn for the same period last year.

Old Mutual’s headline earnings plummeted by 67% to ZAR1.7bn compared to ZAR5.2bn in the same period the previous year. The loss was attributed to COVID-19 claims.

Mmapula Mokoena, head of marketing at Yalu, a credit life insurance and debt protection company, said though the adverse economic climate has highlighted the importance of insurance cover, whether consumers will be able to afford it was questionable, considering that many people may be unemployed and unable to pay insurance premiums.


| Print | Share

Note that your comment may be edited or removed in the future, and that your comment may appear alongside the original article on websites other than this one.


Recent Comments

There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.