The latest results, in relation to 2011, published by South Africa’s life companies highlight their strengths and competitive advantages in a global context. Most have benefited from at least some of the following factors: rising demand for long-term savings products from ‘retail mass’ customers; development of new products; realization of benefits of long-standing programs to boost the profitability of the products that are sold, and synergies from combinations of businesses. Unlike their counterparts in other countries, they appear to have suffered relatively little from the volatility in global financial markets, which intensified through 2H11. In general, they are upbeat about the prospects of (much) smaller new businesses in other countries throughout Sub-Saharan Africa (SSA). Because of the peculiar history of South Africa, the life companies have enormous tolerance of emerging markets risk and particularly political risk. Compared to their counterparts in broadly comparable countries such as Taiwan (especially) or Israel, they have generally had to work with much smaller pools of organized savings. To a greater extent than their Taiwanese or Israeli peers, they have developed very substantial businesses in developed countries. In short, the combination of absolute size, financial strength, world-class corporate governance and orientation towards emerging and embryonic markets has served South African companies very well. Longer-term trends in the non-life segment are less inspiring. Although we think that it is reasonable to look for growth in gross premiums in 2011 that is (just) into double-digits, there does not appear to be any reason why non-life penetration should stop falling over the medium term. The non-life companies are working assiduously to control claims costs, to boost productivity, to develop new products, to exploit economies of scale and, if possible, to grow by acquisition. Like their counterparts in the life segment, they are looking at opportunities outside South Africa. However, for the medium term, they will likely continue to face downwards pressures on prices.
Overall, the strengths of both segments mean that we are optimistic about the medium- to long-term prospects of South Africa’s dynamic insurance sector. The Financial Services Board (FSB)’s solvency assessment and management (SAM) regime may require that some players strengthen their capital bases over the coming years. However, it is very difficult to imagine the problems will be insurmountable. We remain of the view that more high-profile deals, following the merger that produced MMI Holdings, could well occur.
Insurance Report of South Africa
Table of Contents
Executive Summary . 5 Key Insights And Key Risks . 5 SWOT Analysis 7 South Africa Insurance Industry SWOT . 7 South Africa Political SWOT . 8 South Africa Economic SWOT ... 8 South Africa Business Environment SWOT 9 Life Sector .. 10 Africa Life Sector Overview .. 10 South Africa Life Sector 11 Life Insurance Industry Forecast Scenario ... 13
Growth Drivers And Risk Management Projections . 14
Population ... 14
Non-Life Sector .. 16
Africa Non-Life Sector Overview .. 16
South Africa Non-Life Sector 17
Non-Life Insurance Industry Forecast Scenario ... 18
Growth Drivers And Risk Management Projections . 19
Macroeconomic Outlook .. 19
Political Stability Outlook 22
Healthcare ... 24
Health Insurance.. 25
Epidemiology ... 26
Motor ... 29
Islamic Finance 30
Insurance Risk/Reward Ratings ... 32
Competitive Landscape 34
Major Players In South Africa’s Insurance Sector 34
Company Profiles .. 38
Chartis . 38
Global Alliance 40
Guardrisk . 41
HDI-Gerling 42
Hollard 44
Liberty Life .. 45
MMI Holdings .. 46
Munich Re 47
Mutual & Federal 48
Nedgroup Life .. 49
Old Mutual ... 50
OUTsurance . 51
Sanlam . 52
Santam . 53
Zurich SA . 54
BMI Methodology ... 55
Insurance Risk/Reward Ratings 57
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