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The South African Life Insurance and Reinsurance Industry
The South African life insurance industry contributed R429.3bn to the local economy through benefit payments to policyholders and beneficiaries during the course of 2016 and currently holds assets of around R2.63-trillion. The Association for Savings and Investment South Africa (ASISA) reported that in the 12-month period ended 31 December 2016, premiums, investment and other income totalled more than R577bn, while benefit payments to policyholders and beneficiaries totalled R429.3bn.
A Challenging Environment
Although it remains a well capitalised industry, the country’s challenging socio-economic environment continues to constrain the growth of the life insurance sector. ASISA reported that during the 12-month period ended 31 December 2016, individual policy surrenders rose by 16% year-on-year, new business growth contracted and life insurers posted total income growth of a mere 1%, indicating that local consumers are under growing pressure. Life insurers are also facing regulatory disruption and are confronted with new risks emanating from the recent sovereign credit ratings downgrade of the South African economy to “junk” status. The proposed nationalisation of life insurance companies, as mooted by the recently appointed advisor to South Africa’s new Finance Minister Malusi Gigaba, is widely expected to further dampen investor confidence in the country.
The report on the Life Insurance and Reinsurance sector focuses on developments during 2016, general trends in the sector and factors that influence the success of role players. Profiles for 37 companies are provided, ranging from the big four traditional companies, Old Mutual Life, the MMI Group, Liberty Group and Sanlam Life Insurance Ltd, to small companies such as Bophelo Life Insurance Ltd and Bidvest Life Ltd. Also profiled are Absa Life Limited which received regulatory approval to acquire a 75% stake in Instant Life, an online life insurance distribution platform, and Hollard Life Assurance Company Ltd which was prohibited by the Competition Commission from acquiring Regent Life Assurance Company Limited from Imperial Holdings.