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Insurance sector has shown its resilience - Deloitte



WHILE the insurance industry record books may show 2020 was a year in which reported financial results were well below expectations, the industry did show its resilience, while at the same time it positively impacted the lives of its customers in a time of great financial need, according to the Deloitte South African Insurance Outlook 2021 publication.

The effect of the pandemic and the lockdown response was the key driver of the 2020 financial results of insurers.

Deloitte director for actuarial and insurance solutions Jaco van der Merwe said the past year had shown that capital coverage of the insurance industry had not been affected as much as it might have been feared at the start of the pandemic.





“However, it has highlighted the importance of a robust capital management and capital optimisation strategy … The pandemic has prompted change in a sector that was already dealing with systemic challenges.

“The silver lining, though, was the industry’s response that led to unexpected improvements in areas such as customer satisfaction and communication,” said Van der Merwe.

In its overview of the 2020 financial and embedded value results of the largest five listed insurance groups in South Africa, the firm said the completion of the December 31, 2020 financial reporting cycle by the listed insurance groups offered an opportunity for reflection, as the results showed an industry that delivered for its policyholders and the broader economy in uncertain times.

Deloitte said despite the local equity markets drop in value in March last year, the markets recovered during the remainder of the year to end relatively unchanged compared to the start of 2020 (using Swix as a reference).





“That recovery allowed insurance groups, on an aggregated basis, to report a respectable 3.8 percent increase in assets. Insurance groups are also impacted by the value of assets throughout the year, though.

“Old Mutual points out in their results commentary that the average market levels during 2020 were 6.7 percent lower than the prior year, which negatively impacted asset-based fees for insurance groups that manage and administer customer assets.”

The aggregated equity for the insurance groups decreased by R15.6 billion, or 6 percent. The lower equity was mostly a function of the aggregated loss after tax of R4.7bn reported by the insurance groups as well as ordinary dividends paid of R12.7n (2019: R16.2n).



Photo’s by Pexels
Article by Given Majola
Featured in Insurance on line – link to article click here


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