Major life insurance analysis

Sustaining impact - Reflecting on past resilience and future challenges of life insurers in South Africa

Overview

Major life insurance analysis - 31 December 2021 results

The COVID-19 crisis, its economic consequences and the accompanying financial market volatility, have tested local life insurers. To its credit, the industry was able to meet its escalating obligations to policyholders whilst maintaining required capital and liquidity positions and dealing with the interruption to its businesses.

Embedded value and IFRS earnings for the year ended 31 December 2021 were analysed for five major insurers. They included Discovery Limited (Discovery), Liberty Holdings Limited (Liberty), Momentum Metropolitan Holdings Limited (MMH), Old Mutual Limited (Old Mutual), and Sanlam Limited (Sanlam). The analysis was performed in an effort to compare prior years’ results, which illustrated insurers’ financial performance, with a particular focus on the performance of the core life business units.

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Reflecting on past resilience

The combined key indicators for the last decade demonstrate that real growth in profitability had been muted even before the COVID-19 pandemic. Combined IFRS earnings grew with inflation and VNB margins trended slightly downwards.

Figure 1: Key indicators combined since 31 Dec 2011