To enjoy the full Mail & Guardian online experience: please upgrade your browser
06 Aug 2009 10:16
South Africa’s second-biggest insurer, Liberty Holdings, swung to a first-half loss after rising policy lapses hit its life unit, the company said on Thursday.
Liberty, majority-owned by Africa’s biggest bank by assets, Standard Bank, posted a basic loss per share of 483,3 cents, compared with earnings per share of 294,4 cents in the previous corresponding period.
It had forecast a loss per share of between 434 to 521 cents.
South African insurers’ profits have taken a hit from the global slide in equity markets as well as a reduction in consumer demand due to relatively high interest rates, inflation and rising personal debt.
A labour report released last month showed the official jobless rate in Africa’s biggest economy ticked up slightly in the second quarter, but the number of people who gave up looking for work jumped, signalling the impact of recession.
“The headline results are within the guidance at least, but one of the biggest shocks was the reduction in embedded values,” one Johannesburg-based insurers analyst said. “As a result I don’t think they have done enough to strengthen their basis.”
BEE normalised embedded value per share—adjusted for its black economic empowerment deal—for the six months to end June fell 16,7% to R79,19 compared with R94,08 in the year-ago period.
Indexed new business, made up of life and off-balance sheet sales, was at R2,1-billion versus R2,2-billion for the first half of 2008.
Liberty said it was restructuring its business to help stem the rate of policy withdrawals and said it expected to see the “full benefit” of these initiatives over the next 12 to 18 months.
Its peer, Old Mutual, South Africa’s largest insurer, posted a bigger-than-expected drop in statutory profit on Wednesday.—Reuters
Create Account | Lost Your Password?