Most insurers have implemented measures to assist clients who may struggle to pay their monthly premiums. These include premium holidays, discounts and deferrals of rate increases. How will these impact insurers financially?
In a recent media report, financial services group Liberty Life warns that the impact of the coronavirus pandemic and lockdown will have a big hit on its earnings. The group reports that it is expecting profits to drop by more than 20%, both when it reports its six-month financials to the end of June and full-year results to the end of December 2020.
In a separate report, Old Mutual also said that it expected its half-year profits could decline by more than 20 percent as a result of the Covid-19 outbreak impacting on its sales. “Low levels of issued sales in April and May will have a negative impact on our reported profits and value of new business for the first half of 2020,” it said.
Capitec, one of South Africa’s largest banks, also has warned that the impact of the Covid-19 pandemic will dent their future earnings. The bank reported that over the period of the national lockdown, transaction volumes (branch transactions, cash withdrawals and point-of-sale transactions), the number of funeral policies sold and credit sales were lower. They also stated that headline earnings per share and earnings per share will decline by more than 20%.