South African Insurers will report a increase in profits
This is due to the improvement in the global economy.
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As the global economy improves, and South Africa emerges from the recession,
the country's insurance groups are expected to report an overall increase in
profits over the coming weeks.
Market analysts believe that good days are ahead for South African
insurers, due to stable equity markets and therefore a good return on
investments.
The one issue that could affect profit is lapse rates, which analysts are
eyeing with interest.
It remains to be seen whether high policy lapse rates will continue due to
high personal debt experienced by policyholders, or whether the situation has
improved.
"At the half year, those were clearly under pressure to varying degrees,"
said one market analyst, Neill Young. "The economic picture is slightly better
now, so have those lapse rates improved?"
So with improved results and higher profits, what will South African insurers
do with the extra capital?
"A lot of these insurers are sitting on reasonable amounts of excess capital
and the question is how has that been deployed or what is their intention with
it," said Young.
Some of the good results expected include:
- Discovery - Expected to post a 45-55% rise in first half headline EPS.
- Liberty Holdings - Expects full year earnings per share of up to 17.9%.
- Sanlam - Expects normalized headline EPS to be up to 140% higher.
- Santam - Expects a 45-60% rise in full year headline EPS.
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