The insurance industry in SA is cashing in on the improved mortality and morbidity rate.
"...all insurers profited from better-than-expected mortality and morbidity experience, which contributed approximately 5.3% to embedded value earning for 2015," read the PricewaterhouseCoopers' insurance industry analysis report released on Thursday.
"Old Mutual and Sanlam benefitted the most from these experience variances. "For the six months ended 31 December 2015, MMI had significantly reduced positive experience variances for its retail business, but it expected this not to repeat itself going forward."
According to Statistics SA, SA's life expectancy for men stands at estimated 60.6 years and 64.3 years for women compared to 52.6 years for men and 56.4 years for women in 2002. PwC's insurance technical partner Dewald van den Berg said the industry had for the last three years been paying less death claims due to the country's enhanced HIV and Aids treatment programme and medical advancement, among other things.
Van Den Berg spoke after the analysis showed that the financial results of the top-five players in the long-term industry space, which also included Discovery, Liberty, Old Mutual and Sanlam, saw their earnings shoot up by 18% to R33.billion in the 2015 financial year.
The document noted that "MMI has the value-of-in-force business most sensitive to mortality risk in the industry and has had a less positive experience variance in the area compared to prior years".
The value-of-in-force refers to the current value of profits generated from a block of life insurance policies over a period of time.
It said Old Mutual's value-of-in-force continues to be the most sensitive regarding expenses. "While expense efficiencies are expected after the planned unbundling of the Old Mutual Group post-2018, there has been a significant strengthening of the expense assumption in 2015."
Discovery's embedded value of in-force business was identified as continuing to be the most sensitive to changes in discount rate.
"Discovery's business is also the most sensitive to lapse risk.
"The reason for these sensitivities could be the effect of writing more age-rated, increasing premium business with the consequence that more profit is expected to be realised at later durations compared to the more immediate future," it said.
sibanyonim@sowetan.co.za
Insurance industry cashing in
The insurance industry in SA is cashing in on the improved mortality and morbidity rate.
"...all insurers profited from better-than-expected mortality and morbidity experience, which contributed approximately 5.3% to embedded value earning for 2015," read the PricewaterhouseCoopers' insurance industry analysis report released on Thursday.
"Old Mutual and Sanlam benefitted the most from these experience variances. "For the six months ended 31 December 2015, MMI had significantly reduced positive experience variances for its retail business, but it expected this not to repeat itself going forward."
According to Statistics SA, SA's life expectancy for men stands at estimated 60.6 years and 64.3 years for women compared to 52.6 years for men and 56.4 years for women in 2002. PwC's insurance technical partner Dewald van den Berg said the industry had for the last three years been paying less death claims due to the country's enhanced HIV and Aids treatment programme and medical advancement, among other things.
Van Den Berg spoke after the analysis showed that the financial results of the top-five players in the long-term industry space, which also included Discovery, Liberty, Old Mutual and Sanlam, saw their earnings shoot up by 18% to R33.billion in the 2015 financial year.
The document noted that "MMI has the value-of-in-force business most sensitive to mortality risk in the industry and has had a less positive experience variance in the area compared to prior years".
The value-of-in-force refers to the current value of profits generated from a block of life insurance policies over a period of time.
It said Old Mutual's value-of-in-force continues to be the most sensitive regarding expenses. "While expense efficiencies are expected after the planned unbundling of the Old Mutual Group post-2018, there has been a significant strengthening of the expense assumption in 2015."
Discovery's embedded value of in-force business was identified as continuing to be the most sensitive to changes in discount rate.
"Discovery's business is also the most sensitive to lapse risk.
"The reason for these sensitivities could be the effect of writing more age-rated, increasing premium business with the consequence that more profit is expected to be realised at later durations compared to the more immediate future," it said.
sibanyonim@sowetan.co.za
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