South African insurers are counting the cost of higher-than-expected mortality claims amid concern a new wave of coronavirus cases is taking off.
Old Mutual’s life insurance unit reported “a worse mortality claims experience than anticipated” with excess deaths, the number of fatalities over an historical average, weighing on its profit by about R6.6 billion ($416 million) for the nine months through September, it said Tuesday in a statement.
To counter the impact on profitability, it released R4.9 billion of its coronavirus pandemic provision, leaving around R1 billion for excess mortality claims related to Covid-19, it said. The provision will be reassessed at 31 December, the assurer said.
While smaller peer Momentum Metropolitan Holdings reported varied mortality experience across its units, its Momentum Life and Momentum Metropolitan Africa divisions were most severely impacted by Covid-19 related claims.
Its South African life insurance business paid R4.6 billion in mortality claims during the three months through September, compared with a full-year pre-pandemic average of R5.6 billion, it said in a statement.
The statements come days after the National Institute for Communicable Diseases said that the incidence of Covid-19 was increasing in wastewater samples in some areas of Gauteng, South Africa’s most populous province.
Scientists working with the government have predicted that a fourth wave of coronavirus infections could begin in December.
Although they expect it to be less severe than previous resurgences because more than a third of South African adults are fully vaccinated and an estimated 60% to 70% of the population may have already been infected.