South African life insurers are shoring up their capital reserves as they brace for a fifth wave of coronavirus infections.<\/p>\n
Africa\u2019s biggest insurer, Sanlam, said Thursday it will hold three times its typical discretionary capital, increasing reserves to R3 billion ($199 million), to give it headroom to grapple with uncertainties caused by the pandemic.<\/p>\n
\u201cThe group will hold a significantly higher level of discretionary capital until such time that the we are satisfied that there is no risk to group earnings and dividends from the pandemic,\u201d chief executive officer Paul Hanratty said in a statement.<\/p>\n
Covid-19 deaths contributed to excess claims of 4.2 billion rand for Sanlam in 2021.<\/p>\n
While fewer than 100,000 people have officially died of the virus in South Africa, excess deaths during the pandemic climbed to 301,106 in the week ended 5 March. That metric is seen as a more accurate way of measuring the impact of Covid-19 than official statistics, and means that as many as one in 200 in the country may have been killed.<\/p>\n
South Africa\u2019s second-biggest listed insurer, Discovery, has put dividend payments on ice until it receives certainty on the trajectory of the virus. The company has not paid out to shareholders since before the pandemic, and held back even as other financial firms reinstated outlays.<\/p>\n
\u201cIn our country, it has been primarily about death, and the South African effect on mortality has been very very bad,\u201d chief executive Adrian Gore said in an interview.<\/p>\n
South Africa is currently in a lull following the omicron-driven fourth wave in December, but Sanlam sees a new one coming toward the middle of the year.<\/p>\n
\u201cThere\u2019s still 25 to 30 people dying a day right now of Covid,\u201d Hanratty said. \u201cI think for two or three years, at a minimum, we\u2019re gonna see elevated levels of mortality, and we just have to hope it\u2019s not really as bad as things were in the third wave, when it was very very severe.\u201d<\/p>\n