• Sharebar
Life Industry
Sunday, February 1, 2004
Weaker trend

The long-term insurance industry’s results for the six months to 30th June 2003, weakened compared to the same period the previous year, says Gerhard Joubert, executive director of the Life Offices’ Association (LOA).

Commenting on the results, he said that total income increased by 6% from R78,6 billion to R83,5 billion for the same six months in the previous year.
“Although total individual premiums decreased by 8% to R31,8 billion compared to R34,5 billion for the period last year, total recurring premium income increased by 6% to R18,3 billion compared to R17,2 billion.”
“Single premium income decreased by 22% to R13,5 billion compared to R17,2 billion. This reduction could reflect changing economic conditions as well as lower than expected investment returns in the light of the poor market conditions.”
Total group premiums showed a progressive increase on previous figures, up 17% to R29,5 billion this period, compared to R25,1 billion. Regarding new business written, individual recurring premiums increased by 4% with retirement annuities showing a significant increase of 23% when compared to last year.
“Premiums lost as a result of lapses increased by 18% and the number of policies lapsed increased by 26% to 521 028 for the six months to 30th June 2003 compared to the same six months in 2002.
“The LOA is concerned about this development, especially considering that there is a sense in the industry of increased churning activities. Steps were taken to address the issue and the LOA’s Code on Replacement was reviewed during the year.”
The new Code will further ensure that the interests of clients are protected when policies are replaced. It is also believed that the introduction of numerous new generation risk products offering cover at competitive rates is implicated.
Regarding benefits paid, a total of R58 billion was paid out. Individual death benefits decreased by 3% to R3,4 billion, while individual non health disability payouts increased by 13%, and individual health business disability payouts increased by 24%. Group death benefits increased by 8% to R2,1 billion.
Total expenses increased by 15% from R8,4 billion for the six months last year to R9,7 billion this year. Sales remuneration decreased slightly from the half-year to 31st December 2002, but administration and marketing expenses increased by 14% over the same period. Actual income tax and capital gains tax paid, as opposed to deferred tax, and increased by 13% for the period under review.
Total assets decreased by 1% from R710 billion at 31st December 2002 to R705,6 billion at 30th June 2003, he says. “For most life offices, total asset values reduced during the period under review and this was a reflection of current economic conditions.”

Copyright © Insurance Times and Investments® Vol:17.1 1st February, 2004
503 views, page last viewed on October 19, 2020