Recently published research from Business Monitor International, "South Africa Insurance Report Q4 2013", is now available at Fast Market Research
Boston, MA -- (SBWIRE) -- 11/22/2013 -- Lacklustre economic growth, competitive pressures across much of the non-life segment and pedestrian growth in most of the life segment mean that 2013 will probably be a fairly challenging year for South Africa's insurers. Nevertheless, profitability is improving. The companies themselves are seeking opportunities through product innovation and expansion into the rest of Sub-Saharan Africa.
Key Insights And Key Risks
As of late 2013, the latest results that have been published by South Africa's insurance companies highlight their strengths and competitive advantages in a global context. Most have benefited from at least some of the following factors: rising demand for long-term savings products from 'retail mass' customers; development of new products; realisation of benefits of long-standing programs to boost the profitability of the products that are sold, and synergies from combinations of businesses. Unlike their counterparts in other countries, they appear to have suffered relatively little from the volatility in global financial markets. In general, they are upbeat about the prospects of (much) smaller new businesses in other countries throughout Sub-Saharan Africa (SSA).
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Because of the peculiar history of South Africa, the life companies have enormous tolerance of emerging markets risk and particularly political risk. Compared with their counterparts in broadly comparable countries such as Taiwan (especially) or Israel, they have generally had to work with much smaller pools of organised savings. To a much greater extent than their Taiwanese or Israeli peers, they have built very substantial businesses in developed countries. In short, the combination of absolute size, financial strength, world-class corporate governance and orientation towards emerging and embryonic markets has served South African companies very well.
Longer-term trends in the non-life segment are less inspiring. The leading players' comments in relation to 2013 suggest that premiums will grow at single-digit rates over the year as a whole. We see no reason for non-life penetration to stop falling over the medium term. The non-life companies are working assiduously to control claims costs, boost productivity, develop new products, exploit economies of scale and, if possible, grow by acquisition. Like their counterparts in the life segment, they are looking at opportunities outside South Africa. However, for the medium term, they will likely continue to face downwards pressures on prices.
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