Sanlam braces for at least two more virus waves

Africa’s most geographically-diverse insurer Sanlam is preparing for a doubling in excess claims from surges in Covid-19 infections and the longer-term health effects of the pandemic in coming months.

“We are basically planning for two-and-a-half more waves,” Chief Executive Officer Paul Hanratty said by phone. The insurer is also “very realistic” that South Africa’s vaccine program “is not going to impact the current year very significantly,” he said.


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Africa’s most-industrialised nation has been the hardest hit by the pandemic on the continent, with an official death toll of over 51 000 and more than 1.5 million infections. It started inoculating health workers in February, but the government’s program may only reach the two-thirds of the population necessary to achieve herd immunity in 12 to 18 months.

“We estimate our excess claims for the full 2021 year are likely to be two to three times the level of excess claims for the 2020 year,” Hanratty said in a separate video conference. While the finalisation of business-continuity claims at the firm’s property and casualty insurance arm Santam weighed on its outlook, reserves already raised should help it weather the uncertainty, he said.

Sanlam, with a presence in 30 African countries, reported a 13% decline in net result from financial services to R8.4 billion ($562 million) for the year ended in December as growth in its general and life-insurance businesses suffered in the fallout from the pandemic. The measure increased by 17% if the Covid-19 impact is excluded.

Results were boosted by a funeral-cover partnership with Capitec, but another venture launched just two years ago, African Rainbow Life, has been “rationalised” into a broader retail unit to drive efficiencies.

The company has reviewed its remuneration model to retain important staff and introduced a new share scheme with a “speed of recovery” hurdle to push management to reach key financial metrics in line with 2019 levels as quickly as possible.

© 2021 Bloomberg