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South Africa Insurers Count Excess Death Costs As New Wave Seen

South Africa Insurers Count Excess Death Costs As New Wave Seen

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 Ltd.’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 6.6 billion rand ($416 million) for the nine months through September, it said Tuesday in a statement. To counter the impact on profitability, it released 4.9 billion rand of its coronavirus pandemic provision, leaving around 1 billion rand for excess mortality claims related to Covid-19, it said. The provision will be reassessed at Dec. 31, the assurer said.

While smaller peer Momentum Metropolitan Holdings Ltd. 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 4.6 billion rand in mortality claims during the three months through September, compared with a full-year pre-pandemic average of 5.6 billion rand, 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.

©2021 Bloomberg L.P.