Covid-related death claims not as bad as expected Liberty

Liberty Holdings, which with other insurance groups set aside billions of rand in provisions in 2020 for Covid-related claims, will review its pandemic reserve in June, taking into account the evolution of the virus.

However, Liberty, which is majority owned by Standard Bank, said on Thursday in an operational update that deathrelated claims in the first quarter were not as bad as expected. Market reaction was relatively muted with the share price dipping only 0.93% to R61.70 in midafternoon trade, compared with the JSE all share index’s 2% fall. That was its biggest one-day drop since February 26.

Other insurance stocks, including Sanlam and Momentum, also held up on the day relative to the broader market, suggesting a degree of relief.

Liberty’s statement came with SA on tenterhooks for a possible new wave of infections, which could have dire consequences for insurers.

SA has one of the world’s worst death tolls from the pandemic, according to the latest Medical Research Council report, putting the figure at 157,000, versus Wednesday’s official death toll of 52,687. Liberty said death-related claims still rose significantly in the March quarter, which was not as bad as its initial expectations. Liberty Corporate division experienced high claims exceeding the pandemic reserve, which affected its profitability.

“Mortality claims for the group increased significantly during the first quarter due to the second wave of the pandemic in SA, while persistency has not yet worsened as anticipated when the pandemic reserve was reassessed at December 31 2020,” the company said in a statement

“Given this, the pandemic reserve has thus far only been utilised to absorb the relevant risk experiences across SA Retail, Liberty Corporate and Liberty Africa.” Liberty set aside R3bn in provisions in 2020 to deal with Covid-19-related claims.

Group long-term insurance indexed new business sales for the March quarter were up 12.4%. The SA Retail business had an improvement in new business inflows due to strong growth in embedded banking product sales. Group total assets under management rose 2.5% to R795bn, due largely to a favourable investment market performance.

MORTALITY CLAIMS INCREASED SIGNIFICANTLY DURING THE FIRST QUARTER DUE TO THE SECOND WAVE