Old Mutual says Covid-19 vaccine hesitancy in SA has been higher than expected, underscoring the urgency of getting the majority of the population vaccinated before the fourth wave, which scientists predict will strike in December.
About 41% of the adult population in SA had received at least one jab by Monday, according to the National Institute for Communicable Diseases (NICD). This makes it unlikely that the government will hit its earlier target of immunising 70% of the adult population by December.
Insurance companies have been at the coalface of the pandemic, which has forced them to allocate billions to cover death and other related claims.
In an update on Tuesday, Old Mutual said its life businesses in SA continued to feel the squeeze of the pandemic in the September quarter. This was in stark contrast with nonlife business that held up well during the review period.
“Our life businesses had a worse mortality claims experience than anticipated,” Old Mutual said in a statement. This had affected its profits by R6.6bn in the year to date.
“In order to partially offset the excess deaths impact on profit for the year to date, R4.9bn of the pandemic provision was released.”
Benguela Fund Managers portfolio manager Karl Gevers said Old Mutual was likely to increase Covid-19 provisions given that only R1bn remained of the R3.1bn set aside in June.
Market reaction was fairly muted. Old Mutual’s share price was down 1.62% at R13.93 at close of trade on the JSE, with similar losses seen by fellow insurer Momentum Metropolitan.
Scientific experts have said that in the absence of new variants of Covid-19, a fourth wave was likely to be less severe.
Net client cash outflows amounted to R2.6bn in the quarter, compared with net inflow of R3.6bn in the previous September quarter.
Net client cash flows refers to the difference between money received from customers — from premiums, deposits and investments — and money given back to them by way of claims, surrenders and maturities.
Old Mutual said higher client disinvestment in personal finance and wealth management, as well as large client terminations in Old Mutual Corporate, contributed to net client cash outflow.
The company’s nonlife businesses fared well in the quarter, with the value of new business rising fourfold to R1.09bn year on year.
Funds under management rose 9% to $1.202bn, lifted by buoyant local and global markets.
More companies are considering vaccine mandates. While Netcare hospital group is waiting for the courts to rule on the legality of vaccine mandates, competitors Mediclinic International and Life Healthcare both announced in October that they were introducing the policy for staff and providers, joining health and life insurer Discovery, which was the first big group to introduce a mandate.
Update: November 23 2021
The article has been updated with additional information and closing share price .
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