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140 | The South African Insurance Industry Survey 2016
The regulatory reported GWP for reinsurers, as per the FSB’s quarterly report performance has however not filtered through to the bottom line. This is mainly
for the period ended 31 December 2015, amounted to ZAR 19.7 billion (2014: due to adverse claims experience.
ZAR 18.5 billion). This amounts to 7% (2014: 12%) year-on-year growth.
The differences in the FSB-reported results and surveyed results, reflect the The new kid on the block, GIC Re, made its impact by increasing its GWP by ZAR
differences in IFRS and Regulatory reporting. For example, the treatment of 140 million between 2014 and 2015, capturing 1% of the reinsurance market.
products with minimal risk transfer. Most of the increase is due to a book of business transferred by their holding
company, a state-owned insurer in India. The licence (old Saxum Re licence)
Based on the survey results, net earned premiums increased by 3% for 2015. was only active for three months. Most of their business is written in other
The net underwriting profit, before taking management expenses into account, African countries.
increased by 62%. This is mainly as a result of the decrease in net commission
expenses. One of the reasons noted for the decrease is the reduced profit RGA increased its GWP and earned premiums by 4% and 14% respectively
commission incurred on life business. between 2014 and 2015. These increases carried through to the bottom line.
It was a very stable year in terms of incurred losses. The financial year loss ratios General Re increased their GWP and earned premiums by 5% and 6%
have remained similar to 2014. The expense ratio increased by 3%. Some of respectively between 2014 and 2015. This growth stems from the life business
contributing factors include inflation, weakening of the Rand, and the investment and is mainly attributable to individual life business, group lump sum and group
in human resources required to support increased regulatory obligations, growth permanent health insurance business.
aspirations and client service.
African Re achieved 1% growth in terms of GWP. Their underwriting profit
Individual underwriting performance increased by 3%, which is mainly due to improved claims experience. African Re
Munich Re increased its written top-line by 6% (2014: 14%). The Munich Re experienced a 20% increase in its management expenses.
life division did not perform as well when compared to the previous year when
measured by premium volume. However, GWP is not necessarily the best Investment performance
measure to utilise when it comes to life entities. The non-life division ended Reinsurers achieved an average return on investments (including cash and cash
with a solid overall increase of 18% in premium volume. We expect the Munich equivalents) of 5.62% (2014: 5.5%). This was 6.1% (2014: 6.3%) when the
Re results to change significantly going forward due to the decision to close effects of cash are excluded. These returns are quite low when compared to an
its Mauritian subsidiary at the end of 2015 after 18 years in operation. Munich average prime rate of 9.38% and the average 10-year government bond yield of
Re aims to streamline and strengthen the organisation’s business model by 9.77%. They are closest to the average three-month NCD rate of 6.22%. This
establishing Johannesburg as the hub for its Sub-Saharan African business. does talk to the average asset allocation at 31 December 2015, as reported by
the FSB for reinsurers and shown below.
Hanover Re’s GWP decreased by 8%. This puts Hannover Re back to a similar
top-line performance when compared to 2013. Excluding the Hannover Re RGA Re and General Re were the top performers with 8% and 7% investment
premiums, the remaining industry players participating in the KPMG insurance income on investments, including cash. Not surprisingly, they are the
survey, grew by 7% in terms of GWP. two reinsurance companies with the highest CAR ratios with 4.6 and 5.9
respectively, affording them the opportunity to diversify the investment portfolio
Scor outperformed the market and increased its GWP by 18% (2014: 8%). beyond the regulatory constraints. An alternate strategy would be to pay out
The strong growth in the life business continued in 2015. The top-line excess capital in dividends and invest free from regulation elsewhere; however,
