South African Insurers Still Going Strong

February 18 - While global insurance companies are relying on their governments to bail them out after nearly crashing due to the economic downturn around the world, South African insurance companies are proving their worth and stability.

Insurance industry analysts say that local insurance companies have experienced a dent in their profitability but are still going strong.

The latest company to comment on its drop in profits was Liberty Life, who predicted a 25 - 35% drop in headline earnings per share for the full year.

Sanlam went even further and predicted a 35 - 45% drop in profits.

One insurance analyst put it this way: "Boring is the new black. There's not going to be a lot of negative surprises, and in this environment, that's a great thing."

The most challenging part for South African insurance companies in the coming year is to keep new business on their radar screen. While new business has thus far shown resilience in the market, companies will be keeping a sharp eye out for any deterioration.

"Up until the third quarter, we'd seen new business holding up pretty well," commented another analyst. "But I suspect we will see some deterioration of that in the last quarter of the year, as economic conditions take hold."

When deciding on the best and the worst performers in the coming year, analysts expect Old Mutual to be hit hardest due to its market exposure abroad, while Discovery health insurer should continue to do extra well.