2013-01-21 15:01:00 -
South Africa’s sophisticated financial services industry and self-sufficient economy continue to ensure that the country’s insurance sector remains by far the largest insurance market in Africa, according to a new report from A.M. Best Co. In the report entitled, “Africa’s Diverse Insurance Markets Offer Growth Opportunities, Untapped Demand”, A.M. Best also notes that insurance penetration is high in South Africa as a result of its mature life insurance sector.
Carlos Wong-Fupuy, Senior Director, Analytics, said: “An insurance market’s maturity can be gauged by examining proxies, including the size of the life sector, the balance in terms of lines of business and the extent to which motor dominates the non-life sector. South Africa stands out as 79.3% of its total insurance premium
originates from life risks.
The strong demand for life business results in total insurance premiums in South Africa representing 12.9% of gross domestic product (GDP)—well exceeding insurance penetration in some European countries.”
A.M. Best believes that while earnings are strong for some South African companies, competitive pressures in the property/casualty sector are resulting in reduced underwriting margins and challenging market conditions. Relatively prudent investment policies are generally followed, although A.M. Best believes insurers may need investment opportunities in different asset classes, given the low interest rate environment.
The report notes insurers are commonly part of larger financial groups, many of which have been expanding outside of South Africa and in some instances, beyond Africa. Yvette Essen, report author and Director of Industry Research, Europe & Emerging Markets, said: “A.M. Best envisages overseas expansion primarily for the larger South African companies as they seek relief from regulatory and political pressures and foreign currency controls.”
To access a complimentary copy of this report, please visit www3.ambest.com/bestweek/purchase.asp?record_code=208535
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Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
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A.M. Best Company, Inc.Carlos Wong-Fupuy, +(44) 20 7397
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Kuenyehia, +(44) 20 7397 0280Associate Director, Market
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