FINANCIAL SERVICES BOARD
INSURANCE DEPARTMENT
SPECIAL REPORT ON THE RESULTS OF
THE LONG-TERM INSURANCE INDUSTRY
FOR THE PERIOD ENDED
MARCH 2002
1
SPECIAL REPORT ON THE RESULTS OF THE LONG-TERM INSURANCE
INDUSTRY
Industry results - Typical insurers (typical insurers, for the purpose of this report,
are those insurers who offer most of the six classes of business as defined in the
act, in the primary market).
The table below sets out combined unaudited statistics (net after reinsurance) for the
typical insurers for the year ended December 2001 and for the three months ended
March 2002.
12 months ended December 2001 3 months ended March 2002Net premiums- Recurring R'm 60 449 14 551 Net premiums- Non-recurring R'm 59 987 15 380
Net premium increase (year to year) - -
Claims (as % of net premiums) 91 118
Commission (as % of net premiums) 5 7 Management Expenses (as % of net
premiums) 8 9
Investment yield %* 16 0
Number of policies increase (yr to yr) 14 8
Individual lapse %** 31 25
Individual termination %** 27 19
Individual contractual termination %** 24 32
Fund & group schemes termination %** 27 12
CAR cover ratio (median) 3.5 3.3
*Return on investment is calculated according to the formula R=2i/A+B-i where i is all investment income plus realised and
unrealised surplus on sale of investments, A is initial value of investments and B is end value of investments.**Expressed as a percentage of the number of new policies issued during the period.
Car cover ratios - Typical insurers
Number of insurers
FREE ASSETS TO CAR
December2001 March 2002
Covered 0-1 times
0
0
Covered 1-2 times
2 3
Covered 2-5 times
18 19
Covered 5-10 times
4 4
Covered 10+ times
6 5
Total 30
31
2
Industry results - Niche insurers (niche insurers, for the purpose of this report,
are those insurers who conduct business in a specific target market).
The table below sets out combined unaudited statistics (net after reinsurance) for the
niche insurers for the year ended December 2001 and for the three months ended
March 2002.
12 months ended December 2001 3 months ended March 2002Net premiums- Recurring R'm 2 197 745 Net premiums- Non-recurring R'm 129 196
Net premium increase (year to year) - -
Claims (as % of net premiums) 88 69
Commission (as % of net premiums) 7 9 Management Expenses (as % of net
premiums) 9 6
Investment yield %* 11 1
Number of policies increase (yr to yr) 62 53
Individual lapse %** 11 17
Individual termination %** 130 278 Individual contractual termination %** 0 0
Fund & group schemes termination %** 7 14
CAR cover ratio (median) 11.8 7.8
*Return on investment is calculated according to the formula R=2i/A+B-i where i is all investment income plus realised and
unrealised surplus on sale of investments, A is initial value of investments and B is end value of investments.**Expressed as a percentage of the number of new policies issued during the period.
Car cover ratios - Niche insurers
Number of insurers
FREE ASSETS TO CAR
December2001 March 2002
Covered 0-1 times
1
1
Covered 1-2 times
1 1
Covered 2-5 times
1 1
Covered 5-10 times
0 2
Covered 10+ times
5 3
Total 8
8
3
Industry results - Link investment insurers (link investment insurers, for the
purpose of this report, are those insurers who underwrite policies whereby the
value of the policy is directly linked to the value of the assets invested in, and no
guarantees are offered).
The table below sets out combined unaudited statistics (net after reinsurance) for the
link investment insurers for the year ended December 2001 and for the three months
ended March 2002.
12 months ended December 2001 3 months ended March 2002Net premiums- Recurring R'm 259 2 456
Net premiums- Non-recurring R'm 50 757 22 705
Net premium increase (year to year) - -
Claims (as % of net premiums) 69 76
Commission (as % of net premiums) 0 0 Management Expenses (as % of net
premiums) 1 1
Investment yield %* 19 0
Number of policies increase (yr to yr) 36 63
Individual lapse %** 2 1
Individual termination %** 18 14
Individual contractual termination %** 1 2
Fund & group schemes termination %** 68 17
CAR cover ratio (median) 193.4 104.3
*
Return on investment is calculated according to the formula R=2i/A+B-i where i is all investment income plus realised and unrealised surplus on sale of investments, A is initial value of investments and B is end value of investments.**Expressed as a percentage of the number of new policies issued during the period.
Car cover ratios - Link investment insurers
Number of insurers
FREE ASSETS TO CAR
December2001 March 2002
Covered 0-1 times
0
0
Covered 1-2 times
0 0
Covered 2-5 times
0 1
Covered 5-10 times
0 1
Covered 10+ times
11 10
Total 11
12
4
Industry results - Cell captive insurers (cell captive insurers, for the purpose of
this report, are those insurers who conduct business on a cell captive basis
only).
The table below sets out combined unaudited statistics (net after reinsurance) for the
cell captive insurers for the year ended December 2001 and for the three months ended
March 2002.
12 months ended December 2001 3 months ended March 2002Net premiums- Recurring R'm 165 23
Net premiums- Non-recurring R'm 167 554
Net premium increase (year to year) - -
Claims (as % of net premiums) 24 109
Commission (as % of net premiums) 4 0 Management Expenses (as % of net
premiums) 15 1
Investment yield %* 4 0
Number of policies increase (yr to yr) - -
Individual lapse %** 33 11
Individual termination %** 239 0
Individual contractual termination %** 176 -
Fund & group schemes termination %** 19 0
CAR cover ratio (median) 7.9 12.8
*
Return on investment is calculated according to the formula R=2i/A+B-i where i is all investment income plus realised and unrealised surplus on sale of investments, A is initial value of investments and B is end value of investments.**Expressed as a percentage of the number of new policies issued during the period.
Car cover ratios - Cell captive insurers
Number of insurers
FREE ASSETS TO CAR
December2001 March 2002
Covered 0-1 times
0
0
Covered 1-2 times
1 0
Covered 2-5 times
0 1
Covered 5-10 times
1 0
Covered 10+ times
1 3
Total 3
4
5
Industry results – Reinsurers (reinsurers, for the purpose of this report, are those
insurers who conduct only professional reinsurance and are not involved in
marketing to the public).
The table below sets out combined unaudited statistics (net after reinsurance) for the
reinsurers for the year ended December 2001 and for the three months ended March
2002.
12 months ended December 2001 3 months ended March 2002Net premiums- Recurring R'm 1 410 435 Net premiums- Non-recurring R'm 121 39
Net premium increase (year to year) - -
Claims (as % of net premiums) 61 58
Commission (as % of net premiums) 18 13 Management Expenses (as % of net
premiums) 11 8
Investment yield %* 16 2
Number of policies increase (yr to yr) - -
Individual lapse %** 61 -
Individual termination %** 0 -
Individual contractual termination %** 0 -
Fund & group schemes termination %** 0 -
CAR cover ratio (median) 2.8 3.6
*Return on investment is calculated according to the formula R=2i/A+B-i where i is all investment income plus realised and
unrealised surplus on sale of investments, A is initial value of investments and B is end value of investments.**Expressed as a percentage of the number of new policies issued during the period.
Car cover ratios - Reinsurers
Number of insurers
FREE ASSETS TO CAR
December2001 March 2002
Covered 0-1 times
0
0
Covered 1-2 times
2 2
Covered 2-5 times
3 2
Covered 5-10 times
1 2
Covered 10+ times
0 0
Total 6
6
6
Industry results - Assistance insurers (assistance insurers, for the purpose of
this report, are those insurers who offer life policies where the sum assured does
not exceed R10 000).
The table below sets out combined unaudited statistics (net after reinsurance) for the
assistance insurers for the year ended December 2001 and for the three months ended
March 2002.
12 months ended December 2001 3 months ended March 2002Net premiums- Recurring R'm 271 61
Net premiums- Non-recurring R'm 2 1
Net premium increase (year to year) - -
Claims (as % of net premiums) 70 66
Commission (as % of net premiums) 10 11 Management Expenses (as % of net
premiums) 22 22
Investment yield %* 9 0
Number of policies increase (yr to yr) 50 68
Individual lapse %** 28 93
Individual termination %** 51 10
Individual contractual termination %** 7 24
Fund & group schemes termination %** 127 166
CAR cover ratio (median) 3.6 3.6
*Return on investment is calculated according to the formula R=2i/A+B-i where i is all investment income plus realised and
unrealised surplus on sale of investments, A is initial value of investments and B is end value of investments.**Expressed as a percentage of the number of new policies issued during the period.
Car cover ratios - Assistance insurers
Number of insurers
FREE ASSETS TO CAR
December2001 March 2002
