Hillie Meyer. Picture: FREDDY MAVUNDA
Hillie Meyer. Picture: FREDDY MAVUNDA

Momentum Metropolitan Holdings, which revised its earnings target for 2021 on Thursday, says it expects claims to surge and clients to exit policies as the SA economy faces a steep contraction and millions of job losses.

The group no longer expects to achieve its target of normalised headline earnings of R3.6bn-R4bn for its 2021 financial year as a result of the adverse effects and uncertainties related to the coronavirus.

Momentum CEO Hillie Meyer said the company expects an upsurge in claims and the economic effect of the virus to knock consumer spending power.

“Our biggest concern is not the impact on death claims or disability claims, and even less so disability claims. Our concern is more around the economy. Basically, our clients will have less money, some of our clients will lose jobs, some of our clients will not get the increases they need,” said Meyer.

Meyer was speaking after the release of Momentum’s earnings for its third quarter.

The insurer said the coronavirus, with the first case in the country reported on March 5, had cost it R1.2bn. The damage Momentum suffered in March nullified its operational performance, pushing it to a loss of R284m in normalised headline earnings for the quarter, it said.

The company has ruled out a rapid economic recovery, saying new business volumes will be affected. Covid-19-related mortality claims were a risk factor that could affect its 2021 financials, it said.


“We foresee that will probably put pressure on our premiums and the new business that we write in a given year,” Meyer said.

He expects that Momentum’s clients’ book, which sees an annual reduction of 5%-8% — including fatalities — will be much harder hit this year.

“We’re looking ahead because it’s early days. We haven’t seen the impacts of Covid 19 on disposable income yet and even on mortality. That will play out over the next 12 months. So far it’s fine, but we are expecting an increase in withdrawals,” said Meyer.

For clients whose risk is assessed to be high, including those with pre-existing conditions, the company may have to tread with caution in terms of writing new policies, Meyer said.

“Our biggest concern over the short-term is sales volumes because of the lockdown and social distancing, it’s very difficult,” he said.

Shares in the company fell the most in a week on Thursday, down 3.41% to R17.


Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.