By Jackie Cameron
- South Africa’s fourth largest non-life insurer Guardrisk has opted to settle with up to 700 small business clients who are fighting its decision to reject their claims related to the impact of a coronavirus lockdown, the firm told Reuters. The country’s insurers, in line with the industry globally, have declined to pay out under business interruption policies that many firms thought would give them cover because they argue lockdowns were not included in the policies. In an agreement with the regulator, some insurers have offered interim relief payments to affected clients, many of which risk collapse as a result, to keep them afloat while court cases on the matter play out. But Guardrisk, which announced its plans this week, is the first to decide to settle the claims instead, an approach preferred by those representing small firms as it avoids a potentially drawn out and costly legal process. The insurer estimated that 400 to 700 clients would benefit, with claims varying from tens of thousands of rand to several millions, it told Reuters on Wednesday in a written response to questions.
- South African insurer Old Mutual said on Wednesday it would offer a settlement to small firms who are fighting its decision to reject their claims related to a coronavirus lockdown. “We estimate that these financial settlements, combined with already submitted BI (business interruption) claims, will amount to over 650 million rand and will provide settlement for half of the customers with the infectious disease extension,” the insurer said in a statement.
- Shares of Standard Bank Group rose the most in three weeks on the Johannesburg Stock Exchange after a decline in first-half profit was less severe than expected for Africa’s largest lender. Earnings per share before one-time items in the six months through June probably fell 30% to 50% from a year earlier, Johannesburg-based Standard Bank said in a statement on Wednesday. The stock rallied as much as 4.4%, leading gains on the six-member FTSE/JSE Africa Banks Index and helping to pare the gauge’s decrease this year to 36%, says Bloomberg. Some investors “will breathe a sigh of relief that the extent of the credit impairments is limited to a number slightly larger than the global financial crisis, rather than a multiple of it,” Citigroup Inc. analyst Charles Russell said in a report. Still, these could still increase when relief that the lender has extended to clients, such as payment holidays, come to an end and the “true underlying credit performance is revealed.”
- South Africa’s banks are preparing for what could be the worst earnings slump since World War II as measures to curb the coronavirus drag the economy deeper into recession. Lenders are having to boost provisions for doubtful debts and restructure loans with companies and consumers struggling to meet their obligations.
- The decision by the IMF (International Monetary Fund) to grant South Africa’s request for emergency financing under the Rapid Financing Instrument (RFI) is a critical (and positive) turning point for the country’s economy, says Peter Leon.Partner and Co-Chair at law firm Herbert Smith Freehills. The undertakings provided by the South African government in its letter of intent are particularly significant, he says. “Most notably, the government has for the first time undertaken to introduce a limit in the form of a debt ceiling on the amount of debt that it is able to incur. Through the combination of the spending ceiling (which is currently in place) and the debt ceiling the government aims to reduce public debt, which it suggests will peak at 87.4 per cent of GDP in 2023/24. The government finally appears to have committed itself to structural reform,” he notes. For more on that, do listen to the Inside Covid-19 podcast with Alec Hogg, who shares all the latest insights on how South Africa is dealing with the pandemic. Or visit BizNews.com where you will find Leon’s full statement.
- Sasol was the best performer at the end of the trading session in Johannesburg on Wednesday.
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