Metropolitan 2009 profit down on higher policy lapses

South African insurer Metropolitan Holdings posted lower 2009 profit after more consumers defaulted or cancelled life insurance policies and the value of its investment assets dropped.

The country’s fourth-biggest insurer said on Wednesday diluted core headline earnings per share for the year to end-December fell 7% to 141 cents from 151 cents in 2008, in line with its own forecast of a 5% to 10% drop.

The insurer, heavily exposed to the lower end of the retail market, which is more sensitive to changes in the cost of basic items, said food and transport inflation remained its biggest challenges.

Cash-strapped consumers have also been hit by rising unemployment as Africa’s largest economy struggles to get back on its feet after a recession.

Metropolitan’s total new recurring premium business fell 9% to R1,16-billion rand, while its embedded value climbed to R12-billion from R11,3-billion in 2008.

Rival Liberty, South Africa’s number two insurer, reported a drop in 2009 profit last month as fewer customers bought its investment products and existing customers, struggling with high levels of personal debt, allowed policies to lapse.—Reuters