Durban - The life insurance market continued to struggle, according to Metropolitan Holdings' trading update published on Wednesday.
"It's tough out there," Preston Speckmann, group finance director for Metropolitan, told Fin24.com in an interview.
"Some parts of the business are firing, like medical schemes administration. But there's pressure on consumer spending and it's coming through," he said.
Of the numbers provided in the update, recurring premium income for the nine months was 5% higher. However, recurring premium income on new insurance business - which provides a window on new business added in the period under review - increased by only 2%.
Net cash received by clients totalled R3.3bn.
Metropolitan is dominant in the emerging insurance business in which policies are sold to civil servants, such as teachers, and other government employees. Persistency in this sector had remained "surprisingly resilient", said Speckmann.
But the business also has exposure to some top-end clients that are exposed to stock market and variable income. This sector, in which insurers such as Liberty Life compete, had been under pressure, he said.
Key director offloads shares
Overall number of lives under administration on active insurance books had grown and lapses had been unchanged, but this excluded problems flowing from Metropolitan's direct marketing efforts.
There had been too many poor quality, easily surrendered or lapsed policies coming into the business, although Speckmann said this had been worked through.
Of more concern would be the meagre 2% increase in new recurring premium insurance business.
Speckmann said this related to the direct marketing business, where Metropolitan had to pull back on some products and initiatives.
An additional concern was that the executive director and head of Metropolitan's retail business, Phillip Matlakala, had sold 218 300 shares last month worth nearly R3m, and 170 000 shares worth R2.3m on Tuesday.
The stocks are from Metropolitan's share scheme and executives have to exit at some stage, but selling by a key director can be read as a sign of lack of confidence in the group's future.
However Matlakala said he was not the first director to sell shares and had done so for personal financial reasons.
"It has nothing to do with me not having confidence in the company. These shares came through in 2007 and I didn't sell then," he said.
- Fin24.com