Capitec Bank will launch a new life cover product in June as the group reported that its insurance business’s profit after tax increased by 12%, from R2.68 billion to R3.17bn, in its 2024 financial year.
Capitec chief executive Gerrie Fourie told the company’s results presentation on Tuesday that the life product was being piloted among its employees, and about 15% of staff have taken up the product.
“If I look at insurance, it’s for us all about our new systems that we’re building. It is bringing the whole Sanlam business across, making certain we’re ready for new products that we can actually attack the market from next year on,” Fourie said.
Capitec obtained its own long-term insurance licence in its 2023 financial year and began issuing credit life insurance policies in May 2023. Before then, Capitec’s credit insurance policies were underwritten by Guardrisk.
The transfer of the credit life insurance policies from the Guardrisk cell captive to Capitec Life is expected to be completed by July or August, Fourie said.
By the end of February 2024, Capitec had 558 417 active policies issued on its own licence.
The average sum insured increased by 3% to R75.2bn.
The net result from credit life insurance was up by 13% to R1.9bn.
Growth in the insured book accounted for R36 million of the growth in the net credit life insurance result.
The total claims incurred increased by 3%, resulting in a decrease in income of R18m.
Funeral insurance
The net result from funeral insurance increased by 27%, from R1bn to R1.29bn.
In October last year, Capitec and Sanlam announced that their seven-year funeral product co-operation arrangement will end on 31 October this year. Capitec will begin issuing funeral policies on its own licence from 1 November.
The in-force policies on 31 October 2024 will remain in the Centriq cell captive licence and will be transferred to the Capitec Life licence later.
The total funeral book increased by 27%, from 2.2 million policies at the end of February 2023 to 2.7 million policies at the end of February 2024. Currently, 12.1 million lives (2023: 9.9 million) are covered by Capitec’s funeral product.
The cumulative effect of book growth contributed R305m to the growth in the net result for funeral insurance.
Average premium collection rates decreased slightly from 89% for 2023 to 88% for 2024, decreasing the result by R40m.
The average claims ratio for the year was 45% (2023: 42%). The increase in the average claims ratio decreased the result by R92m.
