Leading A Life Insurer Through Covid-19

Riaan van Reenen was appointed CEO of Discovery Life shortly before the coronavirus pandemic hit South Africa.

- Jaco Visser

Starting his career at Discovery back in 1999, Riaan van Reenen took the reins of the company’s life insurance division as CEO a year ago. Little did anyone back then know how the outbreak of a novel coronavirus in the city of Wuhan in China will spread across the planet and grind economies to a halt. Also unbeknownst back then was the death toll – which surged to almost 2m people at the time of writing from an infected population of 90m, according to Johns Hopkins University data – that would rattle life insurers. In SA, the infected population has climbed to more than 1.2m people whilst more than 34 000 have lost their lives, data from the national health department shows.

As the first wave of coronavirus infections and deaths hit South Africans, the listed life insurance market took extremely conservative steps in providing for the unknown impact the pandemic would have on their businesses. Discovery Life made provisions for a R2bn impact, compared with Sanlam’s R1.3bn, Old Mutual’s R2.79bn, Momentum Metropolitan’s R1bn and Liberty’s extremely cautious R3bn provision. Obsidian Capital’s Royce Long in October supplied finweek with their own research on the possible impact of the pandemic on headline earnings for each of the insurers, which ranged from a 41% decline at Sanlam, 67% slump at Old Mutual to more than 100% decline at the other three, including Discovery Life. The provisions – which are non-cash flow accounting transactions – were the main culprit for the dearth in earnings.