South Africa Insurance: Balancing yield headwinds and easing macro risks

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South Africa Insurance: Balancing yield headwinds and easing macro risks

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South Africa Insurance

Balancing yield headwinds and easing

macro risks

Rating Change

More cautious one-year stance on SA insurers 29 June 2026

Easing global inflation and higher economic growth are positive for SA insurers’ new Equity

business and persistency results, as employed individuals ultimately represent the South Africa

sector’s opportunity set. However, lower bond yields will likely further curb sales of Insurance

higher margin investment products (guaranteed annuities), constrain solvency ratios, risk Harry Botha >>

further ALM losses and reduce implied inflation, as noted in December 2025 and March Research Analyst

2026 results updates. SA weather in 1H26 also partly accelerates the normalisation in Merrill+27 113Lynch055 (South152 Africa)

P&C profitability, reducing our P&C earnings growth expectations. Therefore, we take a harry.botha@bofa.com

more cautious one-year view on the sector. We reiterate Buy on Sanlam, OUTsurance

and Momentum and Underperform on Old Mutual. We downgrade Discovery from Buy to

Underperform and Santam from Neutral to Underperform. Exhibit 1: Reiterate Buy on Sanlam,

OUTsurance and Momentum and

Sanlam and OUTsurance preferred; also Buy Momentum Underperform on Old Mutual.

Downgrade Discovery and Santam toWe believe Sanlam and Momentum’s earnings and cash-flow growth potential remains

Underperformunderappreciated. Despite Sanlam’s 1H26E earnings headwinds, we see higher adjusted SA insurer PO and potential upside

headline earnings in 2H26E (c.15% higher than 1H26E), and 19% growth in 2027E. We

expect Momentum’s SA Health, Guardrisk and India operations to support 10% 3Y Group Potential upside PO

earnings CAGR.