SA’s state insurance company, Sasria, is in talks with the National Treasury about a bigger bailout than the R3.9bn already promised, its managing director told a parliamentary committee on Wednesday.
Sasria, the only insurer, political violence in South Africa, has suffered a sudden deterioration in its financial situation after some of the worst violence of the post-apartheid era erupted in July shortly after the arrest of former President Jacob Zuma.
< More than 300 people died and about 3,000 stores were looted immediately after Zuma's arrest, with anger over ingrained poverty and inequality fueling the violence. The economic impact in the two hardest hit provinces, KwaZulu-Natal and Gauteng, is estimated to be tens of billions of Rand.
“The 3.9 billion R20 billion and R25 billion,” said Sasria- Managing Director Cedric Masondo.
“Liquidity is not as big a problem for us as solvency … because we have to recapitalize the business. When we had a good balance of R10bn, the riots wiped that balance out, so we need to recapitalize, ”he said.
Based on a loss figure of R20bn, Masondo said the preliminary figures suggested it that Sasria would need an injection of around R5.6bn to meet regulatory solvency.
“If claims are over R25bn we will likely need (an) additional R7bn” he said.
Last month, Masondo said the insurance company would increase its premiums to cover an increase in reinsurance costs related to the July riots.
Sasria is the newest state-owned company which is reaching out to the government for bailouts, with Eskom and SAA being the main beneficiaries in recent years. In view of the weak economic situation, the government is trying to close the tap on further handouts.