Constantia Insurance Group

The Constantia Insurance Group has delivered a solid set of results under the leadership of new CEO, Peter Todd. Underlying profit from operations (excluding the impact of discontinued business and legacy costs) was R35-million compared to an operating loss of R64-million in the prior year.

“In what has been a significantly challenging year for all businesses and sectors during the Covid-19 pandemic and accompanying economic environment, I am satisfied that the turnaround of Constantia is complete. Our strategy has been clear and focused,” says Todd, who was appointed CEO in February 2020. 

In the year to June 2021, Constantia’s operating result improved by R164 million against the prior year and reflected a R258 million improvement on 2019. This was driven by improved underwriting and a further 25% reduction in operating costs, following a restructure in 2020 and disciplined cost control.  

The group has created authentic, collaborative relationships with its business partners and, over the past three years, it has focussed on building and strengthening its systems and capabilities. 

Constantia now operates three insurance licenses and provides insurance solutions across 19 countries, with dominant positions in health and medical malpractice insurance and a niche focus in life and property & casualty businesses.  

Under Todd’s leadership the business is leaner, more focused and has achieved consistent underwriting performance, with the business having achieved underwriting profits every month since the change in leadership. “Our primary objective was to show consistent performance, which we have done,” says Todd.  

With the exception of the first six months in the Life business, Constantia’s loss ratios have improved across the board.  

“It has been a stellar year for Constantia in which the majority of the group’s businesses performed ahead of expectations. We achieved a 98.1% combined ratio from our underlying operations,” says Todd.  “I am particularly pleased with our General Property & Casualty business, where we have managed to bring our loss ratio down from 84% in 2019 to 51% in 2021, which is better than our peer group. Our focus now is to scale this business while maintaining our strong underwriting discipline.”  

Todd also highlights the positive results of diversifying the Property & Casualty business through an increased focus on Specialty risks which continue to deliver exceptional loss ratios. The Specialty classes now account for 64% of the Property & Casualty segment. 

He believes the company’s focus on streamlining processes and implementing new digital technologies will enhance its value proposition to its intermediaries. Not having to deal with legacy systems has been an advantage in execution. 

Constantia is a market leader in the private health insurance sector. Its health insurance products provide access to private healthcare, while its various risk management initiatives in its medical malpractice business play an instrumental role in improving the quality of private healthcare in South Africa. Constantia’s health businesses make up more than half its premium income. This differentiates Constantia from its competitors. 

Constantia delivered R1.949bn in gross premium income for the year to end-June 2021, down 8% on R2.110bn delivered for the comparable year to end-June 2020, which was in line with expectations as underperforming businesses were exited. 

The group’s four core business segments shone in the reporting period, achieving underwriting profitability across the board. The group also delivered double-digit growth in its high-margin specialist segments. 

An underwriting result of R222m was achieved for the 2021 reporting period, 62% better than the R137m for the 2020 financial year.   

The health business was a standout performer delivering net operating profit growth of 32%.  

Todd says he is proud of the health team for achieving strong results in a tough economic environment beset by a pandemic and a recession. 

“The fact that we have achieved above inflationary GPI growth over the past two years is exceptional. Consistent underwriting combined with our focus on cost cutting measures led to a very impressive double-digit increase in net operating profit,” he says. 

The pan-African insurer which was first licensed in 1952, is in a stronger financial position, having implemented effective cost saving strategies which has included exiting its non-core businesses.  

Constantia has a multi-decade history of providing a sophisticated array of insurance products and services to South African businesses and individuals and is excited about contributing to the South African economy in the future. 

“Our strategy has been clear and our vision for the future is too. Our operating model brings with it a strong foundation for an insurance group of the future,”says Todd.