South Africa: Nedlac Business Lobby Optimistic On Government Bailout for Short-Term Insurer Sasria

analysis

The Nedlac business lobby has tabled a proposal that the government should underwrite short-term insurer Sasria, and indications are that it is willing to do so.

The Nedlac business partners have proposed that government guarantees be extended by the Treasury to Sasria after it has gradually become apparent that the short-term insurer might not have sufficient cash to settle claims for looted and vandalised businesses.

This proposal was also tabled at a meeting on Tuesday between business leaders, more than 90 chief executives, and President Cyril Ramaphosa. A "blanket" government guarantee has been proposed for Sasria's balance sheet to protect the insurer from using all of its cash resources to honour insurance claims. In other words, the government - through its guarantees - would be on the hook for insurance payouts if Sasria doesn't have enough cash resources.

"Ramaphosa and Treasury are keen on the proposal to support Sasria," said a capital markets analyst who attended the Tuesday meeting.

SA's state-owned short-term insurer was established to cover civil unrest claims, and the company is well capitalised. But even with its substantial cushion, Sasria expects insurance claims arising from the recent orgy of looting and anarchy to be so daunting that...

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