The economic downturn and the recession, which has led to consumers lapsing on their life insurance policies, has had a negative impact on Metropolitan Holdings.

The insurance company has reported that its diluted core headline earnings per share for the six months to the end of June fell 12 percent to 61.54 cents from 70.03 cents in that same period last year.

The value of group's new business dropped too, with 7 percent to 104 million rand, while new business recurring premiums rose 11 percent.

Metropolitan Holdings mentioned food and transport inflation, as well as rising unemployment, remained its biggest challenge. It said further deterioration could curtail new business prospects.

The ensurer is more exposed to the lower end of the retail market, which is sensitive to changes in food, fuel and transport inflation.

Most South African insurers' profits have taken a hit from the global slide in equity markets, as well as a reduction in consumer demand due to relatively high interest rates, inflation and rising personal debt.

Metropolitan maintained an interim dividend of 40 cents per share.

Source: Moneyweb!