(Bloomberg) -- South Africa’s property and casualtyinsurers face an even tougher year than expected after Cape Townexperienced its worst storm in 30 years and dozens of fires engulfed the region around thetown of Knysna this week.

Profits under pressure


The insurers, including Santam Ltd., OldMutual Plc’s Mutual & Federal and Rand Merchant InvestmentHoldings Ltd.’s OUTsuranceunit, are already being battered by an economy that slipped into arecession in the first quarter, the country’s credit ratingdowngrade to junk status, continued political turmoil andunemployment at a 14-year high.

“Profit will be under pressure,” said Richard Hasson, an analystat Electus Fund Managers in Cape Town. “In a weak economicenvironment, such as low gross domestic product growth andincreasing unemployment, claims typically pick up, which will notbe good for them. The recent fires and storms will affect thecompanies.”

'Severe devastation'


The storm in Cape Town claimed at least nine lives, blew roofs offhouses, flooded buildings, downed power lines and forced schools toclose on Wednesday. About a five-hour drive to the east, around thewealthy towns of Knysna and Plettenberg Bay, more than 26 firesbroke out late Wednesday, with “severe devastation” in at least 12suburbs, according to local government officials.

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