Vitalis Group SA — Sensitivity, Scenario & Stress Testing
The sensitivity, scenario and stress-testing analysis — base, upside and downside cases across growth, claims, persistency and cost assumptions.
Section 19 · Business Plan
Sensitivity, Scenario & Stress Testing
The sensitivity, scenario and stress-testing analysis — base, upside and downside cases across growth, claims, persistency and cost assumptions.
The financial plan has been stressed against single-variable
sensitivities, integrated scenarios (Upside and Downside), and a set of
named stress events. The results below give investors a defensible view
of the downside protection and the upside leverage embedded in the
business model.
19.1 Single-Variable Tornado Sensitivity
Each variable below is moved by the indicated amount with all other
drivers held at base-case values. The Y-axis impact is on cumulative
five-year EBITDA (Base Case: R(929)M cumulative; positive movement =
improved EBITDA).
| Driver | Move | Δ Cum. EBITDA (R million) | Comment |
|---|---|---|---|
| Net loss ratio | +/- 3pp | +/- 420 | Largest single sensitivity |
| Customer growth | +/- 15% | +/- 380 | Both CAC and revenue affected |
| Persistency | +/- 2pp | +/- 280 | Compounds over 5 years |
| Average premium | +/- 5% | +/- 240 | Mix and price effects |
| Reinsurance cession | +/- 5pp | +/- 160 | Affects net retention |
| Operating cost (ex acq) | +/- 5% | +/- 145 | Mostly fixed cost |
| Investment yield | +/- 100bps | +/- 110 | On growing asset base |
| CAC | +/- 10% | +/- 95 | Compounds with growth |
| Behavioural reward cost | +/- 10% | +/- 60 | Net of partner subsidy |
19.2 Integrated Scenarios
The Upside and Downside scenarios are coherent multi-driver runs (not
single-variable shocks). They are constructed from analyst-defined
“world states” rather than statistical confidence intervals.
Upside Case
Key driver changes: customer growth +20% to Year-5 total of 440K;
loss ratio 2pp better across all lines; persistency +1.5pp; CAC -8%;
broker channel productivity +15%; Vitalis Pay adoption faster (deposits
+30%).
Downside Case
Key driver changes: customer growth -25% to Year-5 total of 275K;
loss ratio +3pp in Years 2-3 (reflecting underwriting cycle
deterioration); CAC +12%; persistency -2pp; Series B delayed by 6 months
requiring R250M bridge sub-debt.
| Year-5 Metric | Downside | Base | Upside | |
|---|---|---|---|---|
| Customers (‘000) | 275 | 367 | 440 | |
| Gross written premium (R million) | 3,418 | 4,991 | 6,287 | |
| Revenue (R million) | 3,148 | 4,621 | 5,892 | |
| EBITDA (R million) | (189) | 468 | 1,124 | |
| Combined ratio (%) | 102.4 | 88.4 | 78.6 | |
| Cumulative cash burn (R million) | (4,820) | (4,000) | (3,180) | |
| Total funding required (R million) | 1,850 | 1,600 | 1,400 | |
| SCR coverage Yr 5 (%) | 142 | 184 | 232 | |
| IRR to Series A investor (%) | 15.8 | 28.4 | 42.1 | |
| MOIC at exit Yr 7 | 2.1x | 3.2x | 4.6x |
19.3 Named Stress Events
Four named stress events have been modelled to test the robustness of
the capital and liquidity plans. The stress modelling assumes each event
occurs in isolation at the most adverse plausible point in the
projection.
| Stress Event | Description | Impact (R million) | SCR ratio post-stress |
|---|---|---|---|
| Pandemic (2x COVID severity) | Excess mortality and morbidity claims for 18 months, partly offset by reinsurance and policyholder shedding. | (420) | 124% |
| Catastrophic flood (KZN-scale) | Property and motor claims concentrated in a single quarter; full XL recovery beyond R40M. | (85) | 162% |
| Cyber breach (Class 1) | Customer data exposure; remediation, fines, customer compensation, brand damage. | (180) | 156% |
| Sovereign credit downgrade | Bond mark-to-market loss on SAGB portfolio (4pp yield widening); recoups over 4 years. | (140) | 152% |
| Combined 2 events | Pandemic + cyber concurrent (severity worst-case). | (540) | 108% |
Under all single named-event stresses the Company retains SCR
coverage above 120%. Only a combined dual-event stress brings coverage
close to the 100% regulatory floor — in which case the Company would
draw on its standby liquidity facility and accelerate the Series B
raise.
19.4 Reverse Stress Test
Reverse-stress analysis identifies the minimum combination of adverse
events that would breach the SAM SCR floor:
- Customer growth shortfall of more than 35% versus base case AND a
4pp deterioration in net loss ratio across all lines for two consecutive
years would together breach SCR (combined probability assessed as <3%
by management). - Such a state would require either an accelerated and discounted
Series B or a structured reinsurance run-off transaction. Both routes
are documented in the capital contingency plan referenced in Section
13. - No single-variable movement within plausible bounds is sufficient
on its own to breach SCR.
Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of Vitalis Group South Africa (Pty) Ltd.