Reflecting on my first full year as chairman of the Santam
board, I believe we can be grateful and proud of the excellent
results in a time of continued global upheavals. Although Santam is
set on a solid strategic path, the business environment continually
requires that we deal with uncertainty and confusion on many
Like many other South African businesses, Santam finds itself
facing two worlds: the developed world with marginal or stagnant
growth - with no apparent sign of an upswing in the market, and the
developing world with pockets of significant growth. We have to
determine which world will have the overriding impact for South
Africa - which remains Santam's most significant market.
FACING A COMPLEX
At the end of my first year, I am delighted by the
degree of complexity that I had to face in this business. I
expected a new environment filled with surprises, challenges and
opportunities for personal growth. This was made bearable by the
fact that I had the privilege to work with a management team that
is technical in their expertise, but also practical in their
approach to business and life.
Ultimately, 2010 was an exceptional year for
Santam. We predicted that it would be unlikely for the company to
maintain this level of performance in 2011. We are pleased
therefore to report to our stakeholders that, despite the fact that
the United Nations claimed that 2011 was the costliest year in
history for catastrophes, Santam again managed to deliver very
satisfactory results for the year.
The momentum that began in 2010 was evident in
the interim results released in August, and at year-end Santam
achieved an underwriting margin of 7.7% compared to 8.5% in 2010.
However, a number of external factors had a dampening effect on
The issue of white-collar crime in the country
has been part of the national discourse in the past year. This has
a negative effect on the insurance industry as well as the country.
While within Santam we can pride ourselves on the soundness of our
risk management processes, it is essential that the national
context in which South Africans live and work show positive
development in the fight against this scourge.
We have a number of strong and capable
operators in the short-term insurance industry, and it is becoming
evident that we have to approach the issue of increasing
white-collar crime collectively. We believe that it is our
responsibility to partner with stakeholders such as government and
religious institutions to tackle this issue. It is a time to be
honest and ask ourselves to what extent the capacity to fight crime
has improved in our country. For more information on how Santam
manages economic crime, please see "Maintaining an ethical and
managing economic crime" in our Sustainability Report.
Our business at Santam is to manage risk for
our policyholders. The business has been forced to be even more
vigilant in managing its claims processes - administering and
settling claims faster while also being more stringent in the
claims management processes. For more information on Santam's
approach to managing economic crime, refer to material issue number
four in the Sustainability Report, available on our website at www.santam.co.za.
Santam's leadership team not only fully comprehends
the technical complexity of the business and the systemic risks it
faces, but also has the ability to communicate this with great
clarity and skill. It is an old company with a strong legacy, but
we are able to renew and change, which is critical for success in
the world we operate in.
Santam intends to consolidate its leadership
position in the general insurance segment in South Africa and
selected emerging markets. The business continues to implement and
refine this vision through its strategic priorities, and a number
of supporting strategic projects as discussed in more detail in the
Chief Executive Officer's Report. During 2011 this included
diversifying the business outside the borders of South Africa.
South Africa remains Santam's most significant
market and we plan to continue outperforming our competitors. In
our aim to diversify our markets and channels, the company's main
challenge now is to apply our competitive strengths in new markets.
In 2011 we made progress with our expansion initiatives. We are in
the fortunate position to be able to take advantage of the regional
economic blocks that are emerging, particularly in Africa. South
Africa's political agenda supports the creation of an African
business identity - perfectly aligned with Santam's strategic
positioning as a player on the continent.
Our footprint and resources offer special
insights and opportunities that we believe can be put to good use
and are relevant to developing markets. As Santam's controlling
shareholder, Sanlam also has Africa aspirations. Therefore, it
makes sense for the two operators to enter new developing markets
in tandem - an approach we are now entrenching also in India.
Although Santam has set itself challenging
objectives in terms of expanding its footprint, we are cautious in
our approach and remain sensitive to the dynamics of our
environment. It remains critical for us to first understand how our
strengths relate to the particular risks and challenges of each new
TRANSFORMING PEOPLE AND
Transformation might well start with race but it is
more than that - it encompasses diversity of thought, creativity,
ability and all the other differences our nation has to offer. At
Santam we are also transforming the way in which we present
ourselves and the way in which we do business, creating the
capacity to commit and operate according to the Santam Way and
Santam continues to make progress along the
path of transforming the people context of our business as well as
the Santam brand. The company maintained the status as a level 3
contributor in terms of the BBBEE scorecard (still to be formally
verified for 2011). The refreshment of the Santam brand was a huge
success. Our opportunity remains to engage our staff to higher
levels of success, to keep attracting the best skills and resources
to our brand, while at the same time harnessing and increasing our
diversity. I firmly believe that diversity is a strength that will
benefit Santam in the business challenges it has to address.
Santam has its own, distinct personality.
Although many of the people working for Santam are extremely
capable individuals and often the best in their fields, they are
also ordinary men and women. They are the kind of people who make a
tremendous impact without standing "on top of a mountain". Our
people are one of our primary strengths and one of the reasons why
I believe that we are a unique company in the South African
The overall Santam identity, culture and
relationships have been sculpted over 93 years. This was reviewed
in 2011 and refocused towards service, delivery and a continued
investment of energy in and commitment to Santam's core business in
The new brand positioning - "Insurance, good
and proper" - is being implemented not only internally, but also
throughout our intermediary network, a core asset for the company.
We are also proud of the Santam black intermediary development
initiative (SBIDI) launched in 2008 that has as its main objective
the active development of black intermediaries. The initiative
takes promising black graduates (we have trained 112 graduates
since) and gives them the training they need to become successful
short-term insurance professionals. The programme is endorsed by
the Insurance Sector Education and Training Authority (INSETA).
The company has quickly come to terms with the
increased requirements for transparency in its stakeholder
reporting; a painless process - attesting to the values already
entrenched in the Santam culture.
The call for more accountability, transparency
and information relevant to all stakeholders by King III and the
new Companies Act has been fully embraced by Santam's board and
Integrated reporting has improved our awareness
of the opportunities for stakeholder engagement that could benefit
the business and contribute to sustainability. For example, we took
a keen interest in the developments and outcomes of COP17 from both
a sustainability and systemic risk point of view. I believe that
COP17 raised the awareness of risks that we are facing as a nation.
For the insurance industry in particular, it highlighted the need
to develop tools to improve our capacity to predict and manage
natural disasters. The fact that a diverse group of countries could
commit to a common vision is a valuable inspiration for business to
collectively approach environmental and social issues in our
Santam's current initiatives in this regard are
covered in detail in our Sustainability Report.
Over the years Santam has received widespread
acknowledgement from various sectors and on many platforms. We do
not chase awards, but we appreciate the way in which the
recognition of our employees and our work contributes to the
reputation and positioning of the Santam brand in the mind of the
Following on the accolades that Santam received
in 2010, the company has once again excelled and demonstrated
leadership in a number of areas as reported on in detail in our
Although Santam also has a number of programmes
through which it recognises its own people, especially in terms of
living the company's values, I want to personally congratulate our
employees, intermediaries and business partners for their
achievements in the past year.
LEADERSHIP AND THANKS
I wish the world was still as simple as when we could
predict with some degree of certainty what was going to happen in
the next 12 months…
The board recognises that the insurance
industry offers one of the clearest demonstrations that
non-financial sustainability issues do not stand apart from
business issues - and that the world is faced with great
uncertainty in both these areas. As a board, we need to ensure that
we have the expertise and diversity to oversee the entire spectrum
of risks, challenges and opportunities facing the company.
During the year, the board saw a number of
changes in its composition. Messrs J le Roux, G Rudman and P
Rademeyer retired from the board during June 2011, whilst Mr D
Gihwala and Dr N Magau resigned during September and November
respectively. Mr M Fandeso, Ms M Marole and Ms Y Ramiah
were appointed to the board during 2011.
To the outgoing directors, I wish to express my
deep appreciation for their valuable contribution during their
tenure and wish them well for the future. I also bid the new board
members a warm welcome and look forward to their contribution to
the Santam board.
It has been a privilege to work with a strong
board that has an effective committee structure to support the
board's role. I appreciate the support of my fellow directors
during the year and the commitment of management and staff.
The new board has a challenging year ahead. Over the past
five years we have consistently aimed for shareholder returns to
outperform the cost of capital by some margin and thereby
continuously enhance shareholder value.
However, we are also realistic about the fact
that the global economic turbulence will continue, that increased
inflation in our own market is a risk and that a European solution
is critical to ensure a revival in our operating environment. We
are facing 2012 with both caution and confidence.
The South African political landscape will be
one of the important influencing factors for business in the new
financial year. We believe and we trust that healthy debate and the
maturity of our democracy will enable us to address potential
changes while remaining steadfastly on the path of sound economic
Santam is certain of where it is going, but as
a nation we need a similar collective vision. Let us hope that 2012
will bring us this common purpose and commitment.
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