Covid-19 impacts Santam group 2020 performance

3 min read 04 March 2021

Key highlights of santam’s results to 31 December 2020:

Santam, South Africa’s largest short-term insurer, today reported acceptable operating results for 2020 under very difficult economic circumstances, despite the negative impact of COVID-19. The group’s conventional insurance book achieved Gross Written Premium (GWP) growth of 5% (2019: 7%) and a net underwriting margin of 2.5% (2019: 7.7%), below the group’s target range of 4% to 8%.

Headline earnings decreased by 47% to 1 100 cps compared to 2 069 cps in 2019. Lower operating results and reduced investment income attributable to shareholders contributed to the decrease.

Lizé Lambrechts, the Santam Group CEO, said Contingent Business interruption (CBI) claims following the national lockdown impacted the company’s operational performance.  

“Our employees and business partners have continued to deliver top-class client service amid unprecedented adaptations required in both their working environments and personal circumstances. These results reflect the ability of Santam to manage significant external challenges in a considered manner that draws on the depth of our resources, skills and experience,” Lambrechts said.

Net investment income attributable to shareholders, inclusive of the investment return on insurance funds, amounted to R1 027 million (2019: R1 396 million). The lower interest rate environment and fair value losses on financial assets were key contributors to the weaker performance.


Conventional insurance reported growth of 5%, despite the severely constrained economic climate.

The Santam Commercial and Personal intermediated business reported marginally negative growth for the period following lower new business acquisition, exacerbated by the impact of COVID-19, as well as premium support provided to ease financial pressure on policyholders during the period of a hard lockdown. Total premium relief of R310 million was provided to motor policyholders in recognition of reduced travelling during the lockdown period. Business retention rates were better than expected in the difficult economic environment.

The Santam Specialist business experienced continued strong growth in the corporate property, crop and engineering businesses. In contrast, the growth in the travel insurance, aviation, transport and marine businesses was negatively impacted by COVID-19.

MiWay achieved excellent growth of 7% in the current operating environment, despite R40 million of premium relief provided to policyholders. Santam Re achieved strong growth in its third-party business, positively impacted by the weak rand.

Gross written premiums from outside South Africa, written on the Santam Ltd and Santam Namibia Ltd licences grew by 28% to R4 963 million (2019: R3 866 million). Strong growth was achieved by the Santam Specialist Business (corporate property and engineering) and Santam Re in Africa, Southeast Asia, India and the Middle East. The specialist Pan-African insurance business with Saham contributed gross written premium of more than R200 million. Weak economic conditions and COVID-19 negatively impacted Santam Namibia’s performance.

The property class reported growth of 8% on the back of strong growth in the specialist property business off-set partly by lower growth through the intermediated channel.

The motor class reported gross written premiums in line with 2019, despite premium relief support to policyholders during the lockdown in April and May 2020. The excellent growth achieved by MiWay and Santam Re, was offset by a contraction of the motor business written by the Santam Commercial and Personal business. New motor products were introduced by Santam and MiWay to recognise reduced driving patterns.


The loss ratio was adversely impacted by provisions for CBI claims, partly offset by a benign claims’ environment, with limited natural catastrophes and lower claims frequencies experienced over several insurance classes following the impact of the COVID-19 lockdown in South Africa.

Santam announced in January 2021 that it will commence the process of assessing and settling valid claims for policies with CBI extensions after obtaining legal certainty on the insured peril for policies with contingent business interruption cover.

The Santam Group settled R21.1 billion in gross claims for 2020 (2019: R18.9 billion).  

The motor class reported strong underwriting performance in the intermediated and direct distribution channels. The motor loss ratio benefited from a benign claims environment with the hard lockdown reducing claims activity in April and May 2020. Following the relaxing of lockdown regulations from 1 June 2020, the claims frequency started to increase, but remained below expected levels for most of the year, returning to normal in November and December 2020 when lockdown restrictions were reduced.

The property class also benefited from the benign claims environment during 2020. This was, however, offset by the CBI claims resulting in a loss of R2 410 million (2019: profit of R212 million). 


The ART business reported operating results of R165 million (2019: R171 million). Income from clients increased to R385 million (2019: R331 million), supported by satisfactory fee income growth in Centriq and improved investment margins achieved. Underwriting results were negatively impacted by COVID-19 related claims.


The group economic capital requirement at 31 December 2020, based on Santam’s internal model, amounted to R7.4 billion (2019: R7.3 billion). This equates to an economic capital coverage ratio of 161%, slightly above the midpoint of the capital target range of 150% to 170%. 


Lambrechts said that trading conditions remain very competitive in a constrained economic growth environment. She added that Santam expects economic activity will, in the short to medium term, be significantly under pressure.

Investment markets are likely to remain uncertain and volatile. The lower interest rate environment will negatively impact investment performance while the non-rand-denominated investments increase foreign currency volatility for the group.

“Despite these economic challenges, we are forging ahead with our FutureFit strategy, having completed the reassessment of its appropriateness during the first half of 2020. Extending Santam’s leadership position in South Africa and building a specialist Pan-African insurance business with Sanlam Emerging Markets remain our priorities. We will continue to focus on improving service to clients and intermediaries, to enable the delivery of our brand promise, Insurance Good and Proper,” said Lambrechts.

No final dividend was declared (2019: 718 cps).