Operational update to shareholders following the annual general meeting held on 31 May 2017

This serves as a general communication to Santam shareholders with regards to the business environment for the four month period ended 30 April 2017.

The Group achieved acceptable underwriting results in a tough economic climate and a deteriorating claims environment. Growth in gross written premium was satisfactory given the impact of competitive market conditions and low economic growth. The Group achieved a net underwriting margin within the target range of 4% to 8%, but below the midpoint.

The Santam Commercial and Personal intermediated business reported strong growth; however the underwriting results were under pressure following significant fire related losses in the Western Cape during January 2017 and an increase in the frequency of claims. The Santam Specialist business experienced very competitive trading conditions and the underwriting results were negatively impacted by a number of large corporate property claims. The other specialist insurance classes achieved solid results, with the Crop business in particular benefiting from benign weather conditions and much better rainfall in summer rainfall regions of South Africa. MiWay reported excellent underwriting results whilst maintaining a good growth momentum. Santam Re contributed acceptable underwriting results.

The investment results were positively impacted by the good performance of both the listed equity and active income portfolios. Foreign currency exchange differences had a minimal impact during the period. The return on insurance funds was in line with the returns achieved during 2016. The strategic investment in Saham Finances, the major new acquisition concluded during 2016, made a satisfactory contribution to equity accounted earnings. The operational performance of Saham Finances remained in line with the business plan.

The transaction to acquire 100% of RMB-SI Investments, a structured insurance business previously owned by Rand Merchant Investment Holdings, announced in August 2016, became effective in March 2017.

The interim results for the six month period ending 30 June 2017 will be published on SENS on or about 31 August 2017.