Santam posts solid performance for first half of 2023

3 min read 31 August 2023

Key highlights of results:

Santam, South Africa’s largest short-term insurer, recorded an overall solid financial performance for the six months to 30 June 2023, with the group’s conventional insurance business achieving Gross Written Premium (GWP) growth of 7% and a net underwriting margin of 3.8% (June 2022: 3.0%).

Excluding large one-off items, an underwriting margin of 7.5% was achieved, well above the comparable 5.6% for the first six-month period in 2022. For the period under review, investment market conditions were more favourable than the first half of 2022, which together with an outperformance of benchmarks, contributed to a return on insurance funds of 2.2% of net earned premiums (June 2022: 0.2%).

The Alternative Risk Transfer (ART) business also reported excellent earnings of R200 million (June 2022: R117 million). This was due to good growth across all main income lines (fee income, investment margin and underwriting margins), reflecting an increase in business under administration and improved investment return earned on assets under management.

The group achieved an annualised return on capital (ROC) of 24%, in line with its hurdle rate.

“The group’s diversification across market segments, insurance classes and geographical reach stood us well in the first six months to 30 June 2023. Together with our industry-leading human capital base and the strength of our balance sheet, it provided a solid platform to achieve an overall satisfactory financial performance for the period, despite a challenging operating environment,” said Tavaziva Madzinga, the Santam Group CEO.

He added: “Insurance growth prospects were dampened by a range of factors that included weak economic growth, pressure on personal disposable incomes, rising interest rates, adverse weather conditions and an increasing cost of reinsurance, among others”.

The group responded to these conditions at both a strategic and tactical level. It launched a new multi-channel operating model on 1 January 2023 that has seen the creation of three business units pointedly interacting with direct clients (Santam Client Solutions), brokers (Santam Broker Solutions) and partnerships (Santam Partnership Solutions). Other client-facing businesses are MiWay, Santam Specialist Solutions and Santam Re & International, which continue to provide growth and diversification benefits to the Santam Group.

“Although at an early stage of implementation, the new operating model provided immediate focus that enabled us to weather the challenges and improve on our performance for the comparable period in 2022,” said Madzinga.

Other interventions include the driving of value through better use of data, such as the expansion of a geo-coding initiative, which creates a comprehensive risk-based view of property locations in South Africa. The business has also continued to implement underwriting actions, including enhanced risk assessments in underwriting, changes to excess amounts and enhanced security requirements for high-risk vehicles. These actions have yielded positive results, with a marked turnaround in the profitability of the motor book and a decline in power surge losses.

Conventional insurance: Gross written premium growth

Overall growth of 7% was achieved in GWP. The group cancelled business of R800 million that did not meet its targets, with the focus remaining on profitability instead of chasing top-line growth. Excluding this, strong growth of 12% was achieved.

The Specialist Solutions business achieved particularly strong growth, with the engineering, marine and corporate property insurance businesses as the main contributors.

The Broker Solutions business achieved good overall growth, with double-digit growth being achieved in the Broker Services function and churn remaining within acceptable levels. The Client Solutions unit recorded acceptable growth, albeit lower than expectations. Focus in the first half of the year was on managing the quality of business written.

MiWay achieved subdued growth of 4% during the period. Pressure on disposable income was evident in an increase in rejected debit orders, lower sales volumes and conversions, and a decline in average premiums in the personal lines business. MiWay has been managing these trends actively, with all of the metrics improving in June. Commercial lines and value-added services however achieved strong growth. MiWay has also launched new strategic initiatives, including an inbound sales strategy, which are expected to be catalysts for accelerated growth in the second half of 2023.

The motor class reported GWP growth of 8% excluding the cancellation of unprofitable business, while the property class grew by 7%. The engineering class achieved excellent growth of 20% recovering well from 2022, due to strong growth at Santam Re and new business at Mirabilis from outside South Africa.

Santam’s collaboration with Sanlam Pan-Africa (SPA) across the African continent in specialist business, continues to yield positive results, with GWP growth of 48% to R286 million (June 2022: R193 million), following solid growth achieved during the first half of 2023 in the engineering and marine businesses.

Conventional insurance: underwriting performance

Underwriting profit increased by 34% at a margin of 3.8% for the first half of 2023 compared to 3.0% in 2022. The Broker and Client Solutions businesses were significantly impacted by weather-related attritional losses in the first quarter of 2023, severe flooding in the Western Cape in June and an increase in the frequency and severity of fire claims during the period under review.

This was offset by a strong underwriting result from the Specialist Solutions business, which more than doubled its underwriting margin.

MiWay recorded a loss ratio of 58.8% (June 2022: 61.3%) and an underwriting profit of R123 million (June 2022: R122 million). Underwriting actions, which include claim efficiencies, and adjusted risk covers, are showing positive results.


Santam does not expect operating conditions to improve in the second half of the year. Economic growth and employment levels will remain suppressed in South Africa, given structural limitations, in particular loadshedding and transportation constraints that place severe pressure on economic activity and investor confidence.

High interest rates and inflationary pressures will also continue to impact on disposable income and claims inflation in South Africa. Under these conditions competitive pressures will remain at elevated levels.

Climate change also poses a key challenge to the group, potentially threatening the insurability of a range of risks where losses become increasingly prevalent. In this regard, Santam continues to address the climate-related risks and the implications for the business in line with the Taskforce on Climate-related Financial Disclosure (TCFD) recommendations.

“As Santam we however remain confident in the group’s prospects and the potential to deliver enhanced growth and profitability through a number of strategic initiatives. These among others include continuing the underwriting actions implemented over the past year, successfully embedding the new operating model, extracting value through closer collaboration with the Sanlam group, and solidifying our partnerships strategy,” said Madzinga.

The Board of Directors has declared a gross interim dividend of 495 cents (June 2022: 462.00 cents).