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Key highlights of Santam’s results to 31 December 2017:
Santam, South Africa’s largest general insurer, today reported solid underwriting results and strong growth for the year ended 31 December 2017. Within the context of a tough trading environment for short-term insurers, the group reported excellent double-digit gross written premium growth of 15% and a solid net underwriting margin of 6.0%, which is well within the target range of 4% to 8%.
The results followed a year impacted by major disasters which included the devastating Knysna fires, floods in Durban and hailstorms in Gauteng. As a consequence of these and other claims events, Santam paid out R19 billion (2016: R16 billion) in claims during the year under review, with R823 million paid out in claims for the Knysna fires. The total claims paid relating to the Durban and Gauteng disasters amounted to R1.1 billion.
“The Knysna fires were one of the worst disasters in South Africa in more than a century. This, coupled with the devastation wreaked by severe weather in Durban and Gauteng, tough economic conditions and a surge in claims, made for a very difficult year. In the face of all these challenges, our business proved its resilience and ability to maintain growth, living up to our brand promise of delivering insurance good and proper”, said Lizé Lambrechts, Santam CEO.
In spite of the tough conditions that prevailed during the period, Santam reported improved performance in a number of areas when compared to the 2016 financial year. These included Gross Written Premiums (GWP) of R29.7 billion (2016: R25.9 billion) for the group.
International diversification continued to show positive results for the Company as Santam’s portion of the GWP from the Sanlam Emerging Markets (SEM) general insurance businesses increased to R2.4 billion (2016: R1.9 billion). Investment income, inclusive of fair value movements on assets and liabilities grew by 65% to R1 374 million (2016: R832 million) on the back of positive fair value adjustments and foreign currency gains on the winding up of Santam International.
Santam, which is celebrating its 100-year anniversary in 2018, also expanded its offering with the acquisition of RMB SI, which is now known as Santam Structured Insurance. This has solidified Santam’s position as the market leader in the short-term insurance sector.
MiWay, Santam’s wholly-owned subsidiary reported excellent results, contributing an underwriting result of R317 million (2016: R178 million). The business also reported a 10% increase in its GWP to R2.3 billion (2016: R2.1 billion).
Headline earnings per share increased by 31% to 1 425 cents (2016: 1 086 cents).
The crop business achieved a solid net underwriting profit of R114 million (2016: R69 million). The motor and property classes of business reported strong premium growth of 10% and 13%, respectively. This was mainly due to significant organic growth in the personal and commercial lines portfolios, and an acquisition of a new block of commercial business.
Santam also continued to focus on playing a meaningful role as an active corporate citizen. The Company’s flagship Partnership for Risk and Resilience (P4RR) programme continued to grow and is expected to impact on more than five million South Africans across 10 district and 53 local municipalities by 2020. The P4RR initiative focuses on mitigating against fire and flood risks in historically disadvantaged communities. Through the Emthunzini Trust, fire-fighting equipment, training and more than 5 000 smoke alarms were donated to such communities.
To further support development efforts, the company continued investing towards consumer financial education during 2017. Through the ASISA Growth Fund, Santam has also provided access to grant loan funding for targeted suppliers.
“Trading conditions remain very competitive in a low-growth economic environment, which translates into the limited growth of insurable assets for the insurance industry. Despite this, we are hopeful that new political leadership in South Africa will enable an environment in which economic stagnation is arrested, and in time, turned around,” said Lambrechts.
“An economic rebound will not only enhance growth prospects, but also potentially reduce levels of crime, arson, and fraud – all of which have put pressure on claims costs in recent years,” she added.
The Board of Directors declared a final dividend per share of 616c (2016: 570c), which is an 8% increase on the previous year.
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