Santam is rocking

Santam expects its half-year earnings to grow significantly due to improved underwriting results and a boost from its alternative risk transfer businesses.

In a SENS announcement released this afternoon, Santam informed shareholders that it is compiling its interim financial results for the six months through June 2024 and expects a significant boost in earnings for the period.

The insurer said it expects its headline earnings per share (HEPS) and earnings per share (EPS) to fall within the following ranges:

“The increase in HEPS and EPS is attributable to improved underwriting results for conventional insurance business as well as earnings growth at the alternative risk transfer businesses,” the company explained.

Santam’s net underwriting margin for conventional insurance business is expected to be within the long-term target range of 5% to 10% of net earned premiums despite significant weather-related catastrophes and other large losses.

The company also said it expects “satisfactory” gross written premium growth.

The company added that its economic capital solvency position is expected to be well within the target range of 145% to 165%.

Santam will release its reviewed results for the six months ended 30 June 2024 on or about 29 August 2024.

These expected results mark a continuation of a strong financial trajectory for the insurer.

In its full-year results for the 2023 financial year, Santam reported strong results, maintaining its market share and growing revenue and earnings substantially. 

Santam reported a 9% growth in its group insurance revenue to R46.88 billion for the year through December 2023. 

Basic earnings per share shot up 65% to R2.97 per share, while headline earnings were up a more modest 27% to R2.31 per share. 

“This is despite the overall operating environment, with headwinds within the insurance industry,” Santam Group CEO Tavaziva Madzinga said. 

“Weak economic growth in South Africa, our largest market, and elevated levels of inflation and interest rates dented any prospects of a meaningful improvement in consumer disposable income.” 

However, he remained cautious regarding the increased cost of reinsurance in South Africa among elevated claims due to severe weather events. 

In 2024, the insurer will focus particularly on fires, looking at how to better prevent and mitigate this hazard.

Economic growth and employment levels are also major concerns for Santam in South Africa. Moreover, it said the impact of load-shedding and transport constraints places severe pressure on economic activity and investor confidence. 

Santam is currently undergoing a transformation through its FutureFit2030 strategy, where it aims to streamline its business and diversify its client base. 

As part of this strategy, unprofitable businesses of more than R1 billion were not renewed during the year.