Santam shoots the lights out

Santam’s interim results revealed a strong performance for the insurer, which saw its income climb by over 30%.

Santam released its results for the six months through June 2024, which showed a solid performance.

The company’s net income increased by 34% to R1.72 billion, supported by a 29% increase in the earnings from conventional insurance and a 63% rise in alternative risk transfer (ART) earnings.

Santam’s underwriting profit increased by 82% at a margin of 6.5% for 2024, well within its 5% – 10% target range, albeit still below the mid-point. This compares to a margin of 3.8% in 2023.

The insurer explained that inclement weather conditions across the Western Cape, Eastern Cape and KwaZulu-Natal resulted in three catastrophe events with total losses of R607 million incurred net of reinsurance. 

This compares to weather-related catastrophe losses of R150 million in 2023. Other significant losses amounted to R98 million, declining from R358 million in 2023.

However, Santam said the underwriting actions implemented at Broker Solutions and Client Solutions significantly improved the risk profile and rating strength of the group’s in-force book.

This created positive earnings momentum, which, together with favourable attritional loss experience, more than offset the R197 million increase in weather-related catastrophes and other significant losses within these business units.

Santam’s headline earnings per share grew from 1,170 cents in 2023 to 1,578 cents per share in 2024.

The insurer said all of its business units delivered underwriting margins in excess of 2023, except for Specialist Solutions, which declined slightly from a high comparative base. 

It said Broker Solutions and Client Solutions continued to strengthen premium rates. 

However, the persistent underperformance of the property class necessitated higher-than-inflation premium increases as part of the package of underwriting actions. 

Motor premium increases were moderated given the improved performance of this book but are closely monitored to ensure that the insurer keeps track of claims inflation.

Partner Solutions also grew strongly from a low base, supported by the transfer of the MTN in-force book to the Santam licence in the first quarter of 2024.

MiWay’s new inbound and tied agency strategies also benefitted business insurance, with growth exceeding 30%.

Personal lines business performed below expectations but improved on the growth achieved in the first half of 2023. Overall, growth at 7% is a pleasing improvement on the 4% achieved in the first half of 2023.

Specialist Solutions experienced a marginal decline in business volumes. 

Santam’s casualty business was negatively affected by aggressive competitor pricing and business being placed directly in the global market. 

The insurer said protecting its profitability is paramount, and it was not prepared to follow the market’s pricing levels.

Engineering had a slower first half in 2024, which is not unusual given the uneven nature of this line of business, which is susceptible to timing differences. 

Santam’s crop business experienced lower volumes due to adverse planting conditions. 

Santam Re also achieved double-digit growth following the cancellation of underperforming businesses in 2023. 

“The portfolio has been successfully restructured and is expected to improve profitability, as evidenced in the first half of 2024,” the insurer said.

Given Santam’s sound solvency position as of 30 June 2024, its board approved an interim ordinary dividend of 535 cents per ordinary share in respect of the first half of the 2024 financial year.

This is an increase of 8.1% on the interim dividend of 495 cents declared in the 2023 financial year.