Santam says earnings were dented by a swathe of catastrophes

Santam says half-year earnings were dented by a plethora of catastrophes in the first half of 2019, which resulted in higher claims than the prior year.

“The first six months of 2019 were characterised by a number of significant catastrophe events, including fires in the Betty’s Bay area in January, hail damage in Newcastle in March, and the storm and flood damage in KwaZulu-Natal during April,” the insurer said.

This resulted in “an overall net impact” of R221m from catastrophes, compared to R69m a year before.

Furthermore, Santam said the crop-insurance business was hurt by “significant hail-related claims” that resulted in a net underwriting loss of R88m. The group reported a net underwriting margin of 5.3% for the six-month period, from 8.4% a year before.

“The Santam group reported solid operational results for the six months to June 2019 in a more normalised claims environment compared to the low level of claims incurred in 2018,” the company said.

Headline earnings per share fell 3% because of “the lower underwriting result” and the numbers coming off a high base from 2018.

The group raised its interim dividend 8% to 392c a share.

“Trading conditions remain very competitive in a low-growth SA economic environment, where limited growth of insurable assets for the insurance industry is experienced,” Santam said.

“Our focus during the second half of 2019 will remain on achieving profitable growth and taking appropriate underwriting actions to manage the risk associated with weak economic conditions.”

The company said it is “making good progress” in establishing a platform for Santam and Saham Finances to become “the leading pan-African specialist insurance provider, with significant growth potential”.

But it warned that the lower interest-rate environment will weigh on investment performances, while non-rand-denominated investments increase foreign-exchange volatility for the group.

hedleyn@businesslive.co.za