SA’s largest short-term insurer Santam says its headline earnings could triple in its 2021 year, a recovery from a tough 2020, when Covid-19 forced insurers to set aside billions for claims and make provisions for clients who may miss payments.
Santam said on Friday it expects headline earnings per share of R22.46-R27.44 in its year to end-December, from R9.05 previously. This is an up to 203% increase year on year, and up to about a third higher than pre-pandemic levels.
In its 2020 year Santam’s results were affected by provisions for Covid-19 business interruption claims, while it also faced reputational damage as it fought a series of court battles concerning the time period for which it was liable for these claims.
The Supreme Court of Appeal ruled against Santam in October, saying it must pay out contingent business interruption (CBI) claims to applicants Ma-Afrika Hotels and Stellenbosch Kitchen for the full 18-month period covered in their policies.
Santam said on Friday its net underwriting margin is expected to be at the top-end of the long-term target range of 4%-8% of net earned premiums, with this referring to a measure of profit on its policies.
In 2020 conventional insurance reported a net underwriting margin of 2.5% compared with 7.7% in 2019, as business interruption claims and provisions of R3bn weighed.
Conventional insurance premium growth, however, continues to be strained, Santam said.
A weaker rand against most currencies and fair value gains on equities were the main contributors to stronger investment income, the group said on Friday, without further detail.
Santam’s 2021 results are also the last full-year results for CEO Lizé Lambrechts, who will be stepping down at the end of June after more than seven years at the helm.
Lambrechts will be replaced by Tavaziva Madzinga, who joins the group from Nairobi-listed investment firm Britam Holdings, where he was group MD. A qualified actuary, Madzinga’s roughly two decades of experience in the broader financial services industry includes a stint with Old Mutual.
Santam’s shares closed 1.91% higher at R275.01, having fallen 5.21% since the start of 2020, giving the group a market value of R31.66bn.
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