Santam has reported a 35% rise in headline earnings per share (HEPS) at the halfway stage of the year, as it made progress with its FutureFit 2030 strategy and diversification across market segments, insurance classes and regions.
SA’s largest short-term insurer reported conventional insurance net earned premium growth of 7% to R15.4bn for the six months ended June at a net underwriting margin of 6.5%, well within the group’s target range of 5%-10%.
Headline earnings per share (HEPS) rose to 1,578c from 1,170c a year ago. An interim dividend of 535c per share was declared.
All its major conventional insurance businesses contributed positively to an overall growth in gross written premiums of 8%, the company said in a statement.
“Underwriting actions at Broker Solutions and Client Solutions, along with portfolio restructuring at Santam Re, improved the group’s risk profile and rating strength of the group’s in-force book,” it said.
“This, combined with favourable attritional loss experience, outweighed the effects of weather-related catastrophes and large losses, creating positive earnings momentum.”
The group paid gross claims of R14.2bn in the period.
The Alternative Risk Transfer insurance business, consisting of Santam Structured Insurance and Centriq, delivered an excellent performance, supported by solid growth across all revenue lines.
International businesses Shriram General Insurance (SGI) in India recorded strong growth from all distribution channels. SGI’s underwriting performance benefited from the book growth and a favourable claims ratio, but it was offset by a lower return on insurance funds, Santam said.
General operating conditions are not expected to improve markedly in the remainder of 2024, the group said.
Investor and business sentiment appears to be positive following the SA elections and an improvement in Eskom’s electricity availability factor. Economic growth and employment levels should benefit over time but are likely to remain subdued in the short term while other structural constraints persist, it added.
The La Niña effect is expected in the third quarter of 2024 and this is anticipated to lead to increased rain alongside the traditional hail season in the fourth quarter. These factors add some volatility to the underlying underwriting margin.
Management actions implemented to date, which Santam continues to roll out, will create positive momentum into the second half, it said.
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