SA’s largest general insurer, Santam, has advised shareholders to expect bumper profit when it publishes its financial statements for the year to end-December next month.
The company on Tuesday said headline earnings per share (Heps), a core measure of profit, are expected to increase by as much as 60% compared to 2023.
Majority owned by Sanlam, it said it expected earnings per share (EPS) to be up by as much as 20% year on year.
“The increase in Heps and EPS is attributable to improved underwriting results for conventional insurance business and earnings growth at the alternative risk transfer businesses,” Santam said.
“The 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,” it said.
The company added that the muted growth in EPS is due to the R70m one-off gain realised in 2023 on the disposal of the company’s stake in SAN JV.
“This one-off gain was included in EPS but excluded from Heps in line with the requirements for the calculation of these metrics,” it said.
SAN JV houses Sanlam’s general insurance business in markets outside SA, including the rest of Africa and India. The deal followed the tie-up last year between Sanlam and Allianz, Europe’s biggest insurer. The new entity, SanlamAllianz, operates in 27 countries in Africa, excluding SA where Sanlam continues to operate as a stand-alone business.
The joint venture has a combined group equity value of about R35bn. Sanlam has a 60% stake in the joint venture, and Allianz 40%.
Santam reported a 35% rise in 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%.
The group paid gross claims of R14.2bn in the six months ended June 2024.
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.
In its interim results the company said management actions implemented to date, which the group continues to roll out, will create positive momentum into the second half, confidence backed up by Tuesday’s upbeat trading update.
Santam shares were 2.98% at R390 shortly before the close of trade on the JSE.
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