Santam bests low growth climate

Johannesburg – Santam, South Africa’s largest general insurer, managed to grow its headline earnings a share by 28 percent in a “relatively benign claims environment”, despite the low-growth economic environment.

The share price gained 7.38 percent to close at R211.54 on the JSE yesterday. Headline earnings a share increased to R18.44 in the year to December from R14.46 a year ago.

Read: Santam sees 12% profit rise

Chief executive Lizé Lamprechts said the slowdown in the economy had affected Santam’s growth. “We have managed to grow our business because we got the basics right,” Lamprechts said.

Santam reported a gross written premium growth of 8 percent (excluding cell captive insurance business), 4 percent lower than the 12 percent achieved by the company in 2014. A cell captive arrangement is where a company chooses to self-insure by owning a class of a special-purpose vehicle insurance company.

Santam also reported a net underwriting margin of 9.6 percent. It said the solvency margin of 48.1 percent was higher than the target range of 35 percent to 45 percent.

Hennie Nel, the company’s chief financial officer, said the depreciation of the rand against the dollar in 2015 had allowed significant foreign currency gains of R362 millions compared with R71m in 2014. “We keep some dollars in our balance sheet and when the rand depreciates against the dollar it reflects positively for us,” he said.

The company raised its dividend by 10 percent to R5.28 a share. MiWay achieved a gross written premium of 19 percent to R1.8 billion.

“MiWay has increased tremendously and has added new customers to the book and the growth we have seen reflects that,” Nel said.

In December Santam sold 76 percent of its shareholding in Indwe Broker Holdings Group for R208m to African Rainbow Capital, a wholly-owned subsidiary of Ubuntu-Botho Investments (51 percent) and Sanlam (25 percent), realising a profit of R15m. Santam retained the remaining 24 percent interest in Indwe.

The transaction will establish Indwe as a leading black-owned insurance transaction brokerage firm in South Africa with direct ties to Santam and Sanlam.

Santam’s focus on international diversification gained momentum with gross written premium from the rest of Africa – excluding Namibia, India, south-east Asia and China of R1.4bn (2014: R1.1bn).