Santam offices. File Image: IOL
JOHANNESBURG – South Africa’s largest general insurer, Santam, on Wednesday flagged that the first four months of 2019 were characterised by a number of significant or catastrophic events that had dented its net underwriting margins.

In an operational update to shareholders following its annual general meeting yesterday, Santam said that events such as the Betty’s Bay area fires in January, hail damage in Newcastle in March and the storm and flood damage in KwaZulu-Natal during April had resulted in the net underwriting margin being slightly below the bottom end of the target range of 4 percent to 8 percent of net earned premiums with the investment return.

The insurer, which is listed on the JSE and on the Namibian Stock Exchange, since February, began trading on A2X Markets in an effort to attract potential new investors.

Yesterday, it warned that significant crop insurance losses were experienced as a result of hail damage.

Santam warned that headline earnings remained susceptible to the inherent volatility of underwriting and investment activities.

Valued at nearly R35 billion, Santam said the Santam Commercial and Personal intermediated business had experienced a strain on growth in the current difficult economic climate.

“The loss ratio increased significantly given the weather and catastrophe-related claims experienced during the period. The net underwriting results excluding the multiple catastrophic events remained in line with expectations.”

The Santam Specialist business experienced strong growth in the corporate property and engineering businesses, with acceptable growth in the other specialist classes.

Santam said that the specialist portfolio achieved “satisfactory underwriting results” with the exception of the marine business, which experienced a number of large claims, and the trade credit business, which incurred higher-than-anticipated loss ratios. Significant hail-related losses impacted the crop business.

However, the group said that the catastrophic events during the period had a limited impact on its subsidiary, MiWay, and the loss ratio and underwriting margin improved even further relative to that of 2018.

“MiWay maintained its strong growth momentum from the second half of 2018,” it said.

Santam’s results for the six months to June were expected to be released on August 29.

Santam shares gained 0.1 percent to close at R302.63 on the JSE on Wednesday.

BUSINESS REPORT