DURBAN – A lack of catastrophic events leading to huge claims in the six months to end June gave insurer Santam some breathing room in contrast to trouble-ridden 2017, despite the weak economy.
Santam declared an interim dividend of 363 cents a share, up by 8 percent.
Last year the group was hit by R800 million claims as a result of severe Knysna fires and storms in Cape Town and surrounding areas.
The absence of these big claims made it possible for the group to report a 13 percent increase in gross written premium (GWP) to R15.6 billion, with the group’s conventional insurance book achieving GWP growth of 9 percent and a net underwriting margin of
8.4 percent, doubling from last year’s 4.2 percent margin.
Santam said the 8.4 percent net underwriting margin exceeded its target range of 4 to 8 percent.
Chief executive Lizé Lambrechts said yesterday that trading was very competitive in the current economic climate. “In the first quarter of 2018, the GDP contracted and the South African Reserve Bank reduced its growth forecast.
With unemployment approaching a record high and inflation hitting consumer spending hard, we are satisfied with our growth and excellent underwriting results,” Lambrechts said.
Santam, South Africa’s largest general insurer, said its subsidiary MiWay slowed down during the period.
MiWay reported a 6 percent premium growth and a claims ratio of 55.7 percent, with GWP of R1.22bn and underwriting profits of R159m, down R179m as compared to last year.
“MiWay did not perform as much as we would have liked. The business was exposed to the weak economy in the country, and we have seen people cancelling business, because of the economically strained consumers,” Lambrechts said.
The group said trading conditions would remain competitive for the rest of the financial year, and its aim would be to grow profitably in South Africa and to increase its international diversification through the Santam Specialist Business and Santam re.
“The focus will remain on appropriate underwriting actions to manage the risk associated with weak economic conditions, also taking the increased reinsurance rates into account,” Lambrechts said.
Santam shares ended the day 0.34 percent lower on the JSE at R300 on Thursday.