Santam offices. File Image: IOL
Santam offices. File Image: IOL
JOHANNESBURG - South Africa's largest general insurer Santam paid out R19billion in claims last year compared with R16bn in 2016.

The company, which celebrates its 100th anniversary this year, paid R823million in claims for the Knysna fires and a further R1.1bn for floods and hailstorms in Durban and Gauteng.

Santam said the payouts, however, did not dampen its performance for the year to December, recording a double-digit gross written premium (GWP) growth of 15percent and a net underwriting margin of 6percent, which is within the target range of 4 to 8percent.

The company said the results demonstrated resilience during what was “a tough year as a result of the strong performance by the motor, crop and engineering businesses, as well as good growth from the international business”.

It said it improved its performance in a number of areas, including the surge of GWPs to R29.7bn from R25.9bn gained during the 2016 financial year.

GWPs are the total revenue from a contract expected to be received by an insurer before deductions for reinsurance or ceding commissions.

International diversification continued to show positive results as Santam’s portion of the GWP from the Sanlam Emerging Markets general insurance businesses increased to R2.4bn from R1.9bn in 2016.

Investment income, inclusive of fair value movements on assets and liabilities grew 65percent to R1.4bn from R832m in 2016 on the back of positive fair value adjustments and foreign currency gains on the winding up of Santam International.

Santam chief executive Lizé Lambrechts said: “Trading conditions remain very competitive in a low-growth economic environment, which translates into the limited growth of insurable assets for the insurance industry. Despite this, we are hopeful that new political leadership in South Africa will enable an environment in which economic stagnation is arrested, and in time, turned around.”

Also read: The people have spoken and Absa listened

Underwriting result

MiWay, Santam’s wholly-owned subsidiary, contributed an underwriting result of R317m from R178m in 2016. The business also reported a 10percent increase in its GWP to R2.3bn compared with R2.1bn in 2016.

Headline earnings a share increased by 31percent to 1425cents from 1086c in 2016.

The crop business achieved a solid net underwriting profit of R114m from R69m in 2016. The motor and property classes of business reported strong premium growth of 10 percent and 13percent, respectively.

Chief financial officer Hennie Nel said Santam was concentrating on innovation in new product development and distribution channels.

“We also want to grow profitability in South Africa and increase international diversification through Santam Specialist Business and Santam Re. In terms of economic transformation, we continue to focus on supplier development,” said Nel.

Santam shares rose 1.82percent on the JSE yesterday to close at R312.60.