DURBAN – Santam, South Africa’s largest short-term insurer, today reported a double-digit decline in earnings for the six months to end June, negatively impacted by lower operating results and reduced investment income attributable to shareholders.
As a result, headline earnings per share (Heps) declined by 33 percent to 663 cents a share, down from last year’s 990c.
Santam was further impacted by an already weak operating environment in South Africa which has deteriorated substantially since February as the government implemented strict measures to control the spread of Covid-19, resulting in a significant slowdown in economic activity.
The group reported gross written premium (GWP) on conventional insurance growth of 4 percent to R14.8 billion, with conventional insurance net underwriting margin of 4.3 percent.
The group said the underwriting margin was at the lower end of its target range and was impacted by a provision of R1.3bn for contingent business interruption claims.
Chief executive Lizé Lambrechts said these conditions continue to impact on the group’s results in 2020.
“Although we experienced a relatively subdued claims environment during the first three months of 2020, the second quarter was significantly impacted by the effects of the national lockdown and the resultant Covid-19-related claims for events cancellation, travel insurance and contingent business interruption cover,” she said.
The group did not declare an interim dividend, given the current uncertainty around the eventual outcome of Covid-19-related claims.
Looking ahead, Lambrechts said the economic activity will, in the medium-term, be significantly constrained by weak consumer spending due to the impact of Covid-19 as well as the likelihood of further load shedding.
“Following the outbreak of Covid-19, we have reassessed our FutureFit strategy and remain assured that it provides the building blocks for success. Building technology as an enabler and driver of efficiency and innovation, is a core pillar of our future strategy,” Lambrechts said.
She added that the group’s focus during 2020 will remain on achieving profitable growth and taking advantage of opportunities presented by the current operating environment.
“We will focus on continued operational effectiveness, tight cost management and customer service,“ Lambrechts said.
BUSINESS REPORT ONLINE