Santam, despite having to deal with storm damage in Cape Town and devastating fires in the southern Cape, achieved some positive milestones this financial period. Photo: Simphiwe Mbokazi/ANA

JOHANNESBURG - JSE-LISTED Santam plans to shift its focus more on the commercial and corporate property classes as the slowdown in the economy hits consumers, who are cutting down spending on new insurable assets.

Santam chief executive Lizé Lambrechts said: “Our underwriting and risk management actions will continue to be focused on the commercial and corporate property classes of business. We are also continuing the optimisation of our non-motor claims channel.” However, the group wants to grow profitability in South Africa and also increase its international diversification through the Santam Specialist Business and Santam Re divisions. In South Africa, Santam was able to settle claims worth R8.8billion for the six months to end June.

The group had to deal with a catastrophe in the Cape with the combination of severe storms in Cape Town and surrounding areas and the devastating fires in the southern Cape in early June resulting in claims of R800m. Despite these unfortunate incidences, the group achieved some positive milestones during the period.

It reported gross written premium growth of 14percent to R13.8bn, while total revenue amounted to R15bn. The company reported lower underwriting results compared with last year, the majority of which could be attributed to disasters and a number of large property claims.

Headline earnings per share declined 6percent to 593cents a share. A conventional insurance net underwriting margin of 4.2percent was achieved, even though it was at the bottom end of its target range of between 4percent and 8percent.

Its subsidiary MiWay had its best six months of trading in the history of its existence, making a strong contribution to the underwriting margin and a 15percent growth in gross written premium up to R1.1bn. Other subsidiaries such as Centriq reported no gross written premium growth due to refunds of risk finance premiums. This was enhanced by the acquisition of the SSI book of business. The ART business reported acceptable operating results before tax of R35m, down from R41m a year ago.

Santam’s share of the gross written premiums of the Sanlam Emerging Markets’ businesses in Africa (excluding South Africa), Malaysia and India, increased 43percent to R1.26bn. Santam’s board declared an interim dividend of 336c a share. Mergence Investment Managers chief investment officer Brad Preston said the gross written premium increase was very strong and ahead of expectations.

“The strong growth in their traditional business suggests that they are winning market share from competitors. “The underwriting margin was at the low end of their long-term range driven by R800m in claims relating to the Cape Town floods and Knysna fires, but this is now a historic number and underwriting margin should normalise in future.

“So all in all a strong number despite missing on the earnings per share line,” Preston said. Santam shares rose 1.57percent to close at R259 yesterday.