Santam lifted its final dividend 7% to 905 cents in the year to December 31 after insurance revenue increased 9% and higher interest rates helped investment returns.
Basic earnings a share were up 65% to 2 973c and headline earnings a share increased by 27% to 2 310c.
Chief risk officer Charisse Ras said yesterday that the conventional insurance net underwriting margin fell to 3.5% from 5.1% after being impacted by floods in the Western Cape, hailstorms in Gauteng, the earthquake in Türkiye, and fires throughout the country, which negatively impacted the profitability of the property class of business.
She said in an online interview there were fewer fires than the year before but the value of them was higher, while the R150m exposure in Türkiye was through Santam’s reinsurance business.
She said in 2023 their insurance book was impacted by smaller weather-related events, in 2022 it had been the large floods in KwaZulu-Natal, there were few natural catastrophes in 2021, while in 2020 the group was mainly impacted by commercial claims arising from the Covid pandemic.
CEO Tavaziva Madzinga said they were pleased with the rise in net income for the year and he was optimistic that the measures they had in place to better manage risk exposures would result in a good result in 2024.
For instance, measures the companyy had introduced in the motor insurance business had resulted in more vehicles being recovered and fewer claims.
He said this was in spite of the tough macroeconomic environment that was making insurance cost and premium increases difficult for consumers to absorb. He said the group was also mindful of its own costs, and this had contributed to the group staff numbers staying flat at around 6 000, through the year.
Santam’s earnings from investment returns increased 91% over a year before, while net insurance earnings were up 3%, leading to total earnings from the conventional insurance business increasing by 25% to R2.91 billion.
“We have a solid legacy and a consistent, proven record of sustainable value creation. Net income increased by 64% with a return on capital of 28.5%,” the group directors said in a statement.
Santam Broker Solutions and Santam Client Solutions were most significantly impacted by the weather-related claims. This was offset by an exceptional underwriting result from Santam Specialist Solutions, where most lines of business experienced a lower frequency of large claims compared to 2022.
The launch of new business through the MTN partnership resulted in a substantial increase in Partner Solutions’ contribution from a low base. Some 151 339 policies, well in excess of initial expectations, had been sold since launch in April 2023 at attractive underwriting margins.
MiWay reported an underwriting profit of R168 million (R254m). Underwriting actions showed positive results, but were offset by investments into strategic initiatives.
The Alternative Risk Transfer (ART) insurance business, consisting of Santam Structured Insurance and Centriq, reported R516m (R368m) profit due to growth in operating earnings as well as investment return.
The investments in India and Malaysia grew revenues by 31%. The Indian business was the main contributor with strong growth across all distribution channels.
Madzinga said in 2023, a new operating model and refreshed strategy had been introduced. Good progress had been made towards 2030 targets and they remained confident in the ability to deliver superior shareholder returns.
BUSINESS REPORT