POWERING RESILIENCE
Santam Group CEO: Tavaziva Madzinga 10 OCTOBER 2023
Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
CONTENTS
- About Santam
- Challenging operating environment
- Recap interim results
- Strategic response
- Sustainability and governance
- Concluding remarks
2
THE SANTAM GROUP IS THE LARGEST SHORT-TERM INSURER IN SOUTH AFRICA, WITH A SOLID LEGACY AND A CONSISTENT PROVEN RECORD OF SUSTAINABLE VALUE CREATION
- Listed on the JSE and subsidiary of the Sanlam Group
- Leading market share exceeding 23% (+R35 billion in GWP)
- A uniquely diversified group
- Product lines
- Geography
- Multi-channeldistribution with over 3 500 intermediaries
- Insures over 1 million policyholders and more than 80 of the top 100 companies listed on the JSE
- Certified as a Top Employer by the Top Employer Institute for the seventh consecutive year
-
Listed on the Top 30 FTSE/JSE Responsible Investment Index and a constituent of the FTSE4Good Index
Series - Relationship with Sanlam Allianz provides growth opportunities in specialist lines across Africa
- Stable dividend policy with ordinary dividend per share at 7% compound annual growth rate
3
AN EVOLVING RISK LANDSCAPE REQUIRES THAT WE PROACTIVELY ENHANCE OUR RISK MITIGATION EFFORTS AND PIVOT TOWARDS GROWTH-ORIENTATED STRATEGIES
Covid-19
pandemic/ Contingent business interruption
Slowing economic growth/ Extraordinary market volatility
Failing
infrastructure/ Loadshedding
4
KZN riots/
Deteriorating
operating
environment
Russia-
Ukraine conflict/ Rising geopolitical tensions
Rate
hardening/ InsureTech competitors
Weather
catastrophes/
Above
avg NatCat
losses
Elevated
inflation/Rising
cost of living
POPIA/
increasing
sustainability and climate disclosures
NATIONAL CATASTROPHES (NATCAT) LOSSES HAVE BEEN ELEVATED OVER THE LAST FEW DECADES DUE TO HIGH LOSS EVENTS SUCH AS STORMS AND FLOODS. THE SIZE AND FREQUENCY OF CATASTROPHE CLAIMS HAVE INCREASED IN SOUTH AFRICA AND AROUND THE WORLD
GLOBAL INSURED LOSSES: ALL PERILS ($ BN) | SANTAM: GROSS TOTAL CATASTROPHE CLAIMS, ALL PERILS (RM) | |
USD bn | R'm | ||||||||||||||
200 | |||||||||||||||
185 | 187 | 6,000 | |||||||||||||
180 | |||||||||||||||
160 | |||||||||||||||
160 | |||||||||||||||
146 | 5,000 | ||||||||||||||
140 | 132 | ||||||||||||||
120 | 120 | 120 | 4,000 | ||||||||||||
101 | |||||||||||||||
100 | |||||||||||||||
77 | 78 | 82 | 72 | 89 | 3,000 | ||||||||||
80 | AVERAGE | ||||||||||||||
70 | |||||||||||||||
60 | 48 | 58 | 53 | 53 | 2,000 | ||||||||||
36 40 | 47 | ||||||||||||||
40 | 31 | ||||||||||||||
26 27 | 1,000 | ||||||||||||||
20 | |||||||||||||||
0 | |||||||||||||||
0 | |||||||||||||||
Fire | Flood | Hail | Earthquake | Other | Infect. Disease | ||||||
2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 1H2023 |
5
FINANCIAL RESULTS - JUNE 2023
Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
DESPITE EXTRAORDINARY CHALLENGES, WE HAVE PROVEN TO BE A RESILIENT BUSINESS WITH ROBUST PERFORMANCE
GROWTH
Conventional insurance GWP growth of 7% (2022: 7%)
GWP grew by 12% (cancelled business excluded)
EARNINGS
Underwriting margin for conventional insurance business of 3.8%
(2022: 3.0%)
Alternative Risk Transfer earnings of R200 million
(2022: R117 million)
Return on Capital 24% (2022:
12%)
FINANCIAL STRENGTH
Group economic capital coverage ratio of 159% (Dec 2022: 156%)
Interim dividend of 495 cps (2022: 462 cps), up 7%
Further announced special dividend of 1780 cps
VALUE DRIVERS
Direct as % of GWP 15% (2022: 19%)
International as % of GWP 17% (2022: 18%)
Policy count: over 1 022 000
Gross claims paid of R14.6 billion
(2022: R14.2 billion)
RESULTS AFFECTED BY:
Negatives: Attritional weather losses, Western Cape floods, Large losses
Positives: Motor, Power surge under control, Specialist performance
7
WE HAVE A SOLID LEGACY AND A CONSISTENT, PROVEN RECORD OF SUSTAINABLE VALUE CREATION
RETURN ON CAPITAL: TOTAL COMPREHENSIVE INCOME EXPRESSED AS % OF
WEIGHTED AVERAGE SHAREHOLDERS' FUNDS
35 | 33.5 | ||||||||||||
28.5 | |||||||||||||
8.9 | 24.0 | ||||||||||||
Percentage | 25 | 21.9 | 22.2 | ||||||||||
18.6 | 6.6 | ||||||||||||
18.5 | 19.1 | ||||||||||||
3.4 | 3.1 | 9.9 | 18.8 | ||||||||||
15 | 11.9 | 5.0 | 12.6 | ||||||||||
24.6 | 8.0 | ||||||||||||
5 | 8.8 | 5.3 | 13.8 | 11.4 | |||||||||
(0.8) | |||||||||||||
( 5) | |||||||||||||
Dec-17 | Dec-18 | Dec-19 | Dec-20 | Dec-21 | Jun-22 | Dec-22 | Jun-23 | ||||||
Insurance ROC | Investment ROC | ||||||||||||
DIVIDEND PER SHARE
share | 2 400 | 2 022 | 2 275 | |||||||||||
2 000 | ||||||||||||||
per | 1 600 | 1 110 | 800 | 1 307 | 1780 | |||||||||
1 028 | ||||||||||||||
1 200 | 952 | |||||||||||||
Cents | 665 | 718 | ||||||||||||
800 | 616 | 790 | 845 | |||||||||||
400 | 392 | 432 | 462 | 495 | ||||||||||
363 | ||||||||||||||
336 | ||||||||||||||
- | ||||||||||||||
2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | ||||||||
8 | Interim | Final | Special | |||||||||||
- We continue to produce a strong return on capital
- We have a stable dividend policy that has enabled an ordinary dividend per share compounded growth of 7% CAGR over the last seven years
- Following the disposal of our stake in SAN JV, we have declared a special dividend of R17.80 per share
GROWTH AND MARGIN REMAIN UNDER PRESSURE IN RECENT TIMES DUE TO A CHANGING RISK LANDSCAPE
GROSS WRITTEN PREMIUM VS CPI + GDP GROWTH
13 | 10.0 | 9.4 | 10.4 | 8.2 9.1 | |||||||||||||||||||
10 | |||||||||||||||||||||||
6.7 | 7.2 | 7.3 | 6.7 | 6.7 | 5.6 | ||||||||||||||||||
Percentage | 7 | 5.4 | 4.3 | 4.6 | 5.3 | ||||||||||||||||||
4 | |||||||||||||||||||||||
1 | |||||||||||||||||||||||
( 2) | |||||||||||||||||||||||
( 5) | (3.7) | ||||||||||||||||||||||
Dec-17 | Dec-18 | Dec-19 | Dec-20 | Dec-21 | Jun-22 | Dec-22 | Jun-23* | ||||||||||||||||
*Year-on-year Q1 2023 GDP of 0.2%, CPI of 5.4% | Growth in GWP | GDP growth + CPI inflation | |||||||||||||||||||||
NET INSURANCE RESULT AS % OF NET EARNED PREMIUM
12.5 | 11.6 | ||||||||||
10.0 | 2.4 | 10.1 | 9.5 | ||||||||
8.8 | |||||||||||
2.4 | |||||||||||
7.5 | 1.5 | ||||||||||
Percentage | 2.8 | 0.2 | 6.5 | 6.0 | |||||||
2.5 | 6.0 | 5.2 | |||||||||
5.0 | 9.2 | 4.6 | 1.3 | 2.2 | |||||||
7.7 | 2.1 | 8.0 | 3.2 | ||||||||
2.5 | 3.0 | 3.8 | |||||||||
- | |||||||||||
Dec-17 | Dec-18 | Dec-19 | Dec-20 | Dec-21 | Jun-22 | Dec-22 | Jun-23 | ||||
9 | Net underwriting result | Investment return on insurance funds | |||||||||
- 12% growth excluding cancelled business
- Excellent contribution from Specialist Solutions
- Engineering, Marine, Property
- Segmented premium increases achieved - double digit growth in Broker Services with persistency remaining within expectations
- MiWay reflects pressure on consumer
- Large losses in both periods
- 2023: Türkiye, run-off losses in Israel, Western Cape floods, fire claims
- CBI reserve release of R155m
- 2022: KZN floods, fire claims
- CBI reserve release of R397m
- Adjusted underwriting margin of 7.5% for 1H23 and 5.6% for 1H22
WE CONTINUE TO BE THE DOMINANT INSURER, WITH A STRONG MARKET SHARE OF MORE THAN 23%. THIS IS SUPPORTED BY OUR DIVERSE PRODUCT LINES
PRIMARY INSURERS: MARKET SHARE BY GWP - 2022
30.0% | |||||||||||
25.0% | 24.7% | ||||||||||
20.0% | |||||||||||
15.0% | |||||||||||
10.0% | 8.4% | 8.1% | 7.1% | ||||||||
5.0% | 4.6% | 4.1% | 3.6% | ||||||||
2.4% | 2.3% | ||||||||||
2.0% | 2.0% | ||||||||||
0.0% | |||||||||||
Santam | A | B | C | D | E | F | G | MiWay | H | I | |
Ltd |
Source: Internal calculations based on the PA's Annual Reports, KPMG
Market share excludes cell captives and reinsurance numbers
SANTAM CONVENTIONAL: GWP PER INSURANCE CLASS - 2022
2%
4%3%
5%
5%
43%
37%
Motor | Property | Engineering |
Liability | Crop | Transportation |
Accident a& Health | Other |
Source: Santam Integrated Annual Report 2022
10
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Santam Limited published this content on 10 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 October 2023 10:41:10 UTC.