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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Disclaimer

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.