Operational update to securityholders following the Santam board meeting held on 1 December 2021
(Incorporated in the Republic of South Africa)
Registration number: 1918/001680/06
JSE Share Code: SNT & ISIN: ZAE000093779
A2X Share Code: SNT
NSX Share Code: SNM
(“Santam” or the “Company” or the “Group”)
OPERATIONAL UPDATE TO SECURITYHOLDERS FOLLOWING THE SANTAM BOARD MEETING HELD
ON 1 DECEMBER 2021
This is a general communication to Santam shareholders and noteholders (“Security holders”) to
provide a business performance update of the Santam Group for the ten months ended 31 October
Conventional Insurance business
The Conventional Insurance business maintained a net underwriting margin above the midpoint of
the target range of 4% to 8%, despite the impact of several significant claim events since the June
2021 reporting period. Satisfactory premium growth of 6% in gross written premium was achieved.
The judgment by the Supreme Court of Appeal on the length of the indemnity period to be applied
to the Ma-Afrika Hotels (Pty) Ltd and Stellenbosch Kitchen (Pty) Ltd policies with contingent business
interruption (“CBI”) extensions, provided the legal clarity Santam was seeking (please refer to
Santam’s JSE Limited Stock Exchange News Service (“SENS”) announcement “Supreme Court of
Appeal judgment on Ma-Afrika indemnity period” released on 7 October 2021). Santam is making
good progress in finalising the open CBI claims. Gross CBI claim payments of more than R2.7 billion
have been made to the end of October 2021, inclusive of the relief payments of R1 billion made in
August 2020. No adjustment has been made to the net remaining CBI claims provision of R1.7 billion
as at 30 June 2021, other than subsequent payments made.
Following the civil unrest during July 2021 in South Africa, Santam has been actively assisting SASRIA,
the state-owned insurer set up to cover unrest-related claims, to support it with settling claims
brought against SASRIA relating to the destruction of property and looting. Santam Re has a small
participation percentage on the SASRIA reinsurance programme with a maximum net exposure of
R315 million. Based on the reinsurance claims relating to the civil unrest submitted by SASRIA,
Santam Re has raised net claims provisions of R210 million by 31 October 2021. In addition, Santam
has been working with its reinsurers to settle claims on a riot wrap around cover facility for some of
its corporate clients, for which Santam has no net exposure.
The Santam Commercial and Personal intermediated business continues to report low growth in gross
written premiums. However, various growth initiatives are showing positive results, which should
assist growth in future periods. Solid underwriting results were achieved, despite the impact of a large
commercial fire claim and hail events in October 2021.
The Santam Specialist business achieved improved growth in the four months since June 2021. Gross
written premiums compare favourably with that reported for the ten month corresponding
reporting period. Satisfactory growth was achieved for the liability business offset by lower gross
written premiums in the corporate property business, following the decision to cease underwriting
business outside of Africa. The smaller specialist classes reported improved growth, benefitting from
the reduced and less stringent lock-down measures. The Santam Specialist business achieved
improved underwriting results since the June 2021 reporting period, with the corporate property,
engineering and liability businesses all contributing to the improved performance.
MiWay experienced marginally lower growth compared to the June 2021 interim reporting period.
Hail events during October 2021 negatively impacted the underwriting results.
Santam Re continued to report strong gross written premium growth. SASRIA reinsurance claims
relating to the July 2021 civil unrest negatively impacted the Santam Re underwriting results.
The investment return on insurance funds remained in line with the June 2021 performance.
Alternative Risk Transfer (“ART”) business
The ART business segment achieved excellent operating results and reported strong growth in
income from clients, supported by good investment and underwriting results.
Sanlam Emerging Market partner businesses
The Sanlam Pan-Africa General Insurance businesses (“SPA GI”) recorded a net insurance margin of
19,5% driven by higher return on insurance funds and a net underwriting margin within the target
range. The strong return on insurance funds is underpinned by the performance of equity markets in
North and West Africa. SPA GI achieved an increase of 14% in gross written premiums in constant
currency, driven by improved volumes in North and West Africa, partly offset by weaker
performance from the assistance business due to pandemic related travel restrictions.
Shriram General Insurance (“SGI”) recorded negative growth in gross written premiums. The
business was impacted by weaker economic activity, lower sales volumes through the credit
businesses as well as no premium increases in 2020 and 2021 on third-party business respectively, as
set by the regulator. The SGI underwriting margin, which has in the past been boosted by reserve
releases from claims settlement, was weaker over the period. Courts in India, where many claims
resolutions happen, have only opened partially for priority cases, which impacted the ability to
finalise claims. SGI reserves prudently under these uncertain conditions. SGI continued to achieve
good investment returns on insurance funds.
The Santam Group’s portfolio investments achieved satisfactory investment performance since the
June 2021 reporting period. The weakening of the Rand against the US Dollar since 30 June 2021
resulted in foreign currency gains on shareholder investments.
The collar structure over equities to the value of R1 billion, entered into by the Group on 3 May 2021
to provide capital protection, matured on 3 August 2021. The structure was not renewed.
The economic capital coverage ratio of the Santam Group as at 31 October 2021 was close to the
midpoint of the target range of 150% to 170%.
Headline earnings remain susceptible to the inherent volatility of underwriting and investment
The financial information included in this announcement has not been reviewed or reported on by
Santam’s external auditors.
Santam’s results for the year ending 31 December 2021 are expected to be released on SENS on or
about 3 March 2022.
Apppointment of Santam Chief Executive
The Board of Santam is pleased to announce the appointment of Tavaziva (“Tava”) Madzinga to
succeed Lizé Lambrechts as the Santam Group Chief Executive. He will be appointed as an Executive
Director to the Board with effect from 1 April 2022 and Chief Executive with effect from 1 July 2022.
Tava joins Santam from Britam Holdings, a diversified investment business listed on the Nairobi
Securities Exchange, where he was the Group Managing Director (please refer to Santam’s SENS
announcement “Appointment of Santam Chief Executive” released earlier today).
Investor Conference call
A conference call for analysts and investors will take place at 16.00 (South African time) today (1
December 2021). Investors and analysts who wish to participate in the conference call should
register as indicated below:
Please register at: https://www.diamondpass.net/4519030 for the call.
Registered participants will receive their dial-in number upon registration. We advise participants to
register and dial in 5-10 minutes before the commencement of the conference call at 16h00. For
assistance, please contact Gloria Tapon Njamo: Santam Investor Relations at +27 21 915 8228
1 December 2021
Sponsor: Investec Bank Limited
Date: 01-12-2021 02:01:00
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