The Santam group reported gross written premium growth of 11% in annual results to the end of December 2018.
The group highlighted a 9.2% underwriting margin, which outstripped its target range of 4% to 8%, and a 7% gross written premium growth for the conventional insurance business to R27.7 billion.
Headline earnings per share increased by 47% to R20.99.
Lizé Lambrechts, Santam Group CEO, said the 2018 financial year had been one characterised by fewer large commercial property and catastrophe claims and that the group was in a very good shape and well geared to tackle opportunities – despite concerns about the global and South African economy.
“In comparison, 2017 was from a claims perspective the worst in over 100 years. Total claims paid in 2017 in relation to the devastating Knysna fires and the floods in Durban and Gauteng amounted to approximately R2 billion. A combination of tighter underwriting practices in commercial property and a benign claims environment contributed to excellent underwriting margins for the 2018 financial year,” she said.
“We saw a strong performance in Santam Commercial and Personal. Conversely, some of the Santam Specialist businesses saw higher claims ratios, which led to underperformance relative to historic results.
“The most notable of these were in SHA, our liability business, where a number of large claims, including product recall claims relating to the Listeriosis outbreak, negatively impacted the results. Despite the tough economic conditions, the group achieved solid growth,” Lambrechts said.
The Alternative Risk Transfer (ART) insurance segment grew gross written premium by 40% (26% excluding the impact of the Santam Structured Insurance acquisition) and reported operating results of R96 million (2017: R84 million).
Net investment income attributable to shareholders, inclusive of investment return on insurance funds amounted to R1 105 million (2017: R1 012 million). A positive movement in foreign exchange differences of R376 million (2017: loss of R116 million) was a key contributor to the improved performance.
The 2017 results included the release of the foreign currency translation reserve of R175 million relating to the unwinding of the Santam International investment.
Cash generated from operations increased to R5.45 billion (2017: R3.3 billion), positively impacted by the improved claims experience.
A return on capital of 31.8% was achieved. The economic capital coverage ratio was 159% – slightly above the mid-point of the target range of 130% to 170%, Santam said.
Looking ahead, Lambrechts said: “The 2019 period will be the final year of our Vision 2020 strategy. We will use the period to define our new strategy for 2020 and beyond. Our strengths remain our diversified footprint, people, capital strength, recognised brand, technical expertise and ability to grow business flows outside of South Africa.
“We will continue to focus on profitable growth, cementing our leadership position in South Africa and exploring the opportunities presented by our emerging markets footprint.”
The board of directors declared a final dividend per share of 665 cents, up from 616 cents in 2017.