2018 Operational Performance Overview
The 2018 financial year was characterised by fewer large commercial property and catastrophe claims events than experienced in 2017, which from a claims perspective was the worst in over 100 years.
A combination of tighter underwriting practices in commercial property and a relatively benign claims environment contributed to good underwriting margins, which increased from 6% in 2017 to 9,2%. Santam Commercial and Personal delivered strong results. Conversely, some of the Santam Specialist businesses saw higher claims ratios, which led to underperformance relative to historic results. The most notable of these are listeriosis claims in Stalker Hutchinson Admiral (SHA), Santam’s liability business. Despite the tough economic conditions in South Africa, Santam achieved satisfactory growth.
The group currently generates 10% of its premiums from outside South Africa and has a strategic goal to grow this contribution significantly through the Santam Emerging Markets Investments, Santam re and Santam Specialist business units.
After the high volume of catastrophe events and commercial fires in 2017 increased Santam’s reinsurance premium rates, risk survey and underwriting capacity was increased and the focus on risk selection tightened. The aim was to contain and manage exposures better and to improve risk management practices. This resulted in an immediate and significant saving on known avoided fire claims this year.
Santam continues to invest in ways to penetrate new and non-traditional markets. Consumer financial education was identified as one of the most effective ways in which Santam creates new market opportunities.
The cluster proactively addresses the social and empowerment challenges in South Africa by increasing procurement from black-owned suppliers.
The money that Santam has invested in the ASISA Enterprise and Supplier Development (ESD) fund creates access to loan funding for new and small BBBEE suppliers in the sector. Now in its fourth year, the programme runs over a 12-month period that includes business assessment and incubation and aims to prepare small black businesses for targeted procurement spend from the group.
2018 salient features
- Santam delivered strong underwriting performance in South Africa.
- We concluded increased participation by Santam in Saham Finances, in terms of which Santam’s effective stake in Saham Finances increased from 7% to 10%.
- All transformation initiatives are running well, and Santam is confident of retaining an industry-leading level 2 BBBEE status for 2018.
- Santam maintained its leading position in the South African short-term insurance sector with various accolades that include recognition in the 2018 Sunday Times Top Brands Survey as a top business insurer. Other accolades include certification as Top Employer in South Africa for the third year running and inclusion in the JSE/FTSE Responsible Investment Top 30 Index, which recognises sustainability practices by corporates.
Read more about Santam’s financial performance in the Financial Review.