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SANTAM LIMITED - Reviewed condensed consolidated interim financial statements for the six months ended 30 June 2016

Release Date: 31/08/2016 14:30
Code(s): SNT     PDF:  
Wrap Text
Reviewed condensed consolidated interim financial statements for the six months ended 30 June 2016

Santam Limited and its subsidiaries
Registration number 1918/001680/06
ISIN ZAE000093779
JSE share code: SNT
NSX share code: SNM

REVIEWED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended 30 June 2016

-  Gross written premium growth both including and excluding cell captive insurance 8%

-  Underwriting margin 6.4% 

-  Group solvency ratio 51%  

-  Return on shareholders' funds 17.4% (annualised)

-  Positive growth contribution from international diversification

-  Acquisition of effective interest in Saham Finances completed

-  Headline earnings per share decreased by 29%

-  Interim dividend of 311 cents per share, up 8%

-  Special dividend of 800 cents per share 

FINANCIAL REVIEW

The Santam group reported strong underwriting results and acceptable growth for the six months ended June 2016 in the context of the current low-growth economic 
environment. The group achieved gross written premium growth of 8% and a net underwriting margin of 6.4% (2015: 8.9%), well within the target range of 4% to 8%.

Investment income, net of fair value movements on financial instruments, of R555 million was significantly lower compared to R767 million in 2015. The South African 
investment portfolio performed in line with the market. Foreign currency exchange losses had a negative impact on investment returns following the relative 
strengthening of the rand since December 2015. In addition, the value of the Sanlam Emerging Markets (SEM) general insurance businesses portfolio showed negative 
unrealised fair value movements following tough trading conditions in certain emerging markets.

The lower underwriting profits compared to the exceptional performance in 2015 and significantly lower investment results reduced headline earnings per share by 29% 
compared to June 2015. An annualised return on capital of 17.4% was achieved. The solvency margin of 51% was higher than the target range of 35% to 45% of net written
premiums.

Gross written premium growth of 8% was in line with the growth achieved in the corresponding period in 2015. This was pleasing in the context of almost no real growth
in the economy and inflation of 6%.

The property class achieved strong growth of 12% on the back of increased corporate property business written in the rest of Africa and good growth achieved by the 
Santam Re property portfolio. The motor class benefitted from 20% growth reported by MiWay, the direct insurance business, (gross written premium of R1 003 million; 
2015: R835 million) but was negatively impacted by corrective actions on unprofitable books of business on outsourced platforms.

The liability class experienced significant competitive market pressure and reported a decline in gross written premiums of 17%. The engineering business for large 
construction contracts was under strain following reduced construction activity in the current economic climate. The transportation class also experienced competitive
pressures reducing growth to 2%.

Growth of 22% was achieved in the alternative risk class following good performance by risk finance and new business.

The group’s focus on international diversification continued to reflect positive growth results with gross written premium from the rest of Africa (excluding Namibia),
India, Southeast Asia and China of R698 million for the period (2015: R450 million). Santam Namibia reported gross written premium of R565 million (2015: R512 million),
resulting in total gross written premium from outside South Africa during this six-month period increasing to R1 263 million compared to the R962 million achieved in 
the comparative period in 2015.

As part of managing its exposure to South Africa’s sovereign credit rating, Santam entered into a three-year alternative risk transfer (ART) reinsurance quota share 
agreement with an international insurer, effective 1 January 2014, with an annual reinsurance quota share premium of R1 billion. The agreement includes a facility 
whereby Santam can use the insurer’s AA-rated licence for business which is dependent on a minimum international scale rating. The agreement also reduces Santam’s 
net catastrophe exposure. 

The net underwriting margin of 6.4% was lower than the excellent margin of 8.9% achieved in 2015; however, it is on par with the seven-year average of 6.4%.

The motor and property classes of business were positively impacted by continued disciplined underwriting, including a significant improvement in the underwriting 
results from business on outsourced platforms. The impact of the catastrophe hail events in Gauteng and North West in January 2016 was significantly reduced by 
recoveries from a sideways reinsurance catastrophe programme. However, a number of large corporate property claims reduced the underwriting results in the property 
class of business. MiWay achieved a claims ratio of 63.1%, up from 60.8% in 2015, mainly due to the impact of significant new business growth and an increase in 
motor parts cost following the weakening of the rand in 2015. MiWay contributed an underwriting profit of R72 million (2015: R76 million).

The underwriting profit of the engineering class of business showed a decrease compared to 2015, mainly due to competitive market conditions and the impact of a few 
large claims reported during the period. The liability class reflected a significant improvement in underwriting results following claims estimate releases and the 
absence of large claims during the period.

Despite the severe drought conditions, the crop insurance business achieved a net underwriting profit of R8 million (2015: R53 million). This was as a result of 
disciplined underwriting and fewer hail-related claims during the crop season. Gross crop insurance claims of R469 million were incurred during this six month period 
of which R231 million related to drought claims. 

There were no significant changes to the group’s reinsurance programme for 2016 as the soft reinsurance market continued to provide opportunities to optimise 
reinsurance placements.

The net acquisition cost ratio of 29% (excluding the impact of the ART reinsurance quota share agreement) increased from 28% for the comparative period in 2015.

The management expense ratio (excluding the impact of the ART reinsurance quota share agreement) decreased from 15.9% in 2015 to 15.5% in 2016. The 2015 comparatives
included the management expenses of Indwe Broker Holdings Group (Pty) Ltd (Indwe). Following the sale of the controlling stake in Indwe in December 2015, the 
management expenses of Indwe are no longer consolidated in 2016. The adjusted ratio excluding Indwe for 2015 was 15.3%. Management expenses growth was well contained
and the marginal increase in the management expense ratio, excluding the impact of Indwe, was due to new growth initiatives.

Strategic project costs, included as part of management expenses, amounted to 0.6% of net earned premium (2015: 0.7%). These costs mainly relate to the continued 
development of a new core underwriting, administration and product management platform for the Santam intermediated business. The project is progressing according to 
plan with the majority of personal lines policies now migrated to the new system. The development phase of the commercial business product was completed in June 2016.

The net commission ratio (excluding the impact of the ART reinsurance quota share agreement) was 13.5% (2015: 12.1%). The comparative ratio in 2015 excluding Indwe 
was 12.8%. A decrease in the gross commission ratio due to the growth in MiWay, where limited commission expenses are incurred, was offset by lower reinsurance 
commissions earned on specialist business lines. These included crop and corporate property, following relatively worse loss ratios compared to 2015. Furthermore, 
gross commission on inwards reinsurance business from Santam Re, as well as business written in Africa, typically carries higher commission rates than South African 
business.

The investment return on insurance funds of R291 million increased from the R236 million earned in 2015, supported by the increase in the repo rate in January and 
March 2016 and positive market movements on Santam’s active income portfolio. 

Investment returns on the South African investment portfolio were significantly lower compared to 2015. For the first half of 2016, listed equities achieved a return 
of 5.6%, marginally underperforming the SWIX benchmark. However, over the longer term, listed equities performed in line with the benchmark. The Santam group’s 
interest exposure is managed in enhanced cash and active income portfolios. The active income portfolios achieved a return of 5.7% for the six months to 30 June 2016,
which is considered acceptable given the fund’s low risk positioning. In May 2016, a zero cost fence structure over listed equities to the value of R1 billion was 
entered into based on the SWIX 40, providing 10% downside protection from the implementation level of 10 621, with upside participation (excluding dividends) of 10.3%.
The structure matures on 15 December 2016. The hedge showed an unrealised profit of R6 million at the end of June. Foreign currency losses of R46 million 
(2015: gains of R62 million) were reported following the 5% strengthening of the rand against the US dollar from December 2015 levels.

Negative fair value movements of R110 million (2015: R13 million positive movement) on Santam’s interest in SEM’s general insurance businesses in Africa, India and 
Southeast Asia reduced the investment performance. Key drivers of the negative fair value movements were:

-  A downward adjustment to the value of the Pacific & Orient Insurance Co. Berhad (P&O) business in Malaysia of R37 million due to lower premium growth. There is a 
   significant focus on expanding the current product offering.

-  A reduction in the value of the investment in Soras Assurance Generales Ltd (Soras) in Rwanda of R46 million following financial irregularities identified during 
   this period relating to prior years. Corrective measures were taken to address these irregularities.

-  Foreign exchange losses of R39 million (2015: R34 million) following the relative strengthening of the rand against emerging market currencies compared to 
   December 2015.

Dividend income of R6 million (2015: R22 million) from the SEM portfolio was also recognised. Santam invested a further R49 million in participatory investments in 
SEM general insurance businesses in Botswana and Zimbabwe. At the end of June 2016, the SEM investments had a fair value of R942 million (December 2015: R1 005 million)
which accounted for 12% of the group’s shareholder funds.

The transaction to acquire a 30% shareholding in Saham Finances, together with SEM, announced in November 2015, was finalised during the first quarter of 2016. The 
acquisition was structured through a special purpose vehicle held jointly by SEM (75%) and Santam (25%) for a total cash consideration of US$400 million. Santam’s 
share of the purchase consideration, amounting to US$100 million, was funded from internal cash resources. Santam acquired sufficient foreign currency in addition to 
existing dollar assets to cover the purchase consideration before the transaction was concluded in November 2015. A cash flow hedge was implemented on 24 November 2015
to cover Santam’s foreign currency exposure by designating these US dollar-denominated cash balances to the transaction. The impact of this was that foreign currency 
gains of R140 million recognised on the designated cash balances since implementation date were not recognised in the statement of comprehensive income, but were 
accounted for as part of the investment in Saham Finances. Therefore, the cost price of the investment, net of the cash flow hedge impact, was R1 412 million. Santam
accounts for the investment in Saham Finances as an associate company and equity-accounted earnings of R30 million for the four-month period from 29 February 2016 was
included in the results for the period to June 2016.

During February 2016, Santam acquired a 49% stake in PPS Short-term Insurance (PPS STI) for R55 million. PPS STI is an independent short-term insurer focusing on 
providing short-term insurance solutions exclusively to Graduate Professionals including the PPS Group’s client base of more than 200 000 professionals.

The group successfully issued R1 billion of subordinated debt in April 2016 with the purpose of investing the proceeds in an interest-bearing investment portfolio 
in order to enhance the group’s regulatory position and to achieve economic benefits.

Prospects
Trading conditions in the South African insurance industry remain very competitive in a low-growth economic environment. Real GDP growth is expected to be zero for 
2016, resulting in almost no growth of insurable assets for the insurance industry. The repo rate increased by 50 basis points in 2015, with a further 75 basis points
increase during the first half of 2016 which will continue to put pressure on consumers.

Despite the 5% strengthening of the rand against the US dollar compared to December 2015, the 25% rand depreciation during 2015 is expected to negatively impact 
claims cost (mainly imported motor parts). Santam continues to focus on the optimisation of the claims and procurement value chains to increase efficiency and counter
the impact of the weakening rand.

The group’s focus remains on profitable growth in South Africa and to increase its international diversification through the Santam Specialist Business and Santam Re.
Santam continues to strategically focus on supporting the development of the SEM general insurance businesses in emerging markets by allocating appropriate technical 
resources. In South Africa, focus areas include developing Santam’s full multichannel capability and MiWay’s business insurance and broker-direct offerings, as well 
as the MiWay Life insurance initiative in conjunction with Sanlam Life.

Santam will maintain its focus on cost-efficiencies to improve the management expense ratio over the medium term.

The investment market is likely to remain uncertain. The higher interest rate environment will result in increased interest income for the group but higher volatility
is expected on interest-bearing instruments. The increased exposure to non-rand-denominated business further increases foreign exchange volatility.

Solvency and special dividend
The group solvency ratio of 51% at 30 June 2016 exceeded the group’s target solvency range of 35% to 45% of net written premiums. With the expected introduction of 
Solvency Assessment and Management (SAM), the new regulatory framework for insurers in 2017, the group will target an economic capital coverage range of 130% to 170%
going forward. The group economic capital coverage ratio was 178% at 30 June 2016. The group is in the process of applying to the Insurance Regulator to use the 
Santam Regulatory Internal Model to determine its regulatory capital. Taking into account the group solvency ratio at 30 June 2016, the current and future regulatory
solvency requirements and further potential acquisitions, the board has declared a special dividend of 800 cents per share. 

Effective management of the impact of regulatory developments will remain a key focus area.

Events after the reporting period
Santam and the shareholders of RMB-SI Investments (Pty) Ltd (RMB-SI) have reached an agreement in terms of which Santam will acquire 100% of the issued 
share capital of RMB-SI. RMB-SI has, over the years, pioneered an innovative specialist insurance structuring business, offering its partners and clients individually 
designed innovative insurance solutions. RMB-SI’s 22.4% interest in Truffle Capital (Pty) Ltd (Truffle) is excluded from the scope of the transaction. 
The transaction is still subject to regulatory approvals by the Financial Services Board and the competition authorities in South Africa, as well as the relevant 
regulatory authorities in Mauritius and Ireland.

There have been no other material changes in the affairs or financial position of the company and its subsidiaries since the statement of financial position date.

Declaration of ordinary and special dividend (Number 125)
Notice is hereby given that the board has declared a gross interim dividend of 311 cents per share (2015: 288 cents per share) and a special gross dividend of 
800 cents per share (2012: 850 cents).

Shareholders are advised that the last day to trade “cum dividend” will be Tuesday, 20 September 2016.  The shares will trade “ex dividend” from the commencement of 
business on Wednesday, 21 September 2016. The record date will be Friday, 23 September 2016, and the payment date will be Monday, 26 September 2016. Certificated 
shareholders may not dematerialise or rematerialise their shares between Wednesday, 21 September 2016 and Friday, 23 September 2016, both dates inclusive.

The interim and special dividends have been declared from income reserves and will be subject to dividends tax. The amounts per share, subject to the 
withholding of dividends tax at a maximum rate of 15%, are therefore 311 cents per share for the interim dividend and 800 cents per share for the special dividend. 
A net interim dividend of 264.35 cents per share and a net special dividend of 680 cents per share will apply to shareholders liable for dividends tax at a rate of 
15%, and 311 cents per share for the interim dividend and 800 cents per share for the special dividend for shareholders that qualify for complete exemption therefrom. The 
issued ordinary share capital as at 31 August 2016 is 115 131 417 shares. The company’s income tax reference number is 9475/144/71/4.

In terms of the dividends tax legislation, the dividends tax amount due will be withheld and paid over to the South African Revenue Service (SARS) by a nominee 
company, stockbroker or Central Security Depository Participant (CSDP) (collectively Regulated Intermediary) on behalf of shareholders. However, all shareholders 
should declare their status to their Regulated Intermediary as they may qualify for a reduced dividends tax rate or they may even be exempt from dividends tax.

Appreciation
The board would like to extend its gratitude to Santam’s management, employees, intermediaries and other business partners for their efforts and contributions during 
the six months.

Preparation and presentation of the financial statements
The preparation of the independently reviewed financial statements was supervised by the chief financial officer of Santam Ltd, HD Nel CA(SA).

Auditor’s Report
These condensed consolidated interim financial statements for the period ended 30 June 2016 have been reviewed by PricewaterhouseCoopers Inc., who expressed an 
unmodified conclusion thereon. A copy of the auditor’s report on the condensed consolidated interim financial statements is available for inspection at the company’s 
registered office, together with the financial statements identified in the auditor’s report. The auditor’s report does not necessarily report on all of the 
information contained in these financial results. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor’s 
engagement they should obtain a copy of the auditor’s report together with the accompanying financial information from the issuer’s registered office.


GG Gelink                                                                L Lambrechts
Chairman                                                                 Chief executive officer

31 August 2016


CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                                                                                                          Reviewed at       Reviewed at   Audited at
                                                                                                                                         30 June 2016      30 June 2015  31 Dec 2015
                                                                                                                              Notes         R million         R million    R million
ASSETS
Non-current assets
  Property and equipment                                                                                                                           96               114           90
  Intangible assets                                                                                                                               837             1 061          827
  Deferred income tax                                                                                                                             124               146          140
  Investment in associates and joint ventures                                                                                                   1 702               173          252
  Financial assets at fair value through income
    Equity securities                                                                                                             6             2 788             3 375        2 730
    Debt securities                                                                                                               6            10 911             8 384        9 721
  Reinsurance assets                                                                                                              7               164               179          164
  Deposit with cell owner                                                                                                                         231                 -          187
  Total non-current assets                                                                                                                     16 853            13 432       14 111

Current assets
  Cell owners' interest                                                                                                                             4                 8            6
  Financial assets at fair value through income
    Derivatives                                                                                                                   6                 6                10            2
    Short-term money market instruments                                                                                           6             1 981             2 118        2 281
  Reinsurance assets                                                                                                              7             3 953             3 549        3 514
  Deposit with cell owner                                                                                                                          61                 -           67
  Deferred acquisition costs                                                                                                                      410               407          525
  Loans and receivables including insurance receivables                                                                           6             3 322             2 720        3 449
  Income tax assets                                                                                                                                17                12           13
  Cash and cash equivalents                                                                                                                     2 241             1 882        3 349
  Non-current assets held for sale                                                                                                8               125               677          541
  Total current assets                                                                                                                         12 120            11 383       13 747
Total assets                                                                                                                                   28 973            24 815       27 858

EQUITY AND LIABILITIES
Capital and reserves attributable to the company's equity holders
  Share capital                                                                                                                                   103               103          103
  Treasury shares                                                                                                                                (460)             (456)        (450)
  Other reserves                                                                                                                                  240               278          548
  Distributable reserves                                                                                                                        7 958             6 858        7 880
                                                                                                                                                7 841             6 783        8 081
Non-controlling interest                                                                                                                          461               430          466
Total equity                                                                                                                                    8 302             7 213        8 547

Non-current liabilities
  Deferred income tax                                                                                                                             217               304          107
  Financial liabilities at fair value through income
    Debt securities                                                                                                               6             2 005               992          974
    Investment contracts                                                                                                          6                 -                76            -
    Derivatives                                                                                                                   6                 1                 -            1
  Cell owners' interest                                                                                                                         1 060               947          980
  Insurance liabilities                                                                                                           7             1 423             1 543        1 525
  Reinsurance liability relating to cell owners                                                                                                   231                 -          187
  Total non-current liabilities                                                                                                                 4 937             3 862        3 774

Current liabilities
  Financial liabilities at fair value through income
    Debt securities                                                                                                               6                48                24           24
    Investment contracts                                                                                                          6                84                 -           70
    Derivatives                                                                                                                   6                 9                 -            -
  Financial liabilities at amortised cost
    Collateral guarantee contracts                                                                                                                104                99          105
  Insurance liabilities                                                                                                           7            11 577            10 434       11 139
  Reinsurance liability relating to cell owners                                                                                                    61                 -           67
  Deferred reinsurance acquisition revenue                                                                                                        183               170          280
  Provisions for other liabilities and charges                                                                                                     83                89          122
  Trade and other payables including insurance payables                                                                                         3 407             2 681        3 412
  Current income tax liabilities                                                                                                                  178               243          318
  Total current liabilities                                                                                                                    15 734            13 740       15 537
Total liabilities                                                                                                                              20 671            17 602       19 311
Total shareholders' equity and liabilities                                                                                                     28 973            24 815       27 858


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                                                                                                             Reviewed          Reviewed                   Audited
                                                                                                                                     Six months ended  Six months ended                Year ended
                                                                                                                                         30 June 2016      30 June 2015       Change  31 Dec 2015
                                                                                                                              Notes         R million         R million            %    R million

Gross written premium                                                                                                                          12 148            11 270           8%       24 319
Less: reinsurance written premium                                                                                                               2 914             2 628                     5 435
Net written premium                                                                                                                             9 234             8 642           7%       18 884
Less: change in unearned premium
  Gross amount                                                                                                                                   (532)             (450)                      528
  Reinsurers' share                                                                                                                                66                 4                      (167)
Net insurance premium revenue                                                                                                                   9 700             9 088           7%       18 523
Investment income                                                                                                                 9               441               502         (12%)       1 210
Income from reinsurance contracts ceded                                                                                                           629               591                     1 236
Net gains on financial assets and liabilities at fair value through income                                                        9               101               265                       235
Investment income and fair value losses on financial assets held for sale                                                         9                13                 -                         -
Net income                                                                                                                                     10 884            10 446           4%       21 204

Insurance claims and loss adjustment expenses                                                                                                   8 488             7 253                    13 980
Insurance claims and loss adjustment expenses recovered from reinsurers                                                                        (2 199)           (1 467)                   (2 470)
Net insurance benefits and claims                                                                                                               6 289             5 786           9%       11 510

Expenses for the acquisition of insurance contracts                                                                                             1 846             1 562                     3 240
Expenses for marketing and administration                                                                                                       1 571             1 577                     3 277
Expenses for investment-related activities                                                                                                         26                18                        53
Amortisation and impairment of intangible assets                                                                                                   22                67                       117
Total expenses                                                                                                                                  9 754             9 010           8%       18 197

Results of operating activities                                                                                                                 1 130             1 436         (21%)       3 007
Finance costs                                                                                                                                     (77)              (47)                     (116)
Net income from associates and joint ventures                                                                                                      45                43                        53
Profit on sale of associated companies                                                                                           11                 -                21                       413
Profit on sale of subsidiary                                                                                                     11                 -                 -                        15
Profit before tax                                                                                                                               1 098             1 453         (24%)       3 372
Income tax expense                                                                                                               10              (336)             (390)                     (908)
Profit for the period                                                                                                                             762             1 063         (28%)       2 464

Other comprehensive income, net of tax
Items that may subsequently be reclassified to income:
  Currency translation differences                                                                                                               (114)               35                       163
  Share of associates' currency translation differences                                                                                           (62)                -                         -
  Hedging reserve movement                                                                                                                       (134)                -                       134
  Tax on hedging reserve movement                                                                                                                   -                 -                       (37)
Total comprehensive income for the period                                                                                                         452             1 098         (59%)       2 724

Profit attributable to:
- equity holders of the company                                                                                                                   697               995         (30%)       2 348
- non-controlling interest                                                                                                                         65                68                       116
                                                                                                                                                  762             1 063                     2 464
Total comprehensive income attributable to:
- equity holders of the company                                                                                                                   387             1 030         (62%)       2 608
- non-controlling interest                                                                                                                         65                68                       116
                                                                                                                                                  452             1 098                     2 724

Earnings attributable to equity shareholders
Earnings per share (cents)                                                                                                       12
  Basic earnings per share                                                                                                                        633               870         (27%)       2 090
  Diluted earnings per share                                                                                                                      627               865         (28%)       2 065

Weighted average number of ordinary shares (millions)                                                                                          110.19            114.31                    112.34
Weighted average number of ordinary shares for diluted earnings per share (millions)                                                           111.23            114.96                    113.72



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                                                                                                       Attributable to equity holders of the company

                                                                                                                                                   Distribu-                      Non-
                                                                                                          Share      Treasury             Other        table               controlling
                                                                                                        capital        shares          reserves     reserves        Total     interest      Total
                                                                                                      R million     R million         R million    R million    R million    R million  R million

Balance as at 1 January 2015                                                                                107          (506)              238        7 171        7 010          430      7 440
Profit for the period                                                                                         -             -                 -        2 348        2 348          116      2 464
Other comprehensive income:
  Currency translation differences                                                                            -             -               163            -          163            -        163
  Hedging reserve movement                                                                                    -             -               134          (37)          97            -         97
Total comprehensive income for the period ended 31 December 2015                                              -             -               297        2 311        2 608          116      2 724
Sale of treasury shares                                                                                       -            56                 -          (56)           -            -          -
Repurchase of shares (refer to note 14)                                                                      (4)            -                 -         (797)        (801)           -       (801)
Transfer to reserves                                                                                          -             -                 4           (4)           -            -          -
Share-based payment costs                                                                                     -             -                 -          124          124            -        124
Increase in capital contribution reserve (refer to note 14)                                                   -             -                 9            -            9            -          9
Dividends paid                                                                                                -             -                 -         (869)        (869)         (82)      (951)
Interest sold to non-controlling interest                                                                     -             -                 -            -            -            2          2
Balance as at 31 December 2015                                                                              103          (450)              548        7 880        8 081          466      8 547
Profit for the period                                                                                         -             -                 -          697          697           65        762
Other comprehensive income:
  Currency translation differences                                                                            -             -              (114)           -         (114)           -       (114)
  Share of associates' currency translation differences                                                       -             -               (62)           -          (62)           -        (62)
  Hedging reserve movement                                                                                    -             -              (134)           -         (134)           -       (134)
Total comprehensive income for the period ended 30 June 2016                                                  -             -              (310)         697          387           65        452
Sale of treasury shares                                                                                       -            75                 -          (75)           -            -          -
Purchase of treasury shares                                                                                   -           (85)                -            -          (85)           -        (85)
Transfer to reserves                                                                                          -             -                 2           (2)           -            -          -
Share-based payment costs                                                                                     -             -                 -           39           39            -         39
Dividends paid                                                                                                -             -                 -         (581)        (581)         (70)      (651)
Balance as at 30 June 2016                                                                                  103          (460)              240        7 958        7 841          461      8 302

Balance as at 1 January 2015                                                                                107          (506)              238        7 171        7 010          430      7 440
Profit for the period                                                                                         -             -                 -          995          995           68      1 063
Other comprehensive income:
  Currency translation differences                                                                            -             -                35            -           35            -         35
Total comprehensive income for the period ended 30 June 2015                                                  -             -                35          995        1 030           68      1 098
Sale of treasury shares                                                                                       -            50                 -          (50)           -            -          -
Repurchase of shares (refer to note 14)                                                                      (4)            -                 -         (797)        (801)           -       (801)
Transfer to reserves                                                                                          -             -                 5           (5)           -            -          -
Share-based payment costs                                                                                     -             -                 -           94           94            -         94
Dividends paid                                                                                                -             -                 -         (550)        (550)         (68)      (618)
Balance as at 30 June 2015                                                                                  103          (456)              278        6 858        6 783          430      7 213


CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                                                                                       Reviewed          Reviewed      Audited
                                                                                                                               Six months ended  Six months ended   Year ended
                                                                                                                                   30 June 2016      30 June 2015  31 Dec 2015
                                                                                                                         Notes        R million         R million    R million
Cash flows from operating activities
Cash generated from operations                                                                                                              844             1 212        3 656
Interest paid                                                                                                                               (50)              (47)        (110)
Income tax paid                                                                                                                            (340)             (350)      (1 002)
Net cash from operating activities                                                                                                          454               815        2 544

Cash flows from investing activities
Acquisition of financial assets                                                                                                          (9 505)           (4 540)     (14 086)
Proceeds from sale of financial assets                                                                                                    8 538             4 532       13 348
Settlement of fence                                                                                                                           -                 -           42
Cash received/(disposed of) through sale of subsidiaries                                                                   11               208                 -         (183)
Staff trust acquired                                                                                                       14                 -                 -          132
Purchases of equipment                                                                                                                      (26)              (18)         (39)
Purchases of intangible assets                                                                                                              (21)              (42)         (85)
Proceeds from sale of equipment                                                                                                               1                 1            -
Acquisition of associated companies and joint ventures                                                                     11            (1 467)                -           (2)
Capitalisation of associated companies                                                                                                        -               (28)         (28)
Proceeds from sale of associated companies                                                                                 11                 -                23          625
Cash proceeds from unwinding of non-current assets held for sale                                                            8               394                 -            -
Net cash used in investing activities                                                                                                    (1 878)              (72)        (276)

Cash flows from financing activities
Purchase of treasury shares                                                                                                                 (85)                -            -
Repurchase of shares                                                                                                                          -              (801)        (801)
Proceeds from issue of unsecured subordinated  callable notes                                                                             1 000                 -            -
Increase/(decrease) in investment contract liabilities                                                                                        7               (29)         (35)
Increase in collateral guarantee contracts                                                                                                    -                11           11
Dividends paid to company's shareholders                                                                                                   (581)             (550)        (869)
Dividends paid to non-controlling interest                                                                                                  (70)              (68)         (82)
Increase in cell owners' interest                                                                                                           120                22           16
Net cash from/(used in) financing activities                                                                                                391            (1 415)      (1 760)

Net (decrease)/increase in cash and cash equivalents                                                                                     (1 033)             (672)         508
Cash and cash equivalents at beginning of period                                                                                          3 349             2 561        2 561
Exchange (losses)/gains on cash and cash equivalents                                                                                        (75)               (7)         280
Cash and cash equivalents at end of period                                                                                                2 241             1 882        3 349


NOTES TO THE INTERIM FINANCIAL STATEMENTS

1.  Basis of preparation
The condensed consolidated interim financial statements are prepared in accordance with International Financial Reporting Standards, IAS 34 Interim Financial Reporting,
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards 
Council and the requirements of the Companies Act of South Africa.

2.  Accounting policies
The accounting policies applied in the preparation of the condensed consolidated interim financial statements are in terms of IFRS and are consistent with those 
accounting policies applied in the preparation of the previous consolidated annual financial statements, except for:

The following new IFRSs and/or IFRICs were effective for the first time from 1 January 2016:
-  Amendments to IFRS 10, IFRS 12 and IAS 28 Investment entities - Applying the consolidation exception
-  Amendments to IFRS 11 - Joint arrangements
-  IFRS 14 Regulatory deferral accounts
-  Amendments to IAS 1 - Disclosure initiative
-  Amendments to IAS 16 and IAS 38 - Clarification of acceptable methods of depreciation and amortisation
-  Amendment to IAS 16 and IAS 41 - Agriculture: Bearer plants
-  Amendment to IAS 27 - Equity method in separate financial statements
-  Annual Improvements 2012-14 cycle

There was no material impact on the condensed consolidated interim financial statements identified.

3.  Estimates
The preparation of condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

In preparing this condensed consolidated interim financial statements, the significant judgements made by management in applying the group's accounting policies and 
the key sources of estimation uncertainty are the same as those that applied to the consolidated annual financial statements for the year ended 31 December 2015.

4.  Risk management
The group's activities expose it to a variety of financial risks: market risk (including price risk, interest rate risk, foreign currency risk and derivatives risk), 
credit risk and liquidity risk. Insurance activities expose the group to insurance risk (including pricing risk, reserving risk, accumulation risk and reinsurance risk).
The group is also exposed to operational risk and legal risk.

The capital risk management philosophy is to maximise the return on shareholders' capital within an appropriate risk framework.

The condensed consolidated interim financial statements do not include all risk management information and disclosure required in the annual financial statements and 
should be read in conjunction with the group's annual financial statements as at 31 December 2015.

There have been no changes in the risk management policies since the previous year-end.

5.  Segment information
Segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been 
identified as the chief executive officer, supported by the group executive committee.

The group conducts mainly insurance and investment activities.

Insurance activities are all core general insurance and reinsurance underwriting activities directly undertaken by the group and are analysed by insurance class. Operating
segments are aggregated based on quantitative and/or qualitative significance. The performance of insurance activities is based on gross written premium as a measure 
of growth, with net underwriting result as measure of profitability.

Investment activities are all investment-related activities undertaken by the group, including strategic diversification activities. Due to the nature of the activities
conducted, investment activities are considered to be one operating segment. Investment activities are measured based on net investment income and net income from 
associated companies and joint ventures.

Given the nature of the operations there is no single external client that provides 10% or more of the group's revenues.

The investment return on insurance funds is calculated based on the day-weighted effective return realised by the group  on the assets held to cover the group's net 
insurance working capital requirements.

Insurance business denominated in foreign currencies is covered by foreign denominated bank accounts and investment portfolios. Foreign exchange movements on underwriting
activities are therefore offset against the foreign exchange movements recognised on the bank accounts and investment portfolios.

The Santam BEE transaction costs are unrelated to the core underwriting, investment or strategic diversification performance of the group. Therefore, these costs are 
disclosed as unallocated activities.

Santam Ltd is domiciled in South Africa. Geographical analysis of the gross written premium and non-current assets and liabilities is based on the countries in which 
the business is underwritten or managed. Non-current assets comprise goodwill and intangible assets, property and equipment, investments in associates and joint 
ventures and SEM target  shares (included in financial instruments).

5.1 For the six months ended 30 June 2016

                                                               Insurance    Investment  Unallocated  IFRS total
Business activity                                              R million     R million    R million   R million

Revenue                                                           12 148           305            -      12 453
Gross written premium                                             12 148             -            -      12 148
Net written premium                                                9 234             -            -       9 234
Net earned premium                                                 9 700             -            -       9 700
Net claims incurred                                                6 289             -            -       6 289
Net commission                                                     1 217             -            -       1 217
Management expenses (excluding BEE costs)                          1 576             -            -       1 576
Underwriting result                                                  618             -            -         618
Investment return on insurance funds                                 291             -            -         291
Net insurance result                                                 909             -            -         909
Investment income net of management fee and finance costs              -           161            -         161
Income from associates and joint ventures                              -            45            -          45
Santam BEE costs                                                       -             -           (6)         (6)
Amortisation and impairment of intangible assets                     (11)            -            -         (11)
Income before taxation                                               898           206           (6)      1 098

Insurance activities
The group's insurance activities are spread over various classes of general insurance.

                                                           Gross written  Underwriting
                                                                 premium        result
                                                               R million     R million

Accident and health                                                  164             2
Alternative risk                                                   1 334            18
Crop                                                                 108             8
Engineering                                                          579            81
Guarantee                                                             32            (5)
Liability                                                            489           172
Miscellaneous                                                         22             3
Motor                                                              5 315           300
Property                                                           3 772            18
Transportation                                                       333            21
Total                                                             12 148           618

Comprising:
Commercial insurance                                               5 853           344
Personal insurance                                                 4 961           256
Alternative risk                                                   1 334            18
Total                                                             12 148           618

Investment activities
For detailed analysis of investment activities refer to notes 6 and 9.

5.2 For the six months ended 30 June 2015

                                                           Insurance  Investment  Unallocated  IFRS total
Business activity                                          R million   R million    R million   R million

Revenue                                                       11 270         595            -      11 865
Gross written premium                                         11 270           -            -      11 270
Net written premium                                            8 642           -            -       8 642
Net earned premium                                             9 088           -            -       9 088
Net claims incurred                                            5 786           -            -       5 786
Net commission                                                   971           -            -         971
Management expenses  (excluding BEE costs)                     1 523           -            -       1 523
Underwriting result                                              808           -            -         808
Investment return on insurance funds                             236           -            -         236
Net insurance result                                           1 044           -            -       1 044
Investment income net of management fee and finance costs          -         466            -         466
Income from associates including profit on sale                    -          64            -          64
Santam BEE costs                                                   -           -          (66)        (66)
Amortisation and impairment  of intangible assets                (55)          -            -         (55)
Income before taxation                                           989         530          (66)      1 453

Insurance activities
The group's insurance activities are spread over various classes of general insurance.

                                                                                                           Gross written  Underwriting
                                                                                                             premium (1)    result (1)
                                                                                                               R million     R million
Accident and health                                                                                                  169            22
Alternative risk                                                                                                   1 094            10
Crop                                                                                                                  67            53
Engineering                                                                                                          539           123
Guarantee                                                                                                             91             8
Liability                                                                                                            588            85
Miscellaneous                                                                                                         29             6
Motor                                                                                                              4 988           324
Property                                                                                                           3 380           136
Transportation                                                                                                       325            41
Total                                                                                                             11 270           808

Comprising:
Commercial insurance                                                                                               5 605           546
Personal insurance                                                                                                 4 571           252
Alternative risk                                                                                                   1 094            10
Total                                                                                                             11 270           808

(1)  The following reclassifications between insurance classes were made as a result of more granular information becoming available: a decrease of 
     R178 million in gross written premium for the motor class and corresponding increase of R178 million for the property class; a decrease of R140 million
     in gross written premium for commercial lines and a corresponding increase of R140 million in gross written premium for personal lines.

Investment activities
For detailed analysis of investment activities refer to notes 6 and 9.

5.3 For the year ended 31 December 2015

                                                                       Insurance     Investment   Unallocated   IFRS total
Business activity                                                      R million      R million     R million    R million

Revenue                                                                   24 319          1 428             -       25 747
Gross written premium                                                     24 319              -             -       24 319
Net written premium                                                       18 884              -             -       18 884
Net earned premium                                                        18 523              -             -       18 523
Net claims incurred                                                       11 510              -             -       11 510
Net commission                                                             2 004              -             -        2 004
Management expenses (excluding BEE costs)                                  3 230              -             -        3 230
Underwriting result                                                        1 779              -             -        1 779
Investment return on insurance funds                                         499              -             -          499
Net insurance result                                                       2 278              -             -        2 278
Investment income net of management fee and finance costs                      -            777             -          777
Income from associates including profit on sale                                -            466             -          466
Profit on sale of subsidiary                                                   -             15             -           15
Santam BEE costs                                                               -              -           (71)         (71)
Amortisation and impairment  of intangible assets                            (93)             -             -          (93)
Income before taxation                                                     2 185          1 258           (71)       3 372

Insurance activities
The group's insurance activities are spread over various classes of general insurance.

                                                                                                                     Gross written  Underwriting
                                                                                                                       premium (1)    result (1)
                                                                                                                         R million     R million

Accident and health                                                                                                            371            60
Alternative risk                                                                                                             2 248            20
Crop                                                                                                                           840           131
Engineering                                                                                                                  1 176           216
Guarantee                                                                                                                      149            13
Liability                                                                                                                    1 327           234
Miscellaneous                                                                                                                   62            11
Motor                                                                                                                       10 247           673
Property                                                                                                                     7 213           330
Transportation                                                                                                                 686            91
Total                                                                                                                       24 319         1 779

Comprising:
Commercial insurance                                                                                                        12 860         1 231
Personal insurance                                                                                                           9 211           528
Alternative risk                                                                                                             2 248            20
Total                                                                                                                       24 319         1 779

(1)  The following reclassifications between insurance classes were made as a result of more granular information becoming available: a decrease
     of R282 million in gross written premium for commercial lines and a corresponding increase of R282 million in gross written premium for personal lines.

Investment activities
For detailed analysis of investment activities refer to notes 6 and 9.

5.4 Geographical analysis

                                                                                 Gross written premium
                                                                    30 June 2016    30 June 2015   31 Dec 2015
                                                                       R million       R million     R million

South Africa (1)                                                          10 885          10 308        21 909
Rest of Africa (2)                                                           986             775         1 973
Southeast Asia, India, Middle East and China (3)                             277             187           437
Group total                                                               12 148          11 270        24 319

                                                                                  Non-current assets
                                                                     30 June 2016  30 June 2015   31 Dec 2015
                                                                        R million     R million     R million

South Africa                                                               1 071          1 414         1 000
Rest of Africa                                                             1 822            405           441
Southeast Asia, India, Middle East and China                                 684            621           733
Group total                                                                3 577          2 440         2 174

(1)  Includes gross written premium managed by specialist business and Santam Re.
(2)  Includes gross written premium relating to Namibia of R565 million (June 2015: R512 million; Dec 2015: R1 056 million).
(3)  Includes gross written premium relating to China of R53 million (June 2015: R57 million; Dec 2015: R140 million).

                                                                             Reviewed at   Reviewed at   Audited at
                                                                            30 June 2016  30 June 2015  31 Dec 2015
                                                                               R million     R million    R million
6.  Financial assets and liabilities
Financial assets
The group's financial assets are summarised below by measurement category.
Financial assets at fair value through income                                     15 686        13 887       14 734
Loans and receivables                                                              3 322         2 720        3 449
Total financial assets                                                            19 008        16 607       18 183


Financial instruments measured at fair value on a recurring basis
The table below analyses financial instruments, carried at fair value through income, by valuation method. There  were no significant changes in the valuation methods
applied since 31 December 2015. The different levels have  been defined as follows:

- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

- Level 2: Input other than quoted prices included within level 1 that is observable for the asset or liability, either directly (that is, prices) or indirectly 
           (that is, derived from prices). Listed bonds that did not trade actively during a financial period are classified as level 2 financial instruments. The 
           fair value of level 2 instruments is predominantly determined using discounted cash flow models based on market observable input.

- Level 3: Input for the asset or liability that is not based on observable data (that is, unobservable input). 

There were no significant transfers between level 1 and level 2 during the current or prior periods.

All derivative instruments are classified as investments held for trading. The rest of the investment portfolio is designated as financial assets at fair value through
income based on the principle that the entire portfolio is managed on a fair value basis and reported as such to the investment committee.

30 June 2016

                                                                      Level 1     Level 2       Level 3        Total
Financial assets at fair value through income                       R million   R million     R million    R million

Equity securities
  Quoted
    Listed                                                              1 719           -             -        1 719
    Unitised funds                                                          -         113             -          113
    Irredeemable preference shares                                          1           -             -            1
  Unquoted                                                                  -           -           955          955
Total equity securities                                                 1 720         113           955        2 788
Debt securities
  Quoted
     Government and other bonds                                         1 821       1 039            27        2 887
     Collateralised securities                                              -         140             -          140
     Redeemable preference shares                                           -         220             -          220
     Money market instruments more than one year                            -       2 450            30        2 480
     Equity-linked notes                                                    -         264             -          264
  Unquoted
    Government and other bonds                                              -         135             -          135
    Collateralised securities                                               -          10             -           10
    Money market instruments more than one year                             -       4 612            33        4 645
    Redeemable preference shares                                            -         101            29          130
Total debt securities                                                   1 821       8 971           119       10 911
Derivative instruments
  Fence structure                                                           -           -             6            6
Total derivative instruments                                                -           -             6            6
Short-term money market instruments                                         -       1 981             -        1 981
Total financial assets at fair value through income                     3 541      11 065         1 080       15 686


                                                                      Level 1     Level 2       Level 3        Total
Financial liabilities at fair value through income                  R million   R million     R million    R million

Debt securities                                                         2 053           -             -        2 053
Investment contracts                                                        -          84             -           84
Derivative instruments
  Interest rate swaps                                                       -           -             1            1
  Exchange traded futures                                                   -           9             -            9
Total derivative instruments                                                -           9             1           10
Total financial liabilities at fair value through income                2 053          93             1        2 147

30 June 2015

                                                                      Level 1     Level 2       Level 3        Total
Financial assets at fair value through income                       R million   R million     R million    R million

Equity securities
  Quoted
    Listed                                                              2 444           -             -        2 444
    Unitised funds                                                          -          50             -           50
    Irredeemable preference shares                                          1           -             -            1
  Unquoted                                                                  -           -           880          880
Total equity securities                                                 2 445          50           880        3 375
Debt securities
  Quoted
    Government and other bonds                                          1 318         946            35        2 299
    Collateralised securities                                               -         166             -          166
    Redeemable preference shares                                            -         257             -          257
    Money market instruments more than one year                             -       1 327             -        1 327
  Unquoted
    Government and other bonds                                              -          65             -           65
    Money market instruments more than one year                             -       4 191             -        4 191
    Redeemable preference shares                                            -          50            29           79
Total debt securities                                                   1 318       7 002            64        8 384
Derivative instruments
  Interest rate swaps                                                       -           -             1            1
  Fence structure                                                           -           -             9            9
Total derivative instruments                                                -           -            10           10
Short-term money market instruments                                         -       2 072            46        2 118
Total financial assets at fair value through income                     3 763       9 124         1 000       13 887


                                                                      Level 1     Level 2       Level 3        Total
Financial liabilities at fair value through income                  R million   R million     R million    R million

Debt securities                                                         1 016           -             -        1 016
Investment contracts                                                        -          76             -           76
Total financial liabilities at fair value through income                1 016          76             -        1 092


31 December 2015
Financial assets at fair value through income                         Level 1     Level 2       Level 3        Total
                                                                    R million   R million     R million    R million
Equity securities
  Quoted
    Listed                                                              1 643           -             -        1 643
    Unitised funds                                                          -          66             -           66
    Irredeemable preference shares                                          2           -             -            2
  Unquoted                                                                  -           -         1 019        1 019
Total equity securities                                                 1 645          66         1 019        2 730
Debt securities
  Quoted
    Government and other bonds                                          1 378       1 122            36        2 536
    Collateralised securities                                               -         190             -          190
    Redeemable preference shares                                            -         214             -          214
    Money market instruments more than one year                             -       1 799             -        1 799
  Unquoted
    Government and other bonds                                              -         132             -          132
    Money market instruments more than one year                             -       4 459             -        4 459
    Redeemable preference shares                                            -         101            29          130
    Equity-linked notes                                                     -         261             -          261
Total debt securities                                                   1 378       8 278            65        9 721
Derivative instruments
  Exchange traded futures                                                   -           2             -            2
Total derivative instruments                                                -           2             -            2
Short-term money market instruments                                         -       2 237            44        2 281
Total financial assets at fair value through income                     3 023      10 583         1 128       14 734

                                                                      Level 1     Level 2       Level 3        Total
Financial liabilities at fair value through income                  R million   R million     R million    R million

Debt securities                                                           998           -             -          998
Investment contracts                                                        -          70             -           70
Derivative instruments
  Interest rate swaps                                                       -           -             1            1
Total derivative instruments                                                -           -             1            1
Total financial liabilities at fair value through income                  998          70             1        1 069

The following tables present the changes in level 3 instruments:

30 June 2016                                                                           Short-term
                                                                 Equity        Debt  money market
                                                             securities  securities   instruments  Derivatives      Total
                                                              R million   R million     R million    R million  R million

Opening balance                                                   1 019          65            44           (1)     1 127
Acquisitions                                                         48           -             -            -         48
Capital distributions                                                (2)          -             -            -         (2)
Transfers between asset classes                                       -          44           (44)           -          -
(Losses)/gains recognised in profit or loss                        (110)         10             -            6        (94)
Closing balance                                                     955         119             -            5      1 079


30 June 2015                                                                           Short-term
                                                                 Equity        Debt  money market
                                                             securities  securities   instruments  Derivatives      Total
                                                              R million   R million     R million    R million  R million

Opening balance                                                     820          56            38            -        914
Acquisitions                                                         51          35             1            -         87
Disposals/settlements                                                (5)        (21)          (11)           -        (37)
Transfers between asset classes                                       -         (15)           15            -          -
Gains recognised in profit or loss                                   14           9             3           10         36
Closing balance                                                     880          64            46           10      1 000

31 December 2015                                                                       Short-term
                                                                 Equity        Debt  money market
                                                             securities  securities   instruments  Derivatives      Total
                                                              R million   R million     R million    R million  R million

Opening balance                                                     820          56            38            -        914
Acquisitions                                                         51           -             1            -         52
Disposals/settlements                                                (5)          -            (2)           -         (7)
Transfers between asset classes                                       -          (4)            4            -          -
Gains/(losses) recognised in profit or loss                         153          13             3           (1)       168
Closing balance                                                   1 019          65            44           (1)     1 127

The investments in Cardrow Insurance Ltd (Cardrow) and Beech Hill Insurance Ltd (Beech Hill) are classified as held for sale (refer to note 8). The investment in 
Cardrow had an opening balance of R390 million (June 2015: R308 million; Dec 2015: R308 million) with exchange losses of R14 million (June 2015: gains of R18 million;
Dec 2015: gains of R82 million) and fair value losses of R376 million (June 2015: Rnil; Dec 2015: Rnil) during the period. The closing balance at 30 June 2016 amounted
to Rnil (June 2015: R326 million; Dec 2015: R390 million). The investment in Beech Hill had an opening balance of R151 million (June 2015: R120 million; Dec 2015: 
R120 million) with exchange losses of R21 million (June 2015: gains of R6 million; Dec 2015: gains of R31 million) and fair value losses of R5 million (June 2015: 
Rnil; Dec 2015: Rnil) during the period. The closing balance at 30 June 2016 amounted to R125 million (June 2015: R126 million; Dec 2015: R151 million). 

The unquoted equity instruments recognised as level 3 instruments consist mainly of the participation target shares issued by Sanlam Emerging Markets (Pty) Ltd (SEM). 
Of the R110 million loss (June 2015: R14 million gain; Dec 2015: R153 million gain) recognised on equity securities, R110 million (June 2015: R13 million; Dec 2015: 
R152 million) relates to the SEM target shares, of which R39 million (June 2015: R34 million; Dec 2015: R105 million) relates to foreign exchange losses (June 2015: 
losses; Dec 2015: gains), and R71 million (June 2015: R47 million; Dec 2015: R47 million) to a decrease (June 2015: increase; Dec 2015: increase) in fair value. Key 
drivers of the decrease in fair value were:

-  A downward adjustment to the value of the Pacific & Orient Insurance Co. Berhad (P&O) business in Malaysia of R37 million due to lower premium growth. There is a 
   significant focus on expanding the current product offering.

-  A reduction in the value of the investment in Soras Assurance Generales Ltd (Soras) in Rwanda of R46 million following financial irregularities identified during this 
   period relating to prior years. Corrective measures were taken to address these irregularities.

The fair value of the SEM target shares is determined using discounted cash flow models. The most significant assumptions used in these models are the discount rate, 
exchange rate and net insurance margin expectations. Should the discount rates increase or decrease by 10%, the cumulative value of the most significant target shares 
would decrease by R108 million (June 2015: R98 million; Dec 2015: R114 million) or increase by R159 million (June 2015: R149 million; Dec 2015: R172 million), 
respectively. If the relative foreign exchange rates increase or decrease by 10%, the cumulative fair values will increase or decrease by R68 million (June 2015: 
R68 million; Dec 2015: R73 million). Should the net insurance margin profile (projected over a period of 10 years) increase or decrease by 10%, the cumulative fair
values will increase by R72 million (June 2015: R68 million; Dec 2015: R79 million) or decrease by R73 million (June 2015: R67 million; Dec 2015: R78 million), 
respectively.

The debt securities and short-term money market instruments classified as level 3 predominantly consist of African Bank Investments Ltd and African Bank Ltd instruments. 
These instruments are valued at the closing market price as listed on the JSE.

The interest rate derivatives represent the fair value of interest rate swaps effected on a total of R100 million (June 2015: R100 million; Dec 2015: R100 million) of
fixed interest securities held in the investment portfolio underlining the subordinated callable notes. The interest rate swaps have the effect of swapping a variable
interest rate for a fixed interest rate on these assets to eliminate interest rate risk on assets supporting the bond liability. The derivatives mature on 12 June 2017. 

During 2007, the company issued unsecured subordinated callable notes to the value of R1 billion in two tranches. The  fixed effective rate for the R600 million issue
was 8.6% and 9.6% for the second tranche of R400 million, representing the R203 companion bond plus an appropriate credit spread at the time of the issues. The fixed 
coupon rate, based on the nominal value of the issues, amounts to 8.25% and for both tranches the optional redemption date is 15 September 2017. Between the optional 
redemption date and final maturity date of 15 September 2022, a variable interest rate (JIBAR-based plus additional margin) will apply. 

During April 2016, the company issued additional unsecured subordinated callable notes to the value of R1 billion in two equal tranches of fixed and floating rate 
notes. The effective rate for the floating rate notes amounted to 9.69%, representing the 3-month JIBAR plus 245 basis points at the time of the issue, while the rate
for the fixed rate notes amounted to 11.77%. The floating rate notes have a call date of 12 April 2021, and the fixed rate notes a call date of 12 April 2023.

Per the conditions set by the Regulator, Santam is required to maintain liquid assets equal to the value of the callable notes until maturity. The callable notes are 
therefore measured at fair value to minimise undue volatility in the statement of comprehensive income. 

In February 2015, a zero cost fence structure was entered into based on the SWIX 40, providing 10% downside protection from the implementation level of 10 443, with up
side participation (excluding dividends) of 10.9%. The structure matured on 17 December 2015 and was not renewed. In May 2016, a zero cost fence structure was entered 
into based on the SWIX 40, providing 10% downside protection from the implementation level of 10 621, with upside participation (excluding dividends) of 10.3%. The 
structure will mature on 15 December 2016.

                                                       Reviewed at   Reviewed at   Audited at
                                                      30 June 2016  30 June 2015  31 Dec 2015
                                                         R million     R million    R million
7.  Insurance liabilities and reinsurance assets
Gross insurance liabilities
Long-term insurance contracts
- claims reported and loss adjustment expenses                   8            13            6
- claims incurred but not reported                              30            24           30
General insurance contracts
- claims reported and loss adjustment expenses               6 972         6 612        6 273
- claims incurred but not reported                           1 762         1 535        1 567
- unearned premiums                                          4 228         3 793        4 788
Total gross insurance liabilities                           13 000        11 977       12 664

Non-current liabilities                                      1 423         1 543        1 525
Current liabilities                                         11 577        10 434       11 139
Recoverable from reinsurers
Long-term insurance contracts
- claims reported and loss adjustment expenses                   4             6            3
- claims incurred but not reported                               7             5            7
General insurance contracts
- claims reported and loss adjustment expenses               2 781         2 502        2 220
- claims incurred but not reported                             289           243          272
- unearned premiums                                          1 036           972        1 176
Total reinsurers' share of insurance liabilities             4 117         3 728        3 678

Non-current assets                                             164           179          164
Current assets                                               3 953         3 549        3 514

Net insurance liabilities
Long-term insurance contracts
- claims reported and loss adjustment expenses                   4             7            3
- claims incurred but not reported                              23            19           23
General insurance contracts
- claims reported and loss adjustment expenses               4 191         4 110        4 053
- claims incurred but not reported                           1 473         1 292        1 295
- unearned premiums                                          3 192         2 821        3 612
Total net insurance liabilities                              8 883         8 249        8 986

8.  Non-current assets held for sale
Santam Ltd initially set up the Santam International group in 2002 to facilitate the expansion into Europe. Santam International Ltd (Santam International) directly 
and indirectly held three subsidiaries called Santam UK Ltd, Westminster Motor Insurance Agency Ltd (WMIA) and Santam Europe Ltd (Europe). The holdings in WMIA and 
Europe were sold in 2008 and Santam International only retained deferred conditional rights relating to the sale contracts. WMIA and Europe were renamed subsequent to
the sale to Cardrow Insurance Ltd (Cardrow) and Beech Hill Insurance Ltd (Beech Hill), respectively.

The deferred conditional rights relating to Cardrow were realised during the first half of 2016 when it paid a dividend of R394 million. Beech Hill was still recognised
as held for sale in the group as at 30 June 2016. It is expected that these deferred conditional rights will also be realised before the end of 2016.

Once the assets have been realised in full, management will commence a process to unwind the Santam International group. The completion of the unwinding process is 
subject to regulatory approval.

                                                          Reviewed at     Reviewed at        Audited at
                                                         30 June 2016    30 June 2015       31 Dec 2015
                                                            R million       R million         R million

Assets that are classified as held for sale
Financial assets at fair value through income
  Equity securities                                                 -             326               390
  Loans and receivables including insurance receivables           125             126               151
  Investment in associates                                          -             225                 -
                                                                  125             677               541

                                                                                                  Reviewed          Reviewed        Audited
                                                                                          Six months ended  Six months ended     Year ended
                                                                                              30 June 2016      30 June 2015    31 Dec 2015
                                                                                                 R million         R million      R million
9.  Investment income and net (losses)/gains on financial assets and liabilities
Investment income                                                                                      441               502          1 210
  Dividend income                                                                                       36                74            119
  Interest income                                                                                      451               366            729
  Foreign exchange differences                                                                         (46)               62            362
Net (losses)/gains on financial assets and liabilities at fair value through income                    101               265            235
  Net realised gains on financial assets                                                                27               505          1 010
  Net fair value gains/(losses) on financial assets designated as at fair value through income          98              (264)          (850)
  Net realised/fair value (losses)/gains on derivative instruments                                      (5)                9             43
  Net fair value gains on short-term money market instruments                                           12                 8              7
  Net fair value (losses)/gains on financial liabilities designated as at fair value through income    (31)                7             25
    Net fair value (losses)/gains on debt securities                                                   (31)                7             25
Investment income and net losses on financial assets held for sale*                                     13                 -              -
  Dividend income                                                                                      394                 -              -
  Net fair value losses                                                                               (381)                -              -
                                                                                                       555               767          1 445

*  Dividend income for the group includes a dividend of R394 million resulting from the realisation of the value in the non-current assets held
   for sale. This resulted in the net fair value of the related investment being reduced by R381 million.

                                                        Reviewed          Reviewed       Audited
                                                Six months ended  Six months ended    Year ended
                                                    30 June 2016      30 June 2015   31 Dec 2015
                                                       R million         R million     R million

10.  Income tax
Normal taxation
  Current period                                             228               376         1 077
  Prior period                                                 -                14            24
  Recovered from cell owners                                 (54)              (39)          (67)
Foreign taxation - current period                             33                29            57
Total income taxation for the period                         207               380         1 091
Deferred taxation
  Current period                                             129                22          (170)
  Prior period                                                 -               (12)          (13)
  Recovered from cell owners                                   -                 -             -
Total deferred taxation for the period                       129                10          (183)
Total taxation as per statement of comprehensive income      336               390           908

Reconciliation of taxation rate (%)
Normal South African taxation rate                          28.0              28.0          28.0
Adjusted for:
  Disallowable expenses                                      0.6               1.4           0.7
  Foreign tax differential                                   0.5               0.4           0.2
  Exempt income                                             (1.5)             (1.6)         (1.2)
  Investment results                                         0.1              (1.4)         (0.9)
  Change in CGT inclusion rate*                              4.1                 -             -
  Income from associates                                    (1.3)             (0.9)         (1.0)
  Previous periods' underprovision                             -               0.1           0.3
  Other permanent differences                                0.1               0.8           0.7
  Other taxes                                                  -                 -           0.1
Net increase/(reduction)                                     2.6              (1.2)         (1.1)
Effective rate (%)                                          30.6              26.8          26.9

*  The increase in the CGT inclusion rate resulted in an increase in the deferred tax provision on fair value movements of R45 million.


11. Corporate transactions
2016
Acquisitions
Saham Finances
The transaction to acquire a 30% shareholding in Saham Finances, together with SEM, announced in November 2015, was finalised during the first quarter of 2016. The 
acquisition was structured through a special purpose vehicle held jointly by SEM (75%) and Santam (25%) for a total cash consideration of US$400 million. Santam's 
share of the purchase consideration, amounting to US$100 million, was funded from internal cash resources. Santam acquired sufficient foreign currency in addition to 
existing dollar assets to cover the purchase consideration before the transaction was concluded in November 2015. A cash flow hedge was implemented on 24 November 2015
to cover Santam's foreign currency exposure by designating these US dollar-denominated cash balances to the transaction. The impact of this was that foreign currency 
gains of R140 million (June 2015: Rnil; Dec 2015: R134 million) recognised on the designated cash balances since implementation date were not recognised in the 
statement of comprehensive income, but were accounted for as part of the investment in Saham Finances. Therefore, the cost price of the investment, net of the cash 
flow hedge impact, was R1 412 million.

Professional Provident Society Short-term Insurance Company Ltd (PST)
During March 2016, Santam purchased 49% of PST for R55 million in cash.

2015
Disposals
Indwe Broker Holdings Group (Pty) Ltd
On 31 December 2015, Santam Ltd, as well as Swanvest 120 (Pty) Ltd, Main Street 409 (Pty) Ltd and Thebe Risk Services Holdings (Pty) Ltd (all wholly-owned subsidiaries
of Santam Ltd) sold 26.34%, 13.82%, 16.8% and 19.04% respectively of their shareholding in Indwe Broker Holdings Group (Pty) Ltd to Sanlam Life Insurance Ltd (25%) and
African Rainbow Capital (Pty) Ltd (51%) for R208 million in total. The net profit realised was R15 million and capital gains tax of R5 million  was recognised. The 
remaining 24%, held by Swanvest 120 (Pty) Ltd, was classified as a joint venture and remeasured to fair value, resulting in a gain of R3 million (included in the 
profit on sale).

                                                                     R million
Details of the assets and liabilities disposed of are as follows:
Property and equipment                                                      23
Intangible assets                                                          223
Deferred taxation                                                            5
Loans and receivables                                                        6
Cash and cash equivalents                                                  183
Provisions for other liabilities and charges                                (1)
Trade and other payables                                                  (170)
Current income tax liabilities                                             (10)
Net asset value disposed of                                                259
Profit on sale                                                              15
Less: Fair value of remaining investment                                   (66)
Less: Purchase price receivable                                           (208)
Purchase consideration received                                              -

The purchase consideration was received in 2016.

Credit Guarantee Insurance Corporation of Africa Ltd
On 9 October 2015, Santam Ltd sold its 33.6% shareholding in Credit Guarantee Insurance Corporation of Africa Ltd for R602 million. The net profit realised was 
R392 million and capital gains tax of R91 million was recognised.

Censeo (Pty) Ltd
On 31 May 2015, Swanvest 120 (Pty) Ltd sold its 37.5% shareholding in Censeo (Pty) Ltd for R23 million. The net profit realised was R21 million and capital gains tax
of R4 million was recognised.

                              Reviewed at   Reviewed at   Audited at
                             30 June 2016  30 June 2015  31 Dec 2015
                                R million     R million    R million
Goodwill reconciliation
Opening balance                       598           833          833
Impairment                             (1)          (30)         (47)
Disposal of subsidiary                  -             -         (188)
Closing balance                       597           803          598

                                                                                            Reviewed          Reviewed      Audited
                                                                                    Six months ended  Six months ended   Year ended
                                                                                        30 June 2016      30 June 2015  31 Dec 2015
12. Earnings per share
Basic earnings per share
Profit attributable to the company's equity holders (R million)                                  697               995        2 348
Weighted average number of ordinary shares in issue (million)                                 110.19            114.31       112.34
Earnings per share (cents)                                                                       633               870        2 090

Diluted earnings per share
Profit attributable to the company's equity holders (R million)                                  697               995        2 348
Weighted average number of ordinary shares in issue (million)                                 110.19            114.31       112.34
Adjusted for share options                                                                      1.04              0.65         1.38
Weighted average number of ordinary shares for diluted earnings per share (million)           111.23            114.96       113.72

Diluted basic earning per share (cents)                                                          627               865        2 065

Headline earnings per share
Profit attributable to the company's equity holders (R million)                                  697               995        2 348
Adjusted for:
  Impairment of goodwill and other intangible assets                                               1                36           52
  Profit on sale of subsidiary                                                                     -                 -          (15)
  Tax charge on profit on sale of subsidiary                                                       -                 -            5
  Profit on sale of associated companies                                                           -               (21)        (413)
  Tax charge on profit on sale of associated companies                                             -                 4           95
Headline earnings (R million)                                                                    698             1 014        2 072

Weighted average number of ordinary shares in issue (million)                                 110.19            114.31       112.34
Headline earnings per share (cents)                                                              633               887        1 844

Diluted headline earnings per share
Headline earnings (R million)                                                                    698             1 014        2 072
Weighted average number of ordinary shares for diluted headline earnings per share (million)  111.23            114.96       113.72
Diluted headline earnings per share (cents)                                                      628               882        1 822

13. Dividend per share
Dividend per share (cents)                                                                       311               288          816
Special dividend per share (cents)                                                               800                 -            -



14. Broad-based black economic empowerment (BBBEE)
In May 2007, Central Plaza Investments 112 (Pty) Ltd acquired 10% of Santam's shares with the following beneficiaries:

- Emthunzini Black Economic Empowerment Staff Trust
- Emthunzini Black Economic Empowerment Business Partners Trust
- Emthunzini Broad-based Black Economic Empowerment Community Trust

The scheme matured in February 2015. Of the shares held by Central Plaza Investments 112 (Pty) Ltd, Santam repurchased 38% of the shares (4 215 000 shares at a price 
of R190 per share for a total consideration of R801 million) and 24% were sold in the market through a successful bookbuild during the unwinding process, and the 
balance distributed to participants.

The consequent distribution of Santam shares and cash valued at R1.1 billion to the beneficiaries started in September 2015 with R530 million allocated to close to 
2 400 Santam and Sanlam employees. Santam shares and cash to the value of R330 million were distributed to 68 black business partners, while the Emthunzini Community 
Trust received Santam shares and cash to the value of R275 million. The unwinding of the scheme had a minimal impact on Santam's black ownership status.

The Emthunzini Black Economic Empowerment Staff Trust is also under the control of Santam Ltd since the unwinding of Central Plaza and is therefore consolidated as at
31 December 2015. The net impact of the inclusion of the staff trust at 31 December 2015 was an increase in cash of R132 million, the recognition of the capital 
contribution reserve of R9 million and an increase of 684 482 in treasury shares.

15.  Events after the reporting period
Santam and the shareholders of RMB-SI Investments Proprietary Limited (RMB-SI) have reached an agreement in terms of which Santam will acquire 100% of the issued 
share capital of RMB-SI.  RMB-SI has over the years pioneered an innovative specialist insurance structuring business, offering its partners and clients individually
designed and innovative insurance solutions. RMB-SI’s 22.4% interest in Truffle Capital Proprietary Limited (Truffle) is excluded from the scope of the transaction. 
The transaction is still subject to regulatory approvals by the Financial Services Board and the competition authorities in South Africa, as well as the relevant 
regulatory authorities in Mauritius and Ireland.

There have been no other material changes in the affairs or financial position of the company and its subsidiaries since the statement of financial position date.


NON-EXECUTIVE DIRECTORS
B Campbell, MP Fandeso, BTPKM Gamedze, GG Gelink (chairman), IM Kirk, MLD Marole, JP Moller, T Nyoka, Y Ramiah, MJ Reyneke

EXECUTIVE DIRECTORS
L Lambrechts (chief executive officer), HD Nel (chief financial officer)

COMPANY SECRETARY
M Allie

TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg 2001
PO Box 61051, Marshalltown 2107
Tel: 011 370 5000
Fax: 011 688 7721
www.computershare.com

SANTAM HEAD OFFICE AND REGISTERED ADDRESS
1 Sportica Crescent
Tyger Valley, Bellville 7530
PO Box 3881, Tyger Valley 7536
Tel: 021 915 7000
Fax: 021 914 0700
www.santam.co.za

Registration number 1918/001680/06
ISIN ZAE000093779
JSE share code: SNT
NSX share code: SNM

SPONSOR
Investec Bank Ltd
Santam is an authorised financial services provider (licence number 3416).


INSURANCE GOOD AND PROPER
www.santam.co.za

Date: 31/08/2016 02:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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