MA-Afrika Western Cape High Court Judgment SANTAM LIMITED (Incorporated in the Republic of South Africa) Registration number: 1918/001680/06 JSE Share Code: SNT & ISIN: ZAE000093779 NSX share code: SNM (“Santam” or the “Company” or the “Group”) MA-AFRIKA WESTERN CAPE HIGH COURT JUDGMENT Santam has taken note of the judgement against the Company, delivered on Tuesday 17 November by the Western Cape High Court, in the matter between Santam and Ma-Afrika Hotels (Pty) Ltd and Stellenbosch Kitchen (Pty) Ltd, relating to policies with Contingent Business Interruption (CBI) infectious disease extensions (the Ma-Afrika judgement). The detailed and complex nature of the Ma-Afrika judgement, as well as its implications, require careful consideration. We have discussed the implications of the judgement with our lead reinsurers and key stakeholders to arrive at a comprehensive response. The Ma-Afrika judgement refers to both the Café Chameleon vs Guardrisk matter as well as the Financial Conduct Authority (FCA) judgements in the United Kingdom. These judgements have been taken on appeal with final judgements expected by late 2020 or early in 2021. Santam believes that the Western Cape High Court erred in its judgement regarding causation and the insured peril, the trends clause and the indemnity period, and is therefore seeking leave to appeal to a higher court. Santam is of the view that its catastrophe reinsurance will limit the net cost of contingent business interruption claims. However, the extent of the reinsurance recoveries will ultimately depend on the response of reinsurers to the outcome of the legal process. Following the Ma-Afrika judgement, Santam has increased its net CBI claims provision by R1.7 billion in addition to the R1.3 billion that was raised in June 2020. The increase in the provision is mainly due to the Ma-Afrika judgement in favour of the insureds and the different view taken by the court regarding the indemnity period applicable to the CBI extension. Santam’s view is that the indemnity period is limited to three months. The court, however, found that the indemnity period is eighteen months in this particular matter. The potential outcome of an appeal against the Ma-Afrika judgement, including other relevant court rulings on these and other Santam policy wordings may materially impact Santam’s assessment of the estimated net CBI claims. This could result in significantly higher or lower actual claims. Also, the inherent complexity of business interruption claims, as well as bespoke policy wordings for corporate clients, require significant assumptions to be applied to determine the best estimate net CBI claims provisions. The overall financial impact of Santam’s CBI exposures will therefore take some time to finalise. The Company will continue to update the market on changes to its best estimate of CBI claims provisions as more information becomes available. During August 2020 R1 billion of the R1.3 billion CBI provision raised in June 2020 was paid out in the form of relief payments to mainly small and medium-sized commercial policyholders in the hospitality, leisure and non-essential retail services industries that have the CBI cover extension and suffered a loss due to the national lockdown. These payments will be considered advance payments against any finally determined claims, if the courts ultimately rule in favour of the insureds. Should the courts rule in favour of Santam, then the amounts paid will be considered relief payments and will not be recovered from the insureds. Santam will continue to communicate regularly through our intermediaries to update our clients on the status of individual claims, especially those impacted by the Ma-Afrika judgement. Santam is committed to paying claims as quickly as possible as and when legal processes are concluded. Underwriting results for the Santam Conventional insurance business continued to benefit from lower claims frequency during the third quarter of 2020. The economic capital coverage ratio of the Group as at 31 October 2020, including the additional net CBI claims provisions of R1.7 billion, remains at the bottom end of the target range of 150% to 170%. The financial information included in this announcement has not been reviewed or reported on by Santam’s external auditors. Santam will provide a more detailed update of its performance in its operational update for the ten month period to 31 October 2020 to be released on or about 2 December 2020. 20 November 2020 Sponsor: Investec Bank Limited Date: 20-11-2020 12:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 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