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Operational update to Shareholders
SANTAM LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1918/001680/06)
(Share Code: SNT & ISIN: ZAE000093779)
A2X share code: SNT
NSX share code: SNM
Bond company code: BISAN
(‘Santam’ or the ‘Santam Group’)
OPERATIONAL UPDATE TO SECURITYHOLDERS FOLLOWING THE SANTAM BOARD MEETING HELD ON 27 NOVEMBER 2019
This is a general communication to Santam shareholders and noteholders (‘Securityholders’) to
inform them of the business performance of the Santam Group for the ten-month period ended 31
October 2019.
Conventional insurance business
The Santam Group’s conventional insurance business segment achieved strong underwriting results
with a net underwriting margin well above the midpoint of the target range of 4% to 8%. Following a
difficult first four months of the year, with a number of catastrophe events and significant crop
insurance losses, the business experienced a subdued claims environment up to the end of October
2019. Acceptable growth in gross written premium was achieved. The investment return on
insurance funds remained stable and in line with the June 2019 return margin.
The Santam Commercial and Personal intermediated business continued to experience strained
gross written premium growth in the current difficult economic climate. The loss ratio benefited from
the benign claims environment since the June 2019 reporting period.
The Santam Specialist business continued to experience strong growth in the corporate property
and engineering businesses, although somewhat subdued since June 2019. The specialist
insurance classes achieved satisfactory underwriting results across the diverse portfolio. The Trade
Credit Business that is in run-off since August 2019, continued to incur underwriting losses.
MiWay maintained its positive growth momentum and underwriting performance since June 2019.
Santam Re continued to expand its third-party business outside South Africa and achieved
acceptable underwriting results.
Alternative risk transfer business (‘ART’)
The ART business segment reported strong growth in income from clients. Good underwriting
results and investment margins contributed to excellent growth in operating profit.
Sanlam Emerging Market (‘SEM’) partner businesses
Economic conditions in the emerging markets where the SEM partner general insurance businesses
operate remained broadly unchanged from the first half of 2019, with the exception of Angola and
Lebanon. The Angolan currency depreciated significantly since the Central Bank removed the
trading band it had put in place to protect the currency, resulting in inflationary pressure and
contributing to foreign currency translation losses due to foreign currency liquidity constraints.
Pressure on the Lebanese economy and general operating environment intensified following social
unrest and political uncertainty. The SEM team is managing these risks closely.
Saham continues to outperform its top-line targets by a considerable margin. Claims experience
however remains under pressure, with the overall general insurance underwriting margin below the
bottom end of the 5% to 9% target range. Saham continues to implement corrective measures,
including repricing and improved claims management. The investment performance has, however,
been better than expected, which partly offsets the lower underwriting result.
Shriram General Insurance maintained its strong underwriting performance since June 2019, while
continuing to deliver solid growth despite a tougher economic environment.
Investment performance
The Santam Group achieved improved investment income results, given the positive market value
movements on the equity and bond portfolios and foreign currency gains during the period to end
October 2019.
Headline earnings remain susceptible to the inherent volatility of underwriting and investment
activities.
The next set of Santam results will be for the year to 31 December 2019, to be released on the Stock
Exchange News Service on 5 March 2020.
CAPE TOWN
27 NOVEMBER 2019
Equity Sponsor: Investec Bank Limited
Debt Sponsor: RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 27-11-2019 03:15:00
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