Short-term insurer Santam on Monday delivered a stellar set of results for the year ended December 31, 2024 with earnings up 51% despite footing millions of rands in underwriting losses from big weather events.
Tavaziva Madzinga, Santam’s Group CEO, characterised 2024 as "a difficult year with tailwinds and economic constraints". Despite this the group showed steady growth, with headline earnings per share rocketed 51% to 3 477 cents from 2023.
Santam posed a final dividend of 985c per share, up 9% from last year, bringing the total dividends for 2024 to 1 520c.
By 1.35pm the share price on the JSE was 1.31% lower at R398.06
Liam Hechter, a fund manager at Anchor Capital said, "The Santam results were good from what I have seen, they were slightly ahead of our forecasts, however, they were within the recently guided to earnings range. Short-term insurers are currently in a firm pricing environment meaning this has cyclically been a good time for them."
The dividend was possibly slightly lower than what investors were expecting, although with a limited number of analysts that cover the stock it’s not easy to really tell what expectations were, he said.
Gross Written Premium (GWP) climbed 11% to R41.3 billion, while Net Earned Premium grew a solid 10%. Investment returns on capital jumped to R1.3bn from R1.1bn, and the net underwriting margin leapt to 7.6% from a leaner 3.5% in 2023 - landing comfortably in the company’s 5%-10% target range. Santam’s balance sheet looks rock-solid too, with an economic capital coverage ratio of 166%, up from 155% in 2023, just above its 145%-165% sweet spot.
It wasn’t all smooth sailing, though. South Africa’s economy took its knocks in 2024—high inflation and interest rates squeezed disposable incomes, while extreme weather events kept claims teams busy.
The result is underpinned by significant weather related losses. Gross claims paid to policyholders hit R28.6bn, down marginally from R29.9bn in 2023, with weather-related catastrophes steady at R748 million, marginally higher than the R744m seen the year before.
Still, Santam’s motor and property books grew GWP by 7% and 10%, respectively, and its alternative risk transfer (ART) business stole the show, boosting profit contribution by 51% to R781m.
Madzinga credited the company’s refreshed FutureFit 2030 strategy for the turnaround.
"The positive turnaround in electricity supply in 2024 and progress in addressing the country’s infrastructure challenges, bode well for future economic growth in South Africa," he said.
"More importantly, over the last two years we have built a solid foundation with our refreshed strategy, which set in place appropriate mechanisms to not only meet the challenging market conditions but ensured that our multi-channel operating model responded well to the needs of our policyholders, intermediaries and other stakeholders."
The strategy’s paid off, with the underwriting margin hitting 7.6% despite R652m in losses from big weather events - Western Cape, Eastern Cape, and KwaZulu-Natal - and R238m in fire-related claims, down from R536m in 2023.
Madzinga said the firm has been driving a whole host of actions, such as working with municipalities of fire prevention and alerts, but this is a key priority for 2025, which will drive margin progression. There will be tighter underwriting actions, or exclusions on risks that are unsustainable ahead.
On the growth front, South Africa still dominates, delivering 82% of GWP at R33.9bn, up from R31.5bn, while international business chipped in 18% with R7.4bn.
The transfer of MTN’s in-force book to Santam’s licence in quarter one 2024 gave the Partner Solutions arm a boost, and an A- (Excellent) rating from AM Best, secured late last year, has opened doors for global expansion. Santam Re’s restructuring is also set to bear fruit down the line, the insurer said.
Out on SENS ☂️ | SNT |
— Cratos Asset Management (@CratosAM) March 3, 2025
• Santam's headline earnings per share (HEPS) rose 51% to 3,477 cents, topping the Bloomberg estimate of 3,226c, & slightly ahead of the mid-point of guidance.
• Insurance revenue +12%
• Underwriting margin 7.6% (2023: 3.5%) due to fewer weather events… pic.twitter.com/Spnp3yFtlD
Looking ahead to 2025, "Santam is positive about topline growth prospects in 2025."
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