Santam, one of South Africa’s leading insurers, has reported a significant rise in annual profits despite facing substantial claims linked to extreme weather events. For the financial year ending December 2024, the company saw a 21% increase in insurance revenue, reaching R52.3 billion. Headline earnings per share (HEPS) surged by 51% to R34.77, while overall profit climbed to R4.35 billion from R3.38 billion in the previous year. The insurer attributed this performance to strategic underwriting actions, premium adjustments, and higher efficiency in managing claims. However, weather-related catastrophe claims amounted to R748 million, highlighting the growing impact of climate-related risks on the insurance industry.
Santam’s core insurance segments delivered strong results, with conventional insurance premiums rising by 10% to R32.2 billion. Its net underwriting margin improved to 7.6%, well within its target range, despite significant losses in the motor and property divisions. The company’s alternative risk transfer (ART) business also performed well, posting a pre-tax profit increase to R781 million. Internationally, Santam’s share in the Indian and Malaysian markets grew by 20%, although net insurance results dipped by 3% due to lower investment returns. Meanwhile, rising vehicle repair costs and persistently high unemployment in South Africa pressured growth in motor insurance, while extreme weather conditions continued to challenge the property segment.
Despite these hurdles, Santam remains optimistic about future growth, particularly beyond South Africa, where its market share remains relatively low. The company has adapted its strategy to focus more on direct channels and underserved market segments, aiming to drive financial inclusion. To counter rising claims costs, Santam has implemented measures such as segmented premium hikes, stricter risk assessments, and improved underwriting techniques. These adjustments have helped stabilise losses, particularly in motor and property insurance, allowing the company to turn its property book from a loss contributor to a profitable segment. With inflation easing and interest rates declining, Santam anticipates some relief for consumers, potentially boosting affordability and demand for insurance products in the coming years.