Santam Limited · JSE:SNT
Santam — FY2024 Earnings Presentation
47 slides from Santam's earnings presentation, Mar 3, 2025
Slide 1: 2024 Analyst presentation
2024 Analyst presentation Financial results for the year ended 31 December 2024 Presented by: Tavaziva Madzinga and Wikus Olivier 3 March 2025 Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Slide 2: Contents
Contents 1. Key messages 03 2. Operating environment 04 3. Operating highlights 07 4. Strategy overview 11 5. Financial results 14 6. Capital management 40 7. Closing remarks 43 Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for it
Slide 3: Key messages
Key messages • Improved performance despite significant headwinds • Broker partnerships strengthened to in the operating environment maintain dominance in intermediated segments • Improvement in Conventional insurance • Good progress with transformation of the direct underwriting margin despite weat
Slide 4: Operating environment
Operating environment Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies. Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group compani
Slide 5: Resilient global growth amidst geopolitical tensions and extreme weather events
Resilient global growth amidst geopolitical tensions and extreme weather events Sustained temperature increase continues to fuel extreme The global economy is stabilising amidst policy uncertainty weather events GLOBAL GDP GROWTH (%) DAILY AVERAGE TEMPERATURE (1958 – 2024) 8 GLOBAL GDP 6.6 18 6 17 3
Slide 6: SA personal lines market remains under pressure
SA personal lines market remains under pressure South Africa continues to face persistent structural challenges High debt ratios continue to significantly affect households’ despite optimism surrounding the GNU disposable income SA GDP AND INFLATION (%) 50% 10 8.0 Distress GLOBAL GDP 40% 4.9 30% 5 6
Slide 7: Operating highlights
Operating highlights Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Slide 8: Performance update: Year ended December 2024
Performance update: Year ended 31 December 2024 GROWTH EARNINGS FINANCIAL STRENGTH VALUE DRIVERS Underwriting margin for Group economic capital Direct as % of GWP 17% Conventional insurance coverage ratio of 166% (2023: 17%) conventional insurance business GWP growth of 10.5% (2023: 155%) of 7.6% (2
Slide 9: Catastrophe losses remain elevated
Catastrophe losses remain elevated • Despite high weather- The average cost of natural catastrophe (NatCat) perils that Santam has paid over the past 10 years has related claims costs, increased compared to the preceding decade. The heightened NatCat claims for Santam now appear to Santam remains in
Slide 10: MiWay turnaround on track
MiWay turnaround on track Traction from new initiatives are contributing to growth, with GWP recording double-digit growth in Q4. Personal lines growth also accelerating towards the desired level. POLICY COUNT GROWTH RECOVERY – GWP - QUARTERLY TRENDS QUARTERLY TRENDS Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Q2
Slide 11: Strategy overview
Strategy overview Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies. Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Slide 12: We have made progress in implementing our refreshed strategy
We have made progress in implementing our refreshed strategy and enhanced our ability to withstand the headwinds Our purpose To safeguard what is important to our clients Strategic intent Leading South African insurer driven by data, with the client at the centre of everything we do Values Care Coll
Slide 13: Our long term targets to 2030
Our long term targets to 2030 FINANCIAL GWP GROWTH NET DIVERSIFICATION RATE UNDERWRITING International GWP MARGIN >20% CPI + GDP + 1% to 2% 5% to 10% Direct GWP> 30% RETURN ON DIVIDEND CAPITAL CAPITAL GROWTH COVERAGE RATIO In line with NEP >24% growth 145% to 165% NON-FINANCIAL POLICY COUNT CUSTOMER
Slide 14: Financial results
Financial results Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Slide 15: Results at a glance
Results at a glance For the year ended For the year ended 31 December 2024 31 December 2023 NEP growth 9.7% 5.8% Claims ratio 61.1% 66.2% Acquisition costs ratio 31.3% 30.3% Underwriting margin 7.6% 3.5% Investment return on insurance funds 2.6% 2.6% Net insurance result 10.2% 6.1% Return on capital
Slide 16: Exchange rate volatility
Exchange rate volatility CLOSING RATES Currency Dec-24 Dec-23 Change United States Dollar 18.87 18.29 (3.2%) Euro 19.54 20.20 3.3% Indian Rupee 0.22 0.22 0.7% AVERAGE RATES Currency Dec-24 Dec-23 Change United States Dollar 18.32 18.44 0.7% Euro 19.81 19.93 0.6% Indian Rupee 0.22 0.22 2.0%
Slide 17: Investment market performance
Investment market performance RETURN FOR THE YEAR INDEX Dec-24 Dec-23 JSE All Share 13.4% 9.3% JSE Swix 40 10.7% 7.3% JSE All Bond 17.2% 9.7% SA Money Market (STeFI) 8.5% 8.0% USD Money Market (SOFR) 5.4% 5.6%
Slide 18: Business volumes
Business volumes Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies. Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Slide 19: Gross written premium vs CPI + GDP growth
• Double-digit growth from Conventional insurance Santam Re despite cancelled business GROSS WRITTEN PREMIUM VS CPI + GDP GROWTH • Partner Solutions benefitting from MTN partnership 10.5 11 9.4 • New initiatives at MiWay 9.1 8.2 driving double-digit growth 8 7.2 7.3 in 4Q24 – overall growth 5.4 5.3
Slide 20: Conventional insurance: personal and commercial GWP
Conventional insurance GROSS WRITTEN PREMIUM SEGMENTAL ANALYSIS – PERSONAL AND COMMERCIAL • Personal lines – good growth from all 8.5% business units, reflecting rate 24 435 strengthening and 25 000 22 519 MTN contribution 13.6 % • Commercial lines 20 000 supported by strong 16 873 14.4% growth at B
Slide 21: Conventional insurance: GWP per insurance class
Conventional insurance GROSS WRITTEN PREMIUM • Good growth in Motor at Broker Solutions, PER INSURANCE CLASS (R’M) Client Solutions and MiWay; more muted 16 786 Motor 7% growth at Specialist 15 738 Solutions 15 435 Property 10% • Property benefitting 14 076 from rate 2 804 strengthening, Liability 4
Slide 22: Conventional insurance: GWP from outside SA
Conventional insurance GROSS WRITTEN PREMIUM FROM OUTSIDE SA • Strong growth in 27.3% Namibia niche 8 000 classes 7 437 • Business gained through 6 000 44.4% 5 844 SanlamAllianz partnership declined 4 745 due to seasonality • R million 4 000 Other international 3 286 reflects strong growth (2.8%) at
Slide 23: Conventional insurance: geographic analysis
Conventional insurance GROSS WRITTEN PREMIUM GEOGRAPHIC ANALYSIS (%) 11% • Positive momentum at Santam Re and 9% Specialist Solutions 7% outside of South 7% Africa • Focus remains on exporting proven capabilities in Santam Re and Specialist Solutions to drive international diversification • Supporte
Slide 24: Reinsurance as % of gross earned premium
Conventional insurance REINSURANCE AS % OF GROSS EARNED PREMIUM 25 20 • Single-digit rate increases in January 2024 renewal for excess-of-loss and 15 catastrophe Percentage programmes 20.7 22.1 20.9 • Optimisation of 10 19.2 20.6 19.2 18.6 programme reduced reinsurance cost 5 • Reduction in rates ac
Slide 25: Earnings
Earnings Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies. Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Slide 26: Analysis of earnings
Analysis of earnings • Marked improvement in profitability of in-force book following R million Dec-24 Dec-23 Variance underwriting actions Conventional 4 604 2 910 58% • Favourable investment market performance Net insurance result 3 264 1 790 82% supported investment Investment return on capital 1
Slide 27: Operating earnings
Operating earnings Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies. Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Slide 28: Net insurance result: Conventional
Net insurance result: Conventional Dec-24 Dec-23 % of NEP % of NEP % change R million R million Gross written premium 41 308 37 368 10.5% Net earned premium 32 192 100.0% 29 335 100.0% 9.7% Claims incurred 19 657 61.1% 19 420 66.2% 1.2% Acquisition cost 10 094 31.3% 8 884 30.3% 13.6% Commission 4 27
Slide 29: Net insurance result as % of net earned premium
Conventional insurance NET INSURANCE RESULT: AS A % OF NET EARNED PREMIUM • Underwriting margin within 5% - 10% target range • Catastrophe claims and 12.5 11.6 large losses of R953 million (2023: R1.2 10.1 10.2 billion) in Broker 2.4 9.5 Solutions and Client 10.0 Solutions 2.4 1.5 2.6 • 2024: KZN fl
Slide 30: Net underwriting result: personal and commercial
Conventional insurance NET UNDERWRITING RESULT: PERSONAL AND COMMERCIAL • Personal lines supported by reduced 44.2% attritional losses and non-recurrence of run- 1 518 off losses from 1 500 cancelled business in 2023 >100% • Commercial benefitted 1 100 1 053 in 2023 from CBI 923 R million >100% rese
Slide 31: Net acquisition cost as % of net earned premium
Conventional Insurance NET ACQUISITION COST: AS A % OF NET EARNED PREMIUM 35 31.3 • Stringent focus on 30.4 30.2 30.0 29.9 30.3 expense management 29.4 30 and driving efficiencies • Roll out of new 25 12.4 13.2 12.5 13.4 13.8 initiatives at MiWay 12.8 13.9 started towards end of 20 1H23 – base effec
Slide 32: Conventional insurance: MiWay
Conventional insurance MIWAY • Traction from new Inbound and Tied Dec-24 Dec-23 Variance Agency initiatives • Strong growth in Business insurance and Gross written premium (R million) 3 713 3 441 8% VAPS • Personal lines growth Underwriting result (R million) 303 168 80% improved on 2023, accelerati
Slide 33: Alternative risk transfer insurance
Alternative risk transfer insurance Dec-24 Dec-23 Variance R million R million • Growth in size of book and new deals Fee income 487 379 28% supporting fee income at Centriq and Santam Investment margin 399 324 23% Structured Insurance • Favourable underwriting Underwriting income 197 85 >100% exper
Slide 34: India/Malaysia target shares
India/Malaysia target shares ANALYSIS OF SANTAM’S SHARE OF NIR FOR P&O AND SGI Dec 2024 % of Dec 2023 % of • SGI achieved GWP R million NEP R million NEP growth of 19.6%, with strong contributions from the Shriram Gross written premium 1 127 937 ecosystem and own channels Net earned premium 927 100.
Slide 35: Investment results
Investment results Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies. Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Slide 36: Asset liability matching
Asset liability matching GROUP CONSOLIDATED NET ASSETS AT 31 DECEMBER 2024 11 143 33 108 3 063 12 736 60 070 100 2 4 4 • No significant change 13 5 in investment mandates 19 of key portfolios – 80 continue to apply strict 10 matching policy for insurance funds and Percentage 60 subordinated debt 92
Slide 37: Size of net insurance funds
Conventional insurance SIZE OF NET INSURANCE FUNDS 12 000 11 041 11 167 10 540 9 910 10 031 10 095 9 987 9 677 10 000 9 370 9 292 9 175 9 271 • Average float balance 8 721 up 7.1% on Dec 2023 8 220 8 444 8 437 8 536 8 546 compared to 9.7% 8 000 growth in NEP R million • Increase since December 2023
Slide 38: Shareholder funds currency exposure
Shareholder funds CURRENCY EXPOSURE 100 5 3 18 18 80 11 15 Percentage 60 40 62 68 20 - Dec-23 Dec-24 Rand US Dollar Indian Rupee (Target shares) Other currencies (mainly Namibian Dollar and Malaysian Ringgit)
Slide 39: Investment return
Investment return Investment return on Dec-24 Dec-23 Variance insurance funds R million R million Conventional 823 759 8% Alternative Risk Transfer 399 324 23% Santam group 1 222 1 083 13% • Improved investment return on all portfolios • Performance exceeded Shareholder benchmarks in general Dec-24
Slide 40: Capital management
Capital management Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Slide 41: Return on capital
Return on capital TOTAL COMPREHENSIVE INCOME EXPRESSED AS % OF WEIGHTED AVERAGE SHAREHOLDERS’ FUNDS 35 33.5 31.9 28.5 28.5 8.9 25 11.9 22.2 9.9 Percentage 3.1 18.5 15.1 15 4.9 24.6 8.0 20.0 19.1 18.6 13.6 13.4 5 8.8 (0.8) (5) Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-24 Insurance ROC Investment
Slide 42: Capital management
Capital management • Group economic capital requirement based on the internal model R9.5 billion (Dec 2023: R8.8 billion) • Group economic capital coverage ratio of 166% at 31 December 2024 (Dec 2023: 155%) • Target economic capital coverage ratio band maintained at between 145% and 165% • Consideri
Slide 43: Closing remarks
Closing remarks Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Slide 44: Our ESG commitments
Our ESG commitments Positive impact on Supporting community Culture and society and nature resilience customer experience • Continued as a constituent of the FTSE 4 • We now support 102 municipalities through • Continued commitment to excellent Good index series and FTSE/JSE Partnership for Risk and
Slide 45: Priorities for 2025
Priorities for 2025 Focused on delivering profitable growth Continue to scale direct Best broker enabler Enhance profitability of the Strong focus on improving efficiencies and property portfolio accelerating our digital capabilities Drive growth through cross-sell Drive client and employee and part
Slide 46: Questions?
Questions? Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Slide 47: Thank you
Thank you