Santam Limited · JSE:SNT
Santam — UBS Powering Resilience Conference 2023
21 slides from Santam's conference presentation, Oct 10, 2023
Slide 1: Powering Resilience
POWERING RESILIENCE Santam Group CEO: Tavaziva Madzinga 10 OCTOBER 2023 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 • About Santam • Challenging operating environment • Recap interim results • Strategic response • Sustainability and governance • Concluding remarks 2
Slide 3: The Santam Group is the largest short-term insurer in South Africa
THE SANTAM GROUP IS THE LARGEST SHORT-TERM INSURER IN SOUTH AFRICA, WITH A SOLID LEGACY AND A CONSISTENT PROVEN RECORD OF SUSTAINABLE VALUE CREATION • Listed on the JSE and subsidiary of • Certified as a Top Employer by the the Sanlam Group Top Employer Institute for the seventh consecutive year • L
Slide 4: An evolving risk landscape requires proactive risk mitigation
AN EVOLVING RISK LANDSCAPE REQUIRES THAT WE PROACTIVELY ENHANCE OUR RISK MITIGATION EFFORTS AND PIVOT TOWARDS GROWTH-ORIENTATED STRATEGIES Covid-19 Weather KZN riots/ pandemic/ catastrophes/ Deteriorating Contingent Above operating business avg NatCat environment interruption losses Slowing Russia-
Slide 5: Natcat losses have been elevated over recent decades
NATIONAL CATASTROPHES (NATCAT) LOSSES HAVE BEEN ELEVATED OVER THE LAST FEW DECADES DUE TO HIGH LOSS EVENTS SUCH AS STORMS AND FLOODS. THE SIZE AND FREQUENCY OF CATASTROPHE CLAIMS HAVE INCREASED IN SOUTH AFRICA AND AROUND THE WORLD GLOBAL INSURED LOSSES: ALL PERILS ($ BN) SANTAM: GROSS TOTAL CATASTRO
Slide 6: Financial Results – June 2023
FINANCIAL RESULTS – JUNE 2023 Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Slide 7: Resilient business with robust performance despite extraordinary challenges
DESPITE EXTRAORDINARY CHALLENGES, WE HAVE PROVEN TO BE A RESILIENT BUSINESS WITH ROBUST PERFORMANCE GROWTH EARNINGS FINANCIAL STRENGTH VALUE DRIVERS Underwriting margin for Direct as % of GWP 15% Conventional insurance Group economic capital conventional insurance (2022: 19%) GWP growth of 7% covera
Slide 8: Solid legacy and consistent record of sustainable value creation
WE HAVE A SOLID LEGACY AND A CONSISTENT, PROVEN RECORD OF SUSTAINABLE VALUE CREATION RETURN ON CAPITAL: TOTAL COMPREHENSIVE INCOME EXPRESSED AS % OF WEIGHTED AVERAGE SHAREHOLDERS’ FUNDS 33.5 35 28.5 • We continue to produce a 8.9 24.0 strong return on capital Percentage 25 21.9 22.2 9.9 3.4 3.1 18.8
Slide 9: Growth and margin remain under pressure due to changing risk landscape
GROWTH AND MARGIN REMAIN UNDER PRESSURE IN RECENT TIMES DUE TO A CHANGING RISK LANDSCAPE • 12% growth excluding GROSS WRITTEN PREMIUM VS CPI + GDP GROWTH cancelled business 13 • Excellent contribution from 10.0 10.4 Specialist Solutions 9.4 9.1 10 8.2 6.7 7.2 7.3 6.7 6.7 – Engineering, Marine, 7 5.4
Slide 10: Dominant insurer with market share of more than 23%
WE CONTINUE TO BE THE DOMINANT INSURER, WITH A STRONG MARKET SHARE OF MORE THAN 23%. THIS IS SUPPORTED BY OUR DIVERSE PRODUCT LINES PRIMARY INSURERS: MARKET SHARE BY GWP - 2022 SANTAM CONVENTIONAL: GWP PER INSURANCE CLASS - 2022 30.0% 2% 24.7% 3% 25.0% 4% 5% 5% 20.0% 43% 15.0% 10.0% 8.4% 8.1% 7.1% 3
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.
Slide 12: Refreshed strategy anchored around three strategic growth vectors
OUR REFRESHED STRATEGY IS ANCHORED AROUND THREE KEY STRATEGIC GROWTH VECTORS, UNDERPINNED BY DATA AND ANALYTICS IN RESPONSE TO THE SHIFTING LANDSCAPE STRATEGIC INTENT: Leading South African insurer driven by data, with the client at the centre of everything we do GROWTH VECTORS: 1 2 3 Scale ecosyste
Slide 13: Client facing operating model geared towards multichannel distribution
OUR STRATEGY IS EXECUTED THROUGH A CLIENT FACING OPERATING MODEL GEARED TOWARDS MULTICHANNEL DISTRIBUTION Old Operating Model SANTAM EXPERIENCE New CLIENT BROKER PARTNER SANTAM RE & SPECIALIST Operating MIWAY SOLUTIONS SOLUTIONS SOLUTIONS INTERNATIONAL SOLUTIONS Model ART CENTRIQ, SSI Our omni-chann
Slide 14: Our long term targets to 2030
OUR LONG TERM TARGETS TO 2030 FINANCIAL GWP GROWTH RATE NET DIVERSIFICATION UNDERWRITING MARGIN International CPI + GDP + 1 to 2% GWP > 20% 5% to 10% Direct GWP > 30% RETURN ON DIVIDEND CAPITAL CAPITAL GROWTH COVERAGE RATIO >24% In line with GWP 145% to 165% growth NON-FINANCIAL CUSTOMER EMPLOYEE PO
Slide 15: Largest quantum of claims paid in our 105 year history
OVER THE PAST SIX YEARS, WE HAVE PAID THE LARGEST QUANTUM OF CLAIMS IN OUR 105 YEAR HISTORY Catastrophe losses resulted in a substantial Retention increased from R150m to R505m for increase in the cost of non-proportional the SA book. Santam Re is still protected reinsurance – CAT programme premium
Slide 16: Actively geocoding our property book to price risks better
WE ARE ACTIVELY GEOCODING OUR PROPERTY BOOK TO UNDERSTAND AND PRICE FOR RISKS BETTER. TO DATE, WE HAVE GEOCODED 50% OF OUR PROPERTY PORTFOLIO WITH POSITIVE OUTCOMES Flood Data Cadastral Data • Flood and sea surge modelling • Crime statistics • Proximity to policyholders and fire Land Cover Data stat
Slide 17: Powering resilience through collaboration with local government and communities
POWERING RESILIENCE THROUGH COLLABORATION WITH LOCAL GOVERNMENT AND COMMUNITIES IS KEY TO NARROWING THE RISK P4RR Outcomes • Reduce fire, flood and drought PROTECTION GAP risk of vulnerable South Africans • Increase the resilience of vulnerable communities to disasters • Increase education and aware
Slide 18: ESG commitments support community resilience and proactive risk management
OUR ESG COMMITMENTS ARE GEARED TOWARDS SUPPORTING COMMUNITY RESILIENCE AND PROACTIVE RISK MANAGEMENT POSITIVE IMPACT ON SOCIETY ESG LEADERSHIP DIVERSITY AND INCLUSION Level 1 BBBEE Appointed a diverse We now support 95 municipalities through Continued as a constituent of the FTSE 4 Good index status
Slide 19: Multi-channel strategy, data capabilities and partnering will strengthen value creation
WE BELIEVE THAT OUR MULTI-CHANNEL STRATEGY, THE INVESTMENT IN DATA CAPABILITIES AND THE PARTNERING FOR RESILIENCE WILL POWER AND STRENGTHEN OUR ABILITY TO CREATE SUSTAINABLE VALUE FOR STAKEHOLDERS Continue to implement corrective underwriting actions where necessary Continue to roll out data use cas
Slide 20: Questions?
QUESTIONS? Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Slide 21: Thank you
THANK YOU Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.