Slide 1: For the Year Ended 31 December 2022
FOR THE YEAR ENDED 31 DECEMBER 2022 PRESENTED BY: TAVA MADZINGA AND HENNIE NEL
Slide 2: Content
CONTENT • The Santam business portfolio • Market context • Financial results • Capital management • Group strategy and priorities • Environmental, social and governance (ESG) matters
Slide 3: The Santam Business Portfolio
THE SANTAM BUSINESS PORTFOLIO Sanlam Emerging Markets Conventional Insurance Alternative Risk Transfer (ART) (SEM) partner businesses • Santam Commercial • Centriq Insurance Santam’s investments and Personal • Santam Structured through SEM in India and • Santam Specialist Insurance (SSI) Malaysia •
Slide 4: Market Context
MARKET CONTEXT
Slide 5: Insurance Market Environment - Global
INSURANCE MARKET ENVIRONMENT - GLOBAL FACTORS INDUSTRY IMPACT Macro-economic • Claims inflation • Rising inflation • Investment losses • Rising interest rates/ yields • Market volatility • Improved float return prospects Geopolitical • Global economic uncertainty • Russia/ Ukraine • Supply chain dis
Slide 6: Insurance Market Environment - SA
INSURANCE MARKET ENVIRONMENT - SA FACTORS INDUSTRY IMPACT Macro-economic • Rising inflation • Consumer pressure • Rising interest rates/ yields • Claims inflation • Market volatility • Competitive pressure • Exchange rates • Weak investment return / improved float return prospects Infrastructure • L
Slide 7: Operating Environment Impacting Results
OPERATING ENVIRONMENT IMPACTING RESULTS REPORTED RESULTS AFFECTED BY: • Weather – KZN Floods best estimate of gross claims is R4.4 billion and net loss of R567 million (inclusive of reinstatement premiums of R381 million) • Inflation – premium increases lagged average cost per claim • Market volatil
Slide 8: Catastrophe Claims: Santam
CATASTROPHE CLAIMS: SANTAM GROSS TOTAL CATASTROPHE CLAIMS: ALL PERILS All years expressed in equivalent values as at 31 December 2022 6 000 5 500 5 000 4 500 4 000 3 500 R million 3 000 2 500 2 000 1 500 1 000 500 - 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 9: Catastrophe Claims: Global
CATASTROPHE CLAIMS: GLOBAL GLOBAL INSURED LOSSES: ALL PERILS ($ BN) Source: Catastrophe Insight, Aon
Slide 10: Operating Environment: Underwriting Response
OPERATING ENVIRONMENT: UNDERWRITING RESPONSE • Weather – reinsurance programme responded, geocoding • Inflation – segmented premium increase, excess management, limited churn, supplier management • Market volatility – mandate adjustments, equity hedge expired (loss of R90 million) • Loadshedding – p
Slide 11: Santam December 2022 Key Facts
SANTAM DECEMBER 2022 KEY FACTS • Conventional insurance gross written premium growth of 8% (2021: 5%) • Underwriting margin for conventional insurance business of 5.1% (2021: 8.0%) • Alternative Risk Transfer operating result of R306 million (2021: R276 million) • Headline earnings per share decreas
Slide 12: Financial Results
Santam is an authorised financial services provider a licensed non-life insurer and controlling company for its group companies.
Slide 13: Exchange Rate Volatility
EXCHANGE RATE VOLATILITY CLOSING RATES % change % change Currency Dec 2022 Jun 2022 Dec 2021 Dec 2021 – Jun Dec 2021 – Dec 2022 2022 United States Dollar 17.02 16.38 15.96 2.6 6.6 Moroccan Dirham 1.60 1.61 1.72 (6.4) (7.0) Indian Rupee 0.21 0.21 0.21 (3.5) (4.2) AVERAGE RATES Currency Dec 2022 Jun 2
Slide 14: Conventional Insurance
CONVENTIONAL INSURANCE
Slide 15: Conventional Insurance: Net Insurance Result
CONVENTIONAL INSURANCE NET INSURANCE RESULT 2022 2021 2022/ 5 Yr 10 Yr % of NEP % of NEP R'm R'm 2021 ave % ave % Gross written premium 35 418 32 745 8% 6.5 7.6 Net earned premium 27 221 100.0 25 858 100.0 5% 5.4 6.0 Net claims incurred 17 588 64.6 16 023 62.0 10% 63.5 64.1 Net acquisition cost 8 24
Slide 16: Conventional Insurance: Net Insurance Result (H1 vs H2)
CONVENTIONAL INSURANCE NET INSURANCE RESULT (H1 vs H2) H1 2022 H2 2022 Total 2022 % of NEP % of NEP % of NEP R'm R'm R'm Gross written premium 16 543 18 875 35 418 Net earned premium 13 018 100.0 14 203 100.0 27 221 100.0 Net claims incurred 8 817 67.7 8 771 61.8 17 588 64.6 Net acquisition cost 3 9
Slide 17: Gross Written Premium vs CPI + GDP Growth
CONVENTIONAL INSURANCE GROSS WRITTEN PREMIUM VS CPI + GDP GROWTH 13 10.0 10 9.4 9.1 8.2 7.2 7.3 6.5 6.7 6.7 7 5.4 5.3 4.3 4.6 4 Percentage 1 ( 2) (3.7) ( 5) 2016 2017 2018 2019 2020 2021 2022* Growth in GWP GDP growth + CPI inflation *Expected 2022 GDP of 2.2% CPI of 6.9%
Slide 18: Net Underwriting Result (H1 vs H2)
CONVENTIONAL INSURANCE NET UNDERWRITING RESULT (H1 VS H2) 2 400 2 064 2 000 1 600 1 389 R million 1 211 1 200 1 091 853 800 400 298 - H1 H2 Full Year 2022 2021
Slide 19: Net Insurance Result
CONVENTIONAL INSURANCE NET INSURANCE RESULT As % of net earned premium 13 11.6 9.4 2.4 10.1 9.5 Percentage 10 8.8 2.4 1.5 2.9 8 2.8 6.4 4.6 1.3 5 9.2 7.7 8.0 6.5 2.1 6.0 3 5.1 2.5 - 2016 2017 2018 2019 2020 2021 2022 Net underwriting result Investment return on insurance funds Target net underwritin
Slide 20: Gross Written Premium per Insurance Class
CONVENTIONAL INSURANCE GROSS WRITTEN PREMIUM Per insurance class (R million) 53 2021 2022 Miscellaneous 99 127 Guarantee 50 1 130 Crop 1 556 572 Accident and Health 719 994 Transportation 1 174 1 550 Liability 1 743 1 730 Engineering 1 759 12 177 Property 13 194 14 412 Motor 15 124 - 2 000 4 000 6 0
Slide 21: Gross Written Premium (H1 vs H2)
CONVENTIONAL INSURANCE GROSS WRITTEN PREMIUM (H1 VS H2) Per insurance class (R million) 30 Miscellaneous 69 H1 2022 H2 2022 42 Guarantee 8 81 Crop 1 475 349 Accident and Health 370 560 Transportation 614 785 Liability 958 857 Engineering 902 6 206 Property 6 988 7 633 Motor 7 491 - 2 000 4 000 6 000
Slide 22: Net Underwriting Surplus per Insurance Class
CONVENTIONAL INSURANCE NET UNDERWRITING SURPLUS Per insurance class (R million) 15 2021 2022 Miscellaneous (19) (5) Guarantee 25 (92) Crop 294 60 Accident and Health 87 98 Transportation 19 252 Liability 375 313 Engineering 518 236 Property (292) 1 187 Motor 382 ( 500) ( 250) - 250 500 750 1 000 1 2
Slide 23: Net Underwriting Surplus (H1 vs H2)
CONVENTIONAL INSURANCE NET UNDERWRITING SURPLUS (H1 VS H2) Per insurance class (R million) Miscellaneous (14) (5) H1 2022 H2 2022 Guarantee 15 10 Crop 63 231 Accident and Health 59 28 Transportation (89) 108 Liability 258 117 225 Engineering 293 (328) Property 36 Motor 109 273 ( 400) ( 300) ( 200) (
Slide 24: Gross Written Premium: Personal and Commercial
CONVENTIONAL INSURANCE GROSS WRITTEN PREMIUM Segmental Analysis – Personal and Commercial 11.0% 24 000 21 327 20 000 19 206 R million 4.1% 16 000 14 091 13 539 12 000 8 000 4 000 - Personal Commercial 2022 2021
Slide 25: Net Underwriting Result: Personal and Commercial
CONVENTIONAL INSURANCE NET UNDERWRITING RESULT Segmental Analysis – Personal and Commercial 1 500 8.6% 1 223 1 200 1 126 (82.3%) 938 900 R million 600 300 166 - Personal Commercial 2022 2021
Slide 26: Gross Written Premium from Outside SA
CONVENTIONAL INSURANCE GROSS WRITTEN PREMIUM FROM OUTSIDE SA 3 600 18.4% 2 973 3 000 2 511 2 400 R million 1 800 (8.3%) 5.4% 1 325 1 215 1 200 1 035 982 (48.7%) 600 466 239 - Namibia Rest of Africa SE Asia, India, Middle East Other 2022 2021
Slide 27: Geographic Diversification
GEOGRAPHIC DIVERSIFICATION CONVENTIONAL INSURANCE 1% 1% 8% 8% 6% 7% GWP GWP 2022 2021 85% 84% South Africa Rest of Africa Southeast Asia, India, Middle East Other
Slide 28: Net Acquisition Cost Ratio
CONVENTIONAL INSURANCE NET ACQUISITION COST RATIO As % of net earned premium 35 30.4 30.2 30.0 29.8 28.6 29.4 30 28.1 1.0 1.0 1.6 1.9 0.9 0.8 1.4 25 Percentage 20 17.0 16.7 15.2 15.0 14.6 15.4 15.2 15 10 12.3 12.1 12.4 12.5 12.8 13.4 13.3 5 - 2016 2017 2018 2019 2020 2021 2022* Commission Management
Slide 29: Reinsurance as % of Gross Earned Premium
CONVENTIONAL INSURANCE REINSURANCE AS % OF GROSS EARNED PREMIUM 25 1.3 20 Percentage 15 10 20.6 20.7 20.8 18.6 18.5 18.6 19.2 5 - 2016 2017 2018 2019 2020 2021 2022 Reinstatement premiums on catastrophe events
Slide 30: Size of Net Insurance Funds
CONVENTIONAL INSURANCE SIZE OF NET INSURANCE FUNDS 12 000 9 910 10 000 8 606 8 646 8 220 7 879 8 000 7 279 6 978 R million 6 000 4 000 2 000 - 2016 2017 2018 2019 2020 2021 2022
Slide 31: Assets Backing Net Insurance Funds
CONVENTIONAL INSURANCE ASSETS BACKING NET INSURANCE FUNDS Currency mix 8 646 8 606 9 000 387 371 (4%) (4%) 2 490 2 155 (29%) (25%) R million 6 000 3 000 5 769 6 080 (67%) (71%) - 2022 2021 ZAR USD Other currencies (mainly Namibian Dollar)
Slide 32: MiWay
CONVENTIONAL INSURANCE MIWAY H1 H2 2022 2021 Change 2022 2022 Gross written premium (R million) 3 283 3 203 2.5% 1 626 1 657 Gross underwriting result, net of CAT recoveries (R 284 285 (0.4%) 122 162 million) Gross claims ratio, net of CAT recoveries 58.6% 60.9% 61.3% 56.0% Gross acquisition cost ra
Slide 33: Alternative Risk Transfer
id ‘Ng mr authorised financial s .ed non-life insurer and c¢ ng company for its group companie:
Slide 34: Alternative Risk Transfer Insurance (ART)
ALTERNATIVE RISK TRANSFER INSURANCE (ART) • Includes the results from: - Centriq Insurance - Santam Structured Insurance • Types of business: - Risk finance - Underwriting managers - Affinity business - Structured insurance
Slide 35: Alternative Risk Transfer Insurance: Centriq
ALTERNATIVE RISK TRANSFER INSURANCE CENTRIQ 2022 2021 2022/2021 R’m R’m Gross written premium 12 269 7 950 54% Income from clients 361 320 13% Participation in underwriting results 56 57 (2%) Administration expenses (162) (151) 7% Operating result after non-controlling interest 255 226 13%
Slide 36: Alternative Risk Transfer Insurance: Santam Structured Insurance
ALTERNATIVE RISK TRANSFER INSURANCE SANTAM STRUCTURED INSURANCE 2022 2021 2022/2021 R’m R’m Gross written premium 1 970 1 483 33% Income from clients 157 150 5% Participation in underwriting results 16 13 23% Administration expenses (122) (113) 8% Operating result after non-controlling interest 51 5
Slide 37: ART Combined Results
ALTERNATIVE RISK TRANSFER INSURANCE COMBINED RESULTS NET OF NON-CONTROLLING INTEREST 2022 2021 5 Yr Ave 10 Yr Ave 2022/2021 R’m R’m % % Gross written premium 14 209 9 835 44% 30% 22% Income from clients 518 470 10% Participation in underwriting results 72 70 3% Administration expenses (284) (264) 8%
Slide 38: SEM Partner Businesses
SEM PARTNER BUSINESSES
Slide 39: Business Developments
BUSINESS DEVELOPMENTS H2 2022 • 14 December 2022: SEM redeemed the African target shares with aggregate redemption distributions to the amount of R126 million paid to Santam • Sale of Santam’s 10% interest in SAN JV to Allianz for Euro 120.5 million announced on 4 May 2022. Regulatory approval proce
Slide 40: SEM Partner Businesses: Santam Effective Holding
SEM PARTNER BUSINESSES SANTAM EFFECTIVE HOLDING Domicile Dec 2022 Dec 2021 Pacific and Orient Insurance Company Berhad Malaysia 15.4 15.4 Shriram General Insurance Company Ltd India 14.1 15.0 NICO Holdings general insurance subsidiaries Malawi and Zambia - 5.6 Sanlam General Insurance (Uganda) Ltd U
Slide 41: SEM General Insurance Participation Investments
SEM GENERAL INSURANCE PARTICIPATION INVESTMENTS ANALYSIS OF SANTAM’S SHARE OF NET INSURANCE RESULT BEFORE TAXATION AND NON- CONTROLLING INTEREST OF SGI AND P&O 2022 20212 % of NEP % of NEP 2022/2021 R'm R'm Gross written premium 746 729 2% Net earned premium 603 100.0 664 100.0 (9%) Net claims incur
Slide 42: SAN JV Carrying Value Reconciliation
SAN JV RECONCILIATION OF SAN JV CARRYING VALUE AS AT 31 DECEMBER 2022 R’m Carrying value at 1 January 2022 1 848 Equity-accounted loss (14) Statement of changes in equity (66) Foreign currency translation differences (58) Other movements in retained earnings (8) Carrying value at 31 December 20221 1
Slide 43: Santam Group
I S IN N TA AM iG 3RO ‘OU 1a } yin a
Slide 44: Net Operating Income
SANTAM GROUP NET OPERATING INCOME Restated R million 2022 2021 2022/2021 Conventional insurance 1 729 2 465 (30%) Alternative risk transfer insurance (before NCI) 355 306 16% SEM partner businesses 136 156 (13%) Net operating income – segmental 2 220 2 927 (25%) SEM partner businesses (136) (156) Ne
Slide 45: Reconciliation to Headline Earnings
SANTAM GROUP RECONCILIATION TO HEADLINE EARNINGS 2022 2021 2022/2021 Net profit attributable to ordinary shareholders (R million) 1 990 2 745 (28%) Per share (cents) 1 816 2 491 Loss on sale of associates - 4 Profit on disposal of intangible assets (15) - Tax on profit on disposal of intangible asse
Slide 46: Asset Liability Matching
ASSET LIABILITY MATCHING GROUP CONSOLIDATED ASSETS AT 31 DECEMBER 2022 23 367 2 539 45 481 8 646 10 929 1 100 8 9 4 4 24 8 15 80 54 16 Percentage 60 73 60 15 40 76 20 46 45 19 23 - Insurance funds ART Sub debt SH funds Total Other assets SEM participation investments Investment in SAN JV Listed equi
Slide 47: Shareholder Funds: Asset Mix
SHAREHOLDER FUNDS ASSET MIX 100 9 7 15 15 80 16 16 Percentage 60 15 15 40 45 47 20 - 2022 2021 Other assets SEM participation investments Investment in SAN JV Listed equities Interest-bearing instruments and preference shares
Slide 48: Shareholder Funds: Currency Mix
SHAREHOLDER FUNDS CURRENCY MIX 100 5 6 13 12 80 16 16 Percentage 60 16 18 40 48 50 20 - 2022 2021 Other currencies (mainly Namibian Dollar and Malaysian Ringgit) Indian Rupee (investment in SEM) MAD (investment in SAN JV) Euro (investment in SAN JV) US Dollar Rand
Slide 49: Investment Return on Shareholders Funds
INVESTMENT RETURN ON SHAREHOLDERS FUNDS 2 000 1 182 1 493 1 500 178 373 415 151 1 000 R million 171 500 888 798 - (299) 2022 2021 (500) Interest and dividends Market value movements (including derivatives) SEM fair value movements and dividends Forex gains and losses (incl. SEM)
Slide 50: Investment Return: Net Investment in SEM Target Shares
INVESTMENT RETURN ANALYSIS OF SANTAM’S SHARE OF NET INVESTMENT IN SEM TARGET SHARES Carrying Change in Carrying Change in value Dilution Redemption exchange value Region valuation Dec 2021 R’m R’m rates Dec 2022 R’m R’m R’m R’m Africa 134 (128) (2) (4) - Southeast Asia 138 1 (2) 137 India 1 419 (90)
Slide 51: IFRS 17
LIFRSaY | WM » = N
Slide 52: Impact of IFRS 17 Transition - 1 January 2022
IMPACT OF IFRS 17 TRANSITION – 1 JANUARY 2022 • The simplified Premium Allocation Approach (PAA) is applied to general insurance businesses • Claim reserves discounted Insurance Insurance liabilities Discounting liabilities • Unallocated loss adjustment expenses (ULAE) are now added to claim reserve
Slide 53: Capital Management
CAPITAL MANAGEMENT
Slide 54: Return on Capital
RETURN ON CAPITAL TOTAL COMPREHENSIVE INCOME EXPRESSED AS % OF WEIGHTED AVERAGE SHAREHOLDERS’ FUNDS 40 33.5 30 28.5 8.9 21.9 22.2 9.9 18.8 Percentage 20 8.2 3.4 3.1 5.0 24.6 8.0 10 18.5 19.1 18.6 17.0 13.8 8.8 - (8.8) (0.8) ( 10) 2016 2017 2018 2019 2020 2021 2022 Insurance ROC Investment ROC
Slide 55: Capital Management
CAPITAL MANAGEMENT • Group economic capital requirement based on the internal model R8.6 billion (Dec 2021: R8.3 billion). • Current Group economic capital coverage ratio of 156%. • In November 2022, the Prudential Authority removed the remaining 10% capital add-on that applied to Santam’s approved
Slide 56: Dividend per Share
DIVIDEND PER SHARE 2 400 2 022 2 000 Cents per share 1 600 800 1 307 1 200 1 110 1 028 952 845 800 790 665 718 616 400 363 392 432 462 336 - - 2017 2018 2019 2020 2021 2022 Interim Final Special
Slide 57: Group Strategy and Priorities
GROUP STRATEGY AND PRIORITIES
Slide 58: Refreshed Strategy Anchored Around Three Key Growth Drivers
OUR REFRESHED STRATEGY IS ANCHORED AROUND THREE KEY STRATEGIC GROWTH DRIVERS WHILST EMPLOYING A DATA AND ANALYTICS CENTRIC STRATEGY PURPOSE: Safeguard what is important to our clients Narrow the risk protection gap in the markets where we do business through collaborative, proactive risk management
Slide 59: New Operating Model to Support the Growth Strategy
NEW OPERATING MODEL TO SUPPORT THE GROWTH STRATEGY Old Operating Model New Operating C&P split Santam Re & Specialist MiWay Model International Solutions Client Broker Partner Solutions Solutions Solutions ART Centriq, SSI Shared Services: Information Technology, Human Resources, Procurement, Transf
Slide 60: Strategic Priorities for 2023
STRATEGIC PRIORITIES FOR 2023 EXECUTING THE REFRESHED FUTUREFIT STRATEGY • Bedding down the new operating model • Continue to implement corrective underwriting actions • Managing increased volatility in insurance results • Executing and implementing on growth initiatives • Strengthen our digital and
Slide 61: Environmental Social Governance
ENVIRONMENTAL SOCIAL GOVERNANCE
Slide 62: Our ESG Commitments
OUR ESG COMMITMENTS SUPPORTING COMMUNITY RESILIENCE AND ESG COMMITMENTS SUPPORTING THE COMMUNITIES CLAIMS PAYING CAPACITY We have been Promote a diverse certified as a top We processed more We paid more than than 6 000 claims and inclusive employer for the R1.5 billion in related to the KZN We settl
Slide 63: Questions?
| QUESTIONS?’ es Santam is an authorised financial service’ provider(ESR 3416), a licensed nér-lifeingu controlling company forits group companies,” . ' ‘
Slide 64: autem i’an authorise hancial services provider(FSP. 340,
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