Santam (SNT) H2 2024 earnings summary

Executive summary

• Demonstrated operational resilience and improved performance in 2024 despite significant headwinds, including extreme weather and challenging macroeconomic conditions.

• Underwriting margin for conventional insurance rose to 7.6%, a significant turnaround from 2023 and within the 5%-10% target range.

• Net income increased by 13% year-over-year, reaching R3,679 million, with a return on capital of 31.9%.

• Strategic focus remains on South African dominance, international expansion, multi-channel growth, and digital acceleration.

• Property portfolio returned to profitability after prior losses, and Santam Re results improved significantly.

Financial highlights

• Gross written premiums grew by 10.5%, exceeding the target range, with net earned premium up 9.7%.

• Underwriting margin more than doubled from 3.5% to 7.6% year-over-year.

• Final dividend declared at ZAR 9.85 per share (985 cps), up 8.8%; total ordinary dividends for 2024 up 8.6% to 1,520 cps.

• Claims incurred ratio improved from 66.2% to just over 61%.

• Alternative Risk Transfer earnings rose to ZAR 781 million (2023: ZAR 516 million).

Outlook and guidance

• Continued focus on profitable growth, scaling direct channels, and further improvement in underwriting margin expected in 2025, barring extreme weather events.

• Property portfolio profitability and ongoing underwriting actions remain key priorities.

• Long-term targets include GWP growth at CPI+GDP+1-2%, return on capital >24%, and international GWP >20%.

• Economic growth in 2025 projected at 1.5%-1.7%, with easing inflation and interest rates.