Headquartered in Cape Town, Santam Group has announced a net income attributable to equity holders of ZAR3.68bn ($201.07m) for 2024, 13% higher than in 2023.
Santam, Africa’s biggest general insurer, said that group underwriting margin more than doubled from 3.5% in 2023 to 7.6% in 2024, well within the group’s 5% to 10% target range.
The company attributed its higher net profits in 2024 to strong premium growth, improved underwriting, solid investment returns, and disciplined cost management.
The company’s directors’ report, released as part of its annual financial statements for the fiscal year ended 31 December 2024, said that the group delivered a strong performance in 2024 despite a challenging operating environment, shaped by extreme weather events, social, economic and geopolitical forces that are intricately linked and changing at an accelerated pace.
Business and investor confidence improved following the general elections in May 2024 and the formation of a coalition government called Government of National Unity (GNU). Progress has been made in addressing structural constraints to economic growth in South Africa, albeit at a slower-than-anticipated pace. The absence of electricity supply disruptions for an extended period in 2024 and positive signs around addressing the country’s infrastructure challenges bode well for future economic growth in our largest market.
However, South Africa recorded lacklustre growth in gross domestic product (GDP) in 2024, with real GDP forecasted to expand by only 1.1% year-on-year at the end of 2024. This reflects the lag between improving business and investor confidence and accelerating foreign capital flows and corporate capital investment. Consumer personal disposable income remained under pressure during 2024 following high inflation and elevated interest rates. Persistent high unemployment levels also suppressed any real growth in the size of the consumer base.
This had a negative impact on the affordability of insurance premiums, as well as new vehicle sales, a key driver of growth in the group’s largest line of business that is, motor. However, inflation started to ease considerably in the past few months, which enabled the South African Reserve Bank to enter a cycle of interest rate reductions. This is providing some relief to consumers.
The directors’ report said that these conditions limited the group’s growth potential due to the high level of penetration in the traditional insurance markets in South Africa, with these segments closely coupled to the performance of the economy and employment levels.
Opportunities for growth outside of South Africa were also more favourable with the group’s low market share in global markets providing enhanced growth opportunities.
Domestic vs international business
South Africa remains the most significant contributor to GWP at 82% (2023: 84%), with business from this market increasing by 8% to ZAR33.9bn (2023: ZAR31.5bn). GWP from outside South Africa contributed 18% (2023: 16%) of total GWP and grew by 28% to ZAR7.4bn (2023: ZAR5.8bn).
Santam’s partnership with SanlamAllianz across the African continent in specialist business continued to deliver positive results. However, GWP declined by 5% to ZAR782m (2023: ZAR822m) due to the volatile nature of specialist business lines.
Financial highlights
|
ZAR m
|
Consolidated
|
Company
|
|
|
2024
|
2023
|
Change %
|
2024
|
2023
|
Change %
|
|
Insurance revenue
|
52,317
|
46,882
|
11.6
|
35,469
|
33,005
|
7.5
|
|
Insurance service result
|
4,512
|
2,817
|
60.2
|
2,967
|
1,636
|
81.4
|
|
Net insurance service result
|
1,630
|
771
|
111.4
|
2,449
|
783
|
212.8
|
|
Net investment income and other revenue
|
6,142
|
5,029
|
22.1
|
3,422
|
2,900
|
18.0
|
|
Total other operating expenses
|
(1,678)
|
(1,296)
|
29.5
|
(498)
|
(274)
|
81.8
|
|
Profit before tax
|
5,952
|
4,405
|
35.1
|
4,595
|
3,226
|
42.4
|
|
Net profit
|
4,356
|
3,383
|
28.8
|
3,698
|
3,123
|
18.4
|
|
Net profit attributable to equity holders
|
3,679
|
3,250
|
13.1
|
3,698
|
3,123
|
18.4
|
|
Source: Santam
|
Prospects
Economic conditions are expected to improve slightly in 2025, with a forecasted GDP growth rate of 1.5%, up from 1.1% forecast by the South African Reserve Bank at the end of 2024. With easing pressure on personal disposable income and a strategic focus on higher growth areas in the direct, partnership and international business areas, Santam is positive about topline growth prospects in 2025.
Santam Group CEO Tavaziva Madzinga said in a statement, “Volatile weather conditions are expected to persist, which may result in volatility in underwriting margins. The underwriting actions we implemented to date will, however, position us well to manage these. We remain confident in the Group’s prospects and the potential to deliver enhanced growth and profitability.”