Santam reports 47% plunge in headline earnings

Santam, a leading insurance company in South Africa, has reported a significant decline in its headline earnings per share for the year ending December 2020. The company's CEO, Hennie Nel, detailed the challenges faced by the insurer, particularly in relation to provisions for contingent business interruption claims. According to Nel, Santam settled around 21.1 billion rand in gross claims, with 20 billion rand related to various claims aside from business interruption. However, the company has raised an additional provision of two billion rand specifically for contingent business interruption claims, with ongoing processing to settle these claims as efficiently as possible. Nel acknowledged the complexity of these claims and the uncertainties surrounding potential future payouts. The outcome may vary depending on factors such as recovery from reinsurance programs and legal proceedings. Despite the financial impacts of COVID-19, Santam managed to increase its growth-written premiums by 5% during the period. Nel attributed this growth to solid performance in the South African and international markets, with specialist businesses contributing positively to the company's overall performance. Looking ahead, Nel expressed caution regarding significant growth in the current economic climate, citing the need for improved economic conditions to drive business expansion. Outside of South Africa, Santam's operations have also faced challenges, particularly in Namibia where economic pressures, exacerbated by the pandemic, have impacted the business environment. Despite these difficulties, Santam remains confident in its strategies and plans for growth in the coming year, aiming to navigate the uncertainties and challenges to deliver positive outcomes for shareholders.