Slides
Page 1
2025 Analyst presentation Interim financial results for the six months ended 30 June 2025 Presented by: Tavaziva Madzinga and Wikus Olivier Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Page 2
1. Key messages 2. Operating environment 3. Operating highlights 4. Strategic update 5. Financial results 6. Capital management 7. Closing remarks 03 04 07 09 14 40 43 Contents
Page 3
Robust performance while building a platform for accelerated value creation • Key performance metrics in excess of long-term targets • Underwriting margin above the 5% to 10% target range. Combined ratio < 90% • Broad based profitable growth with all business units achieving strong underwriting results • We made significant progress in strategic growth vectors • Solid traction in scaling direct through MiWay and Santam Client Solutions • Maintained market share in traditional intermediated channels • Improved performance in our property portfolio • Announced the set up of the Santam Syndicate 1918 at Lloyd’s to accelerate our international and diversification play • Acquired a majority stake in Avatar Holdings (an MGA) in the UK to complement our syndicate • Successful conclusion of MultiChoice general insurance transaction, adding 2 million clients to the base • MTN device insurance sales continues to exceed expectations • Favourable investment returns and continued strong performance from the Alternative Risk Transfer businesses • The group remains well-positioned for profitable growth and shareholder value creation • Continued focus on disciplined underwriting and cost efficiency
Page 4
Santam is an authorised financial services provider (FSP 3416), a licensed non -life insurer and controlling company for its group comp anies. Operating environment Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Page 5
Global growth is facing headwinds, driven by trade policy uncertainty and heightened geopolitical tensions, with P&C rates softening GLOBAL GDP GLOBAL GDP 2.9 -2.7 6.6 3.6 3.5 3.3 3.0 3.1 -5 0 5 10 2019 2020 2021 2022 2023 2024 2025 2026 Global economy faces trade-related headwinds Global Commercial Pricing environment softening Heightened uncertainty driven by trade war and geopolitical tensions -4% -4% -2% -2% 1% 1% 3% 6% 14% 19% 18% 15% 11% 9% 4% 3% 1% 0% -3% -4% WORLD UNCERTAINTY INDEX Q1’90 Q3’93 Q1’97 Q3’00 Q1’04 Q3’07 Q1’11 Q3’14 Q1’18 Q1’21 Q2’25 Global insured losses growing at a long-term rate of 5-7% annually 11 15 8 8 7 13 26 40 125 27 22 33 23 51 62 80 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Earthquakes: Japan & NZ Wildfires: US Earthquake: Chile Source: IMF; Swiss Re Institute, Marsh Global Insurance Index, Ahir, H, N Bloom, and D Furceri (2022), “World Uncertainty Index”, NBER Working Paper
Page 6
SA economy remains constrained by structural and socioeconomic challenges. The US tariffs are expected to cause further strain Source: Santam Insurance Barometer 2025, SARB Rising frequency and severity of weather events Crime and societal issues, including rising cyber attacks Widespread impacts of deteriorating infrastructure (Municipal infrastructure, road, rail, water) Economic pressures: Low economic growth in South Africa alongside persistent high unemployment and deteriorating business confidence
Page 7
Operating highlights Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Page 8
GROWTH Conventional insurance GWP growth of 10% (2024: 8%) Conventional insurance NEP growth of 16% (2024: 7%) EARNINGS Underwriting margin for conventional insurance business of 11.3% (2024: 6.5%) Alternative Risk Transfer earnings of R417 million (2024: R326 million) Net income of R2 045 million (2024: R1 718 million) Return on capital of 33.2% (2024: 33.6%) FINANCIAL STRENGTH Group economic capital coverage ratio of 170% (Dec 2024: 166%) Interim dividend of 590 cps (2024: 535 cps), up 10.3% VALUE DRIVERS Direct as % of GWP 22% (2024: 19%) International as % of GWP 20% (2024: 18%) Policy count: 3.7 million Performance update: June 2025 RESULTS AFFECTED BY: Negatives: Weather-related events in March Positives: Favourable attritional loss ratio, property portfolio improvement, ART performance, MTN & MultiChoice partnerships
Page 9
Santam is an authorised financial services provider (FSP 3416), a licensed non -life insurer and controlling company for its group comp anies. Strategic update Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Page 10
We are executing our strategy, laying a strong foundation for accelerated value creation Strategic intent Our purpose Values Care Collaboration Integrity Innovation To safeguard what is important to our clients Leading South African insurer driven by data, with the client at the centre of everything we do Growth vectors: Drive international expansion and diversification Scale ecosystems and explore new markets through partnerships Strengthen leadership position in South Africa • Shift to a multi-channel model • Maintain dominance in Broker • Scale Direct and tied agency • Leverage SanlamAllianz • Specialist capability (via Lloyd’s) • Scale Reinsurance • Ecosystem/platform play • Cross-sell across the Sanlam Group • Partnerships: MTN, MultiChoice Unlock and develop data capabilities to solidify our competitive advantages Modernise IT and digital capabilities Digitise our E2E value chain and customer journey Leverage data and AI to enhance innovation and underwriting (pricing/risk selection) Good corporate citizen and drive transformation Win the war on talent (Talent mobility) Cost excellence Build resilient communities and establish leadership in sustainability Client and intermediary experience
Page 11
MiWay’s path to accelerated growth gaining traction Source: Santam Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 Q1/25 Q2/25 POLICY COUNT – QUARTERLY TRENDS Q1/22 Q2/22 Q3/22 Q4/22 Q1/23 Q2/23 Q3/23 Q4/23 Q1/24 Q2/24 Q3/24 Q4/24 Q1/25 Q2/25 GWP - QUARTERLY TRENDS Strategic initiatives contributed to double-digit growth in 1H2025, with personal lines growth more than doubling compared to prior period. Strong positive trend in policy count.
Page 12
We are accelerating our international strategy through the Santam Syndicate 1918 to transform our growth prospects and investment case We have received in-principle approval from the Lloyd’s council to set up a Santam Syndicate, with a planned gross written premium of approximately £300 - 400 million for 2026. This will be focused in higher margin specialist business. Lloyd’s opportunity Expected impact Execution through a London-based team ✓ $55 billion GWP – over 7x size of South Africa’s P&C market, ~3x Africa P&C ✓ Access to licenses to trade in 77 insurance and 200 reinsurance territories ✓ Access to Lloyd’s superior ratings with S&P, Fitch and A.M. Best ✓ Strong trusted brand ✓ Strong governance and performance oversight ✓ To be funded through surplus capital and additional debt ✓ To issue an additional R1 billion in subordinated debt to maintain SA regulatory capital ratios ✓ Ordinary dividend growth philosophy remains Increase the share of international business to GWP in 2030 >20% Currently 20% Return on capital of syndicate in hard currency returns for 2030 >24% Current hurdle rate Expected syndicate underwriting margin by 2030 >10% ➢ Cede existing specialist business to the syndicate. ➢ Delivers immediate scale and relevance to the syndicate. ➢ Portfolio mix of 60/40 in 2026, gravitating towards more incremental international over the long term. ➢ Will grow in specialist lines of business that we understand. ➢ Appointing high skilled, experienced team, with strong underwriting and distribution experience ➢ Supported by world-class governance and performance oversight ➢ Partnered with Asta, the leading Managing Agent. Source: Lloyd’s Annual Report 2024; Lloyd’s Capital Market Day Presentation, 12 June 2024; Lloyd’s of London Syndicate analysis June 2025 We have also acquired a 51% stake in Avatar Holdings, a new start-up with a unique technology platform that can underwrite and price mid-sized corporate risks much more efficiently than traditional methods. The investment in Avatar amounted to GBP3 million and was funded from available cash resources. Avatar is expected to be a source of future new business for the Santam Syndicate.
Page 13
Our long term targets to 2030 FINANCIAL NON-FINANCIAL GWP GROWTH RATE NET UNDERWRITING MARGIN DIVERSIFICATION RETURN ON CAPITAL CPI + GDP + 1% to 2% DIVIDEND GROWTH 5% to 10% CAPITAL COVERAGE RATIO International GWP >20% Direct GWP> 30% >24% Based on NEP growth 145% to 165% POLICY COUNT CUSTOMER EXPERIENCE (NPS SCORE) EMPLOYEE ENGAGEMENT SCORE MARKET SHARE TRANSFORMATION ESG >2 million >24% >60 Maintain B-BBEE Level 1 >75% Maintain Top 30 JSE Responsible Investment Index
Page 14
Financial results Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Page 15
Results at a glance NEP growth Claims ratio Acquisition costs ratio Underwriting margin Investment return on insurance funds Net insurance result Return on capital 16% 56.0% 32.7% 11.3% 2.6% 13.9% 33.2% 7% 62.3% 31.2% 6.5% 2.3% 8.8% 33.6% For the period ended 30 June 2025 For the period ended 30 June 2024
Page 16
Exchange rates CLOSING RATES Currency Jun-25 Dec-24 Change United States Dollar 17.77 18.87 5.8% Euro 20.86 19.54 (6.8%) Indian Rupee 0.21 0.22 5.8% AVERAGE RATES Currency Jun-25 Jun-24 Change United States Dollar 18.38 18.73 1.9% Euro 20.05 20.25 1.0% Indian Rupee 0.21 0.23 7.1%
Page 17
Investment market performance RETURN FOR THE PERIOD INDEX Jun-25 Jun-24 JSE All Share 14.7% 5.3% JSE Swix 40 17.7% 3.4% JSE All Bond 6.6% 5.5% SA Money Market (STeFI) 3.8% 4.6% USD Money Market (SOFR) 2.2% 2.7%
Page 18
Santam is an authorised financial services provider (FSP 3416), a licensed non -life insurer and controlling company for its group comp anies. Business volumes Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Page 19
Conventional insurance GROSS WRITTEN PREMIUM VS CPI + GDP GROWTH • Double-digit growth at MiWay, Partner Solutions and Santam Re • First-time contribution of MultiChoice transaction • Good growth at Broker and Client Solutions despite moderation in rate increases • Specialist Solutions impacted by timing differences and soft market conditions in Casualty and Heavy Haulage • Net earned premiums grew by 16% 7.3 4.6 5.3 8.2 5.5 8.1 10.5 9.7 4.2 (3.9) 10.8 9.2 5.7 5.5 3.6 4.2 (4) (1) 2 5 8 11 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Jun-24 Dec-24 Jun-25* Percentage Growth in GWP GDP growth + CPI inflation *Based on South African Reserve Bank forecasted GDP growth and CPI in June 2025
Page 20
Conventional insurance GROSS WRITTEN PREMIUM • Personal lines – softening in rate increases and change in mix of business at Santam Re • Commercial lines – marginal decline at Specialist Solutions; change in mix at Santam Re; good growth at other business units SEGMENTAL ANALYSIS – PERSONAL AND COMMERCIAL 8 515 12 429 8 185 10 899 - 5 000 10 000 15 000 20 000 25 000 Personal Commercial R million Jun-25 Jun-24 4.0% 14.0%
Page 21
Conventional insurance GROSS WRITTEN PREMIUM • Change in mix of business at Santam Re • Solid underlying growth across all insurance classes • Property includes first-time contribution of MultiChoice transaction PER INSURANCE CLASS (R million) 54 82 347 770 1 091 1 143 8 190 7 407 8 130 381 578 816 999 8 257 9 775 0 2 000 4 000 6 000 8 000 10 000 Other Crop Accident and Health Transportation Liability Engineering Motor Property Jun-25 Jun-24 1% (25%) (13%) (25%) 59% 10% (85%) 32%
Page 22
Conventional insurance GROSS WRITTEN PREMIUM FROM OUTSIDE SA • Strong growth in Namibia across all classes of business • Seasonality of business in Rest of Africa • Other international includes Santam Re strategic partnerships 718 606 2 901 4 225 620 718 2 047 3 385 - 2 000 4 000 6 000 8 000 Namibia Rest of Africa Other international Total R million Jun-25 Jun-24 15.8% 41.7% (15.6%) 24.8%
Page 23
Conventional insurance GROSS WRITTEN PREMIUM • Gross written premium remains mostly from South Africa • Positive momentum at Santam Re outside SA • Focus remains on exporting proven capabilities • Launch of Lloyd’s Syndicate to drive accelerated change in profile GEOGRAPHIC ANALYSIS (%) 82% 7% 11% 80% 6% 14% South Africa Rest of Africa Other international Outer ring: Jun-25 Inner ring: Jun-24
Page 24
Conventional insurance REINSURANCE AS % OF GROSS EARNED PREMIUM • Optimisation of reinsurance programmes • Change in mix of business at Santam Re • Relative contribution of specialist lines of business Percentages disclosed for periods prior to Dec-22 not restated for IFRS17, but impact is immaterial 19.2 20.6 20.7 22.1 20.9 19.9 19.2 16.7 - 5 10 15 20 25 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Jun-24 Dec-24 Jun-25 Percentage
Page 25
Santam is an authorised financial services provider (FSP 3416), a licensed non -life insurer and controlling company for its group comp anies. Earnings Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Page 26
Analysis of earnings • Strong growth in net insurance result – improved underwriting performance and return on insurance funds • Investment return on capital impacted by unrealised foreign currency translation differences • Strong growth across most of the ART revenue lines • Annualised return on capital of 33.2%, well in excess of the 24% target R million Jun-25 Jun-24 Variance Conventional 2 526 2 050 23% Net insurance result 2 491 1 352 84% Investment return on capital 35 698 (95%) ART profit before tax 417 326 28% Other (87) (60) (45%) Associates 59 39 51% Amortisation & other (146) (99) (47%) Income before tax & non-controlling interest 2 856 2 316 23% Tax & non-controlling interest (811) (598) (36%) Net income 2 045 1 718 19%
Page 27
Santam is an authorised financial services provider (FSP 3416), a licensed non -life insurer and controlling company for its group comp anies. Operating earnings Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Page 28
Net insurance result: Conventional • Improvement in profitability of in-force book • Turnaround in property portfolio • Lack of weather-related catastrophe claims and lower attritional claims experience • Favourable float returns Jun-25 % of NEP Jun-24 % of NEP % changeR million R million Gross written premium 20 944 19 084 9.7% Net earned premium 17 920 100.0% 15 395 100.0% 16.4% Claims incurred 10 029 56.0% 9 595 62.3% 4.5% Acquisition cost 5 866 32.7% 4 807 31.2% 22.0% Commission 2 493 13.9% 1 997 12.9% 24.8% Management expenses 3 373 18.8% 2 810 18.3% 20.0% Underwriting result 2 025 11.3% 993 6.5% 103.9% Investment return on insurance funds 466 2.6% 359 2.3% 29.8% Net insurance result 2 491 13.9% 1 352 8.8% 84.2% Combined ratio 88.7% 93.5%
Page 29
Conventional insurance NET INSURANCE RESULT: AS A % OF NET EARNED PREMIUM • Underwriting margin above the 5% - 10% target range • Catastrophe claims and large losses of R705 million in 2024 compared to R144 million in 2025 • Current favourable claims experience not sustainable over the long term 7.7 2.5 8.0 5.1 3.5 6.5 7.6 11.3 2.4 2.1 1.5 1.2 2.6 2.3 2.6 2.6 10.1 4.6 9.5 6.3 6.1 8.8 10.2 13.9 - 2.5 5.0 7.5 10.0 12.5 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Jun-24 Dec-24 Jun-25 Percentage Net underwriting result Investment return on insurance funds
Page 30
Conventional insurance NET UNDERWRITING RESULT: PERSONAL AND COMMERCIAL • Favourable claims experience benefiting personal and commercial lines • Strong contribution from property, but not yet at required rate strength 861 1 164 383 610 - 400 800 1 200 1 600 Personal Commercial R million Jun-25 Jun-24 >100% 90.8%
Page 31
17.7 16.6 16.6 16.0 16.5 18.3 18.1 18.8 12.5 12.8 13.4 13.9 13.8 12.9 13.2 13.9 30.2 29.4 30.0 29.9 30.3 31.2 31.3 32.7 - 5 10 15 20 25 30 35 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Jun-24 Dec-24 Jun-25 Percentage Management expenses Commission Conventional Insurance NET ACQUISITION COST: AS A % OF NET EARNED PREMIUM • Stringent focus on driving efficiencies • Investment in strategic initiatives at MiWay and Client Solutions • Upfront acquisition costs in direct businesses • Commission affected by mix of business
Page 32
Conventional insurance MIWAY • Record new business sales • Traction from Inbound and Tied Agency initiatives • Augmented by launch of MiCashback • Strong growth in Business insurance and VAPS • Personal lines growth doubled on 1H24 • Acquisition cost ratio includes spend on strategic initiatives and upfront acquisition cost from strong sales growth 1 Excluding value-added products Jun-25 Jun-24 Variance Gross written premium (R million) 2 043 1 798 14% Underwriting result (R million) 219 145 51% Claims ratio 49.6% 53.9% Acquisition cost ratio 39.5% 37.9% Underwriting margin 10.9% 8.2% Number of clients1 353 406 339 000 4%
Page 33
Alternative risk transfer insurance • Growth in size of book and new deals supporting fee income • Favourable underwriting experience at most partners • Investment margin benefitting from favourable investment market performance Jun-25 R million Jun-24 R million Variance Fee income 270 222 22% Investment margin 222 171 30% Underwriting income 92 100 (8%) Expenses (194) (181) (7%) Operating result 390 312 25% Investment income 27 14 93% Net profit before tax and NCI 417 326 28%
Page 34
India/Malaysia target shares ANALYSIS OF SANTAM’S SHARE OF NIR FOR P&O AND SGI • SGI achieved GWP growth of 18.8%, with strong contributions from the Shriram ecosystem and own channels • Net insurance result up 17.6% on 2024 from higher investment returns • Revaluation of SGI by R145 million in line with strong performance, net of R144 million negative foreign currency translation difference Jun 2025 R million % of NEP Jun 2024 R million % of NEP Gross written premium 750 653 Net earned premium 540 100.0% 444 100.0% Net claims incurred 329 60.9% 248 55.9% Net acquisition cost 214 39.6% 200 45.0% Net underwriting result (3) (0.5%) (4) (0.9%) Investment return on insurance funds 123 22.8% 106 23.9% Net insurance result 120 22.2% 102 23.0%
Page 35
Santam is an authorised financial services provider (FSP 3416), a licensed non -life insurer and controlling company for its group comp anies. Investment results Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Page 36
Asset liability matching GROUP CONSOLIDATED NET ASSETS AT 30 JUNE 2025 27 11 88 3 16 73 86 12 67 76 3 2 2 26 2 - 20 40 60 80 100 Insurance funds ART Sub debt SH funds Total Percentage Other assets Strategic investments Listed equities Interest-bearing instruments and preference shares Cash and money market instruments 11 415 35 492 3 064 13 647 63 618 6 • Disposal of listed equities to fund MultiChoice transaction and to position capital for launch of Lloyd’s Syndicate • Strategic investments mostly reflect economic interest in SGI and NMSIS
Page 37
Conventional insurance SIZE OF NET INSURANCE FUNDS • Average float balance up 22% on Jun 2024 8 220 9 910 8 444 8 721 9 370 11 167 11 197 11 300 10 886 10 672 10 867 11 033 10 993 - 2 000 4 000 6 000 8 000 10 000 12 000 R million
Page 38
Shareholder funds CURRENCY EXPOSURE 62 62 55 60 15 13 24 19 18 20 18 18 5 5 3 3 - 20 40 60 80 100 Dec-23 Jun-24 Dec-24 Jun-25 Percentage Rand US Dollar Indian Rupee (Target shares) Other currencies (mainly Namibian Dollar and Malaysian Ringgit)
Page 39
Investment return • Improved investment return on all managed portfolios • Performance exceeded benchmarks in general • Shareholder investment return impacted by foreign currency translation differences Investment return on insurance funds VarianceJun-25 Jun-24 R million R million Conventional 466 359 30% Alternative Risk Transfer 222 171 30% Santam group 688 530 30% Shareholder investment return VarianceJun-25 Jun-24 R million R million Conventional 35 698 (95%) Alternative Risk Transfer 27 14 93% Santam group 62 712 (91%)
Page 40
Capital management Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Page 41
Return on capital TOTAL COMPREHENSIVE INCOME EXPRESSED AS % OF WEIGHTED AVERAGE SHAREHOLDERS’ FUNDS 19.1 8.8 18.6 13.6 13.4 11.3 20.0 32.5 3.1 (0.8) 9.9 4.9 15.1 22.3 11.9 0.7 22.2 8.0 28.5 18.5 28.5 33.6 31.9 33.2 (3) 7 17 27 37 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Jun-24 Dec-24 Jun-25 Percentage Insurance ROC Investment ROC Dotted line represents the targeted return on capital of 24%
Page 42
Capital management • Group economic capital requirement based on the internal model R9.8 billion (December 2024: R9.5 billion) • Group economic capital coverage ratio of 170% at 30 June 2025 (December 2024: 166%) • Target economic capital coverage ratio band maintained at between 145% and 165% • Considering the capital position, an interim ordinary dividend of 590 cps was declared, up 10.3% on 2024 • Interim dividend will reduce the economic capital coverage ratio to a level that remains at the upper end of the target band • Surplus capital above mid-point allocated to fund growth through Lloyd’s Syndicate • Additional R1 billion subordinated debt issuance in 2H25 in support of Lloyd’s initiative
Page 43
Closing remarks Santam is an authorised financial services provider (FSP 3416), a licensed non-life insurer and controlling company for its group companies.
Page 44
Sustainability in action Positive impact on society and nature Supporting community resilience Culture and customer experience • Continued as a constituent of the FTSE 4 Good index series and FTSE/JSE Responsible Investment Top 30 Index • Risk reduction: 82% of properties geocoded • Continued with the ClimateWise membership • We continue to support 102 municipalities through Partnership for Risk and Resilience (P4RR), additional partners identified • Contributions worth R199 million to the Santam Resilient Investment Fund which focuses on social impact • MTN and MultiChoice partnerships increasing reach to new markets across South Africa • Continued commitment to excellent customer experience and fair treatment • Consistent customer NPS improvement • Ranked 5th in the Top Employer Survey and 1st in the insurance sector • Positive workforce with the employee engagement score of 88% • Launched underwriting academy • Establishment of Culture Council • Maintained our B-BBEE level 1 status since 2018
Page 45
Priorities for the rest of the year Strong H1 performance a springboard for sustainable profitable growth and value creation Scale international diversification: prepare for the launch of Santam Syndicate 1918 Drive growth through cross-sell and partnerships Continued focus on disciplined underwriting and cost efficiency Best broker enabler, improve ease of doing businessRemain steadfast in scaling direct Maintain focus on improving efficiencies and accelerating our digital capabilities Continue to enhance client and employee experience Finalise social impact and climate response plan
Page 46
Questions?
Page 47
Thank you