By Dick­ens, it works

Financial Mail - - INVESTOR’S NOTEBOOK - @scranston

t isn’t much fun writ­ing up the re­sults of such an ir­ri­tat­ingly well-man­aged com­pany as San­tam. Its main prob­lem last year, the prop­erty in­sur­ance book, has swung back to profit as it per­suaded more of its clients not to re­sort to ar­son.

The mo­tor book, run as a loss-leader by most of its com­peti­tors, brought in R513m of un­der­writ­ing profit.

The only sec­tor at which any­one can point fin­gers is its li­a­bil­ity busi­ness, which went R49m into the red — but much of this was be­cause of R100m in li­a­bil­ity claims for its large food-pro­cess­ing clients over the lis­te­rio­sis out­break. As San­tam in­sures 85 of the top 100 JSE com­pa­nies, it is rarely far from such bat­tles.

Per­haps San­tam is not seen to be at the cut­ting edge of tech­nol­ogy: it of­ten treats its Mi­way sub­sidiary as the guinea pig for in­surtech in­no­va­tion. It still re­lies on its agents meet­ing clients in cof­fee shops and fill­ing out ap­pli­ca­tion forms with foun­tain pens.

But CEO Lizé Lam­brechts says it isn’t ac­tu­ally as Vic­to­rian as it seems. There are por­tals that clients can use to ac­cess their ac­counts, and a re­lated por­tal for bro­kers and agents. She says the new in­for­ma­tion-rich mod­els such as Dis­cov­ery In­sure and Hol­lard-backed

INaked are un­doubt­edly im­pres­sive. But the in­for­ma­tion gleaned from a dozen tried-and-tested un­der­writ­ing ques­tions has proved 95% as ac­cu­rate as the hitech ver­sion. Lam­brechts tact­fully refers to how San­tam’s com­peti­tors don’t have enough con­sis­tency. San­tam has made hay while its main com­peti­tors, prin­ci­pally Old Mu­tual In­sure and Bryte, have continued liv­ing in the world of the long lunch and golf ev­ery Wed­nes­day.

At last there is a good busi­ness in the sec­ond slot, namely Hol­lard. The busi­nesses will be go­ing head-to-head on cy­berin­sur­ance; they both have a solid strategy at this end of the mar­ket.

Old Mu­tual In­sure has taken the eas­ier route of fo­cus­ing on its new high-end sports car in­surer Elite Risk Ac­cep­tances, run by the me­dia-friendly Chris­telle Col­man. It’ll be a good busi­ness, but is de­signed for the polo set.

One busi­ness that might not have a long-term fu­ture at San­tam is crop in­sur­ance. As ex­pro­pri­a­tion with­out com­pen­sa­tion is pos­si­ble, farm­ers will bat­tle to get bank fi­nance to plant crops in the first place.

Hit­ting the sweet spot

Fats Domino sang about Blue­berry Hill his rock ’n roll clas­sic. You can now in­vest in your own blue­berry hill

in through the new Fed­group app. Or, if you pre­fer, you can in­vest in a beehive or a so­lar panel. Th­ese im­pact in­vest­ments in the agri­cul­tural sec­tor are avail­able for as lit­tle as R300 and they don’t carry the usual hefty fees, as they are not housed in life poli­cies or unit trusts. This is a bot­tom-up model that does not rely on a squad of Maser­atidriv­ing bro­kers to sell the prod­uct.

Fed­group CEO Grant Field says it dif­fers from the tra­di­tional model for an im­pact fund which, de­spite the “im­pact fund” la­bel, could sit with 70% of its as­sets or more in govern­ment bonds or even cash while wait­ing for in­vest­ment op­por­tu­ni­ties.

Field has en­trusted the in­vest­ments to old hands. The fund’s blue­berry farm­ers are highly spe­cialised and would con­sider grow­ing straw­ber­ries to be reck­less diver­si­fi­ca­tion. Their berries have loyal clients over­seas — th­ese are berries that are eaten on their own, not sec­ond-rate fruit that is squashed into muffins and pan­cakes. Field also hopes to lead a re­vival of real, sin­gle-source honey: much of the honey now sold in SA is dis­guised syrup or thrown to­gether from 20 dif­fer­ent coun­tries.

San­tam still re­lies on its agents meet­ing clients in cof­fee shops and fill­ing out ap­pli­ca­tion forms with foun­tain pens

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