Lockdown is a setback for Santam’s premium growth

SANTAM said in a trading update for the four-month to end April yesterday that the lockdown and economic slowdown had negatively impacted premium growth as new business acquisition reduced significantly.

“Santam Commercial and Personal intermediated business continued to experience strained growth in the current economic climate, exacerbated by the impact of Covid-19 on new business acquisition during April.

“The loss ratio benefited from a benign claims environment experienced since January, with the lockdown further reducing claims activity during April. This was partly offset by provisions for Covid-19 related business interruption claims,” Santam said.

Santam said it had provided refunds and discounts of R327 million to policyholders in April as the financial services company received muted claims during the month as a result of the lockdown regulations.

The group said the lockdown resulted in a muted claims environment for the month, mostly impacting the motor class of business.

“Santam and MiWay both provided premium refunds and discounts on motor policies as well as other premium relief support to personal and commercial policyholders amounting to R327m. Support of R42m is also being provided to small, medium and micro-enterprises and other suppliers,” the group said.

The group was satisfied with its conventional insurance business segment, which achieved a net underwriting margin at the midpoint of the target range of 4 to 8 percent.

“Satisfactory growth in gross written premium, excluding the premium relief, was achieved,” the group added.

During the period of uncertainty, the group has assured its shareholders that its balance sheet held up well during the excessive market volatility.

“Significant foreign currency gains following the weakening of the rand were offset to some extent by fair value losses on listed equity and bond portfolios,” the group said.

Its capital, liquidity and funding positions remain robust and the group said it operated effectively in the face of unprecedented global uncertainty presented by the Covid-19 pandemic.

“Santam’s economic capital coverage ratio remains above the 150 percent threshold and its regulatory capital position remains strong, following the payment of the 2019 final dividend on March 30,” the group said.

Santam will release its results for the six months to end June on September 3.

Santam shares closed 3.05 percent higher at R284.38 on the JSE yesterday.