SAs largest short-term Santam insurer reports drop in new business
New business growth has slowed significantly
SA’s biggest short-term insurer Santam said on Wednesday claims for the first four months of the year were subdued as people were restricted to their homes.
The lockdown imposed by the government to combat the spread of Covid-19 has resulted in fewer road accidents.
Santam is the latest insurer in SA to report a strain on new business volumes as the impact of the coronavirus pushes the economy into a steep decline and adds to consumers’ burdens.
The insurance sector is being thumped by low consumer discretionary spending and clients exiting policies as joblessness rises with some estimates suggesting SA’s unemployment rate will reach 50%.
Santam says it has seen a significant drop in the number of new customers.
Net underwriting margin (which is the profit the company generates after paying claims and business expenses) for its Conventional insurance business, was at the midpoint of its target band of 4% to 8%, it said.
New business growth for the company’s commercial and personal lines unit also took strain during April.
However, the losses incurred in this segment were offset by lower claims since the start of 2020, which were further reduced during the lockdown.
Subsidiary MiWay, which had been showing resilient growth, was also disrupted by the lockdown, though it reported solid underwriting results.
“The Santam Specialist business reported strong growth in the corporate property and engineering businesses, while the growth in the travel insurance, aviation, transport and marine businesses were negatively impacted by Covid-19 during March and April 2020,” Santam said.
It said its underwriting performance was for the Santam specialist business, which was “subdued as a result of the provisions raised for Covid-19-related business interruption claims.”
Despite excessive market volatility, its balance sheet had held up well, it said.
“Santam’s capital, liquidity and funding positions remain robust and the group operated effectively in the face of unprecedented global uncertainty presented by the Covid-19 pandemic,” Santam said.
The company's share price closed 3.61% higher to R285,92 on Wednesday.