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Friday, April 1, 2005
Return to shareholders

Like M&F Santam is planning to return surplus capital to shareholders. This is to be at a rate of R10 per share (totalling about R1,15 billion) subject to shareholder and regulatory approval. The company has declared a huge increase in final dividend of 195 cents a share (compared to 148 cents in 2003) for its latest year end to 31st December 2004. Policyholders also win, as for the second year in a row there are to be no general premium rate increase for the majority of personal lines policyholders.

Good fortunes are largely due to a favourable net insurance result of R1,4 billion and investment result of R1 billion.
Chief executive Steffen Gilbert says the single biggest factor contributing to the group’s favourable underwriting results was the low claims ratios experienced in Southern Africa across most classes of insurance. The group’s net claims ratio of 57% was 7,8 percentage points lower than in 2003 mainly due to benign weather patterns, the absence of catastrophes, a lower frequency of motor accident claims, a reduction in theft claims and fewer man-made disasters.
As he says, “The past year proved to be one of the most favourable underwriting years in the history of the SA short-term insurance industry.
  “We expect a more normal claims pattern and keener pricing in 2005. But we are still in a strong underwriting cycle, the economy and financial outlook remains positive.”
Despite marginal growth in gross written premium in the past year, net written premium increased by 12% because of further optimisation of Santam’s reinsurance programme: the level of reinsurance premiums declined from 26.2% in 2003 to the present 19.4% of gross written premiums during the year under review.
Equity earnings from associated companies were also significantly higher in 2004 due to good earnings from Credit Guarantee Insurance Corporation of Africa Ltd and Lion of Africa Ltd.
 

Copyright © Insurance Times and Investments® Vol:18.2 1st April, 2005
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