Short-term insurer Santam’s headline earnings per share were 89% lower for the first six months of 2008 compared with the same period in 2007, the company said on Wednesday.
The earnings were 89 cents per share compared with 803 cents per share for the same period in 2007.
”From an underwriting perspective, growth and profits were satisfactory, but overall earnings for the group fell sharply due to poor investment results,” Santam said in a statement.
Although during the period under review Santam’s Southern African operations achieved an 8% increase in gross written premium, the net underwriting result for the continuing operations declined during the first half of the year from R469-million to R326-million.
While the overall net underwriting margin remained healthy at 5,7%, Santam incurred a number of large industrial accident- and fire-related claims that adversely affected the underwriting margin in the corporate business unit, contributing to the negative property class performance.
However, the underwriting performance of the personal and commercial business, as well as the specialist classes, met or exceeded expectations in the first six months, despite flooding in KwaZulu-Natal.
Looking ahead, Santam said that underwriting margins are expected to remain under pressure — due to the softer market conditions both for commercial and personal lines and the anticipated deterioration in global and domestic economic conditions.
”In addition, the increased inflationary environment, reduction of individual’s disposable incomes and deteriorating public infrastructure in some areas also pose challenges.” — Sapa