Broker channel stands out in strong underwriting year
The country’s largest short-term insurer reported impressive results for the year ending 31 December 2025, leading with a 6.4% increase in gross written premium (GWP) from its conventional insurance businesses, to R44 billion. Santam’s net underwriting margin ended significantly higher too, up from 7.6% in 2024 to 11.3% on the back of a favourable attritional loss experience.
Weather-related losses were R600 million lower in 2025 versus 2024, but the insurer warned that the favourable claims environment was not sustainable in the context of the increase in the frequency and severity of extreme weather events experienced recently. “Other large losses, in particular fire, are also volatile in nature,” Santam said. “Some normalisation has been experienced in the first two months of 2026, with flooding in the northern part of SA and wildfires in the Western Cape, generating losses of R300 million by end-February.
Green lights all around
“The group recorded a strong financial performance for the 2025 financial year; all key financial performance indicators exceeded their longer-term targets for the full year,” wrote Wikus Olivier, Group CFO, in the executive summary contained in Santam’s Integrated Report 2025. Notably, the insurer surpassed its capital coverage ratio range of 145-165%, coming in at 169%; went above its net underwriting target of 5-10%; and beat its return on capital objective of 24%, achieving 29.2%.
One of the big differences between this year’s results and some of the previous periods is the absence of any mega natural catastrophe loss events. This partly explains the sharp rise in underwriting margin, which is quite high for a traditional and largely intermediated insurer. In layman’s terms, the fires and floods that occurred over the reporting period, while serious, did not translate into large insured losses, with the result the premiums collected far exceeded the R28.5 billion in claims paid.
Santam also announced that it was on track to achieve some of its longer-term diversification objectives. The group has made solid progress towards its 2030 goals of generating 20% of business offshore and 30% through its direct channel, currently standing at 19% and 22% respectively. “We maintained our leading position in the broker distribution channel in South Africa across personal and commercial lines of business, while growing market share in the direct channel and in underpenetrated consumer segments,” Olivier said.
Santam Syndicate 1918 is up and running
International diversification emerged as a strong theme in the latest results. Santam noted that combined, Santam Re and the Santam Specialist Solutions division grew non-South African GWP by 11% to R6.8 billion, with 80% of this premium coming from the reinsurance brand.
“International growth will be augmented in 2026 by the official launch of Santam Syndicate 1918, with Lloyd’s providing its final approval to commence underwriting from 1 January 2026,” Olivier said. Santam transferred R2.2 billion to capitalise the syndicate during 2025, and reported R325 million in one-off establishment costs.
The GWP mentioned in the opening paragraphs indicates the size of the business written by the group’s conventional distribution channels before allowing for reinsurance premiums paid. GWP increased by 6.4% while net earned premium, being the portion of GWP after reinsurance, grew by almost 15%. Santam noted that a surge in new business written through partnerships under Santam Re had contributed to the higher level of growth in NEP, and that this should realign to GWP in future periods.
Property overtakes motor
There were some interesting developments in the GWP contribution by insurance class written in the conventional business, with property overtaking motor. Santam reported R19.970 billion GWP in the motor class (45.4% of the total) followed by property at R16.817 billion, or 38.3% of the total. The engineering, liability, crop and transportation classes each weighed in with premium in the R1.194-R2.055 billion range. Accident and health, at R720 million, was the smallest reported class.
Miway delivered a strong performance in 2025, with the direct insurer achieving record new business sales during the year. According to Santam’s integrated reporting, the influx of new policies supported strong double-digit premium growth and an increase in net policy count, pointing to continued traction in the group’s direct channel. Although Santam does not disclose Miway’s gross written premium as a standalone figure, the commentary suggests sustained momentum in customer acquisition and portfolio expansion across this division.
Intermediated distribution is still the mainstay of the business, with some 3000 intermediaries guiding clients through the structure of policies, offering advice on claims processes and risk management strategies. This figure includes intermediaries active in Miway’s predominantly direct insurance business. The direct ‘push’ should not detract from the 78:22 GWP split between intermediated and direct channels. Under the desired 70:30 target, intermediaries should be bringing in well over R40 billion in GWP in 2030.
Keeping intermediaries in the loop
Santam completed 15 face-to-face intermediary engagement sessions across the country last year. Per Integrated Report 2025, the insurer interacted with around 1880 intermediaries through these sessions. Over the coming years, Santam intends addressing intermediary concerns by digitising processes to improve efficiencies and freeing up time for client engagement; equipping intermediaries with digital tools; and helping with risk management knowledge and training.
The Broker Solutions and Client Solutions segments achieved solid growth in GWP in 2025 despite an overall moderation in premium rate increases. Santam reported that it has successfully dealt with areas of underperformance that had been affecting the business since 2022. “Our persistency experience improved compared to 2024 across commercial and personal lines,” Olivier wrote. He also mentioned strong growth in the Partner Solution segment thanks to the inclusion of the MultiChoice transaction, from May 2025, and around 600000 device insurance sales at MTN.
Another interesting ‘reveal’ in the latest results is the 4.6% absolute decline in the cost of reinsurance as a percentage of gross earned premiums from 2023 to 2025. Santam credited the optimisation of its reinsurance programme (for 1.3 percentage points); the change in mix of business at Santam Re (1.7); and a decline in the relative contribution of specialist lines of business (1.6) for this improvement. Santam also confirmed that the retention limit for catastrophe events was increased from R505 million to R1 billion from the 2024 financial year.
Tallying up the operating profit
The net insurance result from the conventional insurance business came in at R5.255 billion.
Beyond underwriting of R4.16 billion, the insurer also generated income from the investment of its insurance funds, adding R1.095 billion to the 2025 tally. Strong performances across both domestic and offshore equity markets, together with favourable interest rate conditions, supported investment income during the year, though currency movements partly offset these gains. A strong rand saw foreign currency losses on non-South African assets of around R1 billion.
Santam’s Alternative Risk Transfer (ART) division generated R944 million, helping lift the group’s 2025 income before tax and non-controlling interest to R5.799 billion. This division structures cell captive and other alternative risk financing arrangements for corporate clients, allowing participants to retain portions of their risk while benefiting from Santam’s underwriting, administration and risk management capabilities. The executive summary closed on an upbeat note.
Olivier noted a moderate improvement in South Africa’s economic growth outlook for 2026 alongside the 3.3% IMF forecast for global growth in the same year. “Together with easing pressure on personal disposable income in South Africa and our strategic focus on higher-growth areas in the direct, partnership and international space, [this] should support growth prospects into 2026,” he said.
There were some potential red flags to keep in mind, including volatile weather, a muted 2026 investment outlook and a forecast R300 million loss in the first year of Santam Syndicate 1918.
Geopolitics and heightened volatility
“Investment markets are also susceptible to any adverse change in geopolitical conditions,” Olivier concluded, “The recent escalation of conflict in the Middle East is expected to give rise to heightened volatility as well as potential secondary economic impacts. These conditions will likely impact the investment return earned on insurance funds, the investment margin earned by the ART businesses and the net investment return earned on capital in 2026.”
Writer’s thoughts: Many intermediaries will be surprised by Santam’s 2025 underwriting margin exceeding its 10% upper range. Are you comfortable with that margin in the context of the risk mitigation costs and premium increases your clients faced last year? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
