Non-life results signal shifts in risk placement
The reason so many asset managers have been giving South Africa’s bank and insurance shares the thumbs up is revealed in the numbers. Case in point, the recent operational update from the country’s largest short-term insurer, Santam Limited, which confirmed it had met or exceeded all longer-term financial performance indicators in the nine months to 30 September 2025.
Favourable long-term metrics
“Highlights include double-digit growth in gross written premium (GWP) and net earned premium (NEP); an underwriting margin above the upper end of the 5% to 10% target range; and an annualised return on capital in excess of 30%,” the insurer wrote. The SENS also noted that net income growth for the nine months was in line with the performance for the first half of the year. By June 2025, the insurer’s net income had already exceeded R2 billion, up 19% on the first six months of the prior year.
Santam reported a 16% jump in NEP from its conventional insurance business for the first nine months of 2025. NEP is the portion of premium an insurer recognises as revenue for the period already covered after accounting for reinsurance. The insurer noted solid, double-digit NEP growth from its direct brand, MiWay, with exceptional performances from the personal lines and commercial businesses.
“Santam Re also achieved excellent growth, supported by significant business from strategic partnerships,” the trading update noted. “Broker, client and partner solutions recorded good growth too, in line with the performance for the first half of the 2025 financial year. Not all of the conventional insurance businesses were firing. The insurer noted that competitive conditions weighted on the recently rebranded Santam Specialist Solutions.”
Weighing the ART business
Santam distinguishes between conventional insurance, being the core of its non-life underwriting operations, and various other risk-financing structures, including alternative risk transfer (ART) and international underwriting ventures. The insurer confirmed “excellent operating results, with substantial growth in fee income, underwriting results and investment margins” from its ART activities in the nine months to end September 2025.
The big news story for 2025 was the approval by the Lloyd’s Council to launch a Santam syndicate, since named Santam Syndicate 1918. Underwriting will commence from January 2026. “The establishment of the Santam Syndicate is aimed at significantly enhancing Santam’s international growth and diversification ambition; Lloyd’s provides an efficient and scalable platform to access specialist insurance classes,” they wrote.
Local non-life insurers have enjoyed a relatively benign natural catastrophe year. Santam reported it had not experienced any significant claims events year-to-date, but warned that the full year 2025 underwriting result could still be skewed by adverse weather or other significant loss events. Financial market volatility is another potential red flag. Although favourable interest rates served as a tailwind for investment returns over the reporting period, they could easily turn around.
From profit to resilience
Readers will have to wait until end-March next year to see how the insurer’s full year results unfold. To flesh out today’s newsletter FAnews has had to shift focus from the premium and profit reported in the insurer’s trading update to its economics and sustainability positioning around the G20 Summit.
For those of you paying close attention to the headline news, South Africa’s leading banks and insurers have been quite active on the fringes of this global leadership summit. Santam Group CEO, Tavaziva Madzinga, shared some of the insurer’s views in an opinion piece run in the Sunday Times a couple of weeks prior to the G20 Leaders’ Summit, held 22-23 November.
The CEO wrote that the G20 theme of solidarity, equality and sustainability “could not be realised without tackling one of the most pressing global challenges of our time, the rising cost and frequency of disasters.” To support this comment, he noted that the global economic toll of disasters had almost tripled over the past five decades. Available data indicates that annual disaster costs grew to USD180-200 billion between 2001 and 2020, up from USD70-80 billion over the two previous decades (1980-2000).
“This escalation in disasters, from floods and fires to droughts and storms, reflects an increasingly volatile risk landscape,” Madzinga wrote. “Higher costs mean greater pressure on governments, communities and businesses, as well as on insurers who provide the financial mechanisms that help societies recover.” He also went into some detail on how insurers and other private sector stakeholders can partner with government to address key risk factors, especially loss-amplifiers such as poorly maintained infrastructure and socioeconomic disparities.
Addressing SA’s infrastructure challenges
Infrastructure also featured in the 2025 Santam Specialist Solutions Risk Barometer published this October. In its opening pages, the Barometer referenced a complex insurance trading environment defined by “economic pressure, climate volatility, infrastructure strain, cyber threats and evolving regulatory demands…” The contention is that underwriters are unduly exposed to inadequate or poorly maintained infrastructure because it contributes to heightened losses.
A major natural catastrophe loss event that occurred in April 2022 illustrates the point. At the time, excessive rainfall resulted in widespread flooding in and around Durban, KwaZulu-Natal, causing billions of rand in insured losses. Some three years later, Tokio Marine & Nichido Fire Insurance Co, the insurers for Toyota South Africa, brought a R6.5 billion damages claim against the eThekwini Municipality and others.
They are arguing that stormwater management failures, including neglected public infrastructure, contributed to extensive flood damage at Toyota’s Durban plant. If drainage systems and stormwater networks are not maintained, anticipated risks escalate into major insurance exposures.
Underwriters are positioning for these types of losses under a ‘building resilient infrastructure’ tagline. For example, the Sunday Times piece drilled into how Santam’s Partnership for Risk and Resilience (P4RR) meets both business and societal commitments. According to Madzinga, SA’s experience with this programme demonstrates what can be achieved when resilience is viewed as a shared investment rather than a cost.
An insurer’s plea to the G20
Over more than a decade, the initiative has strengthened disaster-management capabilities in 102 municipalities; supported early-warning systems; and helped more than 24 million South Africans prepare for and respond to extreme weather events. As the global community turned its attention to the G20 summit, Madzinga reminded leaders that the stakes could not be higher.
“If the G20 can place disaster risk and resilience at the heart of its agenda, it will not only strengthen the world’s capacity to withstand crises, but will help secure a safer, more equitable and sustainable future for all,” he concluded. The insurer’s underwriting performance over three quarters of 2025 suggests they are already putting resilience and sustainability first, with risk mitigation central to the philosophy.
Writer’s thoughts:
The golden thread running through today’s newsletter is that non-life insurance stakeholders must prioritise resilience and risk mitigation to improve underwriting outcomes. Do you see this requirement playing out in your recent client interactions? Please comment below, interact with us on X at @fanews_online or email us your thoughts editor@fanews.co.za.
