Johannesburg - With damage of close to R3bn, the Knysna fires and Cape storm earlier this year have probably been the worst disasters ever to hit South Africa’s insurance industry. This is according to insurer Santam, which released its half-year financial results on Friday. The two disasters ate away at Santam’s bottom line, which saw its net underwriting margin shrink to 4.2%. If not for the storm and fires, the insurer estimated its net underwriting margin would have remained unchanged at 6.4%.
In June this year, a severe storm hit the Western Cape which resulted in extensive property damage in Cape Town and its surroundings. This was followed by a devastating firestorm in the southern Cape that included large parts of Knysna, Brenton-on-Sea and parts of Plettenberg Bay. The fire destroyed a large number of properties in its wake. Almost 10 000 people were evacuated and there were seven deaths.
“This was by far the worst catastrophe event in South African insurance history, with Santam client claims totalling around R800m, of which R72m related to the Cape Town property damage,” Santam said.
It said the resulting impact on the group’s net underwriting results, including reinsurance reinstatement premiums, was R234m.
The lower underwriting profit compared to 2016 was the key driver of the 6% drop in headline earnings per share, Santam said. But profit still increased by 6% to R808m.
Despite the calamities, Santam still reported 14% growth, attributing its survival in a tough climate to the resilience it had built up due to good business principles.