News

Santam Passes Most Of $257M Flood Loss To Reinsurers

Santam Passes Most Of $257M Flood Loss To Reinsurers

Santam Passes Most Of $257M Flood Loss To Reinsurers

Santam Passes Most Of $257M Flood Loss To Reinsurers

The results of South African insurer Santam for the first half of 2022 contain a gross exposure to flooding in the KwaZulu-Natal area of R4.4 billion (USD 257 million).

But because of its reinsurance program, the company’s overall loss from the floods was reduced to R566 million (USD 33 million), or 87% of the total loss.

ALSO, READ Cost Of UK Flood Events Could Surge By 2050 – JBA

The KZN floods, according to Santam, were the “most serious natural catastrophe” in its history. Santam also stated that there could still be significant changes to the estimations for its gross exposure.

INVEST IN IRAs, SECURE YOUR FUTURE

Even though the company transferred most of its flood loss to reinsurers, unfavorable weather conditions nonetheless had a significant influence on the company’s underwriting results throughout H1.

ALSO, READ Indian Re/insurers Allowed To Raise New Forms Of Capital

In particular, the KZN floods had a significant negative impact on the underwriting performance of the property class. This was partially offset by the release of R397 million in COVID business interruption (CBI) claims provisions, resulting in an underwriting loss of R328 million as opposed to a loss of R109 million for the H1 period in 2021.

Santam Passes Most Of $257M Flood Loss To Reinsurers

With effected total CBI payments of R4.3 billion at June 30th, which equals to more than 70% of estimated eligible claims, Santam believes it has made considerable progress in finalizing the remaining claims and associated reinsurance recoveries relating to the COVID-19 lockout.

Santam evaluated its provisions for CBI claims, the degree of claims aggregation for reinsurance recovery purposes, and estimated recoveries from applicable reinsurance contracts in light of the claims payment experience, and as a result, it has lowered its net provision for CBI claims by R397 million.

ALSO, READ Seoul Flooding Losses “Manageable” For Korean Re/insurers

Through H1 2022, Santam increased conventional insurance gross written premium by 7%, compared to 5% the previous year, and had a net operating result of R429 million, as opposed to R1 203 million previously.

The amount of net investment income, which includes investment return on insurance funds, was R225 million, down from R355 million at the beginning of 2021. Cash generated from operations increased to R4.6 billion from R2 billion, primarily because ART policy premiums and dividends received increased during this time.

ALSO, READ Palomar Reports Significant Premium Growth In Q2 Results

Santam Passes Most Of $257M Flood Loss To Reinsurers

“We had a turbulent market environment during the first half of 2022. Our expectation is that economic activity will, in the short to medium term, be constrained by weak consumer spending,” said Santam Group CEO Tavaziva Madzinga.

“The high inflation environment also puts pressure on claims costs, while loadshedding in the first half resulted in increased power surge claims. In addition, there has been a significant increase in reinsurance premium rates, following several large global and local catastrophe events,” he continued.

ALSO, READ Net Loss Of $343 Million For Liberty Mutual In Q2

“Despite these headwinds, we are confident that the corrective actions we have implemented will start to show a positive impact towards the latter part of 2022. These are primarily in the form of underwriting actions to address the impact of increased claims costs and reinsurance rates. They include procurement efficiencies, segmented premium increases, and higher claim excesses.”


AllInsuranceHUB is a blog for everyone who seeks an informative, educative, and knowledge-based online insurance and investment community. We share Biographies, Top-notch investment tips, finance news, insurance policy details and much more. You can read and share thoughts, ideas, and opinions on the finance market and get real-time updates from around the globe.

IBEH C. JOE

Financial analyst, Entrepreneur, Blogger and Business model

Leave a Reply

Back to top button
%d bloggers like this: