Our opinion on the current state of SANTAM(SNT)Santam (SNT) is South Africa's largest short-term insurer, commanding approximately 22% of the market. Unlike insurers that offer endowment policies, annuities, or investment-linked products, Santam specializes in insuring tangible assets such as buildings and vehicles, as well as offering coverage for personal risks like disability or death that could result in loss of income. The company employs over 6,000 people and holds a level 1 BEE status.
Santam's business model involves paying the first R150 million of any claim, with the remainder covered by its reinsurance policies. The company has demonstrated resilience, particularly in light of challenges such as the Ma-Afrika judgment, which led to an increase of R1.7 billion in its provision for contingent business interruption (CBI) claims. Additionally, the company was impacted by the civil unrest in July 2021, but it continues to maintain its position as one of the JSE's most reliable quality shares.
In its results for the six months ending 30th June 2024, Santam reported a 10% increase in insurance revenue and a 35% rise in headline earnings per share (HEPS). The company attributed its resilient performance to the progress made with its FutureFit 2030 strategy and its diversified portfolio across market segments, insurance classes, and geographies, despite the challenging operating environment in its primary market.
Santam currently trades on a P/E ratio of 15.45, which reflects its status as a blue-chip stock with a strong balance sheet and a long history of steadily improving earnings. The share price has shown a consistent upward trend over the past 39 years, from trading at 90 cents in 1985 to around R348 today. Given its solid track record and dependable performance, Santam is a recommended addition to any private investor's portfolio.
