Investments let Santam soar
Johannesburg - Short-term insurance giant Santam is expecting an improvement of 215% in its interim headline earnings, on the back of strong growth in its investment portfolios, the group announced on Thursday.
In the previous corresponding period, the group reported headline earning of R100m, or 89c, per share. That was 89% lower than the first six months of 2007.
The company is expecting to report interim results at the end of August. In the corresponding financial period, the group reported headline earnings of R100m or 89c/share.
"The performance of the investment portfolio improved considerably as markets saw some recovery during the period," the company said in a trading statement. "Favourable interest rate returns, albeit lower than last year, had a positive effect on cash-related investments."
Insurance businesses derive their income from two sources: firstly by selling insurance policies to consumers, and secondly by realising profits on investments made.
Short-term insurers have battled during the past year due to a number of large-scale fire and flood claims, as well as policy lapses as consumers struggled with a squeeze on their disposable income.
When counterpart Mutual & Federal reported interim financial results in July for the period to end-June, it said its gross premiums had declined by 7%, while investment income dropped 16% to R231m.
Also in July, stockbrokerage firm Barnard Jacobs Mellet said it had downgraded its view on earnings at Santam and described the share as "expensive".
Santam was up 0.4% (35c) to 8 835c/share; in comparison, the financial sector index was up 0.6% in late trade on Thursday.