Johannesburg - South Africa's largest short-term insurer Santam Ltd reported a rise in first-half profit on Wednesday thanks to better returns on its investment portfolio.
The firm said headline earnings for the six months to end June climbed 220% to R320m. Headline earnings per share - the key profit gauge in South Africa - stood at 284c compared to 89c in the year ago period.
However, it said underwriting returns had been hit by increased claims from industrial and fire-related incidents, and said it expected underwriting margins to remain under pressure in the second half.
The company also said demand for its commercial and personal lines business would remain "soft" as it did not expect South Africa's economy, battling its first recession in 17 years, to recover before 2010.
Most South African insurers' profits have taken a hit from the global slide in equity markets as well as a reduction in consumer demand due to relatively high interest rates, inflation and rising personal debt.
Santam, majority-owned by financial services firm Sanlam, said the improvement in its investment portfolio had been helped by a recovery in equity markets in its second half and said favourable interest rate returns had had a positive impact on its cash related investments.
Sanlam, which reports its first-half results on September 3, posted a drop in four-month profit in June and predicted volatile market conditions would have a "major impact" on its full-year earnings.