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Santam profits to tumble

Johannesburg - The country's biggest short-term insurer, Santam (SNT), said on Wednesday that it expects its earnings per share to reduce between 25% and 35% and headline earnings per share to be between 30% and 40% lower for the year ended 31 December 2008, compared to the prior year.

It said this represents a significant improvement from results reported for the first half of 2008 when both earnings per share and headline earnings per share were 89% lower than the first half results of 2007.

"As reported in our Operational update on 26 November 2008, the industry conditions were challenging for the year with pressure on premium rates. However, the company achieved a substantially better net insurance result in the second half of 2008, compared to both the first half of 2008 and the second half of 2007.

"As generally experienced by investors in the financial markets, the performance of the company's investment portfolio was under severe pressure during the year with negative investment returns reported in both halves.

However, absolute investment performance improved during the second half of the year, mainly as a result of reducing the company's exposure towards listed equities. The group's solvency margin comfortably remained within the target band of 35% to 45%," Santam said in a trading update.

The company completed the disposal of its discontinued European insurance operations before year end. The net result for the discontinued operations also ended favourably against the first half of the year and equivalent period in 2007.

Santam will release its audited results for the year ended 31 December 2008 on 24 February 2009.

- I-Net Bridge

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