S.Africa's Santam posts FY rebound, outlook cautious

JOHANNESBURG: South African insurer Santam reported a 51 percent jump in full-year profit on Tuesday, helped by a recovery in underwriting, and said it expects underwriting margins to decline.

Santam, South Africa's largest property and casualty insurer said diluted headline earnings per share totalled 1,343 cents in the year to end-December compared with 889 cents a year earlier.

The results were widely expected after Santam said last month it expected headline EPS to rise by as much as 55 percent. Headline EPS, the main profit measure in South Africa, excludes certain one-time items.

Santam, which is majority owned by life insurer Sanlam, said it was helped by a recovery in its underwriting business and few large industrial accidents and fires.

The company said net insurance premium revenue totalled 13.5 billion rand ($1.94 billion), compared with 12.9 billion rand a year earlier.

South African insurers have begun to recover after being hit hard by a 2009 recession that led to a million job cuts and ballooning household debts, causing customers to lapse on policy payments.

The sell-off in equity markets after the global economic crisis hit investment portfolios.

Santam said it expected underwriting margins to decline to a range of 4 and 6 percent in 2011 due to the weakening rand and higher claim costs after floods spread across the country earlier this year.

Life insurer Liberty Holdings last week reported a surge in full-year profit as fewer of its customers lapsed on payments.

Shares of Santam were down 0.83 percent by 1214GMT, compared with a 0.2 percent fall in Johannesburg's All-share index